Thailand’s delicate balancing act of combatting COVID-19 and reviving economy
Thais are deeply worried about the government’s plan to reopen the country and resume normal business operations by October, as daily infections and deaths rise again amid a bumpy vaccine rollout.
Recent opinion polls suggest most Thais disagree with Prime Minister Prayut Chan-o-cha’s vow to lift all travel restrictions in 120 days, fearing this will fuel new COVID-19 outbreaks.
On Saturday (June 26), the government announced a partial lockdown in Bangkok and nine other provinces from June 28.
New wave, new restrictions
The new restrictions will last 30 days and include closing construction sites and workers’ camps, a ban on dining in restaurants, malls shutting by 9pm, and a ban on large gatherings in hotels.
These restrictions are far less severe than those imposed when the virus first arrived last year, when the lockdown cost the economy a great deal.
“The latest partial lockdown indicates that government is trying to balance the job of containing the virus and taking care of the economy,” said Charl Kengchon, executive chairman at the Kasikorn Research Centre.
Despite the launch of Thailand’s mass vaccination rollout, plus restrictions on Bangkok restaurants and malls and closure of entertainment venues nationwide, daily infections soared to between 3,000 and 4,000 at the end of June.
“People are starting to talk about a fourth round of infections [following the third wave that started in April] as the number of daily infections has risen recently from 2,000 to 3,000-4,000,” Charl said
When the vaccine rollout kicked off on June 7, the delivery of jabs initially met the target of about 400,000 per day, but that quickly dropped to 200,000-300,000 due to dwindling supplies.
At first, the rollout boosted confidence in Thailand’s economic direction.
“But now this positive outlook has diminished due to the daily increase in infections,” said Charl.
Despite growing public concern over surging COVID-19 infections, the Phuket Sandbox scheme is set to roll out on July 1. From next month, fully vaccinated foreigners are welcome to fly in and explore the tropical paradise island without quarantine if they test negative for the virus on arrival.
More suffering for small businesses, workers
With cases of the highly transmissible Delta variant rising and Bangkok running out of hospital beds, reports have suggested that the public health system is on the brink of collapse.
Authorities had initially rejected reports suggesting lockdown restriction would be reimposed in Bangkok.
“The government was reluctant to reintroduce lockdowns quickly because it is worried about the impact on economic activities, which in the end will hit people and businesses,” Charl observed.
Saturday’s lockdown announcement sparked complaints by restaurant owners and netizens about the impact on small businesses that still have to pay rent and utility bills. Plus, most of their workers are not covered by social security and hence not entitled to the 50-per-cent wage subsidy from the Labour Ministry.
“Compensation for construction and restaurant workers should be up to 75 percent of their daily wage and the government should provide support to small business owners,” said Anusorn Tamajai, former dean at Rangsit University’s Economics Faculty.
Crucial two months
The government has long been accused of mishandling the pandemic response and offering inadequate financial support to affected people and businesses.
“The government’s balancing act has been seriously flawed, as it lacked a good plan to procure adequate vaccine supplies in the first place and failed to provide adequate support to those hit by the economic fallout,” Anusorn said.
The next month or two is a crucial period in the government’s efforts to curb the contagion so the country can reopen as planned.
“The government may take a few weeks to evaluate whether it should relax the latest restrictions,” Charl said.
If it is unable to bring the situation under control, tourists will not be confident enough to visit Phuket, which is scheduled to reopen under a sandbox scheme on July 1, he warned.
“Balancing virus control efforts with reviving the economy is a very tough job,” acknowledged Amonthep Chawla, chief of economic research at CIMB Thai bank.
When imposing lockdowns, the government must provide sufficient support to those affected.
“The missing piece in this jigsaw is that the government does not have much money left to rescue people and businesses, as its new plan to borrow Bt500 billion is not enough,” he said.
Adding to economic worries from outbreaks in workers’ camps, infection clusters have also been found in factories.
“Once the construction sector has been brought to a halt, what will be closed next?” Amonthep asked.
More closures will mean a deeper and wider impact on businesses and workers’ incomes. And if the virus spreads widely, the public health system may be brought to its knees.
June 25, 2021 A command centre, called “EOC Phuket Sandbox” has been set up on the resort island, with 70% of its equipment installation complete. Phuket will be the first province to welcome fully vaccinated foreign visitors, without quarantine, from July 1st, according to the government.
Growth forecasts cut
The Bank of Thailand (BOT) recently downgraded its projection for economic growth this year to 1.8 percent, citing concerns over the new wave of COVID-19. The central bank also cut its forecast for tourist arrivals this year to just 700,000. Slower growth means less income for people and small businesses, leaving them more vulnerable since they are already burdened with debt.
Prayut previously asked the Finance Ministry and BOT to find ways of reducing the interest burden for borrowers. Finance Minister Arkhom Termpittayapaisith then met with executives of state-owned banks to discuss options for cutting rates.
“Our bank has a very thin spread [difference between deposit and mortgage rates] and we have to protect the interest of savings account holders,” said Chatchai Sirilai, president of the Government Housing Bank. Our mortgage rate, especially for home buyers, is the lowest in the market, he said.
Lowering lending rates could be achieved by promoting competition and relaxing bank reserve requirements, Amonthep said.
On the other hand, simply imposing controls would discourage banks from lending, forcing borrowers into the jaws of loan sharks and much higher interest rates, he added.
However, Pisit Puapan, executive director of the Fiscal Policy Office’s macroeconomic policy, remains positive about the economic outlook and government’s efforts to curb the virus.
The new infection wave has had a limited impact on the economy, which the government has enough funds to rescue, he said.
“More vaccinations will lead to a drop in the number of infections and that will be positive for the economy,” he added.
By Thai PBS World’s Business Desk