Report No. 3067a-TH FILE COPY Thailand Coping with Structural Change in a Dynamic Economy December 23, 1980 East Asia and Pacific Regional Office FOR OFFICIAL USE ONLY Document of the World Bank 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 Worid Bark authorization. FOR OFFICIAL USE ONLY FOREWORD This report was prepared by a Mission that visited Thailand in February/March 1980. The Mission's objectives were to review the economic situation in Thailand with government agencies and to discuss the policies and programs that would be necessary to alleviate current economic problems and to improve Thailand's longer term prospects for sustaining high rates of growth and reducing poverty. The Mission consisted of John Shilling (Mission Chief), Ian Porter (Deputy Mission Chief), Madhusudan Joshi (Senior Fiscal Economist), Knud Ross (Monetary Economist), and Wafik Grais (Econometrician). The Mission was greatly assisted in their analysis and data gathering by the staffs of the Bank of Thailand, Ministry of Finance, and National Economic and Social Development Board, in particular, and by many other officials of the Thai Government. The Mission would like to express its heartfelt appreciation for their assistance. The analysis and conclusions of this report are nonetheless the responsibility of the Mission. Parvez Hasan (Chief Economist), Willem Bussink (Senior Economist) and Bela Balassa (Senior Advisor, DPS) joined the Mission for its final week of discussions. A draft version of this report was discussed with the Government in September 1980 by a mission led by Edward V. K. Jaycox (Director, East Asia and Pacific Country Programs Department) and including Messrs. Bussink, Shilling, Porter, and Roy Pepper (Economist). This report has been prepared at a time when the Government itself is reviewing Thailand's emerging economic problems in detail as part of the process of preparing the Fifth National Economic and Social Development Plan. In February, 1980, the Government appointed a Steering Committee for the Fifth Plan. Twenty-four subcommittees have since been established to assist the Steering Committee in reviewing major economic problems and developing appropriate policies and programs. In October, 1980, the Government prepared a statement outlining major policies and strategies for the Fifth Plan. The National Economic and Social Development Board is now preparing a "Fifth Plan Frame" which will provide further details on the proposed policies and programs for the Fifth Plan period. The final draft of the Fifth Plan is scheduled for completion by October, 1981. 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 authorization. THAILAND COPING WITH STRUCTURAL CHANGE IN A DYNAMIC ECONOMY Table of Contents Page No. SUMMARY . . . . . . ... . . . . . . . . . . . . . . . . . . i-vii I. INTRODUCTION .... . . . . . . . . . . . . . . . . . . . . 1 II. THE DYNAMICS OF TWO DECADES OF DEVELOPMENT . . . . . . . . . 5 The Record of Growth: 1960-1979 . . . . . . . . . . . . . . 6 Components of Growth: 1960-1979 . . . . . . . . . . . . . . 7 Distribution of Growth . . . . . . . . . . . . . . . . . . 11 III. STRESSES OF THE PAST HALF DECADE . . . . . . . . . . . . . . 13 High Growth and Financial Imbalances . . . . . . . . . . . 15 Production Growth .15 Trade Growth and the Current Account Deficit. . . . . . . 16 Fiscal Deficits .20 Inflation . . . . . . . . . . . . . . . . . . . . . . . . 22 Financial Sector Growth .23 Monetary Policy .24 Energy Policy .25 Production Constraints .30 Agriculture .30 Industry . . . . . . . . . . . . . . . . . . . . . . . . 32 Investment .33 Other Constraints on Growth .34 The Tensions and Tradeoffs .36 IV. POLICY OPTIONS FOR STRUCTURAL ADJUSTMENT . . . . . . . . . . 40 The Magnitude of the Required Adjustment . . . . . . . . . 42 Policies for Structural Adjustment . . . . . . . . . . . . 47 Fiscal Policy and Public Resource Mobilization . . . . . 47 Policy Recommendations .53 Monetary Policy, External Balances and Financial Sector Development. . . . . . . . . . . . 55 Policy Recommendations .57 Energy Policy .58 Policy Recommendations .64 Industrial Development Policy . . . . . . . . . . . . . . 65 Policy Reconmmendations .68 Agricultural Policy .69 Policy Recommendations .71 Combined Policy Action ................. . 73 -2- Page No. ANNEXES I. Analytical Tools: The Social Accounting Matrix and the Simulation Model . . . . . . . . . . . . . . . . . . . 77 II. Financial Institutions . . . . . . . . . . . . . . . . . . . 125 STATISTICAL APPENDIX .... . . . . . . . . . . . . . . . . . . 133 Tables in Text 2.1 GDP Growth Rates . . . . . . . . . . . . . . . . . . . . . . 6 2.2 Inflation Rates . . . . . . . . . . . . . . . . . . . . . . 7 2.3 Agricultural Diversification . . . . . . . . . . . . . . . . 8 2.4 Sources of Industrial Growth . . . . . . . . . . . . . . . . 9 2.5 Energy Consumption . . . . . . . . . . . . . . . . . . . . . 10 2.6 Poverty Indicators . . . . . . . . . . . . . . . . . . . . . 11 3.1 Growth Rates by Sector . . . . . . . . . . . . . . . . . . . 15 3.2 Growth in the Value of Exports and Production . . . . . . . 17 3.3 Growth in the Volume of Exports and Production . . . . . . . 18 3.4 External Balances . . . . . . . . . . . . . . . . . . . . . 19 3.5 Shares of Public Sector Revenue and Expenditure in GDP . . . 21 3.6 Structure of Taxes by Source . . . . . . . . . . . . . . . . 22 3.7 Financial Sector Growth. . . . . . . . . . . . . . . . . . . 24 3.8 Inflation and Interest Rates . . . . . . . . . . . . . . . . 26 3.9 Energy Price Movements . . . . . . . . . . . . . . . . . . . 27 3.10 Actual and Appropriate Energy Prices . . . . . . . . . . . . 29 3.11 Petroleum Revenues . . . . . . . . . . . . . . . . . . . . . 30 3.12 Resource Mobilization . . . . . . . . . . . . . . . . . . . 34 3.13 Growth of Gross Regional Product (GRP) . . . . . . . . . . . 38 4.1 Selected Indicators in Reference Simulation . . . . . . . . 46 4.2 Impact of Greater Public Sector Resource Mobilization and Saving . . . . . . . . . . . . . . . . . . . . . . . . 52 4.3 Impact of Full Adjustment of Energy Prices . . . . . . . . . 63 4.4 Impact of Policies to Accelerate Manufactured Exports . . . 67 4.5 Impact of Increased Agricultural Production . . . . . . . . 71 4.6 Impact of Coordinated Policy Action . . . . . . . . . . . . 75 THAILAND COPING WITH STRUCTURAL CHANGE IN A DYNAMIC ECONOMY SUMMARY 1. During the 1960s and early 1970s, Thailand managed with extra- ordinary success to achieve high aggregate growth, maintain price stability, and make major strides in reducing the incidence of poverty. This was accomplished by expanding land under cultivation, by providing economic infrastructure, by encouraging the private sector to expand production without introducing severe price distortions and controls, and by opening the economy to external trade without heavy dependence on foreign capital. Despite adverse external factors and declining land availability, Thailand has maintained high growth rates in the latter half of the 1970s. In this period, however, growth has been accompanied by accelerating inflation, growing dependence on foreign borrowing, large budgetary deficits, and probably less success in furthering poverty alleviation. As a result, Thailand is currently facing severe economic problems. 2. The magnitude of these problems is evident in the size of the current account deficit, which was over B 40 billion (8% of GDP) in 1979, in the high inflation rate, and in the size of the public sector deficit, which is over B 20 billion for the Central Government (about 4% of GDP) and over B 30 billion for the public sector as a whole. These deficits are unprecedented, and they are not expected to decrease in 1980. They are the result of internal problems within the economy, including failure to fully adjust energy prices, price distortions, and excessive liquidity creation, as well as adverse external factors, including oil price increases and declining terms of trade, slow growth in developed countries, and rising interest payments which have nearly eliminated the traditional surplus on the service and transfer account. Some corrective measures have been initiated, but unless significant further measures are taken, the deficits will continue growing into the 1980s, and the economy may not be able to sustain satisfactory growth performance. 3. The Basic Economic Report, Thailand, Toward a Development Strategy of Full Participation (No. 2059-TH, September 1, 1978) identified some of the fundamental structural issues of raising productivity in agriculture and industry and sustaining Thailand's commendable progress in poverty alleviation, and it proposed a strategy for continuing that progress. The issues of poverty alleviation were further refined in the report, Income Growth and Poverty Alleviation (No. 2566-TH, June 20, 1980). Specific analyses, evaluations, and recommendations for the industrial and energy sectors were made in recent reports, An Industrial Development Strategy for Thailand (No. 2804a-TH, June 5, 1980) and Thailand: Energy Issues and Prospects (No. 2813-TH, May 1980). The results of these studies are incorporated into this report s analysis of the current economic imbalances in Thailand. 4. The World Bank-s analysis indicates that the outlook for the world economy does not offer prospects for sustained improvement over the coming decade: oil prices will continue to rise in real terms, OECD growth will not recover very rapidly, and inflation and high interest rates will continue. Favorable transitory factors notwithstanding, the Thai economy will have to make fundamental adjustments to accommodate itself to this changed environment, to rectify the domestic imbalances that have developed over the past five years, and to restore the balanced growth pattern that has led to the impressive rate of poverty alleviation of the past two decades. 5. Thailand has maintained an exceptionally high real GDP growth rate over the past five years (9% p.a.) despite sharply decreased availability of additional land resources for increasing agricultural production, stagnation of yields of many crops, declining terms of trade, and a tendency toward more restrictions in external markets. In the process, however, it has increased its exposure to price and volume fluctuations resulting from its longer participation in external trade, and its reliance on foreign saving. Growth has been facilitated by exceptionally good export performance for both agricultural exports and manufactured exports, with total export growth averaging 15% p.a. in real terms. Aggregate demand and investment rates were high, savings, particularly in the public sector, did not match the growth in investment, and import values grew more rapidly than in the past, all of which contributed to an increase in the trade account deficit. Rising net service payments led to even more rapid growth of the current account deficit. 6. Due to frequent changes in government during this period, it was not easy to pursue a coherent economic strategy, although there was a consensus, in principle, in favor of promoting growth, restraining inflation, and alleviating poverty. In practice, the hard economic policy choices tended to be resolved in favor of measures that promoted demand and more growth in the short run without due consideration of the longer-term consequences for inflation, the balance of payments, poverty alleviation, or even the longer-term growth potential of the economy. Measures that rapidly increased public sector expenditures without increasing revenues, policies that seriously underpriced energy and several other key goods such as cement, actions that created excessive liquidity to accommodate government budgetary deficits and speculation in the financial sector, interest ceilings that resulted in low or negative real interest rates, and protectionist policies that increased price distortions in the productive sectors are all part of this pattern of policy making. It has stimulated in unsustainably too high a level of activity in the economy in the past five years while allowing severe domestic structural imbalances and extraordinary external and fiscal deficits to emerge. 7. The policies the country has pursued have also favored the modern, urban sectors at the expense of the rural, agricultural sectors. The shift in the relative growth rates in favor of the former and a systematic decline i-iii - in the agriculture-nonagriculture terms of trade since 1975 also suggest that it is unlikely that much progress has been made in rural poverty alleviation since 1975, despite high aggregate growth. 8. Attempts to maintain high growtlh in the near and medium term by policies similar to those used in the past several years will only exacerbate the imbalances and undermine the stability of the economic structure that has permitted sustained economic growth in all sectors and facilitated widespread distribution of the benefits of that growth. This has been recognized and some corrective measures have been initiated. Initial evidence indicates these measures are having some positive impact; however, this report concludes that significantly more action will he required. If it can be initiated quickly and implemented in an effective manner, the short-term costs to the economy will be moderate, and the long-term potential for growth and poverty alleviation will be enhanced. 9. In addition to overcoming the effects of the adverse external factors and the inadequate or inappropriate domestic policies that have led to the large current account and fiscal deficits, fundamental structural changes in the productive sectors of the economy will also be necessary to transform agriculture to more intensive patterns of production and to stimu- late more export-oriented industrial production. These transformations are a normal part of the dynamics of development. If these processes can be facilitated and accelerated, the need to reduce the growth rates of con- sumption and imports will be mitigated and the adjustment process eased. Conversely, if they are retarded, the measures required to reduce the external and fiscal deficits may lead to a prolonged period of slow growth. 10. It appears that the limits of expanding the area of land under agricultural use have been reached during the past half decade, altbough agricultural production growth rates have remained at nearly historical levels - 4-1/2% to 5% - during most of this period. This has been the result of rapid expansion of export crops (cassava, pineapples, rubber, etc.) as markets were opened and high-yielding rubber varieties introduced. Some of these crops are now facing market limitations. Even maintaining these recent growth rates will require a significant effort to devise appropriate supporting policies in agriculture and to increase use of modern inputs. 