Thailand. Country Profile 2005

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1 Country Profile 2005 Thailand This Country Profile is a reference work, analysing the country s history, politics, infrastructure and economy. It is revised and updated annually. The Economist Intelligence Unit s Country Reports analyse current trends and provide a two-year forecast. The full publishing schedule for Country Profiles is now available on our website at The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom

2 The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where its latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London The Economist Intelligence Unit 15 Regent St London SW1Y 4LR United Kingdom Tel: (44.20) Fax: (44.20) london@eiu.com Website: New York The Economist Intelligence Unit The Economist Building 111 West 57th Street New York NY 10019, US Tel: (1.212) Fax: (1.212) newyork@eiu.com Hong Kong The Economist Intelligence Unit 60/F, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) Fax: (852) hongkong@eiu.com Electronic delivery This publication can be viewed by subscribing online at Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author s and the publisher s ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN Symbols for tables n/a means not available; means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

3 VIETNAM Chiang Rai MYANMAR Phayao LAOS ANDAMAN SEA Chiang Chieng Mai Lamphun Lampang Phrae Phumiphon Res. Mae Sot Khao Laem Res. Tak Nakhon Sawan Nam Chon Res. Yam R. Ping R. Nan Siri Kit Res. Uttaradit Phitsanulok Phetchabun Srinakarin Lopburi Res. Suphan Buri Saraburi Ayutthaya Kanchana Buri Nonthaburi Nakhon Pathom BANGKOK Ratcha Buri Samut Prakan Samut Chon Buri Sakhon Petchaburi Pattaya Hua Hin Prachuap Khiri Khan Udon Thani Ubol Ratana Res. Rayong Mekong R. THAILAND Khon Kaen Ko Chang Nakhon Ratchasima Chanthaburi Ko Kut Trat Nong Khai Sakon Nakon Mun R. Aranyaprathet Lam Pao Res. Mukdahan Kalasin Roi Et Chi R. Sisaket Surin Nakhon Phanom Meko n g R. CAMBODIA Ubon Ratchatani Khuraburi Ranong Isthmus of Kra GULF OF THAILAND Chumphon Ko Phangan Ko Samui Surat Thani VIETNAM Phangngaga Phuket Krabi Trang Ban Kantang 0 km miles ' The Economist Intelligence Unit Limited 2005 Ban Hat Yai Nakhon Si Thammarat Phatthalung Songkhla Yala Pattani MALAYSIA Narathiwat Main railway Main road International boundary Main airport Capital Major town Other town June 2005

4 Comparative economic indicators, 2004 Gross domestic product (US$ bn) Gross domestic product per head (US$ 000) South Korea Singapore Taiwan Hong Kong Indonesia South Korea Hong Kong Taiwan Thailand Malaysia Malaysia Thailand Singapore Indonesia Philippines Philippines Vietnam Vietnam Sources: Economist Intelligence Unit estimates; national sources Sources: Economist Intelligence Unit estimates; national sources. Gross domestic product (% change, year on year) Consumer prices (% change, year on year) Singapore Vietnam Hong Kong Indonesia Vietnam Philippines Malaysia South Korea Philippines Thailand Thailand Singapore Taiwan Taiwan Indonesia Malaysia South Korea Hong Kong Sources: Economist Intelligence Unit estimates; national sources Sources: Economist Intelligence Unit estimates; national sources. Country Profile The Economist Intelligence Unit Limited 2005

5 Thailand 1 Contents Thailand 3 Basic data 4 Politics 4 Political background 4 Recent political developments 8 Constitution, institutions and administration 10 Political forces 13 International relations and defence 16 Resources and infrastructure 16 Population 17 Education 18 Health 20 Natural resources and the environment 22 Transport, communications and the Internet 25 Energy provision 26 The economy 26 Economic structure 28 Economic policy 31 Economic performance 34 Regional trends 34 Economic sectors 34 Agriculture 37 Mining and semi-processing 37 Manufacturing 40 Construction 40 Financial services 43 Other services 44 The external sector 44 Trade in goods 46 Invisibles and the current account 47 Capital flows and foreign debt 48 Foreign reserves and the exchange rate 49 Regional overview 49 Membership of organisations 52 Appendices 52 Sources of information 53 Reference tables 53 Population 53 Labour force 53 Transport statistics 54 Central government finances The Economist Intelligence Unit Limited Country Profile 2005

6 2 Thailand 54 Interest rates 54 Money supply 55 Gross domestic product 55 Nominal gross domestic product by expenditure 56 Real gross domestic product by expenditure 56 Gross domestic product by sector 56 Prices and earnings 57 Crop production 57 Mineral production 57 Manufacturing production 58 Construction statistics 58 Banking statistics 58 Stockmarket indicators 58 Principal exports and imports 59 Main trading partners 59 Balance of payments, IMF series 60 External debt, World Bank series 60 Foreign reserves 60 Exchange rates Country Profile The Economist Intelligence Unit Limited 2005

