THAILAND

Kingdom of Thailand

COUNTRY OVERVIEW

LOCATION AND SIZE.

Situated in Southeast Asia, Thailand is adjoined to Laos and Burma (Myanmar) to the north, Cambodia and the Gulf of Thailand to the east, Burma and the Andaman Sea to the west, and Malaysia to the south. Its total area, which is about twice the size of Wyoming, measures 514,000 square kilometers (198,455 square miles). The length of its coastline measures 3,219 kilometers (2,000 miles). Its capital city, Bangkok, is the most populated city in Thailand. Located in the central region, Bangkok is the center of Thailand's economic and political activities. Major cities in the north are Chiang Mai and Chiang Rai, Nakhon Ratchasima, Khon Kaen, Udon Thani, Phitsanulok, Nakhon Sawan, and Ubon Ratchathani. Meanwhile, major cities in the south are Nakhon Si Thammarat, Songkhla, Surat Thani, and Hat Yai.

POPULATION.

The country's population in 2000 stood at 61.2 million, compared to 55.2 million in 1989, according to the CIA World Factbook. The country's population growth rate from 1988 to 1998 has been estimated at an average of 1.05 percent, according to the Asian Economic Survey. The population is expected to increase by 0.93 percent by 2010. The population is predominantly composed of young people, with 70 percent between the ages of 15 and 64, 24 percent below 15 years old, and only 6 percent older than 64 years.

The majority of the population still resides in rural areas. In 2000, the World Bank reported that approximately 40 percent of the country's population, or 25 million Thais, lived in urban areas and estimates that this will increase to 53 percent by 2010. Bangkok hosts about 12 million Thais.

The majority of the Thai population—75 percent— is of the Thai ethnic group, while 14 percent are Chinese and 11 percent are other ethnic groups. Fully 95 percent of the population is Buddhist, while 3.8 percent are Muslims and the remainder represent a variety of religions.

OVERVIEW OF ECONOMY

The Thai economy is one of the most robust in Asia. In the 1960s it was a predominantly agricultural economy largely dependent on its rich produce of crops such as rice, cassava, maize, rubber, and sugar cane, along with its seafood production, primarily of shrimp. Its strategic location and bountiful natural resources has enabled the country to maximize trade opportunities. The 1980s to mid-1990s marked its boom years and its emergence as a diverse, modern, and industrialized economy.

The economy's growth can be attributed to several factors. First, Thailand has pursued a rational approach to industrialization. Prior to its attempt at industrialization, Thailand already had a stable agricultural sector which became the springboard for industrialization. In the 1960s, its first attempt at industrialization was characterized by the strategy of import substitution which centered mainly on food processing. Hence, Thailand used the produce of its agricultural sector to initiate a shift into industrialization. The availability of local laborers, combined with abundant natural produce, enabled the country to increase production and shift to manufacturing or processing products for export purposes. This led to the rapid expansion of the manufacturing sector and a marked increase in exports. This approach enabled Thailand to avoid the usual path taken by newly industrialized economies (NIEs) of pursuing industrialization at the expense of the agricultural sector. The strategy was to gradually build upon existing resources in order to facilitate the development of the economy.

A second important factor was Thailand's diversification of its economy. This is a pervasive trend in the development of the economy, which is rooted in the innate flexibility of the Thai people. This is exemplified by the stages of growth of the industrial sector which began with simple agri-based manufacturing, and steadily progressed to more sophisticated industries through the use of available resources such as rich natural resources and cheap labor. Diversification was also aided by huge inflows of foreign direct investment geared towards a wide range of products, namely electronics, chemicals, property, and processed food. In the 1980s, foreign direct investment totaled US$8 billion, with US$2.5 billion coming from Japan and the rest from Chinese, Korean, and American investors. In fact, 50 percent of the country's industrial output and 20 percent of its industrial workforce are attributable to foreign investors who are attracted by lower manufacturing costs, according to Thailand's Turn.

A third factor in Thailand's growth is government stability. The administration of Prime Minister Prem Tinsulanonda, which lasted from 1980 to 1988, developed a continuity in policies and programs that inspired the confidence of the private sector in both the government and the economy. This translated to a greater willingness to invest in the growing manufacturing industry and support further expansion of export activities.

Fourth, the dynamism of the private sector propelled export production. In 1981, a landmark policy was implemented which facilitated the formation of the Joint Public-Private Consultative Committee on Economic Problems that enabled businesspersons to influence public policy through their associations. This, in turn, led to an increased participation of the private sector in the development of state enterprises. Economic development in the country was largely propelled by the private sector, which invested heavily in industrial growth; the government had a limited role in determining the direction of the economy.

These factors have contributed greatly to the growth of the country's major economic sectors, namely agriculture and fishing, manufacturing and industry, and services, particularly tourism. In 1991, 98.6 percent of all Thai business enterprises were mainly small and medium enterprises, accounting for 90.7 percent and 7.6 percent, respectively. The Ministry of Industry defines small-scale enterprises as those with a maximum of 50 employees with an equity of 10 million baht, while medium-scale enterprises employ 50-200 personnel and have an equity of 10-100 million baht.

The country's inability to produce oil has negatively impacted its growth, particularly during periods of oil crisis such as the world oil crisis between 1970 and 1979. The country's dependence on oil has been reduced with the discovery of its first natural gas field in the Gulf of Thailand in 1981. The country also taps alternative domestic sources of energy such as hydropower, liquefied natural gas, and coal. It is also in the process of studying the use of nuclear power.

At the end of 1990, the country's long-term external debt stood at about US$16 billion. However, annual debt service payments were only equivalent to 10 percent of the total earnings from exports, which means that the debt payments were manageable. The 1997 Asian financial crisis reversed this situation as the combination of US$90.5 billion in debt in 1996-97 and high levels of non-performing loans caused the near collapse of Thai-land's financial sector. The troubles of the financial sector spilled over to the other sectors of the economy which were dependent on the financial sector for credit. Banks had to set aside finances to cover loans which creditors were not able to pay, so they no longer had any money to lend borrowers who were capable of paying. This forced the government to increase its allocation for foreign debt payments to take the pressure away from the financial sector. This resulted in a significant increase in public sector debt, which was only equivalent to 4 percent of GDP in 1996 but rose to 18 percent of GDP by mid-1999.

To alleviate the effects of the crisis, the International Monetary Fund (IMF) gave Thailand a US$17.2 billion assistance package in August 1997. With the help of these funds, reforms in the financial sector were implemented along with the restructuring of the industrial and agricultural sector to increase productivity. Policy reforms to increase accountability and transparency, as well as social reforms to improve education, social services, and human resource development are also being implemented by the government with assistance from the IMF, the Asian Development Bank (ADB), the Overseas Economic Co-Operation and Development (OECD) Fund, and the World Bank.

POLITICS, GOVERNMENT, AND TAXATION

On 24 June 1932, Thailand's political system changed from an absolute monarchy to a constitutional monarchy. The king is the head of state and is very much revered by the Thais. Presently, the monarch is King Bhumibol Adulyadej, who ascended the throne in 1946. King Bhumibol Adulyadej has been specially recognized for bringing the Thai monarchy closer to the people. In 1955, he visited the poorest regions of Thailand in order to see for himself the living conditions of the people. Since then, the king and his family have spent 7 months of every year visiting each of the 76 provinces of Thailand. As a result, the king is very well informed of the distinct needs of each region.

To date, the king has implemented over a thousand projects to improve the living conditions in the remotest rural areas, including the introduction of new crops, water conservation, irrigation, swamp drainage, preservation of national forests, and crop substitution. One of the king's most publicized projects is the Royal Rain-making Project, wherein after years of careful experimentation, 14 different formulae were invented to address the problem of dry spells in Thailand.

