Financial Crisis and Social Protection in Thailand

Opening Remarks by Annette Dixon
Thailand Country Ditector, World Bank
At the Workshop on the Financial Crisis and Social Protection in Thailand
September 11, 2009 
Ayutthaya Province

Khun Suwanee, Dr Kanok, and Distinguished Participants: 

On behalf of my colleagues in the United Nations and the World Bank I would like to say how delighted we are to participate in this workshop which will look at Thailand’s response to the Global Financial Crisis. 

This is the second workshop that the Government has held; the first was convened by the Minister of Finance and looked at the economic and financial aspects of the crisis.  It focused on both the short term issues, such as implementation of the second stimulus package (Building a Stronger Thailand), as well as the directions for medium term policy, especially for managing fiscal risks. The topics discussed included reform of the special financial institutions (SFIs) and reform of the crop insurance scheme to try to move away from direct subsidies to specific crops which distorts to market, to look at how to provide protection to poor farmers. 

This second workshop will focus on the human dimensions of the crisis, and how social protection systems can better protect the Thai population.  It is being convened by, and under the leadership of the NESDB and the Prime Minister’s Office.

Thailand is at a critical point in its development.  Despite impressive growth in the last decades, there remain pockets of vulnerable groups.  Moreover, with this rapid economic growth has come another challenge, of how to deal with growing disparity, which is a social, economic and political challenge. 

The financial crisis has clearly increased vulnerability, and highlights challenges for the social protection system. 

The most recent data suggests that about 8.5 percent of the population in Thailand is poor – living below 1500 Baht per month.  This number is likely to have increased during the crisis.  This group includes elderly people, people with disabilities, and people living with chronic diseases.  Of special concern is that poverty is concentrated among the young – 20 percent of children living in rural areas and 7 percent in urban areas – a total of about 3 million children. 

Protecting the poorest and most vulnerable sections of society is not just about providing charity to get through this difficult period, it is also about ensuring their right to social security and to protect their life-long opportunities. 

International experience has shown that countries with effective Social Protection systems in place are better placed to weather the crisis, and to reduce the long term damage that a crisis can have on its population. 

Thailand should therefore use the momentum of this crisis to further develop its social protection system, to make it better prepared to respond to chronic poverty and social exclusion, as well as to deal with future crises. 

We should also not forget that good Social Protection systems not only protect the poor, but also support further economic growth.  Thailand, along with the rest of Asia, faces a particular challenge to diversify its economies. 

For the most part Asian economies are very export dependent; the challenge is now to grow the domestic side of their economies to provide more diversified sources of growth.  This will involve putting in place SP systems which ensure that people have adequate protection against life-events such as old age, illness, disability, unemployment, etc.  At present, many Asian economies have very large savings rates, in part because people need to accumulate savings to manage these risks on their own.  By putting in place more effective SP systems, this will help to free up savings for investment in the economy, which will in turn help to build domestic demand. 

Today we will be discussing various aspects of Social Protection, including health finance, pensions and cash transfers, and community-based social protection.  We will look at what has already been achieved, including Thailand’s many notable successes, and build on these.  For example, in health financing, Thailand has achieved an impressive level of coverage for a relatively low level of resources.  The provision of free basic education, health care, and pensions for those in the formal sector, are all notable and widely acknowledged achievements. 

However, to the extent that some people are not covered by SP systems then the crisis may put access to services at risk.  Here we need to look at both the income, and non-income dimensions of poverty, in order to ensure that access to services is maintained. 

It is also important to recognize that many aspects of Thailand’s SP systems are developed within the unique historical and cultural context; they reflect the values and ideology of Thailand’s development.  The challenge here is to build on these approaches and develop complementary systems which reflect Thailand’s evolution as a middle-income country.  There is an opportunity for Thailand to learn from international best practices, while at the same time being sensitive to the country context. 

Given the cross-sectoral dimensions of social protection policies, this workshop provides a great opportunity for collaboration.  We have people here from across different government agencies, as well as Think-tanks, academics and NGOs.  We hope that the conversations started here will continue and show results in greater collaboration to jointly solve problems and develop new approaches. 

This workshop also comes at the same time as NESDB is preparing the next five year plan.  In this respect your inputs will be both of short term importance, related to Thailand’s response to the crisis, and will also help to shape medium term policy directions.  Our discussions can help to build momentum for reform and also shape the directions of the 11th plan.  We help that this workshop will help to put in place to further increase Thailand’s economic and social development. 

I look forward to our deliberations.

Thank you.