Thailand ‘Helicopters in’ Debt Relief

But it will have little effect on a nation paralyzed by politics and oligarchy, critics say

‘Politics? Me?’ Photo from Bangkok Post

More than a year after Thailand's Pheu Thai Party formed an unwieldy coalition with 10 other parties to form a government, and with a new prime minister Paetongtarn Shinawatra, the government finally has in place one of the party’s signature populist measures, a US$13.8 billion stimulus package called a “digital wallet” system to disburse funds in three tranches to everybody over the age of 16. 

One of Pheu Thai’s 2023 pre-election promises, it is designed to provide support for 45 million people suffering from Asia’s highest level of consumer debt, at 90 percent of GDP, or THB16 trillion (US$477.3 billion), with the ratio of nonperforming loans trending upward.

The implementation of the package, which one longtime Thai observer called “throwing money from the helicopter,” is a signature gambit by Thaksin Shinawatra, the coup-ousted former premier who returned from 15 years in exile following the 2023 general election, and resembles a similar scheme implemented by Paetongtarn’s aunt Yingluck, the prime minister from 2011 to 2014, a rice subsidy to raise rural incomes that ensured the continued political popularity of the Shinawatra family. “They are buying votes,” said the Bangkok-based businessman, who asked not to be identified out of concern for retribution. “The economy is not doing well. Technically, they are buying votes for the next election.”

Paetongtarn, the daughter of the 76-year-old political kingmaker Thaksin, “faces the same public perception problem that her aunt Yingluck faced when she was PM – which is that many Thais don't believe that she's really the one in charge,” said Phil Robertson, director of the Bangkok-based Asia Human Rights and Labor Advocates Consultancy. “On the street, that's one of the first reactions of most people you meet, and it's a damning one if she is going to lead Thailand to address the serious economic challenges and household debt problems that leave so many feeling pessimistic about the future."

Thaksin, by some metrics, is Thailand’s most powerful political figure, living in retirement and supposedly spending his time playing with his grandchildren. But in the words of one former foreign policy expert with deep ties to the Pheu Thai Party, he wields more political clout than any other politician, having orchestrated the dismantling of General Prawit Wongsuwan’s Palang Pracharat Party and putting together a government coalition with the blessing of King Rama X, the 72-year-old Maha Vajiralongkorn.

But at that, he remains on a relatively short leash. In August, Thailand’s Constitutional Court voted to delay hearing lèse-majesté charges against Thaksin until July 2025 over an offhand comment he made to a Korean newspaper more than a decade ago. The delayed hearing means the lèse-majesté charge is a way of keeping him from getting politically adventurous without having to resort to another coup, of which there have been 13 successful and nine unsuccessful ones since 1932.

On September 12, Paetongtarn, in her first policy speech to the Thai parliament, delivered a chilling address that outlined serious problems facing the country, including overwhelming consumer debt, a society aging at a faster rate than the level of national development with a declining birth rate, the declining quality and skills of the labor force, substandard basic literacy with more than a million children and youth having dropped out of the education system, the spread of narcotics, a continual rise in cybercrimes and online gambling, Small and Medium Enterprises (SMEs), which employ 32-35 percent of the workforce, facing liquidity issues and an NPL-to-overall SME loan ratio which has risen to 7.6 percent as a result of decelerating domestic purchasing power, an inability of traditional industries to adapt to rapid changes in technology, the threat of global climate change to agriculture and tourism and “a long period of political instability, resulting from coups d'état, sharp divisions and polarization, and the removal of governments from power in unpredictable circumstances,” and the over-centralization of government.

“Lastly,” she said, “Thailand is confronted with challenges arising from an altered geopolitical situation. There are divisions and polarization among the great powers and other countries, the existence of trade barriers, and the use of global rules and regulations to create indirect impediments to competition. As a result, every country must adapt their positions and strategies in implementing government policy and adjust their positions with regard to their engagement with various countries.”

She didn’t mention arguably the biggest problem, and that is political paralysis, from which the other problems flow. Thailand is emerging from years of paralysis engendered by a combination of military kleptocracy, royal immobilization, and entrenched oligarchy. The political system had a chance in the 2023 general election when the youth-oriented Move Forward Party scored a stunning upset, winning 151 seats in the May election, upending the plans of Pheu Thai Party, which won 141 seats, to return to power. But Move Forward was ordered disbanded by Thailand’s Constitutional Court on a 6-3 vote for dissolution which was reportedly increased to 9-0 on orders from the palace which is said to have wanted a unanimous decision putting reform out of business, partly because the party advocated a modification of the country’s numbing lese-majeste laws.

In August, as Asia Sentinel reported, Thaksin proposed dramatic changes to improve the Thai economy in a public speech, daring critics to argue that he has undue influence over government policy, and following it up with a 14-point plan presented to his daughter Paetongtarn and members-designate to the new cabinet. The “digital wallet” is part of that plan. But how much more can be achieved is uncertain. The ruling coalition has been attempting to wrestle the digital wallet into place for more than a year. Paetongtarn’s September 12 speech is an indication of how deep the problems are.

Tourism, on which millions depend for their livelihood, still hasn’t recovered from the Covid-19 pandemic, with 35 million arrivals in 2024, still 12 percent below 2019 levels. Its export-led economy has long since lost its place as Southeast Asia’s biggest to Indonesia as the military has bumbled through 10 years of corrupt government and lack of economic planning, prioritizing internal security over economic growth and prosperity. Its youth are deeply disaffected by the dissolution of both Future Forward and Move Forward and the disbarment of their charismatic party leaders. Reconstituted as the People’s Party, it has struggled at the polls in a series of by-elections. Although violent protests greeted the dissolution of its predecessor Future Forward, also disbanded by the court, there has been little this time around. There is little to alleviate the disillusionment of the party’s 14 million voters, most of them young.

While second-quarter growth was slightly above expectations, “the recovery continues to lag ASEAN peers,” according to the World Bank’s latest Economic Monitor. “In June, data indicated a subdued recovery, with activity slowing and consumer confidence declining amid heightened political uncertainty. While manufacturing growth expanded modestly for the full quarter, June activity data shows a renewed decline, and the growth in tourist arrivals slowed. The trade deficit persisted, driven by lagging export recovery and rising imports, particularly from China.” Fiscal spending accelerated despite political uncertainty, the World Bank noted.

As Prime Minister Paetongtarn said in her September policy speech, Thailand remains paralyzed by “a long period of political instability, resulting from coups d'état, sharp divisions and polarization, and the removal of governments from power in unpredictable circumstances.”