7 Thailand 3 Thailand Basic data Total area Population Main provinces 514,000 sq km, of which 38% cultivated and 20% forest 65.24m (end-2004) Population in m (local administration departments December 2000) Bangkok (Metropolitan; capital) 5.68 Chiang Mai 1.59 Nakhon Ratchasima 2.54 Nakorn Srithammarat 1.52 Ubon Ratchathani 1.77 Udon Thani other Thai provinces have populations in excess of 1m Climate Weather in Bangkok (altitude 2 metres) Language Weights and measures Currency Time Fiscal year Public holidays 2004 Subtropical Hottest month, April, C; coldest month, December, C; driest months, January-March, no rain; wettest month in central and northern regions is September, with 305 mm average rainfall, and in the south is December, with 400 mm average rainfall Thai The metric system is officially used. For local dealings, traditional units are used: 1 pikul=60 kg 1 wah=2 metres 1 rai=1,600 sq metres 1 tang=20 litres 1 tical or baht (jeweller s measure)=15.24 grams 1 baht (Bt)=100 satang. Average exchange rates in 2004: Bt40.22:US$1; Bt73.8: 1; average exchange rates on May 25th 2005: Bt40:US$1; Bt73.3: 1 Seven hours ahead of GMT October 1st-September 30th January 1st; March 5th (Makhabuja regulated by Buddhist calendar); April 6th (Chakri Day); April 13th-15th (Songkran Festival); May 5th (Coronation Day); June 2nd (Visakhabuja); July 31st (Asalhabuja); August 1st (beginning of Buddhist Lent); August 12th (Mother s Day the queen s birthday); October 23rd (Chulalongkorn Day); December 5th (Father s Day the king s birthday); December 10th (Constitution Day); December 31st (New Year s Eve) The Economist Intelligence Unit Limited Country Profile 2005

8 4 Thailand Politics Thaksin forms a single-party government Thailand is a parliamentary democracy with a constitutional monarchy. The revered king, Bhumibol Adulyadej, has ensured a degree of political continuity, although there have been 17 military coups (the last in 1991) since the absolute monarchy was abolished in Civilian government was restored in 1973, but over the following three decades administrations tended to be short-lived and unstable. This changed in January 2001, when the newly formed Thai Rak Thai (TRT) party, under the leadership of a former telecommunications tycoon, Thaksin Shinawatra, won a resounding victory in the general election; Thaksin s government subsequently became the first administration to complete a four-year term. The TRT gained an even more impressive victory in the 2005 election, enabling it to form an unprecedented single-party government. Political background A unified kingdom Military governments rule from 1932 to 1973 The first unified Thai kingdom emerged in the 13th century at Sukhothai in the northern part of the Chao Phraya river basin. Subsequently the Thai state (called Siam until 1939) shifted down to the city of Ayutthaya, from which its hegemony extended southwards to Malaya and east into the Khmer empire. The capital was moved to its present site in Bangkok when the Burmese sacked Ayutthaya in Political conflict between the established monarchical order and new groups in society led to the establishment in 1932 of a constitutional monarchy, which still exists. Thailand is the only country in South-east Asia not to have been colonised by a European power. From the establishment of the constitutional monarchy until 1973, the country was ruled by a succession of military governments. Only in 1973 was the last of the military strongmen removed in a student-led uprising. Subsequent civilian governments, weakened by rivalry, were usually short-lived and almost invariably ended in military takeovers, mostly bloodless. Throughout this turbulent period the civilian bureaucracy and the king lent an element of stability to the system. During the second world war the Thai government initially formed an alliance with Japan, but switched its allegiance to the Western powers mid-way through the war. It has subsequently remained a close ally of the West. Recent political developments The last military coup took place in 1991 After 1973 socio-economic pressures that built up during the course of rapid economic growth changed this general pattern, and military involvement in government was limited to power-sharing with civilians. However, factionalism and corruption persisted, and eventually led to another military coup by the National Peacekeeping Council (NPC) in February Fresh elections were held in March 1992, and were narrowly won by a coalition of parties that had backed the NPC. When this coalition could not agree on a candidate for prime minister, the NPC installed the retiring army chief, General Suchinda Country Profile The Economist Intelligence Unit Limited 2005

