This article is co-authored by Lai Qian Huay, Lynn and Luo Xuhong.
Thailand stands at a critical juncture, torn between the imperatives of political commitment and the realities of economic prudence. Prime Minister Paetongtarn Shinawatra has inherited a landscape shaped by both the ambitious policies of her predecessor, Srettha Thavisin, and the enduring structural challenges of Thailand’s economy. Paetongtarn’s economic policies reflect a tension between fulfilling electoral promises and ensuring long-term economic prudence. From pushing forward Srettha’s controversial digital wallet handout to legalizing casinos and spearheading Thailand’s semiconductor ambitions, her administration seems to prioritize immediate political and economic gains while grappling with structural challenges. While these policies aim to boost consumption, tourism, and foreign investment, they risk deepening Thailand’s dependence on unsustainable stimulus measures and uneven regional development. Without structural reforms, Paetongtarn’s bold economic gambits may deliver short-term wins but fall short of securing Thailand’s long-term economic resilience.
Cash Today, Consequences Tomorrow
One of Paetongtarn’s first policy moves as Prime Minister was to move forward with Srettha’s “digital wallet” cash handout program. This initiative, a flagship populist policy from Srettha's Pheu Thai Party for the 2023 General Election, aims to stimulate domestic consumption by providing 10,000 baht (US$ 292) to eligible citizens through a digital wallet application. However, the scheme has been widely criticized as fiscally irresponsible, with concerns that it could further inflate public debt and exacerbate inflationary pressures.
Thailand needs to learn from the mixed results of other Asian countries’ cash handout programs. Taiwan’s cash handouts during the COVID-19 pandemic provided immediate financial relief, but had a limited impact on long-term economic growth. While cash handouts can provide short-term economic stimulus, they may not lead to sustained economic development without accompanying structural reforms. If we look to India, the Direct Benefit Transfer schemes have faced challenges related to implementation and targeting efficiency. Thailand’s own digital wallet scheme has already faced multiple delays due to difficulties in implementation and financing. Without structural reforms to address deeper economic issues, stimulus handouts risk becoming a temporary fix rather than a sustainable solution.
Recognizing these risks, the Bank of Thailand (BoT) has resisted pressure to cut interest rates, keeping the benchmark rate at 2.25% in its December 2024 policy review. The BoT’s cautious stance reflects concerns that lowering rates—alongside a major cash injection—could further weaken the baht and drive inflation higher. While the government hopes that stimulus checks will encourage spending, persistently high household debt and a weakening manufacturing sector suggest that Thailand’s economic struggles cannot be solved through short-term cash transfers alone.
Yet, Paetongtarn’s decision to proceed with the program is not surprising. As a leader bound by the electoral promises of her party, she faces the challenge of balancing economic prudence with political expectations. Abandoning the digital wallet scheme could erode public trust and weaken her government’s legitimacy. Thus, while these policies may not fully address Thailand’s structural economic weaknesses, they represent an effort to uphold campaign commitments and maintain political stability—albeit at a potentially steep economic cost.
Thailand’s Casino Gambit
In January 2025, Thailand’s parliament approved a bill to legalize casinos, a move framed as a revival strategy for its tourism sector. The legislation, which permits integrated resorts with entertainment complexes, aims to attract high-spending tourists and foreign investors. This policy, however, may deepen Thailand’s structural dependence on tourism, a sector that is inherently susceptible to external shocks.
The tourism sector, which once contributed 18% of GDP, has yet to recover from the pandemic’s scars. Less and less affluent Chinese tourists are vacationing in Thailand since the pandemic, which leaves Thailand with a greater proportion of low-spending visitors. Paetongtarn’s administration believes this bill would be a remedy to the ailing tourism industry, with projected increases of 475.5 billion THB (US$14 billion) to tourism revenue and up to 15,000 new jobs created.
However, the casino bill seems to be half-hearted on the alleged goal to promote tourism. Lax regulations on the accompanying entertainment facilities like luxury hotels, retail corridors and concert halls raises concerns that the Paetongtarn’s administration is making a risky all-in on casinos. Singapore has seen her integrated resorts thrive not on gaming alone, but on complementary industries like concerts and conventions. Thailand’s narrow focus on just casinos risks undermining the broader economic benefits that a well-integrated resort ecosystem could bring, leaving Thailand overly reliant on gambling revenue with limited spillover into other sectors.
Foreign investors, notably Galaxy Entertainment and Las Vegas Sands, present their interest in Thailand as a strategic move to diversify beyond Macau amidst a crackdown on junket operators that bring in high-rollers from mainland China. However, their motivations reveal more about their own vulnerabilities than Thailand’s strengths. Galaxy, grappling with Macau’s labor shortages and Beijing’s tightening regulatory grip, sees Thailand as a hedge; an alternative foothold in a region where policy shifts can be sudden and unpredictable. But casino investments are notoriously fickle. The same capital that builds luxury resorts today can abandon them tomorrow, as seen in Cambodia when Chinese investors abruptly pulled out of Sihanoukville’s debt-laden casinos. Thailand’s current appeal lies less in its competitive advantages than in its loose regulations, a condition that could change just as quickly if social concerns mount or neighboring countries offer more attractive terms.
