Strategic Review of Thailand s International Development Cooperation. Report for United Nations Joint Team in International Cooperation

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1 Strategic Review of Thailand s International Development Cooperation Report for United Nations Joint Team in International Cooperation Mark Miller and Werapong Prapha 8/19/2013

2 Contents List of Acronyms Introduction Setting the Scene Objective and methodology Defining Thailand s Approach to International Development Policy Analysis Overarching Government Policies International Cooperation Strategies Strategic Framework for International Development Cooperation Conclusions and recommendations Analysis of Institutional Arrangements for Working with External Partners Bilateral Cooperation Regional and International Cooperation Frameworks International Organisations Partnerships with Domestic Stakeholders Recommendations: Institutional Analysis Coordination of Thailand s Development Cooperation Information Management Monitoring and Evaluation Development of Organisational Capabilities and Staff Development Financing Analysis Official Development Assistance Other external capital flows The National Budget and International Development Conclusions and Recommendations References Annex 1: List of Key Interviewees Annex 2: Participants in Workshop on Development Cooperation, 20 June

3 List of Acronyms ADB Asian Development Bank ASEAN Association of Southeast Asian Nations BOT Bank of Thailand CLMV countries Cambodia, Lao PDR, Myanmar and Vietnam EGAT Electricity Generating Authority of Thailand EXIM bank Export-Import Bank of Thailand GDP Gross Domestic Products GIZ Deutche Gesellschaft fur Internationale Zusammenarbeit IDC International Development Cooperation IOs International Organisations JICA Japan International Co-operation Agency KFW KfW Entwicklungsbank (the German development bank) LIC Lower Income Country MDGs Millennium Development Goals MIC Middle income country MOA Ministry of Agriculture MOD Ministry of Defence MOFA Ministry of Foreign Affairs MOI Ministry of Interior MOL Ministry of Labour MONRE Ministry of Natural Resources and Environment MOPH Ministry of Public Health MOT Ministry of Transport NEDA Neighbouring Countries Economic Development Cooperation Agency NESDB National Economic and Social Development Board NESDP National Economic and Social Development Plan NGO Non-governmental Organisation NHSO National Health Security Office ODA Official Development Assistance ODI Overseas Development Institute OECD Organisation for Economic Cooperation and Development OECD-DAC OECD Development Assistance Committee OHEC Office of Higher Education Commission TICA Thailand International Development Cooperation Agency UNDP United Nations Development Programme UNESCAP United Nations Economic and Social Commission for Asia and the Pacific UNESCO United Nations Educational, Scientific and Cultural Organisation UNFPA United Nations Population Fund UNJT-IC UN Joint Team on International Co-operation UNPAF United Nations Partnership Framework ( ) 3

4 EXECUTIVE SUMMARY This strategic review offers a timely opportunity to look at whether Thailand s existing approach to international development cooperation is meeting the evolving development needs of both Thailand and its partners. In order to do this, the strategic review examines Thailand s development policy, the institutions in place to implement that policy and also the financing that is available for its implementation. 1) Policy Analysis The Royal Thai Government has two overarching statements of national policy: the Policy Statement of the Council of Ministers and the 11 th National Economic and Social Development Plan. Both of these documents outline a number of areas where international cooperation will be used to meet Thailand s own development needs, including infrastructure, trade, green growth, foreign policy, security and human capital development. At the sector level, a number of ministries and agencies have also developed strategies on how international cooperation can contribute towards the achievement of their specific sector policy objectives. TICA has also developed a draft strategic framework on how international cooperation strategies can be used to more effectively contribute to development. Many of the strategies outlined are in keeping with latest international thinking on effective development cooperation. Bilaterally, it stresses that its support for development should be demand-led and based on principles of partnership. Reference is made to the Paris Declaration on Effective Aid. Multilaterally, it outlines Thailand s to serve as a regional knowledge hub and work as a problem solver to tackle regional and global problems. Thailand has also many partnerships agreements in place with other bilateral donors and multilateral organisation with whom Thailand provides triangular cooperation. There is not however, at present an overarching policy on international development which articulates Thailand s goals for development support in terms of the gains to socio-economic development of other countries. Different actors have different views on how they can best meet the interests of their partners and the interests of their citizens through their engagement in international development. Thailand s development cooperation is likely to be more effective if it articulates its own distinctive view on its clear goals for international development that can guide dialogue with partners on how it can address specific development challenges on a long-term sustained basis. It is also important that Thailand comes to common agreement on the parameters of how it wishes to define its contribution to development. Although views differ on what constitutes international development cooperation in Thailand, it is often understood in relatively narrow terms as aid that is provided to support countries less wealthy than Thailand. By focusing only on initiatives eligible to be recorded as aid, there is a risk that the government overlooks other international cooperation strategies that do not necessarily require the transfer of resources, but can serve to achieve its objectives on international development. This might include 4

