41605 CURRENCYEQUIVALENTS (Exchange Rate Effective 11/08/2002) Currency unit = baht (THB) 1 baht = US$0.02 US$1 = THB 43.32 GOVERNMENTFISCALYEAR October 1 ­ September 30 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank JICA Japan International Cooperation Agency AFTA ASEAN Free Trade Agreement JBIC Japan Bank for International Cooperation AusAID Australian Agency for International KPI King Prajadhipok's Institute Development M&E Monitoring and Evaluation ASEM Asia-Europe Meeting MDGs Millennium Development Goals ASEAN Association of Southeast Asian Nations MIGA Multilateral Investment Guarantee Agency BOI Board of Investment MRC Mekong River Commission CAS Country Assistance Strategy NCCC National Counter-Corruption Commission CDP Country Development Partnership NESC National Economic and Social Advisory CEM Country Economic Memorandum Council CFAA Country Financial Accountability Assessment NESDB National Economic and Social Development CPAR Country Procurement Assessment Report Board CSO Civil Society Organizations NGO Non-Governmental Organization DO Development Objective NPL Non-Performing Loans DPR Development Policy Review OED Operations Evaluation Department EXIM Export-Import Bank PHRD Policy and Human Resource Development ESCAP Economic and Social Commission for Asia PPI Private Participation in Infrastructure and the Pacific PPP Purchasing Power Parity FDI Foreign Direct Investment PSRL Public Sector Reform Loan FSAP Financial Sector Assessment Program QAG Quality Assurance Group GDLN Global Distance Learning Network ROSC Reports on the Observance of Standards GDP Gross Domestic Product and Codes GEF Global Environment Facility SIF Social Investment Fund GMS Greater Mekong Subregion SIP Social Investment Project GTZ German Technical Cooperation SME Small and Medium Size Enterprise HIV/AIDS Human Immunodeficiency Virus/Acquired TA Technical Assistance Immune Deficiency Syndrome UN United Nations IBRD International Bank for Reconstruction and UNDAF United Nations Development Assistance Development Framework ICR Implementation Completion Report UNDP United Nations Development Program ICT Information and Communications UNICEF United Nations Children's Fund Technology UNIFEM United Nations Development Fund IFC International Finance Corporation for Women IMF International Monetary Fund WBI World Bank Institute IP Implementation Progress WTO World Trade Organization ILO International Labor Organization WorldBankGroupTeam IBRD IFC Vice President: Jemal-ud-din Kassum Vice President,Investment Operations: Assaad Jabre Country Director/Task Manager: Ian C. Porter Director, EAP: Javed Hamid Team Members: Thailand Country Team Country Manager: Michael Higgins PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP THAILAND--WORLD BANK GROUP PARTNERSHIP FOR DEVELOPMENT EXECUTIVE SUMMARY.....................................................................................................................................i I. COUNTRYCONTEXT.................................................................................................................................3 A. Introduction............................................................................................................................................................................................4 B. RecentPoliticalDevelopments........................................................................................................................................................4 C. RecentEconomicDevelopments......................................................................................................................................................4 D. KeyPovertyandInequalityTrends................................................................................................................................................6 E. Thailand'sDevelopmentChallenges..............................................................................................................................................7 F. Medium-TermEconomicProspectsandExternalDevelopments....................................................................................17 II. PROGRESSSINCETHEFY98-02COUNTRYASSISTANCESTRATEGY................................................19 A. WorldBankRetrospective...............................................................................................................................................................20 B. TheInternationalFinanceCorporationRetrospective.........................................................................................................24 III. THE THAILAND - WORLD BANK GROUP PROGRAM FY03-05 ..................................................25 A. ThailandandtheWorldBankGroup­anEvolvingPartnership.....................................................................................26 B. AchievingGreaterSelectivityintheThailandCountryProgram...................................................................................27 C. TheBank'sCountryProgramFY03-05........................................................................................................................................28 D. IFCandMIGAProgramsFY03-05................................................................................................................................................35 E. Partnerships.........................................................................................................................................................................................36 F. ResultsFocusandCountryProgramMonitoring...................................................................................................................38 G. BankGroupRiskManagement.......................................................................................................................................................39 H. Conclusion...................................................................................................................................................................................40 ANNEXES CountryataGlance................................................................................................................................................................42 Selected Indicators of Bank Portfolio Performance and Management..................................................................44 IBRD/IDAProgramSummary................................................................................................................................................45 IFC&MIGAProgram forThailand........................................................................................................................................46 Summary of Non-Lending Services...................................................................................................................................47 Poverty,SocialDevelopment,andEnvironmentIndicators..............................................................................................48 Key Economic Indicators..................................................................................................................................................49 Key Exposure Indicators......................................................................................................................................................51 StatementofIFC'sHeldandDisbursedPortfolio.............................................................................................................52 Thailand Operations Portfolio..................................................................................................................................53 Summary of Development Priorities................................................................................................................................54 Private Sector Development..............................................................................................................................................55 World Bank Institute in Thailand.............................................................................................................................60 Participation and Consultation in the Thailand-World Bank Group Partnership...........................................63 OEDEvaluation, QAG Assessment, and Client Survey................................................................................................87 Country Development Partnership...............................................................................................................................92 Results Measurement and Management............................................................................................................98 This document provides a framework for a new predominantly a rural problem, with nine of ten poor and innovative partnership between Thailand and the people living in rural areas, two-thirds in the North- World Bank Group for FY03-05.1 In recent years, the east. relationship between Thailand and the Bank Group has progressed from primarily a borrower-lender relation- Thailand's National Development Agenda ship toward a true development partnership. Financial support remains an important part of the Thailand's new Constitution in 1997 was a land- partnership, especially for IFC and MIGA transactions, mark in the country's history. Widely accepted as a but the Bank's role has evolved more toward facilitat- "People's Constitution," it sets out an ambitious vision ing knowledge sharing and providing policy advice on for Thailand's future, driving fundamental changes in medium-term structural issues. Building on this the country's political, economic, and social fabric. To evolving approach, the new Thailand-Bank Group realize this vision, Thailand has formulated a national partnership focuses on diagnostic and monitoring work development agenda--built around four pillars. and a limited amount of implementation support for selected critical issues in Thailand's overall national n Human and social capital, particularly education development agenda. reform, has been highlighted as a top priority. While Thailand has made impressive gains in Economic and Poverty Dynamics primary education, the quality of schooling and enrollment rates in higher education remain Thailand has made significant progress since the major challenges. economic and financial crisis in 1997-98. Macroeco- nomic stability has been restored, access to n Competitiveness has emerged as a key concern after international capital markets has been reestablished, the crisis. This challenge goes beyond restructur- inflation remains low, and real GDP growth is projected ing the financial and corporate sectors and to be about 4 percent this year, up from 1.8 percent in building infrastructure; it includes strengthening 2001. The recovery is driven mainly by consumption innovation systems, moving to a knowledge-based growth, prompted by rising consumer confidence, low economy, and improving the business environ- interest rates, and fiscal measures to stimulate ment, especially for small and medium-size consumption. However, due in part to uncertainties in enterprises. private investment, public debt, and global economic prospects, the recovery remains fragile. Thailand's n Poverty and inequality worsened during the crisis. medium-term prospects now depend on its ability to Because economic growth alone will not be enough address underlying structural reforms--such as to address this challenge, more balanced develop- completing financial and corporate sector reforms and ment and better targeted support are needed to improving the country's competitiveness. Thailand address persistent urban-rural disparities. must also address the paramount challenges of poverty and inequality. Income inequality is among the n Naturalresourcesandtheenvironment havecome under highest in Southeast Asia, and although poverty has stress due to Thailand's rapid economic declined from its crisis peak of 15.9 percent in 1999 to development. Their management was overlooked 13.0 percent in 2001, it still remains above the 1996 in the high-growth years, but natural resources SUMMARY level of 11.4 percent. Poverty continues to be and the environment have now emerged as key policy priorities. 1 In the light of feedback from the Thai Government and other stakeholders, this document is called the "Thailand-World Bank Group Partnership for Development" instead of "Country Assistance Strategy" to reflect the changing nature of the Bank Group's engagement in Thailand. EXECUTIVE i EXECUTIVE SUMMARY Across these four pillars, governance is the work will cover the key economic and social underlying theme--the foundation for sustained developments and fulfill the Bank's due diligence progress in the other areas of the national agenda. responsibilities. It will include a regular series of Progress on governance is required for the public and economic, social, environment, and country private sectors, as well as civil society, and encompasses dialogue monitors as well as support for further greater transparency, accountability, and decentrali- in-depth work on issues of competitiveness and zation. In addition, given Thailand's central role in their links with poverty reduction in the rural Southeast Asia and the Mekong sub-region, in areas of northeast Thailand. It will also give the particular, Thailand also needs to continue deepening Government and Bank Group a basis for identify- its regional cooperation and integration. ing areas in which deeper support could be beneficial--in line with the recommendations of the Previous CAS for Thailand -- Key Lessons Bank's Middle-Income Countries Task Force. Feedback received through stakeholder consul- n In-depthimplementationsupportinafewcriticalareas, tations--including with the Government, civil society, as identified through the comprehensive diagnos- private sector, Parliament, and other donors--a recent tic overview and agreed with the Government. client survey, and OED and QAG assessments point to This implementation support will be provided a number of important lessons. When well-designed through: and integrated, the Bank's policy advice and knowledge sharing can be a viable standalone form of - CountryDevelopmentPartnerships(CDPs).TheCDPs development assistance. However, this assistance must are knowledge-based partnerships which set out be focused, selective, client-owned, and adequately medium-term integrated frameworks for reform resourced, with clear progress benchmarks and programs. The CDPs are led by the Government, monitoring. Through its policy advice, the Bank has with the Bank and other partners supporting also been effective in raising awareness of and the development of the overall reform frame- advancing the debate on key development issues. work, analytical work, capacity building, and However, the Bank needs to help facilitate greater provision of technical assistance. The participation of all stakeholders in the design and Goernment and Bank will engage in CDPs very implementation of actual reform programs and place selectively and in only a few specific areas. greater emphasis on making the work it supports Given the emphasis on knowledge sharing, the widely accessible. World Bank Institute (WBI) will play a key complementary role. Highlights of the Partnership for 2003-05 and Risks - IFCandMIGAtransactionsandIBRDlending. The CDP objectives can also be supported by IFC and Thailand and the Bank Group have developed a MIGA transactions, particularly for the real partnership, with the Government setting the competitiveness pillar in the national agenda. agenda and the Bank Group focusing its interventions In addition, the Bank will use its existing on areas where it can play a catalytic role. The Bank portfolio--and limited new lending if requested Group's engagement will be limited and selective and by the Government--in a few strategically comprised of two complementary levels: important areas. n MonitoringanddiagnosticoverviewofThailand'skey During FY03-05, the Bank Group will provide development challenges across all areas of the implementation support by: national agenda. This diagnostic and monitoring ii nCompleting its work in ongoing partnerships with the CDPs will be measured by outcome benchmarks Government. The Bank will complete its support to and impacts, complementing the traditional moni- the current CDPs for Governance and Public toring of outputs and inputs. However, it should Sector Reform, Social Protection, Financial and be noted that measuring the results of the Bank's Corporate Competitiveness, and Poverty Analysis engagement in a CDP is particularly difficult given and Monitoring by FY04-05. Over this period, the the complementary contributions of numerous Bank's support to each CDP will become more partners. focused on a progressively narrower set of issues. IFC will continue to concentrate on financial n Complementing this development partnership at the markets and corporate restructuring, and MIGA countrylevelwithworkonregionalandglobalpublicgoods. will help build capacity for investment promotion The Bank is already actively involved in a number services. of regional initiatives, such as the Mekong River Commission and the Greater Mekong Sub-region nSelectivelyengaginginnewpartnerships,includingfinan- Program and will strengthen its support for these cial support. AstheBankphasesoutitsengagement programs in the coming years. The Bank will also in the current CDPs, it may engage in a limited help share Thailand's development experience number of new CDPs, possibly for education, through trilateral cooperation with other countries knowledge economy, environment, or infrastruc- in the region, especially with Cambodia and Lao ture. The Government has also requested one IBRD PDR. Disseminating lessons from Thailand's highly loan in FY03 for Highways Management and has successful social investment fund and land titling indicated that it may ask the Bank for more invest- programs are two examples of such cooperation. ment lending in infrastructure in view of the WBI will play a central role in facilitating this backlog of investments, the need for reform, and knowledge sharing. the importance of infrastructure development for growth and poverty reduction. Decisions on where In the context of modest country political and the Bank should focus its limited resources will be economic risks, the financial risks to the Bank are based on diagnostic work and an explicit set of limited and expected to decrease further as a result of criteria for selectivity. These criteria include the limited new borrowing envisaged over the coun- an outcomes-focused program, strong government try program cycle. There are a set of Bank institutional commitment, and linkages with the most critical risks which relate to: strategic effectiveness and policy reform areas--particularly poverty reduc- whether the Bank program is focused on the highest- tion. Specific directions for Bank Group support return interventions; the CDP approach and the will be discussed in the regular, twice-yearly reputational risk to the Bank of insufficient progress CountryProgrammingandReviewDiscussions withthe on one or more CDPs; and operational effectiveness, Government and other development partners. IFC including the need for appropriate staff skills and will complement its current strategic focus with incentivesandsufficienthumanandfinancialresources. greater emphasis on infrastructure and ICT These risks will be closely monitored in the context of investments. It will also help catalyze private the Country Programming and Review Discussions, investments in health, education, agribusiness, and and the Bank will consider disengaging from specific SMEs, investments that are expected to benefit from partnerships if key progress benchmarks are not being SUMMARY Bank-supported policy and advisory work. MIGA met or resources are inadequate. The Bank's decentral- will strengthen its capacity building efforts and ized country office in Bangkok will also help facilitate explore guarantee opportunities. To enhance close monitoring of overall country developments and overall effectiveness and impact, the Bank Group management of the CDP program as well as help to is adopting a results-oriented approach for its ensure knowledge sharing across countries in the program in Thailand. Specifically, progress on the region. EXECUTIVE iii COUNTRY CONTEXT 4 Introduction 4 Recent Political Developments 4 Recent Economic Developments 6 Key Poverty and Inequality Trends 7 Thailand's Development Challenges 17 Medium-Term Economic Prospects and External Developments PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP A. INTRODUCTION AnewGovernmentformedin1997madesignificant progress in advancing the constitutional agenda and This document1 provides a framework for a new restoringmacroeconomicstability. Undertheleadership and innovative Thailand-World Bank Group Partner- of Democratic Party head Chuan Leekpai, governance ship for FY03-05. Since the previous Country Assistance reforms progressed with the establishment of indepen- Strategy (CAS), formulated at the height of the economic dent watchdog institutions, including the National and financial crisis in 1997-98, the relationship between Counter-Corruption Commission, the National Election Thailand and the World Bank Group has progressed Commission, the State Audit Commission, the Admin- from a borrower-lender relationship toward a true istrative Court, and the Office of the Ombudsman. development partnership. Financial support does Furthering the constitutional goal on access to remain part of the relationship, especially for IFC and education, an Education Act granted all citizens the right MIGA transactions, but the Bank's role has evolved more to12yearsoffreeeducation. TheGovernmentalsohelped toward facilitating knowledge sharing and providing restore macroeconomic stability and embarked on a policy advice on medium-term structural issues. comprehensive structural reform program focused on Building on this evolving approach, the Partnership the financial, corporate, and social sectors. proposed for FY03-05 focuses on diagnostic and monitoring work and a limited amount of implementa- Inthe2001elections,thefirstundertheprovisions tion support for selected critical issues in Thailand's ofthe1997Constitution,theThaiRakThaiParty,ledby overall national development agenda. ThaksinShinawatra,wonalandslidevictory. ThaiRak Thai won the election on a pro-poor, pro-rural, and B. RECENTPOLITICALDEVELOPMENTS pro-Thailand platform and formed a coalition government with 325 out of 500 seats in Parliament. Attheheightoftheeconomicandfinancialcrisisin The Government spent its first year in office putting into 1997,ThailandadoptedanewConstitution,alandmarkin place its signature election programs, including more the country's political history. Participatory and affordablehealthcare,supportforvillagefundstofinance inclusive, the new Constitution is widely accepted as a local projects, and a debt moratorium for farmers. The "People's Constitution." It reflects the rise of civil Government has also moved on the governance and society--a vocal middle class, a vigorous NGO commu- public sector reform agenda, with a major restructur- nity, and vibrant business interests--and it sets out a ing of central government ministries in October 2002. It bold vision of Thailand's future, laying the foundation is now placing more emphasis on some of the other for a more open democratic society and serving as the difficult structural reforms. impetus for major reforms. For the first time in Thai history, the Constitution establishes a judicial review C. RECENTECONOMICDEVELOPMENTS process independent of executive branch control, enhancing the accountability of government and the Thailandhasmadecommendableprogresssincethe protection of civil liberties. It provides a legal basis for crisis.RealGDPgrewbyanaverageof3.6percentayear broader public participation. It establishes constitu- during 1999-2001, and poverty came down to 13 tional mechanisms to promote accountability and trans- percent in 2001, from a peak of 15.9 percent in 1999 parency. It is also very specific about the rights, (Box 1). Thailand has been highly effective in restoring liberties, and welfare of the people--including gender macroeconomic stability, achieving low inflation, and CONTEXT equality, access to information, education and health, reducing external vulnerability. Growth rebounded and environmental protection. strongly in the first half of 2002. Estimated to reach about 4 percent for 2002, it is more than twice the 1.8 percent 1 In light of feedback received from the Thai Government and other stakehold- registered in 2001 and will return real GDP to its level ers,thisdocumentwillbecalledthe"Thailand-WorldBankGroupPartnership before the crisis. for Development" instead of "Country Assistance Strategy" to reflect the changing nature of the Bank Group's engagement in Thailand. COUNTRY 4 Box 1. Summary of Recent Economic Developments 1. Growth recovery is strengthening 2. ... driven mainly by consumption. 3. External debt is falling ... 4. ... but public debt is rising. Domesticconsumptionhasbeenthemaindriverof Thailandhasreducedexternalvulnerabilitybypre- growth. A significant fiscal stimulus program amount- servingitsexportmarketshareandloweringitsexternal ing to about 2 percent of GDP and rising consumer debt. In sharp contrast to 2000, export volumes and confidence have supported rural incomes and raised export and tourism receipts grew in 2001, and total private consumption to over 58 percent of GDP. Private export receipts in 2002 are expected to be more than 20 investment, after hitting a low of 11 percent of GDP in percent higher than in 1998. Thailand has also gener- 1998, has risen gradually to reach 16 percent this year, ated annual current account surpluses of around 6 but it remains below the average of about 20 percent for percent of GDP to repay debt and accumulate foreign 1975-90. Further corporate and financial sector restruc- reserves. External debt net of reserves, having come turing is still required, and capacity use, though down from 50 percent of GDP in 1998 to 30 percent in improving in several sectors, remains low. Public 2001, is expected to decline further to around 20 percent investment as a share of GDP has been falling since 1996- of GDP by end-2002, outperforming other countries in 97, as recurrent spending on social safety nets and the region. financial restructuring increased. 5 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP However, public debt has increased, and the D. KEYPOVERTYANDINEQUALITY Governmenthasinitiatedfiscalconsolidation. Thecumu- TRENDS lative buildup of public spending and fiscal deficits boosted total public debt--mainly domestic debt--to Thailand made impressive gains in poverty 60 percent of GDP in 2002. Nearly two-thirds of the reduction from the 1980s to the mid-1990s, but poverty increase in spending stemmed from financial sector increasedwiththecrisis.Althoughhigheconomicgrowth restructuring, with the rest from the costs of social safety rates pulled the income poverty incidence down from nets, the deficits of non-financial state enterprises, and 32.6 percent (17.9 million people) in 1988 to 11.4 percent the fiscal stimulus package. As the Government's plans in 1996 (6.8 million), the incidence of poverty increased for fiscal consolidation are implemented, public debt is sharply to 15.9 percent in 1999 (9.9 million people). expected to stabilize but debt dynamics remain vulner- Economic recovery since the crisis has reversed some of able to lower-than-expected growth, future fiscal policy, this increase, with income poverty declining to 13.0 and state-owned enterprises' performance. percent (8.2 million people) in 2001. However, poverty incidence remains above pre-crisis levels, and a large Corporateindebtednesshasfallenbutstillremains share of the population is clustered around the official high relative to other countries in the region.Corporate poverty line (Box 2). profitability remains weak, and the result is a rise in new and reentry non-performing loans at an annual rate Thailand's poor are concentrated in rural areas. of around 8 percent this year. Large banks are able to Nine of every ten poor people reside in rural areas, and generate profits and fully provision, but others continue the rural Northeast region is home to two-thirds of to be under-provisioned and under-capitalized. Thailand's poor, with a poverty headcount of 28.1 percent in 2000. This severe regional bias is a product of Total factor productivity growth has begun to Thailand's unequal growth pattern in the past. During recover since the crisis. Although there is a cyclical 1987-96, Bangkok accounted for more than 52 percent of component in this recovery, structural factors also the rise in GDP, but only 11 percent of the increase in account for this turnaround in productivity growth. population. By contrast, the Northeast region accounted Recent improvements in regulatory institutions and in for only 11 percent of the increase in GDP but 32 percent the business environment contributed to it; this is of the increase in population. evident from the fact that Thailand's global ranking on competitiveness rose in 2001 relative to 2000 and also Althoughincomepovertydeclinedoverthelasttwo from firm-level information, which suggests that the decades,incomeinequalityincreased.Incomeinequality recovery is led by the more efficient outward-oriented in Thailand rose between 1981 and 1999, with the share manufacturing sector. of income of the poorest quintile dropping from 5.4 percent to 3.9 percent, while the share of the richest quintile increased from 51.5 percent to 58.3 percent. The Gini coefficient of income inequality rose from 45.3 in 1981 to 52.5 in 2000. In the region, only Papua New Guinea, the Philippines, and Malaysia show higher inequality. CONTEXT Poverty and inequality take on many shapes in Thailand. Lack of income is only one dimension of poverty and inequality, with lack of opportunity, empowerment, access to social services, and vulnerabil- ity being other equally important aspects. COUNTRY 6 The continued degradation of the environment and of the Millennium Development Goals (MDGs), agreed inadequate natural resource management deprive some onbythemembersoftheUnitedNations(UN)"to create of their sus tainable livelihood. As described in the next anenvironment--atthenationalandgloballevelsalike-- section, these multi-dimensional aspects of poverty and which is conducive to development and the elimination inequality and measures to address them are a priority of poverty," and which Thailand intends to utilize to for Thailand's national agenda. They are also the focus enhance outcomes- and impact-based management (Box 3). Box 2. Poverty Measurement and Vulnerability Thailand's poverty is measured on an income basis. Poverty line for Consumption-based Population below The official poverty line in 2000 amounted to 882 2000 headcount (%) poverty line (millions) Baht, or US$1.60 in 1993 Purchasing Power Parity PPP$1 a day 5.2 3.2 (PPP). The income-based poverty headcount is 14.2 PPP$1.60 a day 12.2 8.9 percent, while the alternative consumption-based PPP$2 a day 35.6 22.2 indicator is 12.2 percent. A large share of the population is clustered around the official poverty line. Raising the poverty line from PPP$1.60 a day to PPP$2 a day increases the poverty headcount from 12.2 percent to 35.6 percent and the number of poor from 8.9 to 22.2 million. No matter how the poverty line is set, poverty in Thailand remains predominantly rural, concentrated in the Northeast. Regions PPP$1aday(%) PPP$1.6aday(%) PPP$2aday(%) Headcount Shareofpoor Headcount Shareofpoor Headcount Shareofpoor Bangkok 0.1 0 0.3 0 1.2 0 Central 2 6 5 7 12 10 North 5 13 12 15 30 19 Northeast 14 69 28 67 50 59 South 6 11 11 10 26 12 E. THAILAND'SDEVELOPMENT CHALLENGES To address the challenges of growth and poverty Poverty Reduction Strategy drafted in 2002. Consulta- reduction,acomprehensivenationaldevelopmentagenda tions with the Government and other stakeholders isbeingdevelopedaroundfourpillars:HumanandSocial reveal that sustained progress on these four pillars will Capital, Competitiveness, Poverty and Inequality, and also require improvements in governance, as clearly NaturalResourcesandEnvironment.Anchoredinthe1997 embodied in the Constitution, and that effective Constitution, this national development agenda is in line implementation of this agenda should help ensure that with the broad objectives of the Ninth Economic and Thailand continues to reduce poverty, including in the Social Development Plan (2002-06) and the national Northeast. 7 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Thailand's National Agenda i) Human and Social Capital TheHumanandSocialCapitalpillariscriticalto realizingfastergrowth,betterqualityoflife,andgreater socialcohesionandachievingthetargetsoftheNinthPlan andtheMDGs.TheConstitutioncontainsexplicitprovi- sions for access to education and health services, as well as social protection for the vulnerable. achieving universal secondary education; improv- n Education. Thailand is likely to achieve universal ing educational outcomes, including on such critical access to primary education as targeted in the MDGs. subjects as science and technology; enhancing However, enrollment rates in higher education educational standards; and establishing a quality remain low at only 71 percent for secondary educa- assurance system. It will also be important to tion and 25 percent for tertiary. The equity, efficiency, review carefully the balance between public and and quality of education also remain major issues. private provision of services, the adequacy and mix In 2001, Thailand was ranked 44th of 49 countries for of public expenditures, financing issues, and other its competitiveness in education, lower than other constraints to achieve higher enrollment. Asian countries such as Korea, Malaysia, and the Philippines.2 Failure to address these issues could n Health. Over the past 30 years, Thailand has result in further deterioration in Thailand's competi- achieved remarkable progress in basic healthcare, tive position over time, as well as increased tension with significant declines in infant and maternal as disparities grow. The Constitution and the 1999 mortality, and is projected to meet the MDG goal of Education Act are sweeping in their scope with further reducing these mortality rates. Health respect to education. Their intent is to focus account- financing reform remains a key priority. The public ability at the local level (through the establishment sector finances about half of all health expenditures, of local education authorities and school boards), and about 75 percent of Thais have access to some introduce more creativity and locally-driven form of health benefits. To help provide coverage for innovation in curricula; move to a learner-centric the quarter without access, the Government intro- teaching model; upgrade the quality of teachers; duced the "30 baht per visit" health scheme in 2001, establish effective quality assurance; and enhance boosting utilization rates, but at a significant the use of technology. However, the envisaged burden to the budget.3 HIV/AIDS constitutes an administrative reforms have proven difficult to important challenge. Although infection rates in implement, and overall progress to date has been brothel-based sex workers fell from 31 percent in limited. Special emphasis should be placed on 1994 to 18 percent by the end of the decade, the rate 2 Source: World Competitiveness Yearbook 2001, International Institute for Management Development. The criteria for competitiveness in education are comprised ofi)totalpublicexpenditureoneducation,ii)pupil-teacherratio(primaryeducation),iii)pupil-teacherratio(secondaryeducation),iv)secondaryschoolenrollment,v) higher education achievement, vi) education assessment, vii) educational system, viii) university education, ix) illiteracy ofadult over 15 years, x) economic literacy, CONTEXT xi) education in finance, xii) qualified engineers, and xiii) knowledge transfer between companies and universities. 3 Under the 30-baht health policy, all Thais are entitled to receive doctors visits at 30 baht per visit, including any medication prescribed. The policy does not cover procedures such as cosmetic surgery, fertility treatments, organ transplants, or treatment for HIV/AIDS (with the exception of treatment for opportunistic infections associated with HIV/AIDS). COUNTRY 8 of infections among women is increasing faster than ii) Competitiveness among men, indicating that HIV/AIDS will be a health problem for adults and children outside the Competitiveness, critical to sustaining higher traditional higher-risk groups. Particular emphasis growth in Thailand, is a high priority for the current needs to be placed on sustaining condom use and administration. The Government has established a launching an initiative to prevent infection by National Competitiveness Committee, and its competi- injecting drug users. Ensuring access to cost- tiveness strategy seeks to balance the successful East effective treatment also remains a priority. Asian formula of fiscal discipline, openness to trade and investment, and export orientation with a renewed nSocial protection. Thailand's long-trusted mecha- focus on domestic capacity and linkages with domestic nism of community and family-based social protec- firms, including small and medium size and rural tion was tested during the economic and financial enterprises. crisis, and many Thais at the fringes of the economy were left without resources to sustain themselves. n Economic management. In addition to maintaining The main challenge is to put in place formal social sound macroeconomic management, Thailand needs protection mechanisms without displacing these a business environment conducive to innovation, informal mechanisms that underpin social cohesion. entrepreneurship, and competition on a level play- The main components of Thailand's social protec- ing field. This requires improvements in its trade, tion strategy include labor market policies and competition, and investment regimes. While Thai- programs, social insurance, and social assistance. land is a relatively open economy, it intends to The first two are oriented toward those in the further liberalize its trade regime under commit- formal sector, and coverage has been expanded ments to the ASEAN Free Trade Agreement (AFTA) significantly. For example, the old-age pension and its numerous bilateral preferential trade system introduced in 1998 now covers an estimated agreements. Improving the transparency and 5.7 million workers, and a formal unemployment efficiency of customs administration as part of the benefitsschemeisplanned.Socialassistanceschemes Master Plan for Administrative Reform of the are targeted toward only the vulnerable--women, Customs Department is also important. While the children, the elderly poor, and the handicapped. new Competition Law improves the overall compe- However, implementation has been difficult, with tition regime, the institutional capacity to enforce wide gaps in coverage and equity. For example, the law needs to be strengthened along with public enterprises with fewer than 10 employees account awareness of the rights provided to consumers by for more than 40 percent of non-government wage the law. Thailand has been successful in attracting employmentbutarenotcoveredbyanyoccupational foreign direct investment (FDI) in some sectors, safety and health legislation. Unpaid family work- particularly electronics and automotive, but efforts ers and informal sector workers are especially now need to be focused on maximizing the linkages vulnerable, as protection under current laws is between those investments and the domestic limited--this is a gender issue, as 75 percent of the economy and integrating FDI more clearly into the unpaid workers and 80 percent of the informal overall competitiveness strategy. In large part, this workers are women. Less than 15 percent of the means shifting the strategy of the Board of Invest- elderly poor receive social assistance benefits ment from attracting fixed capital investment targeted at the elderly, and only half the recipients through granting discretionary tax incentives to of the student loan program come from the bottom focusing on the enabling environment, including the three income quintiles. Overall public spending quality of local suppliers, human capital, infrastruc- favors richer over poorer provinces, and the ture, and services. efficiency of many programs remains problematic, with significant overlaps. 