THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019–2022 World Bank Office – Bangkok 30th Floor, Siam Tower 989 Rama I Road, Pathumwan Bangkok 10330, Thailand (662) 686-8300 www.worldbank.org The World Bank Group Report No 125234-TH INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR THE KINGDOM OF THAILAND FOR THE PERIOD FY19–FY22 Brunei, Malaysia, Philippines and Thailand Country Management Unit East Asia and Pacific Region The International Finance Corporation East Asia and Pacific Department The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019–2022 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 i The last Country Assistance Strategy was discussed by the Board on December 10, 2002 FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS Currency Unit = Thai Baht (THB) 32.4 THB = US$1 (Exchange Rate Effective September 25, 2018 in SAP, the World Bank) FISCAL YEAR October to September World Bank IFC MIGA Vice President Victoria Kwakwa Snezana Stoiljkovic Keiko Honda Director Mara K. Warwick Vivek Pathak Merli Baroudi Senior Manager Vikram Kumar Shabih Ali Mohib, Daniel Street, Sandro Diez-Amigo, Task Team Leaders Ricardo Habalian Helen Han Gero Verheyen Acronyms and abbreviations ADB Asian Development Bank AEC ASEAN Economic Community ASEAN Association of South East Asia Nations BOT Bank of Thailand CLMVT Cambodia, Lao PDR, Vietnam, and Thailand CPI consumer price index EAP East Asia and the Pacific EoDB Ease of Doing Business EGAT Electricity Generation Authority of Thailand EU European Union EVI Economic Vulnerability Index FDI Foreign Direct Investment GCR Global Competitiveness Report GDP gross domestic product GNI gross national income HAI Human Assets Index HEF Health Equity Fund IBRD International Bank for Reconstruction and Development ICA Investment Climate Assessment ICT Information and Communication Technology IFC International Finance Corporation IMF International Monetary Fund MCH maternal and child health MDG Millennium Development Goal MIGA Multilateral Investment Guarantee Agency MMR maternal mortality rate MOF Ministry of Finance NESDB National Economic and Social Development Board NPL Non-performing Loan OOP out-of-pocket PFM Public Finance Management PIM Public Investment Management PIP Public Investment Program RoO rules of origin SCD Systematic Country Diagnostic SDG Sustainable Development Goal SEZ Special Economic Zone SOE sState oOwned eEntity STRI Services Trade Restrictiveness Index TFP Total Factor Productivity UHC Universal Health Coverage UN United Nations USA United States of America WEF World Economic Forum WHO World Health Organization Contents 1. INTRODUCTION 1 2. COUNTRY CONTEXT AND DEVELOPMENT AGENDA 5 2.1 Social and Political Context 5 2.2 Recent Economic Developments and Prospects 6 2.3 Poverty and Shared Prosperity 9 2.4 Sustainability 13 2.5 Development Challenges 14 3. WBG PARTNERSHIP STRATEGY 23 3.1 Government Program and Medium-Term Strategy 23 3.2 Lessons from Recent WBG Engagement and Stakeholder Consultations 26 3.3 Proposed WBG Country Partnership Framework 29 3.4 Implementing the FY19–22 Country Partnership Framework 38 4. MANAGING RISKS 43 5. ANNEXES 47 Annex 1: Thailand Country Partnership Framework Results Matrix 47 Annex 2: Summary Note of Country Gender Assessment in Thailand 53 Annex 3: Operations Portfolio (IBRD/IDA and Grants) 58 Annex 4. Recent World Bank Completed and Active ASA 59 Annex 5: Statement of IFC’s Committed and Outstanding Portfolio 61 Annex 6: MIGA’s Outstanding Guarantee Exposure 61 Annex 7: External Country Partnership Framework Consultations in Thailand 62 1 Introduction Thailand is a development success story, with sustained strong growth and impressive poverty reduction. From 1986 to 1995, the Thai export-oriented economy was one of the world’s fastest growing at an average rate of 8–9 percent per year. Private investment during this period averaged more than 30 percent of GDP, boosting labor productivity as workers moved from agriculture to the more productive and 1 Thailand now has a 20 Year National Strategy (2017–2036) in place, focused on key structural economic and social reforms to end poverty and boost prosperity. The vision is designed to lift Thailand to higher value-added, technologically advanced sectors and activities, in an increasingly innovative, knowledge- based economy. Near-term objectives and targets of this strategy, as well as implementation arrangements, capital-intensive manufacturing sector. Moreover, public are delineated in the Royal Thai Government’s (the investments in infrastructure and basic education Government) 5-year National Economic and Social rose continuously, enabling the country’s economic Development Plans (NESDP), with the 12th NESDP transformation. GNI per capita rose almost five-fold covering the 2017–2021 period. The Government has from US$ 1,160 in 1988 to US$5,690 in 2015, and requested advisory and technical support from the WBG extreme poverty fell from 14.3 percent to negligible in the implementation of the National Strategy and the over the same period. national development plan, in this period of renewed administrative stability and reform momentum. However, Thailand’s economic growth slowed after the Asian crisis of 1997, and this trend continued This Thailand CPF responds to the new 20-year in recent years. Growth fell from an average annual National Strategy and reflects the fundamental rate of more than 9 percent during the boom years change in the Thailand-WBG partnership in recent to 5 percent between 2000–07 and less than 3 years. With political instability having subsided, the percent between 2010–16, lagging the growth of Government is seeking support from the World Bank, peer economies in the region and elsewhere. Poverty and a continued strong partnership with IFC, to help reduction and gains in prosperity slowed accordingly. achieve its development objectives under the 20-Year Private investment fell from 32 percent of GDP in 1995 Strategy. Thailand signed its first-ever Reimbursable to 18 percent in 2016 amid a sluggish global recovery Advisory Services (RAS) agreement with the World Bank following the 2008–2009 global financial crisis, political in late 2016, and the RAS program has been growing tensions and uncertainty, and stalled structural reforms. rapidly since then (Table 3). New civil society and Government demand for Bank services, and a broad The last World Bank Group (WBG) Thailand Country public-private consensus for the private sector to play Assistance Strategy (2003–08) was discussed by the a greater role in supporting shared, sustained growth, Board on January 15, 2003. Political developments underpin Thailand’s strong interest and commitment to were volatile between 2008 and 2014. This period of a broadened engagement with the WBG on economic government instability also manifested itself in policy and social development. instability and reform bottlenecks which accumulated in the absence of a well-defined long-term social and The CPF for Thailand covers the period FY19–22. economic development strategy and program. The Guided by the Maximizing Financing for Development World Bank provided modest just-in-time knowledge (MFD) principles, the CPF will bring to bear the full services with emergency financing in the wake of the resources of the WBG to facilitate increased private global financial crisis, while the International Finance sector-led development. To this end, the CPF will aim to Corporation (IFC) continued engaging with the Thai create markets and increase private sector investment. private sector on inbound and outbound investments. To help create markets, the WBG will promote For the last four years, since the current government competition and innovation, and help open new markets came to power in May 2014, the political situation has by supporting improvements in Thailand’s business been stable. environment. Supporting the development of a stronger THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 1 enabling environment will help increase private sector The CPF plans to achieve six objectives that together investment. The strengthening of fiscal institutions will aim at Promoting Resilient and Sustainable Growth, also help create a more conducive national business and Strengthening Inclusion. In particular, these environment that crowds in greater commercial objectives are i) to improve Thailand’s competitiveness financing and maximizes the impact of scarce public and ease of doing business; ii) to improve financial resources. The CPF will also support targeted policies and fiscal institutions’ policy implementation; iii) to and programs for the inclusion of disadvantaged and strengthen the quality of infrastructure investments; iv) vulnerable groups, including in the fragile, conflict to address climate change and improve water resource affected areas of Southern Thailand. management; v) to strengthen the social protection and inclusion of vulnerable groups; and vi) to promote The overarching goal of the CPF is to support quality education for all and talent management. The Thailand’s transformation towards an innovative, CPF results framework, together with the CPF program, inclusive and sustainable economy, which is is designed to be flexible—with program content aligned to the country’s first 20-Year National Strategy and expected results substantially specified for the (2017–2036), the Royal Thai Government’s 12th NESDP early years of the CPF period, in line with expressed (NESDP 12) as well as the WBG Systematic Country country demand for WBG services, and more open for Diagnostic (SCD) – Getting Back on Track. The CPF the outer years. Given the rapidly evolving nature of envisages a partnership with Thailand focused on the World Bank’s RAS partnership with Thailand, the the provision of IBRD reimbursable and trust-funded results framework may be significantly revised during Advisory Services and Analytics (ASA) targeting poverty CPF implementation, especially at the Performance reduction and shared prosperity—with an option of and Learning Review (PLR) stage, to reflect evolving IBRD financing based on Government demand, overall country priorities. The timing of the PLR will depend performance, as well as global economic/financial on the evolution of the WBG program, and may developments affecting IBRD’s financing capacity, precede or follow the midpoint of CPF implementation and demand by other borrowers. IFC will continue to incorporate lessons learned from completed RAS supporting inclusive growth through financing and partnerships and maintain alignment of the program advisory services to the private sector. The Multilateral with evolving country priorities and demand. Investment Guarantee Agency (MIGA) stands ready to support eligible investments through its credit enhancement and political risk insurance covers. The WBG program will remain flexible through the CPF period to respond to evolving country priorities and Government demand for WBG services. Broad country-wide consultations1 undertaken in the preparation of the SCD and the CPF in the North, Northeast, South and Bangkok regions have informed the objectives and programmatic priorities of the CPF. The SCD was prepared following several rounds of discussions with Thai government officials, experts, academia, private sector, investors, and civil society actors. The CPF benefited from strategic consultations with the Government on the role of the WBG in Thailand for the CPF period, as well as from discussions with Government officials, private sector representatives, civil society and development partners whose feedback was incorporated into the design of the CPF. 1  Details of country-wide consultations can be accessed through this link: https://consultations.worldbank.org/consultation/country-partnership-framework-thailand. 2 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 3 4 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 2 Country Context and Development Agenda 2.1 Social and Political Context Thailand’s constitutional monarchy, established in 1932, and the public-sector institutions that emerged over time, provided the basis for policy 2 of the country. Its urban population is centered largely around greater Bangkok; though this breakdown is fluid, as millions of Thais move back and forth from rural to urban areas to take advantage of seasonal work. and administrative stability, and paved the way for Migration has been and continues to be an rapid social and economic development into the 21st opportunity for Thailand’s development. There are century. Between May 20–22, 2014, the military formed an estimated 3.7 million migrant workers in Thailand the National Council for Peace and Order (NCPO) led (5.6 percent of the country’s population), mostly by the Prime Minister, to take control of the country. On from neighboring Myanmar, Lao PDR and Cambodia. April 6, 2017, a new constitution drafted by the NCPO Roughly one-half of migrant workers in Thailand are was promulgated, after a nationwide referendum, documented. These migrants contribute significantly replacing the 2014 interim constitution. The transitory to Thailand’s economic growth, and will be more provisions of the 2017 constitution state that the NCPO important as Thailand’s population continues to age. will come to an end when a cabinet established after the first general election under this constitution takes Pressure from Thailand’s southernmost provinces office. Until then, the NCPO retains its powers under the for autonomy from Bangkok continues to exist. 2014 constitution. The outcome of the referendum, the With a Malay Muslim majority, unlike the rest of the smooth royal transition, and the continuation in power of predominantly Buddhist country, the southern provinces the post-2014 Government are contributing to increased of Pattani, Yala and Narathiwat have experienced political stability and predictability over the medium protracted periods of violence and unrest. Since the term. While social divisions persist, broad political reemergence of violent conflict in 2004, there have stability is expected to continue until and beyond the been many casualties. Political violence in the region next elections, announced by the government to take stems primarily from tensions between the nation state place by the first half of 2019. and the Malay Muslim population rooted in economic, social and cultural differences. The conflict presents For more than 50 years, Thailand has stood out profound challenges to the social and economic in Southeast Asia for its strong social stability development of this region. and security, particularly when compared with its neighbors, including Cambodia Lao PDR, Myanmar Another major challenge for Thai society in coming and Vietnam which faced major wars. Thailand decades will be a rapidly ageing society. Thailand’s high is, relatively, ethnically, linguistically and religiously share of people aged 65 years or older, at approximately homogenous, with some 96 percent of the population 11 percent of the population, already stands out among identifying as ethnically Thai and about the same developing countries in Asia, reflecting both increased number as Buddhist. Muslims make up the largest longevity and a rapid decline in fertility. Moreover, religious minority at about five percent of the population, this share is expected to increase to 23 percent by with most living in the southern part of the country near 2035, making Thailand one of the most rapidly ageing the border with Malaysia. Thailand has a population of societies ever seen globally. In contrast, the share of the approximately 68 million people, just over half of whom working age population is projected to fall from 72 to 64 live in rural areas. Some 55 percent of Thais live in the percent over the same period—a decline of around 5.8 rice growing areas of the central and northern parts million local workers in absolute terms. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 5 2.2 Recent Economic Developments and Prospects For much of the last quarter of the twentieth century Thailand was a global leader in economic growth and poverty reduction. The country’s export-oriented economy provided the foundation for average GDP growth of 8.2 percent over this period. This sustained period of strong growth and poverty reduction stood as a model for other countries seeking eradicate poverty in East Asia and elsewhere. This success was fueled by sound macroeconomic policy, openness to trade, financial flows, labor migration and regional integration, investments in both human and physical capital, and policies that facilitated the inclusiveness of economic growth. Indeed, that Thailand maintained robust continuity in its growth-enhancing policy framework against the backdrop of its ever-changing political environment, remains an impressive achievement (Figure 1). Figure 1: Poverty and growth in Thailand, 1986–2016 90 GDP per capita (thousands, in constant 2010 US$) 7 80 6 70 Percentage of households 5 60 50 4 40 3 30 2 20 1 10 - - 00 08 09 06 04 02 07 88 90 98 99 86 10 96 94 92 01 12 16 13 11 20 20 20 20 20 20 20 20 20 20 20 20 20 19 19 19 19 19 19 19 19 National poverty estimate Vulnerability poverty estimate $1.9 poverty estimate (2011 PPP) GDP per capita (right axis) Thailand’s growth was fueled mostly by exports prosperity gains. Private investment fell from 32 of goods and services – mostly benefiting regions percent of GDP in 1995 to 18 percent in 2016 amid a with the production base and close to the port sluggish global recovery after the 2009 financial crisis, (Central Region and Bangkok). The populous political tensions and uncertainty, as well as stalled North and Northeastern regions remain mostly structural reforms. Slower growth can be attributed agriculture-based and focused on low-productivity rice largely to the non-agricultural sectors, particularly production. Similarly, the region comprising Thailand’s manufacturing. three most southern provinces of Narithiwat, Patini and Yala focus mainly on rubber and derivatives as well Economic growth has gradually recovered since as trade with Malaysian northern states. Mirroring the falling as low as 0.9 percent in 2014, after months weaker economic performance, poverty reduction in of protests that effectively shut down government these regions has lagged behind the national averages, institutions and the May 2014 military coup. Growth both in income and non-income dimensions. rebounded to an average of 3 percent in 2015–2016, and 3.9 percent in 2017. The recovery has been However, Thailand’s economic growth slowed down driven by a return to broad political stability, increased after the Asian crisis of 1997, and even further in external demand in the face of stronger trading partner recent years. Growth fell from an average annual rate growth, continued expansion of tourism arrivals and of more than 9 percent in the boom years to 5 percent revenues, and an expansion of agriculture in the face in 2000–07 and less than 3 percent in 2010–16, falling of higher commodity prices and rainfall. However, behind its peers in the region and elsewhere, and economic growth remains significantly lower than weakening the sustainability of poverty and shared during the earlier, transformative high growth decades. 