NESDB. Inside... Special Report. Monthly Report on National Economic and Social Development by Development Evaluation and Communication Office

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1 Monthly Report on National Economic and Social Development by Development Evaluation and Communication Office National Economic and Social Development Board Vol. 21 No. 9 : September 2004 ISSN NESDB Moved Poverty Line to 1,163 Baht, the Number of the Poor up to 8.8 Million OnSeptember 15, 2004, Mr. Chakramon Phasukavanich, Secretary-General of the National Economic and Social Development Board, presided over the seminar çadjustment of the Poverty Lineé. The United Nations Development Programs (UNDP) commissioned the Thailand Development Research Institute (TDRI) to conduct a study on this adjustment and present the preliminary findings. Mr. Chakramon said that the Office of the National Economic and Social Development Board (NESDB) agreed that the Official Poverty Lines of Thailand should be adjusted so that they would be more current and more acceptable since the existing poverty lines have been used since 1992 and they contain many flaws which are as follows : 1) The assumption of the poverty line is that the expense on food accounts for 60% of the total expense in every region every year. Such assumption is not reasonably supported and does not correspond to the actual expense of the poor in some parts of the country. 2) The need for non-food should be calculated by category not as a whole. 3) The expense pattern of the poor is different according to the region. For example, the poor in an urban area may have to spend more money on necessities than those in a rural area. 4) Savings resulting from the family size are not taken into consideration. A family can save expenses per head if the family unit gets bigger. More family members mean less expense per head on food. He referred to the study and stated that the existing poverty line is at 922 baht per head per month whereas the new one is at 1,163 baht. This leads to a higher number of the poor, from 5.99 million to 8.80 million or from 9.8% to 14.4% of the total population at present (61 million). In terms of region, the highest number of the poor (4.58 million) is in the Northeast followed by the North (2.28 million), the Central Plains (1.03 million), the South (0.81 million) and Bangkok (0.11 million) respectively. The number of the poor in the North increases the highest, from 1.11 million to 2.28 million or 20.2% of the total population in the North while the number of the poor in the Northeast stands at 21.9% of the total population in the Northeast. However, the new poverty line does not indicate that Thai people are poorer. The number of the poor is higher because the poverty line has been moved up in line with the current situation. It is generally accepted that if the number of the poor in any country is less than 3%, it can be said that poverty does not exist in that country because it is expected that the government of that country can cope with this level of poverty. If the adjustment is done, it will be submitted to the NESDB Board for consideration before being approved by the cabinet. It is expected that the new figure will be applied in 2005, however, it has to be readjusted when there is a change in the income per head. The Secretary-General mentioned that the distinctive features of the new poverty line are that the latest data has been used in calculating the new poverty line. This data includes the need for calories and protein according to age and gender in 2003, the latest consumption plan in 2002, the new population structure according to the (see page 4) Inside... & GDP of the 2/2004 Quarter Slowed Down by 6.3% 2 Social Situation of the 2/2004 Quarter Witnesses Goals of MDGs 3 Government-Private Sectors Join Hands in Developing Mekong Region 7 Special Report Sustainable Development of Thailand 4 Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy 6

2 GDP of 2/2004 Quarter Slowed down by 6.3% due to Avian Flu and High Oil Prices OnSeptember 6, 2004, Mr. Chakramon Phasukavanich, Secretary-General of the NESDB, informed the press about the national gross Domestic Product (GDP) in the second quarter of He stated that the Thai economy is still expanding continuously at the rate of 6.3%, a little lower than 6.6% of the last quarter because of the Avian flu which broke out in the last quarter coupled with the higher prices of oil. After the seasonal value had been adjusted, the GDP expanded by 0.8%. He added that the expansion of the production slowed down. 1) The agricultural sector shrank by 7.5% due to the Avian flu and the drought resulting in the shrinkage of the livestock and crops by 19.3% and 7.4% respectively. The main products which were hard hit were chicken, chicken eggs, off-season rice growing, cassava, corn and sugar cane. Fishery expanded by 1.6% because of the lower volume of shrimp exports to the United States of America which was considering whether it would impose higher tarriffs on shrimps from major exporters. 