BOT Governor Says Thailand Must Accelerate Economic Structural Reform to Weather New World Order Volatility, Use Big Data to Boost SME Credit Access and Close Grey-Capital Loopholes
The Bank of Thailand Governor has indicated that Thailand must urgently reform its economic structure to cope with the new world order, by addressing the problem of uneven capital allocation that is dragging down the country's growth potential. He also outlined plans to advance Big Data development to expand credit access for SMEs and individual borrowers, alongside efforts to crack down on grey capital and irregular transactions, with the aim of strengthening financial system stability and the country's competitive capacity.
Mr. Wittai Rattanakorn, Governor of the Bank of Thailand , delivered a special lecture at The INTANIA Forum: SURVIVING UNDER THE NEW WORLD ORDER symposium at the Faculty of Engineering, Chulalongkorn University, stating that the world has now entered a Multi World state in which no single power can unilaterally dictate direction. Geopolitics has spilled over into geoeconomics, with tariffs and trade measures being weaponised as tools of power competition, while Global Shocks are occurring with increasing frequency — including COVID, the war in Ukraine, the trade war, and the Middle East conflict.
Thailand's economy, therefore, must not merely be flexible, but must be capable of absorbing shocks, adapting, and continuing to move forward. The key lies in reforming the economic structure, particularly the problem of Resource Misallocation, which is suppressing the country's productivity and potential GDP.
* Excess Liquidity, Concentrated Capital
The BOT Governor said that Thailand does not lack capital — currently the BOT absorbs liquidity through various channels at approximately 5–6 trillion baht per day — yet much of that money fails to flow to productive business units, causing the economy to grow below its potential.
Furthermore, data within the system clearly reflects the anomaly: more than 75% of capital is allocated to large businesses, while SME credit has contracted for 15 consecutive quarters. Even the top 30% most productive SMEs can access only 21% of credit, compared with 63% for large businesses.
* Using Big Data to Boost SME Credit Access
At the same time, inequality in financing costs further undermines SME competitiveness. High-performing SMEs pay an average interest rate of 7.8%, while large enterprises pay around 3.9%, meaning that small businesses that should be propelled toward growth are instead constrained by cost of capital and access to funding.
The key solution is the development of a large database to enable more precise lending decisions, reducing Credit Cost, lowering the cost of extending loans, and cutting operating costs. This database is not a conventional credit bureau, but rather a compilation of multi-dimensional data — including credit data, bank statements, water and electricity usage, and other alternative data — to allow a more comprehensive assessment of borrower potential.
Mr. Wittai said this initiative is aligned with government policy, with Deputy Prime Minister and Minister of Finance Mr. Ekniti Nitithanpraphas taking the lead in driving it forward using the Connect mechanism. If successful, it will allow ordinary individuals and SMEs who are financially disciplined but lack sufficient collateral to access credit more widely at appropriate costs.
* Blocking Grey Capital
Meanwhile, another major problem is grey capital and the informal economy. Thailand has the 14th-largest informal economy in the world, with approximately 9–13% of economic activity being grey, meaning the state cannot collect tax on it and the money does not return to the budget system. The BOT has therefore begun closing loopholes on multiple fronts, including requiring that cash withdrawals exceeding 5 million baht per month be accompanied by a stated reason, following the discovery that 140 billion baht worth of old 1,000-baht banknotes had disappeared from the system. The BOT is also monitoring gold transactions conducted via applications that affect the value of the baht.
Measures to regulate gold trading have begun to show results. After requiring traders transacting more than 50 million baht per platform to report their activity, and requiring those withdrawing more than 2 kilograms of gold bars to disclose their information, the volume of suspicious gold withdrawals has dropped from nearly 20 billion baht per month to 2,500–3,000 million baht. As for digital assets such as USDT, suspicious transactions were found to account for as much as 40% of activity — representing capital flight or transfers out of the country — with a total value of over 250 billion baht within five months. Meanwhile, more than 2,500 mule accounts and online gambling accounts have already been ordered shut.
