March 4, 2020 / 10:52 AM / a month ago

UPDATE 1-Thailand plans $3.2 bln stimulus to ease coronavirus impact

* Plans soft loans, cash handouts, stock market steps

* Expects stimulus to have effect by June

* Says no plans to raise current 7% value-added-tax (Adds detail, quotes)

By Kitiphong Thaichareon

BANGKOK, March 4 (Reuters) - Thailand’s finance ministry will submit proposals to the cabinet next week for a 100 billion baht ($3.2 billion) package of measures to alleviate the impact of the coronavirus epidemic.

Southeast Asia’s second-largest economy is growing at its weakest pace in years, and business groups say it may contract this year if the virus impact drags on all year,

The measures will include cash handouts, soft loans and steps to support the stock market, Finance Minister Uttama Savanayana told reporters on Wednesday.

The government will offer businesses tax breaks to prevent layoffs, and will consider business groups’ requests for lower utilities expenses and security fund contributions, he said.

Cash handouts will be given to low-income earners, farmers and freelancers, Uttama said.

The government will offer higher tax deductions on certain long-term fund investments to support the stock market, which has dropped about 13% so far this year.

“This is just the first batch of steps to cope with the coronavirus impact,” Uttama said, adding economic ministers will finalise it on Friday before submitting it to the cabinet on March 10.

“The stimulus measures will be quite substantial,” he said. “They can be implemented immediately and should bear fruit by June”.

The government has no plans to raise the value-added-tax, currently at 7%, but may help companies with delayed tax payments, the minister said.

Other steps aimed at supporting tourism will have to be proposed by the tourism ministry, he said.

The spread of the virus globally is expected to cut the number of foreign tourists by 6 million this year, particularly from China, Thailand’s biggest source of visitors, according to the Tourism Authority of Thailand. ($1 = 31.33 baht) (Reporting by Kitiphong Thaichareon, Writing by Orathai Sriring; Editing by Simon Cameron-Moore)

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