1) The non-agricultural sector expanded at the same rate as that of the last quarter which was 7.7%. The restaurant and hotel sector expanded by 29.7% because of the higher domestic consumption and tourism promotion. The finance and banking sector expanded by 16.3% because of the good performance of the commercial banks and the Savings Bank. They expanded their credit lines and gained more income from higher interest rates. The transport sector expanded by 10.5% due to an increase in air travel and telecommunication services. The industrial sector slowed down by 7.5% because of the reduction of the raw material industry, capital-goods and technology industry and the food and beverage industry. The construction expanded by 4.6% because of the shrinkage in housing construction. The shrinkage was caused by the continuing high prices of construction materials from the last quarter especially the prices of iron, wood and wood products. Another reason for this shrinkage was that the construction in the government sector was reduced especially in the local government organizations. The wholesale and retailing section 2 Development News Bulletin slowed down a little by 3.1% due to the shrinkage of the agricultural production. The Secretary-General also mentioned that the countryûs expenditure slowed down both in terms of household expenditure and the government expenditure by 5.5% and 4.3% respectively This was due to the fact that the retail prices of oil have been higher so the public has hesitated to spend more money even though there were factors promoting household expenditure. The factors being the pay rise for civil servants on April 1, 2004, higher agricultural income, credit expansion for consumer products offered by the commercial banks and the better situation regarding Avian flu. The investment decreased from 16.2% of the last quarter to12.1%, Largely as a result of the sluggish investment in the private sector both in terms of construction and machinery. The governmentûs investment rose insignificantly since the construction work of the government and the local government organizations decreased. As for the net export, the year-based prices have decreased continuously since the last quarter by 13.2% because of the higher import of major products such as crude oil, electric circuits and industrial machinery. Concurrently, the economy of Thailandûs major export markets especially countries in Asia, the European Union and Japan is recovering. This led to the trade deficit of 6,937 million baht, the first in seven years after the 1997 economic crisis. Moreover, the surplus of the current account decreased to 21,870 million baht accounting for 56.0%. The value of the baht weakened as the exchange rate stood at 40.3 baht per US dollar. He said that the 2004 economy would expand by 6.0% - 6.5% due to the continued expansion of the global economy even though it has seemed to shrink a little, the higher rate of productivity, higher household income and increased reimbursement from the common budget. However, in the second half of the year the Thai economy is still under threat by the higher interest rates proposed by the Bank of Thailand and the increasing prices of oil. These factors have resulted in higher prices of goods and the slow down of the private sectorûs investment. The inflation rate is expected to stand at 2.7% and the current account is in surplus, accounting for 6.0 billion US dollars or 3.8% of the GDP. The 2005 global economy is expected to shrink including the US economy, Japanese economy and Chinese economy. Thailand will also be faced with high interest rates, high inflation and a higher retail price of diesel to relieve the governmentûs burden in subsidizing the sale of diesel. These factors will cause the Thai economy to expand by 5.5% - 6.5% and the inflation rate to be between 2.8% and 3.0%.

3 Social Situation of 2/2004 Quarter Witnesses the Goals of MDGs but AIDS is still a Threat OnSeptember 17, 2004, Mr. Boonyong Vechamanesri, Deputy Secretary-General of the NESDB, and the NESDB executives issued a press release about the Thai social situation during the second quarter. The NESDB has found the following major social issues. Thai Society Compared to Those of Other Countries The development of Thailand was compared with the Millenium Development Goals (MDGs) which are international goals that 189 countries agreed to. It is found that at present the development of Thailand is at a satisfactory level and Thailand can achieve almost all of the goals specified in the Millenium Development Goals by 2015 especially in terms of poverty, hunger, gender inequality, AIDS and malaria. The educational goals are expected to be attained soon. Environmental progress is at a satisfactory level. The proportion of the poor has been reduced by one third and the proportion of the underweight children reduced by half. All Thai children will receive at least a primary education in the near future. The number of new HIV-affected patients has been reduced by 80% and malaria poses no threat to the Thai people. The Thai Social Situations in the Second Quarter of 2004 Human resource quality million people or 2.60% are unemployed and 0.61 million have jobs whose educational requirement is lower than the educational background they actually have. This number is lower than that of the same quarter of last year due to increased employment in the non-agricultural sector especially in the industrial craft and construction sectors. However, more people in the North and the South are unemployed because of drought and the unrest in the 3 provinces in the South. The high unemployment rate is mainly among those who graduate with vocational certificates while the unemployment rate among undergraduates or higher is decreasing. Social security. Personal insurance makes up 82% of all types of insurance followed by health insurance and insurance against accidents. However, life and property safety is still in a worrying state since drug cases and assaults have increased by 14.8% and 2.6% respectively when compared to those in the first quarter. In addition, road accidents during festivals are still high although the government and related agencies have campaigned about the results of drunk driving. During the 2004 Songkran Festival 10,044 were killed and injured, a 15.2% increase from the number of last year and a 13.7% increase from the number of the New Year. Most of the death toll are those killed on motorcycles. The riders are reckless and drunk as well as not wearing safety helmets. The peopleûs way of life and behavior. The number of smokers decreased from 20. 