KATHMANDU, APRIL 12
Dr Somkiat Tangkitvanich, president of Thailand Development Research Institute, is a leading expert in the areas of development strategy, trade and investment policies, innovation policy, education policy and ICT policy.
He is considered the main architect of Thai PBS, the first public television in Southeast Asia, and many media laws in Thailand. Under his leadership, TDRI was nominated "Person of the Year" in 2012 by the Bangkok Post.
He is at present participating in the 20th Nepal Development Research Institute Annual Day Programme in Kathmandu. Bal Krishna Sah of The Himalayan Times talked to him about the aim of think tanks and their contributions to nation building. Excerpts:
What is the purpose of your participation in the 20th NDRI Day?
As we celebrate NDRI's important milestone, we are excited by the approach of our own organisation's 40th anniversary next year. TDRI was fortunate to have received support from the international development community, particularly some endowment fund from the Canadian International Development Agency, during its inception years.
This backing played a crucial role in shaping our organisation's growth and success. We have also learned a great deal from the development experiences of other countries and thus are eager to give back to the international development community by sharing Thailand's development experience and our role in helping the Thai government formulate and implement better policies.
What lessons can Nepal earn from Thailand's: Do's and Don'ts?
Thailand's economic transformation can be attributed to these key initiatives:
1. Strengthen macroeconomic foundation: Thailand has built a robust macroeconomic foundation through prudent fiscal policies, efficient tax collection, and effective monetary management. These have led to economic stability, controlled inflation, and fostered investment and growth. Following the 1997 Asian Financial Crisis, Thailand's macroeconomic institutions were strengthened by making the central bank more independent and bolstering fiscal discipline.
2. Expand access to basic education: Acknowledging education's role in fostering human capital and driving economic development, Thailand has invested substantially in expanding access to basic education nationwide, including building schools in remote areas. Consequently. The country has achieved near-universal primary education, increased literacy rates and enrolment in secondary and tertiary education. The education budget remains a significant part of government spending
3. Pursue foreign income sources: Thailand has sought foreign income sources by promoting its tourism industry, boosting exports, and encouraging foreign direct investment.
The inbound tourism industry contributed around 12 per cent of GDP before the Covid-19 outbreak. Industrialization, facilitated by Thailand's open policy and active promotion of FDI has evolved from labour-intensive to capital-intensive and hightech sectors. As a result, Thailand has become a major exporting country of automotive and electronic products in the region.
4. Develop essential infrastructure: The Thai government has invested in improving basic infrastructure, including transportation networks, power systems, and telecommunications.
These enhancements have fostered connectivity within the country, promoted regional integration, and enabled the country to capitalise on emerging economic opportunities and compete globally. Bangkok has over 10 metro lines in operation, and four-lane is the norm for intra-provincial highways. Thailand has almost completed upgrading its rail network to 'dual track' network. It is also constructing two high-speed rails, one linking the country's three main airports, the other linking with China-Lao highspeed rail network.
5. Establish basic social welfare: Thailand has made strides in creating a basic social welfare system, particularly through implementation of universal healthcare since 2002. This initiative ensures access to affordable, quality healthcare services for majority of the population, contributing to improved health outcomes and greater social equity. The World Health Organisation (WHO) often cites Thai universal health coverage as exemplary for middle-income countries.
Through these initiatives, Thailand has transformed its economy and laid the foundation for sustainable growth and development.
However, challenges persist in transitioning to knowledge-based, dynamic economy, avoiding middle-income trap, and reducing income inequality.
3. Lessons from Thailand: Don'ts
While Thailand has successfully transformed its economy, it has made several mistakes that should make other developing countries cautious:
1. Utilize micro-economic measures to address macro-economic issues: Thailand has repeatedly used micro-economic measures, such as subsidy or price control, to address macro-economic issues such as rural poverty and inflation. Mistakenly believing that farmers are poor and must be financially supported, successive governments have heavily subsidised farmers under the 'rice-pledging' or 'rice price-guarantee' schemes, costing billions of dollars in public funds. Similarly, the government has repeatedly maintained artificially low fuel prices to curb inflation and help the poor by using the 'Oil Price Stabilization Fund'.
These practices have not only proven ineffective, but also damaged public finances and produced unintended consequences.
For example, interfering with agricultural market mechanisms has hindered economic transformation, as evidenced by the fact that around 30 per cent of the workforce remains in the low-productivity agricultural sector - an excessively high level among middle-income countries.
