Thailand’s Tourism Fix Fails: Restaurants Revolt Against Misguided Economic CPR
The economic patient is receiving treatment, but perhaps for the wrong ailment. In Thailand, restaurant owners are in open revolt against the government’s latest attempt at economic CPR — the “Tiew Thai Khon La Khrueng” campaign. It’s a tourism-focused initiative meant to stimulate the economy during the low season, but restaurant owners argue it’s like prescribing a leg splint for a heart attack. They yearn for the return of the “Khon La Khrueng” co-payment subsidy, a direct lifeline to small, local eateries. The real question isn’t just which subsidy works best, but why, a decade after the global financial crisis, the Thai economy, particularly its restaurant sector, remains so persistently, almost structurally, fragile.
Launched under the previous administration as a pandemic shock absorber, the Khon La Khrueng program subsidized 50% of food, beverage, and goods purchases. The current plan offers subsidies for accommodation and tourism-related activities like spas, offering a maximum daily e-coupon of 500 baht. According to Kamol Meechaipattanakit, a restaurant owner and member of the Restaurant and Goods Product Association, this new approach isn’t trickling down, it’s barely dripping. “The Phuket News” reports the sector feels it’s facing tougher times now than during the pandemic, a startling admission.
The restaurant business in the area faces a tough time now than during the pandemic.
This illuminates a central tension in economic stimulus: broad-based consumer spending versus targeted sector support. The former aims for widespread impact, directly boosting purchasing power. The latter hopes for multiplier effects, where increased spending in one sector generates income across related industries. The rub is, multiplier effects only work if that money actually circulates, and isn’t trapped within a narrowly defined and, crucially, elite sphere of activity. Imagine pouring water into a funnel with a plugged spout; the stimulus sits at the top, never reaching the roots.
The problem goes beyond ineffective stimulus; it implicates deeper structural fault lines. Thailand, like many economies reliant on export-led growth, faces the precarious challenge of diversification. For decades, tourism has been the golden goose, accounting for, at its peak, nearly 20% of GDP. That makes the country exquisitely vulnerable to shifts in global travel patterns, geopolitical shocks, and even, as Pisut Suttijindawong, vice-president of the Phuket-Andaman Restaurant Club, notes, the ebb and flow of Chinese tourist arrivals, now further complicated by a sluggish Chinese economy and perceived security risks. This dependency breeds systemic instability. Think of it as building a skyscraper on a foundation of sand.
Furthermore, the Thai economy is marred by profound income inequality, a reality that undermines the very premise of broad-based stimulus. While luxury resorts and high-end restaurants catering to affluent tourists may thrive, smaller, locally-owned establishments serving the mass population are far more exposed to economic downturns and fluctuations in domestic spending. A 2019 World Bank study found that the top 20% of income earners in Thailand control almost 50% of the nation’s wealth. These yawning disparities render any stimulus program reliant on mass consumer demand fundamentally limited; a large segment of the population simply lacks the discretionary income to participate in any meaningful way.
This forces a reckoning with the very nature of economic development. As economist Branko Milanovic meticulously documents in “Global Inequality,” the uneven distribution of gains from globalization has created distinct winners and losers, both within and between nations. Thailand’s predicament underscores the urgent need for policies that foster more inclusive growth, prioritizing higher incomes and increased productivity for the majority, rather than perpetually relying on tourism to paper over the cracks. A return to “Khon La Khrueng” might provide temporary reprieve, a sugar rush to a diabetic, but addressing the underlying structural ailments is the only path to lasting stability. It’s time to question not just the treatment, but the diagnosis itself, and perhaps consider whether the entire economic model needs a fundamental rethinking.