6% in 2001 to 18.8% in 2003; however, the number of children and teenagers who smoke is higher. 76% of smokers are those with less or no education, most of whom are farmers, fishermen and factory workers. The Environment. It is found that soil, water and produce are contaminated with fertilizers and pesticides which are the major causes of cancer. Herbicides are flushed into major rivers and left in the rivers by 50% while 60% of them are left in vegetables. 60% is higher than the accepted level. 38% of them are found in chemical-free vegetables. Chemicals are found mostly in cabbages, cauliflower and kale. AIDS: A Threat to Thai Society The number of newly infected patients with HIV dropped from 143,000 in 1991 to 19,000 in 2003 and more AIDS patients can gain access to anti-virus AIDS medicine. However, without effective prevention and proper solutions to the problem, AIDS can become a serious problem again. In addition, more Thai people, especially those aged between 15-23, lead a risky life vulnerable to AIDS infection. Drugs and alcohol are the leading causes of the spread of AIDS. Furthermore, 50% of them change partners quite often and more of those whose age is less than 18 are infected with HIV. The number climbed from 7.1% in 2001 to 13.8% in In some areas the rate of pregnant women infected with HIV is still high. He added that the NESDB raise such issues to warn the public and those responsible for these matters so that they can find the means to prevent and solve the problems effectively. Development News Bulletin 3

4 Special Article on Development Indicators Sustainable Development of Thailand 1 (1) The development of Thailand in the past focused only on the economic expansion without a systematic use of natural resources, resulting in problems about the environment and natural resources during such period. In addition, the improper production and consumption behaviors of the Thai people caused a clash between people and their surroundings. As a result, it can be concluded that Thailand in the past had a good economy but it had a lot of social problems and its development was neither effective nor sustainable. With this in mind, Thailand and other countries which have been faced with these problems have resorted to sustainable development. They have signed an agreement, Agenda 21, proposed by the United Nations in 1992 in Rio de Janero, Brazil. It is a master plan of the world about sustainable development emphasizing the development of the economy along with responsibility towards society by protecting the natural resources and environment for the benefit of the future generations. To develop Thailand in a sustainable manner, an evaluation framework and effective indicators for evaluating operational results have to be determined. The NESDB has conducted a study to draw up a framework to evaluate the general sustainable development of Thailand and to determine proper sustainable development indicators (SDI) to follow up and measure the impact of sustainable development. NESDB Moved Poverty Line (from page 1) By... Nisawan Pitchdamrong Development Evaluation and Communication Office Sustainable Development of Thailand: 3 Balancing Aspects Aimed at 4 Goals The sustainable development of Thailand has its roots in the çphilosophy of sufficient economyé which stresses development with balance in terms of society, economy and environment in the sense that the development of the three aspects has to be interrelated and lead to mutual benefits. A countryûs economic competitiveness can be promoted with the awareness that the natural resources have to be used carefully so that the present generation and the next can have a share in the resources that are the heritage of every citizen of that country. Four aims of development have been set up as shown in Table 1. Table 1: Four Aims of Sustainable Development of Thailand 1. Quality This aim is to improve the quality of life of Thai people so that they can learn by themselves and improve their potential. In addition, Thailand has to provide quality products and services according to its potential by taking advantage of competition and productivity in line with the environment 3. Fair distribution This aim is to equip the Thai citizen with equal rights in terms of gender, occupation, income, education, basic needs and basic social services. In addition, they can gain access to natural resources allotted fairly for them by taking the needs of the present generation and that of the next into consideration census and the comparative prices of food based on the 2002 year base. In addition, the concepts about the establishment of the food poverty line have been adjusted in line with universal theories especially the application of the concept that the standard of living varies according to region and society. The non-food categories are classified into 9 categories: clothing, accommodation, fuel and lighting, household appliances, medicine and medical bills, personal expenses, transportation, communication expense and education. The size of the family which can save expense per head is also taken into consideration when calculating the 10 products which are food and the 9 non-food categories. 