11. The industrial sector has grown rapidly, and manufactured exports have increased even faster during the 1970s. Maintaining high export growth rates in the future will require more intensive export-promotion activity, both through specific measures and through appropriate macroeconomic policies. Some branches of industry have turned toward more export orientation and their efficiency has improved. ilowever in other branches, protection, price controls, and other restrictive measures such as domestic value-added requirements have increased, which has introduced inefficiencies into the industrial sector. A number of large, capital-intensive investment projects are also being considered which could strain the resources - iv - available to the economy and move it away from its comparative advantage. The combined effect of these developments could impair the growth potential of Thai industries and reduce the competitiveness of Thai exports. 12. Thailand has been able to maintain its high growth rates in recent years without adequately adjusting to the exogenous increases in energy prices and without raising domestic savings commensurate with investment because it has been able to borrow increasing amounts from abroad to finance the domestic saving deficit, which has been largely in the public sector. The full impact of debt incurred since the mid-1970's is now being felt in rising debt service payments. The debt-service ratio for the public sector has increased from 4.5% in 1978 to an expected 10% in 1981. Concerns are increasing about Thailand's creditwortlhiness. Its gross borrowing requirement to fund increasing current account deficits is expanding very rapidly. To maintain even a constant net borrowing requirement (i.e., current account deficit) in these circumstances, the trade balance would have to improve significantly since service payments will continue to grow. It is unlikely that Thailand will enjoy its current high credit standing and access to foreign resources much longer unless it undertakes a comprehensive program to reduce its dependence on growing levels of foreign resources. 13. Thailand has already taken policy actions in a number of areas, including sharp increases in prices for most petroleum products and for electricity in 1979 and 1980, measures to increase government revenues in 1980, and introduction of regulations to increase financial stability and exercise more monetary restraint in 1979 and 1980. These actions are beginning to have noticeable effects on the economy. In conjunction with favorable but transitory developments in the trade and capital accounts,/l they have led to some short-run improvement in the balance of payments and may keep the absolute level of the government deficit from increasing. 14. The report analyzes the effects of these policy actions given the expected trends in the world economy over the next several years./2 For this analysis, it is assumed that some of the recent energy price increases would be passed on to consumers; that more domestic energy would be produced and consumed; that there would be no increased pressure from excess demand to drive up the demand for imports, increase inflationary pressure, and reduce the competitiveness of Thai exports; and that export growth would be sustained at about 10% p.a. Under these assumptions, import growth would be reduced to under 5% per annum. Slower import growth is expected to result from increased use of domestic energy resources, the tapering of the invest- ment boom, lower overall demand, and some import substitution. /1 Including acceleration of rice exports in the first half of 1980 and short term capital inflows in response to changing interest rates differentials. /2 These estimates are based on a simulation model developed for the report and used in simulating the effects of alternate policy measures. - v - 15. Although this scenario is based on relatively optimistic assump- tions about external developments, takes into account recent policy action, and assumes some further action as noted above, the outcome is still not favorable. The fiscal and external deficits would continue to grow and the debt situation would become exceedingly difficult before 1985, if no further policy adjustments are made. The current account deficit would rise to $4 billion by 1985, still over 7% of GDP,/1 and the public sector deficit would remain well above 5% of GDP. Growth would fall below 6% p.a. in 1980-85, and in 1985 the economy would be in even more difficult straits than now. It is unlikely that external resources will be available to finance current account deficits rising from nearly $3 billion in 1980 to approximately $4 billion in 1985 and $5 billion in 1990. Accumulated debt would exceed $20 billion in 1985 and $40 billion in 1990, and the debt service ratio would be about 25% and 30%, respectively. If the relatively favorable trade assumptions were not realized, as is clearly possible in the present world situation, the Thai economy would indeed be in even greater difficulty before 1985. 16. Even taking account of the positive response of the economy to recent policy changes, the Thai Government cannot afford to postpone under- taking further adjustment measures. The risk is too great that external deficits would grow to levels that would lead foreign lenders to force rapid and severe adjustments by reducing access to foreign borrowing. This would severely disrupt the long-run growth potential of the economy and seriously affect the prospects of the poor for rising out of poverty. However, if the Government were to commit itself to a comprehensive adjustment program to be implemented over a period of, say, five years and if this program were perceived to be sufficient to effect the adjustment, then it should be possible to mobilize the necessary foreign resources to finance the deficits that would occur during the adjustment period. The Bank would certainly be able to support Thailand in seeking that additional financing. In these circumstances, a reasonable rate of growth could be maintained and the deficit reduced gradually for the rest of the decade. After about 1985, the economy could again accelerate its growth rate and return to a stable growth path with sustainable external and fiscal accounts. 17. If a comprehensive set of policy adjustments of the order of magnitude discussed in this Report were implemented over the next five years, the size of the current account and public sector deficits would be reduced to approximately 4-1/2% and 4% of GDP, respectively, by 1985. If productivity increases are also achieved, there would be little sacrifice in the long-term growth potential after 1985, and growth might accelerate /1 The current account deficit would grow in absolute size because of the initial size of the trade deficit and because of the growing service payments. The favorable trade growth rates would actually begin to reduce the trade deficit before 1985, but interest payments would increase faster and raise the current account deficit. - vi - moderately above 6% p.a. before 1985. In these circumstances, Thailand would be able to return to its longer-term growth rate of 7-8% p.a. in the latter half of the 1980½s and have firm control of its balance-of-payments and public sector deficits. Current account deficits would not exceed $3 billion p.a.; the debt service ratio would barely exceed 20% in the mid- 1980s and could decline below that level by 1990. It would be possible to eliminate the current account deficit by 1990, but gross borrowing require- ments to service the debt outstanding would still exceed $3 billion per year. At that point, the economy would have a number of options to pursue regarding the current account balance it would accept. 18. This report discusses five areas of crucial importance where policy measures should be implemented as part of a comprehensive program to minimize the risk that the growth process would be seriously disrupted. These are: (a) resource mobilization, particularly in the public sector; (b) monetary policy, including measures to maintain high rates of private saving and to manage external debt and the capital account; (c) energy policy and conservation, with particular attention to pricing; (d) indus- trial policy and measures to promote industrial exports; and (e) agricul- tural policy and measures to maintain high rates of growth of agricultural production and exports. Specific policy proposals in each area are presented in the Report and their rationale discussed in detail. 19. A comprehensive adjustment program should consist of coordinated measures in each of these areas. The burden of placing too much of the adjustment in one or two areas would be too great and probably introduce further distortions into the economy. The objectives of the program should be to move quickly to begin reducing the share of the fiscal and current account deficits in GDP in the short run and to increase the productivity of the economy in the longer term in order to restore high growth rates in the changed world economic situation. The fiscal and external deficits will be improved by policies which lessen demand growth and encourage more saving. A large part of this adjustment will fall on the public sector, which will have to control its expenditures and increase revenues, including public enterprise tariffs. To influence the private sector, appropriate monetary and interest rate policies will have to be followed to encourage continued high levels of savings and appropriate allocation of investment. These policies will tend to reduce aggregate demand growth and the savings- investment gap by both increasing savings and slowing the rate of invest- ment. This will reduce the demand for imports in general and free additional domestic resources for export. 20. Reducing the savings-investment gap will also lessen the demand for foreign saving, as expressed in the growing current account deficit. However, because of the structure of import demand and of the supply of exportables, attempts to increase domestic saving will not reduce the external deficit fast enough unless quite severe measures are taken. Specific measures to reduce the demand for imports relative to domestic goals are also necessary. For example, failure to adjust energy prices fully has led to an excessive oil import bill - nearly one third of current - vii - imports. Further upward adjustment of energy prices will be an essential element in any adjustment program. Such price increases will directly reduce demand for and imports of petroleum. These price adjustments should reflect the considerations of raising sufficient revenues from the energy sector, reducing consumption and imports, and a long-run policy on the development and use of energy resources. Direct action to increase the supply of both agricultural and manufactured exports will complement the measures reducing aggregate demand and help speed the reduction in the external deficit. In addition to reducing the investmentsavings gap, excess demand, and the demand for imports, these measures will also tend to reduce consumption and income growth, particularly in the modern sector, and to improve the relative position of the rural and exporting sectors. These shifts are essential if the economy is to effect an adequate adjustment. 21. Measures to improve industrial and agricultural policy should also be initiated quickly, although their full effect can only be felt over a longer time horizon. These measures will contribute to raising production and productivity and to improving the terms of trade for the agricultural and other exporting sectors. They will be necessary complements to policies which reduce the savings gap and part of the dynamic adjustment to declining land availability and increasing need to absorb more labor into the modern sector. Over the medium term, successful measures in these areas will enable the economy to restore its historical growth rates, albeit with a changed domestic production structure more adapted to the changed external environment of the 1980's. Implementation of policies in all these areas will not only involve making and enforcing difficult economic decisions, but it will also involve making fundamental institutional changes to improve the responsiveness and effectiveness of government agencies in supporting the necessary policy changes. 22. The analysis of this report implies that the risks of not taking further concerted action to reduce the external and fiscal deficits would be very high. Relatively small adverse developments, either domestic or exter- nal, could have very damaging economic consequences. On the other hand, a coordinated program of measures along the lines suggested below would greatly reduce the exposure of the economy to such risks while enhancing its medium- and longer-term prospects for sustaining high rates of growth and meeting its objectives of reducing poverty. Implementing such a policy would require making difficult policy decisions and possibly forgoing some growth in the short term, but it would significantly improve the economy s longer-term stability and capacity to withstand future economic shocks without severe disruption. Within the constraints imposed by external economic and political developments, the outcome depends primarily on the Government's ability to implement appropriate policy measures. - viii - 23. The Government recognizes that Thailand is facing a difficult economic situation due both to adverse external factors and to certain inappropriate domestic policies. During the past year, it has taken action to alleviate some of the economic difficulties through measures to increase domestic resource mobilization, to improve the viability of public enterprises, and to stimulate exports. The Government also recognizes that further measures are still required and that they should be coordinated within an appropriate development of the Thai economy. To this end, a statement outlining major policies and strategies for the Fifth Nlational Economic and Social Development Plan has been prepared, and the National Economic and Social Development Board (NESDB) is now in the process of preparing a "Fifth Plan Frame", which will provide further details concerning Government policies and programs for the Fifth Plan period. This work, as well as the ultimate preparation of a plan which includes detailed policy measures and programs, are important steps in ensuring that the Government will be able to implement a comprehensive adjustment program. The objectives of the program are to reduce fiscal and current account deficits in the short term while improving income distribution and increasing the longer term productivity of the Thai economy. THAILAND COPING WITH STRUCTURAIL CHANGE IN A DYNAMIC ECONOMY I. INTRODUCTION 1.01 Thailand's achievements in economic growth and development over the past two decades have been impressive. Real GDP has quadrupled, and GDP per capita has more than doubled. Life expectancy has increased from 51 to 61 years, primary education has reached essentially the entire population, and the incidence of poverty has been cut in half to about 31% of the population. Thailand-s growth pattern has been relatively free from distortions, has maintained consistently high agricultural growth rates, and has generated widespread improvements in the standard of living, but it has not relied heavily on foreign capital or concessional assistance. This past success, however, provides no assurance that such development can continue without major adjustments in Tlai. policy. Growth since 1975 has been accompanied by increasing public sector deficits, accelerating inflation, depletion of tangible and intangible assets, and current account deficits that cannot be sustained into the 1980s. These are serious disequilibria that must be resolved if Thailand is to continue its rapid rate of development. 