6 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Private investment declined to a 5-year low of 18.0 percent of GDP in 2016 due to structural bottlenecks, as well as domestic and global uncertainty. (Figure 2) Firms cited political uncertainty as the main obstacle to doing business in Thailand (World Bank Enterprise Survey 2016). Political uncertainty has weighed on investor sentiment as firms have been concerned about the risk of policy volatility, and possible delays in planned reforms and public infrastructure projects. Other constraints cited in the enterprise survey, such as electricity and transportation, highlight the importance of infrastructure upgrade. For large firms, labor regulations proved to be a major issue. Nonetheless, Thai foreign investment abroad has surged, rising from approximately US$500 million in 2005 to almost US$12 billion in 2012, making Thailand a net exporter of capital for the first time. If sustained, the return to broad political stability and recent improvements in the country’s regulatory framework for business are expected to improve investor confidence and support a recovery in private investments going forward. Figure 2: Total domestic savings and investments in Thailand, 1980–2017 44 39 Percentage of GDP 34 29 34 19 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Investment Gross domestic saving THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 7 Recent regulatory reforms have significantly Thailand has maintained robust macroeconomic improved the ease of doing business in Thailand. fundamentals. (Table 1) In 2016, the current account The 2018 Doing Business report ranks Thailand in registered a surplus of 11.8 percent of GDP, foreign 26th place among 190 economies in the ease of doing reserves stood at US$ 198 billion, or 3.5 times the business for small and medium enterprises around the country’s short-term foreign debt, and total public world, up from 48th place when applying the same debt at 45.1 percent of GDP. Headline inflation is methodology to last year’s and this year’s data. The low, averaging 0.2 percent in 2017 and 0.1 percent in report recognizes Thailand as one of top 10 economies 2018Q1, in the face of relatively weak domestic demand having improved most in the ease of doing business and low capacity utilization. Despite low inflation, in the last year worldwide. Key reforms contributing to the Bank of Thailand has maintained the policy rate this outcome include the streamlining of requirements at 1.5 percent since April 2015. Capital buffers in the to start a business, the introduction of an automatic banking system remained high, with capital adequacy risk-based system to select companies for a tax audit, and liquidity coverage ratios above 17 percent and 160 and a broadening of the scope of assets which can be percent, respectively. Nonetheless, slow economic used as collateral. recovery has led to some financial fragility, particularly as household debt continued to increase faster than incomes, and investors seek higher returns from riskier financial products such as complex securities and unrated bonds. Table 1. Key Macroeconomic Indicators and Projections (annual percent growth unless otherwise noted) THAILAND Selected Indicators 2015 2016 2017 2018 2019f 2020f Real GDP growth, at constant market prices 2.9 3.2 3.9 4.5 3.9 3.9 Private Consumption 2.2 3.1 3.2 3.7 3.1 3.1 Government Consumption 3 1.7 2 2.9 2.6 2.6 Gross Fixed Capital Investment 4.4 2.8 2.1 6 4.7 4.6 Exports, Goods and Services 0.7 2.1 7.5 6.9 6 4.7 Imports, Goods and Services 0 -1.4 6.5 6.5 5.6 4.1 Real GDP growth, at constant factor prices 2.9 3.2 3.9 4.5 3.9 3.9 Agriculture -5.7 0.6 6.2 4 3.5 3.5 Industry 2.8 2.1 2.9 5.4 3.4 3.1 Services 4.1 4.3 4.3 4.1 4.3 4.5 Inflation (Consumer Price Index) -0.9 0.2 0.7 1 1.2 1.3 Current Account Balance (% of GDP) 8 11.8 10.9 11.3 11.8 12.1 Net Foreign Direct Investment (% of GDP) -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 Fiscal Balance (% of GDP) 0.1 -2.6 -2.8 -2.9 -2.8 -2.7 Debt (% of GDP) 42.3 45.1 46.4 46.6 46.8 47 Primary Balance (% of GDP) 1.1 -1.5 -1.6 -1.6 -1.4 -1.1 International poverty rate ($1.9 in 2011 PPP)a,b 0 0 0 0 0 0 Lower middle-income poverty rate ($3.2 in 2011 PPP)a,b 0.5 0.4 0.4 0.3 0.3 0.3 Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b 7.1 6.5 5.6 4.8 4.2 3.6 8 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Fiscal policy has been prudently expansionary in rate with over 10 months of reserve cover, and a support of economic recovery. The fiscal deficit is significant current account surplus of around 10.9 expected to widen slightly to 2.9 percent of GDP percent of GDP in 2017. Thailand has adequate fiscal in FY2018,2 up from 2.8 percent in FY2017. Public and external buffers to scale up public investments to investment increased by 7 percent 2017, which mostly boost potential growth in an inclusive manner, while reflects an expansion in government and state- managing external risks. owned enterprise (SOE) investment, particularly in construction. Public infrastructure projects are the centerpiece of public infrastructure investment plans. 2.3 Poverty and Shared Prosperity The broadening export upturn and public Over the past few decades, Thailand has made infrastructure plans are contributing to an tremendous progress toward the twin goals improvement in Thailand’s economic outlook. As of eliminating extreme poverty and boosting of October 2018, economic growth is projected to shared prosperity. Between 1986 and 2015, the reach 4.5 percent in 2018, and inflation is expected incidence of extreme poverty as measured by the to return gradually to the inflation target range of international benchmark (US$1.90 per day, 2011 1–4 percent. Continued agricultural recovery and PPP) fell from 14.3 percent to negligible. Using strengthened household balance sheets will support the national poverty line (in 2013, approximately private consumption, while the export upswing will US$6.20 per day 2011 PPP), the poverty rate fell spur manufacturing and private investment. Also, the from 67 percent in 1986 to 10.5 percent in 2014, timely implementation of public infrastructure projects, meaning almost 27 million Thais—more than a third including the Transportation Action plan which of the population—moved out of poverty during this covering 36 large projects worth approximately US$27 period (Figure 1). Gains along multiple dimensions billion, is expected to improve investor sentiment and of welfare have also been impressive: per capita crowd in private investment. However, a broad-based income has risen by 4.2 percent per year on average recovery will hinge on domestic demand. in 2000–2013, increasing numbers of children are now getting many more years of education,3 Thailand’s medium-term prospects are broadly and virtually everyone is now covered by health positive. The current full output real rate of growth is insurance while other forms of social security have estimated at around 4.0 percent over the medium term, expanded. Access to safe water and basic sanitation and is likely to be higher if the Government’s planned is almost universal, and mobility and connectivity economic and social reforms are implemented. have increased remarkably. Moreover, the income Strong fundamentals include a tightly managed and distribution has become more equalized, with the successfully contained public debt, estimated at 46.4 bottom 40 percent accounting for 17 percent of total percent of GDP in 2017, an established track record household expenditure in 2013, compared with 15.5 of fiscal conservatism, a managed floating exchange percent in 1986. Table 2. Poverty in Thailand by Region, 1986–2013 (percent of population below national poverty line) Three Most Total Bangkok Central North Northeast South Southern Urban Rural Provinces 1986 67.4 36.6 66.9 66.6 80.2 67.0 n.a. 47.6 75.7 2000 42.6 6.0 29.0 49.1 59.6 42.0 64.7 22.3 51.7 2013 10.9 1.1 5.4 16.7 17.4 11.0 32.8 7.7 13.9 Source: Thailand Systematic Country Diagnostic. Thailand’s fiscal year runs from October to September. 2 The share of the labor force with secondary education increased 10.8 percent in 1986 to 32.5 percent in 2013. Moreover, around 90  3 percent of Thailand’s youth now complete a lower secondary education. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 9 Poverty reduction was driven by robust and sustained economic growth. For more than a quarter century prior to the 1997 Asian financial crisis, Thailand’s economy grew at an average annual rate of 7.5 percent, creating millions of jobs that helped pull millions of people out of poverty. Since 2000, economic growth continued to play the dominant role in reducing poverty but, increasingly, redistribution has also helped: during the 2000–2013 period, nearly 85 percent of poverty reduction was attributable to growth while the remaining 15 percent was attributable to improvements in income distribution. Figure 3: Inequality in Thailand National Gini Coefficient (household expenditure) 70 South Africa (63) 60 Brazil (51) Thailand 1996 (43)* 50 Malaysia (46) Thailand 2013 (38) GINI coefficient Philippines (40) 40 Vietnam (35) 30 Sweden (27) 20 10 0 60–69 50–59 40–49 30–39 20–29 * Thailand’s relative position if GINI coefficient had remained at 1996 levels  INI coefficient for comparator countries are the most recent values for each country available in the World Bank world Note: G development indicators database. UNDP regional human achievement index Health 1 0.8 Participation Education 0.6 0.4 0.2 Bangkok metropolis Transport and 0 Employment Northeast region communication Southern region Family and Income community Household and living 10 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Nonetheless, poverty and vulnerability continue women. Over 40 percent of SMEs are owned by to pose challenges, with pockets of poverty in women, but these tend to be smaller than those owned the lagging regions of the Northeast, North and my males, and concentrated in lower value-added Thailand’s three most southern provinces. Poverty services sectors. in Thailand is largely a rural phenomenon and is particularly higher among rice and rubber farmers, In the context of a rapid demographic transition who predominantly live in these regions. As of 2014, to an aging society, the effect of aging on elderly 7.1 million Thais were still living in poverty, measured women is profound. As elsewhere, women in Thailand by the national poverty line (at about US$6.20 in 2011 live longer than men (74 years, versus 66 years for PPP). Moreover, in 2013, an additional 6.7 million, or men), but have access to fewer resources, including 14 million in total, were living within 20 percent above inheritance, and they also shoulder a higher share of the national poverty line and remained vulnerable to responsibilities of caring for grandchildren and older falling back into poverty. Approximately 4.7 million family members. Social protection for older women poor, or two thirds of the country’s poor, live in the will be crucial to keep them from slipping into further North and Northeast regions, while poverty rates in poverty. Other emerging gender concerns are the high the three conflict-affected provinces in the three most rate of teen pregnancy (47 per 1,000 females ages southern provinces have remained stubbornly high at 15–19), and the gender aspects of both voluntary and 33 percent of the population. forced migration, including trafficking. Despite improvements in the gender equality of Similarly, lesbian, gay, bisexual, transgender, and education and health endowments and amendments intersex (LGBTI) persons face limited employment to discriminating laws, gender gaps continue in terms opportunities and discrimination in the workplace.4 of economic and political participation. In education, Some transgender individuals are being systematically the traditional gender gap has been reversed at the excluded from many mainstream jobs in both the upper secondary and tertiary levels, with female public and private sectors, and are marginalized to enrollment slightly surpassing that of males. However, a few stereotypical jobs open to them. As a result of wage gaps between men and women persist, with the rejections, an unfriendly environment, lack of freedom ratio of earned income of women and men estimated of gender expression at work, and lack of career at 0.78 to 1.00. Women represent 46 percent of the advancement opportunities, LGBTI persons tend to labor force, and they are underrepresented in several opt out of formal jobs in large organizations and seek non-agricultural sectors and highly-paid managerial employment in smaller enterprises or non-government and executive positions. For example, in 2014, only 34 organizations. The cost to the economy of such percent of business executives were women. Female treatment of LGBTI people includes unemployment labor participation gaps are particularly acute in the or underemployment, lost labor time and lost three most southern provinces, where the female productivity, underinvestment in human capital, and participation rate stands at 66 percent compared to the inefficient allocation of human resources. Also 86 percent for males. Also, women’s participation at the micro level, workplace discrimination reduces in national and sub-national politics has been very wages for LGBTI people in Thailand. Another concern low with, for example, only 6 percent of appointed is the high male-to-male HIV infection rate, which members to the National Legislative Assembly being stood at 12 percent in 2012. The World Bank. 2018. Economic Inclusion of LGBTI Groups in Thailand. 4 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 11 Box 1. Towards Quantifying Economic Inclusion of LGBTI in Thailand International experience and evidence show that inclusion of LGBTI employees at the workplace benefits employers, employees and society. Employees who feel included and welcome show better productivity and more engagement with their company. Firms with inclusive policies can improve their public image in markets, including labor, product, and consumer markets, and gain in staff recruitment, retention, and client acquisition and loyalty. Society can benefit because of a decline in bias and an increase in tolerance, individual and group responsibility, and social cohesion. Thailand is considered progressive among developing and middle-income countries regarding the inclusion of lesbian, gay, bisexual, transgender, or intersex (LGBTI) people. As most existing data on LGBTI issues in Thailand—and around the world—are qualitative in nature, the World Bank, in collaboration with the Ministry of Justice, the Ministry of Social Development and Human Security, and the National Human Rights Commission of Thailand conducted the first research endeavor in Thailand to identify priorities for the country to move from tolerance to full economic and social inclusion and wholly address any form of discrimination when LGBTI groups look for a job, access education and health care services, buy or rent properties, and seek legal protection. Using online surveys and in-depth interviews, the study focused on outcomes for both LGBTI and non-LGBTI people in the labor, insurance, housing, and finance markets, and aimed to capture their challenges in access to education, health, and government services. The online survey captured 3,502 responses from the Thai population living at the time of the survey in Thailand: 1,200 non-LGBTI people and 2,302 Thai people that identified themselves as gay, lesbian and/or as transgender, and intersex, or other. The study was the first ever, globally, known to rely on statistically significant sample sizes among differentiated LGBT as well as non-LGBT control groups. Key results from the study include: Awareness of the national anti-discrimination laws and policies already existing in Thailand • is limited. This result was common to both the LGBTI and non-LGBTI sample, and suggests strengthening dissemination of existing legislation and policies as a priority. Among LGBTI respondents, groups differ in their access to markets and services. • Transgender individuals report experiencing more discrimination and exclusion than gay and lesbian respondents, particularly in education and vocational training, and access to health and insurance services. Lesbian women have worse outcomes than gay men, most notably in access to property and financial assets. LGBTI respondents are more likely than non-LGBTI respondents to report labor market • discrimination. Law enforcement, military and religious institutions are most inaccessible for LGBTI respondents. Application rejection and harassment at work are common forms of discrimination faced by LGBTI. More than one-third of non-LGBTI respondents believe it is acceptable for employers to • discriminate against LGBTI individuals under certain circumstances. Acts of exclusion and discrimination based on sexual orientation in access to housing, education and government services are regarded as reasonable by almost half of the non-LGBTI respondents. 12 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 2.4 Sustainability Although Thailand has abundant water resources, productive growth is limited by inadequate water Thailand’s natural forests and coastal and marine allocations/rights and flood and drought risk resources are being depleted, putting future economic management. Agriculture is the largest user of water, growth at risk. Forest areas have declined steadily, accounting for about two-thirds of total water use, falling from 171 million rai in 1961 to 107.6 million rai followed by water for human consumption, ecology, and in 2009. The loss of natural forests, caused mainly industries.5 The amount of water used by agriculture by illegal logging and smuggling into neighboring increased by 37 percent between 2001 and 2009, countries, means a loss of the large variety of and the demand for water from agriculture continues ecosystem services they provide, including but not to rise (Poapongsakorn, 2013). However, no National limited to providing a habitat for Thailand’s globally Water Law or any formal system of water allocation significant biodiversity and watershed protection. and rights exists (although a draft National Water Law Marine and coastal resources continue to deteriorate is at an advanced stage). Water resource management due to coastal erosion, illegal logging, ocean waste, (WRM) institutions are fragmented, with responsibility conversion to intensive shrimp farming, and illegal and spread across 30 departments in 8 ministries, so destructive fishing. Yet, Thailand’s ability to attract 30+ existing water policies, legislation, and guidelines million visitors annually (providing 12 percent of annual have also been formulated in a disjointed fashion. In GDP) hinges on its capacity to conserve its beautiful 2002, the Department of Water Resources (DWR) was coastal areas and coral reefs. Destruction of mangroves established in the Ministry of Environment and Natural and coral reefs also reduce the coasts’ resilience to Resources as a regulator and to provide limited support storm surges and a rise in sea levels. to integrated WRM and operation of the 25+ river basin committees (RBCs), but RBCs still do not have legal standing. Furthermore, limited information exists to support water allocation decisions. Finally, while water resources investments are significant, operation of the infrastructure is not always efficient. 5  hailand has an estimated exploitable volume of 126 billion cubic meters (m3)/annum against the reported national demand of 50–56 T billion m3/annum (excluding navigation and ecosystem requirements) (ADB, 2013). THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 13 Water and air quality has generally improved 2.5 Development Challenges but remains low, especially in urban areas. Water quality in the national internal water The recently completed Thailand SCD identifies bodies is improving and close to reaching the the key binding constraints to ending poverty and national target of 80 percent at or higher than boosting shared prosperity in the country. The path acceptable standards. However, it is worse in to these goals includes i) creating more and better central Thailand and around Bangkok due to jobs by reviving growth through regulatory reforms; discharges from households, contamination from ii) improving the country’s infrastructure; and iii) agricultural production and livestock, commercial facilitating innovation. Providing more support to and industrial activities near the water resources, the bottom 40 percent of the population (B40) and direct discharges of wastewater into the would also be important, particularly by enhancing rivers. Air pollution is also an important problem the education and skills of the workforce, boosting in Thailand, largely due to energy combustion agricultural productivity and building a smarter, more from vehicles and factories. Bangkok levels of targeted social protection system. Making growth particulate matter 10 and 2.5 micrometers in greener and more resilient is the third pathway, and diameter or less, normally referred to as PM10 and includes better management of Thailand’s natural PM2.5, respectively, still exceeded World Health resources, building resilience to natural disasters Organization air quality guidelines and national and promoting energy efficiency. Underpinning standards. In addition, volatile organic compounds these pathways, strengthening the institutional continue to exceed the national standard around capability of the public sector is critical to facilitate the Map Ta Put industrial estate. implementation of reform priorities. Climate change and vulnerabilities are risks to  HAILAND’S PRODUCTIVITY AND A. T Thailand’s future growth and shared prosperity, COMPETITIVENESS HAVE DECLINED IN and climate-related risks are expected to affect RECENT YEARS, RESULTING IN SLOWER the poor and bottom 40 percent disproportionately ECONOMIC GROWTH strongly. Southeast Asia is particularly vulnerable to the impacts of climate change. Climate change Previous sources of growth in Thailand, based is widely acknowledged to increase the frequency on factor accumulation and exports of low-skill and intensity of natural disasters. In addition to manufacturing products, is no longer yielding the the loss of productive activities, the destruction of same results and the country is facing a middle- critical infrastructure negatively affects the wellbeing income trap. Thailand has lost the competitive edge and opportunities of the Thai people, especially it once enjoyed with respect to peers in the region vulnerable groups. Climate change projections and elsewhere. This is largely due to the slow pace include increased flooding risks during the wet in the implementation of growth-enhancing reforms season—affecting agricultural lands along the and human capital and physical infrastructure Mekong River and its tributaries—and more severe investments. Growth fell from an average annual rate water shortages in the dry season. Thailand is also of more than 9 percent in 1986–1996 to 5 percent likely to be affected by sea-level rise: sea levels in 2000–07 and less than 3 percent in 2010–16, are rising globally, and as a low-lying country with weakening the sustainability of poverty and shared its capital close to the ocean, Thailand is highly prosperity gains. (Figure 4). Moreover, the creation vulnerable. Saline intrusion from the sea has already of low-skilled jobs, which drove much of Thailand’s contaminated some underground water sources, growth in the past, is unlikely to drive future growth, and higher salt levels in the soil from coastal particularly as low-skilled jobs will increasingly be flooding could make soils in Thai coastal farms less created in neighboring ASEAN countries, such as productive. For Thailand to achieve its Nationally Cambodia, Myanmar or Vietnam. Instead, the path Determined Contributions (NDC) and to advance for Thailand to revive high growth and transform green growth, timely and effective policies, itself from a middle-income into a high-income market-based instruments, and close collaboration economy is likely to entail upgrading its industries with the private sector will all be important. and service sector, and creating high value-added jobs that require more skills. This transformation will require substantial investments in terms of both human and physical capital, and policies and reforms to continue improving the business and institutional climate and facilitate and attract those investments. 