Collaboration for a Stronger Thailand (Opening Remarks)

Meeting between Thailand and the World Bank on
Collaboration for a Stronger Thailand
Opening Remarks by Annette Dixon
Thailand Country Director, World Bank
July 3, 2009
Surat Thani province

Your Excellency, Distinguished Guests, Ladies and Gentlemen:

It is my pleasure to join Minister Korn in opening and welcoming all of the participants to this workshop. We at the World Bank especially value this opportunity for two reasons.

First, the workshop provides an opportunity for all concerned government agencies to collectively focus on issues that are relevant - in both stimulating the economy in the current global financial crisis and that will help to position Thailandto become more competitive after the financial crisis subsides.

The topics that we will cover include the implementation of infrastructure investments under the second stimulus package, the management of fiscal risks; the management of fiscal risks; the improvement of the government’s crop support programs and agriculture risk mitigation schemes; as well as the role and risk management of specialized financial institutions.

These are issues not just for Thailandbut for many other countries as well. In this workshop, we will consider international experiences, draw lessons, and identify the good practices that are applicable to Thailandin each of the areas above.

This workshop will also help us identify potential areas potential areas of future collaboration in the forthcoming Thailand-World Bank Interim Country Partnership Strategy which will be finalized shortly.

Mitigating the impact of the crisis and laying foundation for a stronger Thailandpost-crisis

As we are all aware, we are in the midst of the largest economic crisis of our professional lives. As the Chief Economist of the World Bank, Mr. Yifu Lin, a Chinese national, likes to remind us, a crisis represents a competition between danger and opportunity.

The title of this workshop, Collaboration for a Stronger Thailand, could not be more appropriate. Thailandof course has come through a crisis just 12 years ago. And learning from that, it is encouraging to see that, in the midst of the crisis, you are thinking not only about how to survive, but also about how to emerge stronger once the world economy recovers.

The crisis presents countries, both developed and developing ones, an immediate challenge in maintaining economic growth and protecting the livelihoods of its people, especially the poor and the vulnerable. 

On the other hand, the crisis also presents an opportunity for each country to examine what needs to be done to make the country stronger when the global financial crisis subsides.

And thirdly, countries need coordinate their responses and play their part in helping the global recovery, for example in avoiding protectionism. And in its capacity as the current Chair of ASEAN, Thailandhas been playing a significant role in discussions at G20.

The second stimulus package should therefore help both in the short and medium terms. If well implemented, it will help to stimulate the Thai economy in the short-run, and the investments should also lay the foundation for a more competitive as well as productive economy in the longer run.

Many countries are currently implementing stimulus packages. Like here and elsewhere, there is an imperative to ensure that these programs are implemented in a timely, cost-effective, and transparent manner. Thailandalso has an opportunity to implement its stimulus package in a climate-friendly manner, drawing on conceesional financing available for such initiatives.

Specialized financial institutions or SFIs play an important role as a source of credit to SMEs and households – all the more important in times of an economic slowdown like now. As well as providing access to credit, they can provide the business know-how to targeted groups of clients. Good risk management practices and more clarity over their functions will help place SFIs in a better position to provide credit to the needed groups while, at the same time, posing lower fiscal risks to the government. Strengthening SFIs will therefore have a positive impact both in times of an economic crisis and in the future.

Similarly, efficient crop support schemes and farmer risk-mitigation schemes would promote agricultural income security for a large number of farmers and their families. At the same time they will pose a lower fiscal burden for the government. This will allow the government and farmers to put more resources into improving the agricultural productivity, which could increase incomes for farmers in the medium term.

For all of the issues that we will be discussing – whether it be for investment and infrastructure, strengthening institutions, or crop support scheme - is the understanding of their economic, social, and institutional contexts and the details around the implementation, as well as how the experience of other countries can inform developments in Thailand.

At the end of this workshop, I hope that we will be able to identify the key priority issues that we need to work on over the next 2 years to foster a successful implementation of the plans and schemes as well as the action plans to achieve it. The World Bank will be happy to support you where we can.

Sustaining growth that is inclusive in the future

While the areas that we will be discussing in this workshop are important for Thailand’s growth and development, I would like to say that a key strength of any country’s development is its people.   Countries where population is skilled, innovative, healthy, and united are more competitive and better positioned to thrive in the post-crisis global economy, which will be much more competitive than the pre-crisis one.

As for Thailand, improving the skills of the Thai people and the next generation will enable the country to move up the production value-chain, remain competitive, and achieve a respectably high level of growth.

Moreover, promoting better education and skills for the majority of people will help raise their incomes and bridge the current high income gap in Thailand, and to a certain extent, reduce the conflicts aggravated by such a gap.

The incomes of people which would rise with their skills and productivity will also enable them to consume at a higher level compared to the current subdued one. While exports will continue to be very important for Thailand, such improvement in skills and productivity will help raise domestic consumption, which could be another potential growth engine in addition to exports.

However, to achieve that, Thailand will need to develop a more comprehensive social safety net system – one reaching those in both the formal and informal sectors and is financially sustainable.  Such a system which helps provide a certain level of income security for people in times of job-loss, sickness, or old-age, would help raise their current consumption as they feel less need to save for those times.

These are issues that we think will be the key success factors in the near future for a middle-income country like Thailand– and will be the subject of another workshop in the near future.

The World Bank Group is Thailand’s Long-Term Partner

With that I would like to end by saying that the Bank Group is proud to be Thailand’s long-standing partner for the last six decades.  We have worked closely with central and line agencies through out those years. I understand that during the East Asian crisis, the World Bank has worked very closely with many of you in this room.

I am happy that both Thailandand the World Bank have come a long way from that crisis.  Since the end of the East Asian crisis, the World Bank has been working mainly in a knowledge-sharing partnership with Thailand.  World Bank experts have closely collaborated with central and line agencies on several studies and technical assistance programs.

In the past ten years, the World Bank has changed the way it works, and has greatly expanded the range of products and services that we can provide, including financial products for managing various kinds of risks, and technical assistance that transfers global knowledge and expertise.

We seek to be relevant to the development needs of countries, no matter their income levels. As Thailand becomes more successful, grants have become scarcer for a middle-income country like Thailand. So we now provide expanded technical assistance programs for middle-income countries like Thailandon a cost-sharing basis. We hope to continue this modality of partnership in the future.

In the current global crisis, Thailandis in much stronger position to withstand it. I believe that Thailandwill be able to weather this crisis and be well-prepared for a post-crisis world. 

The World Bank stands firm as Thailand’s development partner. I look forward to hearing from the workshop how the Bank can serve Thailandin the years to come.

 

Thank you very much.