While the move of legalizing casinos has received some support from Srettha, Paetongtarn’s decisive move to push forward the legalization of the casino bill demonstrates much more political resolve and concrete action than the more abstract and long-term aspirations of Srettha’s Vision 2030. While Srettha’s tourism agenda was ambitious, it often relied on broad strategies such as enhancing tourist experiences and increasing intra-regional travel without laying out clear legislative or structural reforms to drive immediate economic impact. In contrast, Paetongtarn’s casino legalization effort provides a well-defined path to boosting tourism revenue and foreign investment through regulated gambling - a sector with proven success in regional competitors like Singapore and Macau. Unlike Srettha’s reliance on promotional campaigns and infrastructural improvements, Paetongtarn’s casino initiative directly addresses Thailand’s need for new revenue streams, job creation, and regional competitiveness. By establishing a legal framework for casino operations, she offers a tangible mechanism to attract high-spending tourists and foreign investors, ensuring that her economic strategy moves beyond abstract visions and into immediate policy execution.
Thailand Dreams of Semiconductors
If casinos represent Thailand’s economic id, its semiconductor strategy channels a more calculating superego. In October 2024, Prime Minister Paetongtarn Shinawatra established the National Semiconductor Committee, signaling a pivot toward advanced electronics. Her administration’s move comes at no surprise as Thailand aims to capture a slice of the lucrative semiconductor pie from her regional rivals (Vietnam, India and Indonesia just to name a few). Armed with an ambitious target to bring in US$15bn of foreign direct investment by 2029, the Semiconductor Committee has rolled out a series of generous tax breaks lasting up to 13 years upon fulfillment of certain criteria. Foreign investors have responded: a Foxconn subsidiary has pledged $1 billion for chip packaging plants in the Eastern Economic Corridor (EEC), while whispers of Nvidia’s interest hint at Thailand’s potential to capitalise on U.S.-China tech decoupling.
Yet the path to silicon supremacy is fraught with uncertainties. Nearby Vietnam, with its younger workforce and abundant engineering resources, seems to be way ahead of the competition. Just weeks ago, the Vietnamese government dangled unprecedented incentives of a 50% investment subsidy on the initial investment cost for firms that commit a minimum investment sum of US$118mn. However, state funding alone may not unlock the key to success - Intel’s planned expansion of its plant in Saigon reportedly stalled due to unforeseen bureaucratic complexities. Funding aside, Thailand also recognises that parallel investments in technical education are critical to ensuring long term sustainability. As outlined in the Semiconductor Committee’s strategy, a new talent development scheme involving upskilling and reskilling more than 86,000 people is expected to be rolled out in tandem with FDI inflows.
However, the geopolitical calculus adds complexity to Paetongtarn’s bold plans. Thailand’s bid to position itself as a “neutral” hub in the U.S.-China rivalry mirrors its Cold War-era balancing act. But neutrality is a precarious gambit when semiconductor supply chains are weaponized. An inward-looking Trump administration (which has repeatedly claimed that Taiwan stole America’s semiconductor business) will likely prefer that semiconductor firms invest in expanding manufacturing capacity in the US instead of establishing supply chains stretching across far-flung Asian nations.
Nowhere are Thailand’s contrasts starker than in the Eastern Economic Corridor, a $45 billion megaproject spanning high-speed rail, expanded ports, and advanced manufacturing zones. It is an extension of the highly successful Eastern Seaboard development project that involved the construction of 2 major ports near Bangkok in the mid-1990s, during which Thailand experienced its golden decade of economic growth. Under the EEC, Rayong/Pattaya’s U-Tapao airport and the surrounding logistics park are due for a major upgrade while a 220 km high-speed rail will eventually link U-Tapao to the capital. The EEC embodies the kingdom’s aspirations: a fusion of infrastructure and industry designed to catapult Thailand into the ranks of South Korea or Taiwan. Paetongtarn’s visit to China last week also saw the signing of multiple memorandums of understanding promoting bilateral cooperation in developing Thailand’s nascent digital industry (artificial intelligence), a sector that has been identified as key to sustained economic growth. Yet the EEC’s very ambition underscores a persistent blind spot in the form of the neglect of regions beyond the glittering east.
While the EEC’s skyline rises, Thailand’s northern and northeastern provinces languish. While the eastern seaboard thrives with new factories and transport links, the northern regions remain underdeveloped, reliant on agriculture and low-wage industries. Poverty rates in the Thai South and Northeast regions are almost double the national level, and youth migration to Bangkok’s factories has hollowed out rural communities. The government’s focus on the EEC risks entrenching what economists call “spatial inequality,” a pattern seen in Mexico’s maquiladora zones or Indonesia’s Java-centric growth. The $7 billion high-speed rail linking Bangkok to Rayong may streamline logistics for manufacturers, but it does little for a rice farmer in Udon Thani battling drought and debt.
Conclusion
Paetongtarn Shinawatra’s economic policies reveal a tension between short-term political imperatives and long-term economic sustainability. While the digital wallet scheme fulfills electoral promises, its fiscal risks and limited structural benefits raise concerns about economic prudence. The legalization of casinos offers a targeted boost to tourism, but without robust complementary industries, it risks reinforcing Thailand’s dependence on volatile revenue streams. Meanwhile, the semiconductor push demonstrates strategic foresight, yet regional competition and geopolitical uncertainties could hinder Thailand’s aspirations. Ultimately, while these policies signal an intent to modernize and stimulate the economy, their success hinges on whether the government can implement structural reforms that ensure sustainable growth rather than temporary stimulus.
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