The so-called THB10,000 cash handout scheme may be discontinued under the new leader of Thailand’s ruling party, but analysts are quite positive on this outcome as the funds are expected to be utilized in local and community projects.
Reports from local media suggest that Thailand’s substantial economic stimulus package, amounting to THB500 billion in cash handouts to citizens, is on the brink of being abandoned by the forthcoming government, led by Paetongtarn Shinawatra, daughter of Thaksin Shinawatra. Thaksin, a key figure in the ruling Pheu Thai party, has reportedly advised his daughter to forgo the implementation of the cash giveaway initiative that was previously proposed by the ruling party itself as an election campaign.
The ambitious plan aimed to propel the economy towards a growth rate of 5% annually, akin to several Southeast Asian counterparts. However, disagreements have surfaced regarding the funding mechanisms for this substantial stimulus, involving deliberations with the central bank and lawmakers, coupled with concerns about potential inflationary pressures, leading to delays in its execution.
The recent turn of events, marked by Srettha’s removal and Thaksin’s withdrawal of support, has cast a shadow of doubt over the viability of the cash giveaway program, despite the near approval of an additional budget by Parliament to kickstart the initiative.
Against the backdrop of underwhelming gross domestic product growth in the second quarter and the ongoing challenges stemming from the tourism sector, the future trajectory of Thailand’s economic recovery remains uncertain as the new government prepares to take the reins.
Still, Kasikorn Securities views this positively because without the digital wallet project, there could be a downside risk of about 0.2% against the estimated GDP growth of Thailand in 2024 at 2.6%. However, this downside risk would be offset by the funds being used for stimulating the grassroots economy instead, which is expected to generate more circulation of funds and economic activities than the digital wallet scheme.
The effectiveness of this project depends on the limitations of the time frame for implementation. Overall, we believe it could only provide a positive impact in terms of compensating for the absence of the digital wallet project.
Village fund projects are government initiatives aimed at providing financial assistance to rural communities, particularly those with low incomes. These projects promote employment and increase opportunities for access to capital for grassroots residents.
Stocks that could benefit from the local and village fund projects.
Low-income residents who can borrow money from the fund to develop their careers, invest, or cover other necessary expenses, thereby increasing community purchasing power (Commerce – CPALL / CPAXT / CRC). Additionally, businesses related to finance and personal loans may also benefit positively as they might stimulate additional loan demand from banks or other financial institutions serving that area (Finance – MTC / SAK).
Additionally, communities can use village funds for projects beneficial to the community, such as developing public utilities to improve the quality of life for community members. Consequently, businesses related to construction are likely to benefit (Commerce + Construction material – GLOBAL / DOHOME / HMPRO / SCC / DCC).
