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Country Brief

brief  Progress in the Last Decade
  Current Challenges
  World Bank Assistance to Thailand

Progress in the Last Decade

Following the 1997 Southeast Asian financial crisis, Thailand implemented substantial reforms in its financial sector, strengthening corporate governance, reforming lending practices, and boosting incentives for increasing competition. The resilience of the Thai economy facilitated a quick recovery. After contracting more than 10 percent in 1998, Thailand's economy grew at a rate of more than 4 percent in both 1999 and 2000, and grew by 1.8 percent in 2001 despite a global slowdown.

The country's economic growth has contributed to a sharp drop in poverty levels. Between 1999 and 2000 poverty rates fell by 2 percent. Nearly a million people have bounced back out of poverty following the country's economic recovery.

The government, the first to be elected under the new constitution, has focused on four programs: establishing a centralized asset-management corporation, granting a debt moratorium, supplying a one million baht fund for promoting new enterprises, and providing universal health care to the population. The government's medium-term strategies focus on poverty reduction and balanced development.

Thailand's monarch has recently laid out an agenda to address poverty by promoting a community-driven, self-sufficiency economy. The King has also spoken out against corruption and called for better management of natural resources. The Senate is playing an increasingly important role -- together with the National Social and Economic Council -- in providing more checks and balances as the country moves forward under the new constitution.

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Current Challenges

Despite these advances, Thailand faces additional challenges. Progress in financial and corporate-sector reform has been affected by lagging corporate debt restructuring. The legal regime for bankruptcy, foreclosure, and secured lending remains inefficient, with multi-year backlogs in the civil courts. Financial institutions, although stronger than at the height of the financial crisis, remain vulnerable.

Thailand also faces challenges implementing its new constitution, which considerably strengthens democratic institutions that help ensure accountability, such as the National Counter-Corruption Commission, the Electoral Commission, and the Administrative Courts. Many of these institutions have recently come under attack. The electoral process has been revamped with a directly elected Senate and a reformed system of parliamentary representation. Civil society has gained greater recognition and voice and is becoming a more powerful participant in the policy debate, and the media is among the most free and independent in the region. However, the public continues to regard weak governance -- corruption in particular -- as a major impediment to economic and social development.

The problems of the poor have also increased since the 1997 financial crisis. Before 1997, high growth rates in Thailand had pulled poverty rates down from 32.6 percent of the population in 1988 to 11.4 percent in 1996, lifting nearly a million people out of poverty every year. But much of this progress came to a halt in 1997. With a total population of 61 million, the country saw the number of poor increase from 6.8 million in 1996 to 9.8 million in 1999. The Northeast, the poorest region of the country, experienced a drop in income twice the national average.

Weak environmental institutions and substantial environmental damage -- a byproduct of Thailand's rapid development over the last 30 years -- have also hurt the poor disproportionately. One-third of the country's surface water is unsuitable for human consumption or agricultural use. Half of the forest cover has been lost. Levels of air pollution in Bangkok exceed health standards, and industrial waste generation has hit 1.6 million tons per year.

The poor in Thailand could also benefit greatly from governance reforms, which would afford the impoverished with more security, increased opportunities, and a greater voice. Governance reform is one of the four pillars of the government's agenda -- social protection, competitiveness, environmental protection, and good governance -- which is underpinned by a multi-faceted poverty-reduction strategy.

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World Bank Assistance to Thailand

The World Bank's work in Thailand focuses on working in partnership with the Royal Thai Government, other donors, the private sector, and civil society to support the country's efforts to reduce poverty, improve the business environment, protect the environment, and promote public-sector management and governance.

The Bank has created a new instrument for managing these partnerships, called the Country Development Partnership. The partnership supports the Royal Thai Government's reform program by laying out milestones and timelines for the implementation of strategic reform components. Specifically, the partnership sets forth a three-year plan for progress in a particular reform area, specifying objectives and a program of actions, and identifies the technical assistance required in support of the program. The mechanism was designed and is being executed in partnership with civil society and the private sector and with capacity building support and technical assistance from external partners. The partnership allows the government of Thailand to more effectively manage the inputs of donors in key reform areas at a time when Thailand's need for external borrowing has declined.