9 Thailand 5 Kraprayoon. Public opposition to the appointment of an unelected military man ran deep, and thousands turned out in urban centres to protest. In May Suchinda s allies in the army and the police resorted to violence in an attempt to suppress the protests in the capital, Bangkok, resulting in many deaths. Unstable coalitions become the norm The Democrats are given another chance The TRT claims a resounding victory As a result of the king s intervention, Suchinda was forced to step down and a fresh election was held in September 1992, resulting in the formation of a coalition government of pro-democracy parties under the Democrat Party (DP) leader, Chuan Leekpai. The Chuan administration was severely weakened by policy indecision and constant faction-fighting between the five coalition partners. Corruption charges over a land reform programme forced Chuan to dissolve the House of Representatives (the lower house) in May The DP lost the subsequent election to the Chart Thai (CT) party under Banharn Silapa-archa. However, Banharn, a veteran rural power broker with a fortune made from public road concessions, was never a popular choice. In September 1996 he was forced to call an election when the six-party coalition split on the eve of a censure debate. The New Aspiration Party (NAP), led by a former general, Chavalit Yongchaiyudh, narrowly defeated Chuan s Democrats in the November 1996 election. Chavalit assembled another six-party coalition, but he was subsequently blamed for failing to prevent the collapse of the baht in July 1997 and for appearing indecisive in the face of the ensuing economic crisis. In November 1997 Chavalit was forced to step down. Chuan became prime minister for the second time in December 1997, replacing Chavalit and the NAP, with a shaky line-up of six parties in coalition and 12 defectors from a seventh party, Prachakorn Thai (PT). The ruling coalition increased its 20-seat majority in October 1998 by including Chart Pattana (CP), which controlled 51 seats in the lower house. Despite persistent infighting among the coalition partners, there was progress on political and legislative reform, but by 2000 the public was becoming weary of the slow recovery from the economic crisis and impatient with the government, which was seen as relatively uncorrupt but lacking in dynamism. Thaksin and his TRT party won a historic victory in January 2001 in the first general election under the new electoral laws. The TRT, formed less than two years earlier, mounted an aggressive populist campaign that captured the public s mood and won 248 seats in the 500-seat House of Representatives. In forming the TRT, Thaksin brought together many members of parliament (MPs) who were disillusioned with their original parties but who had cultivated political strongholds in their constituencies. The DP, the country s oldest political party and the TRT s nearest rival, won only 128 seats. The mediumsized parties NAP, CT and CP garnered only one-half of the seats that they had expected to win. The election was the first held under the auspices of the reformist 1997 constitution, which seems to discriminate against smaller parties. The small and medium-sized Thai parties are traditionally region-specific, and thus found it difficult to find the 100 candidates needed to satisfy the requirements of the party list. (Parties need to win at least 5% of the national vote to be allocated a party-list MP.) The Economist Intelligence Unit Limited Country Profile 2005

10 6 Thailand The Election Commission (EC) played an active role in attempting to reduce vote-buying and other fraudulent activities, and the 2001 election marked considerable progress in Thailand s move towards more transparent democratic processes. This election also offered the Thai public a policy agenda, rather than simply personalities, for the first time. Thaksin completes a controversial full term in office Violence in the south continues unabated The TRT wins an even bigger majority in the 2005 election By completing a full four-year term in office, Thaksin surpassed the achievements of all of his predecessors. Despite this increased political stability, Thaksin s first term in office was controversial. His first six months as prime minister were overshadowed by the possibility that he would be removed from his post: he faced charges of having made a false asset statement in 1997, while previously a government minister. In August 2001 the Constitution Court acquitted him, but with only eight out of 15 judges voting in his favour. Despite this initial uncertainty, the Thaksin administration progressively consolidated its hold on power, with covert efforts made to weaken the institutions empowered under the 1997 constitution to provide a robust checks-and-balances mechanism. Non-governmental organisations (NGOs) also criticised the Thaksin administration for its poor record in the human rights area, with Thaksin s war on drugs in 2003 resulting in the deaths of more than 2,000 people. One of the most serious problems that emerged during Thaksin s first term in office was the resumption of violence in the Muslim-dominated southernmost provinces, which have experienced sporadic unrest for decades. As yet it is still unclear who is perpetrating the violence, but the government blames Muslim separatists. The population in the affected region is largely of Malay origin and speaks a Malay-based dialect. The region is poor, unemployment is high, and there is deep resentment of centralised rule from Buddhist-dominated Bangkok. Between early 2004 and April 2005 more than 700 people were killed in the region. Thaksin s hardline approach to the insurgency has been blamed for fanning the flames, and the security force s heavy-handed tactics have been strongly criticised by a number of foreign governments and human rights groups. The most deadly incidents occurred in April 2004, when 34 people were killed in a local mosque in Pattani following a shoot-out between security forces and militants, and in October 2004, when a demonstration resulted in the deaths of 85 people (78 of whom died, mostly from suffocation, while being transported to a police station). In April 2005 Thaksin shifted his stance and pledged to adopt a softer approach to efforts to bring peace and unity to the troubled region. In a generally free and fair election in February 2005, the TRT recorded another resounding victory, winning 377 seats in the House of Representatives. Although the election outcome was widely expected, the margin of victory was in doubt. In the end the TRT fell short of its ambitious target of 400 seats, a result that would have prevented the parliamentary opposition from censuring government ministers, but its margin of victory was more than sufficient to enable it to form a single-party government, the first in modern Thailand. The TRT maintained its dominance in all regions except the south. The south has long been a stronghold of the Democrat Party (DP), which won 52 of the 54 Country Profile The Economist Intelligence Unit Limited 2005

