Thailand - Current economic position and prospects (Vol. 1 of 2) : Main report

Report No. 542-TH Current Economic Position bu ^ and Prospects of Thailand \11 I I VV I V1IUI I 1U11 \/Vlimp I- The MAin Rponrt October 11, 1974 East Asia andl Pacific Department Not for Public Use Document of the International Bank for Reconstruction and Development intert ildelU i el oIpv'IUIJI IIA ssciation 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 It may not be published, quoted or cited without Bank Group authorization.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 EQUIVALENTS Currency Unit - Baht US $1.00 = g 20.00 1.00 =us $0.o5 0 1.00 million = us $50,000 g 1.00 billion = US $50 million Note: The Baht was maintained at a parity of g 20.8 = US$1.00 until July 1973 when it was revalued to 9 20.0 = US$1.00. An average exchange rate of 0 20.4 = US$1.00 has been used for 1973 in this report.  FOREWORD This reporiu i9 based on thle findings of an eUUciUcL rI,ls.;ior. whicIh visited Thailand from mid-January to mid-February 1974. The mission consist- ed of MIessrs R. Hablutzel (chief of mission), L. inkle (keconouiist) B. Schmutz (economist), Miss R. Dacumos (econometrician), Miss R. Torreira (economist), Messrs. N. Koffsky (/senior agricuitural economist) arLU H.Mi. Ailm (agricultural economist). The report also contains a sumnary of the findings of a public finance mission which visited Thailand at the sarme time adr-l which consisted of Mr. 0. Yenal (chief of mission), Ms. K. Artus (fiscal economist), and Messrs. K. Stichenwirth (public enterprises), K. Hubbell (local finance and regional development), and J. Theberge (consultant, industrial incentives). Miss Ubolwann Binmnahmood was secretary to both missions. The report was updated and revised after discussions of the draft with the government by Messrs. Hablutzel, Yenal and Hinkle in mid-August 1974. The report refle'cts the economic situation and prospects of Thailand as of the date of publication.   TABLE OF COTNTENTS Page No. FORES'CRD BASIC DATA MAP SUMIMIARY AND CONCLUSIONTS I. Recent Developments and Economic Overview . . ...... 1 Political and Social Changes ................................. 1 Production and Der.rand ................................. .. Investment and Saving ......................... ....... . . 5 Pubflic FJnance ................................. 7 Money and Credit ................................. 9 Price Movements ................................. 12 Inflation and Income Distribution . . .................. 14 The Near Tenn Outlook ................. . . i .. . .. .. The Effect of Events in Indochina .... 18 Longer Term Constraints on Development ......................... 18 II. Agriculture ...................................... ..... 20 Current Situation . . ......................................... 20 Production and Yields ....................................... 20 Land Avallabil1ity ...... ... ................ 21 Farm Size, Employment, and Income Characteristics . . 22 Agricultural Development Strategy ..... 24 Intensification of Production . . ............................. 24 Rice Policy .......................................... .. 25 Fertilizer Policy ... .. . ..... ................. ... . 29 Agri cultural Diversification . ............................... 29 Irrigation Policy ............................ ..... 0......... 30 Government Organization and Management ..................... 32 Governnent Expenditures for Agriculture . . 33 Research, Extension and Seeds . .. ......................... 33 Agricultural Credit ...... . .............. ......... . 34 Regional Production Potentials ... ... ........ 35 Northeast ................................ ......... 35 South ......................... ... *................ . . . . 36 North ........................................ *. . . . . . .. 37 Cen'ter .. . . . . . . . . .. . . . . . . . . .. . . . . . . . 3  PTPge No. IIdIlU..j C-U PrivateAi C-iI'.a 1iULO, IAuUL__nd .L1I~ nance .................... .... . . . . . . . . ManufacturlnS~-- an auaturnnvestment IC)........................3 Industrial Policy and Investment Incentives .......... ........ 40 .orei nvesu.-en.. ... ................. 4 Industrial Finance ............................................ 44 uuriburucu