Currently, the World Bank is working in partnership on:

  • Social protection with the Ministry of Labor and Social Welfare, GTZ, ILO, and UNICEF.
  • Financial and corporate sector reforms with the Ministry of Finance, the Bank of Thailand, and the National Economic and Social Development Board (NESDB).
  • Governance issues with the prime minister's office and the Office of the Civil Service Commission, AusAID and UNDP.
  • Poverty analysis and monitoring with the NESDB and other donors working on poverty issues.

Results: Helping Communities Improve Their Quality of Life

A Snapshot of the World Bank's work in Thailand:

Social issues:
The Social Investment Project helped to respond to Thailand's financial and economic crisis through the rapid creation of employment opportunities and the provision of essential social services to the unemployed and poor. The project is also using the crisis as an opportunity to support bottom-up service delivery through financing locally identified and manage development initiatives, and through promoting decentralization, local capacity building, and community development.

Education: The Universities Science and Engineering Education Project is improving the quality of undergraduate science and engineering programs by, among other things, strengthening faculty teaching capabilities; upgrading the existing  cience and engineering program content; and modernizing laboratories and strengthening their management. Also, the Secondary Education Quality improvement Project is assisting in raising the quality of secondary education in science and mathematics through strengthening teacher education.

Environment: The Building Chiller Replacement Project is helping Thailand to improve energy efficiency and reduce greenhouse gas emissions in the building chiller sector, while also reducing the consumption of ozone depleting substances required under the Montreal Protocol.

Changing the way we do business: In June 2001, the Bank hosted the Thailand Innovation Day competition, an initiative to foster new and innovative partnerships and products for poverty reduction. A unique collaboration among the Government of Thailand, private sector and civil society groups and the World Bank, Thailand Innovation Day was one of three country pilots of the global Development Marketplace, a World Bank program exploring new ways to do development differently. DM recognizes innovation and encourages creative partnerships among the NGO, business, development banking, and government sectors. Among the highlights of Innovation Day were a range of projects submitted by Thailand's public and private sectors and civil society organizations, showcased and judged around the theme of "information technology and quality of life in rural Thailand". A number of groups were awarded grant funding to implement their projects in partnership with a rural enterprise or community in Thailand.














The Bank is also working with the government on potential partnerships on environment, transportation, and information and communications technology.

In addition, the World Bank's voice on major development issues is now widely heard through the various series of Thailand Monitor publications. The Economic Monitor, Social Monitor, Environment Monitor, and Country Dialogue Monitor series have been disseminated widely to provide insight on current issues, including government policies and the Bank's work in Thailand. The publications attract a wide readership and make headlines, which helps further the national dialogue on policy issues such as competitiveness, financial and corporate sector restructuring, HIV/AIDS, and social and environmental protection.

The World Bank is also engaged with the government to provide advisory services, seminars, and workshops, and to coordinate a small grants program, which provides funds to local civil-society organizations that assist the country's most vulnerable populations. The current lending portfolio includes eight projects: one social investment project ($300 million), two loans for education ($225 million); one land titling loan ($118 million); two technical assistance loans ($30 million); and two loans for energy projects (totaling $245 million). The Bank is also supervising two environment projects funded by grants from the Montreal Protocol and Global Environment Facility, as well as two Institutional Development Fund projects in gender and decentralization.

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Ms. Kimberly Versak
The World Bank Resident Mission in Thailand
14th Floor, Diethelm Tower A
93/1 Wireless Road
Bangkok, 10330
Telephone: +66 (0)2256-7792 extension: 332
Facsimile: +66 (0)2256-7794

World Bank Office in Bangkok :

The Washington External Affairs Office
Melissa Fossberg
Tel: +1 202-473-1792 / 202-473-4919
Fax: +1 202-522-3405


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