By
Wish (Punnapong) Ongipattanakul
Executive Summary:
Thailand faces a convergence of structural economic challenges: decelerating growth, high private-sector debt (180% of GDP), growing public debt (projected at 66% of GDP in 2025), rapid population aging, and a large informal labor sector that encompasses over half the workforce. This informality undermines tax collection, restricts credit access, and leaves millions without social protections.
To address these interlocking issues, this paper proposes the Country’s Basic Bank, a universal, government-managed savings account opened at birth for every Thai citizen. Overseen by a flexible central public body, the system allows citizens to open accounts at participating banks, creating a lifelong financial identity linked to national ID, enabling digital wage payments, automatic tax withholding, and seamless social-security enrollment. Over time, these accounts will transform informal, cash-based transactions into traceable financial flows, expanding the formal tax base, reducing leakages, and improving the delivery of public services.
The system enables the use of advanced econometric credit-risk models, including ensemble methods, ARIMA cash-flow forecasts, and survival analysis, offering transparent and accurate risk assessment for underserved borrowers. Simultaneously, account-level fiscal data will power real-time economic monitoring, nowcasting, and microsimulation, supporting more agile and equitable policy decisions.
Each account will be seeded with a ฿1,000 government contribution, pooled and managed, possibly by the Government Savings Fund under a conservative investment mandate. Upon reaching adulthood, funds may be withdrawn for productive, verified uses like higher education, first homes, or entrepreneurship. A national financial literacy curriculum will accompany the rollout, ensuring account holders understand and maximize their capital.
By embedding every Thai citizen into the formal financial system from birth, this integrated solution promotes inclusive growth, strengthens fiscal sustainability, and equips future generations with tools for upward mobility and formal economic participation.
Widespread Informality
Thailand’s informal labor sector is extensive, encompassing 21 million workers, 52.3% of the total workforce of 40.1 million. Informal workers are generally not covered by labor protection or social security laws and often lack fixed hours, consistent wages, or access to legal protection. This group includes self-employed entrepreneurs and small business owners, particularly in the agricultural sector, which employs more than half of all informal workers and yields nearly half the income of formal-sector employment (National Statistical Office, 2023; OECD, 2023).
Demographically, about half of informal workers are aged 40–59, and 4.4 million of Thailand’s 5.1 million elderly workers (over 60) remain in the informal sector. Although informal work is nearly equally distributed between men and women, it persists longer for women, reflecting their dual roles in caregiving and income generation. Educational attainment is typically low, most have only completed primary education, and 28% face job instability, overwork, or wage issues (Paweenawat, 2023). Despite initiatives like Section 40 to expand social protection for self-employed workers, only around 5–6 million out of 20 million contribute. These vulnerabilities became especially clear during the pandemic, when informal workers faced severe income disruptions but benefited from the sector’s flexibility (OECD, 2023; Paweenawat, 2023).
Labor Market Rigidities and Regulations
Thailand’s strong employment protection laws, especially concerning severance pay, create high dismissal costs and discourage formal job creation. As a result, the country ranks low in global labor market flexibility, placing 102nd out of 141 countries (OECD, 2023). Additionally, mandatory social security contributions totaling 10% of wages increase the cost of formal employment, particularly for small firms.
These structural costs are projected to rise as more people qualify for benefits, further widening the gap between formal and informal employment. Another barrier is the lack of legislation against age-based hiring discrimination, which is common in job listings and restricts older workers’ access to the formal labor market. While Thailand supported related ILO guidelines in 1980, enforcement remains weak (OECD, 2023).
Education and Skills Gaps
Educational and skills disparities reinforce informality. Most informal workers have limited schooling, usually just primary education, resulting in concentration in low-skilled jobs (National Statistical Office, 2023; Paweenawat, 2023). The problem is acute among youth. Despite overall labor market resilience, youth unemployment remains high, especially for women. Long-term unemployment is also rising: 25% of young job seekers have been searching for over six months.
The NEET (Not in Education, Employment, or Training) rate for Thai youth aged 15–24 has surpassed the OECD average, and 45% of workers in this group are in informal employment, risking long-term detachment from the formal economy. Although employment support services are available, awareness and participation in guidance programs declined between 2019 and 2021. Only half of unemployed youth have been reached by these services.
Long Run Policy Proposal:
In Thailand today, over half of our workforce operates outside the formal financial and regulatory system. This pervasive informality erodes fiscal revenues, constrains government investment in infrastructure and human capital, and leaves millions of workers unprotected from economic shocks, unsafe conditions, and inadequate social benefits. Despite repeated efforts to reduce red tape and strengthen enforcement, the absence of reliable identification and digital payment pathways continues to push small entrepreneurs and wage‐earners into cash‐only transactions, beyond the reach of taxation, credit, and social‐security schemes.
