In 2020, due to COVID-19 pandemic the real gross domestic product (GDP) of Thailand is expected to shrink, unemployment level to increase and current account balance to decline due to COVID-19 this year.

Today we will be focusing on economic impact of COVID-19 pandemic on Thailand and the social, fiscal, monetary and employment related policy measured taken by government –

1. Impact of COVID-19 on Thailand Economy in 2020

2. COVID-19 Containment Measures of Thailand

3. COVID-19 Related Fiscal Policy Measures by Thailand

4. COVID-19 Related Monetary Policy Measures by Thailand

5. COVID-19 Related Employment Policy Measures by Thailand

6. COVID-19 Related Social Policy Measures by Thailand

 

1. Impact of COVID-19 on Thailand Economy in 2020

Thailand’s real gross domestic product (GDP) was THB 10,914.84 billion in 2019 and due to COVID-19 outbreak it is estimated to decrease by 7.7% to be around THB 10,074.40 billion in 2020.

Thailand’s unemployment rate was 0.754% of total labor force in 2019. Due to slowdown in global economic activity due to COVID-19 pandemic the unemployment is expected to increase by 31.45% and reach 1.1% in 2020.

Thailand’s current account balance has remained constantly positive since 2017. It is expected to decrease its current account balance in 2020 to 5.165% of GDP from 6.862% of GDP in 2019. This means Thailand will remain net lender to rest of the world in 2020 despite COVID-19 pandemic reducing its current account balance.

As of 15^th Jun 2020, the Thailand government has taken following fiscal, monetary, employment and social policy measures to contain coronavirus (COVID-19) pandemic.

2. Coronavirus (COVID-19) Containment Measures of Thailand

Quarantine/Confinement

A National state of emergency was declared on 26 March 2020 until 30 April, limiting cross provincial movements of the population. The elderly over 70 year of age, person with previous health conditions and children under five years are advised to stay at their home.

Following the declaration of the state of emergency, the Thailand government tightened measures to contain the spread of COVID-19 by imposing a nationwide curfew on 3 April, banning people from leaving their residences from 22h00 to 4h00.

On 28^th April 2020, the Thailand government extended the period of the state of emergency including the night curfew until 31 May 2020.

On 17^th May 2020, the night-time curfew was shortened, starting at 23:00 to 4:00, instead of 22:00 to 4:00.

On 26^th May 2020, the state of emergency including the night curfew was extended until 30 June 2020.

On 15^th June 2020, the Thailand government decided to lift the night time curfew, but the state of emergency and ban on entry remain in effect.

Travel bans/restrictions

Since 1^st May 2020, several airlines have resumed their operation for domestic flights in the major airports in Thailand, except Phuket International airport, where the closure has been extended until 15^th May 2020. The airports and airlines must comply with strict hygiene and preventive guidelines. The international flights are still banned.

On 16^th May 2020, the Ministry of Public Health removed China, Hong Kong (China), Macau (China) and South Korea from Thailand's list of “dangerous disease zones”, in which the countries and territories were listed since early March.

On 16^th May 2020, the Civil Aviation Authority of Thailand (CAAT) extended the temporary ban on international passenger flights for another month until 30 June, with the exception made for state and military aircraft, emergency landing, technical landing without disembarkation, humanitarian aid, medical and relief flights, repatriation flights and cargo flights.

Closure of schools/universities

All schools in Thailand have been closed since 18^th March 2020. All schools will reopen for the new semester on 1^st July 2020, postponed from 16^th May 2020.

On 12^th June 2020, the government allowed international schools, universities with international courses, informal schools and small schools to reopen, while other schools will reopen on 1^st July 2020.

Cancellation of public events / Closure of public places

In accordance with the state of emergency declared on 26^th March 2020, sports complex including boxing stadiums, sports stadiums, sports arenas, playgrounds, horse racetracks have been ordered to close in all provinces throughout Thailand. Natural tourist attractions, museums, public libraries, religious sites, public transport terminals and stations may be considered for closure.

On 30^th April 2020, the Thailand government announced the first phase of the lockdown relaxation allowing 6 types of businesses to resume their activities including public parks and outdoor sport venues.

On 17^th May 2020, the second phase of lockdown relaxation took into effect. Several public places resumed their activities including libraries, galleries and museums.

