42014 The World Bank in Thailand Development in Partnership December 2007 New World Bank Report Says Thai Economy to Slow in 2007, Grow Moderately in 2008 BANGKOK ­ The Thai economy is expected to grow 4.3 percent this year ­ down from 5 percent in 2006 and behind other economies in the East Asia and Pacific Region, according to the new World Bank report released last month. The Bank also forecasts that growth in 2008 will remain moderate at 4.6 percent. InitslatestThailandEconomicMonitor,theWorldBankattributedtheslower growthtodwindlingconsumerandinvestorconfidence,resultingfromhigher oil prices and political as well as policy uncertainty. Tobolstergrowthinthecomingyear,thenewgovernment partners' (particularly the US) growth continue to slow. should move quickly to revive private investment, the Thus Thailand's current account surplus will decline, Monitor recommended. And that can be done through to a projected 2.2 percent of GDP, from 4.9 percent in establishing a clear investment policy, investing in the 2007. "mega" infrastructure projects, and building on reform measures already adopted by the interim government. The need to increase private investment, especially the quality of private investment, is urgent. In 2007, "In the short term, improving private investment will help private investment contracted for the first time since the bolster consumer confidence and spur economic growth," 1997 crisis. Productive investment is critical to increase said Kirida Bhaopichitr, the World Bank Country Economist for Thailand. "Butbecauseinvestmentsalsoenhancetheprivatesector's productivity, increasing private investment is also critical for Thailand to maintain its long-term competitiveness." Among other key findings of the Report: Though growth in 2008 will likely post a small increase to 4.6 percent, manyuncertaintiesremain which could impact that level. These include oil prices, exchange rate appreciation, and deceleration in world economic growth. The necessary increases in investment to maintain moderate growth will hinge on the ability of World Bank Economist Kirida Bhaopichitr during the press conference the new government to make clear policy decisions. The baht appreciation has so far affected a limited Thailand's competitiveness in international trade, number of exporting industries, in particular low- especially as the baht appreciates. Investor sentiment import content industries such as garments and canned isbeginningtorecover,butarealincreaseininvestment fruit as opposed to high-tech exports. However, export next year will hinge upon decisive action by the new growthwillslowto10percentnextyearaskeytrading government to ease policy uncertainty. Continue on page 2 Page Continued from page Accordingly, the report recommends a number of the Conference, a panel of experts discussed Thailand's actionsforthenextgovernmentincludingclarification performance and rankings in Doing Business 2008, with of the Foreign Business Act amendment and the manybusinessfiguresandgovernmentofficialschipping relaxation of the 30 percent reserve requirement on in on their perspective on the rankings. short-term capital inflows. Launched in 2003, Doing Business examines 10 Reducing the regulatory burden would help improve indicators of a country's business climate, the ease or investmentclimate.Developingpeople'sskills,meanwhile, difficulty faced by that country's private sector. These would helpThailand continue strong growth as it would indicators are (1) starting a business, (2) dealing with help the country to move faster toward a knowledge licenses, (3) employing workers, (4) registering property, economy.Theseactionscannotwaitasothercountries (5) getting credit, (6) protecting investors, (7) paying are moving quickly. taxes, (8) trading across borders, (9) enforcing contracts, and (10) closing a business. The latest Thailand Economic Monitor is available for download at www.worldbank.or.th Thailand Moves to 15th in World Bank's Doing Business Ranking BANGKOK ­ On January 1st, 2007, the new electronic cargo clearing system was introduced by the Thai Government.Knownas"e-customs"amongtheThais,this paperless, one-stop system was designed to make the A panel of experts from government and the private sector discussed the export-import business easier by reducing the time and Doing Business rankings of Thailand cost for exporting and importing goods in the country. TheReportclearlydemonstratesthat,ifcountriesreduce The measure also helped Thailand move up two places red tape, simplify business regulations and procedures, intheWorldBank'srankingontheeaseofdoingbusiness, simplify tax collection, and protect private property said SylviaSolf, a Private Sector Development Specialist rights, businesses can be started more quickly and at for the International Finance Corp., the World Bank's lower cost, said Ian Porter, the World Bank Country private investment arm. According to Doing Business Director in Thailand. 2008, the latest annual World Bank report measuring business climates, Thailand is ranked 15 out of 178 In contrast, heavy business restrictions, lengthy countries, compared with 17 a year earlier. procedures, and complex tax administration increase business costs, delay business start-ups and reduce "This goes to show that a simple, unified regulatory competition and firms'productivity, Mr. Porter said. reform can improve the competitiveness of the country," said Ms. Solf during the Doing Business in Thailand "In general, easing the cost of doing business fosters a more Conference held last month at the Ministry of Finance. conducive business climate, which helps promote business growth and productivity, employment, and overall economic Co-hosted by the Ministry of Finance, the Office of Public growth." SectorDevelopmentCommission(OPDC),andtheWorld Bank,theDoingBusinessinThailandConferencebrought Thailand is competitive with other East Asian countries togethermorethan100representativesfromgovernment in many areas studied by Doing Business. However, in agencies, the private sector, and the news media. During the "paying taxes" and "getting credit" areas, Thailand is in the bottom half of the East Asia economies. The country's rankings in these areas have also fallen from last year's, Doing Business shows. In other areas, such as starting a business, registering property or closing a business, Thailand's rankings fell even though the country's score was almost unchanged