Thailand. Country Profile 2006

Transcription

1 Country Profile 2006 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 26 Red Lion Square London WC1R 4HQ 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 the 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 26 Red Lion Square London WC1R 4HQ 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, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright 2006 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 Phangnga ga Phuket Krabi Trang Ban Kantang 0 km miles The Economist Intelligence Unit Limited 2006 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 2006

4 Comparative economic indicators, 2005 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) Vietnam Indonesia Hong Kong Vietnam Singapore Philippines Indonesia Thailand Malaysia Malaysia Philippines South Korea Thailand Taiwan Taiwan Hong Kong South Korea Singapore Sources: Economist Intelligence Unit estimates; national sources Sources: Economist Intelligence Unit estimates; national sources. Country Profile The Economist Intelligence Unit Limited 2006

5 Thailand 1 Contents Thailand 2 Basic data 3 Politics 3 Political background 4 Recent political developments 7 Constitution, institutions and administration 8 Political forces 11 International relations and defence 14 Resources and infrastructure 14 Population 15 Education 16 Health 17 Natural resources and the environment 18 Transport, communications and the Internet 20 Energy provision 21 The economy 21 Economic structure 22 Economic policy 25 Economic performance 28 Regional trends 28 Economic sectors 28 Agriculture 30 Mining and semi-processing 31 Manufacturing 33 Construction 34 Financial services 36 Other services 37 The external sector 37 Trade in goods 39 Invisibles and the current account 40 Capital flows and foreign debt 41 Foreign reserves and the exchange rate 42 Regional overview 42 Membership of organisations 45 Appendices 45 Sources of information 46 Reference tables 46 Population 46 Labour force 46 Central government finances 47 Central government expenditure by function The Economist Intelligence Unit Limited Country Profile 2006

6 2 Thailand 47 Interest rates 47 Money supply 48 Gross domestic product 48 Nominal gross domestic product by expenditure 49 Real gross domestic product by expenditure 49 Gross domestic product by sector 49 Prices and earnings 50 Crop production 50 Minerals production 50 Manufacturing production 50 Construction statistics 51 Banking statistics 51 Stockmarket indicators 51 Main composition of trade 52 Main trading partners 52 Balance of payments, IMF series 53 External debt, World Bank series 53 Foreign reserves 53 Exchange rates Country Profile The Economist Intelligence Unit Limited 2006

7 Thailand 3 Thailand Basic data Total area Population Main provinces Climate Weather in Bangkok (altitude 2 metres) Language Weights and measures Currency Time Fiscal year Public holidays ,000 sq km, of which 38% cultivated and 20% forest 65.1m (2005) Population in million (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 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 2005: Bt40.22:US$1; Bt73.1: 1; average exchange rates on May 30th 2006: Bt38.2:US$1; Bt71.8: 1 Seven hours ahead of GMT October 1st-September 30th January 1st (New Year s Day); February 13th (Makhabuja!regulated by Buddhist calendar); April 6th (Chakri Day); April 13th-15th (Songkran Festival); May 1st (Labour Day); May 5th (Coronation Day); May 12th (Visakhabuja); July 11th (beginning of Buddhist Lent); August 14th (Mother s Day!the queen s birthday); October 23rd (Chulalongkorn Day); December 5th (Father s Day!the king s birthday); December 11th (Constitution Day); December 31st (New Year s Eve) The Economist Intelligence Unit Limited Country Profile 2006

8 4 Thailand Politics 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 The Thai Rak Thai (TRT) party, led by a former telecommunications tycoon, Thaksin Shinawatra, came to power in 2001 and led a coalition government to an unprecedented full term in office. The TRT then became the first party to lead a single-party government in 2005, but mass public demonstrations against Thaksin s government in early 2006 forced Thaksin to dissolve parliament. Political background A unified kingdom Military governments rule from 1932 to 1973 The last military coup took place in 1991 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. After 1973 socioeconomic 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 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. As a result of the king s intervention, Suchinda was forced to step down and a fresh Country Profile The Economist Intelligence Unit Limited 2006

9 Thailand 5 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. Unstable coalitions become the norm in the 1990s The Chuan administration that came to power in late 1992 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 was forced to call an election in September 1996 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. Recent political developments The TRT sees out a full term during 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. This election also offered the Thai public a policy agenda, rather than simply personalities, for the first time. Thaksin surpassed the achievements of all of his predecessors by completing a full four-year term in office. 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 Constitutional 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. The Economist Intelligence Unit Limited Country Profile 2006