The Thai Constitution mandates that the government should be placed under the administrative power of a prime minister, a cabinet, and a bicameral legislature composed of a 253-member appointed Senate and a 500-member, popularly-elected House of Representatives. The prime minister is selected from the majority party in the ruling coalition in the House of Representatives. Since 1932, Thailand has promulgated 16 constitutions, the latest of which was adopted in 1997.

The cabinet is composed of 13 ministries together with the Office of the Prime Minister and the Office of State Universities. Each ministry is led by a minister who is assisted by one or more deputy ministers. In addition, there are ministers holding the portfolio of "Minister Attached to the Prime Minister's Office." These ministers take charge of the sectors assigned to them and assist the government in the formulation and implementation of national programs. The National Economic and Social Development Board (NESDB) is the agency in charge of longer term development planning, which is implemented in 5-year periods. Aside from the NESDB, other important government agencies for economic planning are the Board of Investment (BOI), which provides incentives for investment, the Office of the Technical and Economic Cooperation Department, and the Office of the National Education Commission.

The Ministry of Industry is crucial in assisting the government in all industry and manufacturing-related activities such as formulating policies, licensing of factories, issuing mineral leases, formulating and supervising industrial standards, providing technical assistance to industries, and supervising the Small Industries Finance Office. Meanwhile, the Ministry of Commerce oversees external and internal trade. Specifically, it controls or supervises prices of certain strategic commodities such as rice and provides export promotion services to export companies.

The Thai government believes that the private sector should lead the country in its quest for progress and development. In this endeavor, the government's major contribution to economic growth was to provide economic and social services; provide financial resources for the construction of physical infrastructure like highways, irrigation, and power facilities; and to formulate and offer various incentives and financial assistance to promote private investments, export businesses, and agricultural enterprises.

Since the 1950s, the government followed a clear direction towards private enterprise. International organizations like the World Bank and the United States Agency for International Development as well as the United States have strongly encouraged Thailand towards adopting that strategy.

Presently, the Thai government is at the forefront, alongside the business sector, in implementing a wide range of economic reforms to promote Thailand's economic recovery from the 1997 recession . Improvements have also been made in the implementation of economic and social welfare programs. This effort is guided by the new constitution, which promotes a stronger, more accountable, decentralized, and transparent government.

POLITICAL PARTIES.

As of 1998, Thailand had at least 11 registered political parties, the biggest of which are the Democratic Party (Prachathipat Party) and Thai Nation Party (Chat Thai Party). The other political parties are the Liberal Democratic Party, Mass Party, National Development Party, New Aspiration Party, Phalang Dharma Party, Social Action Party, Solidarity Party, Thai Citizen's Party, and the Thai Rak Thai Party.

Political parties in Thailand serve as the breeding ground for future leaders and bureaucrats. They provide the venue by which those with political ambitions are able to familiarize themselves with the country's democratic structure and processes and obtain a certain measure of political leadership training. However, the political party system in Thailand is still in a state of evolution and can be best described as fragmented, structurally weak, and vulnerable to corruption. The cost of staging a national campaign is very high and the funds needed to finance such an endeavor are generally only available to those in the business world. Hence, businesspeople dominate most of the political parties in Thailand. Moreover, political parties in Thailand are not mass-based, have no distinct ideological differences, and lack full-time, dedicated, and qualified personnel to formulate and implement the party's programs. Since one Thai political party cannot really be differentiated from the other, switching party loyalties is not unusual in Thailand.

REVENUES.

A huge percentage of government revenue comes from taxes which are collected at the national and local level. At the national level, the central government collects an income tax and a profit remittance tax, while the most important indirect tax is the value-added tax (VAT). In September 1997, the government announced an increase in the VAT from 7 percent to 10 percent in order to raise revenue and to meet the conditions of the US$17.2 billion loan extended by the IMF to Thailand. However, businesses making less than US$24,000 per annum were still exempted. The government levies taxes on all personal incomes including income from business, commerce, agriculture, industry, transport, construction, or contracting work. The corporate tax rate is currently 30 percent of net profits for all firms. Other taxes imposed by the central government are customs and excise taxes , and stamp duty . Local governments are authorized to collect different types of taxes such as property and land tax. Tourism and its allied services are the biggest source of revenue of the government, especially in terms of foreign currency earnings.

THE ROLE OF THE MILITARY.

The military has played a large role in Thailand's political history and national development. In less than 3 decades, from 1932 to 1958, Thailand underwent 12 coups d'etat. Since 1958 there have been 6 more coups, half of which were successful in overthrowing the government. Since the transition from an absolute monarchy to a constitutional monarchy in 1932, the country has been led mostly by military leaders.

Against this scenario, it is important to analyze the contribution of military leaders to Thailand's current economic development since they had a hand in crafting most of Thailand's economic strategies. For instance, the rule of Field Marshal Sarit Thanarat after a coup in 1957 laid the foundation for Thailand's economic development. One of the most important contributions of his regime was the formulation of a national economic development policy, the first of its kind, which was implemented beginning in 1961. Numerous technocrats were tapped in the crafting of Thailand's economic strategy for development. His other achievements include the establishment of universities in the north, northeast, and southern regions, the enticement of foreign investors to invest in Thailand by offering incentives such as tax holidays , and hastening the completion of infrastructure projects such as dams, roads, and bridges. Succeeding regimes followed Sarit's example and crafted their respective development strategies after his, a key factor in Thailand's present economic progress.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

In the late 1980s, Thailand's infrastructure failed to cope with the rapid expansion of the economy. In fact, many experts believe that the country's economy could have grown more were it not for hindrances caused by inadequate infrastructure, a problem that is more pronounced

in the rural areas. Thailand's problem with inadequate transportation infrastructure is so severe that the Bangkok Metropolitan Region has become internationally notorious for its legendary traffic jams. Infrastructure for water, sewerage, and energy are also lagging behind the rate of urbanization and development. Secondary cities and rural areas are suffering because of their inability to attract investors due to poor infrastructure.

To address these problems, the Thai government has formulated a long-term infrastructure plan to meet the demands and requirements of a newly industrialized country. The government has prioritized the improvement of existing infrastructure and construction of new projects to alleviate the problem. Building on the goals of the previous economic plans, the Eighth National Economic Plan (1997-2001) allocated US$7.5 billion for infrastructure development, which is 47 percent more funds than the previous plan. The government also identified priority projects such as expressways, rapid mass transportation, port development, water supply, and telecommunications. At the same time, legal reforms are being instituted to enable the private sector to participate in infrastructure development.

However, the immediate implementation of the projects was stalled due to various reasons, the foremost of which was the onset of the Asian Financial Crisis in July 1997, which caused a serious economic recession. The immediate effect was a lack of adequate funds to continue on-going projects or to start construction of planned projects. Other obstacles were disputes with foreign builders and negotiations with potential operators of toll roads as well as last-minute changes in contract specifications and bureaucratic requirements like land-use permits.

Beginning in 1999 Thailand has slowly recovered from the debilitating effects of the recession. Combining funds from different sources like annual budgets, independent development loans, borrowings, and the private sector, a total of US$78 billion was allotted for infrastructure projects. The government is utilizing different strategies such as the Build-Operate-Transfer (BOT) scheme to fund construction of expressways and Mass Rapid Transfer (MRT) systems in Bangkok, to the installation of more telephone lines and the construction of privately-owned and operated power generating plants.

LAND TRANSPORTATION.

Thailand's road networks cover over 170,000 kilometers (105,638 miles). To help alleviate the traffic in Bangkok, an elevated train system was opened in December 1999. An underground subway system is also under construction and is expected to be operational by 2003. A total of US$700 million was allotted for these mass transportation projects. Originating from Bangkok, Thailand's rail network spans 3,981 kilometers (2,474 miles) and transports people to the major regions, namely Chiang Mai, Nong Khai, Ubon Ratchathani, Padang Besar, and Sungai Kolok. The State Railway of Thailand expressed its plans to spend US$4.2 billion between 1997 and 2001 to improve and expand its rail network.