To address these challenges at their root, I propose the introduction of a universal, government-issued bank account for every newborn. By embedding each citizen within the formal financial ecosystem from birth, we create a guaranteed channel for transparent wage payments, social‐security contributions, and progressive tax collection, transforming once-informal economic activity into traceable, regulated flows. Early enrollment in a bank account will also facilitate automatic registration for pension and health‐insurance programs, promote financial literacy through custodial education, and lower the barrier to credit and digital savings products. Over time, this measure will expand the tax base, strengthen workers’ welfare and bargaining power, and foster higher productivity through better access to formal financial services, setting Thailand on a path toward more equitable growth and sustainable public‐finance management.
Embedding every Thai citizen in the formal financial system from day one will hinge not only on universal birth-to-bank-account enrollment, but also on ensuring there is a banking infrastructure capable of servicing this entire population. To make the proposal more flexible, citizens could open accounts at participating banks, overseen by a central body that could be an existing state agency or a new entity under the Ministry of Finance, or the Bank of Thailand. This central body would retain the core mission of ensuring the standardized opening and management of accounts for newborns and the provision of low-cost, accessible services throughout life. By vesting this central body with the mandate to:
- Automatically inaugurate a basic savings account linked to each citizen’s national ID at birth;
- Collect and remit wages, social-security contributions, tax withholdings, and government disbursements (pensions, health subsidies) directly through these accounts;
- Offer digital payment and credit products tailored to vulnerable and low-income households;
We can transform Thailand’s informal cash economy into a transparent, regulated financial ecosystem. This public-private partnership model, combining government oversight with services from participating banks, could ensure that even the smallest micro-entrepreneurs or rural workers have reliable access to banking services.
Refined Predictive‐Modeling Framework for Credit Risk
Embedding every citizen in a lifelong, transaction‐level bank account enables the development of robust, econometric and statistical credit‐scoring models rather than generic “machine‐learning” black boxes.
Key methods include:
1. Ensemble Methods for Nonlinear Patterns
Augment linear scorecards with gradient‐boosting machines (GBM) or random‐forest classifiers to capture nonlinear interactions (for instance, between seasonal income fluctuations and expenditure spikes). Combine multiple algorithms in a stacked ensemble, improving out‐of‐sample accuracy and stability in PD estimates.
2. Time-Series Forecasting of Cash Flows
Apply ARIMA or exponential‐smoothing state-space models to individual account balances, generating forward‐looking features such as projected balance trajectories and early‐warning indicators of cash‐flow stress. Incorporate these forecasts as covariates in your credit‐risk models to anticipate liquidity shocks before they materialize.
3. Survival Analysis for Default Timing
Use Cox proportional-hazards models (or parametric survival regressions) to estimate the hazard rate of default over a borrower’s lifecycle, allowing dynamic provisioning and targeted intervention when risk spikes.
4. Segmentation and Clustering
Perform unsupervised clustering (e.g., k-means or hierarchical clustering) on behavioural profiles to segment borrowers into risk cohorts, enabling differentiated pricing and tailored credit-limit policies.
By shifting from generic “machine learning” to these well-established predictive modeling and econometric techniques, lenders and regulators at the public agency—gain transparent, explainable, and rigorously validated credit‐risk assessments. This precision minimizes adverse selection, optimizes capital allocation, and expands inclusion by reliably underwriting borrowers who were previously “thin‐file” or entirely excluded.
Strengthening Fiscal Sustainability and Mitigating Budget Deficits
Embedding universal bank accounts for all Thai citizens will do more than just improve credit allocation, it will also strengthen our revenue base and enhance the precision of economic statistics, paving the way for more targeted and effective policy interventions.
By channeling wages and transactions through traceable accounts, the government can automate personal-income tax withholding at the source. Employers will remit taxes directly from payroll deposits, converting formerly cash-only wages into compliant, digital flows. At the same time, value-added tax and business-tax liabilities will be captured through routine account transactions, significantly broadening the formal tax base. These measures can boost annual fiscal revenues over the long term without raising headline rates, thereby providing more stable funding for infrastructure, education, and healthcare.
Continuous feeds of deposit, withdrawal, and withholding records into the Ministry of Finance and the National Statistical Office will make it possible to implement real-time fiscal nowcasting. Using Kalman-filter and other dynamic econometric techniques, analysts can update revenue forecasts on a monthly basis, sharply reducing forecast errors and enabling timely budget adjustments in response to evolving economic conditions.
Linking anonymized account histories with demographic registers will support household-level microsimulation for policy design. Before rolling out any new tax credits, rate structures, or social-transfer programs, policymakers can run detailed simulations on synthetic populations. This approach illuminates distributional impacts and identifies optimal benefit levels, ensuring that interventions are both equitable and cost-efficient.