10 6 Thailand Non-governmental organisations (NGOs) criticised the Thaksin administration for its poor record on human rights, with Thaksin s war on drugs in 2003 resulting in the deaths of more than 2,000 people. The Thaksin administration was also subject to criticism for its mishandling of the upsurge in violence in the Muslim-dominated southernmost provinces, which have experienced sporadic unrest for decades. Thaksin s mainly hardline approach to the insurgency were blamed for fanning the flames, and the security forces" heavyhanded tactics were strongly criticised by a number of foreign governments and human rights groups. The TRT wins in 2005, but calls another election in 2006 The results of the snap poll are annulled 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, which has long been a DP stronghold. However, within a year Thailand s political scene had undergone a major upheaval. On February 24th 2006 Thaksin dissolved parliament and called a snap election in the hope of receiving a fresh mandate to govern after months of demonstrations in the capital, Bangkok, demanding his ouster. Pressure on Thaksin to step down had been building rapidly since late 2005, when Sondhi Limthongkul, a media tycoon, began regular anti-thaksin demonstrations in Bangkok. Sondhi s anti-thaksin movement expanded in late January soon after the controversial decision by Thaksin s family members to sell their controlling stake in Shin, the telecommunications company founded by Thaksin. The sale of the stake to Temasek Holdings of Singapore (an investment company owned by Singaporean government) drew widespread criticism, mostly because the Shinawatra family managed to avoid paying capital gains tax on the Bt73.3bn (US$1.9bn) deal. Thaksin s opponents also claimed the sale illustrated a conflict of interest in the extreme, with Thaksin putting his family s interests above those of the nation, and a clear abuse of power. Although his party, the TRT, secured the majority of votes in the April 2nd poll, the leading opposition political parties, the DP, CT and Mahachon, all boycotted the election, claiming that Thaksin s decision to call a snap election was designed to serve his own interests. The opposition s boycott essentially turned the April 2nd election into a referendum on whether Thaksin and the TRT should remain in office. The protest vote in Bangkok was sufficient enough to show that the capital s middle class had had enough of Thaksin and the TRT, but the party remained immensely popular in the north, north-east and central regions, and the support of the rural electorate ensured that the TRT still won around 60% of the popular vote. Despite his party s victory, two days after the controversial general election Thaksin stated that he would not lead the government in the next parliament, a sacrifice made ostensibly for the sake of national unity. Country Profile The Economist Intelligence Unit Limited 2006

11 Thailand 7 Owing to the opposition s boycott, it was inevitable that the election would fail to deliver a full complement of 500 members of the lower house. In the end, TRT candidates standing uncontested in 38 constituencies failed to garner the support of at least 20% of the electorate as required by the constitution to win the seat. After the first round of by-elections on April 23rd, 14 seats remained unfilled, and a second round, which was set for April 30th, was suspended. It therefore proved impossible for the lower house to meet in full within 30 days of the election as stipulated in the constitution. Averting a constitutional crisis, the election results were eventually annulled. In a widely anticipated decision, on May 8th the Constitutional Court ruled in favour of nullifying the results of the controversial election. The verdict, which had the support of eight out of 14 judges, was based on a minor technicality! the positioning of voting booths that did not protect voter confidentiality!and on the court s interpretation that the election date was unfairly set too soon after the dissolution of parliament. Although the court had a solid basis for its ruling, the subtext of the ruling was simply that the results of the election could not stand. The king had effectively said so a week or so earlier when addressing judges from the Administrative Court and the Supreme Court. Following the ruling, the political scene was in a state of great uncertainty without a fully functioning parliament. After taking a holiday, Thaksin returned to assume the responsibilities of caretaker prime minister in late May, but it was unclear whether or not he would stand for prime minister in the next election, which, after much debate, was set to go ahead on October 15th 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. December 2003 Thaksin declares victory in the anti-drug campaign he launched in February 2003, but King Bhumibol Adulyadej is particularly critical of the high death toll. January 2004 Violence erupts in the Muslim-dominated southernmost provinces, and martial law is imposed. January 2005 During the weeks following the tsunami disaster on December 26th 2004, 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 single-party government. The Economist Intelligence Unit Limited Country Profile 2006

