Sean Lee, Research Analyst
Bhumipat Rordtong, Research Assistant
Taiwan ASEAN Studies Center, Chung-Hua Institution for Economic Research
On May 22, 2023, Thailand held its 27th general election, where the Move Forward Party (MFP), representing reformist and progressive interests, emerged as the largest party in parliament with 151 seats. However, due to the electoral system and resistance from military-backed and conservative parties, the MFP’s popular Prime Ministerial candidate, Pita Limcharoenrat, was unable to secure the position. The task of forming the government was passed to the second-largest party, the Pheu Thai Party, which chose to cooperate with military-backed factions to garner conservative support. On August 22, 2023, Pheu Thai candidate Srettha Thavisin was elected as Thailand’s 30th Prime Minister, marking the first civilian PM in nine years. Prime Minister Srettha’s administration officially took office on September 11, 2023. There is much anticipation regarding how the government will lead Thailand out of its current economic difficulties.
Thailand’s Economic Outlook for 2024
Thailand’s post-COVID-19 economic recovery has been sluggish. According to the National Economic and Social Development Council (NESDC), the GDP growth rates from 2021 to 2023 were 1.6%, 2.5%, and 1.9%, making Thailand one of the slowest-growing economies in Southeast Asia. The NESDC, Bank of Thailand (BOT), and International Monetary Fund (IMF) all predict a 3.2% growth for 2024.
Key reasons for the slow recovery include weak exports and tourism, which remain below pre-pandemic levels. In 2023, Thailand's exports totalled 9.8 trillion baht (about USD 26.65 billion), a 1.5% growth over 2022, but the country faced a trade deficit of 300 billion baht (USD 8.1 billion). Meanwhile, tourism revenue was approximately 1.2 trillion baht, around 63% of pre-pandemic levels, with around 28.2 million international visitors in 2023 compared to nearly 40 million in 2019.
Other domestic economic indicators also show pessimistic signals. For instance, Thailand’s household debt reached 91% of GDP in 2023, reducing the purchasing power of households, thus affecting economic growth. Additionally, inflation has been negative for six consecutive months (October 2023 to April 2024), with March 2024 inflation at -0.47%. Prime Minister Srettha described Thailand’s current economic condition as being in an “economic crisis” during a speech on January 25, 2024.
Key Economic Policies of the Srettha Government
On February 22, 2024, Prime Minister Srettha announced Ignite Thailand: Thailand Vision 2030, aimed at steering Thailand’s economy toward a sustainable future. The government has set a goal for Thailand to become an international hub in eight sectors by 2030: Tourism, Wellness and Medical, Agriculture and Food, Aviation, Logistics, Future Mobility, Digital Economy, and Finance.
To accelerate economic recovery and boost both domestic and foreign investment, the Srettha government introduced three major economic policies: the 10,000-baht digital wallet scheme, the Land Bridge project, and a national soft power policy. Below is an overview of each policy and its latest developments:
The 10,000 Baht Digital Wallet Policy
The digital wallet policy is one of Pheu Thai’s key election promises, aiming to boost domestic consumption by distributing 10,000 baht (about 280 USD) to every citizen over 16 years old (approximately 56 million people). The money will be distributed through digital wallets and is limited to use within a 4-kilometer radius from the recipient’s registered address. The policy is expected to stimulate economic growth by creating a multiplier effect and the government hopes this will achieve its target GDP growth of 5%. The government aims for a 3% growth in 2024.
Although the policy has faced strong opposition, including concerns over the sources of funding and potential fiscal risks, the Srettha government remains determined to proceed. The Bank of Thailand has warned that the policy could lead to a significant fiscal burden and inflationary pressure, while economists have expressed doubts about its effectiveness in stimulating economic growth.
Despite these challenges, the Srettha government is pushing forward with the digital wallet initiative. In November 2023, the Prime Minister clarified that the scheme would only apply to those with a monthly income below 70,000 baht. The funds would be spent within the province rather than being restricted to a 4-kilometer radius. The government also announced that the scheme would be implemented in May 2024.
The Land Bridge Project
The Land Bridge Project was first proposed by the previous government in 2021 to align with the Southern Economic Corridor (SEC) plan of the Prayut Chan-o-cha administration. Later, during the 2023 general elections, the Land Bridge policy became one of the core policies of Bhumjaithai Party. After the new government led by Srettha Thavisin took office, Bhumjaithai Party became the second-largest party in the government and strongly supported continuing the feasibility study of the Land Bridge Project. Currently, the project has become one of the flagship policies of the Srettha government.