4 Development News Bulletin Source: The Office of the National Economic and Social Development Board 2. Stability and Adjustment This aim is to expand the economy with stability by providing immunity to economy and society. In so doing, the limitations and capacity of natural resources have to be taken into consideration. A self-contained economic foundation management has to be set up. A wide range of indigenous products has to be available and the countryûs unique culture and identity has to be preserved. 4. Good governance This aim is to provide equal opportunity for everyone to receive information and actively take part in making decisions about public policies through political institutes or social institutions. The First Set of Sustainable Development Indicators of Thailand To achieve the aforementioned aims, components making up the development plans for each aspect have to be determined. The NESDB has compiled sustainable development indicators and organized a brainstorming session so that authorities, experts and related agencies can comment on those indicators. Eventually, 37 indicators have been approved; however, some do not work well because their information background has not been updated or has not been collected before. Consequently, only 23 workable indicators have been chosen to evaluate the development of each aspect as shown in Table 2. 1 This article is adapted from çproject of Sustainable Development Indicators of Thailand (full report)é, the NESDB, Thailand Environment Institute and the Kenan Institute Asia, September 2004.

5 Table 2: Components and Sustainable Development Indicators of Thailand Components Indicators The economic aspect refers to the continued and stable development of the countryûs economy without destroying the environment in the long run. This development has to benefit the majority of the country. 1. Quality development This refers to the effective manufacturing of products in line with the potential manufacturing of the country and the market needs. The effective production factors have to be used including proper production plans and proper consumption which do not destroy the environment. 2. Stable development This refers to stable domestic and international economic systems. The country has to be able to depend on itself and has an economic immunity against changes. The economic growth does not destroy the environment in the long run. 3. Wealth distribution This refers to an equal access to economic activities, production factors and infrastructure provided by the government. This will lead to a narrower gap of income and equal wealth distribution. 1) Total Factor Productivity (TFP) 2) The use of energy per GDP 3) The use of renewable energy 4) Waste recycling 5) The whole unemployment rate 6) The proportion of public debts per GDP 7) The current account per GDP 8) The coefficient of income distribution 9) The result of solutions of poverty problems The social aspect refers to the development focusing on quality society and quality people who can adjust themselves to changes and lead a life that does not destroy the natural resources and the environment. They have security in life and are able to apply social capital and natural resource capital to the utmost. In addition, they participate in making decisions under good governance which aims to create a strong, healthy and sustainable society. 1. Potential development and adjustment in the knowledge-based society This refers to the social development at both individual and organizational levels so that they can acquire more knowledge, develop occupational skills and manage things by themselves in a knowledge-based society which supports sustainable development. 2. Development of quality of life and security in life This refers to improvement of the quality of life and provision of proper environment to live in. Thai people feel secure in their life and property. They are also healthy and can gain access to the social protection system. 3. Creation of value, knowledge and culture leading to social immunity This refers to the fact that Thai society has to put the emphasis on being economical, making worthwhile use of natural resources and applying Indigenous knowledge to their daily life. Furthermore, Thai people have to preserve their way of life, culture and arts. 4. Equality and participation This refers to the fact that Thai people are equal in terms of gender, education, career, welfare, and rights under the same laws and orders. They have a chance to participate in social activities such as politics. They can gain access to information and participate in making decision about public issues. 10) The average year of education 11) The result of learning 12) The average age when first born 13) The health of the population 14) The security in life and property 15) Participation indicator 16) Corruption indicator The environmental aspect refers to the effective management of natural resources and environment to promote a balance between the use of natural resources for economic purposes and their preservation for future use. This also includes providing opportunity and participation in dealing with natural resources and environment. 1. Preservation This refers to the effective use, the protection and the management of natural resources in terms of physical and biological levels so that the resources can yield the utmost benefits for the present generation and the next. This use must not upset the ecological system. 