12 8 Thailand March 2005 The DP s general assembly unanimously votes for Abhisit Vejjajiva as the party s new leader. Thaksin appoints a respected former prime minister, Anand Panyarachun, to head a National Reconciliation Commission (NRC), which has been given the task of curbing the violence in the south. August 2005 Thaksin reshuffles his cabinet, most notably taking the transport portfolio away from Suriya Jungrungreangkit in an effort to placate the public following the highly publicised censure of Suriya over graft allegations. September 2005 Sondhi Limthongkul, a media tycoon, embarks on a campaign to oust Thaksin from office, hosting his TV show live in public after it was taken off the air, and attracting audiences in their tens of thousands. January 2006 Thaksin s family sells its controlling stake in Shin Corp to Temasek of Singapore. The US$1.9bn sale proves highly controversial!it was free from capital gains tax and questions were raised about the details of tax-free share transfers. February-March 2006 Anti-Thaksin demonstrations take place in the capital, Bangkok. Thaksin dissolves parliament and calls a snap election. The opposition parties decide to boycott the poll. April 2006 The TRT secures the majority of votes in the snap poll, but not all seats in the House of Representatives (lower house) are filled. The election results are later annulled. 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 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. Independent institutions lose credibility 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 Country Profile The Economist Intelligence Unit Limited 2006

13 Thailand 9 established to monitor elections to both the upper and lower houses. Although the 2001 election was still subject to fraud and vote-buying, the EC played an active role in attempting to reduce such activities, marking considerable progress in Thailand s move towards more transparent democratic processes. However, the EC came under intense criticism for its handling of the April 2006 snap election, most notably for its alleged favouritism towards the ruling TRT. The EC s reputation has not been the only one to suffer. The fact that Thaksin was acquitted by the Constitutional Court 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 in 2001, Thaksin has compromised the impartiality of the agencies by appointing a number of his supporters to them. The NCCC s reputation, however, was severely damaged in May 2005, not because of a lack of independence but because all NCCC members were forced to resign after being found guilty of wilful self-serving. The Constitutional Court regained some of its credibility when ruling in favour of nullifying the results of the controversial April 2006 election. The judiciary is independent of the legislative and executive branches of government, and Supreme Court judges are appointed by the king. The legal system is based on a civil law system, with elements of common law. Bureaucratic reform is enacted 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. Political forces Last five election results (winning parties) July 1995 Nov 1996 Jan 2001 Feb 2005 Apr 2006a a Election results later nullified. Chart Thai-led coalition New Aspiration Party-led coalition Thai Rak Thai-led coalition Thai Rak Thai Thai Rak Thai Source: Economist Intelligence Unit. The Economist Intelligence Unit Limited Country Profile 2006

14 10 Thailand The dominant TRT lacks cohesion The DP has lacked effectiveness 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. However, the party has suffered factional infighting over the past few years, and there have been some notable splits, particularly in the wake of the political instability in early Members of the most vocal renegade faction, Wan Nam Yen, led by Sanoh Thienthong, resigned from the party in February 2006, shortly after two of the faction s members, Uraiwan Thienthong and Sora-at Klinprathum, resigned from their cabinet posts. The DP is the largest party in opposition, and has traditionally been a force to contend with when out of office. However, it has failed to compete with the TRT. 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. 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. Although the party s decision to boycott the April 2006 snap election proved effective in limiting the legitimacy of the poll, by not standing head-to-head with the TRT in the election, the party opened itself to criticism that it had failed to adhere to democratic principles and was simply avoiding another potential dismal election performance. The king is greatly revered, and is a stabilising force 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. However, during the political turmoil in the first few months of 2006, with mass anti-thaksin demonstrations in Bangkok, the king refused to intervene, despite the calls by the demonstrators for him to appoint a government to replace Thaksin and the TRT. The king Country Profile The Economist Intelligence Unit Limited 2006

15 Thailand 11 eventually helped to bring some calm to the proceedings by spurring the courts into action to avert a constitutional crisis. The king avoided any direct intervention, but questioned the legitimacy of the April 2006 poll, saying that a one-party election was not democratic and that parliament would not be able to function without a full quorum. The public s immense respect for the king makes the monarchy one of the few remaining institutions that garners the full respect of all people and all political parties. Main political figures Thaksin Shinawatra The current caretaker 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 led the TRT to an impressive win in the 2001 election and became the first prime minister to see out a full term in office and be re-elected. However, his time in office has been controversial, as he faced allegations of conflict of interest and abuse of power. His populist polices, however, have endeared him to the rural poor in the north and north-east, but there is widespread antipathy to his government in the capital, Bangkok, and the south. 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). Korn Chatikavanij Deputy secretary-general of the DP. A first-time member of parliament (MP), Korn hails from the world of high finance, having run JP Morgan Chase (Thailand), the local arm of the US-based investment bank, which included a successful securities company that he founded and developed into an unrivalled success. An expert on finance and economics and an Oxford class-mate of Abhisit, he connected with voters in his constituency in Bangkok in a way that belied his patrician background, overcoming a high-profile opponent running for the TRT. Korn s political fortunes sky-rocketed when Abhisit recognised his ability and skill by appointing him to a deputy secretary-general post in the DP. Sondhi Limthongkul Thaksin s foremost critic, and one who has managed to do the most damage to his reputation since late Sondhi is a media tycoon who was once a close ally of Thaksin s. However, after a spate of defamation suits was filed against him by Thaksin and his Muang Thai Rai Sapda (Thailand Weekly) TV programme taken off air, Sondhi embarked on a campaign to oust Thaksin from office in late He began by hosting his TV show live in public, generally focusing on allegations of Thaksin s abuse of power and the government s attempts to suppress media freedom. He is a leading voice in the People s Alliance for Democracy (PAD), which was formed in February 2006 and led mass anti-thaksin demonstrations in Bangkok. The Economist Intelligence Unit Limited Country Profile 2006