14 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Figure 4: GDP growth, selected ASEAN countries 8 7 Percentage of growth 6 5 4 3 2 1 0 2012 2013 2014 2015 2016 2017 Cambodia Indonesia Malaysia Myanmar Philippines Thailand Vietnam Thailand has had difficulty preparing and implementing major infrastructure development programs which are critical for improving connectivity, raising productivity, and accelerating economic growth. Important improvements to the country’s infrastructure networks include, for example: i) encouraging the development of multimodal transportation; ii) facilitating cross-border trade, enhancing the efficiency of logistics and transport management systems; iii) improving railways; iv) modernizing the public transportation network; and iv) introducing high-speed communication and e-government services. Strengthening budget and planning institutions and public investment management (PIM) will be important to adequately implement these investments. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 15 The Government is looking for Public Private capital, and if there are good mechanisms for resolving Partnerships (PPPs) to play a more important role financial distress, firms are better placed to improve in strengthening infrastructure delivery, and has productivity and maintain sustained levels of private taken steps to improve the regulatory environment to investment. In addition, introducing competitive foster infrastructure investment through PPPs, though neutrality in Thailand’s SOEs will also be important for progress has been slow. A five-year Strategic Plan providing a level playing field, avoiding crowding out for Public Private Partnerships was approved in 2015, of private firms, and improving the efficiency of the with a pipeline of 66 projects worth 1.41 trillion Thai SOE sector. baht, most in the transport sector, five of which have been approved for fast track implementation. This has Thailand is an attractive foreign direct investment important implications for ensuring the Maximizing (FDI) destination, with FDI inflows averaging Finance for Development principles are best reflected approximately 3 percent of GDP in the 1999–2017 through WBG engagement during this CPF period. period. However, FDI inflows have become more volatile in recent years, and Thai investment outflows Although Thailand has a relatively open economy, have gained substantial momentum (Figure 5). This some subsectors—particularly in services—remain is partly as a result of faltering investor confidence heavily protected from import and domestic and declining competitiveness with respect to peers. competition. In 2013, Thailand’s service trade Moreover, the Thai economy could leverage greater restrictions were among the highest in the region, as spillovers from FDI to foster innovation. A relatively measured by the Services Trade Restrictiveness Index, weak national innovation system and limited emphasis surpassed only by the Philippines and Indonesia. on developing a skilled workforce has resulted in many Deeper trade integration, including in services, will Thai firms lacking the necessary capabilities to upgrade be critical to foster competition, facilitate innovation and innovate. This means that building competencies and technology spillovers, and open new growth and capabilities of Thai firms is vitally important for opportunities, such as through the ASEAN Economic the Thai economy to move up the value chain towards Community (AEC) and the Cambodia-Laos-Myanmar- more complex functions such as design, research and Vietnam-Thailand community (CLMVT). Improving development, and branding, as well as from the export access to finance will also help increase competition— of low-value parts and components to high-value if firms face fewer obstacles in getting credit and products and services, and to final manufacturers. Figure 5: Foreign direct investment in Thailand (Percent of GDP) 6 Net inflows Net outflows 5 Percentage of GDP 4 3 2 1 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 16 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Figure 6: Thailand’s competitiveness in perspective World economic forum global competitiveness index 2006–07 Institutions 0.8 Innovation Infrastructure 0.6 Business 0.4 Macroeconomic sophistication environment 0.2 Thailand 0 Health and Structural peers Market size primary education Upple middle income ASEAN Technological Higher education readiness and training Financial market Goods market development efficiency Labor market efficiency 2015–16 Institutions 0.8 Innovation Infrastructure 0.6 Business 0.4 Macroeconomic sophistication environment 0.2 Thailand 0 Health and Structural peers Market size primary education Upple middle income ASEAN Technological Higher education readiness and training Financial market Goods market development efficiency Labor market efficiency THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 17  ERSISTENT INEQUALITIES AND SOCIAL B. P information platform to improve program eligibility TENSIONS CALL FOR MORE TARGETED screening and oversight; and iii) creating “graduation SUPPORT TO THE B40 pathways” to promote program exit and sustainable livelihoods. Like other developing countries, Thailand Thailand’s lagging regions present risks to social also faces a challenge of expanding its formal sector cohesion and political stability. The sharp political pension schemes to informal workers. Coverage of divisions and tensions are rooted in a growing sense formal pensions remains under 30 percent of the that economic prosperity and opportunities are not working age population and further innovation in policy shared equally in Thai society. The lagging regions and administration is likely to be necessary to widen of the North, Northeast and the three most southern coverage. The rapidly ageing Thai society, where the provinces, hosting the majority of Thailand’s poor and share of people 65 years and over is expected to vulnerable populations, are falling further behind. More increase from around 11 percent in 2016 to 23 percent targeted support for the bottom 40 percent is thus an by 2035, increases the urgency of these reforms. important priority for Thailand both to boost shared prosperity, and to help strengthen social cohesion and Measured by Program for International Student maintain greater political stability. Assessment (PISA) and other standardized tests, Thailand’s education system is below par for a Thailand does not have an adequate social country with its level of income and expenditure assistance program for the non-elderly poor. per student. The challenge is particularly acute While policies initiated in 2017 are an important first for students in village schools, where 47 percent of step, building the social protection system remains 15-year-old students were found to be functionally an unfinished agenda. Developing a national social illiterate. Moreover, students in village schools are assistance platform for the poor, incorporating falling further behind their peers in large cities, as international best practices and lessons, is likely to measured by average PISA scores, posing challenges substantially improve the prospects of vulnerable for inclusion, labor skills development and long-term groups. To maximize the impact of such a platform, it growth. A recent firm survey shows that manufacturing would be useful to build around one or more flagship firms are considering the lack of skilled workers a top programs. Equally important would be to harmonize constraint for further growth. For individuals, having the delivery systems for social protection to promote the necessary skills and competencies to obtain greater efficiency, transparency, and ease of use for productive employment can help them secure a better citizens. This would include i) developing a robust future and, for those who are poor, help them break targeting system to identify poor and vulnerable out of the cycle of poverty. A better-educated and households; ii) building an inter-operable management skilled workforce is also critical to Thailand’s economic 18 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 growth prospects, as the robust growth the country southernmost provinces of Thailand are at the bottom needs in competitive skill-intensive exports will depend of national standardized test scores, with the severity on having a stronger human capital base. According of the problem increasing in small village schools with to the Global Competitiveness Indicators, the quality limited supply of teachers and educational resources, of Thailand’s education system is perceived to have and have among the highest rates of economic worsened relative to its middle-income peers (and inactivity in the country (19 percent of the population ASEAN neighbors). Three reforms areas seem of aged 15–65 was neither working nor studying in 2013). critical importance in the immediate future: i) improving Access to services is limited when compared with access to Early Childhood Development (ECD) services other parts of the country, and government programs for the poor; ii) addressing Thailand’s problems with are widely perceived as not being responsive to local small schools where approximately 1 million (mainly needs and aspirations. poor) children receive an inferior education; and iii) implementing education reforms, including increasing Conflict-related violence in the three most school autonomy and strengthening the use of southern provinces also has gender dimensions. information to hold teachers and schools accountable Most casualties of the century-old subnational conflict for performance. are men. In terms of proportion, however, women experience a higher percentage (80 percent) of Despite greater commercialization and deaths from separatist violence. A significant number diversification of the sector in recent years, farm of women are killed by bomb explosions in public labor productivity remains low, resulting in high spaces and other incidents of violence.6 In addition, poverty rates among small farmers and farm the conflict disproportionately impacts women in other laborers. Approximately 40 percent of the Thai ways, including domestic violence, emotional trauma, workforce is employed in agriculture (27 percent of negative health outcomes, and economic hardship. whom are estimated to be employed in the sector full- time), more than most regional and structural peers. NADEQUATE NATURAL RESOURCE C. I Nonetheless, the sector accounts for only 9 percent of MANAGEMENT PRACTICES POSES A CHALLENGE GDP, signaling much lower labor productivity than the TO SUSTAINABILITY OF DEVELOPMENT average Thai worker. As poverty in Thailand is largely ACHIEVEMENTS a rural phenomenon, higher agricultural growth would not only increase GDP directly, but is also likely to Ensuring the sustainability of growth and lasting contribute to poverty reduction more than any other livelihoods of the bottom 40 percent will depend on sector, particularly with appropriate pro-poor policies in Thailand’s ability to make growth greener and more place such as i) a better-functioning land rental market; resilient. Forest areas have declined steadily, falling (ii) increased efficiency and sustainability of irrigation from 171 million rai in 1961 to 107.6 million rai in 2009, investments; (iii) more and better funding of agricultural mainly the result of illegal logging and smuggling into research and extension programs; and (iv) improved neighboring countries. Natural forest depletion means agricultural programs targeting the hotspots of rural loss of the large variety of ecosystem services they poverty. provide, including but not limited to providing a habitat for Thailand’s globally significant biodiversity and Conflict and ethnic barriers in Thailand’s three watershed protection. Marine and coastal resources most southern provinces constrain the region’s continue to deteriorate due to coastal erosion, illegal ability to share in the benefits of growth, logging, ocean waste, conversion to intensive shrimp including along non-income dimensions. A legacy farming, and illegal and destructive fishing. Yet, of ethnic and religious-based conflict in the three Thailand’s ability to attract 30+ million visitors annually southernmost provinces of Thailand have stalled (providing 12 percent of annual GDP and over 17 structural transformation and limited the pace of percent of export earnings) hinges on its capacity to poverty reduction. Poverty in the region is chronic, conserve its beautiful coastal areas and coral reefs. headcounts are above the national average, and two of the southern provinces, Pattani and Narathiwat, have As a low-lying country, Thailand could suffer more the 2nd and 3rd highest poverty rates in the country. frequent coastal flooding and droughts around With Pattani Malay being the primary spoken language the agriculturally important Mekong region, and in the region, those who cannot speak Thai or English saline intrusion resulting from climate change. find themselves unable to access higher education Better land zoning and management is needed to or advanced employment opportunities. All three reduce the flood-drought vulnerability. Specifically, 6 Barron, Engvall and Morel. July 2016. Understanding Violence in Southeast Asia. The Asia Foundation.  THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 19 deforestation in the upper reaches increases the risk which will likely include i) improving fuel efficiency and of flash floods and sediment loads in rivers, while promoting greater use of rail transport; ii) improving reducing storage and drainage capacity. Lack of careful energy efficiency standards for buildings and factories; planning for public infrastructure (roads, floodways, and iii) collaborating with regional partners to facilitate etc.) and urban/industrial areas exacerbate the risk of power trade across the Greater Mekong Subregion flooding. Additional priorities include the immediate and the AEC. rehabilitation of hydraulic assets and an increase in drainage capacity. Ensuring regular maintenance of WEAK GOVERNANCE HAS COMPOUNDED D.  these assets in the future will improve the efficiency SOCIAL DIVISIONS AND IMPEDED POLICY and extend the life of flood management infrastructure. AND INVESTMENT IMPLEMENTATION Undertaking a design review of critical flood embankments, and carrying out dam safety reviews The gridlock among political groups in Thailand immediately are integral to ensuring the safety of flood has its roots in the widening gaps in Thai society. control structures going into the next rainy season. Thailand’s ranking in the Transparency International Investment in small- and medium-sized water reservoirs Corruption Perception Index has worsened from 78th upstream and implementing community watershed out of 178 countries in 2011, to 101 out of 176 countries management programs would also improve flood in 2016. There is a growing perception among people management capacity. in Thailand of significant levels of corruption, an unfair judicial system has favoring the wealthiest, Understanding the nature of disaster risks through and government regulations and concessions that hazard mapping is important for disaster risk have protected vested interests at the expense of management and disaster resilient development encouraging growth and job creation. Thailand had planning, and requires a detailed mapping and an advantage twenty years ago, compared with other modeling exercise that includes climate change countries, in perceptions of good governance as projections. This would allow a deep understanding measured by the World Bank Governance Indicators. of the nature and geographical distribution of risk and This advantage was lost, and by 2014, Thailand expected damage, and incorporating these risks into was lagging behind its peers in good governance, planning, design, and specifications of infrastructure particularly in the voice and accountability and assets. Making these risk maps available to the public political stability dimensions. Political instability in conjunction with training can also help improve impeded decision-making until recently, prevented general understanding, and is a first step towards the effective implementation of public investment, planning a strong disaster risk management strategy. and blocked efforts to liberalize key sectors, especially the service sector (Figure 7). Establishing an effective early warning system (EWS) is another vital tool for mitigating the The impact of several Government initiatives to impacts of disasters. An effective EWS must be based revive economic growth will hinge on successful on high-quality, real-time data gathered from detailed implementation. Successful implementation, hazard mapping that takes into account geographic in turn, will require—in addition to sustained and infrastructure characteristics, and historical disaster political commitment—simplified yet transparent information. An EWS can be established over time, decision-making and improved institutional capacity starting with the most deadly or costly disasters before of the public sector to formulate and implement integrating all other disasters. This comprehensive multiyear infrastructure and human capital approach will ensure an effective, efficient system that development programs. In particular, the provides clear messaging that the public can trust. Government may consider comprehensively revamping and modernizing the Public Investment Thailand is growing on an energy-intensive path, Management system. Further strengthening of and high-energy demand growth is expected to the procurement system would also help ensure continue in the future. Thailand pledged at the efficient implementation of public projects and the United Nations Framework Convention on Climate achievement of savings for public finances. In light Change meeting in 2015 to reduce its carbon emissions of the planned mega projects that could resuscitate by 20–25 percent from their 2005 levels by 2030. growth, reviewing public procurement systems and This international commitment is underpinned by the allowing for innovative approaches such as turnkey government’s Power Development Plan (PDP) for 2015– contracting would be useful. Stronger capacity 2036 which pledges to increase renewable energy to deliver new programs will also be needed for so it comprises up to 20 percent of overall power successful delivery of more targeted support for the generation from its current level of 10 percent. The bottom 40 percent and for the implementation of challenge now is implementing these commitments, environmental policies and programs. 