5 influencing policy in partner countries based on Thailand s own knowledge of development, building regional consensus on development issues or facilitating knowledge exchange. Given Thailand s likely financial constraints in providing aid, these may be relatively cost effective alternatives to influencing international development. Thailand also risks underestimating its contribution to development in the region by understanding international development cooperation solely in terms of the size of aid provided. Both the public and private sectors in Thailand are already playing a significant role in the region s development through a much broader range of mechanisms, both financial (e.g. foreign investment and remittance flows) and non-financial (e.g. removal of tariffs for LDC imports) 2) Institutional Arrangements for Working with External Partners Bilateral Cooperation. Demands for Thailand s bilateral support emerge from a wide range of institutions. While this multi-layered relationship can potentially be a great strength in building strong relationships, there are very real risks that if support is uncoordinated that demands for cooperation may not be aligned to Thailand s capacity to effectively provide such support. Where support is uncoordinated, there is also a risk that the number of projects and areas of cooperation proliferates. Effective bilateral technical cooperation also depends upon long-term strategic engagement and planning. While for certain countries, technical cooperation might reasonably serve primarily as a tool of diplomacy, for key strategic partners there should be clear strategies in place as to how technical cooperation will meet the capacity needs of partners. Cooperation frameworks for policy advocacy. Cooperation frameworks are seen as an opportunity for Thailand to advocate and foster consensus on certain policy goals. As part of the ASEAN cooperation framework, for example, agreements will be put in place on trade liberalization policy, on financial integration and the movement of labour. At the international level, the Thai government is working closely with UNESCO in the education sector to promote Education for All initiative. The effective use of cooperation framework depends upon having clearly articulated policy positions in line with the domestic policy agenda. Cooperation frameworks for knowledge exchange. Thailand is actively seeking to promote itself as a regional knowledge hub. If these ambitions are to gain support and recognition in an international development context, there is a need to understand what might be some of the skills and knowledge gaps constraining development in the region; what existing mechanism are in place to support regional knowledge exchange; where Thailand has the capacity, personnel and facilities to fill those gaps; what the international development community has learnt about effective peer-to-peer learning. International Organisations. Increasingly Thailand is partnering with international organisations in triangular frameworks to supplement the financial contributions of these organisations with its technical know-how and knowledge to share on its development successes and challenges. There are a number of examples of where Thailand is actively promoting its own goals for regional development and leveraging the resources of international organisations (both financial and technical) to support the achievements of these goals. At present, such initiatives are isolated and so there is a need to share learning of how such initiatives can be set up effectively. As demand for triangular cooperation grows, there may be 5

6 benefits in the government reviewing the strategic alignment of partners with Thailand s own international development objectives. Domestic Partnerships. Strengthening partnerships between government and other domestic stakeholders is viewed by the government as a key strategy to promote development. There are a number of existing examples where government has partnered with domestic organisations, for example national NGOs or private consultancy firms, to effectively promote its development cooperation agenda. Domestic development partners may also have specific skills that leave them better placed to provide technical support than the government. Institutional Arrangements for Improved Ways of Working within Government Coordination of high-level development policy. It the government is to a present a more consistent government-wide approach to development, there may be benefits in appointing a cross-government committee to advise on the planning of international development policy and its ongoing implementation. This could be done through a new committee or building it into the mandate of an existing committee. Coordination of development finance and technical cooperation. At a country level, Thailand is not currently able to present and overall package of support being provided for development. By improving the exchange of information between NEDA, EXIM bank and TICA of planned aid commitments, the government would be better placed to present a unified package of support to country partners. Inter-ministerial Coordination. There is a recognition that international cooperation could be made considerably more effective by ensuring that the efforts of individual departments within ministries are better coordinated. The Ministry of Public Health has set up a committee on international cooperation with Directors General present from each department that could serve as a useful model. This type of committee have been used as a means to integrate strategies, share information and identify where greater value can be added through department working together. These committees are supported by bureaus for international cooperation acting as a secretariat. Recording Official Development Assistance (ODA). There is a perception within line agencies that existing reporting on ODA is primarily for external stakeholders rather than to inform government development policy. This impression is reinforced by the difficulty ministries face in accessing timely information. There is also a lack of clarity and agreement on what should be recorded as ODA. Focusing information management solely on financial contributions has the potential to underestimate Thailand s contribution to technical cooperation; as much of the support that Thailand provides for development cooperation is not directly financed by the Thai government. Further, the size of financing of activities does not necessarily equate to the impact those activities have and so consideration should be given recording outputs as well as inputs. The processes for recording ODA could also be clarified both between ministries and within ministries. Development Cooperation Learning and Knowledge Management. From the interviews conducted, it is clear that much experiential knowledge of international development cooperation exist, but no formal mechanisms with which to record and share that knowledge are available. 6

