With Thailand expected to hold a general election next year, political parties have kicked off their campaigns offering promises to appeal to voters.
Some business leaders have questioned whether the promises could affect the country's fiscal stability and competitiveness in the long term, as Thailand still faces several economic challenges.
Industry chiefs are calling for national economic reform to benefit people in all walks of life, creating a value-added economy.
Strange campaigns
Recently Bank of Thailand governor Sethaput Suthiwartnarueput said he is concerned about the risk of what he described as "strange political parties' election campaigns" on the Thai economy, specifically those offering debt suspension.
Some political parties are campaigning on offering suspension of both loan principal and interest payments for a certain amount of debt for a long period.
The governor said these kinds of campaigns could make some view Thailand as having high political risk, which could affect the financial system. Certain campaign pledges might sound good to voters, but could affect the country in the long term, said Mr Sethaput.
The country should not add new risks to the economy, he said.
Mr Sethaput said the Thai economic recovery remains on track, but several challenges remain, including the impact from the prolonged Russia-Ukraine war.
Competitiveness concern
Last week the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) said it is opposing the Pheu Thai Party's pledge to raise the daily minimum wage to 600 baht by 2027 because it could affect the business sector's competitiveness.
Such a wage hike could impact foreign direct investment (FDI) and the survival of small and medium-sized enterprises (SMEs), according to the committee.
In addition to the minimum wage hike, the Pheu Thai Party also vows to introduce a minimum monthly salary of 25,000 baht for those holding a bachelor's degree.
The Thai economy faces several challenges next year, including an uneven recovery, higher inflation and rising interest rates, as well as a global economic slowdown, said the JSCCIB. As a result, a minimum wage hike would increase risks for the business sector, Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said at the committee meeting last week.
Some SMEs would be under pressure to shut down if wages rose to 600 baht per day, up from the current level of 328-354 baht. Many SMEs have recovered from the impact of pandemic closures, but their condition is still fragile, he said.
Thailand's competitiveness and ability to attract FDI have faded, especially compared with Vietnam. Thailand's minimum wage rate is 40% higher than Vietnam, according to the chamber.
Any wage increase should match economic circumstances and be in parallel with the development of the country's knowledge-based economy, including upskilling and reskilling workers to improve productivity, Mr Sanan said. Moreover, wage hikes should take into consideration employers' ability to pay such salaries, he said.
The cabinet resolved earlier to approve new daily minimum wages ranging from 328 to 354 baht, taking effect from Oct 1.
Later the Pheu Thai Party clarified its campaign pledge, noting wages would only be raised when the economy is back on track.
Paetongtarn Shinawatra, head of the Pheu Thai "family", said: "Capitalism must have a heart … Wages will be raised when the economy is ready."
She walked back the pledge, stating it is a long-term ambition.
"Right now, a daily minimum wage hike to 600 baht is unthinkable because the economy still isn't faring well. If the economy improves, the system will be able to function," said Mrs Paetongtarn.
"Employers and employees must grow together. The hike to 600 baht is intended to boost the whole system."
More how-to needed
The election campaigns of many political parties are packed with potent promises but lack clear policies to promote how-to in dealing with economic priorities, said Sangchai Theerakulwanich, president of the Federation of Thai SMEs.
SMEs want advice and concrete support from a new government to solve their financial woes, while workers need better skills to add value to their work, in addition to economic stimulus packages from authorities, he said.
Mr Sangchai is disappointed as many election campaigns do not fix the root economic problems, instead pushing financial burdens onto entrepreneurs.
Regarding Pheu Thai's minimum wage hike pledge, he said the party needs to focus on how to enhance the skills of workers.
New skills and knowledge, especially advanced digital literacy, are crucial for workers because they will lead to higher pay, said Mr Sangchai.
For entrepreneurs, it remains unclear what practical measures a new government would launch to help employers deal with higher operational costs.