20 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Figure 7: Thailand’s governance in perspective World Bank governance indicators 1996 Control of corruption 0.8 0.6 Voice and 0.4 Government accountability effectiveness 0.2 Thailand Structural peers 0 Upple middle income ASEAN-5, excluding Thailand Political stability and Rule of law absence of violence/terrorism Regulatory quality 2014 Control of corruption 0.8 0.6 Voice and 0.4 Government accountability effectiveness 0.2 Thailand Structural peers 0 Upple middle income ASEAN-5, excluding Thailand Political stability and Rule of law absence of violence/terrorism Regulatory quality THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 21 22 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 3 WBG Partnership Strategy Government Program and Medium–Term Strategy 3.1  3 The Government’s medium-term reform program is articulated in Thailand’s first ever 20 Year National Strategy (2017–2036) and the NESDP 12, which covers the period from 2017–2021. The NESDP 12 focuses on the near-term implementation of the economic, administrative, and social aspects of the 20 Year National Strategy. It highlights measures to improve equity and reduce inequality, enhance competitiveness of the economy (with better education, skills, productivity enhancing infrastructure, and a sound regulatory framework), improve ability of the public sector to deliver results, improve natural resource management, promote balanced spatial development and strengthen connectivity regionally and globally. Thailand’s 20 Year National Strategy: A Vision of Security, Prosperity Box 2:  and Sustainability The 20 Year National Strategy has six strategic thrusts: (i) promoting national security; (ii) strengthening competitiveness; (iii) developing and empowering human capital; (iv) broadening opportunities to improve social equality and equity; (v) environmentally friendly growth; and (vi) reforming and improving public administration. Individual reforms under these strategic thrusts encompass more than 140 reforms that cut across the entire gamut of social, economic, political, administrative, cultural, and judicial aspects. A key initiative under the 20-Year National Strategy allowing for the expansion of the Map Ta Phut and the NESDP 12 is the expansion of the eastern and Laem Chabang ports, roads, and seaboard, where Thailand’s industrial base railway systems. has been traditionally located, into the Eastern Economic Corridor (EEC). The EEC covers the The government has established a National Reform three provinces neighboring Bangkok as a special Committee (NRC) to drive medium term reforms. economic zone. Within the EEC, the Government is The NRC has been legislated to remain operational building infrastructure, allowing 100 percent foreign beyond the next elections and is led by a former ownership of business including universities, lifting Governor of the Bank of Thailand, and comprises restrictions on foreign ownership and participation private sector, government agencies and think tanks. in sectors traditionally reserved for Thai businesses, The NRC has determined three key issues for and liberalizing work permits for foreign skilled and long-term economic growth – improving semi-skilled labor. In addition, public and private competitiveness, fostering equality and inclusive investments for infrastructure upgrading are growth, and institutional reform. The policy reform expected to reach approximately US$43 billion, framework for the government is presented below. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 23 Concurrently, the Government has promulgated Tackling inequality is central to the Government’s the Competitiveness Enhancement Act (2017) and ‘leaving no-one behind’ strategy. As a sign of high- the Investment Promotion Act to provide tax and level commitment to this agenda, the NESDP 12 will non-tax incentives for high value investments, and specifically target a reduction in income and non- grants to firms that operate in special economic income dimensions of inequality based on area specific zones, use advanced technology, conduct research determinants of inequality. To this end, the Government and development, and/or spur innovation. The has launched a new welfare scheme to support people government has selected 10 industrial/service with an income of less than 10,000 baht per month sectors for targeted promotion: next generation through provision of welfare cards that can be used to automotive, smart electronics, medical and wellness buy basic necessities, including transportation services. tourism, food for the future, robotics, aviation This welfare scheme, which currently covers 11.7 million and logistics, biofuels and biochemical, digital people, complements the existing Universal Healthcare technologies, and advanced medicine. Scheme that covers almost 49 million people. The Government has also embarked on tax reforms aimed The Government has also revised various laws at making the tax system more progressive through and regulations and improved institutional implementation of an inheritance tax and a land and arrangements. A new water management agency property tax. In addition, a comprehensive social has been created under the Prime Minister’s Office protection policy and implementation plan is being that unifies water management issues that were devised to integrate existing social schemes and previously spread across more than 15 agencies. improve targeting mechanisms to support poor and The government has also amended the Foreign vulnerable people. Business Act to allow for greater competition, and other laws and regulations are under review and Thailand is moving away from promoting light revision as well as in a pipeline including, the Eastern manufacturing as the labor advantage recedes Economic Corridor Act, Digital Transactions Law, and wages rise. The government recognizes that Business Facilitation Act and Privacy Law, Securities the country has lost the comparative advantage for and Exchange Commission Act, FinTech Act. The light manufacturing and labor-intensive industries, as entire legislative agenda is focused on making the demographics change and wages rise. Recognizing legal and regulatory framework more agile and this change, the investment promotion regime has fit-for-purpose. excluded such industries from the promotion list. 24 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Government’s Framework for Reforming the Economic Sector 1. Competitiveness 2. Equality and Inclusive Growth 3. Policy, Process, & Institutional Reforms 1.1 Productivity Specific program for important 2.1  3.1 Policy Institutions reform »D  evelop core industries (tourism, groups  trategic planning agencies »S agriculture, food) and high growth  haring knowledge, information, »S  ational Statistic and National »N industries (biotechnology, smart and technology to small farmers Data Unit electronics, digital, education, to increase productivity and healthcare) innovation  nhance supporting factors e.g., »E  evelop accessibility to crop »D human capital, competition, insurance and credit and technology  evelop irrigation system »D  reate platform for skill »C development program 1.2 Regional Integration 2.2 Strengthen community power 3.2 Fiscal Institutions reform  romote borderless trade to »P  trengthen community »S  udgeting Agency »B create target industry at financial system  iscal/Tax policy reform »F regional level  evelop community business »D  sset management agency »A  evelop connectivity network in »D  et up Social Investment »S  ong-term fiscal sustainability »L the region Fund (SIF)  reate regional hub »C 1.3 R&D, Innovation Ecosystem Create balance at national level 3.3 O 2.3   perating and Evaluation » Establish R&D center and Social safety net Institutions reform »R eform Department of Intellectual ntegrate agencies on poverty »I » Execution Mechanisms Property and inequality » Monitoring and Evaluation Unit »E  stablish center to develop  xpand social safety net and »E » Catalyzing mechanism capacity of Start-up and reform social security and small enterprise tax system  rea- and Demand-based »A budget allocation The Government has recently implemented important to push structural reforms forward and attract greater reforms to enhance the business environment, private investments to support the achievement of leading to a substantial improvement in the Thailand’s Thailand’s development goals. Doing Business global ranking from 46 in 2017 to 26 in 2018.7 In fact, the latest World Bank Doing Recognizing the importance of regional integration Business report recognizes Thailand as one of for socio-economic prosperity, the government and the top 10 reformers worldwide, having improved the private sector have ramped up engagement and most in the ease of doing business in the last year. investments regionally and globally. In this regard, Reforms implemented include the simplification of the Government has redoubled efforts to foster requirements to start a business, implementation of connectivity with neighboring countries (Cambodia, a geographic information system to facilitate access Lao, Myanmar, and Vietnam) and taken a more to electricity and property registration, easing access proactive role in the implementation of ASEAN to credit by broadening the scope of assets which Economic Community measures, engaging with can be used as collateral, introducing a risk-based international organizations (the UN SDG’s/COP21, automatic system for tax audits, and making it easier GMS, OECD, the ADB, the IMF, and the World to enforce contracts and resolve insolvency. These Bank) to promote well-being with the ‘leaving no improvements signal the Government’s commitment one behind’ policies. The Neighboring Countries 7 Applying the same methodology to last year’s and this year’s data.  THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 25 Economic Development Cooperation Agency (NEDA) reform program has the potential to significantly increase of the Ministry of Finance also provides concessional potential full output annual growth to above the current financing to neighboring and other countries for 4 percent, and in turn drive, spread, and sustain growth, infrastructure projects. At the same time, the Thai substantially accelerate Thailand’s transition to towards private sector has been investing more in regional a high-income economy with greater equity. countries and globally, including in partnership with the IFC. Lessons from Recent WBG 3.2  The recently approved Southern Border Provinces Administration and Development Policy 2017–2019, Engagement and Stakeholder prepared by the National Security Council (NSC), Consultations explicitly recognizes the complexity and sensitivity of the causes of the conflict in the three most southern The most recent full WBG engagement strategy provinces. It outlines a number of objectives and with Thailand preceding this CPF was the Country initiatives to achieve its vision of a society that is “safe Assistance Strategy (CAS) for the period 2003–2008. and free from any conditions contributing to violence” The CAS focused on providing diagnostic work and where “everybody’s way of life is protected and implementation support in the areas of poverty and improved on the basis of a multicultural society, with inequality, human and social capital, competitiveness participation in a sustainable peace-building process”. and natural resources and the environment. Much of the Building on the growing understanding of local problems implementation support was delivered through Country and needs, the policy acknowledges the value of Development Partnerships (CDPs), primarily knowledge- public participation and sets out to achieve genuine based programs led by the Government and supported broad-based participation and inclusion of people, civil by the Bank and other development partners. This society and disadvantaged groups in problem-solving CPF incorporates lessons from the Country Assistance and peace building efforts in the region. It also seeks to Strategy Completion Report, such as the importance promote trust and cooperation between the state and of selectivity in knowledge-based partnerships, and of the people, including by engendering confidence in a supporting Thailand’s efforts to share its development public remedy and grievance processes. Strengthening experience and promote regional cooperation. local communities and improved incomes and livelihoods of the people are key areas mentioned as The Thailand-WBG Interim Strategy Note (ISN) for part of the conditions contributing to solving conflict the period FY 2011–2012 provided the framework in the south. for IBRD emergency financing in support of recovery following the 2007–2010 global financial crisis, as Taken as a whole, this is the first time since the 1990s well as for continued IFC support to the private sector. that Thailand has such a clear and comprehensive The Government’s stimulus package supported by the program for economic and social transformation, ISN financing contributed to a prompt recovery from as well as integration with regional and the global the crisis, with economic growth rebounding from 0.8 economy. If fully implemented, the economic and social percent in 2011 to 7.2 percent in 2012, though dropping 26 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 again to low levels in later years due to political social protection, education, infrastructure management, uncertainty and stalled structural reforms. Poverty public investment management, among others. continued falling from 17 percent in 2011 to 13 percent Initial experiences with RAS engagement have been in 2012, and further to 7.2 percent in 2015. Progress successful, with authorities engaged in joint analysis was limited in other areas of ISN engagement, such as and implementation of reforms to achieve important strengthening the social protection system for the poor, milestones, such as the substantial improvements in the clarifying the PPP regulatory framework, and addressing ease of Doing Business rankings (from 48 in 2017 to 26 weaknesses in financial reporting and performance- in 2018 with comparable methodology) and Distance to based management. Overall, the ISN instrument Frontier (DTF) resulting from regulatory reforms. proved appropriate for the limited two-year period of emergency public financing needs and continued Extensive stakeholder consultations were held during private sector engagement, with limited prospects for a the preparation of the SCD and CPF, including nine sustained policy or reform partnership with the WBG. countrywide consultation meetings with civil society, think tanks, private sector, regional governments and During the politically turbulent period after the key opinion leaders (see Chapter 6 and Annex 5 of the completion of the ISN, through several months of SCD). Consultations broadly endorsed the identified street protests and violence in late 2013 and early key development challenges for Thailand, as well as the 2014, Thailand’s partnership with the WBG continued outline for WBG partnership with Thailand over the CPF on a modest scope and scale. Prospects for sustained period. Some salient points highlighted by stakeholders policy development or reforms were dim, and there was at the CPF consultations include: i) budgetary reforms limited country demand for engagement with the World are important to support better service delivery; ii) Bank. The Bank focused on supporting community avoiding floods and droughts is critical for the economic driven development in the conflict-affected areas of and social well-being of Thais; iii) higher value addition the three most southern provinces, supporting green in agriculture sector would improve livelihoods of initiatives, and conducting macroeconomic monitoring. poor farmers; iv) updating the regulatory framework The IFC continued to work with Thai private sector on governing private enterprise would strengthen the out-bound investments in the region and investments country’s competitiveness; and v) improving the in Thailand principally in the financial sector. education system, labor policies, and provision of skilled workers is critical to transform Thailand’s economy. The current government renewed the structural reform momentum and requested a broadened, Key lessons learned from ISN implementation, as well strategically structured partnership with the WBG. as more recent engagement including under the first The first five RAS engagements with Thailand have RAS with Thailand include: already been initiated (the first three signed in December 2016 and already completed), and a robust Sharp focus on specialized areas of high Government • RAS pipeline for the short to medium term has been interest at the senior level is key. Reforms that discussed tentatively with the Government, covering Thailand is now implementing cut across multiple a variety of sectors including business environment, agencies which requires stewardship from the very THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 27 top. For example, on ease of doing business the  medium to long-term development plan •A reform process is being led by the Deputy Prime facilitates the identification of priorities for Minister for the economic cluster. This encourages development partners’ engagement with the more than 30 government agencies to collaborate Thai Government. From 2006 to 2014, Thailand did on regulatory reforms. Without such top-level not have a medium to long term reform program. This stewardship, it is difficult for agencies to push meant it was not possible to articulate a partnership through reforms. that would address key constraints in a holistic manner. Thailand’s currently elaborate and articulated  elevance of broad SCD consultations and •R reform program provides a solid basis for engagement follow-up discussions with counterparts. The with development institutions, including the WBG. process of consulting broadly with all stakeholders in the process of preparing the SCD, as well as nvesting in a basic package of WBG services, •I discussing its findings in detail with Government, civil even when engagement on reforms is limited, society and the private sector, facilitates the process facilitates a just-in-time response to a change in of reengagement on structural reforms as it allows Government demand. Thailand has chosen to partner for convergence of understanding on the country in with the World Bank on transformative programs over question’s main development priorities. time and the Bank has stayed engaged throughout, including during periods in which commitment to mportance of an adequate regulatory framework •I reform has been more limited. This has allowed the to WBG engagement and investments. An Bank to retain knowledge and partnerships, and to adequate regulatory framework for renewable energy respond with a broadened and deeper support has allowed Thailand to lead in renewable energy upon request. endowments in Southeast Asia, and facilitate a successful IFC engagement to develop over 3000MW  xploring programmatic RAS legal agreements •E of solar power connected to the grid, as well as a is key to reduce the transactions costs of RAS. substantial improvement in wind power capacity. Entering into a RAS Framework Agreement which On the other hand, weak regulatory frameworks, delineates the umbrella legal terms of the agreements particularly on PPPs, impeded progress on other with the Government helps reduce unnecessary areas of IFC support to infrastructure development, delays in processing a robust RAS pipeline (Table including in the transport sector. 3), particularly in a country like Thailand which has no established method of procuring services from international organizations. 28 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022  roposed WBG Country 3.3 P Achievement of NESDP 12 and National Strategy objectives will depend on the successful Partnership Framework implementation of policy reforms, programs and investments in key areas such as infrastructure,  VERVIEW OF THE WBG THAILAND A. O competitiveness, education, social inclusion and PARTNERSHIP FRAMEWORK environmental sustainability. The WBG advisory services (Bank RAS and IFC advisory) can contribute The CPF outlines a WBG program for FY19-22 in to such successful reforms and investments through support of Thailand’s national development priorities well-targeted, relevant and feasible recommendations, to revive high growth while strengthening inclusion as well as focused technical and implementation and sustainability. The overarching goal of the CPF support, if and as the Government executes its is to support Thailand’s transformation towards an strategy and programs. Hence, the results framework innovative, inclusive and sustainable economy, in (Annex 1) delineates the expected CPF results that can alignment with the country’s 20 Year National Strategy be attributable to WBG engagements and will form the (2017–2036), the Government’s NESDP 12, and SCD basis for evaluating CPF achievements. pathways and priorities. The CPF also envisages WBG engagement with Thailand in leveraging its regional Three selectivity filters have been used to define and global partnerships, including in the CLMVT, GMS, the CPF program at the strategic, program and and ASEAN/AEC regions. The Bank plans to engage activity levels: predominantly through reimbursable and trust-funded Government demand and alignment with the • Advisory Services and Analytics (ASA), while leaving NESDP 12 and the 20 Year National Strategy: open the possibility of future IBRD financing based on The CPF aims to support the implementation of Government demand, overall performance as well as Thailand’s development strategies in areas where global economic/financial developments which affect WBG knowledge an international experience can IBRD’s financing capacity. The IFC will continue to deepen or accelerate reforms. Moreover, the CPF provide both financing and advisory services to the program reflects areas where the Government has private sector in support of inclusive growth. MIGA shown strong demand for engagement and deep stands ready to support eligible investments through its commitment for reform. credit enhancement and political risk insurance covers. Focus on the pathways identified in the SCD to • The CPF puts forward a flexible approach for the WBG’s end poverty and boost shared prosperity: The SCD program, considering the dynamism of a middle-income priorities and the NESDP 12 are aligned and together country, evolving country demand for RAS, and regional guide the choice of CPF objectives and focus areas. and global developments. WBG comparative advantage, including rationale for • RAS engagement: The CPF focuses on areas where The CPF responds to a fundamental change in the the WBG is seen to add most value and the issues Thailand-WBG partnership following the past decade. that are expected to have transformative impact on With increased political stability, the Government is the country’s development. The CPF aims to leverage seeking World Bank’s support and continued strong the WBG’s international experience and convening partnership with IFC to achieve its development power to maximize financing for development in objectives under the new 20-Year National Strategy. Thailand by improving the business and regulatory In addition, MIGA will explore opportunities to support environment to attract higher investment, and in the the National Strategy. The rapid growth of the program AEC and CLMVT regions by supporting cross-border (Table 3) along with new demand from civil society and regulatory reforms and investments contributing to Government for Bank services reflect the country’s the region’s integration and development. interest and commitment to broaden engagement with the WBG on economic and social development. Moreover, Applying the filters to the NESDP 12 objectives and Thailand has taken a leading role in the regional agenda SCD pathways, the six CPF objectives are: of promoting integration and joining efforts to resolve Improve Thailand’s competitiveness and ease of • regional challenges, as well as becoming an important doing business source of capital inflows for neighboring countries. The Improve financial and fiscal institutions’ • WBG’s partnership with Thailand on this agenda may policy implementation help strengthen regional integration, thereby facilitating Strengthen the quality of infrastructure investments • inclusive growth in the AEC and CLMVT regions, including Address climate change and improve water • by integrating trade and possibly investment and labor. resource management Lastly, with a past record of rapid and sustained economic Strengthen the social protection and inclusion • growth and poverty reduction, Thailand is an important of vulnerable groups source of global knowledge on issues faced by countries Promote quality education for all and • looking to transition into both middle-income and high- talent management income status. