A FORCE OF FRIENDSHIP THAT'S LASTED A LIFETIME
Thailand has shown strong progress in both social and economic development over the years, successfully moving from a low-income country to an upper-income country in less than a generation. Poverty, over the past three decades, has also shown a substantial decline, from 67% in 1986 to 7.8% in 2017. But there remain challenges in moving forward. “What we observe from our engagement is that it is relatively easy to put hard infrastructure in place, like highways, railways and airports. But what is much more challenging that we’ve seen in all countries, and especially countries that transform from middle to high income, is the challenge on how to get the soft part of development in place,” Hansl said.
“Key features for achieving shared prosperity, which is the focus of a middle- to high-income country where poverty is nearly eradicated like Thailand, are really how we can make sure that the majority of the population takes part in the inclusive growth that is the objective of the government and of us.”
Some of the local social issues that the World Bank has been concerned with include improving the investment climate to allow inclusive growth and make sure people are equipped with the education and skills for high-paying jobs. Social-protection systems such as healthcare and pensions, especially in the face of an ageing society, also need to be implemented.
“It’s most important that we understand that most citizens take part in growth through their main income source, which is wages, and that is related to the jobs they have. All govto ernments would like their citizens have higher incomes. It’s very natural because then people can spend more and improve the well-being of their family. They may then invest in childifficult dren, assets and houses. That is and much more complex than building hard infrastructure, because it’s influexample, enced by many factors. For it’s influenced by how families are proemergencies. tected in case of health Thailand is very good for having univerhuge sal healthcare, and that makes a difference for people and their ability to move out of poverty and to a higher income group.
“So, it’s a real challenge on two sides here for the government. How do we make sure that more productive jobs are created in the first place? That’s often related to the business environment and a broader investment climate in the country. How can we induce investors to come to Thailand and create these high-paying jobs?”
The ageing society will also impact the shift in labour force in the near future, Hansl continued. With the increase in dependency ratio, does Thailand have a system in place to handle a population that continues to grow older?
Hansl discussed these issues as medium- to long-term challenges that Thailand will have to face in moving forward. But they also require an urgent action plan.
“Take education, for instance. If you don’t change things now, it takes years before children are through a full curriculum of primary and secondary education. Then, that generation will perhaps not have the right skills that are important to adapt to the changing labour market. It’ll take a long time before you see the results. So if you don’t start now, you won’t see changes in 10 years,” she said.
A country’s development may be affected by external factors such as the global economy and political climate. Uncertainties come from many levels, no less from internal factors. Thailand, for instance, carries its own uncertainties from the unstable state of the government. And this can be problematic for the growth of the country.
“Uncertainty makes decision-making for investors and consumers much harder. Investors have to think whether this is a good time to invest and what you see a lot is investors sitting on the fence, waiting to see what’s going to happen,” said Hansl. “The risk is that, ultimately, both household and investors spend less, and that’s not creating growth.”
If people have higher incomes, they may then invest in children, assets and houses