A plea for help

A plea for help

Business leaders are fed up with the government response to the pandemic, calling for tighter borders, more relief measures and a crackdown on human trafficking and gambling dens

Tourists keep to social distancing while queuing to check in at Suvarnabhumi airport. Somchai Poomlard
Tourists keep to social distancing while queuing to check in at Suvarnabhumi airport. Somchai Poomlard

2021 is the year of the Metal Ox in the Chinese zodiac, where hard work and discipline define many of the animal's attributes. The reality at the outset of this year requires such attributes if the economy has a prayer of recovery.

Hard work is definitely in the making for governments, businesses and individuals worldwide as they continue to grapple with surging Covid-19 infections that have depressed sentiment since late 2019.

While some have called it a second-wave outbreak, the Thai government insists the latest contagion, with high infections detected in the seafood market and canned tuna factories in Samut Sakhon province, should be referred to as a fresh round of outbreak.

Many netizens have vented their frustrations on social media, taking jabs and snipes at the government's effort to remedy the situation and tackle illegal activities, such as smuggling of migrant workers and use of gambling dens, that have contributed to surging infections.

The government has refrained from a nationwide lockdown thus far, resorting to labelling each province with different colours, with red indicating the most stringent containment restrictions.

"I would grade the government's efforts as 6 out of 10. The positive is officials have tried to alleviate the economic burden through the co-payment scheme and domestic tourism stimulus," said academic Somjai Phagaphasvivat.

"But the government should accelerate infrastructure development projects to increase the country's competitiveness in addition to implementing interim stimulus measures."

While a nationwide lockdown is not necessary as the move would wreak havoc on the economy, Mr Somjai said first-quarter GDP will likely contract because of an economic slowdown internally and externally, with vaccine distribution underpinning hope of an economic recovery in the second half.

Thailand's GDP contracted by 6.4% year-on-year in the third quarter of 2020 following a 1.8% decline and a 12.1% contraction in the first and second quarters, respectively.

BROKEN ENGINE

The tourism sector is already limping as foreign arrivals were banned for much of last year and domestic tourism, which the government tried to prop up with stimulus measures, stumbled at the end of 2020 as a result of the abrupt surge in Covid-19 cases.

Vichit Prakobgosol, president of the Association of Thai Travel Agents (Atta), said tourism operators are disappointed by the government's response in preventing the country from another wave of infection as illegal border crossers and human trafficking gangs smuggled migrant workers into the country without any screening, contributing to the spread of the deadly virus.

Foreign travellers wishing to visit Thailand have to abide by many stringent measures, such as preparing required documents prior to their trips to ensure standardised health conditions.

Upon arrival, visitors also have to complete a 14-day mandatory quarantine in an alternative state quarantine facility, which they must pay for in their entirety.

Tourism operators want stricter border controls and a crackdown on other illegal activities that can trigger a massive virus spread. This includes gambling dens, which are among the causes of the surge in local infections.

"The most important thing is the government cannot repeat the same mistakes because we know they are the reasons behind this outbreak," Mr Vichit said.

"People who break the law and officers who are involved with illegal activities must be punished."

As operators face a tourism slowdown, financial support to help sustain them throughout the crisis is crucial, including a debt and interest holiday for one year to avoid a liquidity shortage, he said.

A co-payment scheme where the government subsidises 50% of monthly salaries at 15,000 baht for one year is necessary to protect jobs, especially skilled and irreplaceable workers in the tourism industry, said Mr Vichit.

"The pandemic is temporary and tourism will bounce back, but we need to keep experienced staff who can deliver high-quality services to tourists once they return," he said.

The government also needs to import as many vaccines as possible so every Thai can be immunised, as vaccination is the only hope to end the crisis, said Mr Vichit.

He said the Thai Food and Drug Administration must approve more Covid-19 vaccines in case potential customers with purchasing power want the jab first without waiting for free distribution.

Empty streets and food stalls near Bangkok's Khao San Road after the recent surge in Covid-19 cases.  Pornprom Satrabhaya

GREATER MAGNITUDE

The government should continue its financial aid programmes and increase their magnitude, improving existing aid measures but forgoing its controversial cash handout policy, said Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI).

Mr Supant aired his views following a report state officials would help individuals affected economically by the pandemic by giving them 4,000-baht handouts each. The Finance Ministry later denied the report.

The 50/50 co-payment scheme is "good at dealing with the biggest problem most people have," he said, referring to the 3,500 baht in subsidies granted to eligible people to reduce their daily expenses and stimulate consumer spending.