AIR TRANSPORTATION.

Thailand is working on its goal to become the aviation hub of Southeast Asia. It is expanding its existing international airport to accommodate 36 million people by 2003. At the same time, a second international airport, 30 kilometers east of Bangkok, is currently under construction. Presently, Thailand has a total of 106 airports. Of these, 6 are international airports while 29 are domestic airports, with several more provincial airports in the offing.

WATER TRANSPORTATION.

There are 8 international deep seaports in different parts of Thailand, with the major ports in Bangkok, Laem Chabang, Phuket, and Songkhla. In order to reduce the traffic in the over-utilized main port in Bangkok's Klong Toey district, the government is upgrading and constructing additional ports, particularly in the Eastern Seaboard and southern region, along the Gulf of Thailand and the Andaman Sea.

The importance of the Eastern Seaboard is increasing due to the establishment of industrial parks and export processing zones around the sea port in Laem Chabang. The government foresees that the port areas in the south will grow in importance to equal existing main ports.

COMMUNICATIONS.

As of 1998, there were 5.4 million land lines and 2.3 million mobile phone subscribers in the country. As incorporated in the Telecommunications Master Plan for 1997-2006, Thai authorities have set a goal of increasing the number of telephones per 100 people from 4 in 1993 to 18.2 by 2001. In 1999, the government completed the Rural Long Distance Telephone project and is currently operating a total of 20,732 lines or 47 percent of its target. A number of projects are currently underway, including the Fibre Optic Submarine Cable Network Development and the Telecommunication Satellite Network Development.

As of 1999, Thailand had 204 AM stations, 334 FM stations, and 6 short wave facilities servicing about 13.96 million radios. In addition, 5 television broadcast stations provide service to 15.19 million television sets in all of Thailand as of 1997.

POWER.

In the past, Thailand was heavily dependent on imported crude oil. After the world oil crisis in the 1970s, however, Thailand began to explore indigenous sources of energy and was rewarded with the discovery of a natural gas field in the Gulf of Thailand in 1981. As of 1996, 20 fields are in operation with daily oil production reaching 2,500 barrels per day, and of gas reaching 1,200 million cubic feet per day.

Due to the continued expansion of industries, the future demand for energy has been forecasted to increase by 7 percent in the period between 2002 and 2006. Demand for petroleum will still lead this increase at 49 percent, followed by imported coal at 12.4 percent. Demand for electricity has been forecasted to double from 10,203 megawatts in 1996 to 20,400 megawatts in 2006, according to the Asia Pacific Economic Compendium (1996).

Thailand continues to explore other sources of energy within its territory and from neighboring countries. In addition, it continues to construct different projects to meet its energy requirements. Among these are the Greater Bangkok Area Transmission System, the Yadana-Ratchaburi Gas Pipeline, the Ratchaburi Power Plant, and the Eighth Power Distribution System Improvement and Expansion Plan.

ECONOMIC SECTORS

Thailand's economy has grown steadily by an average of 8 percent for the past decade. There is a wide base for growth, with each sector contributing to the development of the economy. Starting out as an agrarian economy, Thailand's bid for industrialization strengthened its industry sector, while the boom in the tourism industry strengthened the service sector. In the 1990s, manufacturing and tourism are the 2 largest contributors to GDP.

Agriculture has been the traditional backbone of the economy, with Thailand being ranked among the top 5 producers of food in the world. In the 1970s, the country supplied 30 percent to 40 percent of rice in the world market. In the 1990s, it continued to be the leading exporter of rice, tapioca, and frozen shrimp. It is also the world's largest producer of rubber, the demand for which has increased due to the AIDS epidemic, which has increased the demand for condoms. Thailand is also one of the world's biggest suppliers of flowers, particularly orchids, which it exports mainly to Japan and Europe. Despite its output, the agricultural sector is on the decline, and is slowly being overtaken by the industry and service sectors in terms of contribution to GDP.

With the re-orientation of production from import substitution to producing for export, and the drive towards industrialization, the manufacturing industry grew steadily until it exceeded agriculture in terms of contribution to GDP. According to Bank of Thailand statistics reflected in the 2000 Business Monitor International Annual Report, the manufacturing industry accounted for 86.8 percent of the country's total exports in 1999. The country's first step into manufacturing was food processing, effectively building on its strong agricultural sector. Today, it is the world's largest exporter of canned pineapple, with one-third of all the canned pineapple sold in the United States coming from Thailand. It is also Asia's biggest exporter of tuna after Unicord, a local company, purchased Bumble Bee Seafoods, the third largest tuna canner in the United States. It now supplies 20 percent of the world market for canned tuna.

The country's service sector is experiencing steady growth, with the boom in the tourism industry. In 1992, tourism accounted for 10 percent of the GDP, with 600 tourists arriving every hour, or 5,256,000 tourists for the year, spending an average of US$1,000 each, equivalent to about US$5 billion a year. This amount is equal to 50 percent of the country's total exports. In 2000, revenues from tourism were expected to hit 343 billion baht or US$6.86 billion, with a total of 9,438,000 tourists expected to visit the country throughout the year.

Strong local corporations—such as Charoen Pokp-hand, which earns revenue of US$2.5 billion annually; Thai Union Frozen Products, the largest canned seafood exporter; and Boonrawd Brewery—work together with various multinational corporations to energize the manufacturing industry. Forecasts for the year 2000 predicted that multinational corporations which have set up shop in the country—such as Mitsubishi, Isuzu, and Honda for automobiles; Fujitsu, Seagate, IBM, Sony, and Matsushita Electronic for electronics; Heineken and Carlsberg breweries, and Nestle and Kellogg for food processing; and Exxon, Montell, and Bayer for petrochemicals—will expand their operations in the country and pump in more investment.

AGRICULTURE

Traditionally an agrarian economy with rice as its main product, the country's agricultural sector has since expanded to cope with the demands of its newly industrialized state. Thai agriculture has a clear advantage over other newly industrializing economies, namely the large portion of land allocated for cultivation, a climate suited to the growth of a wide variety of crops, and high quality strains of agricultural products.

In 1960, agriculture contributed over 40 percent of the national income. This contribution steadily declined due to the intense and rapid growth of the manufacturing sector. By the end of the 1980s, agriculture merely accounted for 17 percent of GDP, which declined even further to 12 percent until the late 1990s, to below 10 percent in 1999. The same pattern exists in terms of its contribution to exports, which stood at 46.9 percent in 1980 and plummeted to 9 percent by 1998.

However, these figures do not indicate a weakening of the sector's significance to the Thai economy, but more a strengthening of the industry and service sectors. Agriculture still accounts for 4 of the country's top exports— rice, canned fish, frozen or chilled shrimp, and rubber— and continues to serve as the foundation of booming manufacturing ventures such as food processing. Processed food such as canned fruits, vegetables, seafoods, and ready-to-eat meals, also enjoy a healthy domestic market, along with sugar and flour.

The agricultural sector has consistently employed about 50 percent of Thailand's 30 million-strong work-force. In 1993, farm population accounted for about 57 percent of the total workforce. If those indirectly engaged in agribusiness industries were included, the estimate would be even higher. Economists predicted that the 1 to 4 million people left unemployed by the 1997 financial crisis in the late 1990s would be absorbed by the agricultural sector.

FIELD CROPS.

Agricultural production is focused on 7 major crops—namely rice, tapioca, rubber, maize, sug-arcane, mung beans, and tobacco leaves—which are grown mostly for export purposes. Fifty percent of the country's cultivated land is devoted to planting rice; Thailand continues to be the world's top exporter of rice, exporting 6.8 million tons of its total production of 23.3 million tons in 1999, worth 7.1 billion baht. Based on Bank of Thailand statistics, exports of rubber amounted to 2 million tons worth 43.9 billion baht, while maize amounted to 80.7 thousand tons worth 528 million baht, according to Business Monitor International. Crop production is expected to increase as genetic research on plants improves yields and as cultivated areas are expanded. However, falling global prices and adverse weather conditions are likely to reduce farm incomes.

