Is Thailand’s Latest Co-Payment Scheme Justifiable?

In May 2026, the Thai government launched a welfare support programme to cushion the adverse economic impacts of the conflict in the Middle East. The programme has two components that are familiar to Thai citizens: a cash transfer system and a co-payment scheme. While helping lower-income Thais in dire economic circumstances can be justified, the scheme’s broad scope of coverage is questionable. 

The first component is the state welfare card, aimed at eradicating poverty through a cash transfer programme targeting low-income households. First introduced in 2017, the monthly cash transfer will be temporarily increased from THB300 to THB1,000 per month from June 2026 to September 2026. It is expected to benefit 13.2 million recipients and cost THB52 billion (USD 1.6 billion).

The second component is a co-payment scheme where the government pays part of citizens’ expenditures on selected essential products such as food, beverages, non-food consumables and transport services. This scheme is aimed at middle-income households and salaried workers. The Thai government has launched seven rounds of co-payment schemes since the Covid-19 pandemic in 2020 (Table 1). In the latest scheme, which covers June to September 2026, the public-to-private co-payment share has been increased from 50:50 government: citizen ratio (in 2025) to 60:40. Eligible purchases are capped at THB200 a day with a monthly limit of THB1,000 for a period of four months. This scheme is expected to benefit 30 million individuals and cost THB120 billion.

Table 1: Thais Helping Thais
Co-payment schemes implemented in Thailand since 2020

Aside from providing temporary relief for households, the co-payment scheme is also aimed at boosting domestic demand and providing support for small businesses. The estimated increase in private consumption expenditure is estimated to contribute around 0.4 to 0.6 percentage points to the country’s national income. 

Is the co-payment scheme justifiable? The exogenous shocks from the recent Middle East conflict have been rapid, severe and unexpected. They have raised the cost of living across the board. Some form of temporary assistance is economically justified, especially in a context of widening income inequality and excess savings among higher-income households in Thailand.

However, the co-payment scheme together with the monthly cash transfer to the welfare card has a broad coverage. It will benefit 43.2 million people, or about 81 per cent of the population aged over 18. In effect, it suggests that the economic assistance programme will extend well beyond those who are genuinely vulnerable to economic shocks. The amount of the total programme constitutes 4.7 per cent of the fiscal year 2026 budget. Although some may argue that broader coverage is preferable, the repeated use of these measures — seven times in less than six years — raises concerns about the cost-effectiveness of public spending.

“ … the government should not lose sight of the need to support medium-term growth. It would be unwise to incur additional debt to finance consumption activities and neglect public investments that increase the country’s capacity to repay its debt.

Wholesalers and retailers are also likely to benefit because the scheme can help sustain sales momentum for many products. For traders, the scheme may also make it easier for them to reduce their inventories of unsold goods. However, it remains unclear whether measures of this kind would have longer-term effects such as encouraging producers to expand production and to pass on the benefits to workers and consumers. Earlier rounds of co-payment schemes do not seem to have any spillover effects on the capacity utilisation levels in its manufacturing sector, which has been declining since 2021 (Figure 1). The scheme could have led to higher demand for imported goods instead of domestically produced ones. This is a plausible reason; an unpublished study on a previous co-payment scheme has shown that only 25 to 36 per cent of the expenditures under the scheme were spent on food and non-food consumable products. This is an issue that warrants further in-depth analysis.

Figure 1: Manufacturing Tanks
Capacity utilization rate (percentage) of Thai manufacturing from January 2021 to April 2026

The Thai government should also help entrepreneurs cope with the adverse impacts of the Middle East conflict. The conflict has led to shortages of inputs and higher input costs across all industries. If they cannot secure raw materials and working capital, they may be forced to scale down or shut down operations, leading to layoffs. Support should be extended to firms, especially SMEs.

Additionally, the government should not lose sight of the need to support medium-term growth. It would be unwise to incur additional debt to finance consumption activities and neglect public investments that increase the country’s capacity to repay its debt.

Co-payment schemes may be useful as short-term relief during today’s crisis but they should not be recurring substitutes for deeper structural reforms that are needed to boost the country’s growth potential. These include reducing regulatory barriers to foreign direct investment and boosting green energy transition. Failure to undertake these reforms would risk creating a cycle of rising public debt and mounting fiscal pressure amidst a lethargic economy.

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