EconThai urges government: Debt-lift measures needed for all, not just farmers

EconThai, the Employers’ Confederation of Thai Trade and Industry, called on the government to hasten steps to alleviate the heavy domestic debt burden, aiming to aid not only farmers but also middle-income earners who are bearing substantial financial loads.

EconThai Vice-Chairman, Tanit Sorat, highlighted the necessity for debt suspension measures to be inclusive, covering a wide range of individuals in need, from farmers and owners of small and medium-sized businesses to middle-income earners. He further emphasised that the suspension should encompass both principal and interest.

This call to action came in the wake of a recent decision by the Cabinet to endorse a new three-year debt moratorium for farmers and small businesses. Further details on this debt relief plan are expected once a two-week study by the Finance Ministry reports.

Middle-income earners, according to Tanit, also require financial relief. Representing a large demographic of debtors grappling with credit card, mortgage, and car finance payments, these individuals contribute significantly to the Thai economy, with 4.5 million middle-income earners paying taxes to the government. In the absence of state aid, Tanit warns of potentially significant asset seizures next year.

Domestic debt in Thailand currently surpasses 90% of the country’s GDP, while public debt stands at 61% of GDP. These figures have raised concerns for both EconThai and the Federation of Thai Industries, especially in light of the Monetary Policy Committee’s recent decision to increase the policy rate by 0.25% points to 2.25%, marking a nine-year high.

Sethaput Suthiwartnarueput, the Central Bank Governor, however, reassured that the regulator will ensure an appropriate policy rate that does not result in financial imbalances.

Meanwhile, Prime Minister Srettha Thavisin pledged to collaborate with employer and employee representatives to consider raising the daily minimum wage to 400 baht, a move opposed by EconThai due to fears of potential layoffs for businesses unable to afford the increased wage.

Further warnings were issued by Tanit against the government adopting the Pheu Thai Party‘s campaign promise of a 25,000-baht salary for university graduates, which he argues could deter students from vocational schools and lead to companies postponing hiring new graduates to sidestep higher operational costs. He stressed the Thai labour market’s need for vocational school graduates to serve new investments in advanced industries, such as electric vehicles.

In related news, the government’s cost-cutting shock releases financial pressure including a reduction of both electricity and diesel costs. Read more here.

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