LIVESTOCK.

The second largest component of agriculture is livestock production, which accounted for 1.3 percent of GDP in 1993. The decline in the prices of field crops and the reduced productivity of land have caused farmers to turn to contract farming of broiler chickens, cows, and pigs. A single broiler contract growing project employs about 145 families who earn an equivalent of US$350 monthly, after paying for the bank loans needed to buy broiler houses and equipment. Research to improve egg production and feed conversion has also been successfully undertaken, making Thailand a leading producer and exporter of frozen chicken. The government also helps this sector by facilitating the improvement of beef and dairy production through cross-breeding and artificial insemination using high-grade breeds imported from the United States, Switzerland, Germany, Denmark, and Australia. Thai beef is exported to Singapore and Hong Kong, and the sector is angling to gain entrance to the Japanese market.

FORESTRY.

The wood industry relies on the wide variety of hard and softwood available in the country's forests. Among these are tropical evergreens, hill evergreens, mangroves, and other trees which are processed to produce firewood, stick lac, gum benzoin, rattan, and bamboo. Rattan is then manufactured into furniture, while bamboo is used for furniture and paper. Dyes, tanning bark, and medicinal herbs are also harvested. The growth of the output from forestry fell from 2.6 percent in the period between 1967-71 to 0.25 percent in the 1982-86 period due to the massive depletion of the country's forest resources. The devastation is caused mainly by the destructive practice of slash-and-burn agriculture by villagers as well as illegal logging. Uncontrolled logging resulted in the felling of 1.5 percent of the country's total forest acreage every year. After heavy floods in 1988 washed away entire villages, the government banned logging and conducted reforestation efforts. Currently, 23 percent of the country is covered with forests following legislation in the early 1990s which called for the maintenance of a proper percentage of forestland.

FISHING.

The country's 3,000-kilometer (1,864-mile) coastline produces an average of over 3 million metric tons of marine products annually, which amounts to about US$2 million. Its fishing industry, which is one of the largest in Asia, exports frozen shrimp, tuna, squid, and cuttlefish. There is also an abundance of freshwater fish in rivers, lakes, and streams as well as flooded paddy fields where farmers purposely raise them. The Fisheries Department also promotes freshwater aquaculture by farmers in large ponds. Forty-five freshwater fishery stations have been set up by the government to promote freshwater aquaculture. In 1999, fishery products accounted for 3.6 percent of total exports. However, its total contribution to GDP has diminished due to the exhaustion of resources in Thailand's coastal waters.

INDUSTRY

The country's industry and agriculture sectors were traditionally intertwined. Today, however, industry has eclipsed agriculture in terms of contribution to GDP, contributing 39 percent in 1997. The rapid growth of this sector can be attributed to free market forces, limited government assistance, and the private sector's quick response to shifting market demands. However, the Asian financial crisis from 1997 to 1998 heavily impacted industries and caused the closure of 8,000 businesses. The increasing cost of labor has also led to a departure from labor-intensive ventures. To date, only the manufacturing industry contributes substantially to national income, particularly the 4 sub-sectors of food processing, automobiles, electronics, and petrochemicals.

The initial move into industrialization in the 1960s was characterized by import substitution, which mainly involved the processing of its bountiful agricultural produce. In 1972, a new Industrial Promotion Act signaled the shift in government policy to an export-oriented economy. This new emphasis began the rapid diversification of the industry sector which saw the rise of several industries, including petrochemicals, textiles, transportation equipment, electronics, iron and steel, and minerals.

The manufacturing sector constitutes Thailand's main industry, producing a wide variety of goods such as textiles and garments, plastics, footwear, electronics, integrated circuits, computers and components, automobiles and parts, and cement. Manufacturing facilities are mostly located in Bangkok and on the Eastern Seaboard, which was launched in 1977 as the long-term site for large-scale small, medium, and heavy industries. In 1993, the manufacturing sector employed 10 percent of the entire labor force . By 1998, however, the sector already employed approximately 20 percent of the Thai workforce, who are among the highest paid workers in the country along with those working in the service industry, according to the Ministry of Foreign Affairs Handbook.

The manufacturing sector expanded its contribution to GDP from 16 percent in 1960 to 37 percent in 1993 to 39 percent in 1997. Given that manufactured goods are produced largely for export purposes, its share of export earnings grew steadily from 32 percent in 1980 to 74.7 percent in 1990 to 84.5 percent in 1999. Presently, its top export markets are the United States, Japan, the European Union, Singapore, Malaysia, Hong Kong, Taiwan, and China, with the United States and Japan jointly absorbing 36 percent of the country's exports.

FOOD PROCESSING.

Canned foods constitute the main export earner of this sector, and Thailand is the world's leading exporter of canned pineapple and tuna. Its export growth rate increased by 6.8 percent between 1998 and 1999. This sector has shifted from basic refining to value-adding (increasing the value of a good in the process of production), hence, the biggest growth segments include ready-to-eat meals like canned traditional Thai dishes, processed seafood, and snacks. Though still largely patronized by the domestic market, 2 rice dishes—namely khaolam, a rice dessert baked in bamboo trunks, and krayasart, a sticky rice dessert—are already being sold in China and Japan. Production of ready-to-eat halal food is another avenue to be explored, to tap the regional Islamic market.

The government has thrown its support behind agro-processing by promoting the establishment of industrial estates that are located near prime sources of raw material. Several multinational companies have also established their presence in the country, namely the Heineken and Carlsberg breweries; Nestle, whose 8 plants are producing a wide range of products from ice cream to mineral water; and Kellogg, which uses local rice as raw material for its ready-to-eat cereals.

MOTOR INDUSTRIES AND AUTOMOBILE ASSEMBLY.

The country is currently the regional center for vehicle assembly and the manufacturing of motor parts, and is the second leading manufacturer of pick-up trucks in addition to the long-established motorcycle industry. Between 1991 and 1996, vehicle assembly peaked at 560,000 per year, in addition to 1.5 million units of motorcycles. The financial crisis debilitated this sector in 1997 and 1998, but it managed to rebound and produced 327,233 units of vehicles following a sharp increase in export orders in 1999, along with 725,425 units of motorcycles. Shipments in motor vehicles and parts in 1999 amounted to US$1.6 billion. Among the auto companies who have established factories in the Eastern Seaboard are Ford, GM, Mazda, Honda, and Toyota.

ELECTRONICS.

This sub-sector produces a wide range of products from low-tech consumer goods , such as TV tubes and computer monitors, to advanced microchips. In 1999, total electronic exports amounted to US$21.4 billion. The government has encouraged its growth by offering official investment incentives to foreign investors. Among the multinational corporations that have been attracted by these incentives are Fujitsu, Seagate, IBM, Sony, and Matsushita Electronics, which produces the National Panasonic brand. However, the sector is undermined by lack of skilled scientific and professional workers and heavy reliance on foreign technology.

PETROCHEMICALS.

Natural gas discovered in the Gulf of Thailand is being tapped for the raw materials upon which to develop a globally competitive petrochemical industry. This sub-sector was greatly affected by the financial crisis due to the massive debts that it accumulated during its development in the early 1990s. However, its performance is picking up with an increase of 2.1 percent in output in 1999, due to higher export demands. Foreign investment is expected to fuel its resurgence with Germany's Phenolchemie, Chevron, Bayer, and Montell pumping in fresh investments.

SERVICES

The services sector is Thailand's fastest growing sector, largely fueled by the boom in tourism. In 1997, services accounted for over 49 percent of GDP and employed over 4.1 million, or 31 percent of, Thai workers.

