UPDATE 1-Thailand's Thaksin backs party's $14.5 bln handout plan

Thai political heavyweight Thaksin Shinawatra on Thursday said his party's flagship 500 billion baht ($14.53 billion) handout plan was needed to boost a sluggish economy, signalling policy continuing under the incoming government. Thaksin's daughter and the populist Pheu Thai party leader, Paetongtarn Shinawatra, was elected by parliament on Friday, replacing Srettha Thavisin who was dismissed by a court order.

"It's about stimulating the economy," he said at an event in the capital Bangkok, outlining the benefits of the handout scheme that was a key campaign promise for his party in last year's election. The "digital wallet" handout scheme, which would see about 50 million Thais receive 10,000 baht ($290.70) of credit via a smartphone application to spend locally within six months, was planned to be rolled out in the fourth quarter under Srettha.

However, Srettha's fall has raised some doubts about whether it would still go ahead. Thaksin's remarks on Thursday indicated that Paetongtarn would likely continue with the plan, which has come under criticism from experts and Thailand's central bank, as the Southeast Asia's second largest economy groans under ballooning household debt.

"This allow more precision for the stimulation of economy," said Thaksin, a former prime minister who spent 15 years in self-imposed exile before making a dramatic return to Thailand last year. In a wide-ranging speech, Thaksin also said Thailand needed to reform its agriculture sector to be more competitive and boost incomes and capacity in tourism, a key driver of growth, including expanding the main airport in Bangkok.

He also said Thailand should do more to protect its economy from an influx of low-cost Chinese products, applying "small steps of protectionism", adding "we have to find equality in competition." He also said the finance minister should work closely with the central bank to make sure fiscal and monetary policy worked in the same direction, and said it was crucial for Thailand's massive household debt to be restructured, and for small businesses to access loans. ($1 = 34.4000 baht)

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