Living below the line
The government has a radical poverty aid programme as it seeks to tackle extreme wealth gap: the national e-payment scheme. By Oranan Paweewun and Wichit Chantanusornsiri
Thailand is Southeast Asia’s second-largest economy, generating 14.4 trillion baht a year and home to some of Asia’s richest people. However, almost a fifth of the country’s population lives in poverty and, appallingly, 4 million are estimated to live below the poverty line, with an income of 30,000 baht a year or 2,500 baht per month.
There is a yawning wealth gap between the rich and poor here. Credit Suisse’s Global Wealth Report 2016 found Thailand had the world’s third-highest inequality, with 58% of the country’s wealth controlled by the richest 1%, behind only Russia at 74.5% and India at 58.4%.
Those at the bottom rung of the economic ladder, particularly those living in rural areas, are angry about the income disparity and claim they are left behind and not reaping the benefits from the country’s development. Some previous governments adopted lavish pork barrel spending for handouts to the poor, who comprise the majority of voters. The social chasm has triggered an unprecedented polarisation over the past decade.
After the military toppled the Yingluck Shinawatra administration to take control of the country in 2014, narrowing income disparity and reducing the country’s rift, while preventing populist spending sprees of past governments, has topped its agenda.
The government’s radical change is to replace blanket poverty assistance cash handouts, of which those earning a high income could sometimes take advantage, with electronic payment under the national e-payment scheme.
With an e-payment system, welfare and subsidies can be directed to povertystricken recipients who sign up and are qualified, alleviating the budgetary burden of blanket assistance.
The government spends 27 billion baht annually to fund the blanket services of free public buses and third-class service on trains.
At a branch of the Government Savings Bank in the Bang Khae district of Bangkok, Miaokhun Saengow is busy filling in a fourpage form to apply for the government’s welfare and subsidy scheme. Completing the form is not an easy task for her as she finds reading and writing difficult.
This year’s registration form requires far more details than last year’s, she says.
Given public criticism after a report that some unemployed people who live in luxury houses and hold millions of baht in assets also obtained cash handouts from the poverty scheme registration in 2016, the Finance Ministry tightened the application requirements.
Some 8.27 million people signed up for subsidies and welfare in 2016, and almost 7
million were qualified to receive a one-off cash handout.
The ministry’s criteria for this year requires applicants to be unemployed or have annual income of 100,000 baht or less last year to receive aid under the programme. They must also have savings, bonds and savings certificates worth less than 100,000 baht combined.
If applicants own property, the space must not exceed 35 square metres for a condo unit, 25 square wah for a townhouse or 10 rai of land for agricultural purposes. Applicants must be Thai nationals aged 18 or older.
The government estimates it will spend 30 billion baht on its poverty aid scheme this year, excluding costs for a new cash handout it announced recently.
Ms Miaokhun does not know what she will get from the government, but hopes it is something after receiving 3,000 baht in a cash giveaway last year.
Late last year the government offered one-off cash handouts to those who signed
up for the scheme, providing 3,000 baht per person to those earning up to 30,000 baht a year. Those earning from 30,000 to 100,000 baht a year were entitled to 1,500 baht.
“The money helps me cover some of my living expenses. Subsidies such as free electricity and tap water bills or free public bus fare do not benefit me as I live for free at my employer’s home, which is also my workplace,” says Ms Miaokhun.
The 59-year-old works at a small joss paper shop where she is paid 3,000-4,000 baht a month on average.
Registration for the government’s poverty assistance scheme is scheduled to close today and around 14 million people are expected to sign up. The government has not finalised what kind of assistance will be provided, but initial plans are for qualified recipients to receive cards for train discounts and free water and power up to a certain limit.
The government is considering offering funds to those below the poverty line
— either a one-time cash handout or a stipend to cover the basic needs.
Phad Seethon, 49, signed up for the scheme this year but not in 2016 because she was unaware it existed.
“I will take a public bus fare discount, but what I really want is cash to use for buying basic needs or paying rent,” she says.
Mrs Phad works as a maid at a home on Silom Road, earning 300 baht a day, but she works only four days a week. She lives with her son’s four-member family in a small room in a flat.
Somchai Jitsuchon, the research director for inclusive development at the Thailand Development Research Institute, is doubtful that self-reported registration would be efficient enough to filter out unqualified persons.
It is very difficult to examine how much each informal worker earns as his or her salary is not taxed or recorded. Some people can use this loophole to again take advantage of the government’s assistance
scheme, he says.
To plug the loophole, the government should adopt a big-data analysis system or talk to village health volunteers to pinpoint needy targets as these volunteers access almost every village, even in remote areas, says Mr Somchai.
Moreover, adding benefits to National Savings Fund and Social Security Fund members who are informal employees are methods to better direct assistance to the poor, he says.
Pornchai Thiraveja, an adviser to the Fiscal Policy Office, admits it is impossible for the government’s current poverty aid system to completely sort out high-income earners. A system based on data provided by village chiefs would be the best method as they have a close relationship with villagers, he says.
There is no state agency directly tasked with poverty registration at the moment, with the Finance Ministry the only body working on the matter, says Mr Pornchai.