TOURISM.

The beauty of the country attracts millions of tourists annually. Thailand boasts beautiful beaches, cultural attractions such as Buddhist temples, bountiful food, affordable high-quality goods such as textiles, and hospitable people. Beckoned by these attractions, tourists have steadily generated income for the country since 1982, with tourism posting a growth rate of 16 percent per year. In 1994, 6.16 million tourists visited Thailand. In 1998, 7.76 million tourists spent nearly US$8 billion. This was exceeded by the 1999 figure, which posted the arrival of 8.5 million tourists. In 1992, tourism employed 1,693,005 workers (5.1 percent of the total labor force), with 923,822 employed directly and 769,183 employed indirectly. The boom in tourism spurred the growth of related service industries which generated employment. Of the total number of workers in the tourism industry, 37 percent were hired by hotels, 26 percent by restaurants and food shops, 11 percent by leisure and entertainment, and 26 percent by the souvenir industry, travel agencies, and other related enterprises. In recognition of the importance of this industry, the Tourism Authority of Thailand works closely with other agencies to develop tourism resources efficiently by promoting investment in tourist-related facilities.

BUSINESS SERVICES.

The continuous expansion of the Thai economy led to the increase in the need for business services including legal, advertising, employment, and general management. In 1997, legal and accounting firms reported the highest revenue while advertising bore the brunt of the financial crisis. The demand for financial restructuring services including merger, acquisitions, and debt collection remained high in 1998, which led to an increase in the sector's employment. To illustrate, one accounting company expanded its debt restructuring division from 2 to 20 people in 1997. Top international consulting firms have offices in Thailand, including Baker & McKenzie and Tilleke & Gibbins for law; Andersen Consulting and Boston Consulting Group for management consulting; Arthur Andersen and Price Waterhouse for accounting; and J. Walter Thompson and AC Neilsen for advertising and media.

RETAIL.

The retail sector is composed of department stores, hypermarkets, supermarkets, and convenience stores, most of which are local companies. Among the international retailer stores are Carrefour, 7-Eleven, Marks & Spencer, and Makro.

FOOD.

As of 1999, Thailand had 639 international restaurants and 328 local restaurants, and about 15,000 fast food, mid-level family style restaurants, coffee shops, noodle shops, specialty food shops, and delivery shops to fuel the food services sector. It also had 2,350 hotels, 364 resorts, and 784 bungalows which account for higher food sales than restaurants. In 1998, total food sales amounted to US$5.385 million. In 1992, restaurants and food shops employed approximately 440,000 workers. Even though the dollar value of food service sales decreased due to the devaluation of the baht during the 1997 Asian financial crisis, the sector grew by 7 percent based on actual sales.

FINANCIAL SERVICES.

Thailand has 34 commercial banks, of which 13 are domestic and 21 are foreign. Among the foreign banks are Bank of America, Chase Manhattan, and Citibank. Leading local banks include Krung Thai Bank, with 646 local branches and 10 overseas branches; Bangkok Bank PCL, with 526 local branches and 21 overseas branches; and Thai Farmers Bank, with 497 local branches and 12 overseas branches. As a result of the financial crisis, some local banks have been taken over by the government and are in the process of reorganization and eventual privatization . The public financial sector includes banks geared for specific purposes including 1) the Government Savings Bank for small savings deposits; 2) the Bank for Agriculture and Agricultural Cooperatives for farm credit; 3) the Government Housing Bank for middle-and low-income housing mortgages; 4) the Industrial Finance Corporation of Thailand for industrial development projects; and 5) the Export Import bank for importers and exporters. Other financial services include finance companies, mortgage lenders, life and non-life insurance companies, and financial cooperatives.

INTERNATIONAL TRADE

Thailand has a long history of international trade. Beginning in the 15th to 18th centuries, during the reign of the Ayutthaya monarchy, foreign merchants who lived near the kingdom's capital conducted trade with foreigners. The country's first significant trade treaty was

the Bowring Treaty in 1855 with Britain. Shortly after that, it also signed treaties with 14 other countries including the United States, France, Russia, Sweden, Spain, and Japan.

Today, the United States, Japan, and the European Union continue to be its top trading partners, absorbing 52.6 percent of all exports in 1999 and supplying 48.8 percent of total imports in the same period. Its other partners are Hong Kong, China, and the Association of South-East Asian Nations (ASEAN) countries, the most significant of which are Singapore and Malaysia. Other countries apart from those mentioned accounted for 18.4 percent of exports and 21.6 percent of imports in the same period.

Thailand's major exports are rice, tapioca products, cane sugar and molasses, and rubber for agriculture; chemicals, polymers, and plastics for the manufacturing industry; and gypsum, natural gas, and feldspar for the mining industry. Bank of Thailand statistics as reflected in the Asian Economic Survey of 2000 identified the country's major export products as machine parts, circuits, frozen shrimp, prawns, sundry items, computer parts, garments, vehicle parts, and plastic products. On the other hand, its major imports are petroleum, integrated circuit parts, and chemicals.

The balance of trade was consistently negative until 1998, which means that the value of the country's imports was bigger than the value of its exports. The discrepancy was minimal in 1970, with import value exceeding export value by only US$541 million. In 1975, imports exceeded exports by US$1.072 billion, which doubled in 1980 to US$2.709 billion. In 1985, imports still exceeded exports by US$2.21 billion, which had quadrupled by 1990 to US$10.309 billion. In 1995, the balance still stood in favor of imports by US$14.337 billion. In a considerable reversal, imports in 1997 exceeded exports by US$5.319 billion but the following year, exports exceeded imports by US$11.485 billion.

Despite the uneven balance of trade, the Thai economy continued to grow by an average of 6.8 percent in the 1970s, 7.5 percent in the 1980s, and 8 percent in the early 1990s before the Asian financial crisis. This growth can be attributed to 2 factors, namely the boom of the tourism industry and the inflow of foreign direct investment. According to International Historical Statistics, in 1970, the services sector contributed 44.1 percent of GDP, which increased in 1980 to 49.7 percent. Though this contribution fell to 46.9 percent in 1999, it is safe to say that the dollar earnings from the tourism industry generated a substantial amount, enough to offset the trade imbalance.

Foreign direct investment (FDI) is another major factor in the growth of the economy since the mid-1980s. In 1988, FDI infused US$1.25 billion into the economy, partly explaining the 7.5 percent growth despite a US$4.332 billion discrepancy in balance of trade in favor of imports. Foreign direct investment doubled to US$2.5 billion in 1990.

Thailand is a member of several international trade organizations including the ASEAN Free Trade Area (AFTA), the Asia Pacific Economic Cooperation (APEC), and the World Trade Organization (WTO).

MONEY

The Thai economy grew with the formulation of the first 5-year National Economic Development Plan in 1958. During the 1960s, the country grew by an average of 8 percent annually. In the 1970s the fluctuation of commodity prices, a rise in interest rates, and the 150 percent increase in world oil prices slowed the economy, although it continued to grow at the rate of 6.8 percent annually. Political instabilit—including student uprisings in 1973, 2 military coups, and increased communist insurgency— hindered the government in its adjustment of economic plans and structures to meet the challenges of the next decade. Surprisingly however, the economy continued to perform well in the 1980s with a 7.5 percent GNP growth rate. The year 1986 is significant because of the fall of the excess value of imports over exports to a mere US$301 million compared to the previous year's deficit of US$2.121 billion, indicating a substantial growth of the value of Thailand's exports. This can be attributed to economic adjustments launched by the government.