7 Monitoring and Evaluation. Similarly, TICA s strategic framework has emphasised the importance of putting in place monitoring and evaluation systems. While some monitoring systems are in place for investment projects financed through concessional loans, no formal mechanisms exist for the systematic capture of evaluation of technical cooperation programmes. 3) Financing Analysis Official Development Assistance (ODA) as a percentage of GDP is low and declining: in 2012, it was recorded as THB1.1 billion (USD37 million equivalent) which is approximately 0.01% of GDP. As a proportion, this is lower than certain middle-income countries (for example China and India), but consistent or higher than others (for example Malaysia, Argentina and Chile). In 2011, 42% was channelled towards international organisations, 31% for concessional loans and grants for infrastructure projects and 26% for technical cooperation. Support for technical cooperation crosses a wide number of sectors, but a larger share is utilized in social sectors with education, health and social development combined accounting for 48% of the technical cooperation funds. Lao PDR has received the largest share of bilateral funds as a result of continued support from NEDA for infrastructure projects. Foreign direct investment and remittance flows to Thailand s neighbours are considerably greater than ODA. As of 2011, Lao, Cambodia, Myanmar and Viet Nam received an estimated USD1,898 million in foreign direct investment, USD 394 million in remittance flows and USD 21 million in ODA. Government policies that affect the size and quality of foreign investment can influence foreign job creation and government revenues. Labour and migration policies that affect remittance flows can also affect household incomes in recipient countries. The national budget supports international development cooperation both through investments it provides to institutions such as NEDA and TICA responsible for administering a large part of the government s ODA, although there is no dedicated programme in the budget on international development cooperation as such. However, the budget does have a number of strategic priorities such as mobilizing foreign policy and international relations, the promotion of ASEAN integration and promoting regional transport and information connectivity, where domestic investments are part of efforts to support regional and international development with mutual benefits for both Thailand and its partners. 4) Key Recommendations Recommendations for setting the overall strategic direction of development cooperation It is recommended that the Thai government develops a master-plan that articulates a common, government position on what its objectives are in the field of international development Parameters should be agreed on what tools it wishes to consider with regard to the achievement of the goals set out in the master plan. Consideration should be given to looking beyond aid instruments. 7

8 The master-plan should serve as a guide to support the prioritisation of technical cooperation in fewer, larger programmes. The master-plan should then act as basis for o Developing sector-based strategic plans in key priority sectors o Developing country strategies for priority countries that outline opportunities where Thailand s own international development strategy is aligned to country needs. o Reviewing the alignment of international and domestic partners and Thailand s own strategy to identify priority partners for supporting the achievement of the development goals. A situation analysis could also be undertaken that reviews how Thailand s ambitions to be a knowledge hub could address specific sector and country development priorities and the potential partners to support those ambitions. Recommendations for institutional structures and coordination Consideration should be given to forming a cross-ministerial grouping to oversee the development and implementation of a cross-government international development policy. This could involve creating a new commission or building into the mandates of existing relevant committees (e.g. the Economic and Technical Cooperation Committee). Large ministries would also benefit from similar commissions in order to support inter-ministerial policy coordination. At a country-level, mechanisms could be put in place to better coordinate country strategies and plans for key partners. If TICA is to ensure that proposed technical cooperation is aligned with the strategic priorities of ministries, then consideration should be given to identifying certain sector focal points who can liaise with relevant agencies. Recommendations for organisational capabilities and capacity There are a number of systems improvements that could be put in place relatively easily that would support improved effectiveness of existing programming. These include: Information management Information should be exchanged on planned support for development cooperation from key agencies (e.g. NEDA, OHEC) as well as recording ODA retrospectively. This would lead to improved coordination and also enable Thailand to present a full package of coordinated support to partners. The information received from ministries should be organized in such a way that it shows crossgovernment support for technical cooperation in sector-based and country-based reports to better communicate internally and with partners a whole-of-government approach to development cooperation. 8