The government can simply adjust this scheme by increasing the financial aid to 5,000 baht until March, said Mr Supant.

This should work better than the 5,000-baht handouts the government gave to each eligible person for three months last year because that giveaway would be "redundant" if used again in tandem with the co-payment scheme, he said.

The cash handouts, intended for informal workers, caused a headache for the Finance Ministry as many disgruntled people gathered at its compound after seeing their rights to the scheme rejected.

"The government should continue with its ongoing economic stimulus measures, improving some to match the situation during the outbreak," said Mr Supant.

He said one particular improvement that should be expedited is the "We Travel Together" tourism campaign, in which the government pays for partial accommodation expenses for local tourists travelling domestically. The scheme is important because some inter-provincial travel has been restricted, and the government must help local tourists receive refunds if they need to cancel hotel bookings, said Mr Supant.

The FTI also wants the government to consider implementing debt relief measures again for businesses, including spas, which are temporarily closed in at-risk provinces.

The move would help relieve their financial burden as dozens of provinces remain in containment zones, he said.

Mr Supant also lobbied for the government to bring back the water and power bill subsidy programme as many people are unemployed and cannot pay their monthly expenses.

When asked to compare Thailand's relief measures with those overseas, he suggested Britain as a model because of its effort to maintain employment.

The UK government helped companies that did not furlough staff, offering salary subsidies of 80% of their wage. The scheme was introduced in March and replaced with a more targeted and less generous support effort in early November, Reuters reported.

Infections were reported at a canned tuna factory in Samut Sakhon. Jiraporn Kuhakan

INDECISIVE RESOLUTION

Somchai Pornrattanacharoen, president of the Wholesale and Retail Association, expressed his disappointment with state measures in handling the latest round of the outbreak, noting the government was not decisive enough in tackling crucial issues, particularly the smuggling of illegal migrant workers.

He also lambasted some state aid measures already implemented, saying they only benefit certain groups of people and businesses, and are not sustainable in the long term.

"The government urgently needs to launch more effective measures to shore up the liquidity of business owners hammered by the virus crisis, particularly the hotel or restaurant industries," said Mr Somchai. "Without sufficient and effective assistance, these owners may have to lay off their employees en masse in the future."

The unemployment rate was 2% in November, down from 2.1% in October, and 783,760 people were out of work, slightly less than the previous month's tally of 810,190, according to data from the National Statistical Office.

Mr Somchai said the government could immediately reduce the corporate income tax, cut electricity bills and introduce leniency in debt repayment, particularly for small businesses that have halted business operations to comply with the government's safety measures.

"We want to see more teamwork and cooperation between each government agency and decisive command, as well as appropriate penalties for organisations that engage in the smuggling of illegal migrant workers. Thais who ignore safety measures, resulting in a surge of new infections, should also be punished," he said.

SPIRALLING DEBT

As the fresh outbreak spreads, the downward spiral of the household debt burden is a grim certainty, said Kasikorn Research Center (K-Research).

Thailand's household debt-to-GDP ratio could spike to beyond 91% this year if economic growth dips below the estimated baseline of 2.6% because of the protracted pandemic, said K-Research.

Given rising downside risks to the growth outlook coming from the new round of infections, this could weaken the economic recovery momentum, said the think tank.

Thailand's household debt ratio rose to an 18-year high in the third quarter of 2020, to 13.8 trillion baht or 86.6% of GDP, rising from 13.6 trillion or 83.8% of GDP in the previous quarter.

New mortgage growth amounted to 160 billion baht in the third quarter of 2020, accounting for 88% of the increased household debt ratio, according to K-Research.

New loan booking of all types of consumer finance, including auto loans, personal loans and credit card spending, also rose in last year's third quarter.

On average, households' debt servicing ratio (DSR) is at 27%. But the DSR ratio of lower-income households, whose earnings are no more than 10,000 baht per month, is higher than the median.

Households with monthly income below 5,000 baht have a high DSR ratio at 84%, while households with a monthly income of 5,000-10,000 baht are around 40%, said K-Research.

According to the central bank's data as of October 2020, outstanding retail loans receiving debt relief measures from financial institutions amounted to 3.5 trillion baht for 10.7 million accounts. The definition of financial institutions covers commercial banks, non-bank companies and specialised financial institutions.

Somruedi Banchonduang and Pathom Sangwongwanich

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