1.02 Favorable endowments of arable land, a responsive labor force, improving external terms of trade until the mid-1970's, and expanding export markets have contributed to Thailand-s commendable growth record. But the country has not escaped the tensions associated with rapid growth and the transition from a traditional, subsistence-oriented economy to a modern, market-oriented economy. Differences in income levels and life styles between rural and urban areas have become more pronounced. Traditional production practices cannot sustain historic growth rates. Regional issues are becoming more important. Events during the 1970½s have aggravated these tensions and added new dimensions to the structural adjustments required of the Thai economy. 1.03 Several major structural problems in the productive sectors of the economy have been identified since the early 1970½s. They pertain to the longer-term development issues of transforming agricultural production, increasing the role of industry in sustaining high growth rates, and creating enough additional employment for the growing labor force. The impending exhaustion of additional arable land will require a transition to more intensive production techniques; the completion of the easy, first stages of import substitution in consumer goods industries will require either pushing import substitution into intermediate and capital goods or -2 giving further encouragement to the economy's export activities; and the modernization of the economy will require the Government to improve its supply and distribution of supporting economic and social infrastructure and to make the bureaucracy more responsive to the needs of an increasingly complex and integrated economy./l These issues are an integral part of the dynamics of sustaining rapid economic growth and modernization, and they need to be addressed by the country's long-run development strategy. 1.04 Elements of these transformations are occurring. In agriculture, yields have increased significantly in the central plain and other areas susceptible to water control. New cash crops have been widely adopted. But in many rainfed areas, the appropriate technology is not well known and less progress has been made. The industrial sector, led by textiles, is developing an export orientation and is becoming a major foreign exchange earner. It is also increasing its absorption of new increments into the labor force. However, protection is increasing and export incentives do not fully compensate for the impediments to local production for export. Industry remains concentrated in the Bangkok area, and outlying areas have little access to modern-sector employment. Programs are under way to improve the distribution of public services, including education beyond fourth grade, health care, and extension services, but they are still heavily concentrated in the more affluent areas. Accelerating the pace of all these transformations has now become more important as resource constraints arising from large public sector and balance of payments deficits weigh more heavily on the economy. 1.05 In the past five years, adverse external factors and insufficient domestic response have led to severe disequilibria in the external and fiscal accounts, adding to the structural adjustments required of the economy. The current account deficit reached a record high 8% of GDP in 1979, and will be at least as high in 1980. The public sector saving deficit reached 6% of GDP in 1979 and is unlikely to decline in 1980. The most significant changes in the external environment have been the rapid increases in the price of imported energy, the decline in net transfers and service payments to Thailand from abroad, and the conjunction of inflation and recession throughout the world. It is now clear that the economy s productive structure will have to adjust to much higher energy prices and correspondingly lower energy use than the pattern which was developing prior to 1973. Energy import prices more than doubled in 1979/80, and are expected to continue rising in real terms for the rest of the decade. /1 These issues were identified and discussed in the Fourth Five-Year Plan and analyzed in the Basic Economic Report, Thailand, Toward a Development Strategy of Full Participation (Report No. 2059-TH, September 1, 1978). - 3 - Domestic energy prices had not fully adjusted to the earlier price increase, and the economy was ill-prepared to absorb the recent one. In the past, high net service and tran;sfer inflows have allowed Thailand to carry large trade account deficits without negative impacts on the balance of payments. Declining international transfers and rising service payments abroad have significantly reduced this cushion and placed more of the burden of current account adjustment on the trade account. Thailand-s participation in and dependence on trade have increased dturing the 1970-s, but the terms of trade have deteriorated since 1974. 1.06 The domestic counterpart to the growing external deficit has been an increasing investment-saving gap, particularly in the public sector. Government revenues have stagnated in relation to CDP, and chronic budgetary deficits can no longer be financed by domestic savings, These deficits, as well as external price increases, have contributed to the recent accelera- tion of inflation to over 20% p.a. The fiscal imbalances are due to delays in adjusting to external energy Drice increases, instability in some financial markets, and the inability of the public administration to adjust rapidly enough to the changing circumstances. They threaten to lndermine the stability of the growth process and of the domestic political economy. 1.07 The external financial community is not likely to continue to fund persistent current account deficits of the magnitudes of the past three years without evidence that efforts are being made to rectify these disequi- libria. Adjustments will have to be made quickly to restrain the external deficits and the investment-savings gap, and to absorb external price increases while reducing inflationary pressures due to excessive demand. Some adjustments are already being implemented to increase government revenues, improve controls over the financial sector, and promote exports; and others are under consideration. Hlowever, the analysis of this report concludes that additional adjustments will be necessary to redress the financial imbalances and to promote production. While tihe impact of different measures will be felt over different time horizons, it is vitally important to initiate action quickly. There is a great danger that if these financial issues are not addressed imniediately, the imbalances will worsen. The economy would then be forced to unldertake more severe adjustments which would be more disruptive to its long-termn development prospects. 1.08 The difficulty of making the domestic adjustments and restoring the external balance is increased by the fact that a significant part of the problem is due to the necessity of transferring large and increasing levels of real resources to energy exporting countries, with resulting losses in domestic real income growth. Failure to recognize this fact in practice, particularly with regard to raising energy prices, has been a major factor in retarding the adjustment process and exacerbating the financial imbalances. In the short run, consumption will have to be constrained to free resources for transfer abroad and for investing in the expansion of domestic productive capacity. To the extent this latter occurs, more resources will be available in the future for both external transfers and - 4 - for raising domestic consumption. These economic factors are compounded by political factors including both the difficult security situation in Indochina and the related refugee situation which are demanding growing levels of the Government's attention as well as larger defense expenditures, and the danger that the increasing perception of economic inequality among Thais will reduce the political stability and cohesion within Thailand. 1.09 In addition to the field work and evaluations of the Mission, the analysis and recommendations of this report draw on the general background provided by the Basic Economic Report and on the specific analyses and recommendations of several recent sector reports: "Industrial Development Strategy in Thailand," (Report No. 2804a-TH, June 5, 1980), "Income Growth and Poverty Alleviation in Thailand: Results of Some Special Studies, (Report No. 2566-TH, June 20, 1980), and Thailand: Energy Issues and Prospects (Report No. 2813-TH, May 1980, in green cover). 1.10 The next section will briefly review the growth record of Thailand over the past two decades to highlight the underlying dynamics of the growth process as they have worked so far. The third section will analyze the stresses of the past half decade, how they have led to the current situation, and what tensions and tradeoffs the economy faces in adjusting to a sustainable growth path. The fourth section will analyze the principal problems: resource mobilization, financial imbalances, energy policy, industrial expansion, and agricultural transformation. It will discuss their implications and interrelations, outline the necessary corrective responses, and propose appropriate policy options for consideration. These alternatives will be analyzed as components of a medium-term adjustment program to re-establish a sustainable growth path without seriously disrupting progress in poverty alleviation. A simulation model has been developed to aid in this analysis, and various options will be compared by means of sensitivity analyses. The model is presented in detail in Annex I. II. THE DYNAMICS OF TWO DECADES OF DEVELOPMENT 2.01 Thailand-s pattern of development has been based on exploitation of natural resources, in this case, agricultural land. Rapid growth in agriculture and rising exports have been major factors supporting the growth in the rest of the economy. The availability of additional land allowed expansion of traditional subsistence production, and helped absorb a growing labor force. It also facilitated the rapid diversification into new cash crops, which was the mainstay of the rapid growth of agricultural exports. These foreign exchange earnings allowed high levels of capital and intermediate goods imports for the whole economy. Agricultural expansion has contributed to the growth of commerce and trade, and agricultural incomes have been a major component in domestic demand, the primary source of industrial growth. 2.02 Economic markets have operated relatively efficiently in Thailand. The private market structure has provided outlets for agricultural surpluses at remunerative prices and supplied credit, support services, modern inputs, and "incentive" consumer goods to encourage the production of those surpluses. Industrial markets have been largely competitive, despite some protectionist policies, and dynamic indigenous entrepreneurs have been a primary factor in the sector-s growth. There is no evidence of significant imperfections or segmentation in labor markets, and real wage rates for unskilled laborers do not vary widely throughout the country. There is considerable labor mobil- ity, and the availability of a large potential supply of unskilled labor at relatively low and stable wages has been an important factor in Thailand's industrialization and competitiveness in manufactured exports. 2.03 The principal contributions of the public sector were to provide and maintain the basic social and economic infrastructure, to ensure the political stability necessary for the expansion of marketing throughout the country, to maintain a stable currency to facilitate foreign and domestic trade, and to encourage the monetization of the economy. After early adventures into direct involvement in productive activities in the 1950-s, the Government recognized its relative inefficiency in that area and has since withdrawn from most production activities other than utilities. The Government has, however, intervened directly in the economy to promote or protect certain industries and to control certain prices for various reasons. This has had indirect effects on the structure of production and on productivity. 2.04 Large parts of the population in Thailand have enjoyed sustained real income growth, and their expectations for future growth are rising. This has led to increasing pressures on the Government from a variety of special-interest groups, particularly in Bangkok, to satisfy these expectations. These groups now represent not only the traditional business and military interests, but also various labor groups and - 6 - associations of small businessmen, such as commercial fishermen or truck drivers. 