Thailand has been developed for over four decades and the living conditions of the poor have been improved considerably during this period.1 During the economic take-off period of 1951 to 1986, the growth rate of Thailand was 4.0 percent and during the boom period of 1987 to 1996 it was about 8.0 percent. However, in the crisis period of 1997 it was -7.0 percent and during the subsequent recovery period of 1999 to 2003 it was 3.3 percent. Thus, in terms of GDP growth, Thailand has developed over the period after 1951 with a set back during the financial crisis of 1997. 2
Although there has been an overall development of Thailand's economy, an inequality of development among the regions still exists. For instance, the northeastern and northern regions are agricultural with the farming population overall being 38 percent of Thailand's 65 million people (according to the 2005 census). Even in the poorest regions of the northeastern and northern parts of Thailand, the ratio for overall income has improved in the period of 2001 to 2005. During this period the Total Export Value of agricultural products increased 8 percent from Baht 533 billions to Baht 704 billions.3 As the income of farmers increases, the poverty in these regions decreases steadily.
Poverty reduction projects were politically motivated under Prime Minister Thaksin Shinawatra’s government from 2001 to 2006. After Thaksin was elected in 2001, he established populist policies such as universal health care, village fund projects and the One Tambon One Product (OTOP) project in order to appeal to the poor farmers from the northeastern and northern regions. These areas thus became Thaksin's political stronghold - even after he was no longer in power. Because Thaksin's poverty reduction projects were effective, the local population in these areas – primarily farmers - became devoted Thaksin supporters.
Early Stage of Poverty Reduction Project
Thailand's Poverty Reduction Projects were started under the government of Chuan Leekpai in 1998. During the Eighth National Economic and Social Development Plan for five years (1997-2001), the government started a people-centered strategy for the reduction of poverty. It started with the decentralization of political structures. The main intention of this decentralization process was to reduce the inequality among the different regions of Thailand which is the main barrier for the reduction of poverty in the northeastern and northern regions.4 Under this decentralization process, each sub-district, or Tambon, is allowed to expense its revenue in local development projects, such as roads, water, sewerage, and garbage disposal.
The National Social Policy Committee, chaired by the Prime Minister, was set up at the same time as an immediate response to the needs of vulnerable groups hurt by the financial crisis. It also gave the communities a lead for deciding how to allocate funds for the development of the community and rural area. The decentralization process and alleviation of inequality among the Thai people wasn't successful, however, under the Chuan Government. Contributing to Thailand's challenge of poverty reduction was a lack of social support for vulnerable groups left out of the benefits of economic development. The Chuan Government therefore also created the Social Investment Fund, backed by the World Bank, the Japanese government and the UNDP. The Social Investment Fund assists the poor by creating jobs and providing social services.5
Thailand's 1997 constitution for the first time provided basic laws for the accountability of state officials in dealing with rural development projects. Local officials are also more independent from the Ministry of Interior and newly independent National Counter Corruption Commission (NCCC ) was set up with prosecutorial power. Although there was such institutional reform for the Poverty Reduction projects, the result still lacked progress for poor families in rural areas. While the Chuan government's intention for the alleviation of poverty was true, it failed to effect poor families. It wasn’t until billionaire turned politician Dr. Thaksin Shinawatra came into power, through unanimous vote from the rural poor in 2001, that things began to change.
Thaksin's era of Poverty Reduction
As the real cause of Poverty in Thailand is inequality rather than poverty itself, Thaksin's populist policies tried to address this issue. He established a universal health care system, village fund projects and the One Tombon One Product project (OTOP). These projects are targeted at helping the poor. For example, the village funds are available for poor farmers for reinvestment of their household products, supplementary income is received by investments from the village funds, and they are entitled to access the universal health care scheme, locally called thirty baht scheme because it costs only thirty baht for health care service in every public hospital.
It seems that these populist policies are directly affecting the poor families of Thailand, especially in the northern and northeastern regions. Therefore, the people from these areas became devoted supporters of the Thaksin government from 2001 to 2006. In fact, the income of rural population increased throughout these years. According to the World Bank, the poverty rate dropped by nearly half, from 21.3 percent to 11.3 percent.6 However, the critics of Thaksin's polices argued about un-sustainability of Thaksin's populist policies in the long term. Although these policies created an increase of income in rural households, it will also lead to increases in public debt in the long term.7 Thaksin's policies therefore lack vision for a long-term strategy, such as investing in education, on-job training and skill development projects.
Because of Thaksin's populist policies, 54.6 billion baht of public debt was incurred after the Thaksin era. From this, 18 billion went to cover a rice-price intervention scheme by the Bank for Agriculture and Agricultural Co-operatives (BAAC); 7.7 billion went to pay for the 30-baht universal healthcare scheme; 7.1 billion went to boost rubber prices; 8.8 billion went for salary hikes to teachers; and another 13 billion was for the village fund.8 Most of these funds disappeared and the poor farmers could not afford to pay back most of them. They therefore demanded debt forgiveness on a regular basis and the state lost lots of money due to Thaksin's populist policies. However, his Thai Rak Thai party, now defunct and reincarnated as People Power Party, gained a lot of benefit from the populist policies because the northeastern and northern regions became strong political bases of Thaksin's party.