From 15^th June 2020, meetings and seminars, exhibition, convention and event halls can resume activities, along with theatres, but social distancing must be respected. Pubs, bars, karaoke shops and entertainment venues will remain closed.

Obligatory shut down of economic activities

In accordance with the state of emergency declared on 26^th March 2020, locations that are risk-prone to the transmission of the COVID-19 have been ordered to temporarily close down in Bangkok and its vicinity., including pubs, spas, fitness centres; and wellness and beauty salons. Any other places such as restaurants, markets and shopping malls may be considered for closure in whole or in part.

On 30^th April 2020, the Thailand government announced a relaxation of some restrictive measures by allowing 6 types of businesses to resume their activities from 3^rd May 2020 including

1. Restaurants
2. Markets
3. dine-in area in supermarkets or grocery stores
4. public parks and outdoor sport venues
5. hair salons and
6. pet grooming services.

These businesses must respect social distancing rules and carry out preventive measures including having health and temperature screening at the entries, providing hand sanitizers and facial masks wearing.

On 17^th May 2020, the second phase of lockdown relaxation took into effect. More businesses are allowed to resume their activities, including shopping malls, restaurants, day-care nursing homes for elderly, meeting rooms, hotels and conference centers with a maximum of 50 participants from the same organization, beauty and wellness salons, fitness centers, public swimming pools, parks and libraries. Cinemas, amusement parks, boxing stadiums and gymnasiums remain closed.

On 1^st June 2020, the Thailand government introduced the third phase of the lockdown relaxation, allowing the reopening of several activities such as theaters, cinemas, massage salons, zoo, boxing stadiums and gymnasiums.

On 15^th June 2020, the fourth phase of lockdown relaxation has been taken into effect. Most of economic activities are allowed to resume their businesses, except pubs, bars, karaoke shops and entertainment venues.

3. Coronavirus (COVID-19) Related Fiscal Policy Measures by Thailand

Overall fiscal measures

The "phase one" package was announced on 11^th March 2020. It includes tax cuts, the reduction of social security contribution payments, among others.

Thailand Government approved the Phase two stimulus package of THB 117 billion on 24^th March 2020. The package aims to financially support those in the informal sector and outside of the social security system; and MSMEs.

On 7^th April 2020, the third stimulus package worth THB 1.9 trillion (about 9% of GDP) was approved by the Cabinet aiming to help people and businesses as well as providing financial aid to farmers. Of this amount, the Ministry of Finance through bond issuance will finance THB 1 trillion, while THB 900 billion will be disbursed from the Bank of Thailand.

Health system measures

On 17^th March 2020, the cabinet approved the budget of THB 6.3 billion from central funds reserved for emergencies to ease and response to the impact of COVID-19. The budget will be allocated to seven line ministries and 14 government agencies.

The Ministry of Public Health distributed 1,000,000 surgical masks per day to the hospitals. Additional 1.5 million N95 masks and 1.9 million personal protective equipment (PPE) will also be allocated. In addition, the Ministry will supply 40,000 pills of Favipiravir and 220 doses of Remdesivir for the COVID-19 treatment.

On 12 May, the Thai Cabinet approved an additional recruitment of 38,105 public health-related posts, in response to the COVID-19 pandemic. The frontline medical and public health personnel to the COVID-19 pandemic will receive an additional monthly allowance between THB 1,000-1,500 for seven months.

Income support measures for individuals and households excluding tax and contribution changes

Monthly cash handout of THB 5,000 for nine million workers from April to June, with possible extension for three additional months until September.

Cash handouts of THB 5,000 per month to three million workers who are not covered by the social security fund (SSF) for three months, starting from April to June. Employees covered by the SSF are eligible for an increased unemployment compensation of up to 50% of their salary.

The government provides emergency loans of THB 10,000 per person at a monthly interest rate of 0.1% and a special loan of THB 50,000 per person at a monthly interest rate of 0.35%.

Tax and contribution policy changes

On 13^th April 2020, the Board of Investment of Thailand (BOI) approved a measure to accelerate investments in the medical sector. This measure introduced a reduction of 50 % of corporate income tax for an additional 3 years will be given to qualified investments in the medical sector, including the production of medical devices and parts, non-woven fabric used as raw materials in the production of medical supplies, diagnostic test kits, drugs, and active pharmaceutical ingredients.

