Thailand Mulls a Fling at the Gaming Tables
|Jun 17, 2015|
Thailand’s National Reform Council may be getting desperate as it seeks to revive the country’s economy. The discipline of military rule combined with market economics has thus far failed to raise growth above anemic levels. So how about allowing casinos?
The proposal has emanated from a group of 12 NRC members led by Anana Vacharotai, a former Pheu Thai member of parliament who knows a money making opportunity when he sees one. He proposes a first casino for the tourist and sin city of Pattaya to be followed by others.
Thus far it has yet to be accepted policy, according to NRC chairman Thienchay Kiranandana but junta leader and Prime Minister Prayuth Chan-Ocha, whose May 22, 2014 coup ended democratic rule in the country, has said he is neutral on the subject. If it gets enough support from government-aligned business groups it could well come to pass.
Keeping Money at Home
The argument goes that it would stop money leaving the country as Thai gamblers currently patronize casinos in Cambodia, Malaysia, Macau and Singapore – to name the nearest ones. Casinos would also attract presumably attract more Chinese tourists or at least persuade them to extend their stays and spend more money.
Such a proposal may seem contrary to the junta’s focus on Buddhism, the monarchy and traditional Thai values as it seeks to suppress pro-democracy sentiment. It is also a proposal that was earlier aired by the NRC’s mortal enemy, deposed premier Thaksin Shinawatra.
But the junta badly needs new revenue ideas. Although tourist numbers have recovered, the growth has mostly been in low spending Chinese tour groups, not European, Japanese, Russian and Arab visitors, many of whom have been turned off by Prayuth’s coup and others horrified by widely publicized backpacker murders in 2014. If even uptight Singapore can now accept casinos, why not Thailand?
The s promoters of casinos also argue that they would benefit the poor. This implausible claim rests on the assumption that illegal betting run by local crime syndicates would shift to legal casinos. However, experience elsewhere shows that taxed legal casinos mostly offer worse odds than illegal ones. Nor would a few large legal casinos provide much opportunity for the mass of Thais living in towns and villages untouched by tourism.
More likely, access to legalized gambling would push up Thailand’s already high and rising level of household debt. This has noticeably continued to increase since the junta came to power despite the fact that consumer demand has been almost flat. Households have been borrowing just to sustain previous standards of living – particularly in rural areas suffering from falls in rice, rubber and other commodity prices.
A low inflation rate is compounding the burden of interest on this debt, now around 80 percent of GDP compared with 70 percent two years ago. The corporate and government sectors meanwhile are in good fiscal health. The total of local currency bonds outstanding has been almost flat since mid-2013. Meanwhile the current account has been in comfortable surplus.
In short, the household sector has been squeezed while the corporate and government sector have benefited. This process has further imbalanced an economy in which maldistribution of income is recognized, even by the junta, as a fundamental problem at the root of political instability and weak growth in productivity.
In theory things should improve this year if growth is driven, as the forecasts suggest, mainly by investment. Public investment is supposed to rise by 11 percent and private by 6 percent in real terms. But skepticism abounds and even many of those who believe it will happen worry that the high import content of much investment will limit its impact on domestic demand. On the other hand, allowing casinos would be a low-cost winner for the external account and tourism earnings. Place your bets.