9 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP effective private participation and competition, and inadequate economic regulations continue to hinder private participation. In addition, poor infrastruc- ture in remote regions--particularly for transport-- has raised logistical costs and constrained rural business opportunities. The Government has begun to address these structural weaknesses. A master plan adopted in 1999 aims to separate the policy, nFinancialandcorporatesectordevelopmentandlegal regulatory, management, and operating functions of reform. The 1997 crisis caused an enormous loss for the infrastructure sub-sectors (including transport, the Thai economy--with non-performing loans telecommunications, energy, and utilities). The (NPLs) peaking at 48 percent of total loans and total reform effort culminated in major realignments of costs to taxpayers estimated at over US$33 billion, state agencies in 2002. The Government also intends or 27 percent of 2001 GDP. There has been a gradual to establish an independent regulatory regime in shift toward greater market discipline of banks and eachsub-sector.Thegoalsaretoimprovegovernance, firms and toward a more balanced financial system, promote private participation in telecommunica- with capital markets, institutional investors, and tions and utilities, strengthen multi-modal trans- non-bank financial institutions playing a more equal port linkages, and improve road and waterway role, reducing the concentration of risk in banks and accessibility in remote regions. Thailand must loans. These gradual changes will spread risks, continuetoimplementthisambitiousagenda,aswell reduce the likelihood of asset bubbles, and better al- as focus on state enterprise reform and capacity locatefundingtothemostproductiveuses.Although building for regulatory agencies and new line the direction for reform is clear, the speed of imple- ministries. mentation has been mixed, in part due to concerns about re-pricing and reallocating assets while the nKnowledgeeconomyandinnovation.WhileThailand's economy is still recovering from the crisis. Further rapid economic growth in the years preceding the structural reforms should provide competitive crisis was driven largely by capital accumulation, incentives which reward restructuring, re-capitali- policymakers understand that future growth will zation, disclosure, good corporate governance, and depend largely on productivity gains--increasing risk-basedpricing.Astrongerlegalregime,especially the capabilities of firms to innovate and the skills of in terms of economic laws and streamlined judicial Thailand's workforce to produce higher value procedures, would build confidence that disputes products. While Thailand enjoys important assets, will be resolved expeditiously. Full implementation such as economic openness, relatively flexible labor of international accounting standards and pruden- policies, a substantial presence of multinationals, tial regulations would attract capital into banks and and rich local wisdom and culture, the challenges firms, while tax changes would promote mergers are substantial. Thai firms face a bureaucratic and better allocation of risk through securitization public service and a system of public institutions and derivatives transactions. Finally, a measured and research universities that are seen as unrespon- transition to a limited deposit insurance program sive to market needs. In addition, Thailand produces would reduce the moral hazard from a bank-domi- a small number of engineers and scientists relative CONTEXT nated system with a high proportion of non- to regional competitors. This contributed to research performing loans and blanket deposit insurance. and development spending of just 0.13 percent of GDP in 1997, half the level of Malaysia, and just one- nInfrastructure. Although the private sector has a twentieth the level of Korea. Corporate governance sizable involvement in infrastructure, state invest- practices have been slow to evolve, with minority ments dominate. Markets are not yet open for shareholders not empowered to play a strategic COUNTRY 10 oversight role. Perhaps more importantly, a lack of capital, technological, and regulatory issues, be inter-firm collaboration, alliances, mergers and effectively addressed along with their financing con- knowledge sharing has prevented an effective straints. response to the pressing quality and cost standards that characterize high-value opportunities. The Thai Government, like Korea, Singapore, Malaysia, and several others, sees ICT as an entryway to a vision of a knowledge-based society, and substantial research supports this view. However, without rapid progress in building core skills and improving the business environment, firms will have neither the capabilities nor the incentive to actually leverage ICT. Without parallel reforms in telecommunications policy, large gaps in information access between rural and urban Thais, larger and smaller firms, is likely to persist. Given the complex, cross-cutting agenda which by its nature requires public-private iii) Poverty and Inequality partnership to be successful, the immediate challenge is to establish the leadership and gover- Reducingpovertyandinequalityremainscentralto nance framework that can help prioritize reforms theGovernment'snationalagenda.Povertyandinequal- and facilitate partnerships across government, civil ity feature prominently in the Ninth Plan and the society, and the private sector. national Poverty Reduction Strategy, which recognize that improvements in human and social capital, nStrategicthrustsfortherealsectors.TheGovernment's enhanced competitiveness and growth, and progress on competitiveness strategy emphasizes sectors in the environment are all critical to poverty reduction, as which the country is perceived to have a compara- captured by the MDGs. tive advantage: agriculture and agro-processing, textiles and fashion, tourism, software, and n Understanding poverty. In the post-crisis environ- automotive. The Government is also stressing the ment, the problem of poverty has taken on new char- importance of shifting the competitive paradigm in acteristics, and better understanding of poverty agriculture, industry, and services toward value cre- dynamics and the changing profile of the poor is ation, product differentiation, customization, needed to strengthen the foundation for anti- market positioning, and cluster development. poverty strategies in Thailand. The Government has Greater understanding of sectoral conditions and been enhancing the poverty database, which can opportunities--including supply chain linkages, greatly assist in analyzing poverty and the impact technological capabilities, and clusters--can enhance of public programs and policies. Important initia- Thailand's competitiveness, but it will also be tives are developing a national poverty map, important that the Government avoid the tempta- improving the socio-economic survey, and estab- tion of "picking winners" and continue to maintain lishing a poverty monitoring system. Further work a "level playing field" for all enterprises, domestic is needed to improve the gender disaggregation of and foreign. Successful promotion of small and poverty data and to develop an understanding of medium size enterprises (SMEs)--which account for the links between gender equality and poverty more than 94 percent of firms, half of industrial reduction. It will also be important to look more employment, and the majority of service employ- broadly at the range and quality of data currently ment--will also require that the underlying struc- collected and at its adequacy in relation to the over- tural weaknesses facing SMEs, including human all growth and poverty reduction challenge. 11 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP n Balanced development. Thailand has not made industry and increasing population, especially in progress in lowering inequality. Income inequality urban areas, has rapidly increased the levels of is increasing, and regional inequality remains high. pollution (solid and hazardous waste, air, noise, and The mean per capita income in Bangkok is more than water). Fine particles in Bangkok's air exceed stan- four times that of the Northeast. To address these dards by 2.5 times, and river water in the central, issues, the Ninth Plan emphasizes sustainable and southern, and eastern regions is of poor quality. The balanced rural and urban development. It focuses resulting risks to human health are high. Thailand on empowering community organizations and civil needs to focus on more effective enforcement of society, decentralizing decision-making power and environmental laws; stronger institutional capac- resources, promoting gender equality, developing ity, both national and local; and increased invest- border provinces as economic gateways, and ments in pollution prevention and control, with providing greater access to sources of information private sector participation. and knowledge for outlying regions. Such measures will need to be accompanied by a significant reallo- nSustainingnaturalresources.Landconversion,slash- cation and improved targeting of government and-burn agriculture, and intense exploitation of expenditures. Because education has the highest water have led to rapid deterioration of natural explanatory power in accounting for interpersonal resources. Forest cover fell drastically from 53 and regional variations in income and inequality, percent in 1961 to 25 percent in 1998, and over- lowering inequality will require addressing educa- harvesting of marine fisheries has reduced fishing tional access and quality. yields by 90 percent. Of particular concern is water scarcity, which occurs against a backdrop of low n Targeted programs. Thailand has a large number of availability, high pollution, and increasing per capita anti-poverty programs in place, and the Government consumption. Thailand ranks the lowest in Asia for recently introduced additional programs, such as annual per capita water availability, but it ranks the three-year debt moratorium for farmers and the 14th in the world in industrial organic water pollu- villagefundprogram.Ifwell-targetedandeffectively tion. To better balance conservation and exploita- implemented, these programs can be an important tion of natural resources, the Government recently supplement to broader strategies for growth and established a new Ministry of Natural Resources and poverty reduction. However, better data, monitor- Environment. The Ministry's immediate challenges ing, and evaluation will be needed. are to ensure an integrated approach to sustainable resource management, eliminate harmful subsidies iv) Natural Resources and the Environment (such as excessive use of pesticides and over- fishing), and assist in the capacity building of local Managementofnaturalresourcesandtheenviron- institutions and communities. As the Constitution ment,overlookedduringthehighgrowthyears,willneed grants local ownership of environment and natural to become a higher priority. Consultations with stake- resources and promotes community involvement in holders have consistently identified natural resources their management, appropriate incentives (such as and the environment as requiring urgent attention. land tenure, water rights, village forest management) Continuing environmental degradation, likely to aggra- and capacity building are needed to create opportu- vate conflicts over the use of natural resources, could nities for communities to partner with local govern- undermine Thailand's social cohesion. ments to find solutions. CONTEXT n Improving environmental quality. Thailand's nEnvironmental commons. Thailand is a signatory to economic expansion has been accompanied by many international and regional treaties, such as significant environmental costs. Rapid expansion of the Montreal and Kyoto Protocols and the Regional COUNTRY 12 Haze Action Plan. It also shares the biologically rich n Localgovernmentanddecentralization.Thailandisa Mekong River with Cambodia, China, Lao PDR, highly centralized country. In 2001, the central Myanmar, and Vietnam. It therefore has an intrinsic government spent 91 percent of total expenditures interest in participating in regional and global and collected 97 percent of taxes, and only 3 percent initiatives. Going forward, the challenge will be to of local government revenues were locally collected deepen regional cooperation and to partner with and retained. The central government has also neighboring countries on initiatives such as the appointed most local officials, determined local integrated management of the Mekong River. government salaries, and approved local budgets. The new Constitution emphasizes decentralization, v) Governance with the Decentralization Act (1999), the Decentrali- zation Master Plan (2000), and the Decentralization Progressongovernanceisrecognizedascriticalfor Action Plan (2002) providing the impetus. Some achievingsustainedprogressunderthefourpillarsofthe functions have begun to be devolved to local gov- developmentagenda.Progressongovernanceisrequired ernments, and the share of local government at all levels: the public and private sectors, and civil revenue is slated to increase from 20 percent in FY01 society. to 35 percent in FY06. However, many issues remain to be resolved. Fiscal transfers are not based on n Effectivenessofnationalpublicsectorinstitutions.The transparent formulas and hence are unpredictable. crisis highlighted concerns about the performance The devolution of revenues, functions, and person- of the public sector, whose role, organization, and nel has not been integrated, and very few personnel processes need an overhaul. The Thai civil service have been transferred to the local level. Furthermore, has been overstaffed and underpaid, and the local government capacity is extremely limited and organizational culture has not rewarded perfor- many local governments are of insufficient scale, manceorservice.Expendituremanagementhasbeen which could affect service delivery. Without a clear characterized by weak linkages among planning, framework for addressing these issues, the move to budgeting, and sectoral policy; lack of medium-term decentralization poses substantial fiscal and other fiscal planning; and weak monitoring and evalua- risks. tion of expenditures. To address these issues, Thailand developed a Public Sector Management n Transparency and anti-corruption. Corruption Reform Plan in 1999. Government commitment in remains problematic. According to a corruption this area is high, as witnessed by the recent passage perception survey in 2000, about 80 percent of Thai of two public sector reform laws--the Public firms surveyed pay for services from government Administration Act and the Ministerial Restructur- agencies that handle transactions.4 The Constitu- ing Act--and the impending passage of the Budget tion and the Official Information Act (1997) aim to Procedures Act, Financial Management and improve transparency and accountability by Accounting Act, and Public Debt Management Act. empowering the public to monitor public policies Together, these laws provide a significant opportu- and public actions and by establishing independent nity to improve public sector performance. The oversight bodies. These new bodies will require success of reforms will hinge upon the details of their sufficient financial and technical resources and implementation, particularly on the careful coordi- independence to carry out their mandated functions nation of expenditures and decentralization. effectively. Sustained commitment at the highest levels is needed to achieve substantial progress. 4 Survey results presented in Poapongsakorn, Nipon et al., Anti-CorruptionStrategyinThailandintheYear2000,November 2000. This publication was prepared for the Thailand Development Research Institute 2000 Year-End Conference. 13 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Plan (2002-2006) as a framework for action. Addi- tional measures needed include developing a gender-disaggregated database to facilitate policymaking, increasing awareness and under- standing of gender issues among officials and the public, and enforcing equal rights and opportuni- ties. Thailand's Development Challenges in a Regional Context Thailand actively supports and contributes to nPublicparticipation.Traditionally,publicparticipa- regional initiatives aimed at economic cooperation, tion has been limited. Through various articles, the includingtheAsia-PacificEconomicCooperation(APEC) Constitution has improved the environment for Forum, the Association of South-East Asian Nations public participation and granted greater roles and (ASEAN),and"ASEANPlusThree"(ASEANplusChina, responsibilities for citizens in public policy design Japan, and Korea). The Initiative for ASEAN Integration, and implementation. As a result, greater civic par- for example, seeks to adopt common policies on trade ticipation has slowly been accepted as common in and investment and meet the requirements for AFTA. many government agencies, and civil society has Thailand also participates in the Greater Mekong become much stronger and active in that process. Subregion (GMS) Program and the Mekong River Despite this positive development, the public's a Commission (MRC), initiatives which are now being bility to participate is limited by a lack of under- strongly supported by the concerned governments and standing of the respective duties, rights, and respon- are contributing significantly to the development of the sibilities of government agencies and the public and GMS. Thailand is in a good position to contribute to and by poor access to information. In addition, some benefit from such regional public goods. Given the agencies do not yet recognize why participation is myriad, ongoing reform efforts in the region, there is beneficial and how it can be carried out meaning- also substantial scope for trilateral cooperation to share fully. Capacity building for civic groups and other lessons and experiences. stakeholders--including some government agencies--and formal mechanisms for public participation in policy formulation, program imple- mentation, and monitoring are needed. nGender equality. Inequality of participation and representation of women is evident in a variety of areas beyond economic participation. In the latest parliamentary election, women accounted for only 9 percent of the representatives elected in 2001 and for only 21 of the 200 elected Senators. The represen- CONTEXT tation of women in the civil service is also low, at about 18 percent in the upper ranks and only 4 per- cent at the highest level. Gender equality is one of the main tenets of the Constitution, and the Govern- ment has endorsed a new Women's Development COUNTRY 14 Box 3. Millennium Development Goals: Summary of Thailand's Progress Goal 1: Eradicate extreme poverty and hunger Target 1: Halve the proportion of people whose income is less than one dollar a day between 1990 and 2015 Target 2: Halve the proportion of people who suffer from hunger between 1990 and 2015 1990 2000 Headcount poverty ratio (%) 27.2 14.2 Percentage share of income/consumption held by poorest 20% 4.2 3.9 The number of poor is declining, but Thailand's poverty rate of 14.2% in 2000 is 3 percentage points above the pre-crisis level. It is very likely that all regions will halve poverty by 2015, but some localities may not be able to achieve this goal. Inequality is also problematic as the percentage share of income accruing to the poorest quintile decreased from 4.2% in 1990 to 3.9% in 2000. Goal 2: Achieve universal primary education Target 3: Ensure that by 2015, children everywhere--boys and girls alike--will be able to complete a full course of primary schooling 1990 2000 Gross primary enrollment ratio 100.5 103.6 Youth literacy rate (% ages 15-24) 98.1 98.9 Universal gross primary enrollment has been achieved, while net universal primary rate is also likely to be achieved. Enrollment in both secondary and tertiary education is anticipated to pick up as the reform program, which aims to achieve universal secondary enrollment, progresses. Universal primary enrollment at the regional level should be achieved by 2015. However, hill tribes may not be able to attain this goal. Goal 3: Promote gender equality and empower women Target 4: Eliminate gender disparity in primary and secondary education preferably by 2005, and to all levels of educa- tion no later than 2015 1990 2000 Ratio of girls to boys in primary and secondary education 94.1 96.1 Ratio of young literate females to males 99.0 99.0 Share of women employed in the nonagricultural sector (%) 45.4 47.3 Proportion of seats held by women in national parliament 2.8 (1988) 9.2 (2001) Good overall progress is being made at all levels. The literacy rate of elderly women remains low and informal education opportunities could bridge this gap. Although women's participation in politics has been quite limited, the number of women in the Parliament is increasing. Note: Only MDG indicators with data for both 1990 and 2000 are included here for illustrative purpose. Source: Based on the National Workshop on the Relevance and Application of MDGs in Thailand, August 2002, convened by the National Economic and Social Development Board, UNDP and the World Bank. 15 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Box 3. Millennium Development Goals: Summary of Thailand's Progress (Continued) Goal 4: Reduce child mortality Target 5: Reduce by two-thirds the under five-mortality rate between 1990 and 2015 1990 2000 Under 5 mortality rate (per 1,000) 41.0 33.2 Infant mortality rate (per 1,000 live births) 37.0 27.9 Immunization, measles 80.0 96.0 Good progress has been made at the national level, but attention needs to be given to hill tribes and adolescent mothers for whom access to social services is a major issue. To achieve the MDG target, the rate will have to be lowered to 27 per 1,000. Goal 5: Improve maternal health Target 6: Reduce by three-quarters the maternal mortality ratio between 1990 and 2015 1990 2000 Maternal mortality ratio (per 100,000 live births) 24.8 13.2 Maternal mortality continues to decline, but hill tribes and adolescent mothers are likely to be vulnerable as access to social services is limited and greater awareness raising is needed. Goal 6: Combat HIV/AIDS, malaria and other diseases Target 7: Have halted and begun to reverse the spread of HIV/AIDS by 2015 Target 8: Have halted and begun to reverse the incidence of malaria and other major disease by 2015 1990 2000 Prevalence of HIV among pregnant women (% ages 15-24) 0.21 0.78 The number of HIV-infected women is on the rise, resulting in an increase in mother-to-child transmission. The existing prevention programs are only stabilizing the transmission but not slowing it down. The vulnerable groups include fisher- men, youth and adolescents, hill tribes, injecting drug users and construction workers. Deaths due to tuberculosis have fallen by nearly 30 percent between 1985 and 1997, while information on malaria remains sketchy. Goal 7: Ensure environmental sustainability Target 9: Integrate the principles of sustainable development into country policies and programs and reverse the losses of environmental resources 1990 2000 Forest area (% of total land area) 28.0 28.9 Nationally protected areas (% of total land area) 12.4 15.8 Access to improved water source (% of population) 71.0 92.7 Access to improved sanitation (% of population) 73.8 97.7 The access to water source indicator is likely to be achieved, but rising water pollution levels continue to threaten the CONTEXT viability of freshwater sources and could setback the achievements. Air quality in Bangkok, water quality in major rivers, and deforestation are major environmental problems. Note: Only MDG indicators with data for both 1990 and 2000 are included here for illustrative purpose. Source: Based on the National Workshop on the Relevance and Application of MDGs in Thailand, August 2002, convened by the National Economic and Social Development Board, UNDP and the World Bank. COUNTRY 16 Thailand and the Millennium Development F. MEDIUM-TERMECONOMICPROSPECTS Goals ANDEXTERNALDEVELOPMENTS The Government has traditionally used the Thailandisexpectedtogrowataround4percentayear five-yearlynationaleconomicandsocialdevelopment and attain its poverty reduction targets (Table 1). Thailand's plans to establish broad targets for achieving its medium-term prospects for growth and poverty reduction priorities. However,thesetargetshavemostlybeen depend on the speed and depth of structural reform and fiscal reflected in input and output indicators, with little consolidation. Annual growth rates of around 4 percent are attention paid to results measurement. Prompted the likely "base case" over the next three years, given the by a more outcomes-focused design of the Ninth country's national development agenda and the expected Plan, the Government is now shifting to a more global economic recovery. Under the base case scenario, outcomes- and impact-based system for allocating export growth is projected to increase, and private invest- resources and assessing progress, and in this ment to rise gradually, but still remain significantly lower context, is carefully reviewing how best to utilize than during 1975-90. However, if an acceleration in reforms theMDGs. boosts private investment and total factor productivity, growth could reach 5.0-5.5 percent a year. On an aggregate basis, Thailand is likely to meetmostoftheMDGsandindeedhasalreadymet Table 1. Medium-Term Base Case several (Box 3). However, for some indicators-- 2001 2002 2003 2004 2005 including maternal and child mortality, commu- (actual) (est.) (proj.) (proj.) (proj.) nicablediseases,andenvironment--theMDGsmay Poverty (% living 13.0 12.7 12.4 11.9 11.4 not be achieved, especially for specific regions and on less than subpopulations. To better track developments at US$1.60 per day) the disaggregated level, the Government is now GDP growth (%) 1.8 3.8 4.0 4.0 4.0 developing an enhanced "MDG+" approach which will disaggregate the MDGs by regional and Current account 5.4 4.0 2.8 1.7 0.0 subpopulation groups and which will be integrated (% of GDP) into its national planning, monitoring, and evalu- Public sector -3.5 -5.4 -4.0 -2.8 -1.8 ation framework. balance (% of GDP) Inflation (%) 1.7 1.0 2.2 2.5 2.5 TheNinthPlantargetofpovertyreductionforend-2005 is expected to be achieved, provided the degree of income inequality in the country remains stable over this period. The target could be exceeded if growth is higher. However, this projection is contingent on policies that not only support sustained growth but also ensure a more vigorous participa- tion of the poorer Northeast in that growth so overall income inequality does not rise. Theprojectedglobalrecoverywillenableexportgrowth ratesofaround6percentayear.Althoughmostanalystshave recently revised their 2003 growth forecasts downward for 17 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP high-income economies, all forecasts show significant Thailand'smedium-termeconomicprospectsface recovery in global growth, trade volumes, and com- risksinthreeareas: modity prices. With domestic policies becoming more favorable for improved competitiveness, it will be n Fiscalconsolidationmaynotprogressasplanned,andpublic possible for Thailand's export growth rates to increase debtdynamicscouldbecomeunfavorable.TheGovernment and be sustained over the next three years. is making every effort to consolidate the fiscal situation and to manage debt judiciously. However, China'sWTOaccessionprovidesexportopportuni- if revenue measures generate less collection than tiestoThailand,evenasitposesnewchallengesinthird- expected and expenditure reduction turns out to be countrymarkets.Thereisconsiderablescopeforincreas- more difficult because of higher state enterprise ing exports to a more open China, as evidenced by the deficits or higher local government spending due to very large increases in exports--from the Philippines, decentralization, the public sector deficit could be Malaysia, Singapore, Korea, Thailand, Indonesia, and higher than currently projected. In addition, Vietnam--to China in the first half of 2002. These unfunded contingent liabilities could turn out to be exports include not only land-intensive products like higher than estimated, and growth could slow due sugar, oil seeds, and wood products but also high-tech to slow implementation of the development agenda products as inputs into Chinese high-tech exports. In or a precipitous deterioration in the external envi- third-country markets, there is strong Chinese compe- ronment. All these factors could worsen the public tition--particularly in garments and textiles--although debt dynamics. Mitigation of these risks will require the impact has been limited so far. a pace of decentralization consistent with improve- ments in local administrative capacity, close The recently initiated fiscal consolidation will monitoring of fiscal developments, and a willing- reducefiscalrisksbutalsoreducepublicinvestment.The ness to react quickly to the possibility of significant Government plans to reduce the public sector deficit to deterioration in fiscal and public debt variables. about 2 percent of GDP by 2005 and to zero by 2008, in line with the aim of capping public debt at 65 percent of n Theexternaleconomicenvironmentcouldworsensharplyon GDP and debt servicing at 16 percent of government several fronts. Business and consumer confidence in expenditures. As this will involve fiscal consolidation high-income economies could worsen more than as well as a focus on revenue measures, the challenge is currently projected, reducing export demand. to ensure that roads, education, and health--all suffer- Further incidents of terrorism in the region could ing significant cuts in public investment after the sharply lower tourism receipts. The rising tensions crisis--receive a larger share of the investments to in the Middle East could also push oil prices to new maintain and improve them. heights over a sustained period, generating a major terms of trade shock. Any of these three external Mostofthedeficitcanbefinanceddomestically,but factors alone would not significantly affect the base some external financing is likely. In 2001, the public case growth scenario, but if they occur together, sector deficit and current account surplus were funded growth in Thailand could be significantly lower than by an excess of private savings over private investment now projected. of around 9 percent of GDP. As private consumption and investment grow, this excess of private savings will n Structuralreformstoimprovethebusinessenvironmentand CONTEXT decline over the next three years, and external financing restructurethefinancialandcorporatesectorscouldslow. of some of the public sector deficit might then be needed. Given the Government's growing commitment to medium-term reforms and to sustained growth and poverty reduction, this risk is seen as low. However, the risk of a more gradual pace of some key reforms cannot be eliminated. COUNTRY 18 PROGRESS SINCE THE FY98-02 COUNTRY 20 World Bank Retrospective 24 The International Finance Corporation Retrospective ASSISTANCE STRATEGY PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP 5 A. WORLDBANKRETROSPECTIVE and social programs. The Social Investment Project (SIP), in particular, helped the Government strengthen social The Bank's Contribution to Thailand's safety net services through an innovative community- Development Results based approach in which resource and program man- agement responsibilities were devolved to the local level. Thailand had reduced its reliance on Bank The Bank also provided four structural adjustment loans assistance before the 1997 crisis. In 1989-96, the Bank totaling $1.75 billion, including a Public Sector Reform accounted for only 2 percent of Thailand's total external Loan (PSRL). The PSRL, the Bank's first programmatic financing, compared with 86 percent from private credi- loan,6 was recognized by counterparts as particularly tors. IBRD commitments in FY88-97 averaged $216 helpful in creating acceptance of reforms by mobilizing million a year, and principal repayments were twice as high-quality global expertise. In addition, the Bank large as project disbursements. In the decade preceding supported a large technical assistance program for the crisis, the Bank's lending portfolio was heavily financial sector restructuring, which was designed with focused on infrastructure (80 percent), and these projects the Government and coordinated with other partners, helped contribute--in particular by providing financial including the IMF, ADB, and bilaterals. The financial STRATEGY transfers--to alleviating the infrastructure bottlenecks sector program, particularly through capacity build- unavoidable with Thailand's double-digit growth. ing, helped to stabilize the financial sector, improve the However, few Bank resources were dedicated to supervisory regime, develop the bond market, manage analytical work, and the Government and Bank engaged the public debt, and liquidate failed finance companies. in only minimal policy discussions. As a consequence, an opportunity was missed to help tackle some key AsThailandhasemergedfromthecrisis,theBank's policy reforms. In particular, the under-investment in mode of engagement has evolved. In the 1998 CAS, the analytical work left the Bank ill-prepared for the planned level of Bank lending to Thailand for FY98-00 ASSISTANCE economic and financial crisis. was US$3.4 billion for 12 projects. However, actual lend- ing--while significantly greater than in previous Bank engagement increased sharply during the years--amounted to US$2.1 billion for seven projects, crisis. With Thailand and the rest of East Asia facing less than anticipated in the base case scenario. No new uncertain economic prospects, the Bank Group focused Bank projects have been delivered since the PSRL was its program on helping to revive growth and ease the discussed by the Board in October 1999. This decline in COUNTRY adverse social impact of the crisis--particularly by demand for Bank lending was due largely to the helping to address some of the structural reforms left Government's emphasis on managing public debt and dormant before the crisis in 1997. The last CAS for reducing external financing. At the same time, the Bank's Thailand, developed at the height of the crisis, was built role has evolved to place greater emphasis on support- FY98-02 around three critical elements: renewing the country's ing Thailand with analytical and advisory services, par- competitiveness, improving governance, and ensuring ticularly through the Monitor series. The Bank's four a more equitable distribution of the benefits of growth. Monitor series--Economic, Social, Environment, and THE As part of a larger assistance package agreed with other Country Dialogue--have helped stimulate public debate donors and the IMF in 1997, IBRD lending helped Thai- on major development issues such as poverty and HIV/ land rebuild its reserves and finance its fiscal stimulus AIDSandprovidedabetteranalyticalbasisfortheBank's SINCE 5 Thailand only joined the Multilateral Investment Guarantee Agency (MIGA) in 2000, hence MIGA is not included in the Retrospective. 6 The programmatic feature of the PSRL was never triggered. As the PSRL ICR noted, the program structure was appropriate, but leverage from financing was limited. The Government's financing needs diminished as the economic recovery gained strength, and subsequent lending for the reform program did not materialize. However, the Government's commitment to reform was maintained, and the Bank's support continued through the CDP-Governance and Public Sector Reform. PROGRESS 20 Box 4. The Country Development Partnership (CDP) What is the CDP? The Country Development Partnership (CDP), launched in 2000, is a knowledge-based partnership. The CDP is a three- year integrated framework for actions in key areas of the country's development agenda. Each CDP is led by the Govern- ment with support from other stakeholders, including the Bank and other donors. The CDP also serves as a vehicle for engaging civil society, the private sector, and other partners in the policy design, implementation, and monitoring process. Depending on where support is needed, the Bank's engagement in a CDP can take the form of analytical and advisory activities, technical assistance, donor coordination, and/or partnerships. In addition, as appropriate, investment projects can selectively support implementation. How does the CDP work? Step I The Government selects key priority areas for the CDP v An outcomes-oriented action plan with a clear timeline, milestones, and accountabilities is formulated, based on v strong analytic work--as laid out in a Development Matrix which describes the CDP objectives, output benchmarks, and capacity building inputs Division of labor and support from other partners is agreed as laid out in a Partnership Matrix which details the v -- inputs of partners and identifies potential resources to be tapped as well as any funding gap Arrangements for specific AAA, TA, and capacity building support are determined v Step II Progress is monitored through public workshops with stakeholders annually or biannually v Specific action plans are fine-tuned and adjusted based on the progress review meeting v Interim implementation reports are completed and disseminated to stakeholders v StepIII CDP progress is integrated in a comprehensive progress review on the national agenda v engagement. In addition, Thailand and the Bank have Evaluation, QAG Assessment, and Client Survey). First, developed the Country Development Partnership (CDP) continuous policy dialogue is needed to ensure that the as a tool to deepen the policy dialogue (Box 4 and Annex Bank is in a position to deliver timely and effective : Results Measurement and Management). This shift assistance if a crisis should occur. Second, to be more toward analytical services and policy dialogue repre- effective, the Bank should concentrate its efforts in a few sents a major shift in the Bank's role since before the critical areas in which country ownership is strong and crisis. engagement would have maximum impact. Third, more effective coordination with other development partners Measuring Bank performance--OED and QAG is needed to avoid duplication. assessments, ICRs The Bank's knowledge and advisory services in TheBank'sassistanceprograminThailandwasre- ThailandwereevaluatedinapilotreviewbytheBank's viewedbytheBank'sOperationsEvaluationDepartment internalQualityAssuranceGroup(QAG)in2002.TheQAG (OED)in2000.TheOEDCountryAssistanceEvaluation review, covering the last CAS period, rated the overall highlightedthreemainlessonsfortheBank(Annex:OED effectiveness of the analytical and advisory program as 21 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Box 5: Performance of Bank Portfolio Performance of the Bank's portfolio has improved dramatically since the economic and financial crisis. After a reasonable track record in the early and mid 1990s, the Thailand portfolio deteriorated significantly from FY97 to FY99 due in large part to the budgetary impact of the crisis and the inexperience of the implementing agencies in new sectors. In response, the Government's Oversight Support Unit was established in the Public Debt Management Office with support from the Asia-Europe Meeting trust fund for its externally-funded loan portfolio. The Bank's Bangkok office also strengthened its Portfolio Management Cluster to provide support to task managers in the fiduciary aspects of procurement and financial management as well as training for both Bank and implementing agency staff. Decentralization of Bank project supervision has also contributed to better portfolio performance. In FY03, the Thailand portfolio comprising seven projects totaling approximately US$800 million and one guarantee -- -- is now one of the strongest in the East Asia and Pacific region. Almost all projects have had satisfactory DO and IP ratings in the past few years. In FY00-02, disbursements averaged 29 percent a year, compared to 13 percent a year in FY97-99, and consistently exceeded regional targets in recent years. However, project implementation has in some cases been STRATEGY slow, and the implementation of one project was downgraded to unsatisfactory in May 2002 due largely to slow disburse- ments. An agreed action plan is now in place and should improve implementation and disbursements, enabling the rating to be upgraded shortly. The Government has also been requesting cancellation of parts of loans when there is no further need for these resources. To date, US$112.9 million has been canceled from five of the existing loans. satisfactory (Annex : OED Evaluation, QAG Assessment, nies Restructuring Loan). Sustainability was judged to and Client Survey). The QAG report points to some be likely for all four projects. Systemic lessons high- ASSISTANCE important systemic lessons for future engagement, lighted from these lending operations include the particularly for the Bank's support to the CDPs. Specifi- following: reform programs should not overtax cally, the QAG evaluation recognized that analytical and implementation capacity. A tradeoff sometimes exists advisory work is a viable standalone instrument even between client ownership versus urgency and program in the absence of lending, but it must be planned and ambitiousness. Broader participation in the reform adequately resourced from the beginning. The analyti- design process might slow implementation in the short COUNTRY cal and advisory program must be selective, well- run but pays off in the long run. Thai counterparts value focused, and driven by client ownership, with medium- the Bank's global knowledge services, even in lending term engagement in mind. Having monitorable progress programs. In addition, the programmatic approach to benchmarks is also essential. assistance, as adopted in three of the four operations, FY98-02 can help sustain momentum for integrated reforms and TheBank'slendingprogramcanbeassessedthrough provide a platform for dialogue on implementation areviewofprojectImplementationCompletionReports progress. The Thailand portfolio of ongoing projects is THE and the status of the ongoing portfolio. Of the seven now one of the strongest in the Bank's East Asia and lending operations delivered as part of the crisis Pacific region (Box 5), suggesting that completed projects assistance package, four have closed: the Finance overall are likely to continue to be rated satisfactory. Companies Restructuring Loan, two Economic and SINCE Financial Adjustment Loans, and the PSRL. In the Bank's final reports on implementation, the outcomes of all four projects were rated as satisfactory. Institutional development impact was evaluated as substantial in three projects and partial in one (the Finance Compa- PROGRESS 22 Feedback from client survey and consultations TheBankconductedananonymousclientsurveyof 500 stakeholders in 2002. The paper survey was con- ducted with Government, NGOs, private sector, academia, and donors (Annex: Participation and Consultation in the Thailand-World Bank Group Partnership). The list of those surveyed was broad and included a wide range of opinions--including NGOs opposed to development--in order to ensure a repre- sentative sample and to gather feedback on a specific set of issues, particularly on the perceptions of the Bank's role in Thailand's development. In general, the feedback with Goverment counterparts as the working and was quite positive. The notable exception was feedback political levels, civil society from various region in the from NGOs who were particularly harsh in their coutry, civic leaders, parliamentarians, the private critique of the Bank's effectiveness. The survey respon- sector, and donor community. These discussions dents identified Thailand's majordevelopmentchallenges to included people who know the Bank well as well as be education and economic recovery, as well as corrup- groups with little or no interaction with--or sometimes tion.Accordingly,respondentsfeltthatthe roleoftheWorld knowledge of--the Bank. Feedback indicated that Bank should focus on strengthening the education Thailand's most pressing development challenges are sector and encouraging greater transparency in governance, particularly decentralization; education; government. On the Bank's effectiveness, the views of competitiveness, especially in the rural sector; social stakeholders varied significantly, with NGOs being most welfare; and natural resources and the environment. consistently negative, and local government employees The multi-dimensional aspect of poverty was also and Bank of Thailand officials the most positive. In emphasized, in particular the linkages between social, particular, many respondents said that the World Bank natural resource, and environmental issues. Consulation was not as effective as it could have been during the participants suggested that the Bank and Thailand need crisis and that it had minimal impact on Government to engage in a true partnership and that the most efforts to renew competitiveness, improve governance, important role of the World Bank is in providing knowl- and ease the social impacts. Respondents perceived that edge and advisory services. In this context, participants financial transfers had been the greatest value added of suggested that the Bank disseminate information more the Bank, closely followed by knowledge services, widely, particularly in the local language, and support particularly in identifying and conceptualizing devel- other information sharing activities. Civil society opment programs. While the Bank was assessed to have stressed the Bank's role in enabling greater participa- been quite effective in producing useful knowledge, tion of all stakeholders in policy design, program studies, and advice, it was viewed as less successful in implementation, and monitoring. They and other making knowledge available. participants saw the Bank as a potential bridge between the Government and civil society or the private sector Workshopsanddiscussionsheldwithawiderange and even sometimes between different Government ofstakeholdersin2001and2002reinforcedthemessages agencies. Government counterparts also highlighted the from the client survey, although the feedback from civil Bank's role as an integrator of reform assistance. society was more positive. That was partly due to inter- However, they noted that the Bank's processes and actions with groups and individuals who knew the Bank procedures (particularly for lending) are at times better and also because the consultation workshops and cumbersome, limiting its ability to respond swiftly to discussions allowed for real dialogue beyond what a client demand and changing country circumstances papersurveycouldachieve.TheBankconsultedindepth (Table 2). 