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 29 WBG Thailand country partnership framework (FY19–FY22) Overarching To support Thailand’s transformation towards an innovative, inclusive and sustainable Goal economy. The CPF aligns with Thailand’s 20 Year National Strategy (2017–2036); the Government’s NESDP 12; and SCD pathways and priorities; and World Bank Group’s comparative advantage. It also envisages WBG engagement with Thailand in leveraging its regional and global partnerships. Focus Area 1 Promoting Resilient and Sustainable Growth. Four CPF objectives will concentrate on partnering with Thailand to promote the economy’s ability to attract higher private investment and maximize financing for development and sustainable growth. Objective 1: Improve Thailand’s competitiveness and ease of doing business Objective 2: Improve financial and fiscal institutions’ policy implementation Objective 3: Strengthen the quality of Infrastructure investments Objective 4: Address climate change and improve water resource management Focus Area 2 Strengthening Inclusion. Two CPF objectives will concentrate on partnering with Thailand to enhance the country’s social and economic inclusion by strengthening targeted support programs to the bottom 40; informing education system reforms; promoting community-driven development in conflict-affected areas; and contributing to end gender and sex orientation discrimination. Objective 5: Strengthen the social protection and inclusion of vulnerable groups Objective 6: Promote quality education for all and talent management Gender concerns are central to the program and have constraints to Thailand’s competitiveness as they been embedded in the CPF objectives and results. relate to increasing productivity in the services sector, The CPF draws on the recent Country Gender Profile improving regulatory framework for private enterprise, for Thailand (Annex 2) and will integrate gender aspects and better infrastructure; and (v) transforming economic in its operations and analytical work aiming to enhance and fiscal institutions to effectively articulate and gender awareness on key issues as well as reduce implement economic and social policies. Additional the identified gender disparities. Gender priorities knowledge partnerships in critical areas have been during the CPF will be in line with the CPF focus areas agreed or are currently under discussion, including and objectives, with a particular focus on enhancing on strengthening inclusion in the three most southern inclusion, voice and protection of vulnerable women provinces and promoting greater energy efficiency and men, including in conflict-affected areas. and sustainability.  OCUS AREAS, OBJECTIVES AND B. F IFC’s engagement will be guided by the IFC 3.0 CROSS-CUTTING PARTNERSHIPS strategy framework. This approach aims to create SUPPORTED BY THE WBG PROGRAM markets in Thailand that are competitive, sustainable, inclusive, and resilient, as well as increase private The WBG program is anchored around a broad sector investment, by applying Maximizing Finance and programmatic RAS engagement on Thailand’s for Development (MFD) principles. IFC will focus its transformation towards greater inclusion, resilience engagement in select priority areas, encompassing: i) and competitiveness. This engagement will cover the infrastructure, with particular focus on leveraging PPPs; five areas which the National Economic and Social ii) innovation to accelerate access and affordability of Development Board (NESDB), the agency leading the reliable broadband services and insurance products; iii) country’s development planning, and the Bank have green growth which places a premium on technology identified as top priorities in the NESDP 12. These are: and increased climate finance to help Thailand (i) improving water management for building resilience produce a more resilient growth model; iv) sustainable against climate change; (ii) developing a smart fiscally cross-border development; and v) strengthening sustainable social protection system to effectively the enabling business environment so that it helps protect vulnerable groups; (iii) improving education leverage greater commercial financing which and skills system to foster inclusion, (iv) addressing maximizes public resources. 30 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 The results framework reflects the flexible approach of remittances; iii) regional energy markets; iv) promoting the CPF, where program design and expected results are organic and high value-added agriculture; v) joint more certain in the early years of the CPF period in line tourism development; vi) regional water management; with expressed country demand for WBG services. Given and vii) financial integration. The outbound knowledge the rapidly evolving nature of the Bank’s RAS partnership sharing of Thailand’s successful development with Thailand, the results framework may be significantly experience may focus in areas such as of debt and revised to incorporate emerging country priorities at the aggregate fiscal management, energy and national Performance and Learning Review (PLR) stage, while electrification, tax policy and administration reforms, maintaining alignment with the NESDP 12 and the SCD. universal health coverage and bond and capital market The exact timing of the PLR will depend on the evolution development. The scope of this regional and outbound of the WBG program, and may precede the midpoint of engagement, as well as the objectives and expected CPF implementation if needed to enhance alignment results, will be delineated at PLR stage. with the established program and to incorporate lessons learned from completed RAS partnerships. Focus Area 1: Promoting Resilient and Sustainable Growth The Thailand – WBG partnership in the two CPF focus areas is expected to include some activities, still under Technological and demographic change, regional discussion, in support of Thailand’s leadership role integration, and the shift of economic weight in the development and integration of the CLMVT to Asia highlight the importance of improving and GMS region, as well as the sharing of Thailand’s competitiveness of the Thai economy. In fact, development experience. The engagement of the enhancing competitiveness is at the heart of Thailand’s WBG with Thailand in support of regional cooperation, development agenda, aiming to boost the economy primarily by contributing international experience and up the value change through investments, productivity expertise, is expected to focus in areas such as: i) and innovation. Achieving this goal will entail removing trade integration and facilitation; ii) labor migration and regulatory bottlenecks and designing appropriately THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 31 targeted investment promotion policies (tax, grants, and Objective 1: Improve Thailand’s competitiveness and non-tax). Recognizing the importance of this agenda, ease of doing business the Government has already launched the Eastern Economic Corridor as the locus of this transformation, A conducive business environment plays a pivotal role passed the new Competitiveness Enhancement Act, in a country’s capacity to attract private investment, and the revamped investment promotion incentives both domestic and foreign. For the private sector to attract firms using sophisticated technologies, to deliver its full development potential in Thailand, such as nanotechnology, advanced materials and creating markets and applying the MFD principles, the biotechnology. country needs to improve the investment climate for both domestic and foreign investment. After a period of The first of two CPF focus areas centers on partnering stalled policy implementation which resulted in a loss in with Thailand in promoting the economy’s ability competitiveness of the Thai economy (see Figure 6), the to attract higher private investments and maximize Thai Government has restarted the reform momentum financing for development and sustainable growth. to improve the business environment, including by This will be achieved by supporting the implementation facilitating cross-border trade through the introduction of policy and regulatory reforms, catalyzing transport of electronic submissions of customs declarations infrastructure investments through PPPs, and by and updating the electronic data interchange system. building the country’s environmental resilience and Continued trade facilitation reforms will be important sustainability. Thailand has lost the competitive edge to achieve the country’s goal of further improvements it once enjoyed with respect to peers in the region in the Doing Business DTF indicators to support high and elsewhere, largely due to the slow pace, if not value-added investments and growth. standstill, in reform momentum. The current Government recognizes the importance of reforms for Thailand to The CPF envisages continued advisory/RAS work revive high growth and transform itself into a high- to improve the regulatory framework for private income economy, attracting domestic and foreign enterprise by implementing priority reforms identified investments to upgrade its industries and service in the recently completed Doing Business reform sector, foster innovation, and create high memorandum and related private sector diagnostics. value-added jobs. This transformation will require A key element of this engagement will be the substantial investments in terms of both human and modernization and integration of business registration physical capital, and policies and reforms to continue and licensing regimes, including by streamlining improving the business and institutional climate and and fully automating business entry and licensing facilitate and attract those investments. procedures into an integrated online process. This 32 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 online platform is expected incorporate the “submit markets in insurance products by improving access information once” principle to minimize the compliance and affordability of insurance products. This will burden on businesses and improve regulatory be achieved by supporting the implementation of coordination across government. Measures to improve innovative data collection and pricing algorithms labor regulations may be progressively included in which help lower the risk, and hence the pricing, this work. The Bank will also partner to streamline of insurance protection. construction regulations and procedures needed to obtain construction permits by introducing i) a risk- IFC will collaborate with the World Bank to explore based inspections process during the building period; improvements in the fixed line and broadband and ii) a single window for online application and infrastructure in the country. As the global economy approval of construction permits. These improvements is being transformed by the digital economy — where are expected to increase Thailand’s attractiveness to broadband internet is enabling cloud computing, data the private looking to invest in the region. collection and artificial intelligence — it is critical for Thailand to harness digital dividends. Internet-enabled The WBG also plans to support the Government’s technologies can also help Thailand strengthen its broader regulatory reform agenda with advisory engagement in global value chains and extract a services to crowd-in further private sector larger share of value-added. The overall approach of participation, create markets and maximize public IFC’s engagement in Thailand in the ICT sector will resources through increased commercial financing. be on an opportunistic basis, given the solid status of These reforms are expected to improve Thailand’s the ICT space in the country. During this CPF period, standing in global indices and address local constraints the IFC will look to help develop projects targeting faced by the private sector. Areas for CPF engagement an increase in access to affordable and reliable in discussion include improving the performance of broadband services and infrastructure (including the services sector by proposing institutional and shared infrastructure such as telecom towers and data policy reforms to accelerate innovation, promoting centers), as well as developing the digital economy innovative economic zones, procurement with by enabling connectivity, digital government shared technology transfer, human skills for new technologies, platforms, and helping foster a stronger digital intellectual property regime to foster adoption and entrepreneurship ecosystem. This will help Thailand’s R&D, and removing regulatory and competition SMEs become more competitive internationally. obstacles to innovation. Recommendations for reforms will also seek to address gender-specific constraints, Objective 2: Improve financial and fiscal institutions’ including in access to commercial financing and labor policy implementation restrictions for women and LGBTI population. Core economic institutions in Thailand have played With the impacts of the digital revolution, and a critical role in the country’s development in the explosion in opportunities for new avenues past decades, including by promoting macro-fiscal of competition becoming increasingly evident in stability and responsive economic planning, financing Thailand, the WBG will look to harness innovation to transformative infrastructure development projects, accelerate access and affordability to key services. and adequately monitoring the implementation of Insurance protection, for example, has yet to become policies propelling the country’s transition from a low an integral instrument of Thailand’s social safety net to a middle-income country in a single generation. system as it has not kept pace with the country’s However, institutional structures and capacity for economic development; there remains a limited economic and fiscal management are fragmented and supply of insurance products at a time when demand have not transformed fast enough to underpin the is soaring as a middle class grows, household savings formulation and execution of the complex programs grow, and populations age rapidly. A corollary of these needed to support an economy’s transition to high growing segments of society in Thailand is the need income status. For example, Thailand is one of the few to strengthen their access to insurance protection middle-income countries without a fully operational and close the gap in insurance protection. Increasing economic and fiscal framework linked to the budget access to cost-effective insurance protection enables system, and institutional fragmentation has led to the economic effects of adverse events, spanning overlapping and outdated processes and rules across illness and death or disability and natural disaster, agencies. In addition, institutional fragmentation to be mitigated for individuals, households, or among the Office of the National Economic and enterprises. In doing so, insurance plays a central Social Development Board (ONESDB), the Ministry of role in helping people to avoid destitution, protect Finance (MOF), and the Bureau of the Budget (BOB) their assets such as cars, and to pursue high-return has hindered the government’s ability to deliver economic activities and investments. In line with large infrastructure programs in a timely and its IFC 3.0 strategy, IFC will look to create new efficient manner. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 33 The World Bank plans to partner Thailand to Building on the Government’s commitment to improve strengthen public investment management. One the country’s international competitiveness through key area of partnership will consist in elaborating the upgrading of productivity-enabling infrastructure, a medium-term investment plan to facilitate the the WBG will seek to support the design of selected execution of Thailand’s infrastructure megaprojects. public infrastructure investments to mobilize More generally, the World Bank plans to conduct a commercial finance. Investments in urban public functional review of economic and fiscal institutions and transport, mass transit roads (expressways), ports and provide recommendations to strengthen and integrate airports, and water utilities are examples of public economic policy and planning, and enhance capacity investments that may complement or catalyze private for project appraisal. This work will especially focus on investments. When appropriate, the World Bank, IFC, measures for improving public investment management and MIGA will work jointly, integrating financing and system, especially for large projects and including those non-financing solutions. IFC PPP Advisory, for example, planned through a PPP modality. In addition, the CPF is exploring opportunities to develop the infrastructure, will explore opportunities to work with the Government information and security systems to expand U-Tapao to modernize procurement systems in order to International Airport, with an estimated value of US$5.7 strengthen the efficiency of planned infrastructure billion. This expansion will serve to boost tourist investments. Moreover, the IFC is looking at deepening arrivals to Thailand’s eastern tourist destinations such the financial sector through private equity investments as Pattaya and Koh Chang, help establish U-Tapao as and support to institutions for the issuance of green an air cargo and logistics hub for the EEC and ASEAN bonds. Lastly, MIGA could offer its credit enhancement regions, and contribute to address growing congestion products to facilitate institutional and other investors in both Bangkok airports, which are currently operating looking to enter or expand their presence in the country. at full capacity. IFC is also exploring opportunities to provide advisory services to strengthen the Laem The WBG will partner with the Office of the Insurance Chabang Port Project Phase 3 PPP to increase the Commission (OIC) in the implementation of OIC’s port’s handling capacity, estimated at US$1 billion, action plan to ensure Insurance Core Principles and is currently in discussions with the Government compliance. A planned RAS engagement will provide on possibly supporting other infrastructure projects support to: i) enhance the OIC supervisory regimes; ii) in EEC, such as a Digital Park PPP. The expansion of develop a crisis management framework for insurance core infrastructure in the coming years is expected to industry; iii) develop a Reinsurance Strategy; iv) improve make Thailand more attractive to investors by lowering communication with all stakeholders; v) enhance logistics costs, creating opportunities for Maximizing transparency through reviewing the official webpage Financing for Development through productivity- of