2.05 There is growing concern within the Government and among otherr influential groups in Thailand about the persistence of rural poverty. With additional arable land essentially exhausted, the traditional dynamic of rural growth and poverty alleviation will no longer function as effectively. It is also becoming increasingly clear that maintaining security throughout the rural parts of the country will depend on assuring that the rural population benefits from economic growth. The Record of Growth: 1960-1979 2.06 Thailand has sustained an aggregate GDP growth rate of nearly 8% p.a. over this period. In the 1960's, agricultural expansion of over 5% p.a. and growing domestic demand were the major elements sustaining growth. Poor agricultural harvests, the impact of the 1973-74 oil price increase, fiscal restraint, and the world recession slowed growth somewhat in the first half of the 1970's. The sectoral growth rates shown in Table 2.1 indicate the stability and balanced growth among the various sectors. The rate of per-capita GDP growth was maintained in the 1970's despite a fall in aggregate growth rate because the population growth rate declined. Table 2.1: GDP GROWTH RATES /a (% per annum, constant Baht) 1960- 1965- 1970- 1975- 1960- 1970- 65/b 70/b 75/c 79/c 70/b 79/c GDP 7.4 8.6 6.4 8.9 8.2 7.6 Agriculture 5.2 5.7 5.1 4.8 5.3 5.3 Industry 11.3 10.7 7.3 13.0 11.8 10.1 Manufacturing 10.7 10.8 9.8 11.9 11.1 10.9 Tertiary 7.3 9.5 6.8 9.1 8.5 7.6 GDP per capita 4.0 5.1 3.4 6.4 4.7 4.8 /a Unless otherwise indicated, all growth rates in this report are calculated by time trend semi-log regression over the time period indicated, inclusive of end points. /b 1962 constant Baht. _C 1972 constant Baht, 1979 data preliminary. Source: NESDB. 2.07 Thailand has enjoyed a remarkable degree of price stability during most of this period. The rate of inflation, as measured by either the GDP deflator or the Consumer Price Index (CPI), was low prior to 1973. Although price stability has been a primary objective of the government, it was not possible to isolate the economy from the external price increases that affected imports and exports in 1973-74, and inflation exceeded 20% in 1974 (CPI basis). Stringent monetary and fiscal policy in 1974/75 and lagging demand brought the rate down sharply in 1975 and 1976, as shown in Table 2.2. 2.08 During this period, government investment projects were delayed and GDP growth slowed, although a large part of the deceleration in growth can be attributed to poor agricultural performance in 1974. Current account deficits were quite low in 1973-74, averaging 0.6% of GDP. Export earning and the terms of trade were favorable. The current account deficit grew to 4.1% of GDP in 1975 and has expanded thereafter as a result of rapid growth, declining terms of trade and what has become a secular decline in net transfers and service payments. Table 2.2: INFLATION RATES (% p.a.) 1960-69 1970 1971 1792 1973 1974 1975 1976 1977 1978 1979 GDP deflator 2 -1 2 9 20 18 3 3 9 9 11 CPI index 2 0 0 5 15 24 5 4 8 8 10 /a /a 15% on a December 1979 over December 1978 basis and 24% on a June 1980 over June 1979 basis. This slowed to 20% in July. Sources: NESDB, Bank of Thailand. Components of Growth: 1960-1979 2.09 The most striking feature of Thailand-s growth pattern over the past two decades has been the sustained growth of the agricultural sector. Most of the growth of agricultural production can be explained by the expansion of land under cultivation at about 4% p.a. until the mid-1970's. Average yields have remained relatively stable. In most areas, it has been easier or more economic to bring more land under cultivation than to cultivate existing holdings more intensively. The expansion of cultivated area included both increasing the size of existing holdings and creating new farm units, which facilitated the absorption of labor. 2.10 There have been offsetting trends within the overall stability of average yields. Intensity of land use and yields have increased sharply in areas where there is water control or irrigation and where high-yielding varieties have been. introduced. On the other hand, in many areas cultivation has expanded into less fertile, marginal areas with lower average yields. The average increases in agricultural value added per unit of land have been limited, about 1% p.a.. They are due primarily to double cropping and diversification into higher value crops. The availability of additional land to bring into holdings is now rapidly diminishing in most parts of the country, and the area of farm holdings may even have declined in recent years. 2.11 Cash crops, such as maize, cassava, sugar and pineapples, have expanded rapidly and reduced Thailand's dependence on rice as the principal crop for sale and export (see Table 2.3). During the 1970½s, production increased faster than domestic demand, and an increasing share of incre- mental output went into exports. This was a major factor in the rapid export growth during that decade. Table 2.3: AGRICULTURAL DIVERSIFICATION (% of value added, current Baht) 1960-65 1966-70 1971-75 1976-79 Expansion in area of farm holdings (growth, % p.a.) - 3.6/a 4.7 -1.0/b Average share of all crops in agriculture 73.7 71.7 .73.6 74.1 Average share in crops of: Rice (paddy) 49.1 47.6 44.0 36.7 Rubber 7.5 5.3 4.6 5.7 Maize 3.3 5.9 7.3 5.0 Sugarcane 2.0 2.2 5.2 5.7 Cassava 2.8 2.4 4.1 7.4 Other crops 35.1 36.5 34.8 39.5 /a 1962-71. /b 1975-79. Source: NESDB, Ministry of Agriculture, Office of Agricultural Economics. 2.12 Growth in the industrial sector throughout the period was based primarily on meeting the demands of the expanding domestic market. In the - 9 - 1960's, import substitution was the next most important source, accounting for about one third of industrial sector growth. Export expansion became the second most important source of industrial growth in the 1970's, as shown in Table 2.4. The easy stage of import substitution into consumption goods had been essentially completed by the early 1970's, and there was little incentive for the private sector to press into substitution in the intermediate or capital goods sectors without substantial increases in protection, which declined from 1968 to 1974, but has since risen. Table 2.4: SOURCES OF INDUSTRIAL GROWTH (%) 1966-72 1972-75 1975-78 Domestic demand 64.1 91.0 79.5 Import substitution 29.4 0.5 -7.7 Export expansion 6.5 8.5 28.2 Total 100.0 100.0 100.0 Source: Industrial Development Strategy in Thailand, Report No. 2804a-TH, June 5, 1980. 2.13 Rather than press import substitution further, export opportunities for manufactured goods were pursued. OECD quotas on imports of textiles and garments from certain other developing countries created a large potential for Thai textile exports. In conjunction with foreign direct investment and joint ventures, the economy was able to capture a relatively larger share of the growth in OECD textile markets. Thailand has since earned its own quotas, but only after firmly establishing an export orientation in the textile industry. Thailand has also entered a number of other export markets, and textiles and garments now account for only one- half of manufactured exports (defined as SITC 5-8 less 68). 2.14 Economic growth has led to increasing energy use. The demand for energy grew 1.8 times faster than GDP in the 1960's, and it slowed only to 1.3 times faster in the 1970s. There was a significant reduction in the growth of energy consumption in 1974, when it grew at 1.8%, or 0.3 times as - 10 - fast as GDP./I As indicated in Table 2.5, most of the reduction in energy demand occurred after 1975. In fact, a significant portion of the reduction in the elasticity is due to the exceptionally high growth in GDP in 1978, (led by agriculture) and a sharp reduction in hydro-electric production in that year due to the low water levels resulting from the drought in 1977. This elasticity is within the "normal" range observed for developing countries. Growtlh of energy consumption has been due to a number of factors: the extension of commercial agriculture relies heavily on the road-based transport system; agriculture is increasingly turning to mechanization and pumps to raise production; the growing industrial and commercial sectors consume large amounts of energy; and rising incomes are leading to higher private use of energy for automobiles, air conditioners, lighting and home appliances. Restrained energy price increases contributed to continued relatively high growth of demand and consumption after 1974. However, the decline in the relative demand growth for energy in recent years can be partly attributed to the effects of the price increases that took place. This indicates a significant negative price elasticity, and shows that is an effective policy. Table 2.5: ENERGY CONSUMPTION 1960-69 1970-74 1975-78 1979 Growth of commercial energy consumption (% p.a.) 15.6 10.6 9.2 Elasticity of energy consumption with respect to GDP 1.8 1.9 1.0 Share of total commercial energy imported (% of energy equivalent) 86.2 88.2 81.1 Value of energy imports (B, billion) 1.5 5.1 18.0 32.6 Energy imports share of total imports (%) 9 13.4 21.1 21.3 Source: NESDB, Bank of Thailand Statistical Bulletin, NEA 2.15 The growth of productive activities was accompanied by significant developments in the financial sector. Banking and other financial institu- tions have spread throughout the country, and there are now branch banks in every provincial capital. In the 1960's, banks shifted their primary atten- tion from financing foreign trade to supporting domestic production activi- ties. Finance companies, which raise funds by issuing promissory notes, and face fewer regulations than banks, grew rapidly since 1964. They now have combined assets equal to about a quarter of those of commercial banks and engage in both industrial and consumer lending. A stock exchange was established in 1975 to broaden equity financing. Specialized financial institutions for lending in support of agriculture, small-scale industries, and long-term industrial activities have also been created. /1 Supply shortages may also have contributed to slow consumption growth that year. Some domestic prices were not allowed to increase enough to cover producers' costs, and products were withheld from markets. - 11 - 2.16 External resources were not a constraint throughout most of this period, and Thailand borrowed relatively little abroad. Thailand has long maintained a conservative attitude about incurring foreign debt and has had sufficient domestic resources and savings to sustain high growth rates without reliance on external resources. The current account deficit averaged less than 2% of GDP for the entire period 1960-75, and the external debt outstanding totaled about $1.3 billion by 1975, including $700 million of private non-guaranteed debt. Trade deficits were often larger during this period, but high net inflows on the transfer and service accounts reduced the external borrowing requirements. Distribution of Growth 2.17 The benefits of growth have been relatively well distributed throughout the country. Since most agricultural production is by small- holders, most of the income growth in that sector has accrued to the rural producers themselves. The overall incidence of poverty has been reduced from about 57% in the early 1960's to about 31% by the middle 1970 s, and from 61% to 35% in the rural sector. Poverty remains largely a rural phenomenon, and it is unevenly distributed throughout the country (see Table 2.6). Table 2.6: POVERTY INDICATORS 1962/63/a 1968/69 1975/76 Incidence of poverty (% of total population) 57 39 31 Rural 61 43 35 Urban 38 16 14 Distribution of poverty (% of poverty population) 100 100 100 Rural 88 94 90 Urban 12 6 10 /a Due to classification of sanitary districts as urban in the 1962/63 Household Expenditure Survey, these results are not strictly comparable to the later surveys where the sanitary districts are more appropriately classified as rural. As a result, the urban and total poverty incidence and urban poverty distribution are somewhat overstated in 1962/63, and the rural incidence and distribution slightly understated. Source: Income Growth and Poverty Alleviation in Thailand, Report No. 2566-TH, June 20, 1980). - 12 - 2.18 Most poverty is concentrated in the Northeast and parts of the North, where the fertility of the land is low. The rural areas have not been stagnant, however, as evidenced by the dramatic reduction in poverty. They have maintained average per-capita income growth rates comparable to those of the urban areas. On the basis of household survey data through 1975, average inter-regional and rural-urban per-capita household income differentials were not increasing as a function of rapid growth. However, the differences in average incomes between urban and rural areas remain large. Within the rural and urban sectors, income differentials have increased as some areas have enjoyed substantial growth in the past two decades while other areas have not experienced any real growth. - 13 - III. STRESSES OF THE PAST HALF DECADE 3.01 Thailand appeared to absorb the immediate impacts of the 1973/74 economic shocks with no significant disruption of its growth rate. Low agricultural growth and declining construction activity had depressed growth in the early 1970's, and the post-1973 record is no worse than 1970-73./1 The initial balance of payments effect of the oil price increase was cushioned by high export prices and continued high transfer and service account earnings through 1975. Most of the other external price changes were absorbed in 1973 and 1974. Domestic inflation shot up and then was brought under control in 1975 as a result of tight fiscal policy. This fiscal restraint was in part unintentional./2 There was great concern that this reaction had unduly retarded growth, which fell to 5.0% in real terms in 1974. However, the decline was at least as much due to slow agricultural growth of 1.4%, which was little affected by these factors, as it was to the decline in public investment expenditures. Agricultural growth recovered to 8.9% in 1975, and GDP grew at 7.6%. The nonagricultural sectors grew at 7.3% in 1974 and 6.8% in 1975, lower than 1972-73, but in subsequent years they averaged more than 10% p.a. 3.02 The one area where the economy had not fully adjusted by 1975 was in absorbing energy prices. Excise taxes and retail margins were reduced on petroleum products to keep domestic energy prices down, and only part of the import: price increase was absorbed in 1974. It was not until 1977 that energy prices were allowed to rise and begin to restore earlier tax levels and margins. Thailand adopted a policy of gradual adjustment on energy prices because energy was viewed as essential for growth and some lower cost domestic energy sources were being developed. Also, the energy price was a very sensitive political issue. Failure to raise energy prices between 1974 and 1977 encouraged continued rapid growth of consumption and imports. 