Thais Are Wondering: What’s Up With PM Srettha’s Digital Wallet Scheme? – Analysis

By Jitsiree Thongnoi

Ratawee Phuiphom is an ardent supporter of the “Red Shirts,” a Thai pro-democracy movement that took hold in the years after a military coup deposed Thaksin Shinawatra as prime minister in 2006.

This army of street activists has always been linked with Pheu Thai, the political party associated with the Shinawatra family. Pheu Thai is back in power as the head of Thailand’s first civilian-led government since 2014, but Rantawee says she feels let down.  

“The government might be able to complete its four-year term,” the 54-year-old said. “But I don’t have any expectations for it. There is nothing tangible to see.”

She was alluding to electoral promises made last year by Pheu Thai and Srettha Thavisin – now the prime minister – to implement programs that would boost Thailand’s post-pandemic economic recovery. 

A linchpin for this is Srettha’s campaign pledge to put a one-time cash handout of 10,000 baht (U.S. $275) each into the pockets of Thai citizens who are hurting economically, through a so-called “digital wallet” scheme.

But more than seven months after Srettha took office, the program has yet to take off. His government is facing criticism and questions over how it will raise the money to pay for this 500 billion baht ($13.7 billion) program. 

“The people are waiting to see if the digital wallet policy can be done and why it is delayed,” said Rantawee, who lives in the northeastern province of Ubon Ratchathani. This former stronghold for both Pheu Thai and the red shirts lies within Thailand’s rice-farming belt, where much of their support comes.

Ratawee is among Thais who are questioning controversies surrounding the digital wallet, a populist policy which, critics say, Pheu Thai cooked up to deliver a quick-fix to the economy. The nation is still recovering from economic ravages of COVID-19, which caused Thailand’s GDP growth to plunge to by 6.1% in 2020, according to the World Bank.  

Srettha, for his part, has promised that the digital wallet program would boost spending at a time when the nation’s economy remains sluggish. His aim is to push Gross Domestic Product to above 5% in the coming years. During the past decade, Thailand’s economic performance has stagnated below that mark.

Promises, promises

Borrowing a page from the populism playbook that made Thaksin so popular as PM two decades ago, the digital wallet scheme aims to inject 10,000 baht into the wallets of eligible people to stimulate spending. Each recipient is expected to spend the money within six months.

Under the initiative, digital money would be wired via an app to Thais ages 16 and older who earn less than 70,000 baht ($1,920) a month or have less than 500,000 baht ($13,760)  in savings – which means that about 50 million Thais are eligible to receive the handout.

But the Srettha administration has not yet decided how it will finance the scheme, and whether the money to pay for this will come through a combination of loans from banks or through the national budget. Borrowing the money from banks could risk violating fiscal regulations because of the sheer size of the combined loans, critics say.

When Pheu Thai campaigned for the May 2023 general election, it assured Thais that it would not need to borrow money to pay for the digital wallet. The party, however, has since changed its position to leave that open as a possibility.

This runs “contrary to the Pheu Thai’s election pledge that it would not need to borrow to fund this scheme – and all for a one-time economic stimulus,” said Mathis Lohatepanont, an observer of Thai politics and a PhD candidate in political science at the University of Michigan.

“Not only is it fiscally irresponsible, it is also not the right cure to Thailand’s ills,” Mathis told BenarNews.

GDP growth was sluggish last year, only 1.9%, he said. Citing the National Economic and Social Development Council, Mathis put this down to “weak exports and a decline in public investment, while private consumption – which the digital wallet scheme is intended to boost – was already healthy.” 

Just ‘trying to gain votes’

Meanwhile in February, Thailand’s National Anti-Corruption Commission proposed a study paper looking into the possibility of corruption and fraud that could stem from implementing the digital wallet program.

It pointed out that Thailand’s economy was not in crisis, only sluggish; a loan of that size, therefore, would risk violating sound fiscal governance, according to the paper.

Independent economics scholar Aat Pisanwanich said he didn’t believe the digital wallet scheme could go through, given the legal and fiscal issues.

“But the scheme is a flagship policy. If it wasn’t implemented, we could see a political change, like changing the prime minister. The government could also be facing an image crisis trying to explain why the policy cannot be implemented.”

“This is a lesson for the next election when there is not enough thinking into policies, just political parties trying to gain votes,” Aat said.

According to Mathis, Srettha has put himself into a tight spot.

“Given that Pheu Thai has provided so much emphasis on enacting the digital wallet policy, there is very little room for Srettha to backtrack before appearing to do all he can to bring the policy to fruition, but perhaps there would be more room to reduce its scope,” he said.

Earlier this week, Julapun Amornvivat, deputy finance minister, said the scheme would go ahead and, by the fourth quarter, eligible people would start spending the 10,000 baht. He said that all issues would be clarified by April 10 and all details mapped out ahead of the program’s implementation later on this year.

“In this economic climate, all sides agree that we need a boost,” he told a press conference on Monday. “I assure you that the project will go ahead and the money will reach the people before year’s end.”

An end to populism?

Since the early 2000s various populist policies implemented by Thaksin have changed the face of Thai politics. Many of those policies remain in play.

These include the “One Tambon, One Product” program to support village-level enterprises and the 30 baht universal health care program, which guarantee access to key treatment for all Thais at a single price.

Pheu Thai has since deployed populist policies in every election. Thaksin’s sister, Yingluck Shinawatra, became prime minister after Pheu Thai won the 2011 general election in a landslide. 

She was propelled into office on a campaign pledge to subsidize rice prices for farmers. The scheme, however, went bankrupt and Yingluck, who lives in exile after being ousted in a 2014 coup, was found guilty of negligence. Earlier this month, the Thai Supreme Court dropped the negligence charge against her.

Ratawee, from Ubon Ratchathani, said that populism had influenced voting, but this did not mean that it was foolproof against downward popularity.

She said the circumstances that saw Srettha selected as PM in August 2023 on the day that Thaksin returned to Thailand from exile, has dampened the people’s, and the red shirts’ confidence in Pheu Thai.

The party placed second during last year’s election, garnering 10.9 million votes. Election winner Move Forward gained 14.4 million votes but failed to gain support from the military-backed Senate to form a government.

“Pheu Thai’s popularity has fallen. It seems as if the party does everything just for Thaksin. And if the digital wallet cannot go ahead, it’s no more [for Pheu Thai],” Ratawee told BenarNews.

Economics scholar Aat agreed that the Srettha government performance has been less than stellar and it “has done nothing new.” 

“In the long run, populism will fade because people realize that to use the money to support a policy that only produces short-term effects can only go so far,” he said.

Yet for some other observers, it’s unclear if populism will continue to define Thai politics in the future.

“Economic populism alone is not enough to win elections in Thailand any longer,” Mathis said.

“Every political party in Thailand, including the conservative parties that had railed against Thaksin, ran on some form of economic populism in the last election. … Yet this also means that economic populism is probably here to stay: When every party is promising more money and more benefits, to be the one party not promising similar schemes would now be a cause to lose votes.”