Finance Minister unveils Financial Transformation plan, promoting increased revenue and accelerated investment, aiming for 4-5% economic growth in Thailand

The Minister of Finance has unveiled a Financial Transformation plan aimed at achieving fiscal balance, emphasizing revenue generation and increasing fiscal space through civil service reform, expanding the tax base, and converting state assets into revenue. The plan aims to reduce the deficit to 3% within two years and accelerate investment-to-GDP ratio from 2% to 24-30%. He points out that if achieved, the Thai economy could grow by 35-4%.

Aug 29, 2568 Mr. Pichai Chunhavajira, Deputy Prime Minister and Minister of Finance Delivered a speech at the Financial Transformation 2025 seminar, Transforming Thai Finance towards Sustainability, organized by the Fiscal Policy Office (FPO), saying that The Ministry of Finance's goal of Financial Transformation comes from Thailand's current fiscal policy which is at an unbalanced level. This indicates that there is not much fiscal space left, with the public debt-to-GDP ratio at around 65%, leaving borrowing space of around 5% of GDP, or approximately 1 trillion baht.

“Raising the public debt-to-GDP ceiling is not a last resort, as it is not an option when the time comes. However, we will do our best, as there are still many avenues to improve it to within achievable limits.”

Mr. Pichai said Transforming fiscal sustainability requires addressing domestically controllable issues, including:

1. Increasing income The ongoing budget deficit problem stems from the imbalance of income and expenditure, with the goal of reducing the budget deficit from 4% in 2568-2569 to 3% in the next two years.

"Our deficit problem stems from government spending, which is allocated annually at 3.8 trillion baht. The majority, nearly 3 trillion baht, is for government work systems and various subsidies. Investment spending is minimal. The actual investment budget, which generates employment, is only about 5 billion baht, or 2.5% of GDP, which is relatively low. Therefore, increasing revenue can begin with civil service reform and compiling data on subsidy payments to both the public and private sectors to ensure targeted assistance and control of expenditures."

Furthermore, Thailand's tax collection structure is inefficient, resulting in taxes collected at only 15% of GDP, which is approximately 3% lower than similar countries, or 18% of GDP, which would generate an additional 6 billion baht in revenue by expanding the tax base.

2. Converting government assets into income (Monetize) For example, infrastructure projects that have already been invested in, such as power lines, highways, or various concessions, can be set up as funds to generate income and help reduce debt burdens. For example, the Din Daeng Expressway, whose concession has expired, can be restructured to monetize.

There is also the issue of investment income, which comes from state enterprises in which the Ministry of Finance holds shares. It is pointed out that Thailand's return on investment (ROA) is less than 2%, making it interesting to wonder why the returns are so low.

Mr. Pichai stated that increasing tax revenue requires driving economic growth. Following the Tom Yum Kung crisis, Thailand's economy experienced three lows: below historical levels, below potential, and below neighboring countries. Economic agencies project GDP growth of 3% to 2568% in 2.0.

The reason for the economy's growth falling below its potential is due to the uncompetitive export and agricultural sectors, and Thailand's investment-to-GDP ratio remains low, falling from 51% before the Tom Yum Kung crisis to 24% in 2567.

so that The key to enabling the Thai economy to expand again คือ Increasing Thai investment from 24% to 30-35% to restructure the economy This is believed to increase GDP growth by 4-5% and reduce public debt to GDP ratio, as well as increase fiscal space.

Meanwhile, new foreign direct investment (FDI) is showing signs of slowing down as Thailand is still unable to adapt to the global trend of shifting towards modern manufacturing.

"Various products listed on the Thai stock market still have an old production structure, keeping the index around 1,700. To increase the index, we must change the country's investment structure. This can be achieved by opening the country and creating investment readiness. Thailand has limited research and development, so we need to tap into know-how, and FDI should help. We need more new FDI."

Mr. Pichai said There are approximately 10 structural problems in Thailand that need to be addressed. For example, land requires finding a way to allow foreigners to lease land instead of owning it. Currently, the Ministry of Finance is in the process of implementing a law that allows foreigners to lease government and private land for 99 years.

“The root cause of the fiscal space problem is the economic structure. Therefore, the solution must be addressed at the root cause.”

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