Thailand's Poverty Reduction Strategy
There are five different parts of the Poverty Reduction strategy in Thailand. The first is Pro-poor Microeconomic management. It includes village fund projects, OTOP projects and other soft-loan projects for the poor. The second component of this strategy is Capacity Building. It intends to bring all children at school-age to the compulsory education in Thailand and provide other training, including workshops and seminars for skill development of rural poor. The third part is the Social Safety Net strategy. This includes the universal health care scheme, a welfare program for elderly people and a social security fund for salaried men and women. The fourth part is a Natural Resource Management strategy. This covers water resource management, land settlement, and a land reform scheme. The last part is the Restructuring of Public Administration which is the decentralization process of Thailand's administration structure, giving the community a lead for poverty reduction of owned community. 9 From these five components of the Poverty Reduction Plan, Thaksin's populist policy covered only two of them, Pro-poor Microeconomic management and Social Safety Net of Universal Health Care.
The most important part of this plan is the last one, however, which is the Restructuring of Public Administration. In other words, community organizing for poverty reduction in the rural areas of Thailand. Under this strategy, the community needs to develop its owned poverty reduction plan. Further, the members of the community need to participate in the process of developing a plan. They also have to be self-reliant and local resources and wisdom need to be cultivated. The philosophy is that the community knows what’s best for poverty reduction and that the role of outsiders, like government agencies and non-governmental organizations, is to facilitate the local strategy.
Without a self-reliant sprit of the community for reduction of poverty, other components of the strategy are deemed ineffective in the long term because micro or macro intervention is wasteful. If the community is not strong enough to manage their plight for poverty, outside assistance will have no result at the end of the day. Thai government and state agencies need to place an emphasis on community development projects as the first priority of poverty reduction schemes. After that, the decentralization process should be in place with the community taking the lead role for the sustainable development of rural population.
From Poverty Reduction to Sustainable Development
Thailand is now in the Tenth National Economic and Social Development Plan, from 2007 to 2011. As a basic strategy of this Tenth National Economic and Social Development Plan, Thai society needs to be developed as a knowledge based society and the potential of the people needs to be cultivated. Further, the plan includes community empowerment, the promotion of social justice, education, and the maintenance of cultural diversity. Economic restructuring is included in order to create sustainable growth and competitiveness. There are also plans to develop biological diversity and to regulate the use of the country's national resources and environment. Finally, there are plans to promote the principle of good government in Thailand's political arena.10
The overall strategy of this tenth five year plan is to draw the Poverty Reduction plan toward the sustainable development of Thai society. Therefore, the Thai government needs to move sustainable development beyond the realm of populist policies, simply designed to draw attention from the electoral base. In order to achieve this, a long term plan is necessary for the education sector of the poor regions. To escape from rural poverty, the population needs to be educated and the necessary skills are required in order to mee the demands of an industrialized economy.
Of Thailand's ten successive development plans, the past eight were prioritized on the industrialized sector of the country. From the ninth plan, it started to look at rural development projects. Under the Thaksin administration, rural development projects became a tool to fulfill his political ambition. In reality, Thailand's rural development projects are yet to be completed and work has to progress from poverty reduction to the sustainable development of rural areas.
If the current Thai government lacks this vision and attempts only to appeal for votes in these areas, poor farmers will not escape from the poverty. However, current political instability in Thailand means that the government cannot focus on rural development projects as its main task at the moment is to win the political battle on the streets of Bangkok. As long as this situation continues, the National Economic and Social Development is meaningless for sustainable development of the rural areas. If the current situation continues too long, at the end of the current five year plan in 2011, Thailand will not be able to compete with other regional economies such as Malaysia and Vietnam.
Conclusion
Thailand's economic development during the past four decades is quite impressive in relation to other countries in the region. According to a survey, Thailand's overall poor population has declined during this period. However, this is due to economic growth rather than the state's intervention for this poorest sector of the population. Poor farmers in the northeastern and northern regions have been living under hopeless situations for decades and only under the Dr. Thaksin Shinawastra government could they dream of an escape from poverty. This will remain a distant dream if the government cannot touch upon the sustainable development for the poor regions.
For the real Poverty Reduction of Thailand, a two-part strategy is necessary. The first part is to restore the economic development into the pre-crisis level. Since 1997 financial crisis, Thailand's economic growth rate is less than its pre-crisis level and only under the Thaksin government, the growth rate rose to double the previous year. After Thaksin was removed from power by a coup in 2006, the growth rate fell because of misperceptions by the military government in regards to economic policy. Although Thailand restored its democratic path in 2007, a year after the coup, Thai elected government faced political opposition from the street protests and thus cannot start major projects as outlined by the National Social Policy Committee. Due to political uncertainty, the economic growth has declined and foreign investors hold off on plans for further investment in Thailand. Therefore Thailand cannot attain its pre-crisis level of economic development in near future.
The second part of the strategy is to improve the capacity of government for the delivery of services to rural areas. In past, this rural area was abandoned by the state official and Bangkok based politicians. Therefore, there is a gap between urban development and rural development with most previous governments neglecting to provide for the welfare of rural populations. The government also needs to speed up the decentralization process which will give a greater role to the local community in alleviating poverty. Thailand has a strong political culture of localism and most of the community leaders or Phurai Bans have great leadership skills for the community. For the decentralization process, local participation is very important and government agencies need to be aware that local knowledge is crucial for the success of these projects.
If Thailand can reduce poverty in the northeastern and northern regions, Thailand's current political crisis will also be solved. Thaksin remains a great savior for rural folks and this creates division and disunity among Thai society. Poverty reduction is thus also part of the political solution in Bangkok. Thai elites need to see this point for long-term stability in the country.
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