Thailand is a Southeastern Asian state that endured sixty years of military political governance from 1932 until 1973 when a democratically elected-government assumed office. After the change of governance, the country has been experiencing growing economic growth rate; however the country heavily suffers from unstable balance of payment (BPO).
The economic situation of the country can be pegged to its participation in international trade with exports accounting for two thirds of its gross domestic growth product (GDP). It has seen its GDP grow of 2% in the 1985 to 10.6% in 1996; in 2010, the country recorded an economic growth rate of 8.0% (Roger, Sedghi & Ami, 2011).
This paper explores Thailand’s economic situation; it will also evaluate the major drawbacks that hinder developments like political instability, poverty, minimal investment, low export revenues, and poor infrastructure. At the end, the paper will offer some recommendations on the policies that the government should implement to have sustained economic growth rate.
Political instability
Thailand having been in military rule was affected economically that it remained dragging as other Asian states advanced economically. The end of the military rule, however, did not mark the end of political violence; a state of political uncertainty emerged later on in 1998 where there was a conflict between two parties in contest for power .
The People’s Alliance for Democracy (PAD) and the People’s power party (PPP) were the parties in contest and due to their fighting saw the GDP drop from 10.4% in 1996 to 8.0% in 2010. The uncertainty surrounding the political atmosphere saw low levels of capital investment, lack of foreign aid and lack of production.
If a company’s managers are not confident that the current environment is favourable to business, they will postpone their decisions (World Bank, 2009). When there is high uncertainty about the political atmosphere, investors and business managers tend to worry those changes of government could lead to changes in certain government policies and regulations that affect businesses (Teena, 1997).
Environmental issues
Thailand faces problems with water and air pollution, soil erosion, hazardous waste issues, deforestation, water scarcity and declining wildlife. Water pollution has at its best caused considerable damage to aquatic life in some of the rivers in Thailand. Over a century, Thailand has seen its wildlife population decrease in an alarming rate.
Elephants being considered a national symbol are not an exception since its population too has dropped. Currently, Elephants are estimated to be 2000, while a century ago, they were 10,000. Poachers and hunters in search for ivory, meat and hides have greatly contributed to this decline. A study also has shown that the practice of keeping wild animals as pets has increased their deaths since majority are only adapted to their natural habitat.
Thailand being a growing economy has many developments which have led to large scale deforestation which has destroyed many wildlife habitats. This loss of habitat combined with over fishing, has seen some species of Sawfish become endangered. The environment being a major factor in Thailand’s economy, there is a need to protect it. In 2008, agriculture, forestry and fishing contributed 8.4% percent to GDP and created farm jobs in rural areas (Henri & Steve, 2010).
Health issues
The heath infrastructures of the country are not adequate to meet the demand of the facilities in the economy; there is a deficit of trained personnel and physical infrastructures. Some of the most dominant diseases are Typhoid, dysentery, H.I.V., Malaria, and diarrhoea. Majority were caused by water pollution and in 1999, hospitalization rates were:
The deteriorating health situation in the country has resulted to a country with reduced manpower and one that has higher medical costs (Lindsay, 2000).
Inflation
Inflation in Thailand has had its effect but its impact has not been heavy. But, its consistent increase has become of concern and its adverse affects on growth. After the Asian crisis, Thailand has taken major steps to boost its growth but its saddening to note that inflation has risen as the growth rise. According to a report, in 1980 the inflation rate was 41 expressed as an index. In 1985 it was 52, in 1990, it was 54.
In 1995, it was 68. In 2000, it shot up to 83. In 2005, it was 93 and currently in 2010, its 108 marking the highest ever it has ever reached. Due to rise in food and oil prices, the annual inflation rate for 2010 rose to 3.5% in July but capital investment and high foreign reserves has ensured the inflation rates remain low. These inflationary trends have reduced the purchasing power of Thailand’s currency. For purchasing power parity comparisons, the US Dollar is exchanged at 22 -34 Baht only (World Bank, 2010). Policies
In environmental issues, the government has ensured effective investigations have taken place. In a case in 1997, where there were deaths caused by water pollution; several Members of parliament as well as NGOs urged the Provincial Governor (PG) to take care of the crisis immediately. To face out this chronic problem of water pollution, several pieces of legislation have been enacted by the government. An example includes the ‘Enhancement and Conservation of Nationals Economic Development in Environment Quality Act (NEQA) of 1992.