Similarly, fixing fuel prices below the market rate has encouraged inefficient energy consumption and excessive greenhouse gas emissions.
2. Tolerate corruption: During Thailand's economic transformation, corruption was initially considered a minor 'cost of doing business' and was therefore tolerated. However, over time, corruption distorted policy decision-making. This led to negative consequences such as unnecessary construction projects and enactment of harmful regulations designed to maintain the flow of bribe money. Due to long-term tolerance of corruption, Thailand's Corruption Perception Index ranking has declined, dropping from 76th in 2015 to 101st in 2022.
3. Allow big businesses to monopolise the economy: The monopolisation of economic sector by big businesses can lead to increased prices for consumers, hinder growth of smaller enterprises, discourage investment in innovation, and create politically influential players with strong connections to political power. Despite enacting the Business Competition Act in 1999, Thailand has yet to prosecute any case of market monopolisation or abuse of market power, nor has it blocked any business mergers. Consequently, a few dominant firms control various markets, including modern retail, alcoholic beverages, telecommunications, movie theatres, and hospitals. Worse still, many monopolists are the result of government's policies.
4. Let excessive income inequality persist: High income inequality can result in low economic growth rates, political instability, and social unrest. It can also lead to costly economic 'populist' policies that aim to redistribute income to the poor, such as providing farm subsidy or controlling fuel prices. The level of income inequality in Thailand remains high compared to most East Asian countries. Wealth inequality is even more striking. For example, a 2018 Credit Suisse report revealed that Thailand ranked first in the world in terms of wealth inequality, with the richest 1 per cent of the population controlling 67 per cent of the wealth.
5. Allow state capacity to deteriorate: The development of a country cannot rely solely on market forces. It also depends on the capacity of the state, which encompasses all branches of government. At a minimum, the government must maintain order, enforce property rights laws, adjudicate contracts, and provide various basic public services such as education, healthcare, and infrastructure.
Without state capacity to collect tax and revenue, the provision of such public goods and services becomes impossible.
In many countries, the state's capacity tends to increase with economic development.
However, in Thailand, the state's capacity has declined over time. According to the International Country Risk Guide (ICRG) Indicator of Quality of Government, the Thai state's capacity score has significantly decreased in the past two decades. This decline is partly attributed to the growing compensation gap between the private and public sector, erosion of meritocracy due to political interference, and the tightening of procedural administrative rules aimed at preventing corruption.
What could be the role of think tanks in Promoting Development?
Think tanks can play a crucial role in policy development by proposing well-researched policies and warning against harmful ones.
They can also help make the policy making process more transparent and democratic by informing and engaging the public. Lastly, they can help strengthen the state's capacity to see problems.
Developing Evidence-based Policies: One of the primary roles of think tanks is to support policy development by providing research, analysis, and recommendations to government officials and policymakers on actions to take or avoid.
At TDRI, we categorise policy recommendations into three groups: correcting misunderstandings, warning against ill-conceived policies, and proposing new policies for adoption and implementation. Examples of our work include demonstrating that most farmers are not poor, and that subsidising farm households through price intervention is not the best policy measure to reduce rural poverty. As a result, we warn against using government agencies to replace the market mechanism in buying and selling rice, which would ruin the market. We also propose a more effective policy in helping poor farmers by improving their productivity using modern farming technology.
Enhancing Public Discourse: Think tanks can contribute significantly to public discourse by engaging with various stakeholders, including media, academia, civil society, and the public at large. They can facilitate informed discussions and debates on critical issues, fostering a culture of transparency and accountability. The primary channels for think tanks to engage the public are through conducting seminars, giving interviews to the media, and publishing op-ed articles.
TDRI actively works with the media to inform and engage the public through our weekly television programme on Thailand's public broadcaster, a weekly radio program, bi-weekly op-ed columns, and social media platforms like Facebook, Youtube, Twitter, and Tiktok.
Strengthening State Capacity: If the state has the capacity to implement proposed policies, the role of think tanks can be limited to policy research and policy formulation. However, as economic and social problems become more complex. It becomes increasingly challenging for governments to address them independently. As the capacity of the Thai state has declined, TDRI helps the government cooperate with the business sector and civil society in designing, advocating, and implementing policies. Examples of these collaborative efforts include our anti-corruption research team working with the government, civil society organisations and business organisations to promote and implement the 'regulatory guillotine' project to get rid of outdated regulations. Likewise, our education reform team helps the Ministry of Education work closely with corporations, the academia, social enterprises, and civil society organisations to design and implement an 'education sandbox', covering over 1,000 schools.
