[BANGKOK] Prime Minister Anutin Charnvirakul’s government is planning stimulus for domestic tourism to lift an economy hit by US tariffs and slumping foreign arrivals, and separately pushing state agencies to front-load spending.
The stimulus package, which will be proposed in a Cabinet meeting next week, includes tax incentives for domestic tourists, letting them use travel expenses to reduce taxable income. It also includes initiatives to increase spending on conferences and events in the country as well as to encourage hotel renovations, Finance Minister Ekniti Nitithanprapas told reporters on Wednesday (Oct 15) after a meeting with economic ministers.
Ekniti also said he will hold talks with Bank of Thailand governor Vitai Ratanakorn on the inflation target next year, declining to comment on whether the inflation target of 1 to 3 per cent remains appropriate. The Ministry of Finance, central bank and other agencies will also discuss irregular flows, he said, expecting the findings from those talks at the end of this year.
The stimulus efforts by Anutin’s government are a direct response to a sputtering economy that’s all but lost its key economic engines: exports and tourism, with the latter contributing about one-eighth of the country’s gross domestic product.
Similarly, the discussions with the central bank come amid a push for greater fiscal and monetary cooperation under Vitai, who became governor on Oct 1. Thai inflation has lagged the government’s target for months.
Ekniti also said the government on Wednesday asked all state agencies to front-load their spending by March and to ensure the total budget disbursement for the current fiscal year reaches no less than 93 per cent, and at least 75 per cent for the investment budget alone.
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The tourism stimulus means Thai people can use their local travel expenses during the Oct 29-to-Dec 15 period to deduct as much as 20,000 baht (S$798.38) from their taxable income, he said. The government is also considering the same tax benefits for companies.
It represents the second economic package this month. Last week, the government approved a US$1.4 billion plan to spur consumption and boost its popularity ahead of a general election early next year.
The stimulus on consumption and tourism altogether may help boost the economy by 0.4 percentage point this year, according to government spokesperson Siripong Angkasakulkiat. The government is expected to consider steps to reduce energy costs to ease the burden on consumers next week.
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Previous years’ domestic travel stimulus directly injected a total of US$1.8 billion to the economy, and the new package may help with confidence. Wednesday data’s showed the Thai industries sentiment index rose for the first time in seven months in September, from a three-year low. BLOOMBERG