These acts have greatly reduced the pollution to manageable levels and increased awareness among companies plus imposing heavy fines on companies that are not complying. The numerous efforts of the government in waste water treatment plants saw a population of around 29% able to access treated water in 2000. The government further projects to access treated water to 65% of its population.
In 1989 – 1992, the government realized that conservation policies were difficult to enforce and came up with acts that require that at least 15% of its land to be protected as forests and 22% to be protected as national parks and wildlife sanctuaries. (Pearmsak, 2007). The government has come up with pollution control department that has standards which focus on lower emission vehicle engines, emissions reduction in plants and factories.
In health issues, policies have been put in place to prevent diseases such as Typhoid, diarrhoea and Dysentery as they are leading to high morbidity and mortality rates in Thailand. The government has put in water treatment plants as all these diseases are water borne hence able to reduce to low levels.
The government has closed all plants that are not adhering to the standards of health required. Klity plant in kanachoburi province was closed due to emissions of toxic levels of lead. The population is being educated on the water treatment methods and are advised to seek medical attention whenever they portray some of the symptoms they have been enlightened about. Majority of these policies on health have been successful in Thailand.
To correct inflation, the new Prime Minister opened out trade with other countries and strongly built a large automobile industry which led to the decline in the inflation. Thailand has found it necessary to be active in tourism which contributes 6% of the GDP. These developments have seen Thailand achieve the lowest unemployment rates lying around 1.2% in the year 2010 and an estimation of a fall to 1% by year 2012 (World Bank, 2010).
Recommendations
To address environmental issue, the government should put up institutions that are in charge of investigations on emissions polluting companies and the same time give them powers to fine the polluters.
Corporate Social Responsibilities acts should be put in place in order to ensure that companies account for their activities and act responsible for the environment. Keeping of wild animals as pets should be prohibited as well as stern measures on poachers and hunters. Environmental studies be introduced in schools at an early age to ensure people learn about the importance of environment to the country’s economy.
To avoid health issues, the government should educate the citizens about the importance of clean water, since in Thailand, majority of the diseases are water borne. The government should put up dispensaries in all locations to make sure even the most interior located person is able to access.
To avoid increased rates of inflation the government and politicians should avoid political instability reoccurrences as it leads to high rate of inflation that has been hard to recover from. The government should encourage private and foreign investors in order to gain more revenue in effort to recover from inflation. Also export oriented manufacturing should be practiced to earn extra revenue for the country (Jennifer, 2002).
Conclusion
The main challenge facing Thailand is political instability, the country has moved from military ruling to the sovereign nation; however the current situation does not favour sustainable economic growth rate. The country is endowed with plenty of natural resources that can only be exploited with an effective administration.
The country’s leadership should check their approach as the country has great potential in the automobile industry, foreign capital investment, and increase in exports and rise in revenue from oil. For a healthy economy, the government should enact policies that look into social parameters within the economy, for instance the health sector is lagging behind with the available personnel and facilities inadequate in capacity and expertise.
References
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Jennifer, H. (2002). National Geographic Today. Activists denounce Thailand’s elephant crushing ritual, 28(3), 40-49.
Lindsay, F. (2000). Thai Agriculture, Golden Cradle of Millennia. Journal of agricultural progress in Thailand, 20(6), 60-73.
Pearmsak, M. (2007). Conflict Resolution. Case study on sustainable forestry management in Thailand, 10(1), 20-24.
Roger, S., Sedghi., & Ami. (2011). The Guardian. How fitch moody’s and s&p rate each country’s credit rating, 45(7), 30-32.
Teena, A. G. (1997). Endangered Animals on Restaurant Menus. Albion journal on endangered species, 22(3), 10-19.
Wannabovorn, S. (2008). Thailand Political Reforms. Thai protest order to leave government compound, 54(3), 101-110.
World Bank. (2008). Uncertain Economic and Political Conditions are Major Constraints to Doing Business in Thailand. Thailand Investment Climate Assessment Update 2008. Retrieved from www.worldbank.org.