InfoQuest (April 13, 2020) -- TMB Analytics noted that a 1 trillion baht package relief measures against Covid-19 will support employees' life for another six months, extend the supporting time of corporate liquid capital from original three months to five months, and will support employment and enable fast economic recovery after the epidemic.
The campaign against Covid-19 consists of two phases: the first phase is "preventing the spread of the epidemic in the country" to avoid severer losses. The currently issued emergency order, curfew order, and blockade measures of all provinces aim to prevent the spread of the epidemic. During this period, about 9 million people and employees have been affected and suffered income losses; enterprises have to suspend operation, causing problems of fluidity. TMB Analytics predicted that this stage will last for about three months (from March to May). The second phase is "returning to normal", when the epidemic will be alleviated. It is expected that economic activities will return to normal after June.
TMB Analytics calls on people to "prevent the spreading the epidemic in the country", and believes that relief measures should be taken to help employees and enterprises survive. The temporary shutdown of various economic and business activities will surely affect employees' income, especially those outside social security system. According to a survey of TMB Customer Insight in 2018, among Thai people aged 18-54, in case of accidents, such as unemployment, the average savings of 50 percent people can only sustain them for two months. Therefore, it is very necessary to take relief measures and inject capital to extend the supporting time in this period.
Recently, the time of handing out 5,000 baht has been extended to six months. About 270 billion baht of subsidies will be handed out to about 9 million workers, aiming to help them tide over the period of "prevent the spreading the epidemic in the country". These subsidies, plus liquidity replenishment measures, namely low-interest loans of 10-50 thousand baht, and measures of reducing expenditures, will minimize the impacts on employees and labors at the current stage. A preliminary assessment shows that subsidies, loans and other relief measures will bring 188 billion baht of liquid capital, or boost the growth of private consumption by 2.3 percent.
Meanwhile, an assessment of operating cycle shows that on average, the liquid capital of SMEs used to cope with emergencies can sustain them for three months. The issued liquidity replenishment measures for SMEs, namely three-phase low-interest loans of 800 billion baht, can help extend the time by two months. An analysis on how industries are affected by intensive lockdown measures shows that service industry is hit the hardest and their liquidity capital can only sustain them for two months (from March to April), including hotels, restaurants, tourism services, recreation facilities, cinemas, and passenger services. Industries for which the liquidity capital can sustain them for four months (from March to June) include energy industry, steel industry, and automobile and parts industry. Daily necessities industry has suffered the least.
TMB Analytics believes that it is very necessary to take economic stimulus measures to restore economic activities as quickly as possible (after June). According to Emergency Loans Act, the sum of the capital is 400 billion baht. If the government issues extra financial and fiscal measures, the economy will recover earlier. Those measures include: tax measures for stimulating domestic expenditures, such as domestic tourism, domestic consumption, housing and automobile; and credit for work and production resumption, and lowering individual income tax. Yet the above-mentioned measures are only secondary at the first stage.
Source: InfoQuest, by Tanawat Suayaem/ Rachada, translated by Xinhua Silk Road
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