Thailand rebates fuel retail spending, may inject 110 billion baht into economy
By Valaiporn Chalermlapvoraboon
BANGKOK, NNA - It sounds too good to be true, but it is true.
Like many countries which have rolled out stimulus aid to support the livelihoods of people and businesses disrupted by the coronavirus pandemic, the government in the kingdom of Thailand is giving 15 million citizens aged 18 or older a 3,000 baht ($98.9) subsidy to cover half of their spending at eligible stores to help bolster retail sales.
Called the Khon La Krueng scheme, the subsidy allows daily cap of up to 150 baht per person to promote responsible spending.
Separately, shoppers can claim up to a total of 30,000 baht in tax rebates when they buy certain goods and services in the 'Shop Dee Mee Kuen' or 'Shop and Payback' scheme also aimed at boosting the ailing economy which had been heavily reliant on foreign tourism.
It seems like a good time to spend or splurge, but Kanokporn C., 29, a sales and marketing manager, wants to use the subsidies wisely.
“I will most likely buy home appliances and electronics under the rebate scheme. My purchases will be long-lasting, functional and practical, and not things like cosmetics," she said.
In contrast, avid golfer Pornchai C., 49, is likely to use the tax rebate opportunity to shop for sports equipment. His partner, Waranya S., also 49, has used the Khon La Krueng scheme to enjoy "discounts" for essential grocery items and when dining out.
Government spokesman Anucha Burapachaisri said the Shop Dee Mee Kuen scheme, which refunds the value-added tax (VAT), would inject about 110 billion baht into the economy and raise GDP by 0.30 percent.
While the government will forgo about 14 billion baht in tax revenue, Anucha believes the scheme would boost spending, encourage companies to register for VAT and grow state coffers in the long run.
The Shop Dee Mee Kuen scheme also covers books and One Tambon, One Product (OTOP) stores that sell quality homegrown products from all regions of Thailand. It excludes alcohol products, tobacco, hotel accommodation, flight tickets, lottery and fuel.
About 3.7 million people are expected to take advantage of the scheme, which began on Oct. 23 and will run till year-end.
Indeed, both schemes have already benefited Siam Paragon, a very popular mall frequented by locals as well as tourists in Bangkok during pre-COVID times.
Siam Paragon reported a 50 percent jump in sales on Oct. 23 when shoppers flocked to its stores the very day the VAT refund scheme was launched. The mall which has a popular food hall and supermarket, also launched promotional campaigns to entice shoppers.
A Siam Paragon spokeswoman told NNA, “This government-endorsed scheme definitely attracts more shoppers and boosts consumer spending.”
She said shoppers went mostly for fashion and luxury items, the two categories that have always been popular with them.
Siam Paragon is one of several exclusive malls run by Siam Piwat Co. The company also operates Icon Siam, Siam Square, Siam Discovery, and Siam Center, which used to be very popular with tourists too.
Notwithstanding the buying perks, Kasikorn Research Center said the income status of shoppers would still dictate their spending amount.
In a report, the center said the tax refund scheme is more likely to benefit people in the higher income bracket earning 500,000 baht a year. However, the lower-income group will remain prudent in spending.
In a survey, the center found that shoppers between 31 and 50 years old are more likely to take advantage of tax rebates to buy food products and refreshments, while those between 18 and 30 have a stronger likelihood to snap up IT and electronics products.
Children are also benefiting from the scheme, like Montouch C., 12, and his sister, Sakunthip, 10. Their parents had already bought Montouch an iPad, while Sakunthip may be getting a new handphone.
“If I am an eligible applicant, I will most likely buy a laptop and IT accessories,” said ardent gamer Montouch. On the other hand, Sakunthip said she would go for art supplies to do more drawing.
The happiness of the teenagers with their new iPads belie the painful truth of the retail world outside.
Months of border closures and travel restrictions have taken a toll on Thai retail and tourism.
Thailand received only around 6.7million visitors during the first ten months of 2020, an immense fall of 79.46 percent from a year ago.
The fallout from the coronavirus pandemic, which impacted on jobs and businesses, had reduced purchasing power and household incomes. This, in turn, battered the Thai retail market, according to Kiatnakin Phatra Securities.
Thai retail is expected to lose between 574 and 789 billion baht after a 10 to 13.6 percent shortfall this year, according to estimates by Government Savings Bank.
Following the easing of lockdown restrictions and government stimulus packages, the retail and wholesale sectors have seen a positive turnaround in the past few months.
After falling by 9.8 percent in the second quarter, the economy has improved with a smaller contraction of 5.5 percent in the third quarter.
The government plans to boost consumer spending and help businesses further with another round of Khon La Krueng subsidy disbursements in early January to benefit more people including a new cohort of youths who have reached the eligibility age of 18.
While many people welcomed the stimulus aid packages doled out by the government, it is not a total picture of peace in the capital.
Students have been staging defiant protests demanding that the powers of constitutional monarchy and army leadership be checked to allow more democracy and freedom of speech in the kingdom.