11 Thailand 7 seats available. The DP fared poorly in every other region, however, and won a total of only 70 of the 400 constituency seats contested. Only two other parties are represented in parliament: Chart Thai (CT), which was part of the TRTled coalition in the previous parliamentary term, and the recently formed Mahachon. CT has 25 seats (18 constituency and seven party-list), and Mahachon has only two (both of which are constituency seats). Important recent events January-February 2001 In the general election the Thai Rak Thai (TRT) party scores an overwhelming victory over the incumbent Democrat Party (DP). Thaksin Shinawatra, the leader of the TRT, becomes prime minister at the head of a three-party coalition. August 2001 Thaksin is acquitted by the Constitution Court of making a false asset statement in January 2002 The New Aspiration Party (NAP) votes to merge with the TRT, and the TRT endorses its decision. October 2002 The government enacts bureaucratic reform bills in the first overhaul of the bureaucracy for decades. January 2003 Anti-Thai riots in Cambodia spark an angry response from the Thaksin government. Diplomatic relations are downgraded until the Cambodian government pays compensation for the damage done to the Thai embassy. February 2003 Thaksin launches his controversial anti-drug campaign. Over 2,000 people are dead after three months, but although the policy is criticised internationally, the Thai public is supportive. April 2003 A veteran politician, Banyat Bantadan, is elected as leader of the DP as Chuan Leekpai retires. December 2003 Thaksin declares victory in the anti-drug campaign, but King Bhumibol Adulyadej is particularly critical of the high death toll and the lack of detailed facts surrounding the deaths of individuals, most of whom were civilians, believed to have been involved in the drug trade. January 2004 Violence erupts in the Muslim-dominated southernmost provinces. Martial law is imposed, and the defence minister, Thammarak Isarangura na Ayudhaya, and the interior minister, Wanmuhamadnoor Matha, are both replaced for failing to contain the troubles. The Economist Intelligence Unit Limited Country Profile 2005

12 8 Thailand April 2004 In the worst outbreak of violence in the south so far, clashes between Thai security forces and armed militants in a number of districts across three provinces, Pattani, Yala and Songhkla, result in the deaths of more than 100 militants and a handful of soldiers. August 2004 The DP s candidate, Apirak Kosayodhin, secures an impressive victory in the election for the post of governor of the capital, Bangkok. The TRT does not field a candidate. The Chart Pattana (CP) party opts to dissolve and merge with the TRT. October 2004 A demonstration in Narathiwat province, in southern Thailand, results in the deaths of 85 people in an incident that provokes domestic and international outrage. January 2005 During the weeks following the December 26th 2004 tsunami disaster, Thaksin reiterates that the country does not need international financial aid. His leadership in the immediate aftermath of the tsunami receives widespread praise. February 2005 The TRT records a resounding victory in the general election and forms a singleparty government. March 2005 The DP s general assembly unanimously votes for Abhisit Vejjajiva as the party s new leader. April 2005 In an apparent spread of the violence in the south to areas outside the main three affected provinces, bombs explode in the airport at Hat Yai, Songkhla province, and at the city s branch of a French supermarket chain. A third blast occurs outside a hotel shortly afterwards. Only two people are killed, but scores more are injured. Constitution, institutions and administration A new constitution is enacted A new constitution, Thailand s 16th since 1932, was approved in September Its principal aims were to stamp out government corruption and to ensure a corruption-free and transparent electoral process. Under the new constitution, MPs must resign their parliamentary seats to take up cabinet posts, ministers are made to declare their assets before and after taking office, and the prime minister must be an elected MP. Candidates must now stand for election to the 200-member Senate (the upper house) instead of being appointed. The constitution stipulates 500 members of the lower house, of whom 400 are directly elected in single-seat constituencies nationwide and the remaining 100 (called party-list MPs) are apportioned to each political party in direct relation to the proportion of votes they receive. Any party receiving less than 5% of the popular vote loses its right to any party-list MPs. The aim is to ensure that MPs directly elected in constituencies concentrate on constituency and legislative work. Only MPs on the party list may be selected to join the cabinet. Country Profile The Economist Intelligence Unit Limited 2005

13 Thailand 9 The anti-graft agencies lose credibility Bureaucratic reform is enacted The central government remains powerful The new constitution created 11 constitutionally independent bodies in a bid to try to limit the scope for graft in politics and to create a democratic system of checks and balances. One of these bodies, the Election Commission (EC), was established to monitor elections to both the upper and lower houses. In the March 2000 Senate election, the EC ordered a rerun of the vote in nearly onehalf of the constituencies, but the law was subsequently amended to prevent this long-drawn-out process. Despite this change, there were numerous reruns of votes after the January 2001 poll, and 100 politicians were accused of fraud. The EC subsequently appeared to have lost its nerve, and only a handful of MPs were disqualified. The main reason for this leniency seems to be that the election law requires that the disqualification of alleged cheats by the commission be unanimous. The EC s reputation has not been the only one to suffer. The fact that Thaksin was acquitted by the Constitution Court has raised questions about its impartiality, particularly as it was acting on a recommendation to prosecute from the National Counter Corruption Commission (NCCC). Thaksin, unsurprisingly, has been heavily critical of the anti-graft agencies, and has attempted to undermine their credibility. Since taking office, Thaksin has compromised the impartiality of the agencies by appointing a number of his supporters to them. The 1997 constitution reduced the size of the cabinet from 48 members to 36 in a bid to increase efficiency. However, the Thaksin government s bureaucratic reform bills, enacted on October 3rd 2002, involved the creation of five new ministries (making a total of 20) and 35 new departments. The new ministries cover: natural resources and the environment, tourism and sport, information and communications technology, culture, and social development and human security. The public debt office and the state enterprise department now come under the Ministry of Finance. The reforms appear to run contrary to the decentralisation initiative outlined in the 1997 constitution and are instead increasing the power of the state sector. They were rushed through the legislature, raising questions about adequate preparation and research, and about the government s numerical strength, which allows it to push through controversial legislation without full debate. Thailand is a unitary state, and the situation is unlikely to change significantly, despite efforts under the new constitution to reduce Bangkok s authority. Following legal changes approved in early 1998, about 100 city and municipal councils were to get much of their revenue from sales and land taxes, instead of relying solely on central government grants. Until now, only the Bangkok Metropolitan Administration has had an adequate tax base. However, the Thaksin administration has since declared its reluctance to increase state funding of local administration organisations to 35% of the national budget by 2006, as required by the new law. It claims that allocations to local government would worsen budgetary constraints and that, although it recognises its obligations to decentralise, the current priority is economic recovery. The legal system is based on a civil-law system, with elements of common law. Thailand has not accepted the jurisdiction of the International Court of Justice. The Economist Intelligence Unit Limited Country Profile 2005