9 Clear guidance should be developed on those activities that should be recorded in the database on development cooperation. This guidance should encourage recording more comprehensive information on the cooperation activities undertaken including triangular cooperation arrangements financed by third parties. Focal points for information management should be identified in each ministry and a small number of specialists identified in TICA to support and train focal points on recording information. Monitoring and Evaluation It would be useful to develop an annual report that reviews the progress of major technicalcooperation projects against a number of agreed metrics (with country partners) that could then be used in conjunction with the development of future plans and strategies. Thailand should conduct some evaluations of its flagship technical cooperation programmes including, for example, the scholarship programme. Thailand should invite its priority partners to provide feedback on its overall country contributions at formally recorded annual review meetings. Knowledge management and training Much of the knowledge that the government has on development cooperation is not formally captured. It would be useful to put in formal structures to capture information on: o Latest international development trends, o The development needs of specific countries, o Guidelines on good practise for both bilateral and triangular cooperation Thailand should proactively use its international partners to support it to address its existing skills gaps in technical cooperation 9

10 1. Introduction 1.1 Setting the Scene Thailand has a relatively successful track record of development. As of 2011, the country reached Upper Middle Income Status with GNI almost doubling and considerable reductions in poverty levels over the previous ten years. 1 Although, Thailand continues to face some development challenges of its own, the Royal Thai Government has for a number of years been working to strengthen its support for international development. In particular, Thailand has a track-record of actively promoting the socio-economic development of the neighbouring CLMV countries (Cambodia, Lao PDR, Myanmar, Viet Nam) and technical cooperation has also extended to both the wider region and beyond. In order to administer this support, in 2004, a Royal Decree was promulgated to establish the Thailand International Development Cooperation Agency (TICA) under the Ministry of Foreign Affairs to promote international development cooperation between Thailand and its partners. In 2005 the Neighbouring Countries Economic Development Cooperation Agency (NEDA) was also established as an independent public body responsible for financing investment projects in neighbouring countries. The environment in which Thailand is offering support for international development has changed markedly since the establishment of these organisations. The CLMV countries to which Thailand has traditionally provided financial and technical support are rapidly growing. Although there are still large income differentials with these countries, incomes with Thailand are slowly converging. These countries are graduating from lower-income country (LICs) to middle income country (MICs) status and are increasingly looking to reduce their dependence on traditional aid financing. They have significantly greater choice for accessing financing and technical support than would have been the case even ten years ago. The development challenges these countries are facing is also evolving with significant drops in absolute poverty levels, but often growing inequality, environmental pressures and continued challenges in job creation. The rapidly changing needs of Thailand s partners require that the government reevaluates the relevance of its contributions to their development. The onset of the ASEAN Economic Community in 2015 will also see much closer political and economic integration in the region, bringing with it both development opportunities and risks. Traditional models of development cooperation that characterize rich countries providing resources to poor countries are seemingly less relevant to Thailand, who is positioned as a middle income country in a regional grouping with neighbours as diverse as Singapore and Myanmar. Thailand s policies on trade, investment, regional governance, technology, migration, defence and the environment will influence not only Thailand s development but also that of its regional partners. Threats to development including public health crises, environmental pressures, economic crises or security threats will often require trans-national responses See for example the Centre for Global Development s Commitment to Development Index that looks at how a range of policies affect countries beyond their borders 10

11 Increasingly, Thailand s contribution to development will not just be judged by the aid that it provides, but also how its policies help or impede addressing issues that cross national borders. The international landscape for development is also changing. Emerging donors are developing their own distinctive approaches to development that do not conform to traditional models. Traditional distinctions made between aid and other forms of commercial finance are viewed as redundant in this framework with commercial investment, grants and technical support often being bundled in a single package of support. 3 There is also growing appreciation of the value of south-south cooperation in human capital development: it is clear that countries value the practical experience of learning from countries, which have recently faced many of the same development challenges. Increasingly, many of the most pressing development challenges, such as climate change and tax evasion, are also recognised as global problems that require global responses. Many traditional bilateral donors and international organisations are being forced to re-evaluate their roles in this changing landscape. As international organisations reconsider their operations and approaches in the region, the demands on Thailand for technical cooperation and support are likely to grow. Without prioritisation, Thailand s own capacity to provide such assistance will become even more stretched. 1.2 Objective and methodology Given these trends, this strategic review offers a timely opportunity for the Thai government to reassess what Thailand s role on international development might be, as a middle-income country in a fast growing and changing region and how it can most effectively play that role. In order to do this, the analysis looks at five key research questions: How is Thailand s approach to international development defined? How is Thailand s policy on international development articulated in its policy framework? How can Thailand work more effectively with external partners to better serve the development needs of partner countries and Thailand? How can Thailand improve the internal institutional mechanisms for coordination, management of information and monitoring and evaluation of development cooperation? Is Thailand s development financing guided by existing policy and institutional responsibilities? The research for this report is based on a combination of sources including: 1. A series of interviews and discussions held with personnel from the Royal Thai Government (see Annex 1) 2. Comments and contributions at a workshop held on development cooperation (see Annex 2 for list of participants) 3. Available and relevant Royal Thai Government policy documents 4. Data compiled by TICA on official development assistance 5. Relevant international literature on effective development cooperation 3 ODI (2012) 11