3.03 By 1975, most Thai officials and other observers felt that the Thai economy had largely adjusted to the shocks of 1973/74. Their primary concern was directed towards restoring the high growth rates of the 1960-s, expanding public investment and social service expenditures in order to further poverty alleviation, and restraining inflation. The external deficits then projected were considered manageable and acceptable in the interests of growth, although they were larger than the economy was /1 Average GDP growth in 1970-73 was 6.1% p.a. compared to 6.3% p.a. for 1973-75; for the nonagricultural sectors, the rates are 6.9% p.a. for the earlier period and 6.8% for the latter. /2 The rise in trade values unexpectedly increased tariff and export tax collections, and domestic price increases required renegotiation of a number of government contracts which delayed capital expenditures. An overall budgetary surplus was recorded in FY74. - 14 - accustomed to. The analysis of the Basic Economic Report /1 supported this position and placed a greater emphasis on growth and distriTution than on further adjustments of energy prices or on reducing the financial deficits. 3.04 Thailand has achieved a real growth rate of 9% p.a. since 1975, which is extraordinary in view of Thailand's deteriorating external situation and the general decline in growth rates experienced throughout the rest of the world. Unfortunately, this growth was not simply a continuation and acceleration of the growth pattern which dominated prior to the energy price inceases, nor was it due to a successful adjustment to the changed external situation. The high 1975-79 growth rate is the result of several policies and other factors which are not likely to be repeated in the early 1980's. 3.05 Measures which promoted growth included controlling certain key prices, such as energy and cement prices, maintaining a ceiling on interest rates, increasing protection, expanding public sector expenditures and deficits, and permitting rapid credit creation to support higher demand. These actions were able to stimulate growth because excess capacity was available in 1975, export growth was exceptional, increasing levels of foreign resources could be mobilized to fill the growing external and domestic savings deficits, price stability had been re-established, and real oil import prices were stable or falling after the 1973 increase. With inflation again accelerating, capacity constraints binding in several sectors, large budgetary and current accounts deficits to be financed, continuing real oil price increases to be absorbed, and foreign commercial banks becoming more cautious about further extension of credit to developing countries, many of the growth-promoting measures of the late 1970's cannot be continued. In fact, these measures contributed to worsening several structural disequilibria, such as the budgetary and external deficits, and to excess demand. They have left the economy uncomfortably exposed to external shocks, such as the doubling of oil prices which occurred in late 1979. 3.06 Recent growth has also been sustained by depleting certain assets of the economy. High rice exports have been maintained by depleting stocks from an estimated 3 million tons in 1977 to a current level of about 0.7 million tons. This depletion is nearly equal to one year's rice exports. Controls on petroleum product prices and power tariffs have depleted the financial assets of public enterprises in the sector and greatly increased their indebtedness, which will only lead to higher price increases in the future and weaker financial situations for these enterprises. Price controls on goods such as cement have led to deferred or forgone investment in capacity and higher-cost imports, reducing the longer-term productive capacity of a major industry. Growing levels of borrowing abroad have absorbed a large part of Thailand's borrowing potential and future increases /1 The report was prepared in 1978 on the basis of preliminary 1977 data, and was discussed with the Government in 1978. - 15 - will not be as easy to achieve once Thailand reaches its country credit limits with commercial banks. It is far more difficult to raise these limits to increase borrowing than it is to increase borrowing up to the established limits. High Growth and Financial Imbalances 3.07 Production Growth. A number of separate elements contributed to the high rates of growth since 1975. Despite wide variation, agricul- tural production remained high throughout the period, falling only slightly below its average historical growth rate (compare Table 2.1 (p. 6) to Table 3.1). Expansion of double cropping in irrigated areas of the central plain, rapid expansion of upland crops such as sugar, cassava, and others, and the recovery of rubber production all contributed to agricultural growth. This added to the overall growth impetus in other sectors and supplied high levels of exports. The industrial and total nonagricultural sectors grew substantially more rapidly than agriculture in 1975-79 than in the previous half decade. The margin of the nonagricultural sectors growth over agriculture in 1975-79 also exceeds that of the earlier decade and may indicate a change in the relative structure of growth in favor of the nonagricultural sectors. Table 3.1: GROWTH RATES BY SECTOR (% p.a., 1972 baht) 1970-75 1976 1977 1978 1979 Agriculture 5.1 6.1 -0.6 14.7 -2.0 Crops 5.2 7.5 -4.7 18.6 -2.7 Industry 7.3 15.7 14.7 11.5 10.1 Manufacturing 9.8 15.5 13.3 9.8 9.8 Construction -0.6 17.6 20.0 17.5 9.2 Tertiary 6.8 8.0 8.2 10.1 10.1 GDP 6.4 9.3 7.3 11.7 6.7 Source: NESDB. 3.08 Industrial growth was led by sharp increases in both the manufac- turing and construction sectors. The former was due to a resurgence of do- mestic demand after the recession of 1974-75, to strong export demand, and to growing investment demand. Textiles and wearing apparel, various kinds of machinery, transport equipment, and beverages were important factors in sus- taining growth throughout the period. The food (declining sugar produc- tion), tobacco, wood (exhaustion of forests and bans on logging), and pet- roleum refining (capacity limitations) branches were the principal elements - 16 - in the decline in manufacturing growth in 1978 and 1979. Supply or capacity constraints were reached. Growth in the other branches declined only slightly from the 1976-77 levels. As a result of efforts to promote domestic industrial growth and reduce the trade deficits, protection increased from an average nominal level of 35% in 1974 to 51% in 1978 for nonimport-competing goods, and from 25% to 36% for import-competing goods./l This has contributed to the demand for investment by import-substituting industries, but has allowed lower efficiency in the use of capital goods./2 /3 3.09 Construction activity benefitted from high private demand, the recovery of government capital expenditures, and the growing investment programs of the public enterprises. The growth of public sector demand for construction fell in 1979, but private sector demand continued at high levels. Policies which maintained low interest rates when inflation accelerated and which restrained the costs of major construction inputs, including petroleum products and cement, lowered the effective price of construction relative to other goods and to financial assets. This contri- buted to a construction boom as investors shifted into real estate. Tertiary sector output increased as a function of expanded activity in the primary and secondary sectors, the rapid growth in external trade, and the rapid expansion of government current expenditures, which grew at 25% p.a. in 1977-79. 3.10 Trade Growth and Current Account Deficits. Export growth rates substantially exceeded GDP growth in the 1970's, reversing the pattern of the 1960s. Thailand enjoyed relatively high demand for most of its agricultural exports, and its manufactured exports captured a growing share of a number of markets. Thailand now accounts for nearly 2% of all manufactured exports from developing countries, compared to less than 0.4% in 1970. The actual /1 Potential effective protection rose from 39% to 99% for nonimport- competing goods and from 45% to 86% for import-competing goods over the same period. Import-competing goods are defined as goods where imports are 10% or more of domestic consumption; nonimport-competing goods are those where imports are less than 10% of domestic consumption. All of this protection was not realized in many sectors, where stiff domestic competition kept domestic prices below import-price-plus-duty levels. Data are from An Industrial Development Strategy for Thailand, Table 7. /2 Since protection allows domestic value added to increase without there necessarily being a corresponding increase in real output measured in world prices, some of the recorded industrial growth may be due to the effects of protection rather than to real increases in production. /3 Despite this growing protection, import substitution has declined slightly in 1975-78 as shown in Table 2.4. This further indicates the declining efficiency of import substitution industries, whiclh cannot even maintain their market shares with this amount of increasing protection. See the Background papers to An Industrial Development Strategy for Thailand for more discussion of this. - 17 - growth rates for manufactured exports were higher in the early 1970's than in the latter half of the decade, but the earlier growth was from a very small base. The latter period is more remarkable because it occurred from a larger base and in spite of the imposition of import quotas on Thai textiles in OECD countries and a world-wide recession. 3.11 The growth in the value of exports greatly exceeded growth of domestic production at current prices./1 This is most evident in the manufacturing sector, but also true for agriculture, as shown in Table 3.2. The value of imports grew less rapidly than exports in both halves of the 1970s, compared to twice the growth rate of exports in the 1960's. However, in recent years export growth slowed and imports accelerated so that import growth exceeded export growth in 1977-79 by 25% p.a. to 23% p.a. The demand for imports of energy and of capital and intermediate goods was high and their prices were rising. In addition to the deterioration in the trade balance since 1976, the declining net transfers and services contributed to the growing current account deficits (see paras. 3.14 and 3.15). Table 3.2: GROWTH IN THE VALUE OF EXPORTS AND PRODUCTION (Current prices, % p.a.) 1960-70 1970-75 1975-79 Agriculture exports 3.2 28.9 17.3 Agricultural production /a 7.2 22.3 11.6 Manufactured exports 16.0 65.5 38.1 Manufacturing production /a 12.5 21.1 19.0 Total Exports 5.8 29.7 23.0 Total Imports 12.0 23.7 21.7 GDP 10.3 19.0 17.6 /a Value added. Source: NESDB, Bank of Thailand. 3.12 A similar pattern holds in constant prices as shown in Table 3.3. Here the shift in the relative export and import growth rates is even more pronounced. Most of the growth in the value of agricultural exports in 1970-75 was due to price increases for rice, rubber, cassava, sugar and maize. The increase in export volume only kept pace with agricultural production. In contrast, with the exception of rising rubber prices, volume growth was the key factor in agricultural export growth in 1975-79, led by cassava exports to the EEC, rubber, rice and canned pineapple. Much of the /1 Part of this is due to rice exports from stocks since 1977. - 18 - expansion of agricultural production in the latter period was in crops not consumed extensively in Thailand, so a larger share of the increment could be exported. Real import growth slowed substantially in 1970-75 as a result of external price increases and slower domestic growth, but it has since rebounded to more normal rates in relation to GDP growth. In the past three years, real import growth exceeded export growth, 10.3% p..a. to 7.7% p.a. Declining terms of trade have further aggravated the trade deficit. Table 3.3: GROWTH IN THE VOLUME OF EXPORTS AND PRODUCTION (Constant prices, % p.a.) 1960-70 1970-75 1975-79 Agriculture exports 2.2/b 5.0 18.7/c Agricultural production /d 5.3 5.1 4.8 Manufactured exports 17.2/b 55.0 22.9/a Manufacturing production /d 11.1 9.8 11.9 Total exports 5.7 8.2 15.5 Total imports 13.4 4.4 11.4 Terms of trade (1975=100) 109.3 107.3 91.7 GDP 8.2 6.4 8.9 /a January - August in 1979. /b 1961-70. /c 1975-78. /d Value added. Source: NESDB, Bank of Thailand. 3.13 As a result of the rapid growth of trade in the 1970's, the economy has become much more open and subject to external influences. The share of imports in GDP rose from an average 20% of GDP in the 1960's to 24% in 1975-79 and 27% in 1979./l Until the mid 1970's, rice was the only major agricultural export crop which was also widely consumed domestically, and its domestic price was effectively insulated from world price fluctuation by the rice premium and reserve requirement. In the past few years, several other crops have acquired large markets both domestically and abroad, e.g., maize, /1 For nonoil imports as a share of GDP, the figures are 17%, 19%, and 21%, respectively. - 19 - sugar, fruits; and their domestic markets are much less insulated from the impact of external price and demand fluctuations than the rice market. As a result, it has become more difficult to isolate domestic prices and incomes from fluctuations due to changes in external prices and demand./l 3.14 Declining net transfer and service receipts have been a major factor in the growing size of the current account deficit in the latter half of the 1970's. As shown in Table 3.4, the 1979 trade deficit is slightly smaller relative to GDP than the average trade deficit for 1960-69, but the current account deficit is four times larger - 8% of GDP compared to 2% in the 1960's. The decline in transfers is primarily due to the withdrawal of the American presence in Indochina. The major change in the service account is the larger interest payments on a growing external debt, as shown by the sharp rise in net factor service payments. Rising tourism revenues have only been able to slow the decline in net service receipts. Table 3.4: EXTERNAL BALANCES (As % of GDP in Current Terms) 1960-69 1970-72 1973-75 1976 1977 1978 1979 Trade balance -8.4 -7.0 -7.5 -3.3 -6.5 -6.0 -8.3 Service balance 4.9 4.0 3.4 0.5 0.6 0.9 0.6 Net factor services - 0.0 -0.1 -0.3 -0.4 -1.0 -1.7 Transfer balance 1.7 0.7 1.6 0.1 0.2 0.2 0.2 Current account balance -1.8 -2.3 -2.5 -2.7 -5.7 -4.9 -7.5 Memo: Resource balance /a -3.0 -4.0 -2.5 -5.5 -4.1 -6.0 /a Balance of trade in goods and nonfactor services. Source: NESDB, Bank of Thailand Statistical Bulletin (various years). 