Tax exemption on risk compensation for medical workers involved in the treatment and prevention of COVID-19

Tax relief schemes include:

• Lowering the payment of withholding tax to boost liquidity
• Allowing SMEs to deduct employee salaries from 1^st April to 1^st July 2020.
• Extending the deadline for filing of corporate income tax to August and September and that of other revenue taxes for three months, speeding up VAT refunds for local businesses.
• Extending the deadline for the filing of excise tax in the service sector and oil products operators.

On 2^nd June 2020, the cabinet approved a royal decree on the cut of the tax on land and buildings by 90% of the amount due for the 2020 tax year. The royal decree also covers a tax exemption for the first home buyers for owners of both land and house.

Public sector subsidies to businesses

On 30^th April 2020, the State Enterprise Policy Committee (SEPC) meeting approved in principle the proposal to rehabilitate Thai airways international, the national carrier, with a loan worth THB 50 billion.

Deferral of taxes and social security contributions and bringing forward expenditures within current fiscal year

The deadline for personal income tax declaration has been extended to August 2020.

Tax deduction on health insurance was increased from THB 15,000 to THB 25,000.

Public sector loans or capital injections to businesses

The Bank of Thailand (BOT) will allocate THB 500 billion for soft loans to SMEs. SMEs will be able to borrow a maximum of THB 500 million at an annual interest of 2% and interest-free for the first six months.

4. Coronavirus (COVID-19) Related Monetary Policy Measures by Thailand

Monetary policy

On 05^th Feb 2020, the Bank of Thailand (BOT) reduced its policy rate from 1.25% to 1.00%, and further to 0.75% on 20^th March 2020, the latter of which was off-cycle.

The BOT will halve the annual rate of contribution from financial institutions to the FIDF from 0.46% of deposit base to 0.23% per annum for a period of two years. This measure is intended to allow financial institutions to immediately pass on such cost savings to businesses and households by further reducing the interest rates.

On 29^th April 2020, the Bank of Thailand injected THB 400 billion into Thailand's corporate bond market by establishing a bridge-financing fund called the Corporate Bond Liquidity Stabilisation Fund.

On 20^th May 2020, the Monetary Policy Committee cut the policy rate by 0.25% point from 0.75 to 0.50%, the lowest rate on record.

5. Coronavirus (COVID-19) Related Employment Policy Measures by Thailand

Support to firms affected by a drop in demand

On 13^th April 2020, the Board of Investment of Thailand (BOI) approved a series of measures to mitigate the impact of the COVID-19 outbreak on businesses, including steps to encourage rapid investment in the manufacturing of medical equipment. The measures include a temporary relaxation of investment conditions. BOI agreed to extend deadlines and relax investment conditions for certain businesses, for instance, an extension of the duration for the duty-free importation of machinery, an extension for an application for license and standard approval; and waivers for temporary cessations of operations for a period of more than two months.

6. Coronavirus (COVID-19) Related Social Policy Measures by Thailand

Support to individuals and households

On 21^st April 2020, the cabinet approved the energy authorities' decision to either waive or cut electricity fees for 22 million households for three months from March to May.

• Free electricity for households with a power meter of less than 5 amps.
• Households with power meters over 5 Amps, will pay the same rate as their February bill if the consumption does not exceed 800 kWh. The amount over 800 kWh will be subject to a 50% discount.
• Households with consumption over 3,000 kWh will obtain a 30% discount.

On 30^th April 2020, the Bank for Agriculture and Agricultural Cooperatives (BAAC) has announced the debt moratorium of one year from April 2020 to March 2021. 3.3 million farmers will benefit from this moratorium worth THB 1.2 trillion.

On 5^th May 2020, the Thailand cabinet approved the Metropolitan Waterworks Authority (MWA) and Provincial Waterworks Authority (PWA) proposals to provide 20% discount on water bills to the private consumers until the end of June 2020.

Source – With inputs from Organisation for Economic Co-operation and Development (OECD), International Monetary Fund, World Bank, International Labour Organization (ILO) and Government of Thailand.