An end to poverty in Thailand is not on the cards

Thailand’s latest social welfare program is a few cards short of a full deck, Wannaphong Durongkaveroj writes.

In October 2017, the government of Thailand implemented a new welfare program: unconditional transfers through the use of cashless welfare cards. The scheme is part of the country’s 2015 National e-Payment Master Plan, which aims to better integrate technology in economic affairs.

Registration for the welfare card scheme was opened between the months of April and May 2017. Out of the 14 million people who applied for the cards, over 11 million were found to have met the government’s five criteria for eligibility: that they are a Thai citizen; are at least 18 years old; are unemployed or have an annual income below 100,000 Baht (US $3,055); hold no financial assets worth more than 100,000 Baht; and do not own real estate.

The cardholders can use their card to buy goods at a registered store known as the ‘Thong Fah Shop’, which sells everyday consumer products like rice, shampoo, and detergent at subsidised rates. They can also use the cards on Thailand’s transportation systems, including urban public transport and buses and trains to the countryside.

Each month, the government transfers between 200 and 300 Baht to the cards, with the exact figure depending on the annual income of the cardholder.

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Under recent changes to the system, cardholders are now allowed to save money on the card for next month’s spending, rather than being compelled to spend all the money in the one month. Cardholders can also choose to top up the amount on their cards.

Even though there has been no official announcement from the government stating the exact cost of the welfare card program, a study from the KU-OAE Foresight Center estimated the total cost of to be around US $1.4 billion.

Since its launch, however, the scheme has encountered a number of problems.

First, the target population for this program is likely too large. The number of welfare cardholders is over 11 million, a very high figure compared to the 5.8 million people who are considered poor by Thailand’s National Economic and Social Development Board and a considerable chunk of Thailand’s total population of 67 million people.

Although the unemployed can apply for this welfare card, Thailand’s unemployment rate is very low – only around one per cent of the total workforce. Thus, the number of cardholders significantly outweighs the number of those who need the scheme.

Second, it has been claimed that 698 people with doctoral degrees and 5,810 people with masters degrees registered in the program, and the government has not clarified how many PhD holders ended up receiving the card. It is thus questionable whether the criteria of this policy can reach the economically disadvantaged people as expected.

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Third, the Thong Fah Shop is not located across the nation and in all the districts. This unavoidably creates extra costs for those who need to travel to other districts.

Finally, there is the question of what types of purchases should be allowed with the welfare cards. For the first year of the program, cardholders were unable to use it to buy cigarettes and alcohol. While this could not prevent people buying such products elsewhere, it at least ensured that the money would come out of cardholders’ own wages, rather than at a cost to the taxpayer.

On 29 August, however, the government allowed cardholders to withdraw cash directly from the bank between September and December 2018. This means that for those months, cardholders are now free to use their monthly allowance on any items – an outcome which runs counter to the government’s initial messaging that the program would only encourage spending on necessary daily goods.

Although the government has been doing its best to solve these problems, the number of issues that have arisen since the scheme was launched shows a lack of readiness of policy.

Thailand is now in the second phase of the program with a more generous subsidy and job training. However, only current recipients of the welfare card are eligible to apply, leaving behind those who failed to join the scheme the first time or have become recently impoverished.

Ultimately, the Thai government needs to redesign its welfare card program. It could start by reviewing the annual income of welfare cardholders to make sure that they still qualify for financial assistance, and by allowing new registrations to the scheme.