2. Good environment This refers to the preservation of a good environment to sustain a good quality of life. Pollution of any kind should be dealt with and measures to prevent pollution resulting from production and consumption should be set up. 3. Participation and distribution of the use of natural resources This refers to the fact that every citizen receives fair distribution of natural resources and benefits from natural resource development. Thai people also have a chance to determine plans and projects to deal with natural resources effectively so that they have a good quality of life. Source: The NESDB 17) The proportion of forest areas and the whole area of the country 18) The proportion of mangrove areas and the target areas 19) The amount of economic aquatic life caught within 3 kilometers of the coast of Thailand 20) The use of aquatic per its existing amount 21) The proportion of water sources with good quality and the whole water sources 22) The quality of air in major cities which is above the safety standard 23) The proper treatment of hazardous wastes NESDB Afforests for the Queen On September 18, 2004, Mr. Chakramon Phasukavanich, Secretary-General of the NESDB, led its administration and staff to afforest in the mangrove area near Asokaram Temple in Samut Prakarn. The NESDB conducted this activity to commemorate the 6 th cycle birthday of Her Majesty the Queen. International Macroeconomic Forecasters Conference Mr. Tanong Pitttaya, Chairman of the NESDB Board, presided over the çinternational Macroeconomic Forecasters Conferenceé to exchange ideas and create a network of macroeconomic forecasters in Asia. The conference was held at the Four Season Hotel, Bangkok during August 26-27, Study Market of Agricultural Products to Keep up with Development and Stabilize their Prices Miss Wilaiporn Liwgasemsarn, Deputy Secretary- General of the NESDB, presided over a seminar, Keeping Pace With Development of Thai Agricultural Products, under the project entitled ça Study of Policy of Agricultural Product Marketing and the Government Role in Stabilizing the Products in Thailand.é The seminar was organized on September 22, 2004 at the Siam City Hotel. NESDB Welcomed Ambassadors from Malaysia On September 6, 2004, Mr. Arkhom Termpittayapaisith, Senior Advisor in Policy and Plan of the NESDB, welcomed ambassadors from Malaysia on the occasion of visiting the NESDB and attending the briefing about the economic development of Thailand. (The next issue will deal with the current sustainable development and guidelines for developing sustainable development) Development News Bulletin 5

6 Special Report on Development Strategies Ayeyawady-Chao Phraya-Mekong Economic During the past decade, Thailand has established an economic relationship with its neighboring countries both bilaterally and multilaterally under such cooperation frameworks as the Greater Mekong Subregion Economic Cooperation Program (GMS), the Emerald Triangle and the Mekong Ganga Cooperation (MGC) to promote economic development, solve poverty problems and boost competitiveness by enhancing both hardware and software development. Such cooperations have led to an increase in foreign investment. In addition, at present the member countries have a closer relationship with each other especially in terms of infrastructure network; however, the existing levels of cooperation are not enough to stimulate the economies of the member countries to attract a lot of investment. The member countries, therefore, have to work more closely to achieve such goals. Problems The varied levels of social development and the economic differences between the member countries pose problems and limitations. For example, Thailand has an economy ten times as big as the economies of Cambodia, Laos and Myanmar and this causes problems about labor movement, drugs and illegal products along the borders. These problems affect relationships and development. Reduction of economic gap and establishment of internal strength To solve such problems, Ayeyawady-Chao Phraya- Mekong Economic Cooperation Strategy (ACMECS) have been established. Such Cooperation focuses on developing sister cities to be the bases of industry, trade and tourism for Thailand and its neighboring countries. An industry which is heavily dependent on labor and raw materials is to be relocated to Thailandûs neighboring countries to promote mutual benefits. A production base along the border has to be established since there is a need for the exchange of production factors, resulting in a win-win situation, more employment and less labor migration. It can be seen that this cooperation is a major tool for reducing the economic gap and social problems. This cooperation also plays a role in boosting competitiveness and bargaining power as well as promoting development in terms of production, trade and investment. The 3 Cs which help strengthen the country members are: Connection - the link between the infrastructure system and common economic Activities Community - the development of community centers along the border so that they can be new production bases and can attract more investment, trade and tourism in addition to developing their surroundings Competitive - the promotion of investment and the development of community and economic areas to be able to compete with other countries in terms of trade, agriculture and industry The importance of ACMECS and the expected results Realizing the importance of this cooperation and the kinship relationship with the neighboring countries, Mr. Thaksin Shinawatra, Prime Minister, declared during the summit meeting that Thailand is willing to cooperate with the neighboring countries to create more jobs and more income for them. This will reduce the development gap and Thailand and its neighbors can grow at the same pace. Thailand will help promote investment in those countries, provide academic and financial assistance and help develop their human resource. The ACMECS will benefit the country members in the following areas. Increasing trade volume and boosting competitiveness in terms of agricultural production 6 Development News Bulletin

