THE GREAT DICTATOR
Sarit Thanarath led a repressive regime but had the vision to launch major economic and social welfare programmes, writes Chatrudee Theparat
Field Marshal Sarit Thanarath was an unforgettable leader: formidable, loved, hated but, above all, feared by the people. His regime was the most repressive and authoritarian in modern Thai history. He abrogated the constitution, dissolved parliament and vested all power in his newly formed Revolutionary Party. He banned all other political parties and imposed very strict censorship of the press.
He established the dualistic type of leadership: His Majesty the King (and the monarchy) was elevated as a sacred embodiment of the nation and its glorious past while the prime minister exercised real power, a structure that has persisted until today.
Nonetheless, the army officer who overthrew the government of Field Marshal Plaek Phibulsonggram in 1957, serving as Thailand’s prime minister from 1958 until his death in 1963, also initiated major economic development and social welfare programmes.
Field Marshal Sarit filled his new government with talented young people who were successful in their respective fields, giving their ministries considerable independent power. Even though he was seen as a military dictator, the military’s budget was no bigger than any other ministries, with the Education Ministry receiving the largest share for the first time in Thailand’s history. Moreover, there were only three military officers (besides himself) in the cabinet. He was advised by the cabinet but final decisions came solely from him.
In a bid to ensure long-term economic stability, Field Marshal Sarit promoted the private sector, abolished monopolies and lowered income tax for foreign investors. He issued a new harsh penalty for corruption, from five years in prison to a death sentence. He also toured the country to see how his plans were going and get a first-hand observation of real life. He pushed for the development of basic infrastructure such a roads, transport, water and energy.
The most significant decision he made was to allow two important financial institutions — the Bank of Thailand and Finance Ministry — to run as fully independent institutions.
Field Marshal Sarit’s main legacy is economic liberalisation. Although his regime lasted only five years, the system survived and became the foundation of the development of Thailand.
In 1959, Field Marshal Sarit restructured the National Economic Council (NEC) formed by his predecessor and gave it a new name: the National Economic Development Board (NEDB). In 1961, the office launched the nation’s first economic development plan to serve as a central framework for national development.
In 1972, social development was officially recognised as an essential part of the national plan. The NEDB thus became the National Economic and Social Development Board (NESDB), as it is known today, under the Office of the Prime Minister.
The first national economic development plan (1961-66) focused primarily on developing agriculture to meet world market demand. The import substitution industrialisation policy, which advocates replacing imports with domestic production, was also highlighted. During this transformation, the government helped to provide the necessary infrastructure and develop technical skills while the private sector was urged to participate in production under state guidance.
The plan came in two phases, with the first phase running from 1961 to 1963 and the second from 1964 to 1966, and aimed for economic growth of not less than 3% a year and increased agricultural production.
According to a Bangkok Post report on Jan 29, 1960, the plan sought to lay economic foundations for future expansion in various fields: agriculture, industries, energy, communications, trade, financial stability and social welfare.
The agricultural plan called for extension in irrigation facilities, increase in production, improvement in technologies, crop diversifications, forest conservation, promotion of livestock farming and development of self-help settlements.
The cooperatives plan called for expansion of the cooperative movement, making cooperative societies self-dependent and introducing new types of cooperatives to benefit the economy.
The industrial programme included the promotion of private investment in industrial sectors, the use of local raw materials, surveys for natural resources, skills training and property sector push.
The energy plan called for completion of the Yanhee hydroelectric project as scheduled, cooperation with the UN in surveying resources of the Mekong and making cheap power available nationwide.
Meanwhile, the communications plan sought improvement in land, water and air transport facilities, with public utilities coming under municipal control and initially subsidised by government.
The trading system plan called for standardisation of quality of export communities, promotion of exports, stabilisation of commodity prices, the setting up of producers and consumers cooperatives, and greater participation in commerce.
For the financial sector, the plan urged thrift in government spending, strict tax collection to increase state income for economic development and the reorganisation of the entire taxation system.
The social plan focused on public health improvements particularly in remote areas, expansion of medical facilities and cooperation with the UN in combating diseases such as leprosy, yaws, tuberculosis and malaria.
Under social welfare, the focus was on building houses for low wage-earners and help for the poor, orphans, senior people, the disabled and victims of natural and other disasters.
During the six-year plan, Thailand recorded average annual growth of 7.2%, with the agriculture sector growing by 4.6% and exports expanding 8.7%. About two-thirds of the economic growth came from the non-agricultural sector.
The manufacturing sector, which grew an average of 10.5% a year, played a vital role in the Thai economy in this period, with its contribution rising from 11.4% of gross domestic product (GDP) in 1961 to nearly 14% in 1966.
The trade sector, the second-largest contributor, also grew from 17.4% in 1961 to 18.7% in 1966. Construction activities grew 11.3% of GDP annually on average from rising demand for commercial buildings and infrastructure development.
These high growth rates were contributed mainly by a sharp increase in both private and government investments, up from 16% of GDP in 1961 to 21.8% in 1966. Rapid expansion of financial institutions, particularly commercial banks, contributed significantly to the financing of private investments.
The transport sector — road, air, railway and port development — also saw remarkable expansion.
The NESDB suggested the government develop industrial estates to help sustain the high growth rate. However, despite the impressive record of economic growth, income imbalance remained, with average earnings in urban areas twice those in rural communities, and those in the metropolitan area of Bangkok more than triple the average in the Northeast.