Vitai: Thai growth model is lagging; bank fees to face system-wide review

The Bank of Thailand governor warned that Thailand’s economic model may not answer the new world, reflecting an unequal allocation-of-resources problem that drags down growth potential.

He stressed that structural reform must move forward alongside maintaining stability, and said the central bank is preparing to tighten scrutiny of bank fees, reducing the burden on retail customers in the next period.

Vitai Ratanakorn, Governor of the Bank of Thailand (BOT), said at the FUTURE READY 2026 event organised by the BRANDi Institute of Systematic Transformation (BiOST) that if one looks at Thailand’s current economic development model, it may have reached a point where it must change completely.

This is because the economic development model Thailand is using now may no longer be suitable for the economic situation or the current environment, which may lead to a condition where the economy cannot expand to its full potential.

• High inequality: big players access cheap credit, SMEs face very high costs

The first most worrying issue is “failure in resource allocation”.

At present Thailand has an economic system where the differences are very clear.

The first 20–30 large business groups and large financial institutions have excellent performance and can access credit in the commercial banking system easily at a very low cost of only 2–3%.

On the other side of the economy, resources do not reach medium-sized SMEs, small SMEs and ordinary people.

If they are not in the high-income group (High Net Worth), access to credit is difficult and the cost is extremely high, from 7% up to 33%.

This situation reflects that the current system makes the already-strong groups become richer and stronger, while the weak groups must bear enormous costs.

Not only that, the problems Thailand is facing are not just temporary problems, but structural problems accumulated continuously, with many dimensions: competitiveness, productivity, investment that has stayed low continuously, chronic household debt, entering an ageing society, as well as problems of law enforcement and inequality in every dimension—financial, education, and social status.

These problems are what drag Thai economic growth to become slower and slower.

“In terms of sustainable development, or ESG, at present many organisations tend to see it as only CSR or doing good PR.

Thai people are good at writing reports and doing PR until receiving awards or being ranked in the world, but in actual practice it still has not gone anywhere.

Therefore, action—actually doing it—is the biggest problem of Thailand, and we need to move past working in a ‘Thai way’ that focuses only on image, towards solving the real root problems.”

For solving these structural problems, it is considered difficult and cannot be finished with one project.

It is not possible to launch only one project and fix all structural problems.

Therefore, solving the problem must be done through many projects continuously, to gradually relieve the symptoms point by point.

If it does not start from today, Thailand’s economy will keep circling in place and cannot go anywhere. This process requires both time and very high patience.

• Must keep a balance between stability and growth

In this regard, the BOT’s role of maintaining economic stability is important, but economic growth must go alongside it as well.

Because clinging only to stability—for example inflation must be low, or banks must be strong—without caring whether the economy grows or not, may not be the suitable answer today.

So the two matters should be fused together, because if the economy does not grow, people’s and businesses’ incomes will not be sufficient, leading to more borrowing and becoming an endless cycle of household debt and business debt.

• The limits of the policy interest rate

However, structural problems cannot be solved by cutting the policy interest rate alone.

Cutting interest rates cannot increase productivity, cannot build competitiveness, cannot directly solve the ageing society problem, or inequality.

Data indicate that a 0.25% rate cut has an effect of stimulating GDP by only 0.2%.

Therefore, the central bank and the government must issue measures that are specific and focused on solving the problem at its root so the economy can grow in the long term.

• Speed up restructuring in 5 areas to fix Thailand’s economic problems

Over almost five months, the BOT has aimed to continuously change its role to help solve structural problems for the country, with several measures carried out continuously in five areas.

First measure: solving retail debt below 100,000 baht that has become non-performing debt, so that this debtor group has a chance to return to the financial system and escape the debt trap in the future.

Second issue: solving the problem of negative SME lending through the SMEs Credit Boost project, using money from the Financial Institutions Development Fund (FIDF) to help reduce the risk of lending to SMEs, hoping banks will dare to extend more credit to SME businesses.

After this, further SME assistance measures will start to be seen continuously within the next two months to relieve the continuing negative-debt problem.

Third issue: reducing the impact on the baht from going in to regulate gold trading through baht-based apps.

At present the trading volume is so high it is shocking—higher than stock trading volume on the Stock Exchange.

Previously, stocks used to trade 20,000 to 30,000 million baht a day; now it has fallen to only about 8,000 million baht per day.

Meanwhile, gold trading through apps has a value as high as 6,000 to 7,000 million baht every day.

Moreover, buying gold through apps has become a channel to hold huge amounts of cash, such as 100 million or 1,000 million baht.

Keeping it at home is difficult and risks being examined; buying through apps has no quantity limits and can be withdrawn as physical gold quickly without anyone detecting it, because it is a business not under supervision.

Therefore, the BOT must close this loophole to control both gold and the currency.

“The lack of supervision in the business of gold trading through apps has a direct impact on the baht. When gold prices surge, people across the country often rush to sell gold at the same time, causing massive dollar selling within a short period such as 3–4 days, which is an important factor making the baht appreciate quickly beyond fundamentals.

To solve this, the BOT has set new measures, requiring everyone to report if gold trading exceeds 20 million baht, and setting a purchase limit of not more than 50 million baht.”

Fourth issue: supervision or suppression of grey money, through controlling the purchase of dollars, after finding behaviour that some groups prefer to buy dollars and hold them as cash in amounts of 1–2 million US dollars per time, or about 30–60 million baht, because it is easy to keep and not awkward like the baht.

So channels must be closed so that exchanging money over 800,000 baht cannot be done without reasonable grounds.

If exchanging more than that, there must be detailed checks of the money trail, including tracking data on the use of USDT (Cryptocurrency) to analyse the data and connect the money trail—an authority the BOT has never used continuously for such a long time before.

In terms of cash control, the BOT will begin strict measures for cash withdrawals from 5 million baht and above in mid-month.

Withdrawers must state sufficient reasons, to prevent the grey economy and capital outflows that do not benefit the country.

It believes these measures will make future money use more transparent, and abnormal transactions will decrease clearly in the next 2–3 years.

• Push ahead to adjust bank fees across the whole system

The last matter that will be done seriously after this is bank fees that are inconsistent and unfair to consumers—such as the case where some banks charge a fee to request a statement of 100–200 baht per account, with no clear fee standard, and consumers have no choice, including charging cross-district fees.

Whether depositing, withdrawing or transferring via ATM, it is contrary to the present era where technology has advanced a lot.

There should no longer be the word “cross-district”, because there is no need to transport banknotes across areas like in the old days.

In addition, fees for retail customers are still very high compared with large customers—especially the BAHTNET system, where the BOT’s cost per transaction is 17 baht, but banks charge customers as high as 250 baht, or a percentage where retail customers are hit much harder than large customers.

In some cases it may be as high as 5% of the amount.

After this, fees will be examined in detail—10–15 items—where fees will be adjusted downward in the period ahead.