3.15 The deterioration of the current account in the later 1970's is due primarily to three factors: the declining terms of trade, high volume growth of imports, and declining net invisible receipts. The first factor was beyond Thailand-s control and primarily due to the oil price increase, although Thailand enjoyed favorable price increases for a number of its exports during the period. The second factor was largely a result of domestic policies which encouraged rapid growth, an investment boom, and high demand for goods that spilled over into imports. In particular, the failure to adjust domestic energy prices rapidly enough encouraged more /1 For example, recent attempts to maintain domestic sugar prices below export prices have led to domestic shortages and eventually the necessity of importing sugar. - 20 - growth of petroleum imports than the economy could afford. The third factor resulted from a combination of external and internal causes. The decline in transfer receipts resulted mainly from reduced US activity in the area. Growing interest payments were a result of generally rising interest rates plus the larger level of external debt that was acquired during the period. These payments will continue to grow as a result of the high level of current borrowing. It is only due to the superlative export performance of the economy that these three factors have not resulted in even more serious balance of payments deficits. 3.16 Fiscal Deficits. Total central government expenditures (current and capital) have recovered from their unusually low levels of the mid-1970½s, growing from about 14% of GDP in 1974-75 to about 17% in 1976-79 as shown in Table 3.5. This compares to 18% in 1970-73 (see Table 3.5). The growth of current expenditures was led by central government expenditures on defense and administration, which grew at 35% per annum. These categories now comprise 40% of total current expenditures, compared to 35% in FY71. Current expenditures have been increasing more rapidly than capital expenditures and now account for 67% of total central government expendi- tures, compared to 60% in FY71. Despite the objectives of the Fourth Plan, the capital expenditure share of the total budget has fallen from 16% to 12% for the economic sectors. Lagging central government investment has been offset by public enterprise and local government investments. They now account for 41% and 14% of total public sector investments, respectively, compared to 24% and 9% in FY71. As a result of the growth of public enterprise investments, total public sector expenditures now account for over 20% of GDP, compared to 18% in 1970-75. 3.17 Growth in central government expenditures since 1975 was not matched by a similar growth in revenues, and large budgetary deficits ensued. Iotal central government revenues as a share of GDP have stagnated at about 13%, and taxes at a little more than 12%, both down marginally from their share in 1970-75. Central government savings have been slightly negative in most years since 1975, and the central government deficit has grown to over 4% of GDP, or about B 20 billion ($1 billion). This has been financed to a much greater degree by borrowing abroad - 57% of the deficit in FY79 compared to an average of 17.8% in FY71-75. Domestic financing of the budget deficit from monetary authorities increased from 55% of the total in FY71 to 72% in FY79. Given the much larger total deficits, this has had a significant inflationary impact. 3.18 The overall buoyancy of the tax system is about unity, and the tax incidence is roughly proportional across income groups, with a slight tendency toward being regressive at the extremes./l About 80% of revenues /1 See An Analysis of Fiscal Activities in Thailand, A Background Paper to the Basis Economic Report, November 1978. - 21 - Table 3.5: SHARES OF PUBLIC SECTOR REVENUE AND EXPENDITURE IN GDP (% of current GDP) 1970-75 (Average) 1976 1977 1978 1979p Central government revenue 14.1 13.1 13.3 13.4 13.5 Central government current expenditure 13.0 13.3 12.8 13.5 13.6 Central government saving 1.1 -0.1 0.5 -0.1 -0.1 Central government investment /a 3.6 3.1 3.6 3.3 3.1 Net central government -2.5 -3.2 -3.1 -3.4 -3.2 Public enterprise investment 1.6 1.8 2.4 3.3 2.8 Self-financing of public enterprise investment 0.6 0.4 0.9 0.9 0.7 Net public enterprise -1.0 -1.4 -1.5 -2.4 -2.1 Net deficit, other /b -0.3 -1.2 -0.4 0.0 -0.8 Total Public Sector Deficit -3.8 -5.8 -5.0 -5.8 -6.1 /a Budget basis, which excludes capital expenditures financed directly by loans and grants. lb Includes repayments of state enterprise debt, savings of local govern- ments (some of which is from transfers from the central budget), govern- ment capital expenditures financed by foreign aid, and miscellaneous net transactions on public capital account. Source: Bank of Thailand, Bulletin of Statistics. are still derived from indirect taxes, although the structure of revenue sources has changed over the past decade as shown in Table 3.6. Indirect taxes are not very elastic with respect to GDP and tend to be regressive in their impact. A greater share of revenues is now generated by the business tax, excise taxes, and the corporate income tax, and a lower share is supplied by taxes on external trade. This latter effect is the result both of a reduction in the relative importance of rice export taxes and of policies reducing or eliminating tariffs on petroleum and certain imports used by the manufacturing sector. The business tax, a gross turnover tax, - 22 - is inefficient and has distortionary effects on the structure of production. Excise taxes tend to be regressive, but can be useful as a part of demand management policies and as a substitute for protectionist import tariffs. Despite very rapid growth of personal incomes and the modern sector, revenues from personal income taxes have hardly increased their share in the past two decades, and the corporate income tax share, which rose from 3% of revenues in 1961 to 10% in 1976, has increased only slightly thereafter. The structure of taxes has not evolved as rapidly as the economy and has been unable to generate adequate revenues. Table 3.6: STRUCTURE OF TAXES BY SOURCE (% share of government tax revenues) FY61 FY71 FY76 FY77 FY78 FY79 Direct taxes 10.2 13.7 18.0 17.3 19.9 19.7 Corporate income 3.3 5.6 10.0 9.7 11.1 10.9 Personal income 6.9 8.1 8.0 7.6 8.8 8.8 Indirect taxes 89.8 86.3 82.0 82.7 80.1 80.3 Imports 34.2 30.0 25.0 25.0 24.6 23.6 Exports 18.9 2.5 3.5 3.5 3.1 3.9 Business 13.9 22.7 23.5 23.2 22.8 21.2 Excise 11.0 18.5 20.5 20.1 18.4 20.5 Others 11.8 12.6 11.7 10.9 11.2 11.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 Source: Bank of Thailand. 3.19 The public enterprises record of generating adequate saving for investment is also poor, in large part due to the refusal of the government to enact adequate tariff increases to cover rising operating costs and expanded investment programs. In 1979, their internal resources managed to contribute only 25% of their capital investment, compared to some 67% in 1970; the rest came from external borrowing (59%) and contributions from the central government (16%). The public enterprises' savings deficit in 1979 amounted to more than 2% of GDP. Including local government saving and other factors, the public sector deficit reached 6.1% of GDP in 1979, as shown in Table 3.5. 3.20 Inflation. The rate of inflation has accelerated since 1976 as a result of excess domestic demand and foreign price increases. The increase was moderate in 1977. But as higher external prices worked their way into the economy and as the government's expansionary policy began to have its effects, inflation has since accelerated and exceeded 20% in mid-1980. There is now some evidence that the inflation rate is moderating as food prices are falling. But this may be only transitory as energy and cement price increases cannot be postponed much longer. When international prices are rising, it is not possible to avoid some degree of inflation in an economy as open as Thailand-s; however, domestic policy also contributed to the inflation./l Government efforts to slow inflation have concentrated on attempting to control certain highly visible prices. But, at best, the price controls can only delay price increases and are not effective antiinflation measures. Other policies affecting aggregate demand have augmented inflationary pressures, including rapid credit expansion to support the finance companies, large public sector deficits financed by borrowing from the central bank, and low interest ceilings. 3.21 Financial Sector Growth. The rapid growth of production in the late 1970-s was accompanied and facilitated by a rapid expansion of the financial sector. The Bank of Thailand actively encouraged expansion of branch banking outside of Bangkok and mandated higher levels of lending to agriculture to stimulate growth in rural areas. The banks themselves grew very rapidly and became more aggressive in seeking new domestic business and participating in external markets (see Table 3.7). In the late 1970's, commercial banks borrowed abroad heavily to meet growing domestic demands for credit. Net foreign liabilities of the banking sector grew rapidly from about $200 million in the early 1970's to $700 million in 1977 and over $1.5 billion in mid-1979. Net liabilities abroad have since declined moderately. However, because usury laws set upper limits on interest rates which could be changed by banks, rates payable to savers were also limited and when foreign rates rose above the Thai rates, short-term capital quickly moved abroad, and there were outflows of several hundred million dollars in short periods in 1978 and 1979 due to interest rate differentials. This caused a great deal of concern at the Bank of Thailand and was a major factor leading to raising the usury ceilings in January 1980. 3.22 Finance companies also grew quite rapidly and, as a result of weak controls, rather precariously. They were highly levered and closely linked with the commercial banks, which were their primary source of funds. The finance companies were heavily involved in the expansion of consumer credit and lent extensively for purchasing (often speculative) equity shares. These companies contributed to the rapid expansion of credit during the 1970's that helped maintain the high level of aggregate demand. 3.23 The Securities Exchange of Thailand (SET) was established in 1975 and grew quickly in the ensuing three years. The paid-up capital of listed /1 The Bank of Thailand estimates that, as a very rough calculation, a 1% increase in import prices adds almost 0.5% to domestic prices, including direct plus indirect effects. Import prices rose 46% from 1976 to the end of 1979, which would imply a 23% increase in domestic prices. The CPI grew 37% in the same period, and the WPI grew 35%. It is interesting to note that the WPI for imported goods rose only 15% during this period while the WPI for domestic goods rose 43%, also indicating that a signi- ficant amount of inflation is not due solely to rising import prices. Export prices may also have contributed to domestic price increases in 1974-75, but their effect on the general price level is not likely to have been significant since. - 24 - Table 3.7: FINANCIAL SECTOR GROWTH (% p.a.) 1970-75 1976 1977 1978 1979 Assets of Banks 24.4 18.4 24.1 25.9 19.9 Assets of Finance Companies 33.2 42.7 2.0 Credit to the Economy 22.5 23.4 27.2 26.6 20.2 Broad Money 20.5 20.0 20.0 18.5 14.8 Net liabilities of commercial banks abroad 31.3 0.5 70.3 81.7 9.2 Memo: GDP (current Baht) 19.0 13.0 16.4 21.5 18.2 Source: Bank of Thailand, Monthly Bulletin. companies increased from B 90 million in 1975 to B 2.4 billion in 1978. Market values of the shares exceeded their original paid-up values by a large amount in 1978, reaching B 4.3 billion. Traded volume peaked in October 1978 at B 15 billion, and B 57 billion were traded that year. Influenced by tight money policies and weakening economic conditions in general, prices on the SET started to slide in December 1978. By February 1979 the volume traded was down to B 0.3 billion. Volume for 1979 as a whole only reached B 22 billion. 3.24 The decline of prices on the SET in 1979 placed a severe strain on the liquidity of the finance companies. As a result of speculation, share prices had been bid up well beyond realistic values. Many of these purchases were financed by loans from finance companies, and they became highly illiquid when share prices fell. This threatened the stability of the banking sector, which held a large proportion of finance-company liabilities. Although the Bank of Thailard would have preferred to impose some monetary restraint at this time, the potential illiquidity of the financial sector forced the Bank of Thailand to reduce reserve requirements and increase access to its credit facilities. This preserved the solvency of the financial sector at the cost of allowing more liquidity creation than was prudent. Various rescue operations enabled the sector to survive the failure of one of the largest finance companies in 1979. Credit growth was more restrained by late 1979 and early 1980, when a number of measures were implemented to rationalize the operations of the finance companies and stabilize the stock market. (See Annex II for details.) 3.25 Monetary Policy. Monetary policy in Thailand over the past 20 years has been, to a large extent, passive. It has controlled the rate of credit expansion as its primary instrument for supporting growth, maintaining price stability, and moderating the balance of payments. Interest rates were allowed to adjust to the rate of credit expansion, although the Bank of Thailand occasionally has used interest rate policies to iron out short-run fluctuations. So long as fiscal policy was not overly - 25 - e-pan I a -rebL rates were not actually constrained, these policies were able to achieve their objectives of growth with stability. In the mid-1970½s, the Bank of Thailand became more active in promoting development objectives with credit allocations to agriculture and branch banking require- ments, but it did not assume such an active role in dealing with overall monetary policy, other financial sector developments, and external debt. The rapid growth of the financial sector, external borrowing, and debt outstanding, however, was accompanied by several disequilibrating factors, including the uncontrolled growth of the finance companies, extensive speculation on the SET, interest ceilings which resulted in negative real interest rates, and extensive participation in international money markets. These factors lead to more rapid expansion of credit than was prudent and contributed to excess domestic demand and inflation. 