23 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Table 2. Summary of Feedback Where the Bank has been effective Where the Bank has been less effective Raising awareness of and advancing the debate on Responding quickly to client needs changing country l l key development issues, and elevating the importance circumstances, oftentimes hindered by cumbersome of medium-term structural reforms lending processes and procedures Helping Thailand to access international experience Achieving selectivity and focusing on the most criti- l l and global best practice, in particular by bringing in cal development areas; ensuring that none of its high-quality TA activities are supply driven Assisting the Government in coordinating and inte- Disseminating Bank information, especially its ana- l l grating key reform efforts, in particular through the lytical work, and making it widely accessible; ensuring CDPs; it has also helped build consensus around that the Bank's work is translated into the Thai these reform efforts and constituencies for change language to broaden the audience A decentralized country office has facilitated a con- More intensively engaging stakeholders beyond the l l STRATEGY tinuous and ongoing dialogue with Government coun- Government and integrating them into program terparts design and implementation B. THEINTERNATIONALFINANCE restructuring cases has meant that IFC was less effec- CORPORATIONRETROSPECTIVE tive in maintaining a positive profile in the country; engaging with the Government, especially on speeding ASSISTANCE Before,during,andafterthecrisis.Inthenineyears up corporate restructuring and developing solutions for preceding the crisis, IFC supported private sector growth disposal of distressed assets; and being a counter-cycli- with around US$1.8 billion of investment in petrochemi- cal investor in a volatile environment. IFC's experience cals, oil refining, financial services, infrastructure, and during the crisis also highlights the importance of IFC's agribusiness. Immediately after the crisis, restructur- local presence in providing responsive client service in ing its portfolio of investments became a priority for a rapidly changing environment. IFC has recently COUNTRY IFC, with restructured projects covering aggregate located more investment officers in Thailand, providing liabilities of more than US$1 billion. In its restructuring a better platform for more responsive client service. efforts, IFC has focused on model transactions that combine financial and operational restructuring with strengthening corporate governance practices, as well FY98-02 as mobilizing funds to assist in the disposal of distressed assets. In FY02, IFC investments have resumed gradu- THE ally, with new project commitments reaching about US$185 million. At the end of FY02, IFC's Thailand portfolio stood at just under US$1.01 billion. SINCE Keylessons.ClientfeedbackandIFC'sownassess- ment suggest that IFC has been effective in: restructur- ing its portfolio; improving governance, disclosure, accounting standards; and supporting bankruptcy reform, including the implementation of bankruptcy laws. However, the visibility of some of its high profile PROGRESS 24 THE WORLD BANK'S COUNTRY 26 Thailand and the World Bank Group PROGRAM an Evolving Partnership 27 Achieving Greater Selectivity in the Thailand Country Program 28 The Bank's Country Program FY03-05 35 IFC and MIGA Programs FY03-05 36 FY03-05 Partnerships 38 Results Focus and Country Program Monitoring 39 Bank Group Risk Management 40 Conclusion PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP A. THAILAND AND THE WORLD BANK GROUP--ANEVOLVINGPARTNERSHIP TheBankGroup'sroleasadevelopmentpartneris valuedbystakeholders,whoemphasizestronglythatthe BankGroupshouldremainengagedinThailand.Thereis, however, a clear consensus that the relationship needs to evolve from primarily a borrower-lender relation- ship toward a real development partnership. In that context, Thailand has clearly indicated its preference for a Thailand-World Bank Group Partnership in support of its development rather than a World Bank Group nIn-depthimplementationsupportinafewcriticalareas, "assistance strategy." Accordingly, the Bank will engage as identified through the comprehensive diagnostic as a development partner in a limited number of areas overview and agreed with the Government. This and mainly through policy advice, knowledge sharing implementation support (which will also be a very both internally and externally, and support for partici- valuable input into the broader monitoring and patory processes, complemented by IFC and MIGA diagnostic work) will be provided through: transactions and very limited Bank lending. Such a partnership is seen by all stakeholders in Thailand as - Country Development Partnerships. These partner- the most effective means for the Bank Group to help ships--with costs financed by the Government, accelerate growth and reduce poverty. Thailand is also the Bank, and other donors (Box 6)--will be the looking to the Bank Group to be more engaged in cornerstone of the Bank's implementation support FY03-05 supporting region-wide initiatives for economic devel- to Thailand. Because of Bank resource constraints, opment, particularly for the Greater Mekong Subregion, there will be no more than 4-5 CDPs ongoing in and to help facilitate the sharing of Thailand's develop- any one year, and these CDPs will be selected ment experience with other countries in the region and according to the selectivity criteria. It is impor- beyond. Going forward, therefore, the Bank Group's tant to have the flexibility to engage in up to 4-5 engagement in Thailand will be limited and selective CDPs each year in order to be able to initiate new and comprised of two complementary levels: CDPs in response to Government requests as PROGRAM existing CDPs are coming to an end. In line with n Monitoring and diagnostic overview of Thailand's key the Government's change in focus, the CDP development challenges across all areas of the program is evolving from a primary focus on national agenda. The purpose of this work is to stay responding to the economic and financial crisis to abreast of economic and social developments, fulfill addressing medium-term structural issues that are part of the national agenda and critical to COUNTRY the Bank's due diligence responsibilities, and engage with the Government and other stakeholders sustainable poverty reduction. analytically on the national agenda, including the broad range of competitiveness and governance - IFC and MIGA transactions and IBRD lending. CDP issues as well as the structural nature of poverty. objectiveswillalsobesupportedbyIFCandMIGA BANKS This work will also provide the Government and transactions, particularly for competitiveness. Bank Group with a basis for identifying areas in In addition, the Bank will use its ongoing portfo- which deeper support could be beneficial--in line lio, and a limited amount of new lending that may with the recommendations of the Bank's Middle- be requested by the Government in a few strate- Income Countries Task Force.7 gically important areas, to support the national WORLD agenda. 7 Middle Income Countries Task Force Report, SECM2001-204. THE 26 Box 6. Cost Sharing in the CDPs The Bank's diagnostic and monitoring work does not involve financial contributions by the Government (some of the Monitors benefit from trust fund support), but cost sharing with the Government is an integral part of the CDP approach. This cost sharing does not involve direct financial contributions from the Government to the Bank. Instead, each of the partners in a CDP--the Government, Bank, and other donors finances its own contributions to the partnership. -- Cost sharing measurement. The Government's financial contribution is measured by the direct costs related to the CDPs. Specifically, these costs capture the time of staff working on the CDPs--for example, the time of the counterparts working on the CDP matrices and monitoring implementation progress--and other costs, such as the organization of workshops and overhead. The substantial costs of actual reform implementation, e.g. financing the cost of decentralizing government functions, will be financed by the Government and are not included in this measurement methodology. Using this approach, the Government's own financial contribution to the current CDPs over the next two to three years is estimated to be US$4.8 million, or about one-quarter of the total partnership costs. This constitutes over three times as much as the Bank's own contributions to the CDPs, totaling US$1.5 million over the same period. These contributions will be complemented by about US$7.7 million from ASEM and other trust funds, as well as by significant financial support from other donors. B. ACHIEVINGGREATERSELECTIVITYIN n Explicit government ownership. The Bank will engage THETHAILANDCOUNTRYPROGRAM only in areas where there is an explicit request and upfront agreement with the Government--both at TheBank'sprogramisbecomingmorefocusedand the political and technical levels--as evidenced by selectiveinanumberofways.First,theBankhasdecided an exchange of letters of support and the scale of not to engage in any stand-alone, ad hoc analytical and resources committed. To the general public, Govern- advisory work outside the monitoring and diagnostic ment commitment is demonstrated by the CDP work and the implementation support through the launches, which include all major stakeholders. CDPs. Second, the Bank's support to CDPs will also become more focused on specific subcomponents. Third, n Bank Group's comparative advantage. Both across and new Bank lending is expected to be limited to very few within CDPs, the Bank will provide implementation operations, and the existing portfolio of loan projects support only if it has a particular comparative is expected to decline to one project by FY05. advantage in technical skills, resources, convening power, or ability to mobilize international exper- Asetofexplicitcriteriawilldeterminetheareasin tise. whichtheBankwillprovideimplementationsupport.These criteria will guide country programming choices and If these necessary conditions are met, the Bank will determine exit from current engagements as well as examine possible engagement through a second set of entry into new ones. The first set of criteria, which cover criteriafocusingonthe potentialimpactofBankinvolvement, the necessary conditions for Bank engagement, include: which include: n Alinktocriticalpolicyreformareas.Inthelightofdeclin- n Existenceofanoutcomes-focusedprogram.TheBankwill ing resource availability from the Bank, linking Bank engage in a particular area only if the Government support to the country's key development priorities has developed a clear and specific program linked to is critical. Particular importance will be given to outcomes.Adetailedimplementationplanwithclear ensuring a strong link with poverty reduction, accountabilities, with a particular focus on address- especially in the Northeast, for any intervention. ing the Government's interagency coordination constraints, will help improve program results. 27 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP n Scaleofdevelopmentimpact.Engagementwillbefocused Decisionsonareasofinvolvementwillbebasedon on areas in which it is possible to achieve significant regulardialoguewithkeycounterparts.Anumberofdeci- development impact. The likelihood of impact will sions to increase the selectivity of the Bank's engage- be determined by the realism of the implementation ment in Thailand have recently been made (Box 7), and plan and partner commitment. the Government, Bank Group, and other partners will holdsix-monthlyCountryReviewandProgrammingDiscus- n Globalandregionallinkages.Positiveregionalspillovers sions to review program progress and determine the and the connection to regional and global public priority areas for Bank Group support in the light of the goods will be important criteria for Bank engage- foregoing criteria. ment. Box 7. Selectivity in the Thailand Program--Examples of Choices The Bank has made several decisions to increase the selectivity of its engagement: The Bank will engage only in up to 4-5 CDPs and up to two new lending operations per year. v The Bank has refocused its engagement in the CDP for Competitiveness because its scope was too broad and is v now focusing in a CDP context only on issues of financial and corporate sector competitiveness. With two current partnerships nearing completion (CDP-Social Protection and CDP-Financial and Corporate Com- v petitiveness), the Bank will phase out of these CDPs by the end of FY04. Some cross-cutting objectives are being addressed across CDPs rather than through separate CDPs. For example, v gender issues are being given particular attention in the context of the CDPs on governance and public sector reform, FY03-05 poverty analysis and monitoring, and social protection rather than being considered for inclusion in a separate CDP. C. THEBANK'SCOUNTRYPROGRAM cal understanding of the coherence and consistency of FY03-05 the Government's ongoing program and the Bank's existing implementation support, as well as identify PROGRAM The Bank's country program for FY03-05 is sum- gaps and potential areas for future implementation marized in Table 3 and includes diagnostic and moni- support. Specifically, the Bank will prepare and publish toring work, support through up to 4-5 CDPs, a limited several types of "Monitors"--economic, social, environ- amount of possible new lending, and supervision of the ment, and country dialogue--to review progress in the ongoing portfolio. It will be complemented by selected relevant area and to provide analytical and advisory COUNTRY IFC and MIGA transactions as well as support from services on a special topic often covering a core diagnos- other partners. tic area. The content of the Monitors, including the special topics, will be based on close consultations with The Bank's Diagnostic Work Thai counterparts, and the work will be carried out in close collaboration with them. The Economic Monitors, BANKS TheBank'smonitoringanddiagnosticrolewillbe timed to match the Bank's biannual "Regional Briefs," filled by the Monitor Series and by occasional in-depth willcontinuetofocusonprogresswithrespecttogrowth, analytical reports, all done in collaboration with Thai structural reform, and public sector reform and gover- counterparts. This work will review progress in nance. Trade, decentralization, logistics and private implementation of reforms and achievement of results provision of services could be among the special topics WORLD across various development areas, provide an analyti- for this Monitor. Future Social Monitors are expected to THE 28 Table 3. Country Program FY03 FY04 FY05 CEM/DPR CEM/DPR Monitor--Economic Monitor Economic -- Monitor Economic -- Monitor--Social Monitor Social -- Monitor--Environment Monitor Environment -- Monitor--Country Dialogue Monitor Country Dialogue -- Monitor Country Dialogue -- Diagnostic/Monitoring ROSC / CPAR / CFAA ROSC* CDP-Financial & Corporate CDP-Financial & Corporate Competitiveness Competitiveness CDP-Governance & Public CDP-Governance & Public CDP-Governance & Public Sector Reform Sector Reform Sector Reform CDP-Poverty Analysis & CDP-Poverty Analysis & CDP-Poverty Analysis & CDPs Monitoring Monitoring Monitoring CDP-Social Protection CDP-Social Protection CDP-Other# CDP-Other# Support CDP-Other# Highways Management Project (US$100 million) Infrastructure-other Implementation (up to US$200 million) Infrastructure-other (up to US$200 million) Supervision of 7 ongoing loan Supervision of 5 ongoing loan Supervision of 3 ongoing loan Supervision/Lending projects, 1 guarantee project, projects and 2 GEF/ODS projects projects and 2 GEF/ODS and 2 GEF/ODS projects projects * The Government is also in the process of considering a possible FSAP. # Other CDPs could include: Education, Knowledge Economy, Environment, or Infrastructure. cover education, vulnerability, and gender. The Envi- growth and ensure that the poor and the near-poor in ronment Monitor will address solid and hazardous rural areas, especially in the Northeast, benefit more wastes, forestry, and biodiversity. The Bank will also from that growth. In that context, it will examine ways publish the Country Dialogue Monitor to review of improving competitiveness (building on past work) progress on the Thailand-Bank Group Partnership. in order to sustain higher private investment, to benefit from the rapidly expanding Chinese market and to An in-depth CEM-type report planned for FY04 is compete with Chinese exports in the global marketplace. expected to assess how Thailand can sustain higher Analysis of the factors contributing to rural poverty in 29 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP general and to poverty in the Northeast, in particular, sis of poverty is being undertaken in the context of the and policies to overcome them are also expected to be CDP for Poverty Analysis and Monitoring. A Public part and parcel of this work. Expenditure Review was undertaken in 1999, and its findings have been followed up on continually, most Financial sector and corporate governance issues recently in the context of the CDP for Governance and are also planned to be covered. Given the importance of Public Sector Reform. The latest Operational Procure- financial sector issues in Thailand, the Government has ment Review in 1999 concluded that the Government's established a steering committee to guide the work on a procurement procedures were generally acceptable. Financial Sector Assessment Program (FSAP) and Procurement responsibilities have recently been Review of Standard and Codes (ROSC). In preparation transferred as part of the major restructuring of the Thai for the FSAP, the committee is planning ROSCs on Government, and the Bank is discussing with the corporate governance, supported by the Bank, and on Ministry of Finance what support might be needed and data and on monetary and financial policy, supported the appropriate timing of both a Country Procurement by the IMF. Assessment Report and a Country Financial Account- ability Assessment. The work needed for a Country TheBank'sprogramalsofocuseson"corediagnos- Environment Analysis is being undertaken as part of tic" requirements. A poverty assessment was prepared the Environment Monitor series. Finally, with respect to andissuedasaSocialMonitorin2001,andfurther analy- gender mainstreaming, further analytical work will be focused and undertaken only when it adds value to work being done by others and will be included in the Social Monitor series. The Bank Group's Implementation Support--at FY03-05 the Country Level Implementation support will be limited and selective and will build on the Bank's diagnostic and monitoring work. It will be based on specific requests from the Government for support in areas where the PROGRAM Bank can add value. As ongoing activities are completed and resources are freed up for new programs, imple- mentation support will evolve gradually toward an increased focus on medium-term structural reform issues. COUNTRY i) Human and Social Capital The Bank has supported the Human and Social Capital agenda primarily in social protection but is BANKS exploring options for deeper engagement in education in the light of its importance in the national agenda. The Bank has not been asked for in-depth support in health, a critical area for achievement of the MDGs, but it will undertake regional work on HIV/AIDS. WORLD THE 30 ii) Competitiveness nThe Bank will complete its current partnership on social protection. To help reduce gaps in equity, coverage, and efficiency in the Government's social In addition to addressing issues of competitive- protection programs, the Bank has supported the ness as part of its overall monitoring and diagnostic CDP for Social Protection since 2001. The Bank is work, the Bank will continue to provide implementa- providing assistance in the overall coordination of tion support to the Competitiveness pillar. However, this CDP activities, as well as technical assistance in support will become more focused on a few priority selected areas of comparative advantage, including areas to be identified with the Government and based pension reform modeling, financial sustainability of on the diagnostic work. While the Bank's support to unemployment insurance, and social assistance financial and corporate sector competitiveness will through enhanced program targeting and a risk and winddowninFY04,theGovernmenthasrequestedmore vulnerability assessment. Because the country's support for infrastructure and for ICT/knowledge progress on social protection reforms is advanced economy. and the next phase of reform would require consid- erable financial resources, the Bank's support to this n The Bank will complete its current partnership for CDP will phase out after FY04, but some of the work financialandcorporatecompetitiveness.TheBankis on issues of risk and vulnerability may be contin- supporting the Government through two ongoing ued as part of the CDP for Poverty Analysis and technical assistance loans and the CDP for Financial Monitoring. The CDP is currently supported by and Corporate Competitiveness. Specifically, the ASEM trust funds, and its principal donor partners Bank is helping to coordinate reform efforts--includ- are the International Labor Organization and the ing support from other partners--and is providing Japan International Cooperation Agency (JICA). The extensive technical assistance for: setting a medium- Asian Development Bank (ADB), AusAID (Austra- term financial sector strategy with a focus on bank lia), UN Children's Fund (UNICEF), and German and non-bank services in urban and rural areas; Technical Cooperation (GTZ) also play important resolving non-performing loans through the Thai roles in providing technical assistance and capacity Asset Management Corporation and through building on specific components. improvements to both in-court and out-of-court resolution regimes; promoting sound intermediation nEducationmaybecomeapriorityforfutureimplemen- and investment on a risk-adjusted basis; enhancing tation support. The Bank has been engaged in the the regulation and supervision of financial institu- education sector primarily through lending opera- tions; enhancing market discipline, financial ac- tions, but there is significant scope for enhancing countability, and corporate governance; and improv- the Bank's policy dialogue with the Government on ing the architecture and infrastructure of debt, broader sector reform issues. To advance that equity, and derivative markets to support the growth dialogue, the Bank will also make greater use of of banks and firms. In addition, the Bank will supervision of its two active education projects. The continue its dialogue and work with the Office of Government and Bank are currently exploring Anti-Money Laundering. Work under this CDP is collaboration through a CDP for education, but a expected to be completed in its current form in FY04. decision on whether to proceed will be made only IFC will continue to focus on financial markets and when the specific objectives and agenda are further corporate restructuring and will also provide tech- clarified. Thailand should also benefit from regional nical assistance on capital market development as work the Bank will be undertaking on quality well as investments in the banking sector and assurance and accreditation in higher education. corporate restructuring. The IMF is assisting the No future Bank lending has been requested by the Bank of Thailand with monetary and banking Government, but IFC has identified education (as supervision matters. This CDP is currently sup- well as health) as a priority area for investment. ported by PHRD (Miyazawa program) and ASEM 31 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP trust funds. Other active partners are the ADB, AusAid, GTZ, and Kenan Institute Asia. nThe Bank will further consolidate its support for infrastructure development. The Government has requested continuing Bank support through a new HighwaysManagementProjectfocusedonroadsector commercialization through private participation in infrastructure management, modernization of the Department of Highways operations, preservation of road assets, and improvement of competition and impact of ICT on other core areas of the knowledge transparency in the awarding of contracts through economy--education and the business environment. the use of e-procurement. The project will help WBI will contribute by building peer-to-peer address the backlog of investment requirements in exchange of experience between Thailand and the sector and places particular emphasis on under- countries that have been successful in leveraging ICT developed geographic areas such as the Northeast for development. Building on telecommunications as well as on roads that will help to facilitate GMS sector reform, aimed at further promoting the and broader regional integration. The Government private provision of services, IFC plans to focus on has also indicated that given the investment-inten- direct investments in information technology and siveness of infrastructure development, it may telecommunications. consider additional IBRD lending on a selective case-by-case basis and would welcome IFC and iii) Poverty and Inequality FY03-05 MIGA support for viable private sector investments in infrastructure. In addition, the Government is TheGovernmenthasrequestedverytargetedBank considering complementing the investment lending supporttostrengthentheanalyticalbasisforimplement- support with a CDP--either for the transport sector inganeffectivenationalpovertyreductionstrategy. or infrastructure development more broadly-- The CDPforPovertyAnalysisandMonitoring,launched focused on modernizing the regulatory regime, in May 2002, focuses on: developing a poverty database enhancing private sector participation, building and national poverty map; improving measurement and PROGRAM institutional capacity, and strengthening the analysis of poverty and vulnerability; fine-tuning network from a regional development perspective. Thailand's poverty reduction strategy for selective public ADB and the Japanese Bank for International actions with high poverty reduction impact; and Cooperation (JBIC) have substantial ongoing infra- strengthening monitoring and evaluation. This CDP will structure projects, and JBIC plans to provide further help Thailand translate the broad goals of its existing COUNTRY support in the coming years. In addition, AusAid poverty reduction strategy into specific, quantifiable, and the French government are supporting gender-sensitive, and time-bound targets, including regulatory reform in the aviation and water sectors, MDG+ targets; improve the targeting of interventions; respectively. and enhance the overall understanding of the dynamics of poverty and inequality in Thailand. It is also expected BANKS nTheGovernmenthasrequestedBanksupportforICT. to support initiatives for the development of poorer The Bank has supported a number of innovative border provinces in Thailand and some of its neighbors. activities in support of rural access to ICT as well as Major partners in this CDP, supported by an ASEM trust a national ICT assessment, and in the coming year, fund, are the ADB, which is contributing through a will be assisting with improvement of governance participatory poverty assessment, and the UN Devel- WORLD for ICT. Should this be successful, a CDP may be opment Program (UNDP), which is helping to track developed which would focus on deepening the progress on the MDGs. Other donors include UNICEF THE 32 and the UN Development Fund for Women (UNIFEM). v) Governance The Bank's involvement in this CDP is expected to continue through FY05. The Bank will continue to support governance reform given its critical importance to all pillars of the TheBankwillcontinuetoprovidesomesupportfor nationalagenda.BuildingonthePSRLof1999,theBank promoting balanced regional development in Thailand. has continued its partnership with the Government Through the SIP, the Bank will continue to provide through the CDP for Governance and Public Sector support for the Regional Urban Development Fund Reform, launched in 2002. This partnership currently which aims to improve basic infrastructure facilities and covers five areas--expenditure management; revenue services and create employment in strategically impor- management; civil service reform; decentralization; and tant urban centers outside Bangkok, while at the same accountability and transparency. Given the significant time enhancing municipality capabilities relating to progress in the first three areas, the Bank's engagement administration, investment planning, project implemen- is expected to shift to the latter two by FY04. The Bank's tation, and financing. The Bank will also be assessing engagement will comprise policy dialogue and mobili- with the Government the experience of the very suc- zation of technical assistance for capacity building for cessful Social Investment Fund in supporting commu- local governments and formulation of anti-corruption nity initiatives in both rural and urban areas and how strategies for national and local agencies as well as that experience can be of benefit to other programs in support to the Government and other organizations in Thailand and shared with other countries. The Govern- building their capacity to monitor and evaluate public ment has not requested any further lending for urban or service delivery. Governance is a WBI priority in rural development, but rural development, especially Thailand, and WBI will provide tailored support on in the Northeast, will be a key focus of future diagnostic accountability, transparency, and decentralization work. issues by strengthening parliamentary oversight and fostering information flow to rural areas and stakehold- iv) Environment and Natural Resources ers outside government through innovative approaches suchasdevelopmentofICTkiosksandcommunity radio The Bank may deepen its engagement on the networks.ThisCDPissupportedbyanASEMtrustfund, environment. The Bank has been engaged with the and its other principal donors include: AusAID, which Government on environment and natural resources is actively involved in expenditure management; the issues predominantly through the Monitor series and ADB, which is supporting the National Counter- two ongoing Global Environment Facility and Montreal Corruption Commission; and UNDP, which has been Protocol operations. With the emergence of environment active in the areas of decentralization and accountabil- and natural resources as a key pillar of the national ity and transparency, including promotion of civil agenda and the recent creation of a new Ministry of society participation. The Bank has no lending opera- Natural Resources and Environment, an opportunity tions in this area and does not have plans for new exists to deepen the Bank's policy dialogue with the lending over the next few years. Government, including on issues that affect the GMS as a whole. The Government and Bank are exploring The Bank Group's Implementation Support--at possibilities for deeper collaboration, including a CDP the Regional Level for the Environment for FY04. The U.S. Asia Environ- mental Partnership and JBIC have also expressed inter- TheBankwillcomplementitsdevelopmentpartner- est in working together in this area, and the former has shipwithThailandwithworkonregionalissuesthatwill entered into a memorandum of understanding with the beofbenefittoThailandaswellasothercountriesinthe BankthroughtheU.S.EnvironmentalProtectionAgency. region. The Bank is already involved with the Mekong RiverCommission(MRC)insupportingtheWaterUtiliza- tion Program through a GEF grant and is considering 33 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP deepening its support for this program as well as for the two channels: first, tailored knowledge and information MRC's Basin Development Program. The Bank is also sharing on key development priorities and second, considering support for a number of activities under existing programs and courses, including those of the the GMS Program, including: supporting Flood Control GlobalDevelopmentLearningNetwork(GDLN).Empha- and Water Resources Programs, encouraging power sis will go to providing tailored support, through inno- trade through implementation of the power trade vative approaches, in partnership with local institutions. agreement, supporting infrastructure development of These interventions will be targeted at two thematic benefit to the GMS as a whole, and promoting private areas: governance and the knowledge economy/ICT. sector development. The Bank will also support the GMS human development program, including contributions TocomplementtheBank'simplementationsupport to work on the major cross-border problem of HIV/AIDS. for the other pillars of the national agenda, WBI will In this context, the Bank's continued direct engagement contributeitsexistingprogramandcourseofferings.GDLN with Thailand through monitoring and diagnostic work will play an increasing role in the delivery of these as well as selective implementation support will help programs, and in light of the local capacity challenge, make the Bank a more effective supporter of regional establishment of distance learning networks within initiatives. Thailand will be explored. The specifics of the WBI program will be discussed and fine-tuned in the context TheBankwillalsohelpshareThailand'sdevelop- of the Country Review and Programming Discussions. ment experience with others in the region. To promote In these programming discussions, WBI will also further trilateral cooperation, the Bank will facilitate further explore options for enhancing facilitating knowledge sharing and learning across countries, knowledge sharing of Thailand's development experi- especially with Cambodia and Lao PDR, which face ences with other countries in the region. FY03-05 serious capacity constraints. For example, the Bank will help disseminate lessons from Thailand's very success- ful social investment fund and land titling programs (both supported by the Bank, the latter for more than 20 years) and arrange for Thai experts on these programs to provide advice for similar programs in Cambodia and Lao PDR. WBI will play a central role in facilitating this PROGRAM knowledge sharing, which will also be of broader benefit to the Bank as a knowledge creating and sharing institution. WBI'sApproachandEngagement COUNTRY Given that the Bank's support to Thailand is principallyaknowledge-sharingpartnershipwithastrong capacitybuildingelement,theroleofWBIisveryimpor- tant. Within the context of WBI's institutional strategy BANKS to focus on one middle-income and one low-income country per region, Thailand will be a priority country for WBI over the next few years. WBI's principal role will be to provide access to international best practice and to facilitate knowledge sharing and dialogue on WORLD critical development issues, both within Thailand and with other countries. Support will be delivered through THE 34 Summary of Bank Program FY03-05 D. IFC AND MIGA PROGRAMS FY03-05 ThecurrentproposalfortheThailand-BankGroup IFC'sApproachandEngagement Partnership presents the base case for engagement. The base case balances Government demand for Bank IFC's country strategy and priorities in Thailand services with what the Bank is able to provide in terms willcomplementtheBank'sassistanceprogram,particu- of its own resources (Table 3). It is based on a Bank larly in supporting the competitiveness pillar of the administrative budget for FY03 that is 35 percent less national agenda. In the near term, IFC will focus than in FY00 and involves a further decline of 15 percent predominantly on financial markets and support the for FY04 and FY05. In the case of the CDPs, these corporate restructuring process. IFC's comparative resources are complemented by the Government's own advantage lies in its wide range of corporate finance resources (cash and in-kind) as well as other trust fund capabilities and may be unique in Thailand in its ability support (and a small amount of support from the Small to offer debt, equity and AAA-rated credit enhancement Grants Program), as described in Box 6. As stated in both baht and local currency. IFC can deploy these earlier, the Bank program will be comprised of up to 4-5 capabilities either on its own account or in concert with CDPs a year as well as diagnostic and monitoring work. local or international financial institutions. In capital In addition, one new project totaling $100 million for markets, IFC intends to provide assistance through Highways Management is being proposed for FY03. In advisory work on developing bond markets and deriva- FY04 and FY05, Bank lending will not exceed two tives and on the use of credit enhancement for local bond projects and $200 million each year, and these projects issues. In the banking sector, IFC intends to invest in tier arealsoexpectedtofocusoninfrastructuredevelopment. 