Government Takes Strict Action Against Shops Inflating Prices to Exploit Subsidies
The government is initiating decisive legal action against retail shops that have unfairly raised prices after registering for the “Khon La Khrueng Plus” co-payment scheme, following a barrage of complaints pointing to widespread abuse and deliberate actions that directly contribute to artificial inflation.
Minister attached to the Prime Minister’s Office, Santi Piyatat, confirmed that price increases represent the most frequent issue reported to the Office of the Consumer Protection Board (OCPB).
The OCPB received a total of 66 complaints nationwide between October 29 and Tuesday, indicating a concerning trend of retailers undermining the scheme’s integrity.
Of these reports, 29 cases specifically detailed shops immediately inflating their prices after joining the programme.
The government views this practice as a blatant and unacceptable attempt to profit dishonestly from public subsidies intended for financial relief.
Minister Santi stressed that such behavior fundamentally “betrays the spirit of the government’s support measures and erodes public confidence.”
The core objective of the scheme is to ease the financial burdens on citizens and provide a critical stimulus to local economies, goals directly compromised when price gouging creates artificial inflation and limits the real purchasing power of the subsidized funds.
Types of Scheme Abuse and Coordinated Enforcement Efforts
The complaints received by the OCPB detail a spectrum of dishonest retail practices beyond simple price inflation.
In addition to the 29 cases of price hikes, other reported abuses included six cases where shops charged value-added tax (VAT) on goods that had already been discounted under the scheme, effectively canceling out the intended savings.
Further, five cases involved merchants attempting to deceive the public by falsely claiming participation in the scheme, often through the use of misleading quick response (QR) codes, and another five cases involved the unauthorized imposition of additional service fees on customers using the subsidy.
Four complaints were related to the illegal sale of banned items, such as alcohol and tobacco, utilizing the programme’s funds.
These various forms of exploitation are directly contrary to the scheme’s objectives of ensuring fair market practices and providing relief.
In response to the widespread issue of price inflation and other violations, the OCPB has established a coordinated enforcement effort involving the Fiscal Policy Office, the Department of Internal Trade, and various provincial commerce offices.
This joint task force is mandated to pursue immediate legal action against all identified violators and to significantly strengthen proactive monitoring across the country.
Consumer Confidence, Economic Impact, and Digital Platform Engagement
The government’s determined efforts to ensure fairness and transparency are crucial for maintaining public confidence in this large-scale economic measure.
Minister Santi reaffirmed that shops found to be engaging in price inflation or any other form of exploitation will face stringent penalties, ensuring that consumers can benefit fully, fairly, and safely from the government’s assistance measures.
The sheer scale of the programme underscores its economic importance: as of the latest figures from the Fiscal Policy Office, over 19 million users have successfully made payments, with total spending exceeding 35 billion baht.
The co-payment programme, which includes 922,491 registered shops and allows a daily use of up to 200 baht per citizen through the Paotang app until December 31, is a vital mechanism for liquidity injection.
The digital commerce component has also shown immense activity, with total food delivery spending under the scheme reaching 419.42 million baht as of Tuesday.
LINE MAN emerged as the dominant platform in this category, accounting for 249.74 million baht and reporting over two million accumulated orders placed by over one million users within a five-day period.
Meanwhile, Grab also reported significant uptake, seeing a threefold sales increase for participating restaurants and logging over one million orders, led primarily by popular single-dish meals.
The OCPB is actively continuing its educational initiatives for both shoppers and vendors on legal compliance and consumer rights to proactively combat inflation and abuse.
Financial Analyst Commentary: Policy Leakage and Digital Commerce Dynamics
The high frequency of price inflation and scheme exploitation, as evidenced by the 29 reported cases of direct price hikes, represents significant policy leakage that erodes the fiscal efficiency of the 35 billion baht subsidy.
From an Economics perspective, the co-payment model’s objective—to maximize the Keynesian multiplier effect by mandating consumption at point-of-sale—is partially neutralized when the subsidy is absorbed by price inflation rather than translated into real purchasing power for the consumer or higher volume for the vendor at stable margins.
The 29 cases of price inflation suggest the subsidy’s incidence is being partially shifted from the consumer to the retailer, resulting in a suboptimal transfer mechanism.
Crucially, the scheme’s reliance on digital platforms like LINE MAN and Grab (419.42 million baht in food delivery) creates a dual market impact.
While the massive injection of subsidized liquidity stimulates the digital logistics sector, the market concentration effect is amplified, consolidating delivery volume and potentially allowing dominant platforms to extract higher take-rates (commission fees) from participating small retailers over time, thereby offsetting the initial benefit to the vendor.
For Investment, the government’s strong enforcement action, targeting abuses like VAT misapplication and QR code fraud, is a positive signal, demonstrating commitment to maintaining the integrity of the digital payment infrastructure, which is vital for attracting long-term fintech investment.
However, the continued need for proactive monitoring implies that Thailand’s small vendor ecosystem requires substantial digital literacy and compliance infrastructure improvements to fully support large-scale, digitally-mediated government assistance programs.