14 10 Thailand The judiciary is independent of the legislative and executive branches of government, and Supreme Court judges are appointed by the king. The government s human rights record is questionable Thailand s respect for human and civil rights has progressively improved since the political upheavals. Civil liberties are for the first time explicitly guaranteed under the new constitution. The lifting of a ban on the formation of unions by employees of state-owned enterprises has improved the country s labour rights. However, child labour remains a concern. Criticism of political parties, public figures and the government became increasingly widespread under the Chuan administration. The private-sector media are not officially controlled, although they practise some self-censorship, especially on issues related to the monarchy and national security. The Thaksin administration is attempting to curtail their freedom. Although segments of the printed press have retained their independence, the broadcasting media are now in effect under government control. Journalists have revealed repeated government interference in news reporting. Thaksin s powerful business connections enable him to threaten the withdrawal of vital advertising if the media become too critical. The Thaksin government has also been criticised by both domestic and international NGOs for failing to respect human rights. Specifically, the extrajudicial killings during the anti-drug campaign in 2003, the treatment of Burmese migrants and the militaristic response to the insurgency in the south of the country have been cited as examples of such abuse. The government s behaviour in these areas, however, has not been strongly condemned by the wider public. Political forces Parliamentary forces (no. of seats in House of Representatives won in Feb 2005 election) Total Constituency Party lista Thai Rak Thai (TRT) Democrat Party (DP) Chart Thai (CT) Mahachon a Elected by proportional representation. Source: Election Commission. The TRT rapidly emerges as the dominant political force During its first term in office, the TRT s parliamentary strength was bolstered by mergers with a number of other parties. In June 2001 the small Seritham Party merged with the TRT, giving the latter an additional 14 seats. In 2002 the National Aspiration Party, which had won 35 seats in the 2001 election, merged with the TRT, and later, in 2004, the CP also dissolved and merged with the TRT, bringing in 31 MPs. Following the 2005 election, the TRT controlled 377 seats in the lower house, enabling it to govern alone rather than merely being the dominant force in a government coalition as during the previous parliamentary term. As it now enjoys the support of more than one-half of the members of the House of Representatives and the Senate combined (which Country Profile The Economist Intelligence Unit Limited 2005

15 Thailand 11 contain 700 seats in total), the TRT government has the power to amend the constitution, possibly further limiting the powers of independent institutions, such as the NCCC. The DP becomes increasingly ineffectual Unionisation remains low The king is greatly revered The DP is the largest party in opposition, and has traditionally been a force to contend with when out of office. However, the size of the TRT s majority in the lower house and Thaksin s dominant and unifying role in the party mean there is little current scope for effective opposition. Throughout 2002 the DP was absorbed with its own leadership contest as the party leader, Chuan Leekpai, announced his retirement in April Banyat Bantadan, a veteran politician with a strong support base in the south of the country, was elected as the new leader shortly afterwards. However, he proved unable to match the charisma and dynamism of Thaksin, and after leading his party to a dismal performance in the 2005 election, Banyat tendered his resignation as leader. In March 2005 the party s general assembly unanimously voted for Abhisit Vejjajiva as the party s new head. Abhisit only narrowly lost the 2003 leadership contest to Banyat, with many party members at the time either claiming that Abhisit was too young to take the helm or being influenced by the party s former secretarygeneral, Sanan Kachornprasart, who backed Banyat strongly. Soon after receiving the party s backing in March, Abhisit pledged to overhaul the DP, to enable it to shed its dour image and present itself as a more potent force to counter the TRT. There is a low rate of unionisation in Thailand, at only 2-5% of the workforce, compared with 10% in both Japan and South Korea. Civil servants are not allowed to become members of trade unions. The most vocal (and the only influential) labour unions are in state-owned enterprises, some of which are scheduled for partial privatisation. The unions have been criticised for a lack of effective leadership and an inability to keep pace with economic changes. They are not a cohesive group, as most unions represent only the workers of individual companies, and there are 1,063 unions in total. Bhumibol Adulyadej, the revered king, is the ninth monarch of the 215-year-old Chakri dynasty. With the help of Queen Sirikit, he has spent much of the last half-century restoring the monarchy from its low ebb in the wake of the 1932 revolution. However, the king, who was born in 1927, has been undergoing treatment for heart and other health problems since the late 1980s, and his designated heir, Crown Prince Maha Vajiralongkorn, is considerably less popular than his father. The king has become more outspoken on political matters in recent years, and in particular since the Thaksin administration took power. In his annual birthday speeches, the king has shown subtle signs of displeasure at Thaksin s arrogance and growing abuse of power. The public s immense respect for the king makes the monarchy one of the few remaining institutions with the power to unseat the powerful TRT government in the last resort. The Economist Intelligence Unit Limited Country Profile 2005