The Land Bridge Project consists of two new ports and new transportation infrastructure. The ports will be in Chumphon province on the Gulf of Thailand and Ranong province on the Andaman Sea, about 90 kilometres apart. These two ports will be connected by a six-lane expressway and a double-standard railway, with an estimated annual container throughput of about 40 million TEUs (Twenty-foot Equivalent Units). The total investment budget for the project is approximately 1 trillion Thai Baht.
According to the current plan, the investment will adopt a Public-Private Partnership (PPP) model, with private companies fully investing in the construction and operation of the port. According to research from the Office of Transport and Traffic Policy and Planning, compared to passing through the Strait of Malacca, the Land Bridge Project could reduce shipping time from 9 days to 5 days.
Since the Srettha government introduced the Land Bridge Project as a key policy, it has been actively promoted to foreign port companies. In November 2023, Prime Minister Srettha announced that Chinese and Saudi Arabian port companies have shown interest in the project. However, the Land Bridge Project still faces some challenges, the most significant of which is the need for two transhipment processes. Since the Land Bridge is not a complete canal, shipping companies will need to unload containers from the first ship at the first port and then transport them overland to the second port, where they will be reloaded onto the second ship. This process may increase shipping costs. Additionally, the waiting and handling time could result in similar or longer shipping times than passing through the Strait of Malacca.
According to a joint study by the NESDC and Chulalongkorn University, the best option for developing the SEC is to enhance and utilize existing infrastructure, rather than building new ports or the Land Bridge. As such, the research concluded that the Land Bridge Project may not be cost-effective. Nevertheless, like the digital wallet policy, the Land Bridge Project is still under study, and the government has yet to draft any legislation for its development, much less begin construction. Further developments will need to be monitored.
National Soft Power Policy
The Thai Party’s National Soft Power Policy can be divided into two main parts: one is the One Family One Soft Power (OFOS) policy, which aims to enhance national creativity and income, and the other is the establishment of the Thai Creative Content Agency (THACCA) as the comprehensive governing body for national soft power, promoting Thailand’s soft power both domestically and internationally.
The OFOS concept originates from the famous One Tambon One Product (OTOP) initiative during the Thaksin Shinawatra era. The main idea is to use the creativity of citizens to showcase the potential and charm of different regions, turning them into soft power and promoting them globally. In addition to being the leading unit for strategic development, THACCA will also establish overseas offices to engage with local partners and conduct market preference research. Furthermore, the government will offer citizens free technical training programs in various creative industries, with the goal of generating 20 million jobs and increasing household incomes to at least 200,000 Thai Baht per year. After the government assumed office, it actively promoted the national soft power policy. On September 13, 2023, the government established the National Soft Power Strategy Committee chaired by Prime Minister Srettha, and on October 3, the National Soft Power Development Committee was created as the main execution unit, led by Paethongtharn Shinawatra, Thaksin’s daughter and current leader of the Thai Party.
On November 30 of the same year, the National Soft Power Development Committee allocated a budget of 5.16 billion Thai Baht to 11 soft power industries (3.5 billion from the 2024 budget, and 1.6 billion anticipated for the 2025 budget). These 11 industries include festivals, tourism, food, arts, design, sports, music, books, film, fashion, and electric vehicles. On May 3, 2024, Thailand’s Prime Minister's Office Minister Jiraporn Sindhuprai announced that the government would establish the Thailand Creative and Design Centre (TCDC) in each province, and open enrolment for technical training in June of the same year. The establishment of THACCA is expected to be approved by Parliament in 2025. The government also set a goal for 2027 to have 100,000 Thai-style restaurants and Muay Thai gyms abroad and to promote Thai films and music bands in international film festivals and music festivals.
For example, Thailand’s soft power policy has been promoted in Taiwan. In late February 2024, the Thai Ministry of Commerce, in collaboration with the Thai Publishers Association, set up the Thai Pavilion at the Taipei International Book Exhibition, attracting many Taiwanese readers to visit and support. Additionally, with government support, Thai films have recently been shown in Taiwan. According to data from Thailand’s Department of International Trade Promotion (DITP), by November 2023, 10 Thai films were released in Taiwanese cinemas, generating a total box office revenue of approximately 28.47 million Thai Baht, which was well-received by Taiwanese audiences, particularly in genres like horror and Boys’ Love (BL) films.