the OIC; and vi) benchmark the latest development enabling infrastructure investments. on its supervisory regime, especially in the legal and market practice. The WBG will also partner with Thailand to improve the country’s rail and freight transport system. Rail Objective 3: Strengthen the quality of infrastructure Transport in Thailand caters about 7 percent of total investments land inter-city passenger transport demand, and only 2 percent (in tonnage) of domestic freight. The Guided by the MFD principles, the WBG will aim to Government recognizes the importance of improving rail enhance the complementary roles of the public and transport and its mode share, and has requested a RAS private sectors in infrastructure. WBG support will partnership with the Bank to improve Thailand’s railway aim to harness private sector participation, including competitiveness and reduce State Railway of Thailand through utilizing risk-reduction instruments such as (SRT)’s debt, currently at approximately US$5.5 billion. PPPs where possible, in line with Thailand’s economy This includes a diagnostic report on SRT’s performance, and market conditions. This is particularly important which will be benchmarked with other countries, given the Government’s limited resources for competing financial modeling for SRT, and risk analysis, which investment and spending priorities, underscoring the will inform the options and scenarios for reform. importance of private participation in providing the infrastructure that will lead to growth, jobs, shared Climate change posing a significant risk to enterprises prosperity, and climate change objectives. Applying the and households in Thailand calls for scaling up MFD principles will involve identifying and supporting financing of the green economy, and in particular opportunities for increased commercial financing to investments in climate-smart infrastructure. Green maximize the impact of public resources, and seek bonds are an ideal instrument for issuers and investors operational and investment efficiencies through to raise and channel financing for projects that address greater private sector participation. In doing so, it will climate change and other environmental concerns in remain central to ensure value for money, social and Thailand. IFC has been a pioneer of the Green Bond environmental safeguards, affordability and accessibility. market and is one of the largest global issuers of Green 34 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Bonds. During the CPF period, IFC will look to build the importance of adequate water management, on the recent efforts of enabling Thailand’s first green and the Government, academia, and civil society are bond to be issued through TMB Bank by encouraging advancing on several potential approaches to the replication. The TMB Bank green bond is helping foster current challenges, including a proposed Water Act, a nascent climate finance market in Thailand, allows a new Water Resources Management Strategy, a new for mobilization, and therefore more stimulation in Water Resource Management Agency under the Office private sector investment in driving green growth in the of the Prime Minister, and calls for more local control of country. By setting the standard and the benchmark for water resources. In this context, the Bank will partner green bonds issued in accordance with the green bond with Thailand to develop resilience against floods and principles which IFC helped develop, IFC has paved the droughts in the face of climate change, and promote way for other issuers and investors to access financing sustainable and equitable economic development. through this product, at a time when demand for green Through on-going programs on HCFC phase-out and infrastructure and other sustainable investments is high the forest carbon partnership facility, the Bank will also in Thailand, particularly given the country’s vulnerability partner with Government and stakeholders to reduce to the impacts of climate change. A green bond market Thailand’s carbon emissions. in Thailand supports the government’s ambitious target to reduce energy intensity by 25 percent by 2030 from The CPF will explore partnership opportunities to 2005 levels. Aligned to the IFC 3.0 framework, a green further strengthen the sustainability of growth. bond market also helps create markets and increase Thailand’s commitment to the Paris agreement is an private sector investment in green financing, including ambitious objective that would require significant reform for lending in renewable energy, energy efficiency and where a potential WBG partnership is currently being green buildings. explored with the Government. Thailand NDC is to reduce its carbon emissions by 20–25 percent from their 2005 Objective 4: Address climate change and improve levels by 2030. The Power Development Plan (PDP) water resource management for 2015–2036 pledges to increase renewable energy from up to 20 percent of overall power generation from Climate change is expected to significantly increase its current level of 10 percent. This requires reducing rain intensity and variability in Thailand, as well as emission directly linked to the energy sector through vulnerability to coastal flooding and saline intrusion. energy subsidies reform, supporting the development Water security is important for agricultural productivity, of renewables, improving energy efficiency, and urban development, and industrial growth, as well as promoting environmental sustainability. The application for protecting the poor and vulnerable from natural of transformative approaches, such as green growth or disasters and economic shocks. The 2011 floods, the blue economy, will be investigated further to ensure that 2016 drought, and rain intensity variability all show growth does not come at the expense of sustainability. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 35 Box 3. Phasing-Out Hydrochlorofluorocarbons (HCFC) in Thailand As a Party to the Montreal Protocol, Thailand is committed to the phasing out the use of ozone-depleting substances (ODS), particularly HCFC. As the world’s second largest residential air-conditioner (A/C) manufacturing hub, and industry where the use of HCFC-based refrigerants was widespread, achieving this goal in Thailand is closely linked to the use of more environment-friendly refrigerants in the country’s A/C manufacturing sector. Through the HCFC Phase-out Project (HPOP), the Bank partnered with Thailand to phase-out the use of HCFC-22, an ODS, and R-410A, a substance with a global warming potential that is 2,000 times higher than carbon dioxide. In collaboration with Government and the private sector in Thailand and abroad, the HPOP facilitated the transfer of more environment-friendly technology to Thai A/C manufacturers, in particular non-ODS and energy efficient refrigerant components such as HFC-32. Moreover, the HPOP contributed to regulatory changes to facilitate the production and use of HFC-32 based A/Cs in all segments of the Thai market, and the banning the use of ozone-depleting HCFC-22. These successful reforms contributed to a significant reduction of ODS consumption in Thailand from 863 MT in 2013 to 589 MT in 2016. The Bank will continue to partner with Thailand to phase-out HCFC in the foam and air-conditioner sectors. The CPF envisages a continued engagement to facilitate transfer of new inverter technology with lower global warming potential refrigerant, in line with the Kigali Amendment of the Montreal Protocol. Moreover, this new technology is expected to further improve energy efficiency of A/C products and facilitate access to the growing market of higher energy efficient (inverter) air-conditioners. At the same time, the project will strengthen the capacity of technical institutes and service technicians to properly install and maintain air-conditioning units, which is critical to maintain the high-energy efficiency performance of these products. Focus Area 2: Objective 5: Strengthen the social protection and Strengthening Inclusion inclusion of vulnerable groups The second focus area will center on partnering Thailand does not yet have a well-developed social with Thailand to enhance the country’s social and assistance system for the poor. Hence, the CPF would economic inclusion by strengthening targeted contribute to developing the social assistance platform support programs to the bottom 40, informing and delivery mechanisms (e.g. targeting; social registry) education system reforms to increase access to to support the poor, vulnerable and excluded groups, quality education for all, promoting community- drawing on Thailand’s emerging experience and regional driven development in conflict-affected areas, and and global good practice. This would include advisory on contributing to end gender and sex orientation i) system design to link socio-economic population data discrimination. More targeted support for the bottom from various sources; ii) enhancing program eligibility 40 percent and increasing opportunities and access determination; and iii) strengthening the efficiency, to services to excluded groups is an important priority poverty reduction impact, and fiscal sustainability of the for Thailand both to boost shared prosperity, and to social protection system. More broadly, the CPF would help strengthen social cohesion and maintain greater support elaboration and implementation of Thailand’s political stability. Moreover, improved access to and broader social protection policies in areas including closing quality gaps in education is critical to generate pensions and active labor programs, in order to promote the labor skills needed for an innovative and inclusive greater coherence and impact across the pillars of high-income economy. the social protection system. Gender aspects of social protection programs will be given particular attention, such as the importance of engaging of men and boys in the protection schemes. 36 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 The CPF would also contribute to the sustainability of the Government’s program, and the capacity of civil of HIV/AIDS financing and response, focusing on key society organizations in key areas articulated in the new and vulnerable populations. In addition, and as part Southern Border Province Administration and Policy, of the Bank’s engagement with Thailand for the region, including the provision of psychosocial services to the CPF plans to support ASEAN’s priority to address conflict-affected persons. This engagement also plans to all forms of malnutrition, including in sharing Thailand’s include support on enhancing women’s opportunity and experience and expertise in addressing malnutrition with capacity to participate in local decision making, as well as lower-middle income countries in ASEAN, in collaboration addressing grievances of both men and women affected with other partners. The specific objectives and modality by the conflict. of the latter program are still under discussion and will be delineated at PLR stage. The Government has expressed interest in partnering with the Bank in addressing LGBTI discrimination. The Government will draw on the World Bank’s The new Gender Equality Act of 2015 intends to promote Community Driven Development (CDD) experience gender equality and address complaints on gender to strengthen inclusion and increase participatory discrimination, including sexual orientation and gender access to services for those affected by conflict identity based exclusion. However, LGBITI groups continue in the three most southern provinces. Building on to face discrimination in school and in the work place, a sustained engagement in the region over the last in part due to implementation challenges and limited decade, the World Bank will partner with Thailand to Government experience in comprehensively dealing expand CDD investments that enhance the participation with LGBTI discrimination. The CPF plans to provide of local communities in local development activities. capacity-building and share international best practices The approach would also help strengthen the grievance to government agencies and civil society organizations redress mechanism, transparency and accountability involved in addressing discrimination against LGBTI. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 37 Objective 6: Promote quality education for all and the basic education system under the ‘Transformation talent management Thailand’ RAS, including a focus on how regional and gender performance gaps can be reduced to promote Public spending on education in Thailand amounts to quality education for all. more than 4 percent of GDP and accounts for around 20 percent of total government expenditure. Moreover, At the same time, attracting and retaining skilled per student spending on education has risen by nearly professionals will be essential for Thailand to attract 150 percent in constant price terms since 2001, rendering highly innovative industries. In this regard, the WBG Thailand among the leaders in education spending will partner in designing a smart talent management in the world. Nonetheless, the education system’s system that would encourage skilled professionals to performance as measured by standardize tests and PISA move and stay in Thailand, as well as develop labor have remained low and stagnant during the period, with policies to allow the private sector to access the low Thailand falling below OECD and regional averages, as and mid-skilled labor they require through a fair and well as expected scores given the country’s per capita transparent system. income or per student public expenditure, pointing to important inefficiencies of spending. Of greater concern is that about half of the Thai 15-year-old students Implementing the FY19–22 3.4  evaluated by PISA performed below the basic proficiency level in science, reading and mathematics. These Country Partnership Framework outcomes also reflect substantial differences in access to education, with students in rural areas of the North and CPF engagement will be based on a robust large Northeast regions of the country performing far worse RAS-driven ASA program, IFC financing and advisory than their peers in Bangkok and the Central region. services, MIGA guarantees, and the possibility of IBRD financing in case strong Government demand The CPF aims to contribute to identifying and arises. The emerging RAS program for the next 18–24 implementing measures to improve the efficiency and months covers areas such as improving the business effectiveness of education spending and resource environment, strengthening key fiscal and economic allocation, to facilitate the provision of quality institutions, enhancing transport logistics in the railway education for all. The CPF program includes a review sector, improving education and social protection of ongoing spending and other educational resource systems, inclusion of excluded and vulnerable groups, allocation for the Office of the Permanent Secretary and participatory and inclusive processes in conflict- (OPS), Office of the Basic Education Commission (OBEC), affected areas. At this time, the government has also and Office of Vocational Education Commission (OVEC), expressed interest in other areas related to economic, with benchmarking to international good practice social, and environmental areas. These will be and policy options for improving resource allocation, developed futher during implementation of the CPF. The utilization and management. The WBG will also provide provision of IBRD financing is not currently envisioned options for actions to raise school performance with in the near term, but may materialize in case of strong transparency and accountability. Moreover, the CPF Government demand for investments contributing to envisages advice to the government on how to improve inclusive growth and shared prosperity. 38 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Table 3: Completed, Ongoing and Emerging Thailand-World Bank RAS Program Thailand Reimbursable Advisory Services Program A. Completed Doing business reform memorandum Government Agency: Office of the Public Sector Development Commission Completed: April 2017 AMT: 12.5 million Thai baht Technical assistance for secured transactions law and resolving insolvency Government Agency: Office of the Public Sector Development Commission Completed: June 2017 AMT: 17.5 million Thai baht Technical assistance for self-assessment of the Insurance Sector Government Agency: Office of the Insurance Commission Completed: June 2017 AMT: 6 million Thai baht B. Ongoing Technical assistance to manage debts of the State Railways of Thailand Government Agency: Public Debt Management Office, Ministry of Finance Expected Completion: October 2018 AMT: 9.5 million Thai baht Implementation support to Office of Insurance Commission on the self-assessment of the Insurance sector (2 RAS assignments) Government Agency: Office of the Insurance Commission Expected Completion: February 2019 AMT: 10 million Thai baht Enhancing Efficiency and Value for Money of Public Expenditures in the Education Sector Government Agency: Office of the Public Sector Development Commission and Ministry of Education Expected Completion: May 2019 AMT: 4.5 million Thai baht Thailand Project Appraisal Guideline and Procedure Review Government Agency: Office of the National Economic and Social Development Board Expected signing: September 2018 AMT: 3.4 million Thai baht THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 39 Thailand Reimbursable Advisory Services Program C. Agreed Pipeline The Comprehensive Doing Business Reform Action Plan Update with a Data Audit of Paying Taxes, and Secured Transaction Regime, and Insolvency and Creditor Reform Project Government Agency: Office of the Public Sector Development Commission Expected Signing: December 2018 AMT: 30 million Thai baht Driving National Strategy for the Transformation of Thailand • Positioning Paper • Improving Water Management • Enhancing Competitiveness • Social Protection • Skills and Education • Economic and Fiscal Institutions for Thailand-4.0 Government Agency: Office of the National Economic and Social Development Board Expected signing: December 2018 AMT: 30 million Thai baht Building Trust and Confidence in Fragile Communities in Thailand’s Three Most Southern Provinces Government Agency: Front Command Cabinet of the Government Expected signing: November – March 2019 AMT: 5 million Thai baht Technical Assistance for Doing Business Portal GOV: Office of the Public Sector Development Commission Expected Signing: October 2018 – February 2019 AMT: 5 million Thai baht D. Potential (24–48 months) Potential RASs (24–48 months): • Big Data Analytics • Smart Cities and Internet of Things Institute • Thailand Schools Outsourcing Initiative • Renewable Energy • Commercial Reforestation • Water Resources Management • Improving Statistical System • Multimodal Transport and Improving Road Safety • Financial Stability and Improving Savings Cooperatives • Payment System Development for Migrants (Greenback 2.0) • Implementation Support for Education Spending Review • Phase-2 of the Thailand Transformation Proposal • Implementation Support for FSAP Findings 40 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 The knowledge program will strategically respond Strong coordination with development partners and to clear and strong country demand to ensure broad civil society will be ensured by regular consultations ownership in areas that underpin the NESDP 12 and on Thailand’s evolving challenges and the WBG’s the 20 Year National Strategy. The overall aim is to program. Thailand does not receive a significant amount deliver knowledge, informed by the WBG’s international of bilateral development assistance, but engagement experience and expertise, in areas where there is with international development partners has intensified demand from decision-makers and broad endorsement in recent years, including with i) the Organization for from civil society, active consideration of policy or Economic Development and Cooperation (OECD), institutional reform options, and sufficient engagement focusing on governance, transparency and some with government counterparts to guide the work and areas of the competitiveness agenda; ii) the Asian ensure ownership of its results. Moreover, annual work Development Bank (ADB), focusing on infrastructure, program discussions will be established and headed financial development, sustainable development and by the Ministry of Finance and the National Social and regional integration; and iii) the International Monetary Economic Development Board to ensure continued Fund, focusing on fiscal and public investment alignment and timely identification and resolution of management. Consultations with these development implementation bottlenecks. The table above delineates partners have informed the design of the CPF. the envisioned RAS program for the near and medium term. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 41 42 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 4 Managing Risks The overall risk to achieving the development objectives identified for the WBG during the coming CPF period is substantial (Table 4). There are three main risk areas linked to the achievement of anticipated results as outlined in the CPF objectives: 4 Uncertainty in areas of country demand for WBG services. The dynamic nature of a middle-income country like Thailand, a still fragile global economic environment, and a new Government following expected elections in late 2018 may lead to substantial changes in (i) uncertainty regarding areas of future country the areas of WBG engagement during the CPF period, demand for WBG services, particularly in the context as well the intended objectives and results. In other of a fragile global environment; (ii) loss of reform to mitigate these risks, the WBG will conduct regular momentum; (iii) overstretched implementation capacity consultations with the Government, including technical in the face of multiple planned reforms. The risks will agencies, as well as civil society to ensure a continued be monitored throughout CPF implementation, and consensus around priority areas of CPF engagement. mitigation measures and activities will be designed and Flexibility will also be important as a mitigation strategy. put in place. The CPF PLR will be used to adjust the Any changes to objectives and expected results will be partnership framework during implementation in case reflected at the PLR stage, which may precede or follow these risks materialize and obstruct the achievement the CPF midpoint depending on the evolution of the of CPF outcomes. engagement and program. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 43 Uptake of WBG recommendations. The knowledge- Implementation capacity. Thailand’s ambitious driven nature of the CPF, particularly with respect development agenda set out in the NESDP 12 and the to the Bank’s engagement in the country, entails 20 Year National Strategy, both in depth and scope, that achievement of CPF objectives is linked to the may exhaust the Government’s capacity to implement sustained reforms. The strong government ownership the large number of intended reforms needed to and demand that is intrinsic in the nature of RAS achieve the country’s development objectives. The engagements helps mitigate this risk. Moreover, the CPF four-year horizon serves to mitigate these risks, WBG expects to remain continuously engaged with as it provides an adequate timespan to deepen the Government counterparts at the technical and policy Thailand-WBG partnership to the level of sustained levels, aiming to incorporate the political and technical implementation support, which will be an integral feasibility of proposed reforms adequately in analysis part of the CPF program. and recommendations. Table 4: Risks to CPF objectives in Thailand Risk Categories Rating (H, S, M, L) Political and governance S Macroeconomic L Sector strategies and policies S Technical design of project or program L Institutional capacity for implementation and sustainability S Fiduciary L Environment and social M Stakeholders M Other M Overall S 44 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 45 46 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 5 Annexes Annex 1: Thailand Country Partnership Framework Results Matrix Focus Area 1: Promoting Resilient and Sustainable Growth 5 CPF Objective 1: Improve Thailand’s competitiveness and ease of doing business Intervention Logic: Core constraints to enhanced competitiveness of the Thai economy include regulatory and infrastructure bottlenecks, as well as constrained competition in some sectors, particularly services. RASs will aim to support Strategy areas #3 and #6 of the NESDP 12 (2017–2022), which focus on Thailand’s strategy for strengthening the economy and underpinning sustainable competitiveness. Specifically, WBG engagement will support achievement of NESDP Target 3.1.8 – obtaining a higher competitiveness rating (achieve top 25 rating from Institute of Management Development (IMD)) as well as 6.1.2 – achieving 2nd place among ASEAN countries in the World Bank’s Ease of Doing Business ranking by the end of the twelfth national development plan period. CPF Objective Indicators Supplementary Progress WBG Program Indicators • Improvement of • Development of reform New engagement: regulatory framework roadmap for all 10 Doing •Doing Business Implementation Support (ASA) for private enterprise Business Areas •ROSC for Insolvency and self-assessments for as measured by Doing • Evidence-based financial regulators (ASA) Business distance to recommendations •Implementation support for digital economy frontier provided on short, strategy and smart cities initiative (ASA) medium and long-term •RAS Implementation Advisory Services Baseline: 77.44 - activities (IFC - ASA) (DB2018) Investment by IFC in companies bringing to •  - Target: >78.50 scale technology and new business models. (DB2021) Number of business • licenses simplified as measured by minimum 25 percent reduction in Regulatory Compliance Cost. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 47 CPF Objective 2: Improve financial and fiscal institutions’ policy implementation Intervention Logic: Economic and fiscal management in Thailand is constrained by institutional fragmentation and outdated processes. In line with Thailand’s ambitions to become a High-Income Country, RAS and IFC support will aim to strengthen and modernize the institutional framework for financial and fiscal management as relates to the country’s ability to implement transformative projects. Interventions under this CPF Objective will inform and strengthen NESDP Strategy #3 for strengthening the economy and underpinning sustainable competitiveness. Specifically, WBG engagement will support achievement of target 3.2.6: “an increase in the efficiency of the financial sector as a means of supporting economic and social development.” IFC engagement will include focus on deepening the financial sector through private equity investments and support to institutions for issuance of green bonds. CPF Objective Indicators Supplementary Progress WBG Program Indicators • Government implements • Advisory Note on Options Ongoing engagement: medium-term investment for Transformation of Private equity investments (IFC - financing) •  plan in line with the Economic and Fiscal Thailand 4.0 program Institutions New engagement: • At least 1 reform option Self-assessment of IAIS • •Implementation Support to Office of Insurance advised to streamline completed Commission on the self-assessment conducted budget and financial Technical Assistance • in FY17 (ASA) management functions provided •Transformation Thailand: Economic and fiscal implemented institutions for TH-4.0 (ASA) •Improving Public Investment Management guidelines with a focus on project appraisal (ASA) •TA to CGD for improving procurement system under the Procurement Law 2017 (ASA) • Digital finance (IFC) •Deepening financial markets (IFC – financing) 48 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 CPF Objective 3: Strengthen the quality of infrastructure investments Intervention Logic: Attracting higher levels of private investment in Thailand depends significantly on improved soft and hard public infrastructure networks. World Bank RASs and IFC engagements will aim to support Strategy area #7 of the NESDP (2017–2022), which focuses on advancing infrastructure and logistics. Specifically, WBG engagement will aim to contribute to achievement of (i) NESDP Target 7.1 to reduce Thailand’s logistics costs; and (ii) Target 7.3 to improve Thailand’s logistics competitiveness and the efficiency of trade facilitation; to develop further the National Single Window (NSW) system to be integrated and able to handle electronically all information exchanged in the import/export process; to raise the productivity of the logistics workforce; and to increase the efficiency of freight transportation at border crossings that connect to the main transportation network. In line with IFC’s strategy on infrastructure development through direct investment and provision of advisory services, IFC support will focus on developing some of the EEC related infrastructure projects such as the airport and port expansions along with IFC views on development of bankable projects. CPF Objective Indicators Supplementary Progress WBG Program Indicators • At least 1 infrastructure SRT’s performance • On-going engagement: PPPs in the EEC benchmarking analysis •Technical assistance to manage debts of the structured and tendered, and financial modeling State Railways of Thailand (ASA) and implementation completed to inform • Nam Theun 2 Hydropower Project (MIGA) initiated. government policies • First green bond issued toward competitiveness New engagement: by a financial institution and financial •Transformation Thailand: Competitiveness – in Thailand, delivering sustainability of SRT Logistics and Services (ASA) an alternative source • Distributed generation •Developing an M&E methodology for granting of long-term finance for (IFC) incentives and developing skills acquisition for climate-smart projects. All projects above 1 • Thailand 4.0 (ASA) NESDB’s Project • billion baht subject •Implementation support for digital economy Appraisal guidelines to new procurement strategy and smart cities initiative (ASA) revised to include guidelines. •TA to NESDB for improving project appraisal project selection criteria, guidelines (ASA) updated economic • PPP advisory (IFC- ASA) analysis and project • Distributed generation support (IFC) appraisal requirements • Pilot green bond (IFC) THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 49 CPF Objective 4: Address climate change and improve water resource management Intervention Logic: Thailand has comprehensive regulations and policies in place to manage the challenges to the “brown” environment (air, water and waste); key constraints are related to the implementation and enforcement. Regarding water pollution, for example, enforcement of the regulations announced in 2012 stipulating more detailed effluent standards by source, water quality collection and reporting would likely lead to improvements. Enhanced water management is also critical for managing Thailand’s vulnerability to floods and droughts, which are likely to intensify because of climate change. The government, in collaboration with key stakeholders, is exploring several approaches to address current challenges related to water management, including a proposed Water Act and a new Water Resources Management Strategy. In this context, WBG RASs will partner with Thailand to promote integrated sustainable water management and to boost resilience against floods and droughts. WBG engagement will aim to support NESDP Strategy #4 for environmentally-friendly growth for sustainable development and contribute to the achievement of target 2.2 to build water security and management of both surface and underground water resources efficiently. Moreover, the Bank will continue its successful partnership with Thailand to meet HCFC consumption reduction obligations of the Montreal Protocol by developing a follow-on project to address complete phase-out of HCFC in the foam sector. The project will facilitate transfer of new inverter technology with lower global warming potential refrigerant to local air-conditioner manufacturers, in line with the Kigali Amendment of the Montreal Protocol to phase down HFCs. At the same time, the project will strengthen capacity of technical institutes and service technicians in order to proper install and maintain air-conditioning units, which are critical to maintain the high-energy efficiency performance of these products. CPF Objective Indicators Supplementary Progress WBG Program Indicators • Integrated water Case studies of emerging • Ongoing engagement: management planning issues in wetland and •Partnership for Market Readiness, HCFC informs NESDP-13. lake management Phase-out • Reduction in HCFC completed • Forest Carbon Partnership Facility emissions Report on selected • issues related to floods New engagement: - Baseline: 834 Ozone and droughts in Thailand Transformation Thailand: Water Management Depleting Potential completed. (ASA) (ODP) tons in 2017 Financing provided • - Target: 602 or less ODP under the HCFC phase- tons by 2022 out and Forest Carbon Partnership Facility 50 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Focus Area 2: Strengthening Inclusion CPF Objective 5: Strengthen the social protection and inclusion of vulnerable groups Intervention Logic: Thailand does not yet have a generalized safety net program for the poor. Hence, WBG engagement under this CPF Objective will inform and strengthen NESDP Strategy #2 for creating a just society and reducing inequality.” Through RAS support to strengthen the social protection system in areas such as system design, fiscal sustainability, efficiency and maximizing poverty reduction impact, the CPF will support achievement of the NESDP performance indicator of “increasing the share of insured persons under Social Security Article 40 and the share of national savings fund members relative to the total labor forces.” To further support inclusion, the CPF will contribute to the new Southern Border Provinces Administration and Development Policy (2017–2019), which aims to strengthen participation of communities, civil society organizations and vulnerable groups in peace building efforts in the sub-national conflict in Thailand’s three most southern provinces. Under this CPF, the WBG will partner with the government to enhance inclusive participatory community development, and to promote state and civil society relations in addressing grievances and improving livelihoods, especially for victims of violence. CPF Objective Indicators Supplementary Progress Indicators WBG Program • Social protection system  iagnostic of Social Protection •D New engagement: reformed to provide Policies, Programs and Delivery  ransformation Thailand: Social •T strengthened support Systems completed Protection (ASA) to the non-elderly poor •T  echnical Note on Options  esigning the scaling up the •D with enhanced program and Recommendations for Community Driven Development eligibility determination Strengthening Thailand’s Social Approach (CDD) and strengthening the Protection System delivered and government’s development programs - Baseline: No unified discussed. in conflict affected areas (ASA and central registry in place  dvisory note on the design of •A Korean Trust Fund) that could be used for CDD project in conflict-affected  ddressing LGBTI Discrimination •A targeting programs areas completed, including Capacity-building (ASA) (2017) operations manuals and CDD - Target: Government related training stressing women launches a social participation in decision making at protection program with the village level. targeting mechanism  ivil society training completed, •C based on a unified and state-civil society policy database (by 2022) dialogues conducted on key issues that would address • Government supported grievance among people affected CDD project is by the conflict, including at least implemented in the one focused on women affected majority of villages in by the conflict. conflict-affected areas, nternational experience and •I incorporating measures advisory on key gender and which strengthen gender SOGI issues shared, including inclusion. with the Government’s Unfair Discrimination/Complaint - Baseline: CDD program Committee. covers 43 villages  wareness on gender equality, •A (2017) and sexual orientation and - Target: CDD program gender identity increased among expanded to at least relevant government agencies, 100 villages by 2022 (as measured by the number of Government staff trained, disaggregated by gender). THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 51 CPF Objective 6: Promote quality education for all and talent management Intervention Logic: Although public spending on education in Thailand accounts for some 20 percent of public expenditure and 4 percent of GDP in Thailand, the performance of the education system is relatively low as measured by standardized tests. Student performance on the Program for International Student Assessment (PISA) has also fallen behind averages for neighboring countries and the OECD; expected performance based on Thailand’s per student public expenditure is also low, pointing to inefficiencies in spending. WBG RASs will contribute to identifying and implementing measures to improve expenditure and other education resource allocation efficiency through a review of spending and resource allocation for key institutions, benchmarking against international experience, and outlining policy options for improving resource allocation, utilization and management. WBG engagement will aim to support NESDP target 2.2 to enhance the accessibility of basic social services. At the same time, attracting and retaining skilled professionals will be essential for Thailand to attract highly innovative industries. In this regard, the WBG will partner in designing a smart talent management system that would encourage skilled professionals to move and stay in Thailand, as well as develop labor policies to allow the private sector to access the low and mid-skilled labor they require through a fair and transparent system. CPF Objective Indicators Supplementary Progress WBG Program Indicators • Action plan to improve • Education spending Ongoing engagement: the cost effectiveness in review conducted, • Education Spending Efficiency RAS (ASA) education developed and and recommendations • Quality Education for All (ASA) implementation started: provided to improve resource efficiency New engagement: - Numbers of larger and management Transformation Thailand: Skills and Education • schools established in education, based (ASA) to improve learning on international best Spending Review of Office of the Permanent • quality: practice Secretary (OPS), Office of the Basic Education • Recommendations Commission (OBEC), and Office of Vocational • Less than 10 in 2016 provided to inform the Education Commission (OVEC) (ASA). • More than 300 by 2020 development of skills Developing an M&E methodology for granting • • Skilled professional acquisition for Thailand incentives and developing skills acquisition for scheme for at least 3 priority sectors. Thailand 4.0 (ASA) professional streams to support Thailand 4.0 developed and implementation started No professional scheme - (2017) At least 3 professional - schemes (2022) 52 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Annex 2: Summary note of country gender assessment in Thailand The 2016 United Nations Human Development Through the advocacy of the women’s movements, Report ranked Thailand 87th out of 188 countries in the women have gained more legal rights. Many the Human Development Indicator (HDI), and also discriminatory laws were amended. Equal education and at 87th in the Gender Inequality Index. Thailand employment opportunities, access to all government has progressed well in reducing gender inequality. jobs and legal rights to sign the contracts among others By 2004, it had achieved the international targets were made possible. Amendments of family laws now set for the Millennium Development Goals (MDGs) in allow women to choose and use their maiden names or poverty, hunger, HIV/AIDS and gender – more than a adopt the husband’s family name. They are also free to decade ahead of the 2015 schedule. Notwithstanding use either the title, Miss or Mrs. both after marriage and this progress, certain aspects of gender inequality still divorce. Marital rape is also now criminalized. persist and demand to be addressed. The following sections summarize key gender issues in Thailand. With the much-improved gender equality women These issues are inter-linked at multiple levels and can play an integral role in all aspects of national produce multiple outcomes. development. However, traditional values and customs have still ascribed a subordinate position to them in Thailand’s constitution guarantees equal rights of social hierarchies. The following analysis presents men and women. The current constitution specifies gender issues in Thailand in four dimensions: (i) that women and men have equal rights and allows endowments, (ii) economic opportunities; (iii) voice and for positive discrimination on the basis of sex agency and (iv) emerging areas of development and along with other determinants. Gender Equality Act growing risks. was promulgated in September 2015 to provide protective measures for those subject to unfair gender discrimination, and further prevent such discrimination. The definition of discrimination is also wide enough to recognize gender diversity, enabling LGBTI people to bring claims under the Act. