Thailand’s decision to implement a 10,000-baht Digital Wallet Scheme (DWS) marks a significant step in its ambition to bolster economic competitiveness and growth.
Set to benefit around 50 million people, the DWS is a cornerstone of the Pheu Thai-led government’s broader digital transformation efforts. Its success, however, hinges on the transparency of policy execution, a crucial factor overlooked in previous initiatives like the State Welfare Card Scheme (SWCS) under the previous administration of Gen Prayut Chan-o-cha.
The SWCS, aimed at aiding those with an annual income below 100,000 baht, was plagued by inefficiency and poor targeting. National household socio-economic survey data revealed its limited impact in reducing monetary poverty. Notably, the scheme also contributed to reduced food expenditure among recipients, indicating critical flaws in its execution. These issues primarily stemmed from bureaucratic complexities and a convoluted screening process, which caused nearly half of the eligible population to be missed.
In contrast to the SWCS, the DWS aspires to mitigate the economic disparities heightened by the Covid-19 pandemic. This ambitious initiative focuses on stimulating consumer spending and aiding Thailand’s transition from a middle-income to an upper-income economy. However, the programme’s specific restrictions — limited to purchasing food and consumer goods within the recipient’s district and prohibiting cash transfers — may impede its effectiveness in having a broad economic impact.
Financing the DWS initiative requires a substantial loan of 500 billion baht, which has been scrutinised for compliance with the State Fiscal and Financial Discipline Act 2018. This decision has elicited diverse reactions, underscoring the importance of transparency and thorough analysis of its long-term financial impacts.
The loan is projected to increase Thailand’s public debt by about 3.06% of its GDP, potentially exceeding the legal debt threshold. Of the 500-billion-baht loan, it must be noted that 20% (100 billion baht) is earmarked for technological enhancement and human resource development. However, the government’s plans to utilise this allocation to improve the SWCS’s weaknesses remain vague.
These weaknesses include inefficient fund disbursement, difficulty identifying beneficiaries accurately, elevated programme administration costs, reliance on banking infrastructure that marginalises unbanked populations, and a lack of transparency in the distribution process. In its original concept, the Pheu Thai Party pledges to use blockchain technology in disbursing the fund instead of sticking with the same old government “Paotang” app, which has been used to disburse financial help under the SWCS.
Blockchain technology emerges as a potential solution to these challenges. Its capabilities in ensuring transparency, reducing administrative overheads, and improving the accuracy of beneficiary targeting are widely acknowledged. However, blockchain is not a cure-all and comes with its own set of challenges, such as technical complexity and scalability issues. A scalable blockchain system is essential to maintain low transaction costs, a critical factor for both the government and recipients.
Given the substantial budget for technological improvements, the government must focus on overcoming these challenges. Ensuring that transaction speeds within the blockchain system surpass those of traditional financial systems is vital. This is particularly important for the Pheu Thai Party, as slow transaction speeds, akin to those of Bitcoin, could severely impact political credibility and the overall success of the DWS.
Investing in a robust blockchain infrastructure is a strategic move for Thailand’s future. It positions the country as a pioneer in the global digital economy and brings numerous benefits. These include enhancing public and private sector efficiency, particularly in finance and supply chain management, and promoting financial inclusion for the unbanked. Blockchain’s inherent transparency and security can foster institutional trust, reduce corruption, and ensure more effective resource allocation. The technology also benefits the tourism industry and remittances thanks to safer, faster, and cheaper payment processing. Furthermore, this investment will create employment opportunities and cultivate a tech-savvy workforce, prepping Thailand for future technological advancements.
With blockchain’s potential to generate revenue through transaction fees and provide valuable insights into transaction patterns and user behaviour, the question of its ownership in the context of the DWS becomes pivotal. The options for ownership include government control, private sector management, or a Public-Private Partnership (PPP). Each model comes with its own set of advantages and challenges.
Government ownership aligns with public service enhancement, transparency, and control over critical infrastructure. This model would ensure that the blockchain system aligns with national policies and goals, which is particularly important in the context of DWS. However, the Thai bureaucracy’s track record in service efficiency and economic competitiveness is less than stellar, raising concerns about the government’s ability to manage such an advanced technological system effectively.
Private sector ownership could bring innovation, efficiency, and industry expertise to the table. This model could foster a competitive environment, driving technological advancements and operational efficiency. The major drawback, however, is that when the investment cost is borne solely by the government, as is the case with the DWS, it rules out the possibility of private ownership.
A balanced and feasible approach could be a Public-Private Partnership. This model integrates the strengths of both the public and private sectors. The government can set regulatory standards and ensure alignment with public interests while inviting the private sector to co-invest and contribute their expertise. This is particularly effective for infrastructure that serves both public and private interests.
Finally, it should be noted that some Thai academicians question the impact that the DWS will have on the Thai economy. However, if managed astutely, the 100-billion-baht investment in digital technological development will contribute to constructing a path for Thailand to meet its economic development goals.
In conclusion, as Thailand embarks on this ambitious digital wallet initiative, it must carefully navigate the complex terrain of blockchain technology. Balancing the need for efficient, transparent administration with the practicalities of technology management and ownership will be crucial. The government’s commitment to technological innovation through blockchain is a commendable step forward. Still, its success will depend on a collaborative approach that leverages the strengths of both the public and private sectors. This is not just an economic imperative but a strategic move that could redefine Thailand’s position in the global digital economy and pave the way for resilient and inclusive economic growth.