16 12 Thailand International relations and defence Thailand s alignment with the West remains intact A new foreign policy focusing on regional ties emerges Tensions with Cambodia reappear 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. 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, later in 2003 Thailand sent more than 440 troops to Iraq to fulfil a largely humanitarian role in the conflict. 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. The focus of foreign policy (other than overriding commercial interests) now appears to be the 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 based his statesmanship on a clutch of assertive policy initiatives, led by the Asia Co-operation Dialogue (ACD) and the Ayeyawady-Chao Pharaya-Mekong Economic Co-operation Strategy (ACMECS). The ACD, a Thaksin initiative, grew from 18 to 25 members in just three years in the early 2000s alongside a host of programmes to promote intra- Asian co-operation. Launched in November 2003, the ACMECS provided an assistance package of Bt10bn (US$247m) to Myanmar, Laos and Cambodia (and to Vietnam from May 2004) for economic development. 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. Country Profile The Economist Intelligence Unit Limited 2006

17 Thailand 13 Thaksin offers support for the Burmese junta Modernisation of the military begins in 1992 Thailand and neighbouring Myanmar have a long history of strained relations. When he came to office, 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 then 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. After failing to make any progress with his own Bangkok Process initiative, Thaksin became supportive of the plans of the State Peace and Development Council (Myanmar s ruling military junta) to implement its own reforms at a self-determined pace. However, the junta s failure to make any meaningful progress with reforms and its refusal to release the pro-democracy leader, Aung San Suu Kyi, from house arrest, has made it difficult for the Thaksin administration to offer its full support to the junta, particularly as other ASEAN nations are taking a tougher approach in their dealings with the junta. The US, which has imposed trade sanctions on Myanmar, has often criticised Thailand s conciliatory stance towards the junta. 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. Military forces, 2005 Personnel (no.) 506,600 Active 306,600 Reserves 200,000 Source: International Institute for Strategic Studies, The Military Balance, 2005/06. 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. The death toll has risen to more than 1,000, comprising militants, members of the security force, in addition to government officials, teachers and Buddhist monks. The most deadly incident occurred in April 2004, when 34 people were killed in a local mosque in Pattani following a shoot-out between security forces and militants. Attacks on government and police property and personnel occurred frequently even before the start of the recent violence, but such attacks now occur regularly. In April 2005 bombs were detonated in the airport at Hat Yai, Songkhla province, and at the city s The Economist Intelligence Unit Limited Country Profile 2006

18 14 Thailand 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. Unrest/demonstrations There are periodic demonstrations, and prior to the anti-thaksin protests in early 2006, the focus of the unrest tended to be related to the government s management of the economy, rather than politics. However, demonstrations are mostly peaceful. Indeed, despite the number of protestors reaching around 100,000 in early 2006, and the high level of animosity displayed towards the prime minister, Thaksin Shinawatra, the demonstrations were peaceful. Labour unrest has historically been limited, but the planned privatisation of the state electricity utility, Egat, has triggered mass demonstrations by labour unions in recent years. 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. Violent crime Street and petty crime exists at a relatively high level, and travellers outside the capital, Bangkok, in particular, need to take precautions. Violence is unlikely to be used against foreigners unless they become involved with the local business mafia. However, in recent years there have been a number of widely reported murders of foreign tourists. 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. Country Profile The Economist Intelligence Unit Limited 2006

