Thailand - Current economic positions and prospects (Vol. 1 of 2) : The main report

FILE COPY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. 82a-TH CURRENT ECONOMIC POSITION AND PROSPECTS OF THAILAND (in two volumes) VOLUME I THE MAIN REPORT March 2, 1973 East Asia and Pacific Department This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY FQUIVAILENTS Currenc.y Unit - Baht US $1.00 = 20.80 % 1.00 Us $0.o4i8 B 1.00 rnillion = US $48,077  FOREWORD This report iq based on the findings of an economic mission which mrisited ThRilnd in September 1972 to undate the last IT3D report on Th-iland's economic situation and prospects (Report No. EAP-28 of Janiinrv 12 1972). The members of the mission were: Mr Christian Merqt Chief of Mission Mr Peter Streng Chief Economist Ms Kazuko Artus Domestic Finance Economist Ms Rosalinda Dacumos F.conometrician Mr Carl Jayarajah Industrial FEconomist   VOLUME I: THE MAIN REPORT TABLE OF CONTENTS P age N o. BASIC DATA MAP SUMMARY AND CONCLUSIONS .............................. i-viii I. RECENT TRENDS IN DEVELOPMENT ......................... 1 Demand and Output ................................ 1 Balance of Payments ............................. 4 External Debt and Debt Service .... .............. 6 Monetary, Credit and Fiscal Developments ........ 7 Employment ...................................... 9 Recent Agricultural Development .... ............. 9 Recent Trends in Manufacturing .... .............. 11 Origins of Development with Stability .... ....... 11 II. DEVELOPMENT POLICIES AND PROBLEMS ..... ............... 14 Third Plan Objectives and Strategy .... .......... 14 Expansion of Agricultural Production for Export . 16 Problems in Exporting Manufactures .... .......... 18 Domestic Financial Management .... ............... 19 External Financial Management .... ............... 23 Long-Term Problems .............................. 24 III. THIRD PLAN PROSPECTS ................................. 26 The Outlook for 1973 ............................ 26 Prospects for Output and Investment, 1973-76 .... 26 Domestic Resoruces Mobilization . ................ 27 Foreign Trade ................................... 28 Non-factor Services ............................. 31 Investment Income and Private Transfers .... ..... 31 External Capital Requirements .... ............... 32 External Debt and Debt Service .................. 34 ANNEX I. Recent Tax Changes.   COUNTRY DATA - THAILAND AREA POPULATION DENSITY 514,000 km 2 37.3 million (mid-1971) 73 per km2 Rate of Growth: 3.1% (from 1960 to 1970) 98 per km of arable lend POPULATION CHARACTERISTICS HEALTH (1969) Crude Birth Rate (per 1000): 41.8 (1967) Population per physician : 6,600 Crude Death Rate (per 1000): 10.9 (1967) Population per hospital bed : 1,504 Infant Mortality (per 1000 live births): 80-90 (1970) INCOME DISTRIBUTION (1970) DISTRIBUTION OF LAND OWNERSHIP (1963) % of income, lowest quintile : 6.5 urban, 5.5 rural % owned by top 10% of owners 32.5 highest quintile : 45.5 urban, 51.0 rural % owned by smallest 10% of owners 1 ACCESS TO PIPED WATER (1970) ACCESS TO ELECTRICITY (1971) % of population - urban :45 % of population - Bangkok Metropclitri - rural: 15 - Other 67 provi'-' ' NUTRITION (1971) EDUCATION (1971) Calorie intake as % of requirements :100 Adult literacy rate % : 70 Per capita protein intake (grammes) : Primary school enrollment % : 90 GNP PER CAPITA in L19712: US $206 GROSS NATIONAL PRODUCT IN 1971 ANNUAL RATE OF GROWTH (%, constant prices) US $ mln. % 1960-65 196 5-70 GNP at Market Prices 6,875 100.0 7.2 8.5 6.1 Gross Domestic Investment 1,606 23.4 14.4 15.4 -3.8 Gross National Saving 1,388 20.2 14.6 11.5 10.8 Current Account Balance 218 3.2 Export of Goods, NFS 1,204 17.5 10.8 7.1 10.3 Import of Goods, NFS 1,430 20.8 11.1 12.3 -85' OUTPUT, LABOR FORCE AND PRODUCT-VITY IN 1971 Value Added Labor Force V. A. per Wor'ker US $ mln. % Mln. % US $ % Agriculture 1,985 28.6 13.076 76.9 152 37.2 Industry 1,776 25.5 0.958 5.6 1,854 453.3 Services 3,190 45.9 2.868 16.9 1,109 271.1 Unallocated . . o.100' o.6 Total/Average 6,951 100.0 17.002 100.0 409 100.0 GOVERNMENT FINANCE / General Government Central Government (US $ mln.) % of GDP (US$mln) % of GDP 1972 1972 1970-72 1972 1972 1970-. 