The first half of the 1990s was marked by similar growth until the Asian financial crisis hit the region. In 1996, real GDP growth rate fell sharply from 8.8 percent in 1995 to 5.2 percent and during the period of the crisis between 1997 and 1998, real GDP growth dropped to-0.43 percent and-10.18 percent, respectively, according to the International Financial Statistics Yearbook. The government spent much of the country's foreign reserves to stabilize the value of the baht, causing the further de-valuation of the currency. The crisis led to a temporary increase in poverty levels in the city and unemployment

due to massive lay-offs specifically in the construction and service industries. These unemployed city-dwellers went back to rural areas hoping to find employment, which led to a rise in poverty levels in the south, central, and northeast regions. Thailand's recession also started a domino effect that led to the fall of the economies of its South East Asian neighbors.

There has been a remarkable resurgence in the economy since then, fueled by the US$17.2 billion assistance package given by the World Bank, reforms in the financial sector, and increased foreign investment. For the first time since 1969, the economy posted a positive balance of trade with the value of exports exceeding imports by US$11.485 billion in 1999, according to the International Financial Statistics Yearbook.

The average exchange rate of the Thai baht from 1984 to 1997 was B25 to US$1. However, the baht was devalued by the administration of Prime Minister Prem Tinsulanonda by 8.7 percent in 1981, and again in November 1984 by 14.9 percent, as part of its austerity measures. This devaluation led to the decline in the cost of production, which resulted in increased revenue from exports.

With the onset of the financial crisis, the baht fell from its B25 to US$1 average to B31.36 to US$1 in 1997, and to an all-time low of B41.36 in 1998. The infusion of direct foreign investment in 1998 led to the recovery of the economy and the increase in the value of the baht to B37.81 against the dollar in 1999, which went even higher to B37.349 in January 2000. By 12 October 2000, however, the baht had devalued once more to a 27-month low of B43.27, which threatened to increase inflation . The depreciation was caused by external factors, including weak regional currencies such as the Philippine peso and the Indonesian rupiah, the strong showing of the dollar compared to currencies such as the Euro, and increase in world oil prices which used up the country's surpluses. Internal factors that were identified include weak economic policies and practices and the country's unstable political situation.

The Stock Exchange of Thailand (SET) was established through the passage of the SET Act in May 1974, and began operation on 30 April 1975. The second revision of the SET Act in 1992 produced the Securities and Exchange Act (SEA) which established a Securities and Exchange Commission to serve as the only supervisor of the securities business.

POVERTY AND WEALTH

In Thailand, the incidence of poverty or wealth is dependent on a person's occupation, location of residence or work, and level of educational attainment. From the 1970s until the early 1990s the poor were mostly agricultural workers in the rural areas, particularly in the

north, northeast, or southern regions, whose highest level of education was 6 years of primary schooling. Meanwhile, those working in the manufacturing or service sectors in the major cities or in the central region— specifically in the Bangkok metropolitan region—who completed at least 12 years of formal education, were more likely to be economically well-off. Due to the concentration of economic activities in the capital, such as construction of physical infrastructure and job creation, the regional disparities in income and wealth slowly began to widen. As Thailand slowly shifted from an agrarian economy to an industrialized economy, economic resources were shifted to the industrial sector and huge demand for factory workers created huge differences in wage rates between farmers and factory workers. As the contribution of the agricultural sector to the economy decreased so did the demand for farm workers. In the latter years of the 1980s, 80 percent of the people living below the poverty line worked in the agricultural sector.

Poverty in Thailand is not so much a problem of an increasing number of families being unable to provide for their most basic needs, as it is a problem of the huge difference in income between the upper 30 percent and the rest of the population. Thailand's impressive economic growth in the 1980s and 1990s has improved overall living conditions, but the benefits of this national affluence have not been distributed equitably. Those belonging to the lower 30 percent of the population are

merely surviving while the upper 30 percent are enjoying the fruits of the country's affluence with brand new houses and cars, overseas education for their children, and increased savings for emergencies. Despite the fact that more and more Thai families are climbing out of the poverty pit, their earning capacity remains low compared to that of the upper 30 percent.

The government has addressed the increasing incidence of poverty in the different national development plans that are formulated every 5 years. From the second to the seventh National Economic Development Plan, the government formulated different strategies in order to achieve a fairer distribution of income and social services, to create more employment opportunities in the rural areas, to assist parents in their children's education, and to provide credit facilities for small-time business ventures.

Before the Asian financial crisis hit Thailand in 1997, government efforts to alleviate poverty were slowly gaining ground with poverty levels falling from 33 percent in 1988 to 11.4 percent in 1996, according to the World Bank. However, the income distribution remained inequitable with the top 20 percent earning 12.2 times more than the bottom 20 percent in 1988. The disparity

worsened further in 1993 with the top 20 percent earning 15.8 times more than the lowest 20 percent of the population. Average income in the most impoverished region in the northeast was 11.9 times lower compared to Bangkok in 1994. Consequently, rural workers tried to find work in the urban areas, especially in the Bangkok metropolitan area, causing the proliferation of slum areas in the urban cities.

In July 1997, as the Asian financial crisis ravaged the Thai economy, hundreds of workers in the construction and service industries in Bangkok were laid off. These newly unemployed workers moved back to the rural areas to find work in the agricultural sector which was performing strongly in those times. This migration caused the incidence of poverty to increase in the agricultural regions because not all of the unemployed could be absorbed in the agricultural sector. The northeast region experienced the largest increase in poverty during this period, rising from 19.4 percent in 1996 to 30.8 percent in 1999. Overall poverty incidence in Thailand rose from 11.4 percent in 1996 to 13 percent in 1998 as an additional 1.1 million people fell below the poverty line.

Poverty in Thailand can be attributed to several factors. First is the concentration of economic activities in Bangkok and a number of other urban areas. Investment, goods and services, government programs, and well-paying jobs are still largely concentrated in the capital and nearby urban areas despite government efforts to decentralize economic development. The concentration of resources and investment in Bangkok is evidenced by the fact that it contributes over 50 percent of the country's GDP despite hosting only about 10 percent of the population. In contrast, other regions, especially rural areas, suffer from inadequate investment and employment opportunities.

Another reason stems from the failure of the Thai government to provide social safety nets amid the country's rapid growth and industrialization. The government over-prioritized the implementation of financial and industrial reforms and neglected to formulate and implement a comprehensive social service program to protect the most unprepared sectors from the ill effects of rapid industrialization. Moreover, experts have expressed that, had Thai authorities given the same attention to the social sector, it might have even surpassed its current development and would have ensured its future development with a steady source of well-educated and multi-skilled labor as it shifts to technologically sophisticated industries.

A third problem is the weak educational system in the country. Inferior and inadequate education is the root of the growing income gap between city dwellers and villagers. As poverty in the rural areas worsened, many rural folk could not afford to send their children beyond the 6 years of compulsory schooling, making them unqualified for the higher paying jobs in the manufacturing and service sectors. As a consequence, these families were trapped in the vicious cycle of poverty where living conditions of the succeeding generations do not improve due to lack of education.

Another problem is the failure of the government to implement agricultural land reform policies. This failure has resulted in insecure land ownership and increasing tenancy, or production on rented land. As the population increased, people in the rural areas encroached into the forest areas to settle and plant. After several years of residence in these areas, they claim illegal ownership of the land which results in periodic conflicts with government authorities. Due to the government's refusal to issue land titles to legalize the ownership of the land to the farmers who are tilling it, rural workers lack the proper legal documents to secure agricultural support such as credit facilities and technical support and have no security of ownership over the land. This leads to low productivity from the land. Another problem is the increase in the number of farm tenants who till other peoples' land because they either have no land of their own or because they had to sell their own land to pay off accumulated debts.

In 2000, the World Bank reported that Thailand has not fully recovered from its economic recession in 1997. The most recent data revealed that the number of poor increased from 11.4 percent in 1996 to 15.9 percent in 1999. Just like in the past, Bangkok remains affluent while other regions suffer. According to the World Bank's country report for 2000, poverty incidence in 1999 increased from 5.8 percent to 8.8 percent at the outskirts of the urban areas and 14.9 percent to 21.5 percent in the rural areas. At the same time, Thailand continues to suffer from unequal income distribution with the richest 30 percent accounting for some 80 percent of the aggregate national income while the other 70 percent account for roughly 20 percent of the aggregate national income.