"We are afraid many election campaigns cannot be translated into action because they have not been thought through," he said. "Eventually, the concern is the Thai economy will fail to make good progress."
Mr Sangchai suggested political parties work on how to reform economic structures to benefit people from all walks of life. The federation wants to see policies that support how-to in operating businesses at a time of economic uncertainty.
Entrepreneurs want to know how to increase their competitiveness in order to survive and bring in money to hire workers, he said.
New structure needed
Somchai Lertsutiwong, chief executive of Advanced Info Service (AIS), Thailand's biggest mobile operator by subscriber base, said the country's key priority should be to improve the quality of life for low-income residents amid multiple challenges, including high inflation, tepid purchasing power and increasing household debt.
Several political parties have offered populist policies with perks to canvass for votes, including monthly free internet access and a financial subsidy for a certain period of time, he said.
Others have brought up a debt moratorium for a year, which requires thorough consideration, said Mr Somchai.
Referring to a 600-baht daily minimum wage, he said it may take a few years before such a measure can be implemented.
A higher daily minimum wage is possible and it could help the country escape the middle-income trap, said Mr Somchai.
"However, the country needs new structuring, supported by a new political mindset, willingness by corporations and digital upskilling among people. All dimensions should be reformed to create a value-added economy," he said.
"A daily minimum wage hike may not be that effective if nothing is done to develop the country, particularly improving skills among workers in the new economy."
Many corporations, including AIS, have begun shaping management attitudes to cope with greater challenges in the near future, said Mr Somchai.
New recruits could decline for corporations as the focus shifts to those with high skill levels and talent, he said.
"It is hard to predict when the country will be on the path to real economic recovery," said Mr Somchai.
He said people's purchasing power has been diminished, compounded by high household debt.
State investment projects can be a key driver for the recovery, but it remains difficult to find any projects that can deliver real benefits to the people in the long run, said Mr Somchai.
Be realistic
Hotels were walloped during the pandemic when the global lockdown prevented people from travelling, which resulted in permanent closures for many hotels.
Marisa Sukosol Nunbhakdi, president of the Thai Hotel Association, said hotels absolutely need additional loans or a relief fund to help them regain their footing, but those measures should be realistic and not disable the financial industry.
"Every hotel would be happy to receive loans because the costs for restarting were expensive, particularly for payroll and maintenance. But the suggested financial stimulus measures are not realistic, like providing a grace period without interest, as banks have to run their businesses," said Mrs Marisa.
As some campaigns promote such populist policies, she said parties should be careful not to erode the financial discipline of borrowers as banks typically collect interest under conditions agreed to by both sides.
Many hotels have good partnerships with banks and maintain credibility through regular repayments, enabling them to secure new loans when needed to invest or expand their businesses.
Mrs Marisa said debt suspension without interest is unrealistic. Hotels would appreciate low-interest offers instead, she said.
She said the best support for the tourism industry involves efforts to bolster demand and solve the manpower shortage.
The main obstacle to former hotel workers returning to the hospitality sector is low confidence in the sector, not daily wage levels, said Mrs Marisa.
"They have learned how fragile their jobs can be and don't want to risk being laid off again if something happens. The long-term solution is to stabilise the tourism market because income for these jobs depends on service charges, not the minimum wage," she said.
Responsible campaigns
Athiphat Muthitacharoen, a lecturer in the Faculty of Economics at Chulalongkorn University, said election campaigns should have some social and economic responsibility.
Party campaign promises should reflect their responsibility to the economy over the long term, he said.
Mr Athiphat said campaigns that focus on giving away something or offering welfare could add a burden to the country's budget or affect tax revenue. Following a giveaway, the government has to determine how to offset the revenue loss from such campaigns.
He said the country's public debt-to-GDP ratio surged to around 60% from 40% before the pandemic.
Thailand remains mired in the middle-income trap and needs to invest in infrastructure development, said Mr Athiphat.