from last year's. "This is not because Thailand is getting worse, but other countries are reforming more in these areas," explained Ms. Solf. Countries should, however, focus less on rankings and more on reforms that will further improve business climate, theWorld Bank team noted. "The main objective ThaiFinanceMinisterChalongphobSussangkan(inforeground)chairing of Doing Business is not to rank countries, but to identify the internal government meeting on the results of Doing Business 2008 Page 2 thegoodpracticesthatmakedoingbusinesseasierinsome countries than others," said Justin Yap, a Regulatory Economist of the World Bank The Doing Business methodology also has its own limitations, Mr. Porter pointed out. To make the data comparable across countries, for example, the Doing Business indicators refer to a specific type of business (a standardized case of company with five owners, 10-50 employees, whose start-up capital is 10 times its income per capita, etc). In addition, the Doing Business survey does not cover infrastructure,workers'skills,andpoliticalaswellaspolicy Justin Yap (left) provided the background on Doing Business during the Conference, while Sylvia Solf (right) presented the in-depth findings on uncertainty, all of which are critical to business growth, Thailand said Albert Zeufack, theWorld Bank's Senior Economist in Thailand and an expert on investment climate and whole picture," he explained. "It is important to look competitiveness. beyond the rankings and into reforms that are necessary "If you focus too much on the rankings and only on the to continue improving the overall business climate." indicators studied by Doing Business, you will not get the For more information, please visit www.doingbusiness.org Other Events Excessive speed and driving under the influence of alcohol are the primary causes of road accidents in Japan Supports Thai Youth Thailand, which kill more than 10,000 people every Helmet Use Program with year.In2006,forexample,434deathsand4,772injuries $859,200 Grant caused by road accidents were reported during the New Year's holiday alone. An innovative campaign to reduce traffic fatalities Of the 300,000 people involved in road accidents in among youngThais received significant support from 2006, more than a third were using motorcycles. theJapaneseGovernmentthroughaUS$859,200grant However, less than 15 percent of the motorcyclists signed in Bangkok last month. involvedintheseaccidentswereusinghelmets,despite This grant will enable the International Federation of thelawrequiringthemto.Giventhathalfofthepeople Red Cross and Red Crescent Societies (IFRC) to who use motorcycles are under 25, an awareness- implement the Youth Helmet Use Program in 120 raising program targeting young people should be an communities in the Northeast. Road accidents are effective measure to reduce deaths and serious now a leading cause of death inThailand, killing about injuries. 1,000 people a month. A lot of these accidents happened in rural areas and involved youth on motorcycles. This could have been prevented if young people understood the importance of helmets and could afford one. ThegrantisprovidedbytheJapanSocialDevelopment Fund (JSDF) ­ a joint Japan-World Bank mechanism providing direct support to the poorest and most Representatives of the World Bank, Ministry of Finance, and the IFRC during the grant- vulnerable countries within the World Bank Group. signing ceremony Thegrantwillsupportanawareness-raisingcampaign, helmet subsidies, and enforcement of helmet use in poor communities near national highways. Under the agreement,theselectedcommunitieswillidentifytheir own priorities for road safety, and then develop and implement their own education and enforcement campaigns using funds provided through the grant. A portionofthegrantwillalsosupporttrainingprograms Helmet use is rare among youth in Thailand (photo courtesy of the Global Road Safety to enable community members to provide first aid to Partnership) accident victims. Page Clean Development Mechanism: Opportunities for Thailand WhatistheCleanDevelopmentMechanism?Andwhat'sinitforThailand? These questions were answered during the November 19 seminar on the Clean Development Mechanism (CDM).The seminar was co-hosted by Chiang Mai University's Energy Research and Development Institute (ERDI) and the World Bank Office Bangkok. This seminar aimed to increase public awareness of CDM, one of the three mechanisms established under the Kyoto Protocol designed to reduce greenhouse gas emissions and address global warming. More than 60 government officials, local business operators, and university lecturers as well as students signed up to hear from two World Bank's experts on CDM: Nat Pinnoi (background) and Pongtip Puvacharoen (foreground). Other speakers included the ERDI Director, Asso. Prof. PrasertRerkkriangkrai,andaWorldBankexpertonrenewableenergy financing, Chanin Manopiniwes. If you would like to request any of our seminar materials, please contact our Public Information Assistant, Buntarika Sangarun, at (0) 2686-8326, or email bsangarun@worldbank.org. New World Bank Regional Library Now Open in Chiang Mai Good news for those who live in Chiang Mai and are interestedintheWorldBank'sanalyticwork.Youcannow access our research and publications at the new World Bank Regional Library at Chiang Mai University! World Bank Regional Libraries in East Asia and Pacific offerawiderangeofpublicationsondevelopmentinthe region. In addition, visitors will also have access to all of our major annual publications, including the World Development Report (WDR), an invaluable guide to the World's social, economic, and environmental progress today,andDoingBusiness,thereportmeasuringbusiness climate in more than 170 countries. Our Depository and Regional Libraries are hosted by leading universities and research institutes around the world. With their support, we have been able to share knowledgeandinformationmoreeffectively.InThailand, we team up with Chulalongkorn University, the Thailand Development Research Institute, the National Institute of Development Administration, Khon Kaen University, and now Chiang Mai University. The launch of theWorld Bank Regional Library at Chiang Mai University took place on November 19 and created a lot of interest among CMU students and lecturers. We are thankful for CMU's support and we look forward to more collaboration with the University in the future. Page