Economists are advising the new government to focus more on income distribution, as it is an efficient way to strengthen the country’s economic fundamentals.
Bunluasak Pussarungsri, an executive vice-president and head of research at CIMB Thai Bank, said income balance should be a priority for the government because the country’s economy has grown more unbalanced.
Thailand ranks next to last in the world for the income gap between rich and poor, and minimum-wage earners do not have the same access to public health, utilities and education that middle-income earners do.
Thailand is facing a “middle income trap”, with high prosperity among middle-income earners in Greater Bangkok. Income per capita in Samut Sakhon province is 20 times higher than in Si Sa Ket, he said.
“If this middle income trap persists, the country’s economic imbalance will widen. The new government should address the problem by trying greater income distribution measures,” said Dr Bunluasak.
The government may enact property tax, inheritance tax, or land-reform measures or build opportunities for lower-income earners. Further support measures for small and medium-sized enterprises are also needed, he added.
Dr Bunluasak noted that SMEs represent 99.5% of the country’s companies, but their economic role was still marginal and had not increased over the past few years. The country needs to revamp its education system, infrastructure investment, and develop a creative economy if it wants to stay competitive, he said.
“Populist policies are not a problem if the government can maintain a positive fiscal budget, and the budget status is quite strong now. However, such policies should benefit all people, not just a specific sector,” he added.
Source: Bangkok Post