1 & 2 capital of selected banks and provide partial guar- There is only a base case scenario for the Bank's partner- antees and structured products to strengthen their ship with Thailand. If the Government does not sustain balance sheets and improve their profitability. These its commitment to the CDPs in terms of reform owner- investments in the banking sector clearly complement ship and resource contributions, the Bank's engagement Bank sector reform objectives as spelled out in the CDP- would be scaled down to only diagnostic and monitor- Financial and Corporate Competitiveness. Investments ing work and supervision of the remaining project in corporate restructuring will also benefit from and portfolio. If circumstances change and the Government contribute to improved bankruptcy and corporate law requests additional financial support beyond the reform. numbers indicated in the base case scenario, the Bank would consider such a request in the context of a revised Overthemediumterm,IFCintendstosupportcom- country strategy. petitive, restructured companies by providing equity support and consolidating their long term liabilities. Much of the Bank's program will continue to be For example, IFC recently worked closely with the local managedoutofthedecentralizedcountryofficeinBangkok. affiliate of an international investment bank to guaran- Going forward, the office will enhance its information tee partially a long-term local currency bond issued by sharing activities, including more dissemination of a large Thai telecoms company. This facilitated the reports and other information in Thai and the develop- financial restructuring of the company's debt while also ment of a Thai-language website. The office now also setting a new maturity standard for the local currency acts as a regional hub supporting Bank programs in bond market. Deepening the equity market is a particu- Cambodia, Lao PDR, Malaysia, and Mongolia. This lar concern for investors in smaller, privately-held should enable it to provide enhanced support for companies because taking the company public can regional activities, particularly those associated with provide a market for the investors to sell their shares. In the Greater Mekong Subregion. the long term, IFC intends to focus on direct investment in areas of competitiveness in infrastructure and infor- 35 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP mation technology. A key priority for IFC will be MIGA'sApproachandEngagement private investment in health, education, agribusiness and SMEs, some of which is expected to benefit from the Inthenearterm,MIGAexpectsdemandforguaran- diagnostic work of the Bank and related CDPs. teeswithinThailandtoremainlow,withsomepotential opportunitiestohelpindependentpowerproducers,where IFChasincreaseditslocalpresence.TheIFCnow sponsors may be interested in Breach of Contract cover- has more investment officers in Bangkok with expertise age. MIGA will therefore emphasize technical and in its priority sectors, such as financial markets, infra- advisory services to the Board of Investments and the structure, power, health, education, and investment Thai Export-Import Bank, with a focus on attracting restructuring. The regional familiarity of IFC's staff foreign investments into Thailand, and assisting Thai should permit successful investment approaches used investors looking to invest in the region. MIGA will also in neighboring markets to be adapted to the Thai continue to provide advisory services to Thai EXIM to context, and make IFC a valuable partner for intra- help create and launch their own political risk insur- regional investments. IFC's client responsiveness will ance (PRI) product, and MIGA hopes to co-insure or also be enhanced by an expanded Bangkok-based legal re-insure Thai EXIM once its product is launched. MIGA team as well as greater specialization in transaction will also continue its advisory work with BOI and its processing. The local IFC team will focus more on needs training of BOI staff on on-line resources as well as identification and initial investment structuring, which co-marketing of MIGA and BOI services to Thai should enhance client satisfaction and, ultimately, investors looking to invest abroad. sustainability. E. PARTNERSHIPS FY03-05 Donor activity is declining and increasingly selective. Donors are now focusing on providing policy advice, technical assistance, and capacity building, with financial resource transfers playing much less of a role. They are also becoming more selective, and their activi- ties are better coordinated, more complementary, and aligned around a set of common goals. The CDPs are PROGRAM recognized by Thailand and the donor community as providing a good platform for coordinating reform efforts among all partners. In support of the CDP objec- tives, donors are lead partners with the Government in some specific CDP components (Box 8). COUNTRY BANKS WORLD THE 36 Box 8. Summary of Donor Activities and Support to CDPs United Nations The United Nations (UN) is finalizing the United Nations Development Assistance Framework (UNDAF) for 2002-2006, due to be published in late 2002. The UNDAF, which adheres to the Ninth Plan, focuses activities for the UN family and other donors around six central themes: (i) poverty reduction, (ii) social protection and social development, (iii) gover- nance, (iv) international competitiveness, (v) human security, (vi) environmental management. The Bank has been actively involved in the UNDAF preparation, the Bank's program in Thailand is very supportive of the UNDAF, and several UN agencies are partners in the CDPs. ILO, for example, is a major partner in the CDP for Social Protection, working on unemployment insurance and occupational safety and health. UNDP is one of the leading donors on the CDP for Poverty Analysis and Monitoring, focusing specifically on tracking Thailand's progress on the Millennium Development Goals and in the CDP for Governance and Public Sector Reform, working on decentralization and promoting good governance. Asian Development Bank (ADB) The ADB issued its Country Strategy and Program Update for 2002-2004 in July 2001. Its program focuses on seven thematic priorities: economic growth, human development, gender development, good governance, private sector devel- opment, environmental protection, and regional cooperation. The ADB is ainvolved in the CDP for Financial and Corporate Competitiveness, where it is the lead donor partner on governance of specialized financial institutions and pension reform. The ADB is also one of the main partners in the CDP for Governance/Public Sector Reform, supporting anti-corruption efforts particularly by providing continuing assistance to the National Counter-Corruption Commission. The ADB partici- pates in the CDP-Poverty Analysis and Monitoring through the participatory poverty assessment. Going forward ADB expects its program in Thailand to focus primarily on nonlending activities, complemented by support for private sector transactions. IMF Thailand completed its 34-month stand-by arrangement with the Fund in June 2000 and began scheduled repayments in late 2000. The Fund continues to be engaged in the CDP for Financial and Corporate Competitiveness on supervision and monetary policy issues. Bilateral donors Japan. JBIC is placing greater importance on knowledge assistance, including capacity building and policy and institu- tional improvements as a complement to its lending program which is expected to continue to focus primarily on infrastruc- ture and total about $400 million per year. JICA, which is focusing on human resource development, capacity building, and ICT in Thailand, is an active partner in several CDPs including the CDP for Social Protection where it is working on occupational safety and health and unemployment insurance. Australia. AusAID's focus in Thailand is on governance, economic and financial reform, and social impacts of the crisis. AusAID is a major partner in the CDP-Governance/Public Sector Reform, supporting expenditure management reforms, especially those undertaken at the Bureau of the Budget. In the CDP for Financial and Corporate Competitiveness, AusAid and the World Bank have a joint venture in support of the Ministry of Finance to reform state-owned financial institutions. Australia also provides technical assistance and capacity building within the CDP for Social Protection. Germany. GTZ is actively involved in the CDP for Social Protection, funding technical assistance for vocational guidance and employment services. In the CDP for Financial Corporate Competitiveness, GTZ is assisting the Bank for Agriculture and Agriculture Cooperatives. Going forward, GTZ will focus its work on two key focal areas of economic reform: the competitiveness of SMEs and industrial environmental management. U.S. The Kenan Institute is working on technology and industrial issues, including industrial networks and clusters and science and technology as well as capacity building in social protection. In support of the CDP for Financial and Corporate Competitiveness, the Kenan Institute conducts programs in bank training, consulting services for SMEs, and leadership development, and the American Bankruptcy Institute is supporting the Bankruptcy Court. The US AEP is also supporting a number of environmental initiatives. 37 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP F. RESULTSFOCUSANDCOUNTRY results-based management; and (c) to aggregate out- PROGRAMMONITORING comes and impact across the different CDPs so as to evaluate overall program results in light of the national Toenhancetheoveralleffectivenessofthecountry agenda, specific goals established by the Ninth Plan, program, the Bank will pilot a more results-focused and the MDGs/MDG+ goals. A preliminary "country approachfortheCDPs.Thisapproach,detailedinAnnex scorecard" which summarizes how partner inputs and B16, has three overall objectives: (a) to shift monitoring jointly prepared outputs contribute to country of progress from inputs and outputs to outcomes and outcomes and impact across the CDPs is shown below impacts, accounting for Government contributions as (Table 4). This scorecard and the individual CDP results well as those of the Bank and other partners; (b) to summaries in Annex : Results Measurement and improve the existing CDP Development and Partnership Management are initial attempts to sharpen the Matrices so that they can be used as a tool for enhanced country program's results focus and will be further developed as the country program progresses. Table 4. Thailand Country Scorecard CDP-GPS CDP-SP CDP-PAM CDP-FC Impacts MDG+--Achieving at the National-level (aggregate) (by 2015) Achieving in Northeast provinces and among vulnerable population sub-groups Intermediate--Reducing poverty incidence to less than 12 percent by 2006 Outcomes Desired: Desired: Desired: Desired: Enhancing the (by 2006, based A responsive public sector Enhancing social insurance Enhancing opportunities for competitiveness of financial onNational that is efficient and account- for all age groups the poor institutions and firms. Agenda) able Intermediate: Enhancing Intermediate: Implementing Intermediate: Intermediate: coverage and efficiency of FY03-05 the poverty reduction Strengthening the financial Enacting new laws to reform social assistance programs; strategy; Targeting interven- sector strategy and structure; public administration and Broadening employment tions to reduce regional Enhancing market discipline, finance; Operating fiscal services; Institutionalizing the inequality; Standardizing supervision and regulation; decentralization mechanism; unemployment insurance techniques for analyzing Developing capital markets; Adding skills in central and scheme; Improving safety in poverty, inequality and Improving the speed and local agencies; and work places; and Institution- vulnerability; and a quality of corporate restructur- Improving Monitoring and alizing a viable pension Functioning monitoring and ing; enhancing legal PROGRAM Evaluation system. system evaluation system. framework. Outputs(joint Preparing policy notes on Preparing policy notes on Preparing poverty map and Preparing analytical reports; productsof relevant topics; Developing relevant topics; Developing panel socio-economic Conducting capacity building partners) public service agreements; implementation mechanism survey; Developing workshops; Implementing Building local capacity and for intermediate outcomes; guidelines for poverty over fifty discrete activities training over 200 staff in Over 200 staff trained in measurement; Establishing with ten different line new skills; Publishing COUNTRY new skills; Publishing annual poverty monitoring and agencies; Consulting with the monitoring note; Developing monitoring note. evaluation system; and private sector. public sector monitoring and Building capacity and evaluation system. training over 100 staff; Publish annual monitoring note. BANKS Inputs(FY03-05) Bank = 0.5 Bank = 0.24 Bank = 0.25 Bank = 0.5 US$ million Government = 1.2 Government = 0.55 Government = 0.95 Government Trust Funds = 1.5 Trust Funds = 1.5 Trust Funds = 2.3 Cash = 1.05 In Kind = 1.0 Others WORLD Trust Funds = 2.4 Loan = 3.0 GPS - Governance and Public Sector Reform; SP - Social Protection; PAM - Poverty Analysis and Monitoring; FC - Financial and Corporate Competitiveness THE 38 TheGovernment,Bank,andotherstakeholderswill risk Thailand poses to the Bank is anticipated to further hold regular twice-yearly Country Programming and decrease significantly. Review Meetings to discuss progress on the national agenda. The meeting will review progress on the Bank's Bank institutional risk. In the context of these overall program in Thailand, identify the key gaps and country and financial risks, the Bank must manage a set areas where further work is needed, and help the Bank of specific institutional risks, which in particular include: decide on where to redirect its efforts and resources. An enhanced Country Dialogue Monitor will serve as the n Strategic effectiveness. With declining Bank resource basis of discussion. Specifically, the Monitor will give a availability for Thailand, there are risks that the brief assessment of country progress on the national Bank's program is insufficiently focused on the agenda--based on the Bank's overall diagnostic work-- highest return interventions or that the Bank would and summarize the progress achieved through the CDPs missopportunitiestosupportkeyreformeffortsand/ (based on the enhanced results summaries of each of the or would exit from its engagements prematurely. CDPs and the overall country scorecard) and ongoing These risks will be mitigated in the following ways: lending activities. first, the Bank will channel its support through the CDPs, which are designed to focus on the highest G. BANKGROUPRISKMANAGEMENT priorities. Second, the Government and Bank will regularly review the strategic effectiveness of the Country risks. The country risk factors in Thai- Bank's support in the twice-yearly Country Program- land are common to many Bank Group programs and mingandReviewDiscussions.Third,throughinvesting pertain in particular to political and economic risks. The in its diagnostic and monitoring work and selectively key political risk is that the Government will not supporting the Government through CDPs, the Bank remain committed to difficult reforms, although it has will be prepared to respond to any potential new made progress in migrating from its short-term post- crisis in a timely and cost-effective way. election reform program to a medium-term structural reform program. Another risk is that after October n The CDP approach and reputational risk. As the CDPs 2002--the five-year anniversary of the Constitution, depend on the contributions of all partners, the Bank marking the first opportunity for constitutional amend- has little direct leverage over final outcomes. There- ments--potential amendments could weaken the impor- fore,ifprogressunderaCDPisinsufficienttheBank's tant role of the Constitution as a catalyst of the reform reputation might be put at risk. While the CDP process, although this risk is viewed as relatively small. approach may be riskier than a traditional analyti- The key economic risks, highlighted in Section V, include cal and advisory approach, it also has significantly slow progress on fiscal consolidation, financial and higher potential returns. To mitigate these corporate sector restructuring, and further destabiliza- reputational risks, the Bank will conduct upfront tion of the global economic environment. due-diligence on choosing the appropriate partners foraCDP;itwillcloselymonitorandreviewprogress Financial risks. In the context of modest country of the CDPs--in the context of its results manage- political and economic risk, the financial risks to the Bank ment framework; and, if key progress benchmarks are limited. In addition, Thailand is currently in the are not met, the Bank will consider disengaging from process of prepaying Bank and other multilateral debt a partnership. and total Bank exposure has declined from $3.2 billion in 2001 to an estimated $2.6 billion by the end of calen- n Operationaleffectiveness.TheBank'ssuccessfulengage- dar year 2002. Overall, with modest country risk, ment in its new business model in Thailand requires pre-payment of Bank loans, and limited new borrowing appropriate staff skills and incentives and sufficient envisaged over the country program cycle, the financial human and financial resources from the Govern- 39 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP ment, Bank, and other partners. Adequate trust fund Group to remain engaged in Thailand. However, there resources are also critical for success. Finally, the is a clear consensus that the relationship needs to evolve country program's effectiveness depends on a further from a borrower-lender relationship to a real decentralized country office, to enable close moni- development partnership. Thus, the Thailand-World toring and management of the partnerships and Bank Group Partnership for Development reflects a ensure knowledge sharing across countries in the continuing but limited and selective engagement region. The Bank's risk mitigation includes in between Thailand and the Bank Group for the period particular its commitment not to engage in in-depth FY03-05 through knowledge sharing and policy advice, implementation support unless the right financial complemented by IFC and MIGA transactions and very and human resources preconditions at the Bank and limited Bank lending. Through this engagement, the all its partners are met. In addition, the role of the Bank can also help share Thailand's development Bank's Bangkok office as a regional hub places it in a experience with other countries and provide more very good position to enable knowledge sharing and effective support to development in the Greater Mekong learning across projects and countries in the region-- Subregion as a whole. a key objective of the overall Thailand-Bank Group partnership. H. CONCLUSION Thailand has made significant progress since the economic and financial crisis of 1997-98. However, the FY03-05 recovery remains fragile, and medium-term prospects for accelerating growth and addressing Thailand's paramount challenges of poverty and inequality will depend on Thailand's ability to successfully address underlying structural reforms. In this context, the Government and other stakeholders would like the Bank PROGRAM COUNTRY BANKS WORLD THE 40 ANNEXES 42 Country at a Glance 44 Selected Indicators of Bank Portfolio Performance and Management 45 IBRD/IDA Program Summary 46 IFC & MIGA Program for Thailand 47 Summary of Non-Lending Services 48 Poverty, Social Development, and Environment Indicators 49 Key Economic Indicators 51 Key Exposure Indicators 52 Statement of IFC's Held and Disbursed Portfolio 53 Thailand Operations Portfolio 54 Summary of Development Priorities 55 Private Sector Development 60 World Bank Institute in Thailand 63 Participation and Consultation in the Thailand-World Bank Group Partnership 87 OED Evaluation, QAG Assessment, and Client Survey 92 Country Development Partnership 98 Results Measurement and Management PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Country at a glance 11/11/2002 East Lower- POVERTY and SOCIAL Asia Middle- Thailand & Pasific income 2001 Population, mid-year (millions) 61.2 1,826 2,164 GNI per capita (Atlas method, US$) 1,930 900 1,240 GNI (Atlas method, US$ billions) 118.4 1,649 2,677 Average annual growth, 1995-01 Population (%) 0.7 1.1 1.0 Labor force (%) 1.2 1.3 1.2 Most recent estimate (latest year available, 1995-01) Poverty (% of population below national poverty line) 13 .. .. Urban population (%oftotalpopulation) 20 37 46 Life expectancy at birth (years) 69 69 69 Infant mortality (per 1,000 live births) 28 36 33 Child malnutrition (% of children under 5) 18 12 11 Access to an improved water source (% of population) 80 74 80 Illiteracy (% of population age 15+) 4 14 15 Gross primary enrollment (% of school-age population)# 104 107 107 Male# 105 106 107 Female# 103 108 107 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981 1991 2000 2001 GDP (US$ billions) 34.8 98.2 120.7 114.7 Gross domestic investment/GDP 29.7 42.8 22.7 23.0 Exports of goods and services/GDP 23.8 36.0 67.1 66.3 Gross domestic savings/GDP 23.4 36.3 31.4 30.1 Gross national savings/GDP 22.3 35.1 30.1 28.7 Current account balance/GDP -7.4 -7.7 7.7 5.4 Interest payments/GDP 2.0 1.8 3.1 3.0 Total debt/GDP 31.1 38.4 66.0 58.8 Total debt service/experts 20.3 13.0 15.5 20.8 Present value of debt/GDP .. .. 63.4 .. Present value of debt/exports .. .. 89.0 .. 1981-91 1991-01 2000 2001 2001-05 (average annual growth) GDP 8.2 3.2 4.6 1.8 3.5 GDP per capita 6.5 2.4 3.8 0.9 1.8 Exports of goods and services 15.5 8.5 17.6 -4.2 3.0 STRUCTURE of the ECONOMY 1981 1991 2000 2001 (% of GDP) Agriculture 21.4 12.6 10.3 10.2 Industry 30.1 38.7 40.5 40.0 Manufacturing 22.6 28.2 32.0 32.1 Services 48.5 48.7 49.3 49.4 Private consumption 63.8 54.5 57.1 58.3 Generalgovernmentconsumption 12.8 9.2 11.4 11.6 Imports of goods and services 30.1 42.5 58.4 60.2 1981-91 1991-01 2000 2001 (average annual growth) Agriculture 3.9 1.9 4.9 .. Industry 10.9 4.5 5.2 .. Manufacturing 10.7 5.8 6.0 .. Services 7.9 3.1 4.0 .. Private consumption 6.9 3.5 6.1 0.3 Generalgovernmentconsumption 3.8 4.6 2.6 1.6 Gross domestic investment 11.6 -6.0 10.9 0.6 Imports of goods and services 14.1 3.1 27.3 -8.3 Note: 2001 data are preliminary estimates * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. # Education figures subject to revision when updated data available in 2003. ANNEXES 42 Thailand PRICESandGOVERNMENTFINANCE 1981 1991 2000 2001 Domestic prices (% change) Consumer prices 12.6 5.7 1.6 1.7 Implicit GDP deflator 8.4 5.7 1.2 2.2 Government finance (% of GDP, includes current grants) Currentrevenue 14.9 18.7 15.5 15.2 Currentbudgetbalance 0.6 7.8 1.6 1.3 Overall surplus/deficit -3.5 4.5 -2.9 -4.8 TRADE 1981 1991 2000 2001 (US$ millions) Total experts (fob) 6,902 28,330 67,889 63,190 Rice 1,208 1,199 1,642 1,585 Rubber 497 983 1,525 1,325 Manufactures .. 21,040 59,673 55,532 Total imports (cif) 9,933 37,576 62,181 61,847 Food 338 1,863 2,003 2,067 Fuel and energy 2,984 3,435 6,834 7,130 Capital goods .. 15,107 28,991 29,457 Export price index (1988=100) .. .. 100.0 94.5 Import price index (1988=100) .. .. 92.8 90.1 Terms of trade (1988=100) .. .. 107.8 104.7 BALANCE of PAYMENTS (US$ millions) 1981 1991 2000 2001 Exports of goods and Services 8,513 35,504 81,758 76,215 Imports of goods and Services 10,750 42,261 71,642 69,216 Resourcebalance -2,236 -6,757 10,116 6,999 Net income -503 -1,076 -1,373 -1,357 Net current transfers 169 261 585 600 Current account balance -2,569 -7,572 9328 6242 Financing items (net) 2,613 12,190 -10,945 -4,925 Changes in net reserves -43 -4,618 1,617 -1,317 Memo: Resources including gold (US$ millions) 2,726 18,416 32,661 33,048 Conversion rate (DEC, local/US$) 21.8 25.5 40.6 44.5 EXTERNAL DEBT and RESOURCE FLOWS 1981 1991 2000 2001 (US$ millions) Total debt outstanding and disbursed 10,852 37,703 79,695 67,133 IBRD 936 2,420 2,940 2,998 IDA 51 108 90 86 Total debt service 1,875 4,898 14,015 20,720 IBRD 89 395 360 449 IDA 3 2 4 4 Composition of net resource flows Official grants 77 154 38 .. Official creditors 645 159 491 -283 Private creditors 951 2,939 -5,436 -7,179 Foreign direct investment 291 2,014 3,366 .. Portfolio equity 0 41 1,044 .. World Bank Program Commitments 0 40 0 0 Disbursements 314 162 456 365 Principal repayments 31 210 185 263 Net flows 283 -48 272 102 Interest payments 61 187 179 190 Net transfers 222 -235 93 -88 Development Economics 43 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Selected Indicators* of Bank Portfolio Performance and Management As of 11/04/2002 Indicator 2000 2001 2002 2003 Portfolio Assessment a Number of Projects Under Implementation 13 13 12 8 b Average Implementation Period (years) 3.6 4.3 4.8 4.8 a, c Percent of Problem Projects by Number 0.0 0.0 9.1 10.0 a, c Percent of Problem Projects by Amount 0.0 0.0 1.8 1.9 a, d Percent of Projects at Risk by Number 0.0 7.1 9.1 10.0 a, d Percent of Projects at Risk by Amount 0.0 9.7 1.8 1.9 e Disbursement Ratio ( percent ) 25.4 26.2 36.9 12.8 Portfolio Management CPPR during the year (yes/no) no no no no g Supervision Resources (total US$) 935,000 582,000 445,000 384,000 f Average Supervision (US$/project) 71,923 44,769 37,083 48,000 MemorandumItem Since FY 80 Last Five FYs Proj Eval by OED by Number 88 10 Proj Eval by OED by Amt (US$ millions) 5,993.7 1,865.9 % of OED Projects Rated U or HU by Number 11.4 0.0 % of OED Projects Rated U or HU by Amt 5.9 0.0 a. As shown in the Annual Report on Portfolio Performance (except for current FY), plus one guarantee project. b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. FY03 figure is disbursement ratio as of 9/30/2002. f. The supervision intensity has included the regular lending plus the guarantee project (excluding GEF and MP projects). It has also excluded the resources spent on portfolio management. g. Includes resources for ICRs for projects recently completed plus resources for proposed Highway Management Project * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. ANNEXES 44 IBRD/IDA Program Summary As Of Date 10/22/2002 ProposedIBRD/IDABase-CaseLendingProgram Fiscal year Proj ID US$(M) Strategic Rewards Implementation (H/M/L) Risks (H/M/L) 2003 TH-Highways Management Project 100.0 H M Result 100.0 2004 IBRD Loans - other 100.0 - 200.0 Result 100.0 - 200.0 2005 IBRD Loans - other 100.0 - 200.0 Result 100.0 - 200.0 Overall result Result 300.0 - 500.0 45 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP IFC & MIGA Program for Thailand Thailand - IFC and MIGA Program, FY 2000-2003 2000 2001 2002 2003 IFC approvals (US$m) 0.00 0.12 197.60 87.00 Sector (%) CHEMICALS 5 COLLECTIVE INV VEHICLE FINANCE & INSURANCE 100 45 HEALTH CARE TELECOMMUNICATION/INFORMATION 50 PRIMARY METALS TRANSPORTATION & UTILITIES Total 0 100 100 Investment instrument(%) Loans Equity 100 19 Quasi-Equity 13 Other 68 Total 0 100 100 MIGA guarantees (US$m) 0.00 0.00 0.00 0.00 ANNEXES 46 Summary of Non-Lending Services As Of Date 11/01/2002 a b Product Completion FY Cost (US$000) Audience Objective Recent completions Social Monitor 2002 18 All Knowledge Economic Monitor 2002 50 All Knowledge CDP - Competitiveness 2002 160 All Knowledge/Strategy Environment Monitor 2002 18 All Knowledge Underway CDP - Poverty 2005 237 All Knowledge/Strategy CDP - Financial/Corporate 2004 500 All Knowledge/Strategy CDP - Social Protection 2004 240 All Knowledge/Strategy CDP - Governance 2005 550 All Knowledge/Strategy Planned ROSC/FSAP * 2004, 2005 700 Gov Knowledge CDP - Other 2007, 2008 400 All Knowledge/Strategy Economic Monitors 2003, 2004, 2005 300 All Knowledge Social Monitors 2004, 2005 100 All Knowledge Environment Monitors 2003, 2004 100 All Knowledge Country Dialogue Monitors 2003, 2004, 2005 90 All Knowledge DPRs (CEM) 2004 240 All All a. Government, donor, Bank, public dissemination. b. Knowledge generation, public debate, problem-solving. * FSAP and ROSC costs in FY04 will be funded from the Center and have been included in the totals. 47 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Poverty, Social Development, and Environment Indicators Latest single year Same region/income group East Lower- Asia& middle- 1970-75 1980-85 1994-00 Pacific income POPULATION Total population, mid-year (millions) 41.4 51.1 60.7 1,855.2 2,047.6 Growth rate (% annual average for period) 2.9 1.8 0.7 1.1 1.1 Urban population (% of population) 15.1 17.9 21.6 35.2 42.0 Total fertility rate (births per woman) 4.5 2.8 1.9 2.1 2.1 POVERTY (% of population) National headcount index 31.0 23.0 14.2 .. .. Urban headcount index .. .. .. .. .. Rural headcount index 35.0 27.3 18.8 .. .. INCOME GNI per capita (US$) 390 810 2,000 1,060 1,130 Consumer price index (1995=100) 32 65 123 135 146 Food price index (1995=100) .. 59 124 .. .. INCOME/CONSUMPTION DISTRIBUTION Share of income or consumption Gini index .. .. 41.4 .. .. Lowest quintile (% of income or consumption) .. .. 6.4 .. .. Highest quintile (% of income or consumption) .. .. 48.4 .. .. SOCIAL INDICATORS Publicexpenditure Health (% of GDP) .. .. 1.9 2.0 2.3 Education (% of GDP) 3.5 3.7 4.7 2.9 4.6 Social security and welfare (% of GDP) 0.7 0.6 1.1 .. .. Netprimaryschoolenrollmentrate (% of age group) Total* 83 98 103 91 91 Male* 86 100 104 91 91 Female* 79 97 102 91 91 Access to an improved water source (% of pop.) Total .. .. 80 75 80 Urban .. .. 89 93 95 Rural .. .. 77 66 69 Immunization rate (% under 12 months) Measles .. 26 96 85 89 DPT .. 62 97 85 89 Child malnutrition (% under 5 years) .. .. 18 10 11 Lifeexpectancyatbirth Total 61 66 69 69 69 Male 59 63 67 67 67 Female 63 68 71 71 72 Mortality Infant (per 1,000 live births) 60 42 28 35 33 Under 5 (per 1,000 live births) 102 58 33 45 41 Adult(15-59) Male (per 1,000 population) 327 280 229 183 192 Female (per 1,000 population) 259 210 144 132 125 Maternal (per 100,000 live births) .. .. 44 .. .. Births attended by skilled health staff (%) .. 52 95 .. . ENVIRONMENT INDICATORS Forest Area (% of total land area) .. .. 28.9 27.2 31.8 Nationally protected area (% land area) .. .. 13.9 7.0 4.9 Share of electricity generated by coal (%) .. .. 18.3 61.9 42.9 Note: 0 or 0.0 means zero or less than half the unit shown. * Net enrollment ratios exceeding 100 indicate discrepancies between the estimates of school-age population and reported enrollment data. Education figures subject to revision when updated data available in 2003. ANNEXES 2002 World Development Indicators CD-ROM, World Bank 48 Key Economic Indicators As Of Date 11/08/2002 Actual Estimate Projected Indicator 1997 1998 1999 2000 2001 2002 2003 2004 2005 National accounts (as % of GDP) a Gross domestic product 100 100 100 100 100 100 100 100 100 Agriculture 11 12 11 10 10 10 9 9 8 Industry 39 38 40 40 40 39 39 39 39 Services 50 50 50 49 49 51 52 52 53 Total Consumption 65 64 67 69 70 70 71 73 74 Gross domestic fixed investment 34 22 21 22 23 23 24 24 24 Public sector investment 12 11 10 8 7 7 7 7 7 Private investment 22 11 11 14 16 16 17 17 17 b Exports (GNFS) 48 59 58 67 66 65 65 65 65 Imports (GNFS) 47 43 46 58 60 59 60 62 63 Gross domestic savings 35 36 33 31 30 30 29 27 26 c Gross national savings 33 33 31 30 29 28 27 26 24 Memorandum items Gross domestic product 140.4 115.8 122.2 120.7 114.2 124.6 133.4 143.0 153.1 (US$ billion at current prices) GNI per capita (US$, Atlas method) 2,700 2,080 1,980 2,020 1,900 1,910 1,990 2,130 2,260 Real annual growth rates (%, calculated from 1988 prices) Gross domestic product at market prices -1.4 -10.5 4.4 4.6 1.8 3.8 4.0 4.0 4.0 Gross domestic income -1.9 -12.4 1.0 2.3 -2.6 6.5 4.9 4.3 4.8 Real annual per capita growth rates (%, calculated from 1988 prices) Gross domestic product at market prices -2.0 -11.1 3.6 3.8 0.9 2.8 3.0 3.0 3.0 Total consumption -1.4 -10.7 2.1 4.8 -1.9 5.7 6.3 5.3 6.1 Private consumption -1.1 -12.7 2.1 5.3 -1.3 6.6 6.8 5.2 6.5 Balance of payments (US$ millions) b Exports (GNFS) 72,504 66,092 71,453 81,758 76,215 80,257 86,121 91,775 97,426 Merchandise FOB 56,725 52,878 56,801 67,889 63,190 64,900 69,500 74,003 78,749 b Imports (GNFS) 72,635 48,623 5,6367 71,642 69,216 72,900 80,045 87,116 95,003 Merchandise FOB 61,349 40,643 47,529 62,423 60,665 63,200 69,500 75,638 82,532 Resource balance -131 17,469 15,086 10,116 6,999 7,358 6,076 4,659 2,424 Net current transfers 475 415 353 585 600 998 993 988 983 Current account balance -3,110 14,291 12,466 9,328 6,242 4,933 3,734 2,428 427 (Continued) 49 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Key Economic Indicators (Continued) Actual Estimate Projected Indicator 1997 1998 1999 2000 2001 2002 2003 2004 2005 Net private foreign direct investment 3,298 7,360 5,742 3,372 3,652 2,700 2,700 2,700 2,700 Long-term loans (net) 1,602 -10,117 -11,928 -9,232 -7,872 -4,786 -5,558 -4,425 -1,646 Official 5,930 1,094 2,262 820 1,379 31 -1,681 -2,985 -3,153 Private -4,328 -11,211 -14,190 -10,052 -9,251 -4,817 -3,877 -1,440 1,507 Other capital (net, incl.errors & ommissions) -12,439 -9,800 -1,696 -5,085 -705 -950 250 270 276 d Change in reserves 10,649 -1,734 -4,584 1,617 -1,317 -1,897 -1,126 -973 -1,757 e Public finance (as % of GDP at market prices) Central Gov - Total revenues 18.0 16.2 15.5 15.5 15.2 15.5 14.6 15.5 15.5 Central Gov - Total expenditures 19.7 18.7 19.0 18.4 18.0 19.5 17.7 17.7 16.8 Central Gov surplus (+) or deficit (-) -1.7 -2.5 -3.5 -2.9 -2.9 -4.0 -3.1 -2.2 -2.2 Extra-budgetary balance -2.6 -0.5 -0.3 -0.4 -0.8 -0.2 0.3 0.3 Non-financial public enterprise balance -1.4 -2.0 -0.9 -0.1 -0.6 -0.8 -0.8 -0.8 Comprehensive public sector balance -6.5 -6.0 -4.1 -3.5 -5.4 -4.0 -2.8 -1.8 Price indices (YR88=100) Merchandise export price index .. .. .. 100.0 94.5 97.9 101.6 105.1 108.7 Merchandise import price index 110.2 96.5 92.2 92.8 90.2 89.2 90.4 92.5 94.2 Merchandise terms of trade index .. .. .. 107.8 104.7 109.8 112.4 113.6 115.4 f Real exchange rate (US$/LCU) 70.6 68.8 62.8 63.3 69.4 68.0 68.0 68.0 68.0 Real interest rates Consumer price index (% change) 5.6 8.1 0.3 1.6 1.7 2.1 2.5 2.5 2.5 GDP deflator (% change) 4.1 9.2 -4.1 1.2 2.2 2.2 3.0 3.0 3.0 a. GDP at market prices b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation ANNEXES 50 Key Exposure Indicators As Of Date 11/11/2002 Actual Estimate Projected Indicator 1997 1998 1999 2000 2001 2002 2003 2004 2005 Total debt outstanding and 109.7 104.9 96.8 79.7 67.4 59.5 54.3 50.4 48.6 disbursed (TDO) (US$bln) /a Net disbursements (US$bln) /a 0.0 -17.4 -13.5 -12.9 -7.5 -7.2 -4.9 -3.6 -1.9 Total debt services (TDS) 5.6 4.9 6.8 13.3 16.8 11.3 11.5 8.8 7.8 (US$bln) /a Debt and debt service indicators (%) TDO/XGS/b 151.3 155.7 135.5 97.4 88.4 74.1 63.3 54.9 49.8 TDO/GDP 78.1 90.6 79.2 66.0 58.8 48.0 40.7 35.2 31.7 TDS/XGS .. 7.4 9.5 16.3 22.0 14.0 13.3 9.6 8.0 Concessional/TDO 6.0 7.2 9.8 11.9 15.4 16.1 16.2 15.7 15.0 IBRD exposure indicators (%) IBRD DS/public DS /c 14.7 12.5 8.4 7.2 5.2 7.1 6.5 6.7 7.8 Preferred creditor DS/public 23.2 26.3 28.2 29.5 37.6 39.0 23.7 17.5 16.6 DS (%) /d IBRD DS/XGS 0.4 0.4 0.4 0.4 0.5 1.2 0.4 0.4 0.4 IBRD TDO (US$bln) /e 1.7 2.3 2.9 3.2 3.2 2.6 2.6 2.4 2.1 Of which present value of 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.3 guarantees (US$bln) Share of IBRD portfolio (%) 1.6 2.0 2.4 2.6 2.6 2.1 2.0 1.9 1.8 IDA TDO (US$bln) /e 0.10 0.10 0.09 0.09 0.09 0.08 0.08 0.08 0.07 IFC (US$bln) Loan 0.44 0.45 0.46 0.40 0.35 0.30 n/a n/a n/a Equity and Quasi-equity /f 0.10 0.11 0.11 0.98 0.97 0.77 n/a n/a n/a a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short-term capital b. "XGS" denotes exports of goods and services, including workers' remittances. c. Figure for 2002 excludes prepayments. d. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank of International Settlements. e. Includes present value of guarantees. f. Includes equity and quasi-equity types of both loan and equity instruments. 51 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP IFC Portfolio for Thailand Thailand Statement of IFC's Held and Disbursed Portfolio As of 6/30/2002 (In US Dollars Millions) Held Disbursed FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1991/93/96/98 Ayudhya Leasing 5.45 2.4 - - 5.45 2.4 - - 1995/96/98 BTSC 80 9.83 9.83 - 80 9.83 9.83 - 1993/00 Bumrungrad 23.11 1.14 - 26.84 23.11 1.14 - 26.84 1993 Central Hotel - 13.95 - - - 13.95 - - 1994 Dhana Siam 10.74 - - - 10.74 - - - 2001 Fitch Thailand - 0.11 - - - 0.11 - - 1987/96/98 HMC Polymers - 3.92 - - - 3.92 - - 1992 Krung Thai IBJ - 0.35 - - - 0.35 - - 1988/93 Peroxythai 1 - - - 1 - - - 1995 Saha Farms 18.02 9.9 10 18.02 18.02 9.9 10 18.02 1984/91 SEAVI Thailand - 1.46 - - - 1.46 - - 1990 Siam Asahi - 6.37 - - - 6.37 - - 1993/94 Star Petroleum 64.03 - - 139.45 64.03 - - 139.45 2001 Telecom Asia - - 27.01 - - - - - 1989 TFB-Ladprao - 0.33 - - - 0.33 - - 2000 Thai Equity Fund - 37.5 - - - 1.13 - - 1996/02 Thai Petrochem 97.51 - - 383.33 97.51 - - 383.33 1993/94/95/96 TUNTEX - 4.92 - - - 4.92 - - 1987 UPOIC - 1.08 - - - 1.08 - - Total Portfolio: 299.86 93.26 46.85 567.64 299.86 56.9 19.83 567.64 ApprovalsPendingCommitment FY Approval Project Name Loan Equity Quasi Partic 2002 TPI WC Facility - - - 10 2002 Fabrinet 12 - - - 2000 TEF Mgmt. Co. - 0.2 - - 2001 West Bangkok 39.65 - 10 - 2001 Alusiam 7.25 1.5 - - Total Pending Commitment: 58.9 1.7 10 10 ANNEXES 52 7. rig. 6.3 2.5 1 5.3 316 O 38.3 27.8 61.1 19.3 44.9 52.9 55.9 2.475 Undisb. Millions 8.0499312 5.3193349 6.27656238 2.34976779 1.81352697 38.26816362 19.31320462 26.03456922 28.98390913 45.21969253 184.1036624 US$ in 11 18.88 57.677 Cancel. Amount 23.92472 25.46806441 136.9497844 Original 5. 40 2 2.475 44.975 GRANT IDA project. 