12 2. Defining Thailand s Approach to International Development Different development actors have different perspectives on both the objectives of development cooperation (economic growth, human development, job creation etc.) as well as the processes and tools that best promote those objectives. For many years, the predominant focus of multilateral agencies and traditional bilateral donors has been on poverty reduction and the related achievement of the Millennium Development Goals. In order to achieve these objectives, these agencies have predominantly focused on the role of aid and how it can be used more effectively to achieve targeted goals (see for example the 2005 Paris Declaration on Aid Effectiveness). Many emerging donors are bringing their own distinctive approaches to development, both in terms of the motivation underpinning cooperation and also the tools of cooperation being used. For example, given its ongoing development needs, China recognizes as its primary responsibility to contribute to the development of its own population. The Government s White Paper on Development articulates first how they will use domestic and foreign policy to achieve their development goals, and second how its approach to cooperation will lead to mutual development benefits and prosperity of other countries. 4 China also focuses on a different set of instruments to achieve its goals. While many traditional donors have focused on the role of Official Development Assistance, the Chinese government would see commercially motivated market-based loans, technical support and grant money as an overall package of development cooperation. In this paradigm, terminology such as ODA and even international development cooperation would be deemed largely foreign concepts. These different perspectives on development are also reflected in the national institutional structures that oversee development. In China, where policy for international development is rooted in the national development strategy, overall oversight for development policy and financing is with the State Council, the highest policy authority. Given the strategy is focused primarily on supporting mutual growth and investment; development financing is largely administered by the Ministry of Commerce. This is in contrast to the United States and Australia for example, where development policy is administered by USAID and AusAID respectively whose names clearly suggest a strong focus on aid. Defining Thailand s own Development Model The draft strategic framework on International Development Cooperation of TICA (in keeping with its institutional alignment to the Ministry of Foreign Affairs) is predominantly focused on technical cooperation and aligned to goals on strengthening international relations. For example, the vision stresses the importance of international recognition from working as an effective development partner. The framework emphasizes an approach to development that looks in broad terms at how the 4 For example China should develop itself through upholding world peace and contribute to world peace through its own development. It should achieve development with its own efforts and by carrying out reform and innovation; at the same time, it should open itself to the outside and learn from other countries. It should seek mutual benefit and common development with other countries in keeping with the trend of economic globalization, and it should work together with other countries to build a harmonious world of durable peace and common prosperity. This is a path of scientific, independent, open, peaceful, cooperative and common development ( 12

13 government can use international cooperation strategies to promote mutual benefits for Thailand and other parties. The framework, for example, refers to Thailand s potential role as a knowledge hub as well as a problem solver for regional and international problems. It also stresses principles of horizontality and working with partners, rather than in terms of donor and recipient. For most parties interviewed in Thailand, international development cooperation was perceived in more narrow terms about providing technical assistance to improve social welfare in countries less wealthy than Thailand. International development cooperation (IDC) was perceived by many as distinct from international cooperation (IC) with IDC understood as benefitting poorer countries, while IC is understood to be about using international relations to promote benefits for Thailand. As such, during research, it was suggested by certain actors that they had resources available for promoting international cooperation, but not international development cooperation, which was deemed the responsibility of TICA. In contrast to the approach taken by China, for example, economic cooperation, is seen as enhancing Thailand s economic prospects, but is not perceived as development cooperation. Development is understood predominantly as a charitable transaction. The involvement of the private sector in development would be understood in terms of its corporate social responsibility, rather than its potential to create jobs through market-based foreign direct investment. Similarly, EXIM Bank, who support Thai companies to invest in neighbouring developing countries are not considered as part of Thailand s development model unlike in China or Korea. Underneath an umbrella of economic cooperation, NEDA s vision is to provide economic development cooperation. This is primarily done through the provision of concessional loans to neighbouring countries for infrastructure projects; however, technical assistance is also provided in relevant economic sectors including trade facilitation and infrastructure development. Figure 1: Thailand's existing development model High level foreign policy and international economic cooperation International Cooperation Economic Cooperation Cooperation strategies of line ministries that support international relations (e.g. OHEC s International Development Cooperation ( Technical Cooperation Economic Development Cooperation (Concessional Loans for Infrastructure) Cooperation strategies that support economic cooperation objectives (e.g. 13

