1

NESDB2005

Strategic Frameworkfor Economic and Social Restructuring in Thailand

Office of the National Economic and Social Development Board (NESDB)

28 April 2005

Kampanat Pensupar, Ph.D

2

NESDB2005

• Strategic Planning Agency

• Socio-Economic Policies Advisory

• Intelligence Unit

Roles and Responsibilities of NESDB

3

NESDB2005

TRACK I

ConsumptionInvestmentEmployment

TRACK II

Export of goods and services

GDP growth

average 5.2 %

TodayThe past 4 years

GDP 2004 6.5 Tril. baht

Inflation 2.7% Current account 6.2% of GDP

Public debt 46.2% of GDPNPLs 11.4% of total loansForeign reserves 48.9 bill$

Stability

4

NESDB2005

Dual Track Development Model

First track emphasizes foreign direct investment

and manufactured exports under economic integration

with rest of the world

Domestic demand element

Second track: domestic and grassroots

Local enterprise element

1. OTOP2. Village Funds3. SMEs Bank and People Bank4. Venture Capital5. Housing project and housing loans for GPF member and SOEs employees 6. Capital Creation7. Low price computer and internet fees8. 30 Baht health care9. Life insurance policy for low income

Parallel emphases on two pillars

Global competitiveness

Economic Forecast as ofEconomic Forecast as of December 7, 2004

Economic Forecast as ofEconomic Forecast as of December 7, 2004

2002 2003p 2004f 2005f

GDP (current price, bil.B) 5,446.0 5,930.4 6,523.4 7,130.1

GDP Growth (const. p., %)

5.3 6.9 6.2> <

5.5-6.5

Gross Investment (const. price, %)

6.5 11.9 12.7 12.2

Aggregate Consumption (constant price, %)

4.8 5.8 5.9 5.6

Export Value (%) 4.6 18.6 22.5 11.8

Import Value (%) 4.4 17.0 25.7 15.5

Trade Balance (Bill.US$) 2.7 3.1 2.8 -0.4

Current Account (Bill.US$)

7.0 8.0 10.1 8.7

Current Account/ GDP (%)

5.5 5.2 6.2 4.6

Inflation (%) 0.7 1.8 2.7 2.9-3.2

6

NESDB2005

Poverty1998 2000 2002

Poverty line (baht/person/month) 882 916 922

Number of poor (mil.person) 8.88 8.16 6.22

Poverty ratio (%) 14.22 12.96 9.76

1998 2000 2002

GINI coefficient 0.51 0.53 0.51

Income share of highest 20% (%) 56.5 57.8 55.2

Income share of middle 60% (%) 39.3 38.3 40.6

Income share of lowest 20% (%) 4.2 3.9 4.2

Income Distribution

7

NESDB2005

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

20101960 1970 1980 1990 2000

Rice

Crude Rubber

Ores & Metal

Scrap

Textile Fiber

Fruit &

Vegetable

Rice

Crude Rubber

Fruit &

Vegetable

Non-ferrous

Metal

Textile Fiber

Clothing

Electrical

machinery

Seafood

Other Machinery

Rice & Rubber

Electrical

Machinery

Computer-Parts,

Accessories

Seafood

Telecom

Equipment

Apparel

Tourism

What’s Next???

•Agri…•Manuf……•Service

Rice

Fruit &

Vegetable

Non-ferrous

Metal

Crude rubber

Electrical

machinery

Import Substitution, Export-led growth, FDI Innovation + Knowledge

Key Policies/Drivers:

GDP Mil Baht

Goal: What will be Thailand’s next real sector development path?

8

NESDB2005Dare to dream Thailand from now to 2020Dare to dream Thailand from now to 2020 Dare to dream Thailand from now to 2020Dare to dream Thailand from now to 2020

Trends of Economic Development

1950 1960 1970 1980 1990 2000 2010 2020

ComparativeAdvantage

CompetitiveAdvantage

AdaptiveAdvantage

Understanding marketplaceUnderstanding marketplace

Developing productsDeveloping products

Understanding the worldUnderstanding the world

GrowthGrowth

9

NESDB2005

Economic restructuring

Economic growth with stability

Expand opportunities to grassroot level

Economic integration

TechnologyPopulation and social change

Environment and natural resource

Consumption trend

GDP GDP 9.5 Tril. baht9.5 Tril. baht

4 PrinciplesEconomic stability

Value creationProactive social policy

Regional economic cooperation

Key Points

2008FuturePast 4 years

6 strategiesAgricultural value creation

Industrial value creationServices base expansionProactive social policySecurity and international cooperation

Public sector reform

Dual Track Policies

Paradigm shifts

10

NESDB2005

International Economic Policies

International Economic Policies

Global Reach and Local Link: Bilateral FTA

Prosper The Neighbours: ACMECS,

GMS

11

NESDB2005

5 Paradigm shifts

Economic Integration Technology

Population & Social Envi. & Nat. Resource Consumption Trend

12

NESDB2005

Economic stability and sustainability

Proactive social policy to create

positive externality

Global and regional positioning

Value creation from knowledge applicationล

Guiding Principles for Economic and Social Restructuring

Sustained ProsperityMore Balanced Structure

Better Distribution

13

NESDB2005

New DemandNew Demand

Existing Resource Endowment

New Technology

• People

• Natural resources

• Cultural values

• Indigenous Knowledges

• “Thainess”