16 12 Thailand Main political figures Thaksin Shinawatra The current prime minister and founder of the Thai Rak Thai (TRT) party, Thaksin made a personal fortune from government telecommunications concessions and won respect for his business acumen. Thaksin s previous political record was not impressive. As deputy prime minister in Chavalit Yongchaiyudh s government, he promised to solve the traffic problems of the capital, Bangkok, in six months, but resigned shortly afterwards, having achieved nothing. He has continued to make populist promises since coming to power in January 2001, and has been criticised for failing to consult the cabinet and for his inability to accept criticism. However, his government has implemented most of his policy promises, with the exception of the pledge to wipe out corruption. Since coming to power Thaksin has progressively tightened his grip on the domestic polity, and has aspirations to becoming a regional figurehead. Snoh Thienthong Formerly a member of the New Aspiration Party, Snoh led a group that defected, and is now the TRT s advisory committee chairman and a leading adviser to Thaksin. Snoh heads the Wang Nam Yen faction of the TRT. (The other prominent faction is led by Yaowapa Wongsawat, Thaksin s sister.) Snoh is a provincial power-broker based in the north-east of the country. He is one of the few survivors of the patriarchal type of politicians that dominated Thai politics from the 1980s to 2001, and has little sympathy for democratic ideals he opposed the writing of the reformist 1997 constitution. Although he has the money, seniority and experience to continue to wield power under the Thaksin administration, he appears to have lost some of his direct influence over TRT party affairs. Snoh made no secret of his disappointment at Thaksin s selection of appointees to key ministerial posts following the 2005 election. In particular, he hit out at Thaksin s offer to make him honorary chief whip; he served as chief government whip during the previous parliamentary term. Abhisit Vejjajiva After narrowly losing the Democrat Party (DP) leadership election to Banyat Bantadan in April 2003, Abhisit finally took control of the party in March 2005 following Banyat s resignation. He differs from the old school of Thai politicians in that he is Oxford-educated, young, and professes a fondness for rock groups. He describes himself as a professional politician, and believes that information technology is a key force for political reform (in the sense that the more people know, the less politicians can hide from them). Abhisit probably represents the DP s best chance of dislodging Thaksin from power. International relations and defence Military forces, 2004 Personnel (no.) 514,200 Active 314,200 Reserves 200,000 Source: International Institute for Strategic Studies, The Military Balance, 2004/05. Country Profile The Economist Intelligence Unit Limited 2005

17 Thailand 13 Modernisation of the military begins in 1992 Thaksin appoints close allies in the military reshuffle The defence budget is cut Thailand s alignment with the West has faltered at times The influence of the armed forces in Thai political affairs has decreased dramatically since their unpopular seizure of power in The new constitution has made them more accountable, and the cabinet must now approve all internal service budgets. However, a plan to make all three services come under the command of a civilian leader was scrapped after strong opposition from senior officers. Officially, the three services still report to the supreme commander, but in practice the army chief has influence over all services because of the numerical dominance of the army. Chuan appointed General Surayud Chulanont chief of the army in This was the first time that an army chief was not chosen from among the top five senior officers. Chuan believed that Surayud was the right man to carry out much-needed reform of the services. Surayud progressed steadily towards meeting these objectives, linking the restructuring with wider efforts to create a professional, non-political defence force. The number of volunteers for the army started to rise, and it was intended that future promotions be made on the basis of ability rather than connections. However, Surayud s reforming zeal and, in particular, his opposition to close ties with the Burmese junta, brought him into conflict with the Thaksin administration, and in 2002 Thaksin orchestrated Surayud s promotion to the largely ceremonial role of commander-in-chief. In the controversial annual military reshuffle in 2002, which involved an unhealthy degree of political interference, General Chaisith Shinawatra, Thaksin s cousin and a former adviser to the supreme commander, was elevated to the position of army assistant commander. He later became army chief, and in the annual 2004 military reshuffle became the new supreme commander, with General Pravit Wongsuwan being appointed commander-in-chief. Budget constraints mean that most artillery and naval craft are now sourced cheaply from China, mixed with US supplies from the 1960s and earlier. The task of re-equipping the armed forces has absorbed over 20% of the annual military budget in recent years, with modern tanks, artillery and frigates being the priority items. In May 2001 the army was given permission to spend Bt4bn (US$100bn at the annual average exchange rate for that year) on ammunition and petrol to replace depleted reserves, but a policy of no new weapons procurement was also announced. Budget expenditure on defence as a percentage of total budget expenditure has dropped continuously in recent years. In fiscal year 2003/04 (October-September) defence expenditure was around Bt80.9bn (7.3% of total expenditure), compared with Bt71.4bn (8.4%) in 1999/2000. Since the end of the second world war Thailand has been a staunch ally of the West, holding annual joint military exercises with the US and Australia. In the 1970s Thailand was in the front line of the ideological struggle in South-east Asia. After left-wing governments took power in all three countries in Indochina (Vietnam, Laos and Cambodia) in 1975, Thailand became a base of support for Khmer factions opposed to the Vietnamese occupation of Cambodia. During the first US war against Iraq in 1991, Thailand allowed US forces the use of the U-Tapao air base. The Economist Intelligence Unit Limited Country Profile 2005