Electric Vehicle 30@30 Policy
Thailand is a major vehicle production country, ranking as the 10th largest vehicle producer globally in 2022, and is the largest vehicle manufacturing hub in ASEAN, often referred to as the Detroit of the East. In recent years, Thailand’s vehicle industry has been actively transitioning to electric vehicles (EVs). In September 2015, the Electric Vehicle Association of Thailand (EVAT) was jointly established by the automotive industry. In 2020, the government established the National Electric Vehicle Policy Board (EV Board) to formulate and oversee EV policies. The ambitious 30@30 policy aims to achieve a target where zero-emission vehicles (ZEVs) account for 30% of the domestic total vehicle production by 2030, and to ban the sale of gasoline-powered vehicles by 2035 (meaning all new vehicles sold in Thailand must be electric). Thailand also plans to actively build EV-related infrastructure, with a goal to install 12,000 public DC fast-charging stations by 2030, and to increase that number to 36,500 by 2035.
Thailand primarily encourages car manufacturers to invest in electric vehicles through tax reductions. The Board of Investment (BOI) offers investment incentives for EV supply chains, including EV manufacturing (cars, motorcycles, tuk-tuks, buses, trucks, etc.), charging stations, and EV platforms (energy storage systems, charging modules), with tax exemptions ranging from 3 to 8 years depending on the investment amount. Other incentives include reducing the excise tax on electric vehicles from 8% to 2%, lowering import duties to no more than 40%, and providing subsidies of 70,000 to 150,000 Thai Baht per EV unit.
To achieve the 30@30 policy target, the Thai government announced the EV 3.5 policy in December 2023, which will offer further tax reductions and subsidies for battery electric vehicles (EVs) imported or produced domestically between 2024 and 2027. This includes electric passenger cars, pickup trucks, and motorcycles. For example, the excise tax for electric passenger vehicles will be reduced from 8% to 2%, import duties will not exceed 40%, and subsidies of up to 100,000 Thai Baht per unit (for cars priced under 2 million Baht) will be provided. Domestic electric pickup trucks and motorcycles will receive subsidies of 100,000 Thai Baht per unit.
Thailand has been particularly active in attracting electric vehicle investment from Chinese car manufacturers, including BYD, Great Wall Motors, and SAIC Motor. According to BOI statistics, in 2022, Thailand attracted foreign investment totaling approximately 434 billion Thai Baht, with EV investments playing an important role. For example, BYD has committed to investing 17.9 billion Baht to build the first overseas electric vehicle factory in Thailand. Additionally, the joint venture between Foxconn and PTT Group, Horizon Plus, has established an electric vehicle plant in Chonburi province, with an investment amount of 36.1 billion Baht, making it the largest EV investment in Thailand. Production is expected to begin in 2024.
In general, the Thai government is satisfied with the electric vehicle investment boom, but it has raised concerns among local auto parts suppliers. According to reports, only five of the 660 members of the Thailand Auto-Parts Manufacturers Association (TAPMA) received orders from Chinese EV manufacturers. This may be due to the China-Thailand Free Trade Agreement, which makes Chinese parts more price-competitive than local Thai parts, leading most car manufacturers to use Chinese components, which could negatively impact the survival of local suppliers.
Future Outlook
The Srettha government’s economic policies can be divided into two main parts: new policies that aim to rejuvenate the Thai economy, such as the digital wallet and soft power policies, and the continuation and strengthening of policies from the previous administration, such as attracting investment for the land bridge project and further developing the EV industry with policies evolving from EV 3.0 to EV 3.5. However, because the Srettha government is a multi-party coalition, its operations have not been smooth, especially with the national budget for 2024 not receiving approval from Parliament until March, meaning the government has not been able to immediately address current economic issues. According to data from the National Economic and Social Development Council (NESDC), the economic growth rate for the first quarter of 2024 was only 1.5%, the lowest among ASEAN countries.
Thailand still faces many potential challenges in reaching the government’s target of 3% GDP growth for 2024. Global economic slowdown, high inflation, rising interest rates, and geopolitical tensions could all suppress Thailand’s exports and tourism industry. Weak global demand may slow the recovery of Thailand’s economy. Domestically, high household debt levels and the pressure of living costs may limit domestic consumption, while supply chain disruptions and labor shortages in some industries may hinder production and investment. Structurally, increasing productivity and transitioning to higher-value industries remains a long-term challenge for Thailand. The mismatch between industry skills and current digital transformation needs could hinder growth. Therefore, the government must adopt comprehensive policy measures to overcome these challenges, including supporting the private sector, strengthening the tourism industry, and addressing structural economic defects.
Overall, while the Srettha government’s economic policies are still in early stages, there is a clear determination to address the country’s economic issues. However, challenges remain, and the effectiveness of policy implementation is still to be observed. Additionally, domestic political instability could once again affect investor confidence, with the Constitutional Court expected to rule on the future of the largest opposition party, the Move Forward Party, and Prime Minister Srettha, as well as Thaksin Shinawatra, the spiritual leader of the Pheu Thai Party, which could potentially trigger another political storm.
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