Knowledge Management

• Repackaging/Branding Real Products & Services

• Value Creation

• Balancing Economic & Social investment

• Repackaging/Branding Real Products & Services

• Value Creation

• Balancing Economic & Social investment

14

NESDB2005

Strategies for Economic and Social Restructuring

• Agricultural value creation and natural resources

• Industrial value creation

• Services base expansion

• Proactive social policy

• Security and international cooperation

• Public sector reform

15

NESDB2005

Measures• Factors of production

– Increase irrigated land by 6 mil.rai (incl. small reservoirs and pipe system) to reduce risks and divest main crops

– Efficient water management for agriculture and other usages– Land quality improvement and increase biodiversity

• Agricultural price stability by management of demand and supply of products, regional producers coordination, and ensure regional food security

• Promote production and utilization of Ethanol and Biofuel created from main crops such as cassava, sugar cane and oil palm

• Promote animal farming especially cows and increase researches on artificial insemination

• Asset capitalization in fisheries sector (Seafood Bank)• Develop agricultural product standard and food safety system, and

GAP• Increase investment in research and development (esp. horticulture

and husbandry)• Support OTOP to create non-farm incomes for farmers• Improve marketing and distribution channel to deliver fresh products

to consumers

Agricultural value creation & natural resources

16

NESDB2005

Industrial value creation

Measures

• Cluster development• Entrepreneur development for SMEs and community enterprises• Develop national innovation system and intellectual property

system• Develop science and technology infrastructure• Promote branding and design• Increase IT application in SMEs• Develop excellent centers for future technology• Promote investment in new automobile model and improve

quality in order to reach 18. cars production target• Develop “Energy Hub”• Promote green production and waste reduction

17

NESDB2005

Services base expansion

MeasuresTourism• Expand aviation networks through open sky policy and low cost airline• Linking tourism networks especially cultural package tour with

neighboring countries• Develop new tourism sites and prevent deterioration of tourism

environment• Establish standard for tourism facilities such as hotel, spa and traditional

massage • Develop tourism standard and human resource Health• Promote talented overseas medical doctors and teachers to work in

Thailand• Negotiate FTA to allow reimbursement of healthcare expenditure in

Thailand from home (foreign) country’s social security systemFinancial• Promote Bangkok to be a region business and financial hub• Develop financial market, and new instruments• Develop secondary market for mortgage loans, and establish building and

loan associationsinfrastructure• Develop logistics system and expand infrastructures• Develop broadband communication infrastructure

18

NESDB2005

• Promote varieties of savings scheme for retirement and increase opportunities for work for aging group

• Promote appropriate health behavior for aging group• Plan for the establishing of long-term healthcare system• Revive traditional value and culture of cohabitation of different age

groups in society• Increase opportunities to utilize knowledge of aging group in

economic and social development e.g. expanding the Brain Bank scheme

Aging Society

• Improve housing standard and public services in order to create good social environment and reduce health expenditure of people

• Improve basic infrastructure and accessibility for aging and disability groups

Housing

Human and Social

Security

• Promote community strength and role in managing safety and security in life and assets• Promote social protection for people in informal economy• Promote role of family in nurturing discipline, life-skill and social responsibility

Proactive Social Policy

19

NESDB2005

• Accelerate ACMECS and JDS to support bordered economy including economic and social cooperation and seeking development partners

• Negotiate trade agreement and cooperation at bilateral, regional and mutilateral levels in order to expand market access, arrange inter-agency mechanism for comprehensive and coordinated negotiation

International CooperationInternational Cooperation

Warning SystemsWarning Systems

• Build an early warning system of natural disaster and network of regional cooperation in early warning systems

Security and International Cooperation

20

NESDB2005

• Building capacity of central agencies in order to be intelligence agency supporting trade negotiation and cooperation dialogue

Capacity Building of

Central Agencies

Capacity Building of

Central Agencies

Building Social Harmony

Building Social Harmony

• Campaign and ingrain Thai value and Thainess identity• Build mechanism in public sector and civil society for protection and

reduction of conflict• Promote mechanism for people participation in economic and social

development e.g. participate as Advisory board of CEO governor• Promote socially responsible and constructive media

• Develop regional planning strategy to be management tools for CEO governor, provincial cluster and region

• Build capacity for management and administration at regional level such as sub-district administration and CEO governor

• Design urban plan and land usage plan, and expand infrastructure to support urban expansion and livable-city development

• Establish resource allocation mechanism for public infrastructure investment with clear and efficient responsibility of central and local agencies

Domestic Regional

Development

Domestic Regional

Development

Enabling Competitiveness of Private Sector

Enabling Competitiveness of Private Sector

• Reform law, rule, regulation and tax system• Reform bureaucracy and public services • Anti-corruption at every levels and professions• Increase government budget for social, environment and natural

resource while diversify sources of fund for infrastructure development

Public sector reform

21

NESDB2005

• Poverty Eradication Policy

• Human Development and Quality of Life Policy

• Restructuring Policy toward a balance and competitive economy

• Natural Resources and Environmental Policy

• Foreign and International Economic Policy

• Legal System Development and Good Governance Policy

• Policy to Promote Democracy and Civil Society Process

• National Security Policy

Government Policies

22

NESDB2005

www.nesdb.go.th

Think Economicand Social Strategy,

Think NESDB....