15 15 100 145 300 81.9 118.1 143.4 918.4 IBRD guarantee Portfolio one Grants) 1997 1998 1995 1997 1995 2001 2001 1996 1999 1997 1998 Result FiscalYear 09/02/2002 and appraisal include at not Date Operations Of S U S S S S S S S S S does Rating As Progress projected PSR (IBRD/IDA Implementation table as Last Thailand date above Supervision S S S S S S S S S S S to 0.00 23.49 The 618.44 160.50 160.50 Objectives 6,458.06 5,019.05 7,076.50 5,042.54 Development MT - project. EDUC disbursements one I ENG. are ASSIST & actual PROJ IMPROV REPLACEMENT REPLACEMENT IMPLE SUBS minus REIN P069028 RELIA SCIENCE MGT date and & III QUALITY ASST DIST CHILLER CHILLER to INVESTMENT IMPL EDUC repaid repaid repaid DEPLETING Name AUTOM TITLING P069027 (Active) (Closed) (Active+Closed) SEC #s 116 (Active) been (Closed) been (Active+Closed) been ID Project DISTR FIN LAND METROPOL'N OZONE TH-BUILDING TH-BUILDING PROJECT TH-SEC TH-SOCIAL TH-UNIVERSITY THAILAND-ECO disbursements has has has Projects ID result Projects Project Disbursed Disbursed Disbursed Undisbursed Undisbursed Undisbursed which which which Intended of of of Closed IBRD/IDA* Total Total Total Total Total Total Active Project P042268 P053616 P004803 P037086 P004649 P069028 P069027 P004791 P056269 P004805 P054799 Overall a/ Note: 53 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP no but beyond projects monitoring/ Country pollution"). the support support; support d program ongoing government; air of of country involvement by potential Bank Bank Bank of part on priorities "urban Bank as direct direct direct Partnership for Bank completion for for addressed work for dialogue need and reviewed with well Reconciliation environment, be request request request going for being special on Development no no will diagnostic No dialogue. assisting g c ongoin completion;" w w be priority o o Low High High L High L High High High Moderate Moderate Moderate Moderate Moderate may Bank secondary c there or priority "female Priorities High High High High High High High High High High issue, Moderate Moderate Moderate Moderate the Country on and education, HIV-AIDS cross 11/08/2002 for stability lead education teacher the equity, through Date accountability and macro Development resource development inequality poverty;" Of participation have management of infrastructure, equity, reform, reform, corporate b As sector "rural may enrollment, protection natural ICT regulation poverty, political issue maintaining transparency, levels, effective Northeast network and MDB and all near education social in inequality NPLs, healthcare financial Major of reduction, of restructuring, secondary of Summary esp. across mechanisms participation, another transport pollution, poverty, income economic women poverty rural competitiveness, decentralization, low of universal quality decentralization, monitoring development financing strengthening formal poverty, urban degradation high resolution supervision, corporate governance,SME private border for example, "high." (e.g., for or a Development agree; gement Fair Fair Fair problems Good Good Good Good Good Good Good Good Good Good not "poor." Country Excellent "moderate," or do Mana performance Sustainable "fair," "low," Infrastructure & priorities use Economic Department if country-specific population & Socially "good," & & Sector priority, principal policy mining sector reduction nutrition area Private sector & explanation, Reduction sector protection development "excellent," Development development indicate Use Indicate To Give Poverty Economic Public Gender Education Health, Social Rural Environment Social Financial Private Energy Infrastructure . . . . Network Poverty Human Environmentally Finance, a b c d ANNEXES 54 Private Sector Development The Thai private sector faces three challenges: to continue to improve balance sheets and address substantial overcapacity, to strengthen its capacity to compete globally in an increasingly knowledge-based economy, and to strengthen and integrate smaller, domestic and rural firms to help stimulate productive job creation. This will require continued focus on financial sector reform and corporate restructuring, competitiveness, and the domestic business environment. Post-Crisis Performance Successintacklingtheeconomicandfinancialcrisishasimprovedgrowthprospects. The financial sector has undergone significant restructuring. NPLs have declined from around 45 percent of outstanding loans at end 1998 to around 11 percent at end March 2002. More than 60 financial institutions have been closed or merged. Competition has increased along with foreign bank participation. Corporate debt has been restructured. As at end March 2002, about 2.5 trillion Baht worth of corporate debt (500,000 cases) had been restructured including headline restructuring cases. The external debt of the private sector declined by about US$18bn between 1997 and October 2001. However, the quality of domestic debt restructuring has been uneven. The Thai Asset Management Company has been established to accelerate restructuring of loans in state-owned banks. n Astrongexportperformancesupportedcorporaterecoveryandisnowbolsteredbyincreaseddomesticdemand.Robustexport growth in 1999 and 2000 dampened financial distress. After contracting in 2001, export growth is expected to pick up again in 2002. In the past year and for the rest of 2002, corporate profitability in property, construction materials and retail sectors improved primarily on the back of increased domestic private consumption. n Privateinvestmentispickingupbutremainsbelowpre-crisislevels. Aftertouchingalowof10percentofGDPin1998, private investment increased to 15 percent in 2001. Because of the need to complete restructuring and because of excess capacity, fixed investment growth remains muted. n Thailand'sattractivenesstoportfolioinvestorsdeclinedsignificantlyduringthecrisis,buthasgainedground. Thailand'sshareof regional investment indexes, such as MSCI, decreased from 15 percent pre-crisis to 3 percent, and several large investment funds, including California Public Employees Retirement Savings Fund delayed investments, indi- cating a lack of confidence in Thailand's corporate sector prospects and/or governance. In 2002 Thailand was among the better performing emerging markets for equity investors, but most foreign inflows were concentrated in finance and property, reflecting a crisis recovery rather than enhanced competitiveness of the real sector. n Regionalintegrationisbecomingareality. Bordertrade,whichhaslongbeenasourceofgrowthforalimitednumber of Thai firms, is emerging as a significant component of the corporate landscape. With Cambodia and Laos pursuing WTO membership, regional transportation corridors opening, and export processing zones being developed, the Greater Mekong Subregion is emerging as an economic entity. n FDIisrecoveringslowly.Afterdecliningin1998and1999,FDIisshowingsignsofsustainedrecoveryandtheBoard of Investments expects to reach the 2002 target of US$4.5bn. Large investments are strengthening Thailand's 55 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP position as the leading regional center for automo- tiveproduction,andthecountryisbeginningtomake inroads in long-stay tourism, film production and other service industries. The Country's Private Sector Development Strategy Thailand's private sector has evolved rapidly through distinct stages ­ import substitution to create economic diversification in the 1970s, export oriented, labor-intensive manufacturing in the late 70s and 80s, and restructuring during the crisis. Current economic policy, as reflected in the Ninth Plan and the recent Cabinet decision to establish a National Competitiveness Committee, is focused on building domestic competitiveness and the foundations of a knowledge-based economy. This reflects a desire for a development strategy that builds on a more sustainable foundation, causing less damage to the natural environment and social fabric, and strengthening local knowledge and social capital. In executing this strategy, the Government will take a two-track approach: retaining the competitiveness of its export-oriented manu- facturing base, while focusing renewed energy on domestic entrepreneurs and rural enterprises. The 9th Economic and Social Development Plan (2002-2006) has three goals: n Enhance competitiveness of Thai firms in global markets; n Increase the skill and knowledge intensity of operations; and n Promote balanced growth by expanding opportunities for small and medium enterprises. Movingfromrestructuringtogrowthandcompetitivenesswillrequirebusinesstorespondtoaradicallydifferent environment. As a result of the internationalization of production, advances in communication and transportation technology, rapid reform in China, Vietnam, India and other large developing countries, and trade liberalization which has taken place over the last four years, the Thai private sector emerges from the crisis facing a much more competitive playing field than it faced in 1996/97. Barriers which have protected domestic firms from global compe- tition have eroded and will continue to be removed. The extent to which the private sector is prepared for full liberalization is unclear. Globally, firms have responded to competition through reorganizing management, special- izing, innovating, creating new forms of alliances, mergers, acquisitions, and integrating into production networks which seek to source globally those resources required to retain competitive advantage. For the Thai private sector, engaged intensively in financial restructuring over the past few years, the operational response has been gradual. Apart from sectors such as banking, retail, cement and telecommunications, in which some degree of market liberal- ization and entry of foreign firms has forced a competitive response, most sectors emerge from the crisis with similar organizations, strategies, product lines, technologies and management teams. In part this is related to family ownership, one of the highest in the region: 62 percent of corporations are controlled by families, and in about 60 percent of the companies, the presidents and the chairmen of the boards are from the same family as the largest shareholder. Little consolidation has taken place which would have removed excess capacity, total quality manage- ment systems have been slow to deploy, venture capitalists are not investing, and a large number of firms continue to operate, undercapitalized and unable to attract capital with outdated strategies. ANNEXES 56 Other majorchallengesremain: n Financialandcorporaterestructuringisincomplete.Oneofthemostsalientcharacteristicsofthecrisiswasthebreak- down of trust and discipline, the foundation for financial intermediation. The capacity of the financial system to provide risk and long-term loan capital is limited by incomplete reforms in supervision, monitoring, enforcement of security interests and corporate governance. The lack of breadth and depth in non-bank capital markets ­ equity markets in particular ­ raises the cost of capital, limits opportunities to intermediate risk, and constrains the ability of Thai firms to fund acquisitions. This, in part, is due to weak protection provided to minority shareholders relative to insiders, the subject of reforms to the Public Company Act that have been delayed for several years. n TheinternationalcompetitivenessofThaifirmshasbeendeclining.Corporatecashflowsarestillnotadequatetofinancea rapid ramp up of investments in technology and skills modernization. For the past four years, Thailand's global competitiveness ranking has slipped. Competition from China has intensified. At the same time, as revealed through a series of detailed studies sponsored by the Bank, the capacity to transit to a knowledge-based economy is hampered by policy and institutional constraints in tertiary and vocational education, ICT policy and in the R&D and innovation systems. While core literacy at 93 percent is high, Thailand produces less than half the engineers per capita as China, and 10 percent of Singapore. As a result, Thai firms continue to rank extremely low relative to competitors in research spending, innovation and ICT utilization. n Secondgenerationregulatoryreformsarerequiredtoimprovetheinvestmentenvironment. Thailandhastraditionallybeen very open to investment, but regulatory and administrative barriers are considerable. A recent McKinsey analy- sis estimated that GDP could be increased by 1-3 percent without additional public investment by removing regulatory and administrative barriers to the private sector. Private sector participation in infrastructure sec- tors is also welcome, but regulatory frameworks have limited the role of the private sector. Telecommunications firms operate under limited concessions provided by the state duopoly, and in the case of internet service providers, are required to provide a state firm a 35 percent ownership stake. The challenge now is to establish independent regulatory bodies and an explicit PPI framework that will allow state enterprises to transition to more commercial entities operating in fair competition with the private sector. Transition to a knowledge economy will also require opening the services sector to greater competition, since services are critical to manufacturing competitiveness. n ThegovernmentistargetingitseffortstospecificsectorsinwhichitfeelsThailandhasacomparativeadvantage.Awareoflimited public sector capacity and influenced by growing international attention on the role of clusters in development, the government is focusing effort on subsets of automotive, fashion, tourism, software, and agribusiness. The challenge will be to understand in greater depth the regulatory barriers to integration of domestic producers in the regional and global economy. The BOI recently relaxed zoning criteria that tended to prevent market-based location decisions, clustering and other economies of location to emerge. The Bank Group PSD Strategy TosupporttheGovernment'sstrategiesofstrengtheningcompetitiveness,integratingtheeconomyandbuildinga knowledge-basedeconomy,theBankwillfocusitseffortsonthecriticalareasof: financialandcorporatecompetitiveness, investmentclimateandinfrastructure,andICTandknowledgeeconomy.TheBankGroup'sworkentailscorediagnos- tics; knowledge sharing; selective implementation support and investment financing from IFC. Operational flexibil- 57 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP ity and exit is an integral part of the strategy. The strategic goals, implementation, monitoring and exit arrangements are articulated in the Country Development Partnerships (CDP) for Financial and Corporate Competitiveness and the possible future CDP on ICT. The strategy envisages limited lending by the World Bank. The CDP approach is demand driven, and has been prepared in partnership with the private sector, government, financial institutions and civic groups. Priorities have been established through a bottom-up consultative process. It is flexible and permits shifting from policy advice to support for implementation in response to developments in the economy and at the request of the government. The CDP approach envisages annual reviews of progress and needs within an overall three-year framework. At the time of these reviews, specific support activities will be dropped or replaced. The time-bound nature of the CDP also permits the Bank to significantly reduce support once the goals articulated under the CDP are met. For example, the CDP on Financial and Corporate Competitiveness envisages a transition from short-term restructuring to financial sector development and a reduced engagement in FY04. TheCDPforFinancialandCorporateCompetitivenesssupportsbothstrategyand implementationofstructural reformswhichwillenhancethecompetitivenessofThaifinancialinstitutionsandfirms. Thekeyelementsare: n Strengthen the financial sector structure: set a medium-term strategy for the financial sector, including microfinance and non-bank financial institutions in both urban and rural areas. n Enhance market discipline: transition from the current blanket guarantee to limited deposit insurance. n Enhance supervision and regulation of financial institutions: capacity building for regulators of banks and non-bank financial institutions. n Develop capital markets: improve the architecture and infrastructure for government bond markets, corporate debt and equity instruments and derivatives. n Improve the speed and quality of corporate and debt restructuring: policy and implementation support to the Thai Asset Management Company and the Office of Mediation in the Courts of Justice. n Economic law reform: capacity building for the Council of State to enhance the quality of economic law in Thailand, with a focus on secured lending and the regimes for problem loan resolution and corporate reorganiza- tion. n Enhance intermediation on a risk adjusted basis: improve risk management methods in government controlled financial institutions and improve credit information. n Enhance corporate governance: implement international accounting standards, improve shareholder rights, and train directors. Thebusinessenvironmentwillbestrengthenedthroughsupportforregulatoryreformsininfrastructure,removalof impedimentstobusinessandmarkets,andcapacitybuildingforinvestmentpromotion. ThekeyelementsofthePSD strategy are: n Conduct a Investment Climate Assessment including a detailed analysis of specific regulatory, tax and adminis- trative barriers to competitiveness and to the enabling environment for the domestic private sector and rural enterprises. n Improve the regulatory framework for private sector participation and risk sharing in road construction and maintenance. n Promote independent sector regulation of infrastructure. n Continue MIGA's support to the Thai Board of Investment in building capacity for investment promotion, investor support services and analysis of investment environment. ANNEXES 58 In addition, while the Bank will not engage directly in specific cluster-level interventions, as part of the forthcoming CEM/DPR, the Bank will conduct a business environment assessment which will help identify sector-specific regula- tory barriers which limit competitiveness and raise the cost of doing business. ThetransitiontoaknowledgeeconomywillbesupportedthroughsupportforICTasapillarofinnovationand knowledgesharing,policyandinstitutionalreformstostrengthenskills,encourageinvestmentsinR&Dandestablish private-public partnerships for innovation. The Bank has completed detailed diagnostics relating to skills develop- ment, R&D policies and deployment of ICT, including a detailed National ICT Assessment. These have been discussed with the government and the private sector. Progress in ICT in the past has been held back by a lack of clear gover- nance and leadership, which weakened the Government' ability to address and implement a robust knowledge- economy agenda. The PSD strategy will assist the government to implement the recommendations of the studies through: n A partnership with the newly established Ministry of ICT to build policy capacity, n Policy advice on telecommunications sector reform, n E-government and rural ICT strategy, and n Strengthening the ability of the private sector to leverage ICT to improve business operations. In this respect, the PSD work will integrate closely with public sector reform efforts. Over time, the PSD perspective will be applied to other aspects of the knowledge economy, including helping align education sector outcomes to workforce needs. Current IFC priorities include investments in financial sector institutions, private infrastructure projects, the InformationTechnologysectorandtheSmallandMediumEnterpriseSector. InFY02,IFCexpectstocommitapproxi- mately US$200 million. US$ 97.5 million have already been committed. In collaboration with foreign joint venture bank, IFC has established a partial risk guarantee to support lending to middle market clients. The Thailand Equity Fund has been established to increase supply of equity capital. IFC is assisting a private telecom company improve its debt profile by partially guaranteeing the issuance of local currency bonds by the telecom company. IFC is also exploring the possibility of establishing a special purpose vehicle to invest in NPLs in the property sector. IFC's advisory activities include support for a study on derivatives, sponsorship of business roundtables on competitive- ness and FDI. 59 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP World Bank Institute (WBI) in Thailand Overall approach of WBI in Thailand FY03-05 WBI will include Thailand as one of two focus countries for the East Asia Region. This reflects WBI's overall strategy, developed in consultation with the regions, to choose one low-income and one middle-income focus country per region. WBI will support the overall priority development objectives in these countries, as identified in the Thailand-World Bank Group Partnership for Development, emphasizing capacity enhancement and knowledge shar- ing--the core of WBI's institutional mandate. In Thailand, WBI will support the World Bank Group program in three distinct ways: first, by enhancing the capacity of specific institutions and stakeholder groups to access knowledge from multiple sources, both local and global; second, through use of that knowledge especially to help implement specific priorities identified in selected Country Development Partnerships (CDPs), and third, by sharing Thailand's development experience with other countries in the region, particularly lower-income countries. Toachievetheseobjectives,WBIwillofferitsfullrangeoftoolsandapproaches,inparticularbydrawingonits experience in: n delivering thematic learning activities through regional or country-tailored courses and seminars; n developing learning partnerships between Thai and other institutions to share and localize content, n using innovations to extend the reach, scope and adaptability of its activities such as global electronic networks and distance learning, as well as WBI's internet-based products and services in support of learning programs;1 and n evaluating the effect of delivered knowledge on development outcomes. WBI'sstrategywillhavetheoverarchingprioritytosupporttheBankGroupcountryprogramobjectivesinthe areas of governance and the knowledge economy. WBI will support these areas through a customized approach, by providing tailored, in-depth learning and knowledge sharing opportunities. In addition, WBI's existing regional learning programs and course offerings will be contributed on a case by case basis to the country program. Further details are given below. MoreeffectiveuseandpotentialscalingupofexistingGDLNanddistancelearningcenters,bothwithinThailandat theprovinciallevel,andincollaborationwithneighbouringcountriesandgloballearninginstitutions,willalsobean integral part of the strategy. Particular attention will be paid to development of knowledge tools and in-country and regional communities of practice in specific thematic areas as well as to systematic capacity enhancement to adapt and localize content through secondary networks (e.g. UNINET or the InterUniversity Network servicing national and provincial universities) in order to reach regional managers, decision makers, professionals, entrepreneurs, and community organizations. Going forward, distance learning priorities will include exploring links between the GDLN at Chulalongkorn University and the university's own national distance learning network, CUNet, to increase regional reach, as well as using the network to connect countries in the Greater Mekong sub-region to share experi- ences. 1 These include e-learning activities (e.g. online courses) and other Internet-based activities such as electronic discussions, thematic and program web sites, and community web sites. ANNEXES 60 Finally,inalignmentwiththePartnershipobjectives,amajorprioritywillbetoenableknowledgesharingwithin and across different stakeholders in civil society and private sector, different branches of government (Executive and Parliament), and at national and sub-national levels. Highlights of proposed customized support to priority areas ThecustomizedsupportproposedundertheWBIcountryfocusinThailandwillaimoverthreeyearstodevelop learning activities and partnerships to support in an integrated and synergistic manner the governance2 and knowl- edge economy/ICT programs. WBI's customized learning programs in Thailand will be developed to ensure sustainability beyond single learning activities and possible extension to other beneficiaries in the Region. Governance. WBI will support the accountabil- ity, transparency, and decentralization areas within the CDP-Governance/Public Sector Reform by providing support for strengthening parliamentary oversight, building local capacity, and fostering information flow to rural areas and stakeholders outside government. Partnerships with one or more institutes in Thailand (such as, for parliamentary programs, the King Prajadhipok's Institute) will be developed to sustain learning activities in these areas. In FY03, a customized course on parliamentary oversight will be developed in partnership with KPI for delivery in FY04, initially to permanent Parliamentary staff, and eventually to legislators. While the final content would flow from a needs analysis, these seminars would be expected to cover the budget cycle in Thailand, implications for Parliament of the Budget Reform process, improving understanding of Parliament's role in financial accountability in Thailand, and Parliament's role in decentralization. Training would be a blend of face-to-face and distance learning that would draw from regional experiences and good practices. As the governance program advances, links will also be developed to the knowledge economy/ICT programs through learn- ing activities in e-governance3 described below. For example, one learning activity to be pursued under strengthen- ing of parliamentary oversight is knowledge sharing on "e-parliaments" which are helping certain parliamentary bodies worldwide increase administrative efficiency, improve information access and dissemination, and enhance parliamentarians' interaction with citizens. Learning programs will also explore best practice approaches on how to extend participation of stakeholders beyond the government, including through pilot innovative approaches, such as ICT kiosks and community radio networks. Knowledge economy/ICT. WBI support in these areas will complement the focus on governance. The Thai government ­ like counterparts in Korea, Singapore and elsewhere in the region ­ sees the ICT sector as an important contributor to its vision of a knowledge-based society. The key obstacle to realizing this vision in the past has been 2 The focus on governance, including e-governance and civil society participation, is also consistent with recent surveys in theEast Asian and Pacific Region on the most highly ranked training needs and priorities identified by distance learning centers and their clients. 3 Broadly defined as "the use by government agencies of information technologies that have the ability to transform relations with citizens, businesses, and other arms of government." 61 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP the lack of an appropriate governance framework of policies and institutions that link ICT to core reform areas such as education, public sector reform, and competitiveness. WBI will contribute to realizing this vision through peer- to-peer exchanges between Thai leaders and representatives of governments and the private sector that have exceeded in the critical elements of effective knowledge economy governance ­ public-private partnerships, catalyzing innovation, and competitive sector management. These will bring together communities of practice from national and local jurisdictions worldwide where ICTs have been successfully used to enable greater transparency and efficiency in public service delivery and civic engagement. In FY03, the focus will be on developing a needs analysis with the key stakeholders in the program. The initial part of the program, which will begin in FY03, will entail one or two short best practice GDLN dialogues on issues ranging from vision development to implementation of an e-development strategy, including the role of Government Chief Information Officers. Subsequently, beginning in FY04, the focus will be on sustaining dialogue in topical areas--such as use of e-government applications to improve internal efficiency and service delivery, or use of ICT to enhance teacher training, or questions of policy to bridge the digital divide. A major goal will be to develop communities of practice in this area which WBI will help catalyze through on-line and face-to-face exchanges. Given that there is also significant potential to develop learning partnerships in e-governance within Thailand and the region, this aspect will be explored as part of this program to enable activities to be developed and delivered in a sustainable manner. The specifics of the WBI program will be discussed and fine tuned in the context of the Country Review and Programming Discussions. An approach to monitoring and evaluation (M&E) will also be developed that is more inclusive and largely directed by on-the-ground impacts for which the customized WBI interventions will be designed. To enhance overall validity and effectiveness, it will incorporate not only the views of training partici- pants, but the perspectives of government and the views of those (e.g., civil society, representatives of the poor, and others) who are the ultimate intended beneficiaries. It will be participatory in the sense that the M&E system consults with intended beneficiaries, and that these views are taken into account in the regular re-shaping of WBI program interventions within the country. Inadditiontothecustomizedsupportabove,WBIcapacitybuildingsupportwillcontinuethroughparticipation from Thailand in different regional or global course offerings. In FY03, four WBI regional course offerings have been offered or are planned in Thailand. Over 300 participants from Thailand are expected to attend alongside partici- pantsfromothercountries.Furthermore,over30participantsfromThailandareexpectedtoattendnineWBI regional or global courses offered outside Thailand in FY03. ANNEXES 62 Participation and Consultation in the Thailand-World Bank Group Partnership Summary TounderstandwhatroletheWorldBankshouldplay inpost-crisisThailand,theBankembarkeduponaprocessof consultation and participation in developing its plan for operatinginThailand.Theprocessevolvedovertwoyears, starting in 2001 and including input from Government, civil society, Parliament, the private sector, and other donors. It was by no means comprehensive, but it did provide the Bank with valuable insight into where it could be most useful to Thailand. The Process Duringthefirstyearofbusinessplandevelopmentin 2001, the Bank consulted with civil society organizations. The Thai version of the Country Dialogue Monitor ­ a publication which spells out major issues where the Bank maintains an ongoing dialogue with government, as well as the government's approach and the Bank's assistance ­ was used as the basis for the World Bank's consultations. The Bank worked in partnership with civil society counterparts, using a participatory process, to organize the meetings. In early 2002, the World Bank identified several key stakeholders for the consultation process including the Government­ high level policy-makers as well as officials from the operational level, the donor community, private sector, civil society, the National Economic and Social Advisory Council, and Parliament. Small advisory groups of key stakeholders were established and consulted to gather advice on the development priorities and consultative process, and a series of consultations were held. Theconsultationprocesswasorganizedincooperationwithkeycounterparts. Documentsweretranslatedinto Thai, and, depending on the participants, meetings were conducted with simultaneous translation. Discussions were focused around a set of key issues: the development challenges facing Thailand; feedback on the World Bank's existing program; as well as input into where the Bank could be most useful, including in which sectors and using what types of support. Main Themes and Issues Arangeofissuesemergedfromthisseriesofdiscussions.Afewthemesstandout,however,becausetheyseemed to reflect the majority of the discussions, including: n Bea"knowledgebank."Onecivilsocietyrepresentativecalledknowledge"asafewaytocontributetothecountry's development." There are many aspects to this issue. Many said they valued the Bank's research and analysis but said it should be shared more broadly, in Thai, with the grassroots. Some said the Bank should support other information-sharing activities, also at the grassroots, including improving access to information mainly through 63 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP support to community media. Balancing and exchanging global and local knowledge was another issue. Many saw value in the Bank's ability to bring global knowledge to Thailand. Others called for more of an exchange ­ or saw knowledge as a way to bridge gaps between urban and rural people. And still others saw the Bank's role as bringing knowledge from outside to help communities understand and adapt to change, particularly in terms of the rapid changes brought by globalization. n TheBankisacatalystandabridge.SomesawtheBankanditsresearchandanalysisasacatalyst,stimulatingdebate and dialogue on key issues, for example on competitiveness. Others saw the Bank as a potential bridge between Government and civil society or the private sector and Government, and even sometimes between different Government agencies. Government counterparts for the different Country Development Partnerships stressed the need for regular meetings of the group and said they saw the Bank as a bridge to help improve overall coordination in Government among different departments working on complementary issues. n TheBankandThailandneedtoengageinatruepartnership.Inmanyoftheconsultationmeetings,participantsvoiced concerns over the use of the word "assistance." They were interested in forming "partnerships" with interna- tional organizations. Donor agencies expressed the need for partnership and commitment from government, and in some cases, sharing funding of programs. Some of those consulted also expressed the need for a clear definition of what a partnership between Thailand and the World Bank Group would really mean in practice. n Civilsociety,Parliament,andtheprivatesectorareincreasinglyimportantstakeholdersinthedevelopmentprocessinThailand.The Bank needs to work with these partners to understand Thailand better, participants said, but it also needs to engage with them to help strengthen their roles under the new Constitution. Many expressed the need for the Bank to engage stakeholders more broadly to help the Bank better understand the local context. n Capacitybuildingandlearningarejustasimportantastechnicalassistance.Peoplesawtheneedsrangingfromthecommu- nity level and civil society organizations to Parliament and Government. People saw learning and capacity building in different ways. Some focused on the broader needs of education reform and skills training, especially in information and communications technology (ICT). Others discussed capacity building with respect to enhancing governance, particularly in enhancing the monitoring role of local communities in development projects as government services and budgets are decentralized. Still others saw learning and training as ways to strengthen communities. Government officials stressed the need for real learning and capacity building within government, not only technical assistance. n PeopletheBankconsultedwithalsosaidtheyappreciatedtheprogramsongovernanceandcompetitiveness,including work on the financial and corporate sectors, poverty, and social protection and wanted the Bank to do more. They stressed the Northeast as an area of focus as well as the need for increased emphasis on rural areas. Decentraliza- tion should be the focus of the Bank's governance work, they said, and the Bank should play more of a role in regional development. The Bank's Response Theinputsfromtheconsultationshavebeeninvaluable.Goingforward,theBankisemphasizingknowledgeand capacity building as well as working in partnership. The Bank recognizes and welcomes the expanding role of civil society, the private sector, Parliament, and new institutions like the National Economic and Social Advisory Council in the country's development. The Bank has also taken steps to broaden and deepen our dialogue and our working ANNEXES 64 relationships with development partners in the country, including our primary partner, the government, and is working to build closer links with regional institutions. TheBankalsoseesitsroleasacatalystandabrokerandwillcontinuetoworkinthatfashion.Sincethebeginning of this process, the Bank has revised its thinking and the overall partnership document based on this set of consulta- tions. The Bank hopes this begins a dialogue process to enhance the impact of the Bank's engagement with Thailand. Participation and Consultation in the Thailand-World Bank Group Partnership Introduction In 2001, the World Bank Group began work on its new partnership document for Thailand. The last such plan, approved in 1998 during the height of the regional economic crisis, was based on assisting Thailand through its severe recession. Because of the crisis, it was prepared quickly with little consultation. In 2001, the country was in a very different situation. The recession was over, although unemployment was still high, productivity and firm profitability were still low, and income poverty was still higher than before the crisis. Thailand had its first directly elected Senate and the first Government under the provisions of its new Constitution. Thailand had borrowed heavily during the crisis recovery period, including $2 billion from the World Bank, and had embarked on a serious program of structural reforms. With the economy stabilized, the country's need and desire for more foreign borrow- ing had declined significantly. InordertounderstandwhatroletheWorldBankshouldplayinthisenvironment,theBankembarkeduponaprocess ofconsultation.Theprocessevolvedovertwoyears,encompassinginputfromGovernment,civilsociety,Parliament, the private sector, and other donors, and has provided the Bank with valuable insight into it could be most useful to Thailand. Thisdocumentisbeingwrittentoensurethattheserichdiscussionsareadequatelyunderstood,synthesized,and documentedandthattheyareproperlyreflectedinthefinalThailandWorldBankGroupPartnership.TheBankrecognizes the need to continue and broaden the dialogue with all stakeholders so that the Bank's work is effective and relevant. Through the Country Development Partnership (CDP) programs, the Bank will continue to engage on a regular basis with key stakeholders. The Process From February 2001 to October 2002, the World Bank held a series of consultation meetings with a variety of stakeholdersaboutThailand'sdevelopmentpriorities,challenges,theWorldBank'srole,andthedirectionofitsfuture activities.Theconsultationsproceededintwophases.Phaseonein2001focusedonabroadsetofissues,rangingfrom globalization to decentralization and poverty and from the environment to the evolving role of civil society. The second phase in 2002 concentrated on the development challenges facing Thailand and the role the World Bank should play. The major consultations in the first phase were two large meetings with civil society in Prachuab Kirikhan and Pitsanaulok provinces in 2001. Those meetings had a major impact on the way the Bank consulted with civil society, including holding a consultation in the Northeast, and the way the Bank looked at issues such as poverty. 65 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Asecondwaveofconsultations,specificallyonthepartnershipdocument,beganinearly2002.TheWorldBank identified the key stakeholders for the consultation process including the Government ­ high level policy-makers as well as working-level officials­ civil society, the National Economic and Social Advisory Council, Parliament, the private sector, and the donor community. Small advisory groups of key stakeholders were established and consulted to gather input and advice. The consultation process was organized in cooperation with counterparts; documents were translated into Thai, and, depending on the group gathered, discussions were conducted with simultaneous translation. Discussions were focused around a set of key issues: the development challenges facing Thailand; feed- back on the World Bank's existing program of support; as well as input into where the Bank could be most useful, including in which sectors using what types of support (capacity building, technical assistance, knowledge services, grants vs. loans). The structure of the meetings took different forms, some were more formal than others, some included breakout groups, some occurred over days, others were much shorter. TheBankhasalreadyorganizedfeedbackmeetingstorespondtothosewhojoinedintheconsultationsonhowthe Bank has integrated inputs from the process into the actual plan and implementation, and the final partnership document will be translated into Thai and shared with the participants of the various discussions. Inadditiontoface-to-faceconsultations,theBankalsoconductedasurveyofkeystakeholders.Thefindingsfrom that survey, which are included in annex B14, support the findings from the various consultations. Thisdocumentattemptstogiveaflavorofthefeedbackfromthevariousstakeholdersbyfirstsummarizingthe consultation sessions with civilsociety;theGovernmentAdvisoryWorkingGroup;seniorpolicymakers;donoragencies;private sectorrepresentatives;theNationalEconomicandSocialAdvisoryCouncil;andParliament. Aftereachmeetingsummary,thekey recommendations from each of these groups are given. At the end of the document, the Bank offers its response to the recommendations ­ some have been reflected in the partnership document while others would require specific requests from the Government or are areas where the Bank does not have a comparative advantage or a mandate to work. Summaries of the Consultation Meetings - Civil Society Meetings with civil society representatives in Prachub Kirikhan and Pitsanulok provinces, February and March 2001* TheWorldBank,incollaborationwithCivicnetandtheIndo-ChinaIntersectionDevelopmentInstitute,organized consultative meetings with Thai civil society organizations from all over the country in Prachub Kirikhan province (southern region) during February 22-25 and from Pitsanulok province (northern region) on March 10-11. Represen- tatives of 55 organizations participated in these two meetings. Civicnet and the Indo-China Intersection Develop- ment Institute organized and facilitated the meetings with input from the World Bank in order to ensure productive consultations with participants who had never been active in the World Bank's activities in Thailand. * Note: Becausethesemeetingsfollowedasimilarformatandaredocumentedinaseparatereport,theyarebeingsummarizedtogetherhere.Becausethepartnership documentwasnotyetprepared,thesediscussionsweremoregeneral,focusingonglobalizationissuesandusingtheThailandCountryDialogueMonitorto stimulateconversationonarangeofissues.TheDialogueMonitorsummarizesthemajordevelopmentsinkeysectorslikeeducationandthefinancialsector andthenlooksattheGovernmentspoliciesandprogramsandtheBanksdialogueandworkinthatarea. ANNEXES 66 Many had misperceptions about the Bank, and hence, were wary of its role.Mostparticipantsassumedthatall mega projects including the Southern Gas Pipeline were financed by the Bank (they are not), and that the Bank dictates all of Thailand's development plans (it does not), which the participants saw as contributing to Thailand's move towards globalization. The discussions were very frank and fruitful and were extremely helpful to the Bank in better understanding the role of civil society, their perceptions of development, their thoughts on Thailand's develop- ment challenges and their hopes for the country, particularly under the new Constitution. Theissueofglobalization--andmanaginginaglobalizedworld--wasamajortopicfordiscussion.Participants felt that the word "competitiveness," which the Bank used in discussing Thailand's ability to manage and reap the benefits of a globalized world, implied a fierce battle where there is a clear winner and loser. Participants said they felt this did not correspond to the Thai way of life. Competitiveness should start by realizing the potential of the rural sector, they said, and more attention given to developing the rural areas, the agricultural sector, and to supporting local products. Some participants felt that maybe Thailand would be better off not competing in the globalized world at all. The King's theory of a sufficiency economy was raised as an example of one desired approach. In addition, participants said the Government needed to invest more in building human resource capacity and developing a learning society. ParticipantssuggestedthattheBanklooktothenewConstitutionforguidanceandjustifyitsworktostrengthen civic participation to enhance transparency and accountability in the public sector. Participants expressed fear that corruption would increase in the local areas because of decentralization. They agreed that the role of community media in fighting and preventing corruption is key, particularly through changing the culture and attitudes of the younger generation. Participantsseemedtornbetweentheneedformoreinformationandknowledge,andafearofthepotentialnegative impacts information and new technologies could have on rural villages. Basic ICT infrastructure is limited in rural Thailand because equipment is expensive and users lack basic skills. Participants said this fact has increased the gap between urban and rural Thais. Seeingpovertyasincomealone,participantssaid,doesnotgiveanaccuratepicture.Theysaidthisapproachhas encouraged the poor to think more about material wealth than about happiness. Participants said they felt that the Government did not have a clear policy regarding social issues. They said the laws are there, but social protection measures are not enforced and do not seem to cover all groups, especially the vulnerable groups. Participants urged the Bank to focus on poverty in the rural areas, particularly the Northeast, which they identified as "bearing the brunt of development." ParticipantssawnaturalresourcesandtheenvironmentasbeingcloselylinkedtopovertyandurgedtheBankto work with these connections in mind. The environment was seen as having been "sacrificed" for Thailand's export- based development strategy. The way the Government has decided on and implemented big development projects has created a great deal of mistrust between Government and civil society. Participants said they felt the Govern- ment often starts a project well before the public is informed and that public hearings "are just a Government mechanism to add legitimacy and are not true consultation." Participants urged the Bank to play a facilitating role to bridge the gap between the Government and civil society organizations. The Bank should promote the management of the environment by local communities as well as strengthen public capacity to monitor projects that have an impact on the environment. 