14 Conclusions and Recommendations For Thailand to effectively influence the development of other countries, there needs to be a clear and unified position on Thailand s development model, in other words what Thailand is looking to achieve through its development cooperation and the tools being used to achieve those goals. At present in Thailand, it seems there is not a consistent understanding of the objectives of what development cooperation might be and how it should be defined. Given this lack of clarity, it would be useful for Thailand to develop a comprehensive master-plan on international development that articulates clearly Thailand s own distinctive model of how it is supporting international development and the benefits for both Thailand and partners. This should aim to provide a unified view that draws from existing overlapping strategies for economic cooperation, international cooperation and international development cooperation. While there are some emerging characteristic features of Thailand s approach (e.g. strengthening regional connectivity, positioning itself as a regional hub of learning etc.) more could be done to clearly outline why international development matters for Thailand and how it tends to support it. 14

15 3. Policy Analysis 3.1 Overarching Government Policies The Royal Thai Government has two overarching statements of policy, from which all government strategies are drawn: the 11 th National Economic and Social Development Plan prepared by the National Economic and Social Development Board (NESDB) and the Policy Statement of the Council of Ministers that is developed by the Office of the Prime Minister. These are considered in turn. a) The 11 th National Economic and Social Development Plan Thailand s own approach to development influences the development of other countries: most markedly that of its immediate neighbours, but also countries in the wider ASEAN region and beyond. Thailand s planned approach to national development is most recently articulated in the 11 th National Social and Economic Development Plan (NESDP), which runs from The development plan is based on six strategic pillars: o o o o o o Creating the just society Developing a lifelong learning society. Strengthening of the agricultural sector and security of food and energy. Restructuring the economy toward quality growth and sustainability. Creating regional connectivity for social and economic stability. Managing natural resources and the environment toward sustainability. Most obviously, the strategic pillar for the creation of regional connectivity is outward looking and has implications for both the development of Thailand, but also its neighbours in the region. Strategies for improving regional cooperation cut across a wide range of sectors (see Box 1) Box 1: Strategic pillars for improved connectivity require cooperation across a number of sectors Cooperation on infrastructure networks Develop connectivity in transport and logistics systems under regional cooperation frameworks. Cooperation on trade and investment Develop investment bases by improving competitiveness in the region. Accelerate utilization of free trade agreements currently in effect. Use Thailand as a business base for foreign investors in the Asian region Cooperation on green growth Promote constructive international cooperation to support economic growth in ethical and sustainable ways Cooperation on international governance 15

16 Constructively engage in regional and international cooperation frameworks to provide alternatives in foreign policies in the international arena. Support non-profit international organisations for regional development. Strengthen domestic development partners at the community level. Cooperation on human capital development Prepare for the ASEAN Economic Community by developing human resources in all economic sectors. Cooperation on international security, disaster management and public health Contribute to the international community s efforts to improve the quality of life by fighting against terrorism, international crimes, drug trafficking, natural disasters and epidemics. Cooperation on migration Create economic regional partnerships regarding human capital development and labour migration However, other strategic pillars in the 11th NESDP that are less evidently outward looking also have implications beyond Thailand s borders. A key component of Thailand s planned restructuring of its economy is to utilize science, technology, innovation and creativity. One example that is cited is that it is necessary to improve productivity in the agricultural sector and to enhance value creation through innovation and green production processes. Productivity gains and technological improvements in agriculture can affect both prices of agricultural products and agricultural processes outside of Thailand. In addition, Thailand s approach to managing natural resources and the environment toward sustainability can also affect the lives of the poorest in both the region and beyond. If Thailand is able to successfully implement its strategy to shift the development paradigm and redirect the country to a low carbon and environmentally friendly economy then Thailand s contribution to climate change to which the world s poorest are particularly vulnerable will be less marked. How Thailand uses its natural resources also affects regional environmental public goods, like the Mekong, and those whose livelihoods depend on these resources. a) The Policy Statement of the Council of Ministers The way in which Thailand cooperates with other countries, regional communities and international organisations affects Thailand s development and international development. An abridged version of Thailand s policy on Foreign Affairs and International Economic Cooperation is outlined in Box 2. 16