72 Current Receipts 1,116 14.9 15.1 1,059 14.2 14.3 Current Expenditure 1,083 14.5 14.0 1 031 13.8 13.3 Current Surplus 33 0.4 1.1 2 0.4 1.0 Capital Expenditures 453 6.1 6.3 432 5.8 5.9 External Assistance (net) 37 0.5 0.7 37 0.5 0.7 The per capita GNP estimate is at 1970 market prices and is calculated on the same basis as the figures in the 1972 World Bank Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. Tentative estimate of unemployed; their normal occupations are not known. j Fiscal years ending September 30 of calendar years shown. not available not applicable p preliminary  COUNTRY DATA - THAILAND Nov. Nov. MONEY, CREDIT and PRICES .1965 19 1970 1971 1971 1972 (Million US $ outstanding end period) Money and Quasi Monev 1,098 1,965 2,220 2,581 2,528 3,118 Bank Credit to Central Government (Net) 53 341 553 872 833 1,192 Bank Credit to Private Sector 602 1,102 1,339 1,482 1,478 1,030 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 27.1 31.7 33.9 37.3 36.4 41.7 General Price Index (1963 = 100) 107.7 116.3 115.4 115.3 116.5 127.1 Annual percentage changes in: General Price Index 1.9 -0.8 -0.1 9.1 Bank credit to Central Government (Net) 45.2 62.2 57.7 43.1 Bank credit to Private Sector 12.9 21.5 10.7 10.3 nALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1970-72) 1970 1971 1972 (Millions US $) US $ Mln. _ Exports of Goods, NFS 1,092 1,204 1,549 Rice 162 19.2 Imports of Goods, NFS 1,409 1,430 1 615 Corn (maize) 97 11.5 Resource Gap (deficit -) -318 -226 Rubber 98 11.6 Tin (metal) 77 9.2 Interest payments (net) 44 28 7 Tapioca products 64 7.5 Workers' Remittances . . . Kenaf and jute 45 5.3 Other Factor Payments (net) -25 -26 -26 -All other commodities 302 35.7 Net Transfers 3 6 10 Total 845 100.0 Balance on Current Account -296 -218 -75 Direct Foreign Investment (Net) 31 33 54 EXTERNAL DEBT, DECEMBER 31, 1971 Net MLT Borrowing Disbursements 273 261 323 uS $ Mln. Amortization 206 218 220 Public Debt, incl. guaranteed 348 Subtotal T X 103 Non-Guaranteed Private Debt 425 Capital Grants 46 37 29 Other Capital (net) 20 8 29 Total outstanding & disbursed 773 Other Items n.e.i. 214 97 63 DEBT SERVICE RATIO for 1971 / Increase in Reserves (+) -128 0 203 Gross Reserves (end year) 906 866 1,052 Public Debt, incl. guaranteed 3.4 Net Reserves (end year) 766 766 969 Non-Guaranteed Private Debt 14.1 Total outstanding and Disbursed 17.5 RATE OF EXCh'ANGE IBRD/IDA LENDING, JANUARY 31,1973 (Million US $) IBRD IDA Throgh - 1971 -DIA US $.00 A= 20.8 Outstanding & Disbursed 189.6 - 1.00 = us $ o.048 Undisbursed . 76.7 - Outstanding incl. Undisbursed 26.3 - Since - 1971 US $ 1.00 = f 20.8 1.00o= us $ o.o48 j Ratio of Debt Service to Exports of Goods and Non-Factor Services. 2 Includes SDR allocations, profits from exchange realignments, and errors and omissions. / Excluding loans not yet effective. not available not applicable p preliminary e staff estimate East Asia & Pacific Department 2/15/1973  MAP 1 CJ N O R T H f ? 9 f t ) < < ~~~~~~~V I E T N A M on|P* ohieon N goo o n (, * Hod LOiopOn5~ ~~, eP's, K Sonoontiototi Unornd,i .***,/ o~~~IC e n Udor U, oonPnn Ni.: I g tof)J uJ~~~~~~claI ,1 <( oi,_ Scworkolokip~ . ".,,. * Sokolnok orn Q 2 Sukh~~~otol a *@0 \* Tk l P ,Ison. oke ' ) atKmpoengphel\< \\ Pchobco o nken t5~ ~ \ i Klong Klugi ,Wncompug KI.n y i Rolbro ngC o Aroon, Porki omntsoogtroo Cholbr, %, \ t ~~Petsd *Sriroocho *. K M R EPBI I ak n 0 D)3 ) H~~-uohin *, o d I,~~~~~~~~~~~~~~~~~~~~~~~C Roz a.. D -U o,