These prerequisites must also be backstopped by strong policy credibility, the second area of priority. 2. Maintaining macroeconomic policy credibility  In its quest to provide public services, the policymakers must avoid being the source of harm. International experience is filled with cautionary tales of how a lack of policy discipline could lead the economy awry. Over-bloated and inefficient government increases risks of unsustainable public finance, and can sow the seeds for political conflicts. Lax monetary discipline is associated with hyperinflation and financial instability. Maintaining macroeconomic policy credibility and discipline must be an integral part of economic reform in Thailand. Policy credence is not an independent choice, but is shaped by the overall institutional setup. Institutions are the set of rules and norms that governs the incentives of economic agents and constrains their behaviours. Political developments, strength of the legal system, property rights enforcement, quality of workforce, degree of corruption are but some aspects of the institutional environment. They all interact with the policymakers’ ability to pursue their objectives credibly. Institutions evolve via a mixture of history, will power and luck. A combination of factors at critical junctures can determine the path of institutional change. Thailand must seek to make the most of the current windows of opportunities, to build on reform momentum, and promote a virtuous circle of institutional development. The ultimate goal is to have a political setup that is in accordance with international standards, with a stronger institutional framework to promote a credible and effective public policy.

As for companies, the concessional financing term according to the scheme was specified as three years, not four as with SMEs. Part of the cost of financing is subsidized where the State shoulders the entire cost for the first year and 50% of the cost for the second year, while the beneficiary has to cover the whole cost for the third. Part Two: guarantee of financing In addition to subsidizing the cost of financing, the scheme proposes a State guarantee of the financing extended to SMEs to incentivize banks to grant financing. The layout is suited to the local economy where the State guarantees 80% of the principal debt but not the cost of financing. Meanwhile, an annual fee of 0.25% is to be paid to the State to reduce banks’ moral hazard and to generate revenue for the government to partially offset the cost of the scheme. The committee proposed a set of controls and restrictions to guarantee that the financing is spent towards the indicated purposes, most importantly: companies refrain from distributing dividends to shareholders while benefiting from the scheme. They must retain the national staff ratio as of 31 December 2019 and work towards satisfying the target ratio for 31 December 2021, relevant to their respective sector. It is worth noting that this guarantee has several advantages for the economy, for banks and economic entities including the following: -  The actual cost to the government to guarantee financing does not exceed one tenth of the overall financing extended to economic entities.