19 Thailand 15 Resources and infrastructure Population Population growth is falling Ethnic variations exist Population growth has been slowing in recent decades (according to national sources), falling to an average of around 0.9% per year in , from around 1.8% in the early 1980s and 3% per year in the 1960s. Thailand"s population stood at an estimated 65.1m in According to the UN Development Programme (UNDP), in 2003 around 24.5% of the population was below 15 years of age, compared with 40% of the population below 13 years of age in 1980, while 5.4% of the population was above 65 years of age. In 2003 life expectancy stood at 70 years, up from 61 years in There has also been improvement in the infant mortality rate, which stood at 23 per 1,000 births in 2003 compared with 74 in 1970, primarily as a result of improved health provision. The labour force has been growing at a relatively fast pace, averaging 1.7% per year in , and urbanisation is growing rapidly. The proportion of urban residents increased to 32% in 2003, according to the UNDP, up from 24% in 1975, and it is expected to continue to rise. Most of the urban population is 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. Population by age and region: data from 2000 census (m) Age Total Urban Rural 0-4 4, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 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 The Economist Intelligence Unit Limited Country Profile 2006

20 16 Thailand 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. 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 92.6% in 2003, according to the UNDP, 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 education are enrolled in vocational colleges rather than universities, and curriculum standards are generally poor. Consequently, the skills required for a shift to higher value added and high-technology industries are still in short supply. Less than 20% of graduates choose science or technology degrees, compared with 52% in Malaysia in Educational reform is behind schedule Under the 1997 constitution, free education is guaranteed for children up to 12 years old. In addition, the National Education Act of 1999 stipulated a timeframe of three years for an ambitious reform of the entire system. In 2002 the government finally enacted educational reform, with the launch of an initiative guaranteeing 12 years of free education to all children and plans to increase the autonomy of tertiary-level institutions. However, the scope of the reform was limited, and a number of important issues were not addressed. These include the curriculum (the Thai curriculum tends to require rote-learning for tests rather than teaching to solve problems or think independently), regional differences in the quality of educational provision, access to schooling for the disadvantaged and, most importantly, the financial resources to guarantee 12 years of free basic education. However, lower-income families have complained that, although there may no longer be school fees, parents still have to buy textbooks and school uniforms for their children and have to pay for some forms of tuition and school activities. Country Profile The Economist Intelligence Unit Limited 2006

21 Thailand 17 Health Public-sector predominates, but it is short of funding Preventive public health measures are instituted Healthcare is still predominantly provided by the public sector, although private-sector care grew rapidly during the 1990s. The public health network, which accounts for around two-thirds of hospitals, includes a health centre in every tambon (group of villages), a hospital with ten to 90 beds in every district, and one referral hospital with at least 200 beds and specialised care in every province. The mispricing of services over the years has meant that the public health services rely heavily on government subsidies, and many are close to insolvency. This issue of insufficient funds was made worse by the introduction in February 2001 of universal healthcare at only Bt30 (around 75 US cents) per hospital visit. Under the Bt30 healthcare scheme, which covers people without health insurance, the government established a flat-rate subsidy per patient to pay the hospital or doctor, but both private and state hospitals are complaining that this does not reflect the true average cost per patient. The subsidy was initially set at Bt1,308 in 2003/04, but has risen steadily to Bt1,659 (around US$40) in 2006/07. Medical staff are reportedly reluctant to work in rural hospitals because of strains on their finances. There is also anecdotal evidence that participating hospitals are unwilling to dispense drugs costing more than Bt30, thus defeating the purpose of the scheme. Furthermore, there are concerns that in the long term the scheme could prove to be a disservice to the poor, as private hospitals will continue to improve their services, whereas state hospitals under the programme will shoulder an increased burden with limited funding. There has been a large increase in the number of private hospitals in the past few years. At end-2005 there were about 400 private hospitals, with most concentrated in urban areas. Occupancy rates fell at private hospitals following the introduction of the Bt30 scheme, forcing private hospitals to upgrade their facilities and aggressively seek business from middle- to upper-income Thais and foreigners. Standards of care are high, and hospitals use the latest medical technology. Prices are much lower than in Western countries: equivalent treatment would cost twice as much in Japan, three times more in Singapore, five times more in Europe and eight times more in the US. Thailand has traditionally focused on preventive public health measures, such as sanitation, clean water supplies and vaccinations, as the most cost-effective means of improving the health of the population. This policy has led to remarkable improvements over the last decades, although life expectancy is still lower than in neighbouring Malaysia. The decline in infectious-disease rates has been much slower than in other South-east Asian nations, with tuberculosis, dengue fever and malaria still prevalent. In addition, chronic and degenerative conditions, such as cancer and heart disease, are on the rise. The government launched a massive public education campaign in the mid-1990s to raise the public s understanding of the risk of HIV/AIDS, and the rate of infection appears to have stabilised. The Economist Intelligence Unit Limited Country Profile 2006