17 Box 2: Abridged version of Thailand s Foreign Policy as articulated in the Policy Statement to the National Assembly 1) Expedite the promotion and development of relations with neighbouring countries by enhancing cooperation between the public sector, private sector, people and the mass media in order to cultivate mutual understanding and instil closeness among all sectors which will lead to expanded cooperation in the areas of economics, trade, investment, tourism promotion, transportation 2) Create unity and promote cooperation among ASEAN countries in order to realize the goal of creating an ASEAN Community by 2015 in the economic, socio-cultural and security areas. 3) Take on a creative role and promote the national interest in international organisations to address all transnational issues that affect human security. 4) Strengthen cooperation and strategic partnership with countries, groups of countries and international organisations that play important roles in global affairs in order to boost confidence in Thailand, 5) Encourage people-to-people contacts with foreign countries, as well as promote a positive image and technical assistance with developing countries so that people, governments and the international community will have positive attitudes toward the Thai people and Thailand. 6) Promote public awareness and understanding of border issues and global changes that affect Thailand so as to forge consensus in the formulation and implementation of foreign policy. 7) Support People Diplomacy to safeguard the interests of Thai nationals, 8) Utilize regional connectivity within the ASEAN region and sub-regions in order to expand the economic base in terms of production and investment, 9) Coordinate the work of government agencies overseas in order to carry out foreign affairs efficiently, effectively and with high quality. 10) Promote close cooperation with Muslim countries and Islamic international organisations to create a correct understanding that Thailand is working on resolving the issue of the Southern Border Provinces, At the heart of Thailand s International Cooperation policy is a wish to increase Thailand s international standing in order to be better placed to meet the development needs of Thai society. For example, the Ministry of Foreign Affairs articulates its vision as: To serve as a leading organisation in enhancing Thailand s capacity to have a dignified international status, by playing an honourable and active role, in the field of political stability and security, economic and social development, and ensuring that Thai society can best benefit from globalization. 5 In addition, there are also a number of policy objectives in the government s stated economic policy that also emphasize the mutual benefits of closer economic integration. Relevant policy strategies are outlined in Box

18 Box 3: Examples of economic cooperation strategies that have development benefits beyond Thailand s borders Encourage expansion of Thai entrepreneurs investment in neighbouring countries that are able to supply labour and factors of production to bring forth economic prosperity for Thailand and the region Promote and expand integration in the areas of economics, trade, investment and finance to enhance mutual benefits under cooperative frameworks and international trade agreements Expedite the establishment of Special Economic Development Zones in areas with high potential, with particular attention given to border provinces, in order to promote trade, marketing, investment, employment and sourcing of raw materials from neighbouring countries, making full use of ASEAN s regional connectivity. 3.2 International Cooperation Strategies At the sector level, a number of public bodies are articulating how international cooperation strategies can contribute towards the achievement of the policy objectives set out in high-level overarching government policy documents. For example, the Bank of Thailand (BOT) has a clear strategy in place to work towards the achievement of improved financial integration, articulated as a priority in the Policy Statement of the Council of Ministers. One way the BOT is doing this is through actively promoting the presence of Thailand s commercial banking sector in the region. The main objectives of the Bank s assistance are to support Thai banks in opening branches overseas, to ensure policy compatibilities, and to support the co-development of the financial sector in neighbouring countries. These initiatives have clear benefits for Thailand, but also can potentially support financial inclusion. The BOT is also working with the Ministry of Finance to support Thailand s neighbours to access Thailand s capital markets. For example, Lao PDR issued bonds worth THB1.5bn to institutional investors in Thai capital markets for the first time in May While this initiative supports the development of Thailand s domestic bond market, it also provides a channel to intermediate regional savings for regional investments. The Ministry of Education is another good example of a line ministry with a clear direction on international cooperation. The Office of Higher Education Commission (OHEC) aims to provide internationalization and regionalization to Thailand s higher education. OHEC has a strong emphasis on building an educational hub in ASEAN and is pursuing an active role in international cooperation with other ASEAN countries to exchange and share knowledge about higher education quality and standards. The Ministry of Agriculture and Cooperatives (MOAC) has also prepared an international cooperation strategy with a view to supporting the achievement of Thailand s goal to be promoted as the Kitchen of the World both in terms of agricultural products it produces. The strategy came as a result of extensive consultation with various stakeholders, including strong involvement from the private sector. The vision of the strategy is to build confidence of Thai food and agricultural products and support international cooperation on agriculture for sustainable results. Under this vision, the MOAC highlights as one of their key strategies to develop strong international cooperation practices with other countries and international organisations. It also aims to support the exchange of knowledge and technical expertise between countries. 18

