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Thailand is handing out cash to boost consumption. But the poor could miss out

As Thailand’s economy has yet to recover from the lockdown imposed to prevent the spread of the coronavirus, the Thai government is once again resorting to cash handouts to boost domestic consumption.

Passengers wearing face masks as a preventive measure against the spread of Covid-19 walk out of a commuter train station in Bangkok.

Passengers wearing face masks as a preventive measure against the spread of Covid-19 walk out of a commuter train station in Bangkok.

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As Thailand’s economy has yet to recover from the lockdown imposed to prevent the spread of the coronavirus, the Thai government is once again resorting to cash handouts to boost domestic consumption.

But I doubt the strategy will work in Thailand, where the plague of inequality — which has existed long before the Covid-19 outbreak — is obstructing vulnerable members of society from accessing government resources.

Last week, the Finance Ministry announced a proposal to hand out a total of 45 billion baht (S$1.96 billion) to 15 million people to drive up the consumption of consumer goods.

The plan, which is likely to be approved by the cabinet later this month before launching in October, will see 3,000-baht handouts transferred to targeted individuals via the state's e-wallet app, called Pao Tang.

Under the plan, these individuals would receive a 50 per cent subsidy from the government for any purchases made at participating retailers, shops and supermarkets.

The purchases will be capped at 100-200 baht a day.

The scheme is expected to inject about 90 billion baht into the economy, equivalent to a gross domestic product growth of 0.28 per cent.

Lavaron Sangsnit, chief of the Fiscal Policy Office, told reporters last week the handouts are meant to be spent on goods sold by small- and medium-sized enterprises (SMEs), including street vendors and stall owners who signed up for the scheme.

Undoubtedly, the plan will stimulate consumption in the short run and consequently improve the government's economic reports.

But at the same time, the government needs to be aware of one major issue — the handouts won't go to those who need them the most.

Though Thailand has a high rate of social media penetration, there is a massive digital divide which prevents the most vulnerable in society from accessing the government's aid programmes.

This is especially true for low-income workers and small business owners, who are among the hardest-hit by the pandemic.

The divide was evident during the registration period for an earlier 5,000-baht handout, which was launched to provide immediate relief to those hit hardest by the government-imposed lockdown in early March.

Those from the lower rungs of society — many of whom have no access to mobile phones and bank accounts, a prerequisite for the aid — complained the packages were simply inaccessible.

More than a few said they weren't familiar with the web platform because of their limited digital knowledge.

Some had to seek assistance from friends or acquaintances to register. In many cases, they had to pay a "commission" once the handout was wired to their account.

But they were among the lucky ones — many who paid the fee upfront were cheated out of their money.

This digital divide means more tech-savvy, middle-class individuals — who weren't as economically affected by the Covid-19 lockdown — are more likely to grab the cash handouts.

So, it doesn't take a lot of imagination to figure out who are the primary beneficiaries of this 45-billion-baht aid programme.

Other beneficiaries include well-established business operators, including franchised minimarkets and retailers that accept e-payments, which would make easy gains from the scheme.

As a matter of fact, the government already knew about the inadvertent consequences of such a scheme, as something similar happened when it rolled out the Taste-Shop-Spend scheme, in which 1,000-baht handouts were transferred to about 10 million individuals through the app.

It was evident from the start that most of the recipients were well-to-do individuals. Even without the scheme, they would still be able to use their own money to spend on goods and services.

Given the government's scarce resources — it has sought enormous loans to pay for those handouts — spending them to help the rich seems irrational.

Unfortunately, there has been little attempt from the government to assess the effectiveness of its previous handout schemes and figure out where the money ended up.

Without such assessments, these handouts will only serve to widen Thailand's already-wide socioeconomic gap.

Some experts have suggested the use of simple vouchers or coupons, as using apps — which makes the aid contingent on owning a mobile phone — prevents the most vulnerable groups from accessing the aid.

Meanwhile, others have gone further by calling for the introduction of a universal basic income, where unconditional payments are made to those who need it without the need for registration.

But realistically, those who are well-off should realise they have the option of not claiming the aid, if they think they have enough.

The idea of a universal basic income should be considered as it minimises exclusion errors. That said, there needs to be a frank discussion about the government's resources and the method of distribution.

While the government is keen on short-term measures, it seems to have no intention to tackle Thailand's inequality at a deeper level.

The lockdown wreaked havoc for low-income workers and SMEs. People were laid off and incomes lost, but the state, by imposing impractical conditions, is essentially leaving them out in the cold.

This is in stark contrast to the rich and affluent, who can easily access any government aid scheme and are likely to survive the pandemic more or less unscathed.

One piece of evidence shows that sales of luxury goods recovered quickly after the pandemic peaked. Wealthy people with better connections always emerge winners.

Given its limited resources, the government should review schemes which benefit well-off recipients over others. They shouldn't be eligible for such aid in the first place. BANGKOK POST



Paritta Wangkiat is a Bangkok Post columnist.

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Thailand inequality Covid-19 coronavirus cash handout

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