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 53 (I) ENDOWMENTS or not. They face lost opportunities, single motherhood and no or low paid work, as well as the denial of Health basic human rights, including abortion options, and incomplete education.15 Much progress has been achieved in terms of health as illustrated in key health indicators. Life expectancy Education for both sexes has increased over the years. The maternal mortality rate per 100,000 live births has Overall enrollment rates in the school system have dropped from 25 in 2000 to 20 in 2000 in 2015.8 been rising steadily and with the expansion of Numbers of births attended by skilled health personnel educational opportunities, the ratio of female net in 2012 were 99.6 percent. A steady decline in the enrollment is high at all levels. In fact, the traditional under 5 mortality rate has been witnessed. The rate gender gap has reversed at the upper secondary was 13 per 1,000 live births in 2016.9 Child wasting and school and tertiary level with female enrollment now overweight are both on the rise according to latest data, surpassing that of males. between 2006 and 2012, wasting increased from 5 percent to 7 percent, and overweight from 8 percent to Although the gender gap was closing, there are 11 percent. While stunting is below the regional average, inherent inequalities. Unequal opportunities exist 16.3 percent (2012) of children under the age of five are among poor families living in remote areas and stunted and this is an increase from 2006.10 various ethnic communities where children still do not attend schools. In 2014, about 380,000 children HIV and AIDS is still a major public health problem. of primary-school age were still out of school and 52 In the ADB‘s Country Partnership Strategy, 2013–2016, percent of those were girls.16 In addition, it is estimated Thailand ranks second highest in Asia, after China.11 that 60 percent of migrant children are not attending The estimated number of people living with HIV in 2016 school. In addition, in terms of skill and learning was 450,000.12 Prevalence rate of HIV among adults outcomes, Thailand follows the global gender gap aged 15–40 is 1.1 percent of the total population in that in relation to Science, Technology, Engineering, and age group. The number of new HIV infections in 2016 Mathematics (STEM) graduates where women still was 6,400. An alarming scenario is the infection rate of remain under-represented. young women, aged 10–18 which is twice that of young men.13 Intimate partner transmission of HIV was about (II) ECONOMIC OPPORTUNITIES: 36 percent. Women have reported limited negotiating power for safe sex particularly in married couples as Women represent 45.7 percent of the labor force, perception of trust in the male partner’s fidelity and there is still a wage gap between men and is undermined. women.17 Over the past three decades, female labor has shifted from the agricultural sector to the While the overall birth rate is decreasing, the non-agricultural sector. Men and women are engaged numbers of women under 20 giving birth have been in the manufacturing and services industry almost increasing. An average of 355 women under the age equally, however women are concentrated in certain of 20 give birth in Thailand every day, 10 of whom are areas such as the health and service sectors. The wage younger than 15 years old. In 2012, the ratio of female growth has been faster for female workers which could adolescents under 15 giving birth was 53.8 per 1,000 be related to the increase in their skill level, however girls compared to 31.1 to 1,000 in 2000.14 This means the average wage for women remains lower than more than 10 percent of all adolescent girls in the for men. The ratio of the estimated earned income country are mothers, whether parenthood was intended between women and men was 0.78 to 1.00.18 8 WHO, 2015. 9 WHO, 2014. 10 UNICEF 2016. WB Data. 11 ADB 2016. 12 ADB 2016. 13 WHO 2014. 14 According to public health statistics compiled by the Department of Health, there were a total 801,737 births in 2012. Of that number,  129,451 mothers were teenagers aged 15–19, out of a total 2.4 million teens in the same age group. The ratio of adolescents giving birth is 53.8 per 1,000 girls the same age. 15 Motherhood in Childhood: facing the challenge of adolescent pregnancy. State of Thailand’s Population. UNFPA, 2013. 16 UNESCO UIS. 17 World Bank data 2017. 18 World Economic Forum, 2016. 54 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Over 40 percent of SMEs in Thailand are operated is better in the business sector where 38 percent of by women, however, such businesses tend to be executives were women in in 2014. smaller than those owned by men.19 Women-owned SMEs tend to concentrate on offering services In terms of political participation, women’s while male owned SMEs are more likely to be in the participation in national and sub-national politics has manufacturing, mining, and utilities industries. Women been low. At national level, only 16 percent of senators still faced constraints in terms of lacking relevant skills, and members of parliament were women after the limited access to trainings, managerial experiences 2014.22 The proportion of women at the ministerial level and networking opportunities. was 11.1 percent in 2016.23 There was only one female cabinet member in 2017. The numbers are lower for Lesbian, Gay, Bisexual, Transgender and Intersex local level politics. In 2012 women elected into offices (LGBTI) persons face discrimination in all dimensions formed only about 12 percent at provincial level, 13 of economic and social life, with discrimination percent at municipal level, and about 15 percent at the being highest for transgender people.20 They often sub-district level.24 Low acceptance of female leaders is experience employment discrimination and workplace one of the main barriers for women in the public sector. exclusion, which negatively affects the type of employment and compensation received. Social acceptance of violence (by intimate partners or gender-specific) against women and girls (VAWG) (III) VOICE AND AGENCY is high. Thailand ranks 36th among 75 countries in the incidence of acts of physical violence, and seventh Women’s agency (voice and influence) has made very among 71 countries in sexual violence.25 The first ever slow progress. The proportion of women in executive population-based Survey on Domestic Violence against positions has improved slowly. For government Women in Thailand conducted by WHO in 2000–2003 services, the number of women executives at the level reported physical or sexual violence by an intimate of department head was 15 percent in 2004 and 20 partner at 41 percent (from a sample size of 1,536) of percent in 2015,21 although women formed the majority ever-partnered women in Bangkok and 47 percent in of civil servants (65 percent in 2015). The situation Nakhonsawan. Women characterized such violence 19 Huani Zhu and Carlos Kuriyama, 2016. 20 World Bank (2017). Economic Inclusion of LGBTI Groups in Thailand. 21 Office of the Civil Service Commission, 2015. 22 Office of Women’s Affairs and Family Development, 2015. 23 World Bank data 2016. 24 Local Administration Department, 2014. 25 UN Women Annual Report 2015–2016. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 55 as justifiable under certain circumstances, including percent of transgender, 49 percent gay, and 62.5 negligence in housework or childcare, refusing sex, percent of lesbians said their job applications were disobeying husbands, or being unfaithful. While the refused because they were LGBTI. In the workplace, percentage of women in agreement with each of 40 percent of transgender respondents experienced these justifications may vary widely, there is very little harassment or were ridiculed, and 22.7 percent of gay disagreement about a husband’s right to subjugation.26 respondents were not promoted because they were Although the Domestic Violence Act (2007) does LGBTI. The impacts on these individuals are significant provide legal protection in such cases, response not only on their income and career, but also on their coordination for full implementation with gender psychological and emotional well-being. More than half sensitivity remains a challenge. of all LGBTI respondents report emotional problems, including depression, anxiety, and frustration, because A significant proportion of lesbian, gay, bisexual, of discrimination or exclusion in the labor market. transgender, and intersex (LGBTI) individuals are victims of discrimination and violence. Thailand (IV) EMERGING AREAS AND GROWING RISKS has ratified the landmark resolution on human rights violations based on sexual orientation and gender Emerging trends present different challenges for both identity (L9/rev1 2011), together with a number of men and women. As highlighted in SCD analysis, other United Nations human rights resolutions and Thailand is facing a rapid demographic transition to conventions.27 Despite the common perception that an aging society. The elderly population (aged 60 and Thailand is relatively progressive in the recognition up) is increasing in Thailand.29 In 1980, 5.5 percent of of Sexual Orientation and Gender Identity (SOGI), the total population was elderly. In 2014 , 15.3 percent LGBTI people still face discrimination in the Thai of population of Thailand was aged over 60. It is now society. Many dimensions of economic and social life estimated that 32.1 percent of the total population discrimination were reported according to a research (around 17 million, or a quarter of the population) will on Economic Inclusion of LGBTI Groups in Thailand.28 be elderly by 2040. With this increase in the elderly Significant numbers of LGBTI participants in the survey population, Thailand will witness a steady decline of report discrimination in accessing jobs, government people of working age – from 67.9 percent in 2012 to an services, education or training, health services as estimated 52 percent by 2040 – the highest among all well as buying or renting property. As many as 77 the East Asia and Pacific countries, including China.30 26  HO Multi-country Study on Women’s Health and Domestic Violence Against Women. Thailand Country Findings. 2005. http://www. W who.int/gender/ violence/en. 27 ISHR (2011) Historic decision: Council passes first-ever resolution on sexual orientation & gender identity. International Service for  Human Rights. 17 June 2011. Retrieved 14 March 2014 from http://www.ishr.ch/ news/historic-decision-council-passes-first-ever- resolution-sexual-orientation-gender-identity#Votes. 28 World Bank, (2018). Economic Inclusion of LGBTI Groups in Thailand.  29 Refering to people aged 60 and above. Reference have been taken from the paper: The Situation of Thailand’s Older Population. An  update based on the 2014 Survey of Older Persons in Thailand. Population Studies Center Research Report 15-847 October 2015. 30 www.worldbank/en/country/thailand/publication/thailand-economic-monitor-june-2016-aging-society-and-economy. 56 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 The effect of aging is more profound on women. GOVERNMENT’S PRIORITIES AND COMMITMENT Women in Thailand, as elsewhere, live longer than TO GENDER ISSUES men (to an average age of 74, versus 66 for men) and have access to fewer resources, including Much effort has been made in Thailand by the inheritances. Recent research found that while the government, NGOs, and women’s movements majority of elderly men continue to earn their income to reduce the gender inequalities gap. The Thai from employment (including farmers), the main income Constitution guarantees equal rights of men for elderly women are from children and elderly and women. In addition, the subsequent Gender allowances, which are often not sufficient. In addition, Equality Act (2015) was enacted to prohibit gender elderly women are more likely to become heads discrimination. International obligations such as of household (widows) and have to provide care to the Convention for the Elimination of all kinds of grandchildren while relying on limited sources of care Discrimination Against Women (CEDAW), Millennium and support. While the Thai government is revising Development Goals (MDGs), Sustainable Development its policies to better respond to its aging population, Goals (SDGs), and action plan of the ASEAN gender aspects must be considered to ensure that Committee for Women, have all been instrumental to future policies and social protection programs respond the narrowing of gender inequality in Thailand. Civil sufficiently and effectively to the needs of elderly men society groups have also made strong contributions and women. to improve gender equality in Thailand, either by themselves or through partnerships with national As the conflict-related violence in the southernmost machinery. Women’s movements too have been provinces of Thailand continues, the impact on men strong and produce many positive changes in society. and women grows. In Thailand’s southern border provinces, men make up the majority of casualties in the For the national policy and plan, the Women’s century-old conflict fueled by Malay-Muslim grievances Development Plan under the 12th National Economic against the Thai State, which entered its latest phase and Social Development Plan (2017–2021) was of protracted violence in 2004. In terms of proportion, issued. Based on the challenges identified in the however, women experience a higher percentage (80 implementation of the 11th Plan, the 12th Plan has percent) of deaths from separatist violence. A significant outlined 5 strategies: (1) creating a paradigm shift number of women are killed by bomb explosions in in the public perception on gender equality; (2) public spaces and other incidents of violence.31 In empowering women at all ages; (3) developing addition, conflict impacts women in a combination of fair and effective enabling conditions for women ways over an extended period, including domestic development; (4) developing comprehensive violence, emotional trauma, negative health outcomes, protective and corrective measures for violence and economic hardship. survivors; (5) strengthening mechanisms for women’s development. While the overall birth rate is decreasing, the numbers of women under 20 giving birth have been To support the implementation of gender agenda, increasing. In the Thai context where there is a social institutional mechanisms have been created at stigma, pregnant teenagers are more likely to drop parliamentary, ministerial and agency levels. At out of school which results in lost opportunity and an the parliamentary level, standing committees are increased financial burden on society through child overseeing the review draft legislation and are health care, foster care and welfare assistance. The conducting studies to find solutions for women, youth, government issued the Prevention and Solution of the the elderly, and disabled for both Senate and the Adolescent Pregnancy Problem Act that came into House of Representatives. At the ministerial level, the effect in July 2016, which states that all young people government appoints the National Commission on the between 10–19 years of age must have access to Policy and Strategy for the Improvement of the Status service and information on sexual and reproductive of Women, chaired by the Prime Minister. The Office health. This enables pregnant teenagers to access of Women’s Affairs and Family Development of the proper care and support and remain in school. Ministry of Social Development and Human Security Occupational training and support is also available is another key coordinating mechanism for women to teen mothers. advancement and gender equality promotion. 31 Understanding Violence in South East Asia. Barron, Engvall and Morel. July 2016. The Asia Foundation. THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 57 Annex 3: Operations portfolio (IBRD/IDA and Grants) Closed Projects 129 IBRD/IDA* Total Disbursed (Active) of which has been repaid (1) Total Disbursed (Closed) 8,259.02 of which has been repaid 8,301.92 Total Disbursed (Active+Closed) 8,259.02 of which has been repaid 8,301.92 Total Undisbursed (Active) 1.66 Total Undisbursed (Closed) Total Undisbursed (Active + Closed) 1.65697533 Active Project Difference Between LastPSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursementsa Development Fiscal Frm Project ID Project Name Implementation IBRD IDA Grants Cancel. Undisb. Orig. Objectives Year Rev’d P115761 TH-HCFC S S 2014 0.0 0.0 23.9 0.0 7.7 0.0 0.0 Phase-out Project (Phase I) Overall Result 0.0 0.0 23.9 0.0 7.7 0.0 0.0 *Disbursement data is updated at the end of the first week of the monrh. a Intended disbursements to data minus actual disbursements ta date as projected at appraisal. 58 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Annex 4: Recent World Bank completed and active ASA Lead GP/Global RAS ACS - FY Task ID Task Name Resp. Unit Themes (Y/N) 2014 P117121 Thailand: #8119 Enhancing SEC GFMDR Finance & Markets N Audit Assessment Capacity 2014 P124623 Thailand Country Development GTIDR Transport & ICT N Partnership for Sustainable Development 2014 P128838 Thailand CG ROSC Implementation GFMDR Finance & Markets N & Supervision 2014 P132563 Thailand CDP-G 2013 GGODR Governance N 2015 P132293 TH: Broadband for Accelerated GTI09 Transport & ICT N Rural Dev. 2015 P143563 Thailand Country Development GED02 Education N Partnership for Human Development (FY2013–2015) 2015 P145112 Solvency Modernization & Risk- GFM08 Finance & Markets N Based Capital for the Insurance Sector 2015 P146230 Analysis of basic education system GED02 Education N 2015 P146231 Graceful Transition to an Aging GHN02 Health, Nutrition & N Society Population 2016 P153077 Thailand Programmatic Poverty GPV02 Poverty and Equity N AAA 2016 P156296 Poverty and Inequality Analytics GPV02 Poverty and Equity N 2016 P156297 Technical Assistance on GPV02 Poverty and Equity N Measurement 2016 P160360 Thailand Economic Monitor 2016 GMF02 Macro Economics & N Fiscal Management 2017 P162118 Support to the Government GTC02 Trade & Y of Thailand on Improving the Competitiveness Environment for Doing Business 2017 P162150 Thailand Secured Transactions & GFM08 Finance & Markets Y Insolvency Legal Reform Project 2018 P158457 Programmatic Thailand Economic GMTP1 Macroeconomics, N Monitor Trade and Investment THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 59 2018 P164278 Improving Thailand's Railway GTD02 Transport & Digital Y Sector Competitiveness Development 2018 P164943 Supporting Gender and Social GSU02 Social, Urban, Rural N Inclusion in Thailand and Malaysia’s and Resilience Country Programs Global Practice 2018 P161408 Reimbursable Advisory Services to GFM09 Finance & Markets Y conduct a guided self-assessment against the full set of Insurance Core Principles Project 2018 P124554 Economic Inclusion of LGBTI GSU06 Social, Urban, Rural N Groups in Thailand Study and Resilience Global Practice 2019 P164651 Enhancing Efficiency and Value for GED02 Education Y Money of Public Expenditures 2019 P166198 RAS for Preparing A Community GSU02 Social, Urban, Rural Y Driven Development Project and Resilience for Conflict-affected Areas in Global Practice Thailand's Deep South 2019 P166803 Thailand Project Appraisal GTD02 Transport & Digital Y Guideline and Procedure Review Development 2019 P166911 Transforming Thailand National GMTP1 Macroeconomics, Y Strategy RAS Trade and Investment 2019 P166922 Prepare a Crisis Management GFCPN Finance, Y Framework, Integrated Supervisory Competitiveness and Framework and Reinsurance Innovation Strategy for the Thai insurance 2019 P167006 Advisory Assistance to Enhance GFCPN Finance, Y Public Disclosure and Support Competitiveness and Compliance with International Innovation Standards in the Insurance Sector 60 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Annex 5: Statement of IFC’s committed and outstanding portfolio Com- LN LN ET QL+QE GT RM ALL ALL LN ET QL+QE GT RM ALL ALL mitment Institution Rapay Cmtd Cmtd Cmtd Cmtd Cmtd Cmtd Cmtd Out Out Out- Out Out Out Out Fiscal Short Name ment - - IFC -IFC - IFC - IFC - IFC - IFC - Part -IFC -IFC IFC -IFC -IFC -IFC -Part Year IFC 2012 BMUL RSE 0 0 0 0 0.07 0 0.07 0 0 0 0 0.02 0 0.02 0.00 2012 Conti Auto 13.33 28.57 0 0 0 0 13.33 0 13.33 0 0 0 0 13.33 0.00 Thai 2013/ Lakeshore I 0 0 15.00 0 0 0 15.00 0 0 8.07 0 0 0 8.07 0.00 2016 2007 Lombard 0 0 5.25 0 0 0 5.25 0 0 0.01 0 0 0 0.01 0.00 Asia III 2012 Lombard Asia 0 0 17.78 0 0 0 17.78 0 0 8.26 0 0 0 8.26 0.00 IV 2012 SRF Thailand 15.00 21.00 0 0 0 0 15.00 0 15.00 0 0 0 0 15.0 0.00 TMB Bank RSF 0 0 0 0 70.66 0 70.66 0 0 0 0 59.71 0 59.71 0.00 Total 28.33 49.57 38.04 0 70.73 0 137.09 0 28.33 16.33 0 59.73 0 104.39 0.00 Portfolio Annex 6: MIGA’s outstanding guarantee exposure Investor Effective Expiration Name Investor Business Project Maximum Date Date (Guarantee Country Sector Name (US$) Holder) 06/14/2005 06/13/2025 BNP Paribas France Infrastructure Nam Theun 2 38,090,285 38,090,285 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 61 Annex 7: External country partnership framework consultations in Thailand Date Participants Location March 23-24, 2017 Central government Pattaya May 2, 2017 Civil society Bangkok Civil society, private sector, academia, and May 18, 2017 Songkhla local government Civil society, private sector, academia, and May 24, 2017 Khon Kaen local government May 31, 2017 Development partners Bangkok Civil society, private sector, academia, and June 14, 2017 Chiang Mai local government 62 THAILAND – WORLD BANK GROUP COUNTRY PARTNERSHIP FRAMEWORK 2019-2022 Contact Us World Bank Thailand 30th Floor, 989 Siam Piwat Tower 989 Rama I Road, Pathumwan Bangkok 10330 Tel: +662 686-8300 Email: thailand@worldbank.org www.worldbank.org/thailand facebook.com/worldbankthailand