3.26 Until January 1980, usury laws constrained interest rates to ceilings established in times of price stability. Real interest rates became negative when inflation accelerated, as shown in Table 3.8. This discouraged private savings and encouraged high levels of demand for consumer goods. Credit was cheap and available, so people bought goods in anticipation of further price increases. The marginal savings rate declined from 22% in 1976 to 16% in 1979. Given the inflationary expectations about price increases for capital investment and manufactured goods, the constrained borrowing rates and relatively easy availability of credit made investment in capital goods and other real assets a very attractive option. This raised domestic demand in these areas and drove up prices in such sectors as real estate, spilled over into higher imports in other sectors as capital goods and consumer durables and generally increased domestic demand. Thailand-s financial institutions had easy access to the Euro-dollar and Asian-dollar markets, and they were able to satisfy part of the excess demands for funds, and implicitly for foreign exchange, by increasing their liabilities abroad. This disrupted attempts by the Bank of Thailand to regulate credit expansion and restrain demand, and it contri- buted to higher growth and import levels. Energy Policy /1 3.27 Thailand has not been immune from the disruptive effects of the energy price increase in 1973/74, although the direct impact on growth has been less than in many oil-importing developing countries. Most of the impact of rising energy prices has been absorbed in the growing current account and public sector deficits. Thailand has delayed adjusting domestic energy prices to changes in the cost of energy imports on the grounds that higher energy prices would adversely affect growth and inflation. As a result of these policies, the direct contribution of energy price increases to the overall inflation has been relatively modest on the basis of computed indices./2 /1 See Thailand: Energy Issues and Prospects (No. 2813-TH, May 1980, in green cover) for a more detailed discussion of these issues. /2 The weight of petroleum products in the WPI is about 2.5% and their price has inceased more than twice as fast as the whole index. The model used in this report estimates that the elasticity of domestic prices to increases in the import price of petroleum products is about 0.25, i.e., a 10% increase in the imported energy price leads to about 2.5% increase in domestic prices if the latter are not constrained. - 26 - Table 3.8: INFLATION AND INTEREST RATES 1970-75 1976 1977 1978 1979 1980 (Jan) Interest rates on time deposits over 12 months (%) 7.3 8.0 8.0 8.0 9.0 12.0 Changes in CPI (%) 9.9/a 4.2 7.2 8.4 9.9 24.5/b Real interest rate (private savers) -2.6/a 3.6 0.7 -0.4 -0.8 -12.5 Interest rate bank loans, maximum (%) 14.3 15.0 15.0 15.0 15.0 18.0 Change in WPI for manufactured goods (%) 10.2 3.5 7.7 11.0 17.0 24.7/b Real interest rate (commercial borrowers) (x) 4.1 11.1 6.8 3.6 -1.7 -6.7 Change in Import Price Index (%) 18.5/c 6.1 5.5 7.5 18.3 24.9/b /a Includes inflation rates of 16% in 1973 and 24% in 1974. In all other years, real interest rates were positive and averaged 4.6% vs. -10.6% in 1973/74. /b May 1979 to May 1980. /c Includes increase of 64% in 1974. Other years averaged 7%. Source: An Industrial Development Strategy for Thailand, Report No. 2804a-TH, June 1980, Table 11; Bank of Thailand Monthly Bulletin. 3.28 Successive administrations have been unable or unwilling to enforce major price increases or to impose alternative measures to curtail demand. The Government has not developed a coherent energy policy despite measures limiting price increases and encouraging more domestic energy production. Between 1970 and 1978, domestic energy prices in Thailand have increased only slightly faster than the CPI (see Table 3.9). In 1979 and 1980, domestic energy prices finally grew significantly more rapidly than the CPI. As a result of the failure to curtail demand for energy and of the low hydroelectric potential in 1978-80 petroleum imports soared, and the impact of energy imports on the balance of payments is now being felt. Energy imports, which were about 9% of imports by value in 1970 ($0.12 billion), rose to 21% of imports ($0.7 billion) in 1975 and 22% of imports ($1.6 billion) in 1979. They are expected to reach 35% of imports, or $2.7 billion, in 1980. 3.29 Because domestic retail prices include processing and retail mar- gins and various taxes, domestic prices may not need to increase as fast as import prices to pass on the full effects of rising petroleum import costs. The differences between the indices in Table 3.9 may overstate the lack of adjustment. In fact, one means the Government used to slow the overall price increase was to reduce distribution margins and domestic taxes after 1973. They only returned to their pre-1973 levels in real terms in 1979, Table 3.9: ENERGY PRICE MOVEMENTS 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 Average import price of oil (B/bbl) 43.1 49.0 50.8 64.2 209.2 232.0 250.1 269.1 286.3 409.0 650.0/i Index 100.0 113.7 i17.9 149.0 485.4 538.3 580.3 624.4 664.3 949.0 1508.1 Electricity /a (B/kwh) 0.28 0.28 0.28 0.28 0.37 0.46 0.48 0.50 0.61 0.61 0.90 Index 100.0 100.0 100.0 100.0 132.1 164.3 171.4 178.6 217.9 217.9 321.4 Premium gasoline /b (B/1) 2.10 2.10 2.10 2.30/c 3.62/d 3.62 3.62 4.22/e 4.22 5.60/f 9.80/h Index 100.0 100.0 100.0 109.5 172.4 172.4 172.4 201.0 201.0 266.7 466.7 High speed diesel /b (B/1) 0.98 0.98 0.98 1.05/c 2.33/d 2.33 2.33 2.64/e 2.64 4.88/f 6.54/h Index 100.0 100.0 100.0 107.1 237.8 237.8 237.8 269.4 269.4 498.0 667.3 - Fuel oil /b (B/1) /g /g /g /g 1.44 1.44 1.44 1.61/e 1.61 2.90/f 3.61/h Index CPI Index 100.0 100.4 105.3 121.7 151.3 159.3 166.0 177.9 192.8 211.8 256.3/j /a EGAT price for bulk electricity to MEA. /b Retail in Bangkok. Th In July; gasoline raised to B 3.01 and diesel raised to B 1.60 in December. /d Raised in February. te Raised in March. /f Raised in January to B 5.60 for gasoline, B 2.98 for diesel and 1.77 for fuel oil, raised to figures shown in table in July. /g Uncontrolled prior to October 1974. Th Raised in February, diesel was raised to B 7.39, but rolled back to this level in March. /i Estimate. /j May 1980. Source: Thailand, Energy Issues and Prospects (Report No. 2813-TH, May 1980, Green cover). Bank of Thailand - 28 - when the government began to accept the necessity of making the economy absorb greater energy price increases. 3.30 Table 3.10 shows what appropriate" prices would have been in selected years if taxes had been kept at the same level as in 1970-73 for petroleum products. The appropriate rate assumes processing and distribution costs grow at the same rate as the CPI, petroleum costs grow with the import price, and taxes are the same real level as 1970-72 (grow with the CPI), in appropriate rates A, or the same percentage of the retail price in appropriate rates B. For electricity, the appropriate rate is assumed to be that which generates an 8% return on revalued assets. As can be seen from the table, only about two thirds of the 1973/74 energy price increase had been absorbed by the economy by 1979, when the economy was faced with further major price increases for energy imports./l 3.31 In addition to the negative impact on the balance of payments, efforts to keep energy prices low have added to the public sector deficits. Government taxes on energy products were reduced and subsidies were paid to refiners at various times. As a consequence, public sector saving has suffered. It is estimated that such subsidies ran as high as B 3 billion in 1979./2 The gross share of government revenues from petroleum product /1 Technically, retail petroleum prices are now approximately equivalent to the import price of crude plus processing and distribution costs and some taxes. Fuel oil has often been priced below cost and cross-subsidized by higher prices of other products or borrowing by the Oil Fuel Organization [currently by the Petroleum Authority of Thailand (PTT)] to offset operating losses due to the low selling price of fuel oil. However, these retail prices have been well below those obtaining in other oil importing developing countries. They are too low to discourage consumption adequately, encourage investment in energy conservation, or encourage development of alternative domestic sources. Since Thailand is expected to remain a large net importer of energy, such retail prices are not consistent with restoring and maintaining a sustainable current account deficit. Import and excise taxes must be imposed to achieve domestic prices sufficient to encourage the conservation required to restrain the growth of petroleum imports to sustainable rates. Thus "absorbing price increases" and "appropriate" prices refer to pricing policies which achieve the objectives of constraining imports of energy by encouraging conservation and alternative domestic energy development. /2 This includes allowances to refineries to offset the higher spot price of product imports that could not be passed on to consumers and guaranteed borrowing of the Oil Fund to maintain a low fuel price to the Electri- city Generating Authority of Thailand (EGAT) when the Oil Fund-s revenues were exhausted. To a large extent these subsidies to energy producers have been funded by government-guaranteed borrowing rather than by direct payments, and they do not appear on the government budget. They are difficult to trace. Unless a budgetary transfer is made, these debts will have to be repaid out of yet higher future tariffs and taxes on energy. - 29 - Table 3.10: ACTUAL AND "APPROPRIATE" ENERGY PRICES 1970 1973 1975 1978 1979 1980 Average oil import price B/bbl 43.1 64.2 232.0 286.3 409.0 650.0 /d Electricity actual (B/kWh) 0.28 0.28 0.46 0.61 0.61 0.90 Appropriate /a - - n.a. n.a. 1.00 1.50 Premium gasoline actual (B/liter) 2.10 2.30 3.62 4.22 5.60 9.80 Appropriate A /b - - 5.38 6.92 8.99 11.95 Appropriate B /c - - 7.86 9.09 12.42 17.21 High speed diesel actual (B/liter) 0.98 1.05 2.33 2.64 4.88 6.54 Appropriate A /b - - 3.17 4.26 5.67 7.83 Appropriate B /c - - 3.48 4.58 6.32 8.87 Fuel oil actual (B/liter) 0.70 /d n.a. 1.44 1.61 2.90 3.61 Appropriate A /b - 2.27 2.98 4.06 5.61 Appropriate B /c - - 2.35 3.10 4.25 5.91 /a Rate necessary to achieve 8% return on revalued assets. lb Assuming that 80% of ex-refinery prices in 1975 and 90% of ex-refinery prices in 1978-80 represent oil import costs and grow at rate of oil import prices and that remaining share of refinery prices, taxes, and retail margins grow at CPI rate. /c Same as (b) except taxes are assumed to be same percentage share of the retail price as in 1970-72: 43% for gasoline, 16% for diesel and 7% for fuel oil. /d Estimate. Source: Mission estimates. -30 - taxes fell from 8% in 1970-73 to 6.6% in 1978 as a result of reducing these taxes, as shown in Table 3.11. Changes in the excise tax rates in 1979 raised the gross share of petroleum revenues to 8.9%. However, inclusion of subsidies would significantly reduce the net contribution of the energy sector to government revenues. Unfortunately, precise estimates of these subsidies are not yet available. The proper objective for taxes on petroleum in a net importing country such as Thailand, however, is not to raise any specific share of public revenues, or even to generate sufficient revenues to finance some share of investment in the transport or other user sectors. The proper objective has become to set a level of retail prices consistent with balance of payment equilibrium and appropriate incentives for conservation and development of indigenous energy. Tariff controls on public enterprises in the power sector have reduced their earnings and diminished their ability to finance their growing investment programs. This has placed more demands on the government budget and foreign borrowing to help fund these public enterprise investments. Table 3.11: PETROLEUM REVENUES (B million) 1970-73 average 1974 1975 1976 1977 1978 1979 Petroleum excise taxes 1,368 2,496 2,258 2,204 3,080 3,378 5,669 Petroleum import duties 346 529 374 425 509 734 1,124 Total /a 1,714 3,025 2,632 2,629 3,589 4,112 6,793 Petroleum revenue as % of central government revenues 8.1 8.0 6.9 6.9 6.9 6.6 8.9 /b Source: Bank 6f Thailand. /a Excluding subsidies to petroleum refiners or users to maintain lower prices. These subsidies are rarely financed by budget items and have proved difficult to estimate precisely. /b Excluding subsidy elements (financed primarily by borrowing of public enterprises) which may have amounted to 3% of government revenues. Production Constraints 3.32 Agriculture. The evidence now indicates that the availability of new land for expanding agriculture has been nearly completely exhausted. The amount of arable land not currently within holdings is very small and often not easily accessible. Some 20% of land within holdings is not 3 - currently cultivated and represents an additional resource, although there is a practical limit on the amount of land within a holding that can be cultivated at any one time because of fallow requirements, local topography, woodlots, house plots, etc. Against this must be discounted the land currently under cultivation which is poorly suited to that purpose and should be withdrawn for reasons of soil and watershed conservation, etc., when land-use patterns are rationalized. 3.33 Over the past five years, the total area under holdings does not appear to have expanded at all. Production increases mist have been the result of more intensive use of land within holdings, including diversifi- cation to highervalued crops. In irrigated parts of the central plain and some other areas, significant intensification of land use is already taking place, and modern practices are replacing traditional techniques. The technology for this intensification into high-yielding varieties of rice and maize under water-controlled conditions has been well-researched and is widely applied in suitable areas. Where there is irrigation or adequate residual moisture, double cropping has increased the effective amount of land under cultivation: some 20% of irrigated land is double cropped. Currently about 10% of arable land is irrigated, and this could be raised to 20% by 1990. 