How can we stop brain drain or a movement like "Let's Move Out of This Country" in Thailand?
Actually, sometimes brain drain can be brain gain. Some countries have learned that lesson for example, Taiwan. India has also learned that lesson from brain drain, some of them have become CEOs in the silicon Valley.
The important thing is they should return when the condition is right in the country. So, brain drain can be brain gain.
People go out not because they are pushed out, but because they cannot understand what is happening in their country.
If they have left the country for better income it's not a problem because even developed countries help them to do that. Sooner or later, developing countries like Nepal and Thailand can grow faster than developed countries. They must then return to the country. We can also create more opportunities so that they can return in the future.
But if the political elite do not allow the younger generations to participate in the government apparatus, they feel frustrated, bitter and furious. If they can go out that is good for them, but not for the country. But if they cannot go out they feel the anger and that will be a big problem for any country.
I think the government, political parties, and business leaders have to understand the frustration of the young generation because the technologies are growing very fast and even people with basic education will be challenged. They will have difficulties coping with the technologies. Chat GPT, AI will change the world and this will be really challenging.
I think ageing elites and businesspersons must recognise burning issues such as climate change and prepare the young generations for these challenges. That will help resolve the generational conflict.
How can Nepal control rampant corruption?
Thailand is also facing similar kind of problem. We are just a little ahead of Nepal (Thailand 101/ 180 and Nepal 110/180, According to the Transparency International Report 2022). Thailand also has corruption. And it's really important to get rid of corruption The problem is that big politicians join hands with business tycoons and obstruct growth of new business. They also use the government in doing business that's a really big corruption.
Then there is also petty corruption - police and bureaucrats taking bribe.
So, we have to use the third pillar of society. The three pillars include the government, business, and civil society. Civil society has to work together to prevent the government-business corruption nexus. In Thailand we have formed Anti-corruption Thailand - a-group formed by business people, civil society people, and academicians. TDRI has also joined with its anti-corruption research.
Such groups find strategies to fight corruption. Corruption happens when the condition is bad. The condition can be corrected.
The main thing is people have to realise corruption has to be controlled because it is like cancer. Unless you stop it you run it into problems.
How to solve the problem of climate crisis in vulnerable countries like Nepal?
Nepal is really vulnerable to climate change. The day is not far when Nepal will face problem like the flood in Pakistan. If climate change impacts Nepal, why would any tourist visit the country? Why would anyone climb Mt Everest if climate change happens.
So, you must be very careful. Adaptation is something that can be taught to people. Basically, there are two pillars to climate change. The first one is mitigation and the second is adaptation. We must go for the collective good with the help of the international organisations.
Mitigation is necessary, but we have to be very selective. We have to cooperate with internal organisations and that should be on our own, for instance, health issues. If you are burning fossil fuel you should control it because it can cause climate crisis and destroy the tourism sector. The government should focus on this rather than on difficult things. We must use the adaptation technique as we are the top ten vulnerable countries to climate change.
Similarly, the education system is equally important. If people are not educated they do not realise, what is happening around them? Focusing on teaching people to adapt can be another solution to the climate crisis.
People engaged in agriculture and professional sectors must take the help of think tanks to mitigate the problem.
How challenging will AI be in the context of developing countries like Nepal? It is going to be really challenging for everyone. It has changed the globe drastically.
Humans can learn but not that fast, so it will make our life really hard. Developing techs like that is not in the control of developing countries like Thailand and Nepal.
Even elite universities like Standford have not developed such a system. It has to be big techs like Microsoft and Google. So, it's totally out of our hands. We can do a few things that are in our control. The first is to try to control the bad side of AI, for example using AI to manufacture weapons. We should look at the benefits of AI. For example, in my country people are not good at speaking English but with tourism as the biggest income earner, we must be good at the language.
So, why don't we use AI to help us. We can also use it to increase productivity of small scale business. For example with the help of the new generation of Chat GPT, we can do the coding. So, be aware of the harmful effects of AI, but also think of the benefits we can derive.
A version of this article appears in the print on April 12, 2023, of The Himalayan Times.