18 14 Thailand In 2003, at the start of the US-led invasion of Iraq, the Thai government remained conspicuously quiet, but eventually announced its neutrality. This was in contrast to its regional neighbours, Singapore and the Philippines, which gave their full backing to the US. However, Thailand later sent more than 440 troops to Iraq. The troops fulfilled a largely humanitarian role in the conflict, but they sustained casualties in December 2003, when two soldiers were killed by a car bomb. The then US ambassador to Thailand, Darryl Johnson, said that the dispatch of Thai troops to Iraq had helped to strengthen bilateral ties with the US, and the US later designated Thailand a non-nato ally, meaning that Thailand will now benefit from greater access to US weaponry in addition to enhanced security co-operation. A new foreign policy focus has emerged Tensions with Cambodia reappear Thaksin offers support for the Burmese junta The focus of foreign policy (other than overriding commercial interests) now appears to be strengthening of regional links. This is not limited only to Thailand s immediate neighbours in the Association of South-East Asian Nations (ASEAN), but to deepening ties with India and China and the wider Asian region. It is within this framework that Thaksin now seems to be striving to become a regional figurehead. He has commented on the growing power vacuum in the region since the fall of former president Soeharto in Indonesia, and the retirements of Lee Kuan Yew as prime minister in Singapore and of Mohamed Mahathir as Malaysian prime minister. Ties with Cambodia have been strained since the 1991 peace settlement at the end of the Indochina war, with the Cambodian government accusing Thai security forces of backing an abortive coup in 1994 and until its collapse in supporting the Khmer Rouge through logging deals. However, in recent years bilateral relations have warmed, and Thai businesses now have considerable investment and assets in Cambodia. This new rapport was shaken in January 2003, when violent anti-thai riots led to the burning of the Thai embassy in the Cambodian capital, Phnom Penh, and considerable damage to Thai business concerns. The riots were reportedly sparked by unsubstantiated reports that a Thai actress had said that Cambodia s national symbol, Angkor Wat, should be returned to Thailand. The Thais responded angrily to the riots, and diplomatic relations were downgraded. However, relations have since returned to normal. Thailand and neighbouring Myanmar have a long history of strained relations. Under the Chuan administration, relations with Myanmar deteriorated as Chuan publicly condemned the Burmese regime and its human rights record. Thaksin promised to improve relations between the two countries, switching the focus to mutually advantageous commercial deals. After a brief honeymoon period, tensions escalated in May 2002 when the Burmese authorities accused the Thai army of aiding the Shan rebels (who are waging a guerrilla war against the Burmese army), and the border was closed for around five months. The Thaksin administration has since attempted to strengthen relations, in part to protect Thailand s commercial interests in Myanmar, and also to gain the military government s support in clamping down on crossborder drug smuggling. Thaksin has been particularly supportive of the plans of the State Peace and Development Council (Myanmar s ruling military junta) Country Profile The Economist Intelligence Unit Limited 2005

19 Thailand 15 to implement its own reforms at a self-determined pace, and also of Myanmar s right to hold the ASEAN chair in However, the government has been working behind the scenes to broker a deal whereby the junta backs down form the chairmanship without losing face. In early 2005 some ASEAN member states intensified pressure on the junta to initiate meaningful reform or pass on its turn to lead the group. The US, which has imposed trade sanctions on Myanmar, has often criticised Thailand s stance towards the junta. Security risk in Thailand Armed conflict Historically there has been little serious risk of armed conflict in Thailand, but since the beginning of 2004 there has been mounting civil unrest in the southernmost provinces of Thailand, home to the minority Muslim population. Over the last 30 years there have been sporadic outbreaks of violent protest by the Muslim population against rule by the Buddhist-dominated government in the capital, Bangkok. Attacks on government and police property and personnel occurred frequently even before the start of the recent violence. In April 2005 bombs were detonated in the airport at Hat Yai, Songkhla province, and at the city s branch of Carrefour, a French supermarket chain, raising concerns that the violence was likely to spread: these were the first bomb blasts to have occurred outside Yala, Pattani and Narathiwat. The latest targets, an airport and a foreign-owned business, also lend credence to fears that the insurgents are now intent on attacking economic targets in addition to government and military ones. Moreover, the greater sophistication demonstrated in the recent attacks may indicate increased support from forces outside the conflict zone itself, and perhaps from regional Islamist groups, such as Jemaah Islamiah. From time to time Thai and Burmese forces clash along the joint border, with exchanges of mortar or shell fire. Although the chances of this escalating into a major conflict are small, tensions between the two governments and the armed forces increased considerably in mid The joint border was closed in May, and a vitriolic anti-thai campaign was launched in the Burmese media. In October 2002 full diplomatic relations were restored and the border was reopened. Unrest/demonstrations There are periodic demonstrations, but the focus of the unrest tends to be economic, rather than political, and directed at the government. Labour unrest has historically been limited, but there is a risk that it will become more of a problem as the government pushes ahead with the privatisation of state assets. Certain industries, such as power and the national airline, are widely perceived as important national assets, and their sale to foreign strategic partners could cause a public outcry. In early 2004 the planned privatisation of the Electricity Generating Authority of Thailand (EGAT) triggered mass demonstrations by labour unions. Violent crime Street and petty crime exists at a relatively high level, and travellers outside Bangkok, in particular, need to take precautions. Violence is unlikely to be used against foreigners unless they become involved with the local business mafia. In 2001 an Australian who was auditing rice companies in the north of Thailand was shot dead, and in May 2002 a translator and aide to a US businessman was killed The Economist Intelligence Unit Limited Country Profile 2005