7 Cooperation Strategy By... Sumitta Chongplapholkul Spatial Development Office Government - Private Sectors Join Hands in Developing Economy in the Mekong Region Relocating the production bases of agriculture and industry from Thailand to its neighboring countries Creating more jobs, increasing income and reducing the development gap among the four countries Operational mechanism International mechanism. The development plans have to be put forward at every level of meeting by the Ministry of Foreign Affairs of each country member which acts as a coordinator. Internal mechanism. The planning units have to work with other related agencies to map out plans / projects to achieve the goals Conditions Cooperation strategies. A precise cooperation framework is a major condition leading to the success of the development. Each sector has to work in the same direction to reduce problems about the development gap and strengthen the member countries. In addition, the members can adjust themselves effectively to the changing world. Coordinating mechanism at international level and at national level. This will create a closer development network among agencies in each member country and between ACMECS country members. Strategic planning and promotion of the potential of planning unit. The planning unit of the ACMECS, equipped with competent personnel, has to be able to determine strategies / plans / projects by taking the culture of each member country into consideration so that they can be effective and in line with the master plans. On September , the NESDB organized the High Level Public and Private Consultation Meeting (PPCM) at the Siam Intercontinental Hotel. It was a meeting on economic cooperation between 6 countries in the Meong region. The meeting was presided over by Mr. Suwat Lippatapanlop, Deputy Prime Minister. Mr. Somchet Taeracoop, Deputy Secretary- General of the NESDB, said that the main objective of this meeting was to create a cooperation network between the public and the private sectors so that the government can direct the development in line with the needs of the investors, resulting in more investment in tourism, trade and services in the region. Besides promoting more investment, the governments of the six countries participating in this meeting agreed to respond to the requirements of the public sector as follows. Cooperation. A high level public and private consultation meeting should be held regularly to promote cooperation in planning and solving problems. (see page 8) Development News Bulletin 7

8 For Official Use of Office of the National Economic and Social Development Board It not delivered, please return to the Development Evaluation and Communication Office Office of the National Economic and Social Development Board, 962 Krung Kasem Road, Bangkok Tel Facsimile : , Internet : address:dsid@nesdb.go.th Government - Private Sectors (from page 7) Plans and rules promoting investment. The member countries have to adjust their plans and revise their rules to be standardized and transparent. The members are willing to do as requested and add them to the planning of GMS. Standardization for agricultural and industrial products. To promote investment in terms of agriculture which is the main income of the GMS member countries, the public and the private sectors of the member countries will cooperate to develop food safety standards from the cultivation, harvest and food production to meet the needs of the market and of their trade partners. The products will come under the GMS Brand. Removal of trade sanction measures which are not tax. The measures cover 6 areas: infrastructure, agriculture, industry and investment, tourism and service, facilities about trade and investment and development of society and human resource. Access to funds. The government and international financial organizations are willing to promote investment in terms of infrastructure and production especially agricultural production. The private sector which is ready to invest in terms of trade can do it right away while farmers who are not familiar with trading or a company which is not sure about the turnover at the beginning can ask for special promotion from the government or a financial institution to gain more access to funds and reduce investment risks at the beginning. Dissemination, public relations and access to information. Areas, investment promotion privileges and marketing information should be available for investors so that they can make a better decision on their investment. GMS visa. This is a way of promoting tourism in the member countries. He added that Thailand has the potential to determine plans for attracting foreign investment since the public and the private sectors are actively joining hands to achieve such goals and Thailand will also provide assistance to its neighboring countries. This meeting will strengthen the cooperation between the public and the private sectors, encourage more foreign investment and increase Thailandûs competitiveness.