19 Common to all of these cooperation strategies are clear linkages to the national policy goals outlined in the overarching policy statements. Not all of these cooperation strategies will necessarily be of benefit to Thailand s development partners. There are however areas within these strategies where there are key areas of common interest and mutual benefits. For example, Lao s issuance of Thai Baht denominated debt has enabled the Lao government to diversify its debt holdings, while enabling Thailand to deepen its domestic bond market. The work of the Ministry of Education to promote Thailand as an educational hub also has clear potential benefits in terms of the development of human capital in the region. 3.3 Strategic Framework for International Development Cooperation a) TICA s strategic framework for technical cooperation TICA has developed a draft strategic framework for international development cooperation. In line with its institutional responsibilities, the framework focuses specifically on technical cooperation and how it can be used to build capacity in other countries. Many of the strategies outlined are in keeping with latest international thinking on effective development cooperation. Bilaterally, it stresses that its support for development should be demand-led and based on principles of partnership; reference is also made to the principles of the Paris Declaration on Effective Aid. Multilaterally, it outlines Thailand s to serve as a regional knowledge hub and work as a problem solver to tackle regional and global problems. Thailand has also many partnerships agreements in place with other bilateral donors and multilateral organisation with whom Thailand is working on triangular cooperation arrangements. The strategy notes that a key motivation for international development cooperation is to build Thailand s recognition on the international stage. This is consistent with high-level foreign policy, where technical assistance is viewed primarily in terms of the diplomatic benefits it can convey: [To] promote a positive image and technical assistance with developing countries so that people, governments and the international community will have positive attitudes toward the Thai people and Thailand (Policy 7.5) While soft diplomacy is an understandable objective of technical cooperation, shared by many donors, it does mean that technical assistance is not necessarily targeted to those who most need the support. The strategic framework recognizes that past cooperation has tended to focus on building the capabilities of public servants, but not necessarily local farmers for example. The strategic framework also notes that technical cooperation is not necessarily well-integrated with sector policies. Cooperation is seemingly often not targeted to meet national specific sector-based strategic goals such as addressing specific regional skills gaps that impede the Thai labour market; reducing risks of communicable diseases that cross borders; or promoting the interchange of academic knowledge within the ASEAN region. Where cooperation is not integrated with sector policy objectives, there is a risk of weak ownership of implementing agencies in line ministries, who feel that such activities are not part of their core mandate. 19

20 b) Strategy on the Provision of Grants and Loans for economic cooperation The provision of development finance is primarily seen as a tool to promote economic cooperation with Thailand s neighbours. It is largely perceived as being separate to the technical cooperation that Thailand provides. Thailand s development finance contributions have primarily focused on supporting the development of transport infrastructure in Thailand s neighbouring countries through the provision of concessional loans administered by NEDA. Support is targeted to those projects that strengthen connectivity with Thailand and its neighbours. Increasingly, NEDA is looking to finance projects that link Thailand and its neighbouring countries to the wider Asian region through strengthening regional transport corridors. EXIM Bank has also been involved in the intermittent financing of strategic infrastructure projects in the region. In 2008, they provided a loan to support financing of the construction of the Nam Theun II dam in Lao PDR. A substantial part of the electricity (995MW) generated through this plant is being exported to the Electricity Generating Authority of Thailand (EGAT) as part of a long-term power purchase agreement (PPA) signed in Under the agreement the Lao Government will earn $80m in the first 25 years. 6 Focusing the provision of development finance on infrastructure development is in keeping with a traditionally East-Asian approach to development financing. Japanese and Korean aid agencies have historically focused relatively more of their ODA on infrastructure sectors than bilateral aid agencies in Europe and the US. Similarly, China has focused much of its development cooperation on supporting the development of large-scale infrastructure projects. 3.4 Conclusions and recommendations Thailand has a clear high-level policy and a growing number of strategies at ministerial level on how international cooperation can meet Thailand s own goals on socio-economic development. It also has strategy documents in place that look at how technical cooperation and aid-finance can be used more effectively. There is not, however, at present an overarching policy on international development which articulates Thailand s goals in terms of the gains to socio-economic development of other countries. Thailand s development cooperation is likely to be more effective if there are clear goals that can guide ongoing engagement, both at a whole-of-government level and the sector level. As has been discussed, different actors have different views on how they can best meet the interests of their partners and the interests of their citizens through their engagement in international development. There would be benefit in articulating Thailand s own primary objectives