20 16 Thailand (the businessman had asked for police protection). These killings are usually carried out under contract, and the masterminds are rarely caught. In one month alone in early 2002, a Dutch investor in a small shrimp farm and an American running a private gibbon sanctuary were shot dead. In such cases, disgruntled employees are the most likely perpetrators. Organised crime There is also a high level of organised crime, but it is primarily a domestic phenomenon. Crime rings, many of them involved in the drug industry, use violence against rival gangs. However, foreign companies are unlikely to come into contact with such groups. During 2001 there were two bombings at branches of a UK supermarket chain, Tesco, in Bangkok, raising the possibility that foreign retail interests were being targeted. It has now been proved that the attacks were undertaken by members of a security firm hired by Tesco. Kidnapping and extortion Kidnapping is not a threat to foreign businesspeople. Extortion is rampant. The security forces, particularly the police and customs departments, can be expected to demand additional remuneration for services. Resources and infrastructure Population Population growth is falling Population growth has been slowing in recent decades (according to national sources), falling to an average of around 0.6% a year in , from 3% a year in the 1960s. According to the UN Development Programme, the infant mortality rate fell from 74 per 1,000 births in 1970 to 24 per 1,000 births in 2002, as a result of improved health provision. Meanwhile, life expectancy at birth rose from 59.5 years in to 69.3 years in Maternal mortality has also fallen, from 200 per 100,000 live births in 1970 to 44 by In % of the population was below 15 years of age, compared with 40% of the population below 13 years of age in In 2004 the population was estimated at around 64.5m. Population by age and region: data from 2000 census (m) Age Total Urban Rural 0-4 4, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,404.3 Country Profile The Economist Intelligence Unit Limited 2005

21 Thailand 17 Ethnic variations exist The Chinese population has been assimilated Urbanisation is increasing Population by age and region: data from 2000 census (m) Age Total Urban Rural , , , Source: Bank of Thailand. Although Thailand s population is one of the most homogeneous in South-east Asia, there are pronounced ethnic variations. In the northern border areas an estimated one-third of the population speaks Lao rather than Thai, and other dialects are spoken that would not be understood in the rest of Thailand. In some parts of the south a dialect involving a mixture of Thai and Malay is spoken. The main unifying force is religion all but around 5% of the population is Buddhist. The largest minorities are Muslim Malays (an estimated 4% of the population is Muslim, most of whom are ethnic Malays residing in the southernmost provinces) and the 600,000 people belonging to hill tribes in the north. About 14% of Thais claim Chinese ancestry, but the actual figure could be as high as 30%. In the capital, Bangkok, about 70% of the population is believed to have some Chinese blood. Demographic data lack accurate ethnicity assessments, partly owing to assimilation policies followed by governments since the 1940s. Thailand is urbanising rapidly. The proportion of urban residents increased to 43.3% in 2000 from 33.2% in 1990, and is expected to continue to rise. Most are concentrated in Bangkok and its extended Metropolitan Area, which has an estimated population of 12m. The west and far north are the most sparsely populated areas of the country. Education Educational standards remain low, despite improvement According to the 2000 census, the average number of years of education that had been received by those aged 15 years rose to 7.8 in 2000, up from 5.7 in Government efforts at improving education have resulted in a 91% enrolment rate in primary schools, as well as a considerable rise in enrolment in secondary schools. Attendance at secondary schools, although still relatively low by regional standards, has risen from 17% in 1970 to 45.5% in 1990 and 65.7% in 2000, according to the census. Furthermore, about 22% of the college-age population is enrolled in a tertiary-education institution, comparing well with the rate of only 11% in Indonesia. The adult literacy rate, at 94%, is one of the highest in the region. However, nearly 80% of the current labour force has received only primary education, and, most importantly, the quality of secondary and higher education does not meet the requirements of an expanding economy aiming to remain internationally competitive. The majority of students in tertiary The Economist Intelligence Unit Limited Country Profile 2005