67 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Meeting with international NGO representatives in Bangkok, February 28, 2001 OnFebruary28,theWorldBankorganizedaconsultativemeetingwitheightinternationalNGOsattheWorld Bank's office. Participants encouraged the Bank to work more with civil society to improve good governance along the principles of the new Constitution. In the Bank's support to social protection programs, participants encouraged the Bank to look at labor issues and the rights of workers. Many of the participants said they would like to learn more about the Bank's projects in other countries and urged the Bank to improve the way it shares information. Meeting between civil society leaders and the World Bank's Regional Vice President in Bangkok, March 14, 2001 OnMarch14,keyrepresentativesofThaicivilsocietymetwiththeBank'sRegionalVicePresidenttodiscussissues affectingthedevelopmentofcivilsociety,theevolutionofthecivilsocietymovement,andtheroleoftheWorldBankin Thailand.This was a very small, informal meeting. Participants encouraged the Bank to work more with the Govern- ment to improve the enabling environment for civil society. They suggested that the Bank set up a system to improve dialogue and communication with civil society and to find suitable, innovative mechanisms to work directly with civil society and provide more capacity building for this sector. Within its own projects, they said, it is important for the Bank to ensure that the benefits reach the target groups especially at the local level, as well to reduce gender disparities in society. Meetings with civil society leaders in Bangkok, March 26, 2002 InMarch,theWorldBankorganizedameetingwithkeyleadersofnationalcivilsocietyorganizationstogather inputsandadviceondevelopmentissuesaswellasontheoverallconsultativeprocess.ParticipantsagreedthatThailand is at a critical juncture in its development and needs "the right kind of intervention from international organiza- tions." They saw knowledge as a "safe way to contribute to the country's development" and encouraged a "balance between monetary inputs and knowledge sharing." They also stressed the importance of improved engagement with civil society. Participants said that the Bank deals well with Government but not with civil society. They offered advice and assistance in improving the Bank's consultations with civil society, recommending the Bank take a bottom- up approach and talk with local, grassroots organizations to share information about the Bank and hear their ideas and needs. ThegroupencouragedtheBanktosupportlearningandknowledgeactivitiesatthegrassrootslevel;toworkwith local networks to support the exchange of local and international knowledge; to support alternative voices and creativity in public policy formulation, implementation, and monitoring; to support a trialogue among "the state, civil society, and the market." They encouraged the Bank to work with the "vibrant civil society sector" to engage more with the majority of the people. They recommended that the Bank think constructively about ways it can use its existing mechanisms of support to improve the enabling environment for civil society and strengthen the weaker sectors of society, especially the poor and vulnerable groups. Specific recommendations for Bank programs included a focus on human development, including education reform. They also recommended the Bank consider the gender dimensions of its work to help improve the potential for both males and females in Thai society and use a "bottom- up approach" to consultations. The Bank representatives agreed that focusing on knowledge efforts would help create new space for dialogue among all sectors in society and bridge country knowledge with global knowledge. ANNEXES 68 Meeting with local civil society organizations and community leaders, July 11-12, 2002 in Nakorn Ratchasima InresponsetosuggestionsthattheBankconsult directlywithgroupsintheNortheast, aconsultative meetinginNakornRatchasimaprovincewasorganized inJuly2002.Seventycivilsocietyrepresentativesand local community leaders from the upper and lower Northeast region attended the workshop. Most of the participants had never worked with the Bank before ­ many did not know about the Bank before this eeting. They were enthusiastic about the meeting; almost everyone invited attended. Many participants had misperceptions about the Bank and were suspicious about the Bank's intentions and its role in Thailand. Most of these were cleared up during a pre-consultation session on the World Bank and its operations, which was held before the actual discussions on the specific themes. The consultation started with a review of Thailand's development direction especially towards the Northeast. Later breakout sessions on key development issues were organized to discuss the current situation and to offer recommendations. TheparticipantssaidthattheNationalPlanswerenotrelevanttotheirdailylives.Theplans,theysaid,focus more on the capitalist economy and use Western ideas and approaches. This combined with foreign loans and a lack of voice in the process were perceived as a "new type of colonialism." They said the Government does not provide opportunities for local communities to participate in various activities including safeguarding their own environ- ment. The participants said the development plans should be more localized and integrated with the noble truths of Buddhism on caring for, managing, and safeguarding the environment. The key recommendations from the participants included the need for knowledge from the outside to help communities adapt to change; support for community media, especially community radio; increasing training and learning opportunities in the provinces; providing grant funds directly to civil society organizations; and the organization of a future forum for the poor and disadvantaged to meet with the World Bank. Key recommendations from all of the consultations with civil society For the Bank as an institution n Provide more information about the Bank and its operations to the public, especially civil society organizations. This could be done by providing more information in Thai to civil society organizations and holding a series of informational meetings for civil society organizations. More information is also needed on the Bank's role vs. the IMFandADB. n Be a "knowledge bank," providing international knowledge and experiences on issues, bridging the international and local knowledge gaps; analyzing and simplifying information on key policy issues for the public; disseminat- ing information through forums, articles and publications; supporting local research capacity, including that of NGOs; helping to bridge the gap between policy makers and civil society, as well as improving the environment for civil society to participate in public policy. Local media is recommended as one of the most effective mecha- 69 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP nisms to promote local learning and information sharing. n Increase participation within projects and encourage the engagement of civil society in early stages of project design. n Promote the strengthening of the civil society sector through knowledge activities, capacity building, and "inno- vative mechanisms." n Avoid funding mega-projects in Thailand. n Strengthen integration of gender issues into the Bank's work. Competitiveness n Understand the Thai context, the concept of the sufficiency economy, and the role of community networks and local wisdom when working on competitiveness. n Continue promoting transparency and accountability in the private sector and financial sector. Balance assistance between the macro and micro levels to include community and rural credit. n Focus attention on the rural areas, particularly the agriculture sector. Support to rural communities needs to include community strengthening, bridging the macro and micro economies, strengthening of community information databases and networks, developing skills and alternative education for local communities, identi- fying potential markets, determining ways to add value to local products, and the need for community funds. It is important to strike a balance between the need for more information in rural areas and the fear they have of potential negative influences. Governance-public sector reform and people's participation n Continue efforts to improve the enabling environment for civil society, especially laws relating to CSOs and participation until civil society has enough strength to dialogue directly with the Government. n Empowering the people is key to reforming the public sector. Only a well-informed citizenry could make Government agencies accountable. There is a need to strengthen the civil society sector and the newly-created independent organizations so as to improve accountability and transparency in the public sector, particularly in overseeing procurement, the bidding process, fiscal transactions, and other decisions. This is especially impor- tant in relation to decentralization to consider strengthening local communities to act as watchdogs over fiscal transactions and other decisions. n Support the disclosure of information; media capacity building, particularly at the local level, is encouraged. Social Policy and Poverty n Think and work holistically, considering the connections between sectors and issues, i.e., the linkage between environment and poverty. n Involve people and communities in poverty programs and strategies. The World Bank-funded Social Investment Fund is a good example of the kind of program that builds social capital. n Assist the Government in developing a rural strategy that focuses on community participation and empower- ment. However, participants also cautioned against separating rural and urban issues too much. n Focus more on the Northeast of the country. n Emphasize education, particularly analytical thinking, and help expand opportunities for quality education in the rural areas especially to the poor and vulnerable groups through distance learning or IT. ANNEXES 70 n Support the enforcement of labor laws and promote the accountability of the employers' sector; engagement of consumers and employees in SOE privatization; and skills development and welfare systems for workers. n Encourage the Government and private foundations to pay more attention to the poor and vulnerable groups. Bank research should reflect the reality of poor and vulnerable groups. Environment n Appreciate the linkage between environment/natural resources and poverty. n Promote the effective use and conservation of natural resources, strengthen public awareness and capacity in environmental issues, including EIAs and SIAs, to monitor environmental aspects of development projects. Summaries of the Consultation Meetings--Government and Other Stakeholders Meeting with the Government Advisory Working Group in Bangkok, April 3-4, 2002 TheGovernmentAdvisoryWorkingGroupincludessome25working-levelrepresentativesfromvariousagencies whointeractregularlywiththeBanktoimplementprojects,executegrantfunds,orformulatetheframeworksforthe Country Development Partnerships. This group of counterparts knows the Bank very well and has an ongoing, productive relationship with Bank staff, a fact which made these meetings very frank. The first consultation with the Advisory Working Group was held over two days in April 2002 to introduce the process for developing the Bank's business plan; and for the Bank to get the counterparts' insight on the country's development challenges and priorities, lessons learned from the past, and ideas for the Bank's engagement in the future. TheparticipantsdiscussedconstraintstodevelopmentwithintheGovernment,includingweakcapacity;thelack of ability to execute some programs even when the high-level vision is strong; and the lack of coordination among ministries. Governance, competitiveness, education, poverty reduction, social welfare, SME/micro-enterprise development, and privatization and SOE reform were major challenges for the future. Participants said they valued the Bank's analysis and research and links to global knowledge. They also said they valued the Bank's balanced assessments and advice, good individual projects, and the Bank's ability to stimulate debate and dialogue on key issues. The Bank's emphasis on competitiveness, for example, raised awareness within Government, and now Government is developing its own competitiveness framework. ParticipantsidentifiedconstraintstoworkingwiththeBankincludinglanguagebarriers,sometimescomplex Bank procedures, and need for the Bank to engage more with civil society and the private sector. Participants emphasized country ownership of programs and emphasized the need for a "true partnership." They emphasized the need for real capacity building, not just technical assistance. Knowledge, particularly global knowledge, dissemi- nated widely in the local language would be highly valued. Many of the counterparts in this group are involved with the various Country Development Partnerships. This was the first time they had met collectively as a group, and they recommended holding overall coordination meetings for all of the different CDP counterparts to discuss syner- gies among programs and improve Government coordination across ministries and departments. Overall, this group said the Bank's work in Thailand is highly valued and the Bank should stay engaged in Thailand even though the Government may not need to borrow. 71 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Meeting with the Government Advisory Working Group in Bangkok, June 14, 2002 On June 14, 2002, a follow-up meeting with the same group of counterparts was held to further discuss the framework of the Bank's business plan, the development priorities, and the Bank's country program for the next three years. The presentation materials from the World Bank's internal review meeting were also shared with the counter- parts. The participants agreed with the direction of the proposed plan and discussed the practicalities of the CDP process and ways to make it work more smoothly. Meeting with the Government Advisory Working Group in Bangkok, September 18, 2002 Athirdconsultationsessionwasorganizedtosharethedraftbusinessplandocumentwiththecounterpartsin September 2002. World Bank staff led the discussion in Thai to allow for maximum inputs. This strategy proved to be highly effective as over 20 Government representatives stayed for the entire four-hour meeting. One key message from this session was the Bank should clearly and explicitly state its intended development strategy for Thailand, particularly whether it would be based on a lending or non-lending mode of engagement. The process under which development activities are carried out by implementing agencies should be modified and streamlined, with proper knowledge transfer to the Thai agencies beyond just technical assistance. More importantly as the partnership between Thailand and World Bank progresses, the Working Group and the Bank should hold periodic meetings to discuss progress, obstacles, results and the impact of the Bank's work in Thailand. In addition, the Bank should clearly identify exit criteria for CDP activities ­ either stemming from a lack of demand from the Thai Government or the lack of Bank administrative budget. Key recommendations: Inalloftheseconsultations,thediscussionswereveryfrankandrecommendationswereprovidedonspecificissues. n The Bank and the Government's relationship is moving from lender-borrower towards development partner. This new relationship has to be clearly defined and stated in the business plan document because this is the basis for future work of the Bank. Financial assistance in various forms, for example, grants as well as loans, have not been ruled out. The form of financial assistance will depend on the priorities of the Government and the economic circumstances of the country, as well as the availability of funds from the Bank. n The Government representatives said the Bank should align its support with the Government's four national agenda items, namely, Competitiveness and Cluster Development, Poverty and Inequality Reduction, Strength- ening Human and Social Capital, and Sustainable Development (Natural Resources and Environmental Management), and consider the budget and financing gaps. n The Government said it needs expertise, knowledge sharing in sectoral work (such as infrastructure regulations, social protection, pension reform, and development of ICT capability) and funding from the Bank for technical assistance and help with coordination of implementation. The group proposed having a standby credit or revolving fund to bridge the funding gap between immediate needs for timely technical assistance and the Government's two-year budgeting process. The revolving fund would disburse quickly while the Government's budget process was set in motion. When the money was received from the Budget Bureau, the revolving fund would be repaid. n The World Bank could work with the Government to organize inputs from other stakeholders and donors, both in Thailand and in the regional context including the Greater-Mekong Subregion (GMS) and ASEAN. ANNEXES 72 n Regarding the need for more focus, for example, when dealing with service delivery, it may be more effective to specify which sector or geographical area that the Bank would like to work with stakeholders. n CDP-Coordinator engagement is needed at all levels ­ policy and operational ­ so the CDPs are totally integrated into Government policies. Some components of the CDP for Competitiveness,1 for example, are lagging behind while others are advancing. Each component should operate independently but milestones for subcomponents should be tied together so there is more pressure to deliver. Monitoring of the CDP process should be publicized and disseminated widely to all levels. n Continuous monitoring and evaluation are critical to the success of program implementation and need to be clearly defined in the business plan document. Meetings with senior policy makers in Bangkok, 2002 InadditiontotheBank'scontinuedengagementandconsultationwiththeGovernmentWorkingGroup,theBank alsoconsultedwiththeMinisterofFinanceandseniorpolicy-makerswithintheRoyalThaiGovernment.In2002,aseries of group meetings were held with senior officials from key agencies such as the Fiscal Policy Office and the Public Debt Management Office of the Ministry of Finance, and the Office of the National Economic and Social Development Board (NESDB). These meetings are not documented individually because many were part of the Bank's ongoing dialogue withGovernmentontheBank'sengagementwithThailand.AmeetingwiththeMinisterofFinanceSomkidJatusripitak was held in July 2002 to discuss the overall development framework, the Bank's value-added role, and progress on the Bank's business plan. The Minister of Finance2 said that Thailand's development framework and challenges as outlined in the draft documentaswellasareasofBanksupport,proposedactivities,andmodesofengagementwerecrucialandrelevantto Thailand's development direction. He said that Thailand has an ambitious structural reform agenda, and would like support from the Bank, noting that the Bank's programs focusing on competitiveness and poverty reduction were needed in Thailand. The Minister said he was pleased with the Bank's proposed partnership programs and would welcome the Bank's continued support to relevant reform programs, especially in areas of knowledge sharing, analytical and advisory services, and support to institutional and human resource capacity building, which he called "software. " Minister Somkid said the Ministry of Finance team will work closely with and support the Bank in "tailoring projects and development programs" with or without future lending. Senior Government officials also confirmed during subsequent meetings that the Bank's understanding of the national development agenda was consistent with Thailand's development direction, based on the underlying principles of the 1997 Constitution and related legislation. Given that Thailand has yet to produce an Assessment of Investment Needs that would support the national developmentagendaandcurrentfinancialstability,policymakerssaiditisdifficultfortheGovernmenttoidentifythe futureinvestmentgapsandfinancingneeds.Seniorofficialssaidtheybelievedthatthefinancinggapsandneedswould be reviewed on a case-by-case basis. 1 Note: This CDP has been refocused. 2 Note: Some of Minister Somkid Jatusripitak's comments are quoted from the minutes of the meeting prepared by Ministry of Finance officials. 73 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Key recommendations: n The Minister of Finance urged the Bank to put more emphasis on the expansion of the private sector industrial base, the coordinated and centralized development of SME entrepreneurs, and the development of competitive- ness capacity in specific sectors such as the automotive and food processing industries. n Thailand's role in regional development is crucial. The Bank and Thailand could have a leading role in the development of the Greater Mekong Sub-region (GMS). n In the area of governance, the Bank should consider focusing on supporting Thailand's decentralization process. n In the area of competitiveness, key reform areas include: competition policy, corporate governance for non-listed firms, SOE reform, and the regulatory regime. Thailand lacks expertise in these areas, and knowledge transfer would be valuable. Meeting with donor agencies in Bangkok, March 20, 2002 TheWorldBankorganizedapre-consultationwithdonoragenciesonMarch20todiscussthecountry'sdevelop- ment challenges, the various donor programs, and to share information about the process and status of the develop- ment of the World Bank's business plan. Representatives of key donor agencies in Thailand, including the Japanese Bank for International Cooperation (JBIC), the Asian Development Bank (ADB), German Technical Cooperation (GTZ), and AusAID (Australia), attended the meeting. Donor agencies agreed on the need to closely cooperate on develop- ment programs in Thailand in order to avoid duplication and improve effectiveness. Donors agreed on several other points: individual programs would be increasingly focused and selective; interest on the part of Government in foreign borrowing for development had declined significantly; and lending and non-lending programs would likely decline over the coming years. Co-financing from the Government will be critical for donor funding in the future to ensure sustainability and commitment. GTZ, for example, said it would only fund programs co-financed by the Government. Key recommendations: n Continue to use partnership matrices to coordinate capacity building and technical assistance efforts, particu- larly at a sectoral level. n Hold periodic donor coordination meetings with key counterparts. n Explore potential tri-lateral partnerships (with the Royal Thai Government, another GMS Government, and a donor agency) to work on regional issues. n Explore the possibility of support to municipalities. InadditiontoformalconsultationswithdonoragenciesontheBank'sproposedprogram,Bankrepresentatives havealsoworkedonanongoingbasiswithdonorcounterpartstoimprovethecoordinationofprogramsinThailand.Inthe development and execution of the Country Development Partnerships, Bank staff engage with donor counterparts to ensure that efforts are complementary. During the UN's process to develop its United Nations Development Assistance Framework (UNDAF), World Bank technical staff participated in the various working groups to ensure that World Bank activities were coordinated with other parts of the UN system. This process, although not a formal part of the consultations, did contribute to the Bank's information sharing with donors and sharpening of the focus of the Bank's partnership document. ANNEXES 74 Meetings with private sector representatives Overthepastthreeyears,theBankhasengagedtheprivatesectorinthecontextoftheCDPforCompetitivenessand morerecentlytheCDPforFinancialandCorporateCompetitiveness.Theprivatesectorgroupincludesbusinesspeople and opinion leaders from large corporations, small and medium-sized firms, individual entrepreneurs, legal professionals, bankers, and industry experts. There were two types of consultations. A series of workshops and meetings have been held with different groups of stakeholders (leaders from both the public and private sectors, as well as other partners) to discuss key issues (e.g., the Private Sector Forum); to coordinate and assess the impact of the technical assistance programs and plan for the future (Technical Assistance Coordination Meetings); or to plan new development initiatives under the Partnership (CDP Consultations with Private Sector Leaders). Inaddition,meetingswereheldperiodicallywithrespectedindividualsfromtheprivatesectortoreviewanddiscuss analyticalreportsortofollowupontherelevancyandapplicabilityofpolicyrecommendationsthattheBankhasprovided totheThaiauthorities.TheGovernmentrequestedthattheBanksolicitthiskindoffeedbackfromtheprivatesectorin order to enhance the effectiveness of development policy initiatives. Recent reports on restructuring non-performing loans, corporate governance, and the Thai Asset Management Corporation were shared with private sector representatives. Key recommendations: Private sector consultations support continued Bank Group engagement with Thailand. n More dialogue and education is needed on what is meant by "competitiveness" and "good corporate gover- nance." The Bank Group has been helpful in putting these challenges on the agenda, but there is still misunder- standing about definitions and implementation among leaders in the public and private sectors. n One private sector banker commented that the Bank Group's technical assistance program has high impact. However, the Bank's policy notes and analytical reports on sensitive financial and corporate matters, while of very high quality, have not had much recent impact on policy and implementation by the authorities. Awareness is created and discussion stimulated among decision makers, they said, but structural change is slow. n Private sector stakeholders are aware of the analytical work and policy recommendations the Bank Group has provided to the authorities. The Bank should continue to provide analytical reports in areas identified by the authorities and incorporate the private sector comments and suggestions as in the past. n The Bank Group has been successful in partnering with and engaging the private sector, particularly by making sure that private sector views are heard and understood by Government policymakers. It also helps to bring different agencies of the Government together, which lessens the risk of a "silo" approach to policy. n Continued policy advice and technical assistance on the structural reform of the financial sector and corporate debt restructuring, including legal and judicial development, is welcome. n Through the Bank Group's knowledge base and expertise, strategy and advice on increasing investment and commercial bank lending would be welcome. n Local knowledge of international benchmarks, standards and expectations needs to be enhanced, and the Bank Group should continue to bring this to Thailand. 75 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Meeting with the National Economic and Social Advisory Council (NESC) in Bangkok, July 13, 2002 TheBankwasinvitedtogiveapresentationontheWorldBankanditsfuturestrategicoperationsinThailandtothe members of the NESC during the Council's regular session on July 13. Over 100 participants including the Council's members and advisors attended, and the discussions were frank and fruitful, particularly considering this was the first time the Bank had met with the Council. The Bank clarified many misperceptions about the Bank. Members reflected on their frustrations with the Bank and other international organizations. The Council acknowledged that the proposed CDPs were needed by Thailand and placed emphasis on anti-corruption measures, good governance, social protection, decentralization, employment, income distribution, and direct assistance to grassroots communi- ties. They strongly recommended that the Bank talk about a "partnership" with Thailand and not "assistance to Thailand." They did not support new loans, saying that they felt big projects were "riddled with corruption." Key recommendations: n The Bank should consider changing the document's name from "Country Assistance Strategy (which is the Bank's standard name for this kind of document) to reflect mutual cooperation and a partnership with Thailand. n The Bank should ensure that financial assistance it provided would go directly to the poor and vulnerable groups. n The Bank should enforce measures to prevent corruption in assistance projects. Meeting with members of Parliament in Bangkok, October 9, 2002 The World Bank in partnership with the King Prajadhipok'sInstitute(KPI),aresearchinstituteattached toParliament,organizedahalf-dayconsultativemeeting with members of Parliament in October. Speaker of the House Khun Uthai Pimchaichon opened the event with appreciation for the Bank recognizing the importance of the legislative branch and seeking to consult on its strategic framework. The Speaker said he hoped that the Bank would continue to engage the Parliament and KPI in the Bank's future activities especially through information and knowledge sharing about key develop- ment issues from other countries. Fifteen Senators and members of the House representing various committees such as Education, Health, Finance and Labor attended the meeting. These Parliamentarians knew the Bank quite well and were supportive of continued engagement in Thailand. They provided very specific recommendations for the Bank. Key recommendations: n There is an increasingly negative public perception toward international financial institutions as part of global- ization. Organizations like the Bank need to adjust more rapidly to this new environment, namely in recognizing the many new players beyond the Government, such as the Parliament and civil society. The representatives said, however, that this changing environment makes it difficult for the Bank to operate effectively. ANNEXES 76 n In terms of its advisory role, the Bank still has a comparative advantage at the macro level. The monitor publica- tions were cited as useful for the Government and the country. n Members of Parliament expressed the need for a clear definition of what a partnership between Thailand and the World Bank Group would really mean in practice. They also asked about the role of Parliament in this new partnership. n There was a need expressed for grants to support the legislative process especially in oversight of the executive branch and to support the oversight institutions established under the Constitution. n There was a suggestion for a comparative study on legal systems that would enable and empower the poor and provide knowledge back to the region. n The Bank needs to clarify its position and role, especially for medium and long term development, and not duplicate the work of the IMF, which works on short-term issues. The crisis, where both institutions were involved in more short-term responses created confusion about the roles of the respective institutions. n The national agenda, stated clearly in the Constitution, should be the basis for the World Bank's work in Thailand. n The Bank should consider regional cooperation beyond the Mekong sub-region, including support for ASEAN. n Bank experts must have a good understanding of the local context in order to effectively analyze issues. n Thailand is facing environmental management problems especially on solid waste and wastewater treatment, most urgently at the local governmental level. The Bank might want to consider partnering with the private sector and government agencies to invest in this area. n Currently, the lending process is managed through the Ministry of Finance. During the crisis the legislative branch was involved only in approving loan payments and is by law limited to overseeing the lending process. Parliament hopes to be able to have an opportunity in the future to review lending documents prior to approval. n Areas where the Bank could potentially play a role, according to this group of Representatives and Senators, include education to develop human resources, including ICT; the development of women's potential; health; technical assistance and knowledge in the area of SMEs, risk-based supervision, trade, and financial institutions; and investments in science and technology for the short, medium and long term, focusing in the short and medium-term on agriculture, food and health. The World Bank's Response to the Consultations TheBankhighlyappreciatesthetimeandinvaluableinputseachpartnerhasgiventodeveloptheThailandWorld Bank Group Partnership. The Bank recognizes and welcomes the expanding role of civil society, the private sector, Parliament, and new institutions like the National Economic and Social Advisory Council in the country's develop- ment. The Bank has taken steps to broaden and deepen our dialogue and to work in partnership with stakeholders in the country to help ensure that the Bank's work is grounded in local needs and priorities. Since the beginning of this process, the Bank has revised its thinking and its draft partnership document. In the Thailand World Bank Group Partnership document, we have begun to integrate and reflect the input from the consultations with the various development partners. The Bank looks forward to discussing these issues further during implementation with a view to further enhancing the quality of its work. RecommendationsreceivedthroughtheprocessandtheWorldBank'sresponse The following section addresses the major recommendations from this series of consultations. The key recom- mendations have been summarized to reflect similar recommendations from different discussions with different groups. The World Bank's response follows each recommendation. 77 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP On the World Bank in general Recommendation: Clearlydefinethenewdevelopmentpartnerrelationship.(Govt) WB: The partnership document defines this relationship, including the criteria that will be used by the part- ners to decide on country programming choices, both across and within CDPs, as well as with respect to lending, and sets out the framework for regular monitoring and dialogue. Recommendation: Rename the Country Assistance Strategy, the Bank's standard name, to reflect mutual cooperation and partnership with Thailand. (NESC) WB: The document was renamed the Thailand-World Bank Group Partnership to reflect the new working relationship. Recommendation: Recognize the many players in development beyond the Government, such as the Parliament and civil society. (Parliament) WB: Throughout the development of the Thailand-World Bank Group Partnership, the Bank has been consult- ing with representatives of civil society, Parliament, the NESC, donors, private sector, as well as Government The Bank will continue to engage these various partners in the implementation and monitoring of the Bank's work in Thailand, especially the CDPs. Recommendation:Usethenationalagenda,statedclearlyintheConstitution,toprovidethebasisoftheWorldBank's work in Thailand. (Parliament) WB: The Constitution has been used as the basis for the Bank's understanding of Thailand's agenda and provides a very valuable framework for looking at the roles of various players in development, including civil society, media, and Parliament. Recommendation: Align Bank support with Thailand's four national agenda items, namely: Competitiveness and Cluster Development, Poverty and Inequality Reduction, Strengthening Human and Social Capital, and Sustainable Development (Natural Resources and Environmental Management), and consider the budget and financing gaps. (Govt) WB: The Bank has used the four pillars of the national agenda to organize the discussion on Thailand's development challenges with the underlying theme of governance stemming from the Constitution. Recommendation: Provide expertise, knowledge sharing in sectoral work (e.g., infrastructure regulations, social protection, pension reform, and development of ICT capability) and funding for technical assistance and help with coordination of implementation. (Govt) WB: The Bank is working in partnership with Government and other donors on social protection and pension reform through the CDP for Social Protection. The Government has also requested support for infrastructure and ICT and the knowledge economy, and the Bank is working with the Government on the development of programs in these areas. However, resource constraints also mean that some tough choices will have to be made about priority areas for Bank involvement. Recommendation: Have a standby credit or revolving fund to bridge the funding gap between immediate needs for timely technical assistance and the Government's two-year budgeting process. The revolving fund would disburse quickly while the Government's budget process was set in motion. When the money was received from the Budget Bureau, the revolving fund would be repaid. (Govt) ANNEXES 78 WB: TheBankwouldbepreparedtosupportarevolvingfundfortechnicalsupportiftheGovernmentrequests such support. Recommendation:Potentiallyplayarolein:educationtodevelophumanresources,includingICT;thedevelopmentof women's potential; health; technical assistance and knowledge in the area of SMEs, risk-based supervision, and trade and financial institutions; and investments in science and technology for the short, medium and long term, focusing in the short and medium-term on agriculture, food and health. (Parliament) WB: In some of the areas mentioned, such as ICT and education, the Bank has taken these issues into account and will be working on them through the development of potential CDPs. In other areas where the Bank has not been engaged, such as food security and health issues, the Bank would be prepared to consider working on this if the Government requested our involvement and if we had a comparative advantage in providing support. However, resource constraints will limit the number of issues on which the Bank can work. Recommendation:Toensuregreaterfocus,specifywhichsectororgeographicalareathattheBankwouldliketowork with stakeholders. (Govt) WB: To ensure greater focus in its programs overall, the Bank--in consultation with the Government and other stakeholders--has developed criteria which will guide country programming choices, both across and within CDPs, as well as with respect to lending. These criteria include links to critical reform areas, ownership, and the Bank's comparative advantage. Recommendation:Work more in the rural areas, especially in the Northeast. (CSO) WB: The Bank is providing resources to support activities targeted at rural areas in the Northeast, such as community radio programs, rural IT programs, and the small grants fund for NGOs. Recommendation:Avoidfundingmega-projectsinThailand.(CSO) WB: The Bank is no longer engaged in mega projects in Thailand. Recommendation: Ensure engagement of the CDP at all levels, including the policy level. CDP components should operate independently, but milestones for subcomponents should be tied together so there is more pressure to deliver. Monitoring of the CDP process should be publicized and disseminated widely to all levels. (Govt) WB: There will be regular reviews of all the CDP programs and involving all of the CDP coordinators where issues such as links to the policy level will be discussed. The Bank will explore the idea of linking subcompo- nents together more closely with the CDP counterparts. An annual Country Dialogue Monitor with a six- monthly update would be made public to help monitor progress. Recommendation: Clearly define monitoring and evaluation plans in the partnership document. (Govt) WB: One section of the document is devoted to monitoring outcomes of the program. This approach has three overall objectives: to shift monitoring of progress from inputs and outputs to outcomes and impacts; to im- prove the existing CDP matrices so that they can be used as a tool for enhanced results based management; and to aggregate outcomes and impact across the different CDPs to evaluate overall program results, in light of the national agenda, measured by specific goals established by the Ninth Plan as well as the Millennium Develop- ment Goals. Recommendation:IntegrategenderdimensionsintotheBank'sactivities.