According to the World Bank, during the 1990s the Thai government became more aggressive in addressing the root problems of poverty and the ever-widening income disparity. In 1993, the Ministry of Interior launched the Poverty Alleviation project which provides interest-free loans to poor rural households who want to engage in micro-enterprise. Meanwhile, the Ministry of Education is implementing the Educational Loans Program, which provides loans to students from low-income households to encourage them to continue their studies beyond the 6 years of compulsory schooling. The Thai government has likewise launched programs to create jobs in the rural areas by hiring villagers for the construction of rural infrastructure, such as in the case of the Tambon Development Program.

WORKING CONDITIONS

In 1999, more than 50 percent of the 362,683 establishments in Thailand were located in Bangkok and nearby provinces. Based on 1999 labor statistics, Thai-land's total labor force was 8,134,644, with males (4,253,327) edging out females (3,881,317). About 4.4 million are working in the informal sector —which involves domestic work, traditional handicraft production, and manufacturing of export goods—and small-scale enterprises with less than 10 workers.

During the 1997 recession, it was estimated that about 8,000 businesses closed down while those that continued to operate had to lay off staff, reduce wages, and cut bonuses in order to stay afloat. Women were the first to be laid off in most of the industries except in printing and advertising, retail and wholesale, and furniture and wood products.

The unemployment rate fluctuated from 2.2 percent in February 1997 to 4.6 percent in February 1998 and 5.2 percent in February 1999 before dropping to 4.3 percent in February 2000. In the first 2 quarters of 1999, the total number of unemployed persons peaked at about 1.7 million. The recession has caused real wages to fall, with agriculture being the hardest hit sector. Between August 1997 and August 1999, overall real wages fell by 6.1 percent, with real wages falling by 15 percent in agriculture, 8 percent in manufacturing, and 7 percent in construction.

LABOR UNIONS AND ISSUES.

In 1999, Thailand had a total of 1,087 private enterprise labor unions, 44 state enterprise labor unions, 19 labor union federations, 8 labor union councils, 226 employer associations, 3 employer association federations, and 10 employer councils, according to the Department of Labor Protection and Welfare. Membership in these voluntary organizations may vary from 250 to 8,000 workers. In specific industries such as textile, doll, and artificial flower making, it can be expected that the majority of the union members will be female. Female union leaders, however, are a rarity in Thailand.

One of the effects of the recession in 1997 was a marked increase in labor disputes compared to figures in the past 17 years. Approximately 80 percent of these cases involved the collection of severance pay.

Different government agencies, led by the Ministry of Labor and Social Welfare, ensure that working conditions, especially in the factories, conform to legally-established standards. However, despite periodic inspections, working conditions in the factories still need improvement. One study reports that over 20,000 Thai workers suffer occupational afflictions every year. In 1993, the Committee for Workers' Health and Safety was established after a tragic blaze that killed 188 Kader workers.

In general, Thai workers complain about low pay, excessive working hours, and inadequate medical benefits. The textile industry has been specifically cited in many studies as having some of the most dismal working conditions characterized by deafening noise, poor lighting, inadequate medical facilities, and improper ventilation. Each year about 30 percent of the industry's female workers suffer from byssinosis or "cotton sickness" from cotton dust particles. Meanwhile, women in other industries likewise suffer from other occupational hazards.

Based on 1998 labor statistics, of the total 186,498 cases covered by the workers' compensation fund, 67.8 percent involved temporary disability requiring less than 3 days of leave, 29.7 percent involved temporary disability requiring more than 3 days of leave, 2 percent involved permanent partial disability, while 0.4 percent involved death.

Thailand's 1997 constitution mandates equal rights and protection for men and women. However, the results of various surveys reveal that there is still some discrimination against Thai women in terms of professional advancement and wages. Most employers in the private sector hire women only when there is a difference in wage rates. Commonly, firms would rather not hire women or promote them to more important jobs because of traditional attitudes against women working outside the home. Likewise, women are not prioritized for skills training and upgrading since it is unlikely that they will be promoted to higher positions anyway. Women are commonly employed in labor-intensive industries, service and entertainment jobs, and the informal sector.

One of the negative consequences of Thailand's tourism industry is the prostitution of its women and children, especially those who have no formal schooling or only finished the first 6 years of schooling. The law prohibits women under 18 from working in nightclubs, dance halls, schools for dancing, bath and massage houses, and hotels, however, there are not enough government personnel to conduct inspections.

Thailand has been severely criticized by the international community for the proliferation of child domestic workers in its factories and brothels, or houses of prostitution. Child labor involves not only Thai children but also children of migrant workers of neighboring countries. Determining the exact number of child laborers in Thailand is difficult since parents or companies do not want to cooperate with authorities for fear of prosecution or loss of income. Different agencies have conflicting estimates of number of prostituted children in Thailand. The estimates range from 40,000 (1997) by the Thai government, to 200,000 (1997) by the international organization End Child Prostitution, and 400,000 (1998) by the BBC News. Based on the provisions of the Labor Protection Act (1998), persons between the ages of 15 to 18 can only work in non-hazardous jobs and must secure permission from the Department of Labor. Moreover, they cannot work at night or during holidays.

In the mid-1990s, only 40 percent of the Thai labor force had completed secondary or post-secondary education. Enrollment in secondary education is slowly increasing, although it is still low compared to other countries in the region. The gross enrollment ratio of formal secondary education increased from 64.8 percent in 1997 to 70.6 percent in 1999. The New Education Act of 1999, as provided for in the 1997 constitution, has mandated the extension of compulsory schooling to 9 years from the current term of 6 years and the implementation of a 12-year free education program by 2004. Moreover, the act has reduced the power of the central ministry in favor of new school districts within the next 3 years.

In its early years of development, Thailand placed too much priority on developing the primary level of education to the detriment of the quality of secondary and tertiary education. As a consequence, Thailand lagged behind other countries in terms of research and development in science and technology, which meant that its workforce was ill-equipped to handle the emerging opportunities in high technology industries. As a result, the companies that were engaged in these industries chose to set up the center of their operations in other Asian countries. It was only after the 1997 financial crisis that Thailand started paying attention to the improvement of its educational system.

Over the years, the Thai government has formulated different strategies to improve the skill level of its work-force (World Bank, 2000). Among these programs are the Vocational Training Promotion Act (1994), the Training Tax Exemption Decree (1995), and the Skills Development Fund (1997), which grants low-interest short-term loans for approved training courses that would provide skills certification.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1300s TO 1500s. Thailand's very first kingdom, Sukhothai, is established. It is remembered for its contribution to Thailand's art, architecture, and politics.

1378. King Borommaracha I of Ayutthaya conquers Sukhothai's frontier city of Chakangrao. The Kingdom of Ayutthaya becomes the dominant power in the Chao Phraya Basin, site of the present capital, Bangkok. This period, which ends in 1767, marks Thailand's earliest achievements in the area of international trade.

1767-82. General Phraya Taksin, former governor of Tak, defeats the Burmese invaders that destroyed the Ayutthaya kingdom and establishes his kingdom at Thon Buri, across the river from what is presently Bangkok.

1782-1809. Rama I, ancestor of the present monarch, establishes Bangkok as the capital of Thailand and rebuilds the Thai state. Some of Thailand's greatest structures are built during King Rama I's reign, including the Grand Palace and the Temple of the Emerald Buddha.

1821-68. The Thai Kingdom faces the challenge of avoiding Western imperialism during the consecutive reigns of the monarchs Rama II and his 2 sons, Rama III and Rama IV. Under the reign of King Rama IV,

Thailand signs a significant trade treaty with Britain in 1855 called the Bowring Treaty which paves the way for greater Thai presence in the world market.

