Thailand to use ‘utility tokens’ in a bid to boost ailing economy
Thailand’s Pheu Thai Party will reportedly use “utility tokens” for its upcoming digital wallet scheme, aimed at stimulating its national economy.
The scheme, which was promised during the party’s election campaign, would provide 10,000 baht ($290) in the digital assets to all Thais aged over 16, local media reported Wednesday.
Those tokens would have to be spent at local businesses within a 4km radius of the recipient’s registered address within six months.
While based on blockchain technology, it is unclear whether it will be featured on a permissioned or permissionless ecosystem. Blockworks has reached out for further clarification.
It’s estimated to cost the taxpayer about 560 billion baht ($15.4 billion). The funding is expected to come from tax collection in the 2024 fiscal year and increases in tax generation from economic expansion and borrowing.
The government is also expected to issue the tokens specifically for consumer transactions which will not be made eligible for trading on digital asset exchanges, according to separate reports.
Stumbling economy
Thailand’s economic growth prospects have notably weakened, mainly due to stagnant productivity following the COVID-19 pandemic. Total factor productivity growth fell from 3.6% per year in the early 2000s to just 1.3% between 2009 and 2017, according to figures from The World Bank.
Private investment has also dropped sharply, from over 40% in 1997 to 16.9% of GDP in 2019, while foreign direct investment shows signs of slowing.
The pandemic further worsened these challenges, leading to a 6.1% economic contraction in 2020. The downturn was significantly worse than during the 2008 financial crisis and second only to the 1998 contraction.
The use of utility tokens to pay for goods and services would allow for greater transparency and accountability, though some locals have cast doubt over its implementation, per the reports.
The Bank of Thailand does not currently allow the use of utility tokens as a means of payment though the ruling party is likely to discuss a revision of the regulations with the central bank, per the reports.
Thailand’s scheme is expected to be launched before the Songkran festival in April 2024, though the exact timing remains uncertain due to the complexities of the initiative.