(CSO) WB: The section on cross-cutting issues in Box 7 of the document gives more detail on how the Bank is incorpo- rating gender issues as well as poverty and civil society participation into the CDPs. 79 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Recommendation: Consider working on regional issues and cooperation beyond the Mekong Sub-region, including ASEAN. (Parliament and Govt) WB: The Bank will work in partnership with Thailand and other country partners and donors to further strengthen the GMS Program and the MRC support ASEAN. Recommendation: Explore potential tri-lateral partnerships (with Royal Thai Government, another GMS Govern- ment, and a donor agency) to work on regional issues. (Donors) WB: The Bank will further explore this with other donor partners. The Bank will initially focus on making sure that the experience and expertise in programs the Bank is involved in Thailand are shared with other countries and in particular with Thailand's neighbors Cambodia and Lao PDR where capacity constraints are very serious. Specific examples of such cooperation and knowledge sharing will include dissemination of lessons from the Thailand Social Investment Fund program and the Thailand land titling program (which was supported by the Bank for over twenty years) and arranging for Thai experts to provide advice and guidance on similar Bank-supported programs underway in Cambodia and Lao PDR. Recommendation: Bank experts must have a good understanding of the local context in order to effectively analyze issues. (Parliament) WB: Through engagement with various stakeholders and increased involvement of World Bank staff from Thailand, the Bank is working to strengthen our understanding of the local context. Recommendation: Be a "knowledge bank," providing international knowledge and experiences on issues, bridging international and local knowledge gaps; analyzing and simplifying information on key policy issues for the public; disseminating information through forums, articles and publications; supporting local research capacity, including of NGOs; helping to bridge the gap between policy makers and civil society, as well as improving the environment for civil society to participate in public policy, including using local media, one of the most effective mechanisms for information sharing and learning. (CSO) WB: The Bank is working through CDP programs as well as with the World Bank Institute and other resource providers to be a "knowledge bank." The Bank will continue to provide international experience and technical support as requested by counterparts and is working with strengthening civil society and local media through the CDP for Governance and Public Sector Reform. Recommendation:ClarifytheBank'sroleinmediumandlongtermdevelopment;donotduplicatetheworkoftheIMF or ADB. (Parliament and CSO) WB: We have tried to clarify this in the partnership document and through our continuous engagement with donors and other stakeholders. Our CDP programs are geared towards medium and long-term development. and would not duplicate the work of the IMF, which works on short-term issues. The World Bank and the ADB are partners in several of the CDPs, including the CDP for Poverty Monitoring and Analysis where the two institutions work on complementary aspects of the program. Recommendation: Provide more information about the Bank and its operations to the public, especially civil society organizations by providing more information in Thai to civil society organizations and holding a series of informa- tional meetings for civil society organizations. (CSO) WB: Information on the Bank's activities is on the World Bank's website (http://www.worldbank.or.th) and is available at the Public Information Center at Chulalongkorn University in Bangkok on the 5th floor of the Center for Academic Resources. In addition, each CDP involves wide stakeholder participation in both formu- ANNEXES 80 lation as well as monitoring. Increasingly, documents like the Monitor publications are routinely translated into Thai. The Bank is working to further these efforts in the coming years, including the development of a Thai-language website. Recommendation: Allow Parliament the opportunity to review lending documents prior to approval. (Parliament) WB: The Bank is expanding our information sharing with all development partners, including members of Parliament. Regarding approval of lending, the Bank follows the regulations of the country. Recommendation: Clarify the role of Parliament in this new partnership. (Parliament) WB: The Bank considers Parliament to be an important development partner. The Bank has just started to work with the Parliament through the WBI-governance program. In our future analytical and partnership programs, Parliament will be one of our key partners. Recommendation: Promote the strengthening of civil society through knowledge activities, capacity building, and "innovative mechanisms." The Bank should provide resources and adjust mechanisms to be more flexible to work with civil society groups. (CSO) WB: The Bank has a small grants program which provides direct assistance for knowledge sharing and capacity building to civil society in various countries including Thailand. Unfortunately, the Bank has relatively few mechanisms to work directly with civil society. In investment projects, the Bank has adjusted our procurement guidelines to provide more flexibility for community participation. Recommendation: Increase participation of civil society organizations in the Bank's analytical work and operations, especially in monitoring and evaluation of Bank projects. (CSO) WB: The Bank is supporting the Government in consulting and working with civil society at the grassroots level to develop poverty reduction strategies and environmental management strategies and monitor the Government's reform progress and service delivery. Recommendation: Increase transparency and accountability in the Bank's assistance projects. (CSO, NESC) WB: TheWorldBankhasadoptedanewpolicyondisclosureofinformation,whichwentintoeffectJan.1,2002. A pilot initiative to improve implementation of this new policy is helping to make more information available in the local language, including the development of a Thai-language website. Recommendation: Build stronger mechanisms and enforce measures to prevent corruption in assistance projects. (CSO,NESC) WB: The Bank has prior and post- reviews for bidding and contracting of goods and services on all Bank- funded projects. The Bank's internal audit department also performs random checks to ensure compliance with procurement procedures on both grants and loans. The Bank is also working with the Government to improve its procurement and audit systems. Recommendation:Holdperiodicdonorcoordinationmeetingswithkeycounterparts.(Donors) WB: The Bank will hold meetings every six months with all of the key counterparts in the CDPs to discuss progress, problems, and opportunities. Recommendation: Continue to use partnership matrices to coordinate capacity building and technical assistance efforts, particularly at a sectoral level. (Donors) 81 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP WB: The partnership matrices are important tools for Government to manage the often complex capacity building and technical assistance efforts. These are an integral part of managing and monitoring the CDPs. Recommendation: Explore the possibility of support to local governments-municipalities (Donors and Parliament) WB: Yes, the Bank is currently supporting local governments through the Regional Urban Development Fund and would do more if requested by the Government. Recommendation: Ensure that Bank assistance goes directly toward the poor and vulnerable groups. (NESC) WB: The Social Investment Fund (SIF) and the small grants program have provided direct support to benefit civil society and vulnerable groups; the SIF has closed but the small grants program will continue--however, the amounts involved are very limited. Financial and Corporate Competitiveness Recommendation: Place more emphasis on the expansion of the private sector industrial base, the coordinated and centralized development of SME entrepreneurs, and help to develop competitiveness capacity in specific sectors such as automotive and food processing industries. (Govt) WB:TheBankengagedinanintensiveprogramtoboostcompetitivenessofSMEs,whichfocusedonincreasing participation of Thai SMEs in significant supply chains and providing them with infrastructure and knowl- edge services to boost their value added. Four industries received special attention. The government is implementing and monitoring this program. Recommendation: Provide technical assistance and knowledge in the areas of SME, trade and financial institutions, competition policy, corporate governance for non-listed firms, SOE reform, and the regulatory regime, structural reform of the financial sector and corporate debt restructuring, including legal and judicial development. (Private Sector and CSO) WB: Technical training and capacity building are central to the Bank's support, including setting up and developing the curriculum for the School for Examiners at the Bank of Thailand and the Institute of Directors, which improves governance of firms. The Bank is investigating ways to share knowledge with young leaders in the provinces about economic forces and trends. Recommendation: More dialogue and education is needed on what the Bank means by "competitiveness" and "good corporate governance". (Private sector) WB: The Bank holds dialogue sessions with the private sector and members of civil society where different understandings are aired and discussed. Technical assistance is provided to responsible line agencies which adopt best practice within the Thai context. Recommendation: Enhance the impact on policy and implementation of the Bank's high quality policy notes and analytical reports on sensitive financial and corporate matters. (Private sector) WB: The Bank engages at the policy level on sensitive and difficult issues. The authorities have their own program, and private market participants also have views. While different stakeholders often agree on the direction of reform, often there are different approaches and speeds of implementation. The value added provided by the Bank includes serving as a catalyst for productive dialogue among stakeholders within Thailand. ANNEXES 82 Recommendation: Continue to provide analytical reports to the private sector and incorporate private sector comments and suggestions as in the past. (Private Sector) WB: Yes, the Bank will continue this practice. Recommendation:ContinuetobringdifferentagenciesoftheGovernmenttogether,whichmitigatestheriskofa"silo" approach to policy. (Private Sector) WB: The Bank will enhance this work through the CDPs, particularly through bringing all of the CDP coordinators and partners together bi-annually. Recommendation: Strategy and advice on increasing investment and commercial bank lending would be welcome. (Private Sector) WB: The Bank has advised (a) the BOI on investment strategy, (b) the regulators on a regulatory platform which encourages new lending and investment, as well as promotes competitive incentives among financial institutions, and (c) the regulators on reform of the legal regime and the governance/disclosure regime which will build confidence and attract new capital. Recommendation: Continue to enhance local knowledge of international benchmarks, standards and expectations. (Private Sector) WB: The purpose of the Bank's technical assistance and advisory work is to provide international experience that can be customized to the Thai situation. Recommendation: Understand the Thai context, the concept of the sufficiency economy, community networks, and local wisdom when working on competitiveness. (CSO and NESC) WB: Yes, the Bank will continue to increase our understanding of the local context when working on this and other areas. Recommendation: Attention to the rural areas, particularly the agriculture sector, is important. Support to rural communities needed includes community strengthening, micro-credit, bridging the macro and micro economies, strengthening of community information databases and networks, developing skills and alternative education for local communities, identifying potential markets, determining ways to add value to local products, and the need for community funds. Understand the balance between the need for more information and the fear that rural communi- ties have of potential negative influences. (CSO) WB: Regarding access to financial services in the rural areas, the Bank is supporting the development of a medium-term strategy for the financial sector, which includes a policy framework for micro-credit. Governance and Public Sector Reform Recommendation: Help to strengthen the civil society sector and the newly-created independent organizations so as to improve accountability and transparency in the public sector and governance, particularly in overseeing procurement and the bidding processes. (CSO) WB: Through the CDP for Governance and Public Sector Reform, the Bank has proposed grant funding to support the establishment of civil society networks and strengthen their participation in the monitoring and evaluation of reforms and service delivery at the central and local government levels. The Bank has also been working on strengthening the auditing capacity of the State Audit Office. Other donor partners to the CDP on Governance, such as the ADB, have been providing support to independent organizations such as the NCCC. 83 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Recommendation: Help improve capacity of local media to provide information to local people and help combat corruption. (CSO) WB: The Bank has been working on this issue through the CDP-Governance and Public Sector Reform. The Bank conducted a study -on the role of community radio programming (2001) in providing information and in monitoring the government's performance. The Bank has also proposed to fund the development of a model for producing community radio programs. Recommendation:Enhancedisclosureofinformation.(CSO) WB: The Bank will work on this issue through the CDP-Governance and Public Sector Reform and in the implementation of the World Bank's new disclosure policy. Through, grant funding, the Bank, has proposed to support pilots of "Electronic Kiosks" in local government offices to improve information dissemination and public service delivery at the local level. For its own programs, the Bank is working to make information more widely available in Thai and is developing a Thai ­language website. Recommendation: Support the establishment of a fair and transparent performance measurement system to monitor and evaluate service delivery of line agencies. (CSO) WB: The Bank supported a public sector client survey (2001) and has proposed to support the development of a performance management system to monitor and evaluate the performance of line agencies in a fair and transparent manner. Recommendation: Continue efforts to improve the enabling environment for civil society, especially laws relating to CSOs and participation until civil society has enough strength to dialogue directly with the government. (CSO) WB: The Bank has been involving civil society in dialogue with the Government through the CDPs. On laws related to civil society organizations, the Bank has not been working on this issue, but would consider it if the government requested our involvement. Recommendation: Provide grants to support the legislative process especially in oversight of the executive branch. (Parliament) WB: The Bank and the WBI have been providing assistance to strengthen the oversight role of Parliament through workshops both in Thailand and abroad. The Bank and WBI have been discussing with Parliamentar- ians and KPI ways to strengthen the technical capacity of Parliament, especially on the oversight of budget allocation and utilization. Recommendation: Produce a comparative study on legal systems that would enable and empower the poor and provide knowledge back to the region. (Parliament) WB: The Bank has not been involved in this issue. We would consider this if the government requested our involvement. Recommendation:ConsiderfocusingonsupportingThailand'sdecentralizationprocess,includingsupporttostrengthen local communities to act as watchdogs over fiscal transactions and other decisions. (CSO) WB: The Bank has been supporting Thailand's decentralized process through advice on establishing rules for allocating grants to local governments, as well as assessing the capacity of local governments and improving their financial management. The Bank, through grant funding, has proposed to strengthen the central government's ability to assess and help build local government capacity; to improve the provision of services by local governments; as well as information dissemination through piloting "Electronic Kiosks". The Bank, ANNEXES 84 through, grant funding has proposed to support the establishment of civil society networks and strengthen their participation in the monitoring and evaluation of reforms and service delivery. Social Policy and Poverty Recommendation: Think and work holistically, considering the connections between sectors and issues, i.e., the link- age between environment and poverty. (CSO) WB: The Bank and Government will be holding regular six-monthly review meetings to bring people working in different areas together. Under the CDP for Poverty, for example, the NESDB and Bank will analyze the interconnection between poverty and the environment. This will also be a priority for a possible future CDP for the Environment. The Bank has also launched a study on the link between poverty and the environment in neighboring countries. Recommendation:Involvepeopleandcommunitiesinpovertyprogramsandstrategies.(CSO) WB: The Social Investment Fund was an excellent example of a World Bank-funded project that has helped to build social capital. Currently, the main focus in the CDP for Poverty is to support the implementation of strategies and policies that would create opportunities for the poor, most of whom reside in the rural areas. In addition, the Bank also promotes participation from stakeholders in the implementation of poverty strategies and programs. Recommendation: Reflect the reality of the poor and vulnerable groups in World Bank research. (CSO) WB: Through the Monitor series', the Bank has looked at a range of issues reflecting the reality of poor and vulnerable groups, especially the latest Social Monitor volume on "Public Policy and Poverty." Recommendation:Helpbuildacommunitydatabasefortrackingpoverty.(CSO) WB: The Bank is providing technical assistance to develop a poverty map and database for poverty research and monitoring. Some of village level data has been put on the NSO's website (http://www.nso.go.th) and can be accessed by others for poverty analysis and monitoring. Recommendation:AssisttheGovernmentindevelopingaruralstrategythatfocusesoncommunityparticipationand empowerment ­ but do not over-separate rural and urban issues. (CSO) WB: The Bank will discuss with our counterparts to see how the Bank can take this recommendation forward. Recommendation: Emphasize education, particularly analytical thinking, and help expand opportunities for quality education in the rural areas especially to the poor and vulnerable groups through distance learning or IT. (CSO, Parliament) WB: The Bank is in discussions with Government on potential partnerships on education reform issues and on ICT, including for the rural areas. Recommendation:Workmoreonhealthrelatedissues.(Parliament) WB: The Bank would be prepared to consider working on this if the Government requested our involvement and if we had a comparative advantage in providing support. However, in view of resource constraints, the Bank will need to be selective and can work on only a limited number of issues. 85 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Recommendation: Support the enforcement of labor laws and promote the accountability of the employers' sector; engagement of consumers and employees in SOE privatization; support skills development and welfare systems for workers. (CSO) WB: The Bank works closely with Ministry of Labor (MOL) on labor market issues through the CDP for Social Protection, which require coordination and participation from both employers and employees. Technical assistance is provided on occupational health and safety issues and regulations and on child labor issues. Recommendation: Provide assistance on social security issues to farmers' groups. (CSO) WB: The Bank is not involved in this issue. This is not an area where the Bank has a comparative advantage. Recommendation: Encourage the Government and private foundations to pay more attention to the poor and vulnerable groups. (CSO) WB: Through working with the Government to strengthen the understanding of poverty in the country with the CDP for Poverty Analysis and Monitoring, the World Bank, the Government, and other donors are working to raise awareness of these issues among all stakeholders. Environment and Natural Resources Recommendation: Promote the effective use and conservation of natural resources, strengthen public awareness and capacity in environmental issues, including EIAs and SIAs. (CSO) WB: Through a possible future CDP for Environment, the Bank would be working with the Government to develop an environmental partnership program. Recommendation:Promotethemanagementoftheenvironmentbylocalcommunities.(CSO) WB: TheBankprovidedassistancetotheSocialFundaswellasthePollutionControlDepartmenttoencourage local communities to plan and implement local environmental solutions. Recommendation: Strengthen the public capacity to monitor environmental projects. (CSO) WB:TheBank'ssafeguardpoliciesmandatedisclosureofenvironmentandsocialstudiesundertakenforprojects financed by the Bank. The Bank has supported capacity building at the PCD and OEPP on participation and disclosure. Recommendation: Promote transparency and disclosure of information for all Government projects that affect the environment. (CSO) WB: The Bank cannot insist on the application of its safeguard policies on projects that are not financed by the Bank. However, the Bank has helped to build capacity in the Government to follow best practice on disclosing environmental and social assessments. Recommendation:Helpincreasepublicawarenessonenvironmentissues.(CSO) WB: Through the Environment Monitors, which are disseminated widely and translated into Thai, the Bank is helping raise awareness on environmental issues. Recommendation: Consider partnering with the private sector and Government agencies to invest in environmental management problems especially on solid waste and waste water treatment. (Parliament) WB: If there is a request from Government for Bank financing for these sorts of environmental management issues, the Bank would be responsive. ANNEXES 86 OED Evaluation, QAG Assessment, and Client Survey This Annex presents the executive summaries of three key evaluations of the World Bank country program in Thailand over the last three years. The summaries are not edited so as to convey the feedback received in its original form. For more detailed information, the full document references are provided in the footnotes. 3 OED Executive Summary After remaining stagnant for a century, Thailand's real GDP per capita increased six-fold from 1955 to 1995, without declining in any of these forty years. The economy was remarkably resilient to shocks both external (oil shocks) and internal (military coups, riots and political crises). Suddenly, the miracle ended with a crisis which took everyone, including the Bank, by surprise. With GDP reaching double digit growth in the late 1980s and private capital pouring into the country in the first half of the 1990s, the role of the Bank became marginal. During the decade preceding the crisis net Bank disburse- ments to Thailand remained negative. Bank lending responded to the demand of the client, and 80 percent of Bank commitments went to infrastructure (power, transportation, and oil and gas). These projects received excellent ratings. They were efficiently implemented by competent organizations and the cost of lending per project was half of the Region's average. This type of lending contributed to ease the infrastructure bottlenecks connected to double digit growth. But the Bank's impact on policy was very limited. Although the number of poor fell drastically since 1975, income inequalities increased through the 1980s and the income gap between agriculture and the rest of the economy widened. Bank reports stressed that most of the poor derived their livelihood from agriculture, but no agricultural project has been presented to the Board since FY86 and the Bank lacked a coherent strategy to help Thailand alleviate rural poverty. Since the mid-1980s Thailand had shown little interest in borrowing from the Bank for agriculture. In the mid-1990s, Thailand was expected to graduate soon to Part I status. Although concerns over the sustainability of the large external current account deficit had been growing since late 1996, the Bank's strategy remained basically unchanged through June 1997. When the crisis occurred on July 2, the Bank held a portfolio of pre-crisis projects with $1 billion undisbursed. These projects no longer fit with pressing needs. In spite of the $0.35 billion disbursement of a financial adjustment loan in December, net transfers from the Bank to Thailand in FY98 will not exceed $0.2 billion, or 0.1 percent of GDP. In FY98, the Bank focused on financial sector restructuring since social and political pressures for reforming the system were at their peak after the financial meltdown. Still, the Bank could have proceeded to a much more drastic restructuring of its portfolio. The crisis opened a window of opportunity for reforms which would not have been possible during the boom years. To be effective, the Bank should concentrate its efforts in a few areas where it can have an impact because there is strong ownership of reform. Strengthening the financial system, improving access to secondary education, reducing corruption in customs services to improve Thailand's competitiveness and reducing social suffering during the crisis may be quoted as examples. In view of the uncertainties, the present strategy should be reviewed in a year or two. 3 OED Thailand Country Program Evaluation, 2000 SecM2001-0067. 87 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP 4 QAG Assessment Executive Summary This report is the first of three under a special QAG pilot exercise. It is both a learning activity as well as the testing of a potential new instrument. It explores and assesses the quality of AAA activities over a rather unique period in the Bank's relationship with Thailand. It is aligned with the latest CAS period (FY99-01) during which Thailand has substantially emerged from the financial crisis that started in mid-1997. The Bank, in a closely coordinated process with major partners, notably the IMF, ADB and Japan, had provided signifi- cant financial support in the 1997-1998 period. By late- 1998, soon after the CAS was formally submitted to the Board, there were already signs that the immediate financial crisis was easing. It was becoming apparent that there might not be much new lending beyond the 2-3 large crisis- driven adjustment operations in the pipeline. But at the same time, there remained uncertainty about the robustness of the recovery and some doubts as to whether the worst was indeed behind the Thais. In this context, by 1999, the Bank's AAA program, reinforced by the very substantial resources that were committed during the crisis both by the Bank and other partners as trust funds or direct contributions, took on an unusually central role in programming. The Bank team more recently has explored the use of an innovative concept, the Country Development Partnership (CDP). In this context of high uncertainty and `rich' financing, combined with a sophisticated middle-income client, high expectations have been placed on the AAA program. Overall we rate the effectiveness of the Bank's AAA programFY99-01asSatisfactory. Thereweresomekeypluses,butalsosomeimportantvulnerabilitieslooking forward. Client engagement was strong, especially around the crisis-linked tasks. The technical, `internal' quality of most products was good or very good; the program was delivered efficiently overall; there were strong and collaborative relations developed with other donors to the benefit of the client; and there was excellent management leadership provided by the Country Director. These positive points emerged very clearly in discussions with the Thai officials, other donors, and even with the often-critical civil society. At the same time, there was significant variability among the individual tasks, and also among the four CAS themes, particularly within the two key dimensions of our assessment ­ Strategic Relevance and Likely Impact. There was a significant diffusion of tasks, with several still being Bank-driven rather than based on indications of strong Thai Government (RTG) commitment to, and/or capacity for, action. The rich resource endowment of the AAA program (including very substantial SFO funding and bilateral trust funds) appears to have helped sustain this diffusion. As a result, we conclude that part of the program, while technically of good quality, is not likely to have a sustainable developmental impact. However, taking into account the unique and uncertain situation prevailing at the time, notably the fact that this was a response to a major crisis, an overall Satisfactory rating is judged to be appropriate. 4 Country AAA Program Review Pilot Assessment: Thailand. June, 2002. Quality Assurance Group. ANNEXES 88 There is now considerable demand in Thailand for continued support from the Bank via AAA activities, even in the absence of lending. The RTG has indicated it values Bank policy advice and technical assistance, as well as being sympathetic to the more recent CDP mode. There is scope, indeed a continuing demand, for a well-designed and focused AAA program to help Thailand move beyond immediate crisis management and deal with some of the challenging long-term structural issues. The CDP offers a potentially very effective approach to organizing AAA work around clearly client-led tasks. It fosters partnerships with Thais and within Bank teams. This concept holds considerable promise to improve development effectiveness of the program. It can serve to define a broader consen- sus around a strategic agenda. However, to be effective it needs to be applied with discipline; the drivers should be sustainability and (much greater) selectivity. A focus on implementability and results is key. Some important systemic lessons are: n AAA is a viable standalone instrument in the absence of lending, but must be planned (and adequately resourced) as such from the beginning. n A strong AAA program needs to be well-focused; selectivity can be as key as for a project portfolio. n For high impact, an AAA program must be planned and resourced with a sustained Bank engagement in mind and confidence about client ownership. n Monitorable benchmarks for AAA (ideally within the overall partnership and updated periodically) should be the norm for effective performance assessment. n A CDP-like process can be very effective in building a constituency for focused action; it should avoid being a mere umbrella; it should start by framing a strategic perspective, then moving to the prioritization and mobilization of a set of actionable tasks; a strong Bank field presence is a prerequisite. n At a minimum there needs to be an improved system for collating information on resources spent on AAA activities from BB and Trust Fund sources alike; a broader stock-taking of these activities, maybe via the CPPR, would be very beneficial. ThailandClientSurvey--SummaryofFindings The Thailand Client Survey5 was meant to quantitatively gather the opinions of critical stakeholders towards the World Bank and its role in development in Thailand. There were 140 respondents out of the approximately 500 paper surveys sent out by an independent opinion research firm in May, 2002 to opinion leaders in Government, academic, private sector, NGOs, financial institutions, and donor agencies. The survey measured attitudes towards: n The overall environment in Thailand n The Bank's programs n The way the Bank does business in Thailand n Attitudes toward the Bank's work during the East Asia Crisis in 1997 n Perceptions of the Country Development Partnership The major findings are summarized below. 5 External Affairs Client Survey Thailand conducted in May, 2002. 89 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Is Thailand heading in the right direction? In general, stakeholders did not have a terribly high level of optimism about the future in Thailand (6.0 mean rating on a 10 point scale). Government respondents across the board (local and national) were most optimistic while NGOs were least optimistic about the future. What are the greatest challenges facing Thailand today? Opinion leaders considered education, by far, the greatest challenge facing Thailand (30 percent of respondents identified this as the greatest challenge) followed by the economy (17 percent). When asked the second greatest challenge, corruption emerged strongly. What value does the World Bank bring? Overall, research indicates that stakeholders recognized the basic value of the Bank. Every audience group rated the statement "It'sworthdoingwhathastobedonetoworkwiththeBank" 6.9 and above except NGOs (5.25). Particularly high ratings came from Local Government representatives (7.9). Views on relevance of the Bank were slightly lower, with an aggregate mean score of 6.5. What areas should the Bank be involved in? It is not surprising, considering Thailand's critical challenges that stakeholders identified that "strengthening the education sector" and "encouraging greater transparency in govern- ment" were the two most important areas in which stakeholders believed the Bank should be involved (4.5 on a 5 point scale). Stakeholders reported that it was important for the Bank to be involved in a number of other areas: helping to reduce poverty; helping to strengthen the financial system; safeguarding against corruption in projects/ programs it funds with procurement rules; and ensuring attention is paid to the environmental impact of its programs. How effective is the Bank? In terms of overall effectiveness, the views of stakeholders varied significantly. Overall it was slightly positive with an aggregate mean score of 6.7 (10 point scale). NGOs were particularly harsh (4.2) whereas local government officials and Bank of Thailand respondents were the most positive (mid 7 range). When asked about "specific" effectiveness, the highest effectiveness rating was for "encouraginggreatertransparencyin governance." How effective is the Bank on project- and program-related issues? Other than a low score for building capac- ity at the communitylevel,moststakeholdersratedtheBankinthe6-7+rangeinthefollowingareas: n Staying involved in projects n Flexibility in the face of changing circumstances n Disbursement of funds n Monitoring projects n Collaborating with government on Bank supported programs/projects n Strengthening institutional capacity However, NGOs and academia were fairly negative about the Bank's approach on most of these issues ­ particularly flexibility and building capacity. ANNEXES 90 How effective was the Bank in response to the crisis? Research indicates that many respondents did not believe the World Bank was terribly effective during the East Asia crisis. Ratings (on 10 point scales) were consistently low for private sector respondents, NGOs, and academia. No aggregate mean score was higher than 6.3. Research findings suggest that for many stakeholders(outsideofBOTandGovernment),theBank responded slowly to the crisis, and the Bank's impact on government's efforts to do the following was negligible: n Renew competitiveness n Improve governance n Ease the social impact of the crisis How effective is the Bank in producing and sharing knowledge? In general respondents rated the effective- ness of the Bank at producing useful knowledge (studies, analyses, advice) quite high (4.0 mean score on a scale of 1- 5). Respondents were slightly less positive about whether the Bank makes its knowledge available (3.8). 91 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Country Development Partnership Summary TheCountryDevelopmentPartnership(CDP),whichprovidesanintegratedframeworkofsupportforpriorityareas withinThailand'snationaldevelopmentagenda,wasdevelopedtohelpconvertThailand'sdevelopmentgoalsintostrat- egyandtoadvancetheimplementationofparticularcomponentsofthenationalagenda. EachCDPspecifiesobjectives and a three-year program of actions for a priority thematic or sectoral area, laying out specific milestones and timelines for implementation. The CDP is developed by the Government--supported by other partners as requested-- and executed in partnership with local stakeholders and with capacity building support and technical assistance from external partners. The World Bank has supported particular aspects of four CDPs to date, for example through advisory services for the formulation of a CDP program or through mobilization of international expertise for a particular subcomponent within a CDP. Description of the CDP AlthoughThailandhasemergedfromtheeconomicandfinancialcrisis,itcontinuestofacechallengesinsustaining themomentumofitsreformprogramandadvancingitsmedium-termdevelopmentagenda. Toaddressthesechallenges, the Government and World Bank developed the CDP, a three-year integrated framework which lays out a specific work program for a subset of priority issues and outlines accountabilities for implementation. The CDP also identi- fies the capacity building and technical assistance needed to support the Government's efforts and thus helps coordi- nate the activities of the Government's partners in a particular area. Because the CDP is developed by the Govern- ment, the partnership is led by the country but facilitates access to global experience and expertise. Participation and collaboration among various government agencies and with domestic partners, including civil society and the private sector, are also critical features of the CDP. The CDP helps facilitate greater participation of all these groups in policy design, implementation, and monitoring. Each CDP involves a number of steps, with one to two years required for preparation. The key steps are: i. The Government selects priority thematic or sectoral areas for the CDP. ii. An integrated strategy is developed, with inputs from concerned agencies within the government and major stakeholders outside government. iii. An outcomes-focused action plan with a clear timeline, milestones, and accountabilities is formulated based on strong analytic work--as laid out in a Development Matrix which describes the CDP objectives, output benchmarks, and capacity building inputs. iv. A division of labor and support from other partners is agreed--as laid out in a Partnership Matrix which details the inputs of partners and identifies potential resources to be tapped as well as any funding gap. v. Arrangements for specific AAA, TA, and capacity building support are determined. vi. Programs are implemented and monitored on a regular basis, as described below. Implementation progress is monitored through consultations rather than reporting requirements. Rather than simply exchanging assessments or implementation reports, the Government, local partners from civil society and the private sector, and any external donors involved hold consultations on the progress of each CDP program (as measured against the implementation benchmarks in the Development Matrix) every year, or more frequently if needed. Depending on the workshop conclusions, specific action plans are fine-tuned and adjusted as needed. ANNEXES 92 The CDP from the World Bank Perspective DependingontheCDP,theWorldBank'scontributiontoaCDPtakesdifferentforms. InoneCDP,theGovernment may seek the Bank's support in providing the analytical work which will serve as the basis for formulating the integrated strategy for implementation. In another CDP, Bank support may come primarily through technical assistance for a subset of issues. In all CDPs, the World Bank is one partner among many and "takes the lead" on a limited number of issues as requested. Ultimately, the Bank's engagement depends on the Government's request for Bank support in an area and the Bank's comparative advantage in being a partner for that area. ProvidingimplementationsupportthroughaCDPoffersanumberofimportantadvantagesfortheBank. First, because the Government develops the CDPs for high-priority areas within the national agenda, the Bank can have more confidence that the limited resources available for implementation support are focused on the most critical strategic areas. Second, by delivering targeted support through CDPs in which clear implementation plans have been formulated, the impact of the Bank's involvement is likely to be higher. Third, because the CDP lays out relative roles and responsibilities of the Government's partners, it helps the Bank better coordinate its work with other donors and stakeholders, reducing duplication of efforts and pinpointing areas in which support is needed. Finally, involvement in a CDP helps facilitate a quick response should the Government decide to borrow for a priority area and puts such borrowing within a larger policy framework for medium-term reform and improving its longer-term impact. TheWorldBank'sCDPSupport SincethedevelopmentoftheCDPconceptin2000,theWorldBankhasprovidedsupportinvariousformstofour CDPs--Governance/Public Sector Reform, Social Protection, Competitiveness (now Financial and Corporate Competitiveness), and Poverty Analysis and Monitoring. The Bank's involvement in specific subcomponents of these CDPs is described in the attached summary matrices. BuildingonthelessonsofthefirsttwoyearsoftheCDPconcept,theGovernmentandBankhavebeenfocusingon howtofine-tuneandimprovetheCDPconcept. TheCDPforCompetitivenesswasthefirstCDPtobelaunchedandwas reviewed as part of the QAG's pilot assessment of Thailand's AAA program. One of the most important lessons emerging from the QAG assessment was that in order to have sufficient specificity, clear accountabilities, and maximum impact, it is probably desirable that a CDP selectively targets a limited number of areas rather than covers all major issues under a pillar of the national agenda--while remaining sufficiently broad to require participation of a number of institutions within and outside of government. The Government and Bank subsequently decided to narrow the scope of work and focused on financial and corporate sector issues, which gave rise to the CDP-Financial and Corporate Competitiveness, and to consider possible future CDPs in areas of ICT and infrastructure. Likewise, the other ongoing CDPs focus on a limited subset of issues within a pillar of the national agenda. Furthermore, as described in the next annex, work is underway to make new CDPs more results-focused, with an emphasis on outcomes and impact as well as inputs and outputs. 