The government
has launched its “Shop Dee Mee Kuen” program (Shop and Payback), which offers
taxpayers income tax deductions when spending up to THB30,000, in order to
stimulate consumption over the 70 day period from October 23rd to December 31st
2020. KResearch expects that the program will help bolster consumption in the final
quarter of the year, resulting in a cash flow of up to THB5.55-120 billion being
generated in the economy, if 1.85-4.0 million taxpayers participate in the
program. When combined with other stimulus measures introduced earlier, namely the
“Kon La Khrueng” program (Let’s Go Halves), a cash handout to welfare card holders
(they will receive an additional THB500 every month for three months) and the
gradual opening up of the country to foreign tourists, the measure will help
improve the Thai economy in the fourth quarter of the year with a smaller contraction
than in the previous two quarters.
The “Shop Dee
Mee Kuen” program will not only help deplete high inventory levels of goods,
but will also help boost sales volume and increase liquidity for various
businesses. In addition, the increased spending will help create a better
economic atmosphere and restore economic confidence. Overall, the retail sector
will benefit the most from this program, while the increased spending is likely
to benefit the banking sector as well due to the higher spending using credit
cards.
However,
KResearch sees that the “Shop Dee Mee Kuen” program will boost spending only
for a short period and will have a limited contribution to employment, because
manufacturers may not increase production if they do not see a continuing
recovery of the demand. The biggest gainer will probably be VAT-registered large-to-medium
businesses , while small and medium enterprises (SMEs) outside the VAT system may
not directly benefit much from the program. Nevertheless, the recovery of
consumption after expiration of the program will depend on fundamental driving
forces of the economy, especially the tourism sector, employment income and
agricultural income.
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