1868-1910. Under King Chulalongkorn's reign, Thai-land's communication system is modernized with the introduction of post and telegraph services. Mass transportation is also introduced with the construction of a railway network. Under his reign, a more centralized and bureaucratic political structure is established, the slave system is abolished, and Thailand becomes more outward looking.

1910-32. The reigns of Rama VI and VIII are marked by their contributions to Thailand's educational system. In 1917, Thailand's first university, Chulalongkorn University, is founded. In 1921, Rama VI issues a law on compulsory primary education. Upon his brother's death, Rama VIII accedes the throne. He works on establishing Thailand in the international community.

1932. Thailand becomes a constitutional monarchy after a bloodless coup d'etat on 24 June. A formal constitution is promulgated and a National Assembly is established with the monarch as Head of State. In the same year, the first formal comprehensive education plan is implemented.

1942. The Bank of Thailand Act establishes the country's central bank. The Bank of Thailand holds the main accounts of the Thai government including those of government enterprises.

1946. On 9 June, King Bhumibol Adulyadej ascends to the throne. In the same year, Thailand becomes a member of the United Nations.

1949. Thailand becomes a member of the World Bank.

1955. King Bhumibol Adulyadej becomes the first Thai ruler to travel to the poorest provinces of Thailand, in the northeast region, to check for himself the living conditions of the people. This begins the implementation of more than a thousand social projects.

1957. The premiership transfers from Field Marshal Pibul to Field Marshal Sarit Thanarat. The policies of his administration are focused on economic development and national security. Under his administration, the first national economic development plan is formulated.

1959. Thailand's Board of Investment is established. Its main tasks are to promote investment of both foreign and local capital in the private sector.

1962. The automobile industry is established as part of the government's import substitution policy.

1967. Through the primary initiative of Thailand, the Association of South-East Asian Nations (ASEAN) is established in accordance with the Bangkok Declaration.

1972. In December, Field Marshall Thanom Kittikachorn announces a new interim constitution that provides for a totally appointed legislative assembly, two-thirds of the members of which would be drawn from the military and police.

1973. In May and June, students and workers rally in the streets to demand a more democratic constitution and genuine parliamentary elections. On 14 October the military government of Field Marshal Thanom Kittikachorn and Field Marshal Prapass Charusathien is overthrown by student-led mass demonstrations which culminate in shoot-outs with almost 100 people killed.

1974. The Stock Exchange of Thailand is established and placed under the supervision of the Ministry of Finance and the Bank of Thailand.

1975. The pullout of 27,000 United States military personnel based in Thailand as part of the Vietnam War effort begins in March and is completed in mid-1976.

1976. A bloody coup d'etat is staged at the Thammasat University on 6 October.

1977. Another violent coup d'etat brings to an end the 1-year civilian regime of Thanin Kraivichien. General Kriengsak Chamanand becomes the prime minister. Under his administration, Thailand achieves some kind of political stability, thereby attracting foreign investors who establish businesses in the country.

1978. A new constitution is promulgated in December.

1980. In February, the government's decision to increase the prices of oil, gas, and electricity provokes opposition from elected politicians and demonstrations by students and workers, reminiscent of the 1973 demonstrations. As opposition grows, Prime Minister Kriangsak resigns and is replaced in March by General Prem Tinsulanonda.

1984. The Thai baht is devalued after much pressure from the International Monetary Fund and as part of the government's austerity measures.

1987. The manufacturing sector surpasses the performance of the agricultural sector in exports by a wide margin, marking the beginning of Thailand's industry-led economic development.

1989. Thailand becomes a founding member of the Asia Pacific Economic Cooperation (APEC).

1991. In February, a coup d'etat establishes yet another military government led by General Suchinda Kraprayoon.

1992. The Office of the Securities and Exchange Commission is established to closely monitor and supervise the operations of Thailand's stock exchange.

1995. Thailand joins the World Trade Organization as one of its founding members.

1997. A financial crisis hits the East Asian region, causing the Thai economy to nosedive with GDP growth falling to-0.14 percent from the previous year's 5.52 percent.

1998. Thailand's economy makes an impressive recovery. For the first time, the country registers a positive trade balance caused by an influx of foreign direct investment.

2000. National elections are conducted and culminate in the election of Thaksin Shinawatra, a successful Thai businessman and leader of the Thai Rak Thai Party.

FUTURE TRENDS

The success of the country's economic programs rely on the effective implementation of reforms that the government is presently putting in place after the financial crisis revealed the weaknesses and gaps in Thai-land's economy. The Thai economy is poised for greater involvement in heavy industries, including automobile assembly, petrochemicals, electronics, and a more diversified food processing sector focused on value-added products such as ready-to-eat meals and canned foods. The economy has rebounded from the Asian financial crisis of 1997-98, although the World Bank believes that it has yet to fully recover. Challenges facing the economy include weak infrastructure, labor skills that do not match the needs of an increasingly industrialized economy, and the need to re-organize the financial sector to ensure that loans are paid in order to avoid a crisis similar to that of 1997.

Thailand has greatly benefitted from the US$17.2 billion World Bank assistance package in terms of recovering from the crisis. However, due credit must also be given to the strong inflow of foreign direct investment and the robust performance of the tourism industry that enabled the economy to rebound and pose the first positive balance of trade since the 1960s.

Efforts at decentralizing political power to local governments and communities must be stepped up in order to ensure that the rest of the country progresses along with Bangkok. Another important factor is the development of physical infrastructure in the rest of the country to promote the growth of rural communities and increase their contribution to Thailand's economic development. To achieve this, the government's proposed strategy to actively partner with non-government organizations in assisting rural communities must be implemented effectively since using this approach would also ease the disparity in income among the regions and within the different economic classes. Furthermore, the government must actively pursue the stamping out of corruption in order to bring about an even higher rate of economic growth.

Among the other concerns that government must address in the years ahead is the pending maturation of HIV-infected citizens into full-blown AIDS carriers. As of 1999, 700,000 Thai people are infected with HIV. The World Bank predicted that in the year 2000, 55,000 Thais will have developed AIDS and 29,000 more will have become infected with HIV. This will negatively affect the productivity of the country's labor force since those who are afflicted with the disease are mostly women in their prime productive years.

Thailand's industrialization has taken a toll on its environment, as its resources were depleted of raw materials that were needed to support the growing industries. Having realized the impact of environmental degradation, the government is stepping up efforts to rehabilitate its denuded forests and heavily polluted and over-fished coastal resources. In agriculture, research and technology has produced strains of crops that are high yielding and suitable to rotation which enables the land to recover from the effects of monoculture (the cultivation of a single type of crop). However, the continuous use of pesticides and herbicides still inflict considerable environmental damage.

DEPENDENCIES

Thailand has no territories or colonies.

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World Bank. Thailand Country Dialogue Monitor. <http://www .worldbank.org/eap>. Accessed April 2001.

—Maria Cecilia T. Ubarra

CAPITAL:

Bangkok.

MONETARY UNIT:

Thai baht (B). One baht equals 100 satangs. There are notes of 50 satang and 1, 5, 10, 20, 50, 60, 100, 500, and 1,000 baht, and coins of 1, 5, 10, 25, and 50 satangs and 1, 5, and 10 baht.

CHIEF EXPORTS:

Computers and parts, textiles, rice.

CHIEF IMPORTS:

Capital goods, intermediate goods and raw materials, consumer goods, fuels.

GROSS DOMESTIC PRODUCT:

US$388.7 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$58.5 billion (f.o.b., 1999). Imports: US$45 billion (f.o.b., 1999). [ International Financial Statistics 1999 reports 1998 exports of US$54.46 billion and imports of US$42.97 billion.]