93 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP UNDP UNDP UNDP Partners ADB ADB ADB, ADB, ADB, Other AusAID, AusAID, AusAID, AusAID, AusAID, (FY03-05) Reform Assistance, Assistance, Assistance, Assistance, Monitoring Sector Technical Technical Technical Technical Engagement Public Assistance, Bank Dialogue, and Dialogue, Dialogue, Dialogue, Policy Monitoring Technical Policy Monitoring Policy Monitoring Policy Monitoring in in by (a) (b) be (iii) CG the min- pilot to Governance agree- ICT by in system assess and offices, organi- line bureau- of Revenue manage- develop- ministries to Institute for for through administra- of government by programs Support reform use for system service discipline, adopted revising delivery treasury (iv) the schemes local radio be sector capacity for capacity independent budgeting public to and measurement transfer strategies of developing reporting results-based financial plan agreements through in effectiveness (LG) building Prajadhipok's public of provincial Partnership in information and and agencies' and community King action Office capacity ministerial compensation framework outcomes, and of delivery collection offices Assist through and collection performance (CG) and and (ii) anti-corruption and Audit budget and government role Objective and area efficiency of of performance-based service online service intergovernmental of implementation of agency State society and performance and local capacity Strengthen developing of in indicators Development in guidelines an of rewards, (ii) the capacity, civil guidelines issues government of improve LG performance Assist formulation on regional LGs, revision developing to administration (ii) role Parliament departmental building the CG improvement central in government assisting assisting in and Country tax developing management in of implementation developing performance ICT by by and procedures, by formula-based. key penalties strengthen Assist anti-corruption Support Support Assist Support istries ments Improve assisting Department's (i) through cratic ministries, ment and (i) utilizing improving and financial (iii) more (i) ing agencies zations tive Strengthen monitoring capacity monitoring Thailand and and human cross- revenue and reform of Component Enhancing expenditure reform Improving management reform Restructuring public institutions promoting resource Facilitating transfer functions decentralization Enhancing government accountability transparency ANNEXES 94 Kenan JICA Partners ILO-IPEC, JICA GTZ, JICA JICA Other AusAID, AusAID, UNICEF, Institute, ILO, ADB building, building building, building Protection capacity capacity capacity capacity Engagement building building Social design, design, design, design, Bank for work work policy capacity policy policy policy capacity TA, AAA TA, TA, TA, AAA TA, TA, on pro- pro- pro- pen- health Partnership through increase to reform matching; information system assistance policymakers sustainable of job compensation to occupational scheme stabilizer of social UI fiscally delivery supply Development operational worker's and improved risks for and and viable information program welfare injury market sound Country through effective reform counter-cyclical MOLSW a market with national an a Objective social of financially labor of as with and the labor cope and act and of links Thailand management timely and unemployment workers trends development of and and sustainable development effective program efficiency the risk help for an security to market useful system safety; Improve institutional Reduce vide Reform and gram Design worker Establish labor grams Promote sion for Reform Assistance Protection Protection Component Social Employment Services Labor Unemployment Insurance Statistics Social Pension 95 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP AusAid, IMF GTZ Kenan Kenan Asia, ADB, Partners Agencies AusAid, Agencies AusAid, Agencies AusAid, Bankruptcy Asia Asia, Institute Other FY03 Regulatory Worldwide, Regulatory Worldwide, Institute Kenan American Institute Regulatory Worldwide, Institute AusAid in- ca- ca- tech- tech- tech- tech- tech- tech- policy policy work- policy analytic party and party party party party party and GDLN, GDLN, IFC requested; third third third building, third third third building building work building, as reports requested; by Competitiveness staff, staff, staff, staff, staff, staff, as notes workshops, workshops, capacity capacity capacity analytic capacity Engagement Bank Bank Bank Bank Bank Bank analytic notes IFC by by by by by by policy investments by requested requested Corporate Bank policy and building, and advice building, as advice as advice advice advice advice assistance, assistance, assistance, assistance, assistance, assistance, and Policy nical pacity notes Policy nical pacity notes Policy nical shops, advice Policy nical reports vestments Policy nical Policy nical to Mar- Thai Financial of Deposit for Bond Institutions products firms risk-adjusted for tandards Directors a Limited and of on Government-Con- to institutions Financial of Auditing sector competitiveness and management Partnership lending Plan and financial Education institutions Regimes Transition risk of new (Derivatives) and financial via enhance and Master Court and the Clearance/Settlement Corporation firms Rationalization of financial Regulations growth and Institutions of Accounting Rights Objective for and Institutions equity and Out and Products supervision Market Capacity New Discipline Blueprint NPLs Institutions Development of and and debt, Fund of banks strategy Financial to Capital Management sustainable of intermediation Financial Implement Sector Market Conglomerates governance Shareholder term Architecture Judicial Financial Information and Supervision firms Management Management Country Asset Bank regulation access overhang sound good growth support and Improve Insurance ket Development trolled Financial Build Implementation Financial Specialized Market Risk Implement Thai Legal, to Risk Credit Non Adopt Improve medium Set Enhance Improve support Resolve banks Promote basis Promote Thailand Speed of Risk the and a Sector and Supervi- Regula- Interme- Basis Corpo- Capital the on and Restructur- Quality Governance Component Strengthen Financial Strategy Structure Enhance sion tion Develop Markets Improve and Corporate Debt ing Enhance diation Adjusted Enhance rate ANNEXES 96 Partners ADB Other UNICEF, UNIFEM UNDP Monitoring Building Building, Building work and AAA Capacity Capacity Capacity Engagement TA, TA, TA, Building, Analysis Bank Design, Design, Design, work Capacity Poverty Policy TA, Policy AAA Policy for of to on pov- par- time track reduc- MDGs on effort and will analyzing over the monitoring focused data that of and and poverty Partnership MDGs, role implementation the system the the the poor. of government's programs actions. for on measuring the issue-specific non-participatory developing and of with of and and support and both into evaluation to plan Plan high-impact assessment Development and actions input strategy standard action the techniques as Objective Action in spanning costed public and living vulnerability the disaggregated serve reduction and monitoring Country the for assist to and strategies. strategies in specific will standards, both improve knowledge and development. poverty effective and methods prioritized, and living the inequality an Thailand reduction reduction changes and space indicators, strategy Thailand's Develop erty ticipatory poverty Improve poverty, poverty monitor Strengthen practical, Develop key and tion in and of Inequality Database Reduction Monitor- Evaluation Vulnerability and Component Poverty Measurement Analysis Poverty, and Poverty Strategy Poverty ing System 97 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP Results Measurement and Management Introduction Thepurposeofthisannexistolayoutaframeworkforimprovingthemeasurementandmanagementofresultsinthe implementationoftheThailandCAS. IntheBank,resultshavepredominantlybeenmeasuredinoutputterms,suchas loan commitments, disbursement targets, project-specific output indicators (i.e. number of schools built or length of roads constructed etc.), finished reports/papers, and more recently the quality of projects and portfolio. Development impact of the Bank's assistance has been evaluated by the Operations Evaluation Department (OED) only after the completion of the project cycle, which made it difficult to use OED's impact evaluation as a results orientated manage- ment tool during the program implementation phase. The increasing consensus around the Millennium Develop- ment Goals (MDGs) and Monterrey declaration have now highlighted the need to boost efforts to better measure and manage the results of development assistance. InThailand,theGovernmenthastraditionallyusedthefive-yearlynationaleconomicandsocialdevelopmentplans toestablishbroadtargetsforachievingitspriorities.However,themeasurementofprogresstowardthesetargetshas predominantly been based on input and output indicators, captured in the government's budget system, with little attention paid to results measurement. Prompted by a more outcomes focused design of the Ninth Plan, as well as other on-going bureaucratic reforms, the Government has begun to shift toward a more outcome-based system of allocating its resources to agencies at the national and local level. The Bank partnership with Thailand can build on these promising foundations. TheBankandThailandareenteringanewphaseandmodeofengagementwhichisprimarilydrivenbyknowledge- based partnerships and less by lending. This assistance will be based on providing a comprehensive diagnostic overview, predominantly delivered through the Country Monitor series as well as through periodic development policy and other reviews. The Bank will also provide selective implementation assistance through the Country DevelopmentPartnerships(CDP).ResultsmeasurementintheCDPsisparticularlydifficult,asoutcomesandimpactof this knowledge sharing partnership relies on many complementary contributions of partners, and their attribution is difficult to establish. Also, the Bank's direct contribution is less pronounced than in traditional lending programs, limiting its ability to influence the final outcomes of the partnerships. Nevertheless, as described in the following sections, the Bank has developed a general approach for improving results measurement and management in the context of the Thailand country program. This approach is still very much work in progress and will be refined and improved in collaboration with the National Economic and Social Development Board (NESDB) and other concerned agencies during implementation. Objectives ThisResultsMeasurementandManagementFrameworkhasthreeobjectives:a)toshiftmonitoringofprogress from inputs and outputs to outcomes and impacts, accounting for both government contributions as well as those of the Bank and other partners; (b) to improve the existing CDP development and partnership matrices so that they can be used as a tool for enhanced results based management; and (c) to aggregate outcomes and impact across the different CDPs so as to evaluate overall program results, in light of the national agenda, measured by specific goals established by the Ninth Plan where appropriate, as well as MDG/MDG+ goals.1 1 ItislikelythatThailandwillachievemostoftheMDGsonanaggregatebasis.However,thismayconcealdifferencesamongvariousprovincesandpopulationgroups, and thus the Government is proposing to use MDG+, which is currently being developed. ANNEXES 98 Elements of the Framework This integrated framework will be applied to CDPs and has four elements: (a) Measurement units and their indicators (input, output, outcome and impact); (b) Partnership, the involvement of different partners (elected representatives, government, civil society, private sector, media and donors); (c) Implementation, applying this framework to measure the results of actions spelled out in each CDP and to track the progress of implementation benchmarks for achieving the outcomes (both intermediate and desired); and (d) Risks that need to be addressed. In addition to the CDPs, the Bank's Monitors (Economic, Environment and Social) which are used as diagnostic and monitoring tools, can also help to track outcomes and impacts. This resulting framework is illustrated in Figure 1 and explained below. The framework is applied to the four existing CDPs--Governance and Public Sector Reform, Financial and Corpo- rate Competitiveness, Poverty Analysis and Monitoring, and Social Protection--and the preliminary results of an enhanced results summary for each of the four CDPs are shown at the end of this annex.2 a. Measurement i. Impact indicators measure the long-term (2002-2015)consequencesoftheoutcomes, the development changes in society or the economy or environment to which the CDP contributes. The Thailand-World Bank Group Partnership will consider the goals of the Constitution, and MDG and MDG+ indicators to measure long-term changes. In Thailand, 28 of the 48 MDG indicators are regularly measured, while the remaining 20 are monitored on an ad-hoc basis. However, the quality, consis- tency and coverage of the MDG statistics is inadequate. It should be noted that different ministries and agencies use various indicators, and at present there is no unified reporting approach in the country to track overall performance. ii. Outcomeindicatorsmeasurethedirectandshort-to-mediumtermeffectsofoutputsonthebeneficiariesofthe relevant CDP. The indicators are at two levels: ultimate desired and intermediate. The former is aligned with the overall objectives of the national development agenda and the targets set by the Ninth Plan. The latter includes completed measures and reforms, such as policy and institutional changes, amendments to laws and regulations, and reorganization of institutions and management systems. At the core of each CDP is the achievement of the ultimate desired outcome of the national agenda and the Ninth Plan. Specific activities of each CDP are designed to contribute to this desired outcome in partnership with others and through achieve- ment of intermediate outcomes. 2 Similar Results Summaries will be prepared for future CDPs. 99 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP iii. Output indicators track in a conventional way the most immediate results produced by a CDP ­ completed reports, workshops, staff trained and dissemination. These indicators apply to both non-lending and lending activities. iv. Inputindicators measures human and financial resources, such as Bank budget, staff time, additional trust fund resources mobilized, government counterpart support (budget and staff time) and additional resources mobilized from other donors. Each results summary also identifies the contribution of donors. b. Partnership In Thailand and elsewhere, it is recognized that activities of part- Table 1. Roles of Partners ners need to be synchronized so Partner Inputs Outputs Outcomes Impacts as to maximize the effectiveness of development assistance. This Government--Cabinet/ H H H H includes national and interna- Ministries/Agencies/Local tional partners. The partners are Elected Representatives M L M H broad-ranged and normally Community L M H H include elected representatives, Judiciary L L M M government ministries and agen- cies, local government institu- Civil Society L M M M tions, judiciary, civil society, Private Sector M M H H private sector, media and donors. Media L L M M In the context of Thailand, Donors M H L L partnership issues are particu- larly important as the overall H--Highly involved; M Moderately involved; L Least involved -- -- Bank assistance is based on a partnership approach and broad based participation of stakeholders beyond the government has been an important feature in the country's recent history. In light of the above, the results framework must present a transparent system in which the contributions of all partners are captured and recognized. However, as the ultimate impact of a knowledge sharing partnership relies on the many complementary contributions of each of the partners, the attribution of specific outcomes and impacts to different partners is very difficult to establish. However, despite the limitations in attributing final outcomes of a CDP to the specific partner contributions, the proposed approach for enhanced results measurement and management will outline clear responsibilities for delivering specific outputs, thereby ensuring that accountabilities are not diluted. To shed some light on the partnership relationships and how they impact the results measurement and management framework, Table 1 highlights some of the roles different partners have. The following example illustrates the partnership in one of the CDPs. In CDP-Poverty Analysis and Monitoring, as an input, the Bank is assisting the NESDB to develop a poverty map and improve the database through Bank expertise, consulting services and field surveys. The output will be published maps and improved data that are disseminated at the national and local level. The intended intermediateoutcome from this output is the design of targeted interventions and its implementation. At both stages, communities will play an influencing role. NESDB would take the lead at the design stage, with line ministries and local institutions having a significant role during implementation. The donors ANNEXES 100 have a minor role in supporting incremental capacity building needs. Eventually, a sum of such interventions should assist the country to meet its desiredoutcome of enhancing opportunities for the poor through the implementation of the national Poverty Reduction Strategy. Subsequently, over a period of time, the longer-term impact will be realized. c. Risks A program based on knowledge products has much more uncertainty than a lending-based country program for the Bank. Normally, such uncertainties stem from a less than explicit commitment by the government, fluidity in engage- ment with agencies and lack of leverage to influence decisions. The risks emerging from these uncertainties will be carefully managed. For example, there is no requirement for the line ministries to implement targeting of pro-poor programs based on NESDB's poverty maps, which could skew the desired outcome. This proposed framework will enable each CDP to identify the risks and their management. At the launching stage of each CDP, the Government and the Bank will sign a Letter of Agreement to ensure that both parties are committed to implementing the CDP with the required resources and support provided by all parties in the partnership. Each CDP will identify the risks relevant to its activities and outline an approach to mitigate them. Results Measurement in the CDPs ThestructureoftheCDPsareexplainedinpreviousannex. EachCDPisatwopartdocument.Adevelopmentmatrix is an outcome-focused action plan which includes implementation benchmarks that have both output and process indicators (measured against time). This is supported by a partnershipmatrix, which details the division of labor among partners and identifies the resources that need to be mobilized to implement the partnership matrix. The application of Results Measurement in CDPs is explained below. a. The Development Matrix begins with a definition of outcome-oriented objectives for each selected theme of the CDP. For each objective, the outputs to be realized are identified and benchmarked so that progress can be tracked during the life of the CDP. The supporting capacity building inputs are also identified in this matrix; and b. The Partnership Matrix further elaborates the inputs and identifies funding opportunities for specific capacity building initiatives. These initiatives can be funded through both internal and external (donor) sources. It also lists potential external partners whose resources could be accessed. An indication of the funding gap is also provided in the matrix. Looking ahead, the four existing CDPs will be restructured to improve the measurement of results using this framework. Thefollowingchangeswillbeeffected. a. Improvingthelinkagesbetweeninputsandoutputs. The annualized outputs (implementation benchmarks) will be better synchronized with the inputs (capacity building needs) from partners. In future, inputs will be disag- gregated to annual requirements. This will give a timely feedback to learn whether the CDP is on track to achieve the intermediate and desired outcomes; b. Addingriskmanagementtothepartnershipmatrix. Theidentificationofrisksandtheirtreatmentwillprovideamore realistic accounting of outcomes. The risks in CDPs could range from political, economic, resources, staff and participation. Stating the risks upfront and ensuring their continuous monitoring will improve the function- ing of the partnership. Government and other donor inputs need to be fully accounted so as to ensure that the matching amount of resources are available; 101 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP c. HarmonizingthecontentsofCDPs. The CDPs need to strike a balance on the treatment of issues so that results can be better accounted for, and enable comparison of results across CDPs; and d. Incorporating MDG+ indicators. The relevant MDG+ indicators as developed by the Government will need to be integrated in the CDPs. Process TheimplementationoftheframeworkwilltakeplacebothattheindividualCDP-levelandtheoverallcountry program. Theprocessisexplainedbelow: a. Each CDP has four stages of measuring results ­ (i) at identification, outcome-oriented objectives are defined; (ii) at concept stage, inputs and associated outputs to achieve the outcomes are specified, including the selection of indicators3 ; (iii) during implementation, the progress on achieving the outputs is measured; and (iv) at completion, the achievement of desired outcomes (including intermediate outcomes) and likely impact to be generated are assessed; b. For the Thailand-World Bank Group Partnership for Development, the results framework could be used at three stages to assess the overall results through a Country Program Scorecard: (i) a baseline scorecard has been compiled by aggregating the results summaries of the four CDPs, while those of future CDPs will be added later; (ii) as part of the programming review process, the imple- mentation progress of the scorecard will be assessed. The focus here will be the outputs (implementation benchmarks) and interme- diate outcomes; and (iii) at the end of the overall partnership period, progress to- wards achieving the desired outcomes is evaluated along with the assessment of whether the country in on-track to achieve MDG/MDG+. Conclusion Thepreliminaryresultsofanenhanced resultssummaryforeachoftheongoingCDPs are attached. They represent an important step forward in developing a results chain 3 The following criteria will guide the selection of indicators and the establishment of a baseline­ importance of the indicator to measure the outcome and impact (MDG and other national goals), the availability of historical trends, cost of collecting and analyzing information, familiarity of counterpart staff with the indicators and their robustness of the in-country statistical systems to generate date and track trends. ANNEXES 102 that links inputs to outputs, outcomes, and impact in a logical framework and indicates the role of other partners and the influence of complementary activities as well as the risks that need to be managed. To improve the framework and the specific results summaries, further work needs to be done in a number of areas, including making the targets (especially the outcome targets) more specific and monitorable, strengthening the information base, and better defining the role of other partners and other activities. 103 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP agen- fail reform reform equity, National to between implemen- agencies/ concerned in among direction? and stakeholders functioning ectiveness, commitment resistance arrangements priorities Risks political non-RTG eff in cooperation increasingly other passage of Acts well RTG coordination in of of and of are of of system and decentralization ns efficiency, Lack Lack cies Change plans Delays tation Bureaucratic and Changes Lack RTG CSOs Lack M&E Coordination citize the n n n n n n n n and the the and of of imple- increase Sector society, in support to central goals needs civil of environment sectors Parliament the donors all Public collaboration the of of organizations objectives capacity other changed governments achieve CSO the the a to engagement Reach/Partners and to governments, and local and and Contribution society constitution Strong local independent menting RTG Involvement Bank incremental respond n n n n n to to the costs ministries, level ability of trans- society service efficient, line transfers in Governance evaluation rising addresses higher finance*, be government RTG's public and agenda to that fiscal perform for in and changes the agencies, beneficiaries timely providing continually assessing the national formula CDP of efficiently monitoring and for on central delivery through the their and weaknesses and in management contributes and and administration and development capable system outputs service critical the of Plan activity Provinces transparent MDG+ public financial framework and provision effectively Summary: system services of governance to Ninth which and effects evaluation revealed reform ensure to RTG outcomes, the to Northeast to and of delivery term Improved of crisis the improve sector CDP of the Results to management laws achievement the decentralization in goals performance governments quality service (2006)- by public the new financial environment the seeks monitoring of fiscal and or local to assignments Goal resource above and public of A achieved consequence short-to-medium CDP-G facilitates supported government public accountable. operating and economy timeliness MDG National responds transparent of that capacity implementing economic (2015): an a local mentioned performance expenditure the and Long-term or Direct activities Outcomes: and and The which the and (2015): access, Objective: functions services system National Outcome: the transparency Enacting improve transparent, Implementing revenue Strengthening ferred Implementing agencies basic services Diagnosis: about Strategic and Impact MDG+: of Northeast delivery Outcome Desired of Intermediate n n n n ANNEXES 104 re- ac- ac- of docu- grant of for of of budget skills appropriate participation Act. experts funding of review availability and lacking allocation trust Risks counterpart consultant the commencement staff in internal in Management stakeholders Debt Discontinuation from Delays tivities Consultants skills Timely ments Inadequate tivities Inadequate funds Inadequate Inadequate Delays sources, Public n n n n n n n n n the do- and civil and organi- Act, agencies with other monitoring line in from knowledge of non-RTG KPI Accounting reform among of nd partnership a funding other sharing & Reach/Partners Coordination sector builds practices Donor Coordination RTG society zations Involvement public Additional nors Regional best Management n n n n n n Financial civil and local (KPI), indica- to Public program programs outcomes mobilized build implement the to Management Act to Institute Cross-Govern- AUSAid, reform radio Act, help revisions specific funding (e) of Donors to constitutio performance related Donors for delivery ADB, Revenue and the key (b) of Procedures Procedures including topics other community progress Prajadhipok's Additional from UNDP areas. decentralization and agencies service on (c) and goals components 2 Budget King Budget line and Reform; fiscal and year 1.2 the monitor esti- esti- the a system (a) CDP ministries 0.045 to new forums and Bank, USD about Act, Decentralization; of to for arrange- the reform kind, facilities times meetings, of (FY03-05) and USD by (d) achieve process, Government the in World to 2-3 for around at reforms Management office time contribution by training renewal of Bank, be cover: according counterparts measurement above to Reform; (b) to Administration Transparency produced note and forums the society staff counterpart years- ments workshops SDP mated million monitoring with - - - by and bureaucratic Government the in Public Contribution mated million Expenditure results Service of identified the consistency capacity, learning (a) agreements of monitoring performance reduce Civil on guidelines, provided 1.5 Act, mil- and staff WBI to (c) sectors time consultations participation 0.55 USD immediate Accountability all notes service reform sector technical components = DEC, of staff National USD Most Components: Reform; ment Resources the Restructuring regular policy society public public framework, workshops (FY03-05) = annual procedures Fund from PREM civil community percent full-time Bank Staff Budget lion Trust million 50 TTL 1 and Contribution Prepare Conduct Publish and Develop Develop tors Develop government's service and Conduct Resources - - Expertise - - - Ministerial Output Input The n n n n n n n n n n Footnote: * 105 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP & line and line bureau- promote among across from direction approach strengthened. priorities uses, commitment interests be partners tive reform to Risks political RTG's to RTG's in and vested coordination of implementation integrated produc needs of in coordination or of of most firms Lack leadership Lack agencies Change Delay Changes Lack poor agencies Resistance cratic the recovery. and n n n n n n n to het of the the be- of of private leaders institutions agencies resources phase goals dialogue and line sectors next the Competitiveness Competitiveness all provincial financial allocate this regular government partners of of makers of among achieve and from from National to during Reach/Partners policy participants the condition vulnerability, Contribution society constitution Extensive tween sector Engagement Support Support Coordination and Committee Corporate society of n n n n n n financial and a decrease the the out and and to via of in sector society and segments alleviate firms. financial in GDP Principles all to guarantee. of for and people legal for non-productive discipline Financial financial Core the aims and changes beneficiaries percent was the blanket for competitiveness and implementation) in stakeholders market CDP the institutions SMEs the to +-30 and cause on to management current successful opportunities This TAMC CDP contributes key risk basis crisis, the via development Enhance basis A financial addressed taxpayer outputs the strategy the and income downturns of from activity be sectors. Thai Thai institutions; accountability adjusted since (both and of will adjusted poverty. the future structure. which and effects restructuring risk of NE risk financing Summary: to into program a outcomes, cost and a reform assets financial corporate of the term on the to cost on of CDP in of 1997 and corporate disclosure accomplished and the in strategy source insurance of competitiveness structural population) by access a Results environment areas services of been crisis or the regulation investment as reduction financial components. sector quality has deposit The urban and ensure frequency and consequence the short-to-medium governance, Enhance percent supported financial as and in the and Poverty to markets much economy finance and Enhance financial firms limited (4.5 well lending (2015): the a speed the as and While Long-term or micro Direct activities Outcomes: to supervision growth access capital new corporate the reducing regimes (2015): Objective: people investment and by Outcome: National 3m court Strengthen transition Increase provinces, Enhance assessment Develop institutions Improve of Promote Enhance Diagnosis: Strategic sustainable Impact MDG+: drove lending/ poverty Northeast strategy Outcome Desired Intermediate n n n n n n ANNEXES 106 of re- and from grant of review counter- participation the (ASEM of availability experts the internal agencies counterparts in availability and line Risks funding budget the staff continuity the key) in stakeholders consuming of at Government Bank Discontinuation from Time documents Lack parts Inadequate request Inadequate the the Delays sources n n n n n n in and work agencies "regional coordina- of partners line sharing funding regional aspect enhance among among to partner knowledge goods" Reach/Partners on Coordination Coordination Additional Strengthened tion assistance public Thailand n n n n fin/ (28 the (six debt & gov't credit corpo- reports, of AusAid, technical and Partners: on NBFIs TAMC architecture mgt and implement and disclosure improves risk reform; to Partners lending Bilateral completed and market Institute, bank -- law Key and Blueprint, IMF; of projects), Donors secured capital (11 ADB, Kenan GTZ. Sector for other on micro-finance, economic governance components regulation of governance for be and for from coun- to CDP and education and support Financial improve the framework the to workshops the to by 1,000,000 by improves (BoT) ASEM framework and investor a court Government estimated agencies US$ dissemination supervision of contribution and projects) which sharing under support sets Government equipment and (3 Bank, out produced to reports assistance above Cost terpart, around Cash line $1,050,000 SDP and the improve which and valuers products n n trained TAMC results to assistance via legal workshop analytical mgt technical of of identified staff training 40 provided staff WBI, risk property and and time time plus ntl institutions, immediate technical 2,400,000 train improve 500,000 03-04) = 3,030,000 staff staff DEC, staff 2nd & to (USD) = reports assistance, Most workshops, assistance, building/training restructuring and Resources components building of (FY financial from Fund Budget= competitiveness Loan infrastructure, debt percent percent national Bank WB Trust TA 35 TTL 60 a percent Staff FSPS Analytical corp Capacity projects) Technical and rate Twinning owned information Technical assistance resolution Capacity projects) Resources - - - Expertise - - - Output Input n n n n n n n n 107 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP in ob- civil agen- minis- National Ministry their informal and reform in on (insurance, among new direction s across the achieve commitment of to priorities functioning Risks political government in dependent stakeholders of fails instrument implementation RTG the coordination well in of coordination of of and by were Lack Lack cies Change plans Commitment Reforms jectives Delay Changes Lack M&E Poor tries nized Thais n n n n n n n n n management recog in the the ca- risk of now of partici- work is Previously, program social goals sectors CSO the actively incremental system all system. and are of diversifying formal achieve support by to government-led Protection Reach/Partners needs unions the protection practiced. Contribution society constitution Strong Donors pacity Government partnership Labor pating social Social n n n n n mechanism currently strengthen to for the the the equi- to of social of country's society system need informal an protection approach in CDP the programs in responsive in The and similar a standards. in social enhanced changes protection beneficiaries services formal needs. system and health a assistance implementation formal the social a weaknesses on and the Summary: community-based social interventions contributes system individual embraces through the development protection employment safety to outputs support establish of the that target structural functioning of activity to a social on-going to will Results pensions of tended provinces equity RTG that preserving which effects surface coverage to outcomes, system occupational basis through and to Improved while term the assist the efficiency CDP Northeast to sustainable of in MDG+ framework ad-hoc the and choices brought amended (2006)- market) by broaden an seeks environment fiscally with management the on or MDGs scheme. crisis Goal that labor way and with Achieving targeting, consequence short-to-medium which CDP-SP supported management groups. coverage and reforms sound a economy Achieving National insurance information economic (2015): age the competitive coverage, wide all compliance Long-term or Direct activities Outcomes: cost-effective The Objective: and (2015): for mechanisms, Outcome: and National net provides Enhancing Institutionalizing table Strengthening manner. Institutionalizing Improving Institutionalizing unemployment Diagnosis: support society. Strategic safety Impact MDG+: that approaches Northeast above. Outcome Desired insurance Intermediate n n n n n n ANNEXES 108 re- docu- Grant of of the budget skills experts participation appropriate of and the review in availability lacking staff Risks allocation consultant counterpart the and internal in stakeholders Discontinuation from Consultants skills Timely ments Inadequate funds Inadequate Inadequate Delays sources n n n n n n n of do- and PIU Min- unions the Human sharing PIU the terms other Bank in and the and fund the within from between trust with Social between and of and funding employees coordination Reach/Partners Coordination Labor together departments of Ministry Donor Ministry, work Coordination other istry and Development Additional nors Regional knowledge n n n n n in the risk spe- at market for AusAID, trained mobilized protection social implement Unemploy- insurance. report labor to (c) staff areas. social JICA, year) (LMI) Donors funding UNICEF per and Donors ILO, information, and (2 simulation, program Services; survey. labor UI government other unemployment Safety in Additional from GTZ cific information of market e.g. 200 and components and 2 (> topics mil- esti- USD esti- components labor CDP Employment market issues -- forums Health establishment about arrange- the (b) kind, 0.035 cover: meetings, labor of above in and by selected and Government around to related (FY03-FY04) implementation assessment on on be for USD and time the programs facilities to at labor Bank, Contribution survey million for Assistance; Occupational on produced (SRA) the forums staff counterpart years office ments workshops levels above (d) Contribution mated 0.55 - - - SDP mated lion by documents selected vulnerability Government Social n n results and listed for learning (a) guidelines and of provincial provided mil- Assessment and WBI and risk staff Socio-economic technical time and building/training million of activities 1.5 immediate Insurance; Risk and = components DEC, staff 0.24 system, (USD) pilot national Most Components: ment Resources the = regional Social design framework workshops capacity policy from (FY03-FY04) Fund time HD (ASEM) skills) percent Staff Bank Budget Trust lion 50 TTL Half and Prepare national, Improve Prepare Publish Conduct issues Undertake assessment. Conduct information new Resources - - Expertise - - - Output Input n n n n n n n n n 109 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP to PRS agen- fail for National in among direction re-evaluating reforms is activities. stakeholders commitment commitment priorities objectives Risks political implement implementation in other of the RTG Thailand coordination RTG to in of of of and implemented cate. participatory Lack Lack cies Change Plans Lack The achieve Failure Delays Changes and eradi n n n n n n n n to lo- reform the the of work- of PRS? and govern- influenc- the approach policy in goals of the sectors CSOs the Monitoring of holistic all building, organizations NESDB of between of and achieve CSO to requires role network Reach/Partners implementation and capacity the community together and Contribution society Constitution Strong ing Strong cal ing Partnership ment Analysis through n n n dimension the the that can envi- poverty of of new society that inequal- a in and Poverty areas on for reducing rural 2006 1). poverty, in gender takes changes by inequality beneficiaries It and like (Goal implementation CDP effort the and 1). the crisis. urban on analyzes percent in 12 the contributes that (Goal development economy poverty poverty poor through outputs dimensions, of than after the in local of government's activity the key Summary: poor less issue the for the Provinces to the which effects other life measurement changes outcomes, to for distribution East of projects. and support term the Results important improving CDP and to of incidence poverty North monitor spatial standards. an quality for the in for to poverty as aims by environment opportunities living poverty tackle of (PRS) in programs, to poverty system Improving between consequence short-to-medium CDP-PAM opportunities supported re-emerges Reducing and Enhancing policies, economy Strategy variation Halving tracking (2015): methodology/tool a linkages the Long-term of goal: interventions Direct activities Outcomes: Poverty Objective: (2015): regional vulnerability self-reliance National Outcome: Reduction : and poverty-related Targeting reduce Standardizing ity Establishing Establishing ronment. Diagnosis: its Strategic Impact MDG+ enhance Northeast Intermediate Outcome Desired Poverty Intermediate n n n n ANNEXES 110 in the from from docu- skills of and resources stakeholders PRS availability fund review of of discontinues appropriate trust counterpart Risks budget internal lacking process Bank Discontinuation the Government implementation Timely ments Inadequate Inadequate government the Staff n n n n n n of the do- civil rep- and and in outputs other review and from knowledge Donors community academics of government, shaping of of of in work local funding sharing and Reach/Partners tanks outputs practices Involvement society resentatives Participation preparation draft Involvement think Additional nors Regional best n n n n n to pri- Re- 200 and PRS compo- and poverty program and related than mobilized implement Poverty to map, panel UNIFEM measurement. (c) topics (more specific MDGs funding Donors on for study, System researchers Donors poverty both UNDP, survey e.g. other vulnerability from NGOs, Additional from UNICEF areas. SES Measurement; feasibility and and Components: Evaluation counterparts of 3 issues for and mil- esti- and USD esti- CDP with society, indicators forums about arrange- the inequality kind, on civil related 0.055 outcome cover: meetings, of by Analysis in and Government around forums to on (FY03-FY05) component Monitoring be for USD time based facilities poverty to at poverty, Bank, contribution million Poverty above ministries, on panel for learning produced the Staff Counterpart (b) years Office ments workshops Poverty (SES). depending issues. line Contribution mated 0.95 - - - SDP mated lion system, and and by (d) Government n n results and, with identified survey guidelines related of Database; map provided WBI and staff monitoring workshops building/training million Strategies; time million immediate poverty measurement skills) 2.3 Poverty components DEC, poverty consultation = staff on (USD) 0.25 national Most (a) duction poverty and new Resources the = feedback capacity framework socio-economic from in (FY03-FY05) Fund plans. TTL time PREM of regular sector percent Staff Bank Budget Trust (ASEM) 50 TTL Half and Disseminate nent Prepare Establish action Conduct outcomes. Hold vate Conduct database trained Resources - - Expertise - - - Output Input n n n n n n n n 111 PARTNERSHIP FOR DEVELOPMENT THAILAND - WORLD BANK GROUP ANNEXES 112