With comprehensive administrative data replacing sporadic survey sampling, employment, income, and consumption metrics will gain unprecedented accuracy. Margins of error will shrink dramatically, and disaggregated transaction data will allow the National Economic and Social Development Council to monitor sector-specific trends, whether in agriculture, manufacturing, or services, and tailor sectoral policies accordingly.
Moreover, near-real-time indicators of behavioral responses, such as shifts in spending following a tax-rate change, will create rapid feedback loops for adaptive policymaking. The government can use these insights to calibrate economic relief measures or targeted incentives, such as conditional cash transfers or regional tax holidays, to the communities and households that need them most.
As a result of higher and more predictable revenue inflows, the persistent trend of budget deficits can be mitigated to some extent. Greater tax compliance and broadened bases reduce the need for deficit financing, while improved nowcasting helps avoid unexpected shortfalls and the costly interest burdens they entail. Over time, this strengthens fiscal resilience, allowing the government to draw down existing debt levels, lower borrowing costs, and allocate resources more efficiently across competing priorities, lessening the burden of debt servicing cost.
Together, these innovations will both expand Thailand’s formal revenue base and transform how policies are designed, evaluated, and adjusted. By utilizing universal financial inclusion alongside advanced fiscal analytics, we can achieve more equitable growth, stronger public-finance sustainability, and truly evidence-based governance.
Further Implementation: Human Capital Improvement
To operationalize the Child Capital Account, the Thai government will deposit ฿1,000 into each account at birth, triggered automatically upon registration in the national civil registry. These funds will be pooled and professionally managed by a designated public entity, such as the Government Savings Fund (GSF), which already oversees retirement portfolios for informal-sector workers. Leveraging GSF’s investment capacity and risk-governance infrastructure, the portfolio will follow a risk-averse, capital-preserving strategy—primarily composed of Thai government bonds, complemented by modest allocations to global equities and infrastructure to provide long-term, inflation-adjusted returns (Government Savings Fund, 2024). All earnings will be reinvested, allowing the principal to compound securely over an 18-year horizon. As such, considering 461,421 were born in 2024, implementation would mean that at least 461,421,000 would need to be injected each year to keep the program running.
Upon reaching age 18, the funds will become withdrawable for productive, formally verifiable purposes—such as higher education, vocational training, registered business start-ups, or first-time homeownership. This ensures that the capital seeded at birth translates directly into human capital and formal economic participation (Darity & Hamilton, 2010).
Crucially, this model is designed to be more competitive than traditional savings products offered by commercial banks, which typically yield below-inflation interest and are often inaccessible to low-income households due to account minimums, fees, and documentation barriers (Bank of Thailand, 2023). In contrast, the Child Capital Account is fee-free, government-backed, and automatically opened for every citizen, offering a low-risk investment vehicle with higher expected real returns—particularly attractive to underserved and informal households.
To maximize long-term impact, the government will also roll out a national financial literacy program integrated into the basic education curriculum. Starting at the lower-secondary level, students will receive formal instruction in budgeting, compound interest, responsible borrowing, digital payments, and long-term planning—co-developed by the Ministry of Education, the central coordinating body, and GSF. These lessons will incorporate real-world simulations using students’ own Child Capital Accounts to foster ownership and understanding. Upon turning 18, account holders will also have access to mobile apps, workshops, and account planners that help them compare returns, assess risks, and choose appropriate uses for their matured funds.
By combining government-guaranteed savings, investment discipline, financial literacy, and restricted-use withdrawals, this program ensures that the capital does not just sit idle, but becomes a springboard for formal-sector mobility and intergenerational equity. Over time, it will place competitive pressure on commercial banks to raise standards for inclusivity and transparency, while building a financially literate population embedded in the formal economy from birth.
Disclaimer: The views and opinions expressed in this paper are solely those of the author and do not necessarily represent those of the Office of Fiscal Policy or the Ministry of Finance of Thailand.
References
Bank of Thailand. (2023). Financial access survey results. https://www.bot.or.th
Darity, W., & Hamilton, D. (2010). Bold policies for economic justice: The baby bonds proposal. The New School and Duke University.
Government Savings Fund. (2024). Annual report. https://www.nsf.or.th
National Statistical Office. (2023, December 19). Over half of Thai workers in informal sector. Bangkok Post.
Organisation for Economic Co-operation and Development. (2023, December). OECD Economic Surveys: Thailand 2023. OECD Publishing.
Paweenawat, S. W. (2023, September). Gender and Informal Work in Thailand (Knowledge Management Note 5). World Bank.
Wish (Punnapong) Ongipattanakul
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