3.34 Much less is known about the technologies for intensification of production and increasing yields in the more uncertain conditions of rainfed areas, which constitute the majority of Thai agriculture./l Sustained agricultural growth in those areas will have to be based on more intensive use of the available land through improved techniques, stabilization of water supply, and more diversification into higher value crops. 3.35 In addition to the natural water constraint in rainfed areas with relatively low rainfall, the availability of reliable water supply is becoming a constraint to expanding agrictultural production in some irrigated areas. The potential sustained flow from reservoirs limits the amount of land that can be brought under irrigation, and there are conflicting demands for that water from the power sector. The "drought" that has reduced second cropping this year in the central plain to 30% to 40% of its normal extent is due in part to prior use of water for power generation in order to decrease the use of imported energy. Beyond this, rice is a very water-intensive crop, and its cultivation restricts the total areas that can be irrigated. Although some irrigated areas are suited only to rice cultivation, other areas may well be suitable to less water-using crops, which would allow larger areas to be irrigated. In some rainfed areas, a shift into less water-using crops would also increase the land's productive potential. The general availability and allocation of water resources will increasingly become a constraining factor in modernizing agriculture, and will require more careful planning. /1 Farm-level techniques are now known for increasing production of cassava and sugarcane, where yields have been slipping in the past two years. It remains, however, to find means of disseminating and implementing these changes. - 32 - 3.36 Industry./l Industrial output has expanded rapidly in the past decade. However, protection has also increased in the past six years, and a number of price controls have been introduced in an attempt to restrain inflation. These policies introduce distortions and lead to supply shortages in the economy that will adversely affect the growth prospects of several industries. For example, price controls on cement have reduced investment incentives and turned that branch from a net exporter into a net importer. 3.37 Tariff protection, import and export quotas or bans, and domestic value added requirements have allowed the rapid expansion of some industries. This has been achieved at high domestic resource cost in relation to their contribution to real growth, and there is no convincing evidence that these measures have reduced total imports./2 For example, the automobile industry, which has grown faster than manufacturing as a whole, generates negative value added to world prices. Protection-induced price distortions raise the costs of other sectors, including those which produce for export. It is estimated that protection and other distortions can reduce an exporter's value added by up to 30% compared to a situation with no distortions, even allowing for tariff rebates on exports./3 Protectionist measures also raise the domestic prices of the protected goods, fueling inflation, and eventually retarding investment and growth. Although many of these distortions have been introduced in the name of encouraging domestic production, they will act as a constraint on growth in the longer term./4 /1 See An Industrial Development Strategy for Thailand (No. 2804a-TH, June 5, 1980) for a detailed discussion of these issues. /2 If imports of capital and intermediate goods into import-substitution industries and the higher domestic demand from protection-generated incomes are taken into account, increased protection may increase total imports. /3 This estimate is based on effective rates of protection calculations. /4 In Thailand, the first stages of import substitution behind protection contributed to growth in final goods industries and could be defended on infant-industry grounds. Because most import substitution occurred in consumer goods industries, the resulting price increases did not generally affect the cost structure of other industries. However, as attempts are made to encourage substitution in intermediate goods sectors by protection or domestic content regulations, the resulting distortions and inefficiencies could have more serious consequences on the growth prospects of other, efficient, import-substituting or exporting industries. - 33 - 3.38 Thailand's rapid growth of manufactured exports has been based in large part on low production costs in relation to competitor countries. These low costs are a function of low wage rates and past price stability in Thailand. Domestic inflation is accelerating, driving up wage rates and other cost factors. The minimum wage has increased faster than the rate of inflation since 1977, and this must have had an effect on rais- ing other wages. Under the existing exchange regime, these cost increases are passed directly onto the dollar cost of exported goods, which may endanger the competitiveness of Thai manufactured exports if the inflation of Thai costs in dollar terms is any higher than that of its competitors. 3.39 The structurre of industrial incentives in Thailand has tended to favor relatively capital-intensive projects, which have had a relatively high import content. This tendency has been reinforced recently by several specific proposals for large-scale, capital-intensive projects seeking various forms of government assistance or support. In view of the serious savings and balance of payments constraints facing the economy at this time, continuation of such trends will tend to raise capital-output ratios and reduce the growth and employment impact of the investment resources available to the economy. 3.40 Investment. The adjustment process, as well as the underlying transformation of the economy to modern production techniques and to less energy using processes, cannot be achieved without continued substantial levels of investment in industry and in agriculture. The investment levels reached in the past two years, however, may have been too high and not very efficiently allocated. Achieving adequate levels of investment will depend on the efficacy of resource mobilization from both domestic or foreign sources. On average, the private sector has saved enough to meet its own investment needs; the public sector has not, as shown in Table 3.12. 3.41 In the past, the public sector has been able to mobilize private savings surpluses when available, or to borrow foreign resources. Until three years ago, the magnitudes involved were not large, and external finan- cing was not a constraint. The availability of adequate private domestic savings to finance public investment cannot be counted on, however. Contin- ued inflation, low or possible negative real interest rates, and slower real income growth will tend to reduce the private sector's propensity to save. Continued borrowing at present levels will increase Thailand's debt burden and impair its excellent credit standing. Under these circumstances, sufficient foreign resources may become more difficult, if not impossible, to obtain. In addition, commercial sources abroad may become less willing to risk exposure in LDCs in general./l /1 Net foreign lending of US banks may slow down as a result of increased concerns over their LDC exposure, stricter surveillance by regulatory agencies, and concern regarding the adequacy of their capital base. Strict funding requirements laid down by the Ministry of Finance have slowed down net lending by Japanese banks. - 34 - Table 3.12: RESOURCE MOBILIZATION (% of GDP) Prelim. 1970-75 1976 1977 1978 1979 Public saving 2.2 1.1 2.5 1.9 1.5 Public investment /a 6.0 6.9 7.5 7.7 7.6 Net -3.8 -5.8 -5.0 -5.8 -6.1 Private saving 19.0 19.8 18.1 20.3 19.0 Private investment /b 18.1 16.3 18.5 18.8 20.2 Net 0.9 3.5 -0.4 1.5 -1.3 Total Saving 21.2 20.9 20.6 22.2 20.5 Total Investment 24.1 23.2 26.0 26.5 27.9 Total surplus/deficit (-) Domestic saving basis /c -2.9 -2.3 -5.4 -403 -7.4 National saving basis 7d -2.0 -2.5 -5.6 -4.7 -8.3 /a Including government investment directly financed by foreign borrowing. /b Including stocks. /c Equivalent to the balance of goods and nonfactor services in the balance of payments. /d Including net transfers and factor service payments. Equivalent to the current account balance. Source: National Accounts, NESDB. Although Thailand's access to private external sources of credit for the amounts needed seems reasonably assured in the short term, the possibility of foreign capital supply constraints developing cannot be discounted for the medium term. Thailand will not be able to continue relying so heavily on foreign borrowing as a means of postponing domestic adjustments to increase domestic saving and to reduce the external deficit. Other Constraints on Growth 3.42 Despite its expansion in the 1970 s, the financial sector has deficiencies which will inhibit growth in some areas. Formal financial activity is still concentrated around Bangkok, and it has fallen short of - 35 - meeting the credit needs of agriculture, smaller-scale enterprises, and productive activities in the regions outside of the greater Bangkok area. Bills and loans to agriculture amounted to only 5% of outstanding lending of commercial banks in 1979, up from 3% in 1975. The remainder of the mandated 13% credit allocation to agriculture (including 2% to agro-industries) is being satisfied by deposits with the Bank for Agriculture and Agricultural Cooperatives (BAAC). Efforts to promote lending to small-scale industry through the Small Industries Finance Office (SIFO) have met with little success, and local lending requirements on branch banks outside of Bangkok have primarily been satisfied by loans to finance commerce and consumer purchases. There is little long-term lending other than through the Industrial Finance Corporation of Thailand (IFCT), a semi-public development finance company which accounts for less than 2% of industrial lending. 3.43 The role of the Government in supporting economic development has been profoundly changed by the growth and dynamism of the Thai economy since 1960. However, due to the lack of continuity in political leadership during this period and the bureaucracy's resistance to change, the organization and operations of the public sector have been slow to adjust to the current requirements of social and economic development. 3.44 Growing awareness of the need to improve development management led to some important bureaucratic reforms during the second half of the L970s, particularly in the internal organization of the civil service and the delegation of certain planning functions to provincial administrations. However, these measures did not form part of an overall long-term plan for the modernization and rationalization of public sector activity, and a number of critical institutional weaknesses still exist. Foremost among these is the absence of an authoritative and effective planning system for public sector expenditures and programs. Although the four national development plans produced since 1961 have provided clear statements of overall Government policies and objectives, they have generally failed to specify priorities, sectoral strategies, and development programs in sufficient detail to serve as a viable basis for annual budgeting and policy formulation. The actual allocation of resources within the public sector has tended to be more strongly influenced by internal bureaucratic pressures and short-term considerations than by a long-term national strategy. 3.45 The institutional structure of the Government limits its ability to implement programs to raise rural incomes and productivity or to improve access to social services. The highly centralized character of the public sector interferes with rural development programs and skews the distribution of the benefits of development. The general lack of delegation of authority, the centralized decision-making procedures, and the emphasis on maintaining rigid financial controls reduce the responsiveness of public agencies to local problems and local initiatives. The concentration of Government resources and personnel in Bangkok biases public programs and expenditures towards the service of urban needs. Coordination of departmental activities in the implementation of rural development programs is seriously impaired by the proliferation of departments and divisions with - 36 - overlapping functions and little incentive to cooperate. Lack of lateral mobility within the civil service tends to reinforce this compartmentaliza- tion. As resources are becoming more constrained and the requirements of structural adjustment more demanding, the quality of the Thai Government-s economic analysis and policy formulation; its ability to mobilize, allocate, and manage public resources; and its capacity to provide services will become far more crucial./l Tensions and Tradeoffs 3.46 Rectifying the financial disequilibria currently faced by the Thai economy will add to the tensions inevitably created by the rapid development in the productive sectors. Policy measures required in the short run to reduce public sector deficits and improve the balance of payments will unavoidably involve compromises and tradeoffs among economic objectives that have differential effects on the economic well-being of various groups within the economy. The problems of establishing and adhering to priorities are further complicated by the relatively open, but still uncertain, political system that is evolving in Thailand. There is a high probability that economically necessary measures will be politically difficult to implement. Thailand's policy making over the past several years has been affected by this tension and, as a result, it has been dominated by short-run, ad hoc measures in response to political as well as economic pressures. The Government has lacked an effective guiding framework for establishing priorities among different development objectives (although the Plan has laid down some general objectives). Frequent changes of administration have exacerbated this problem. 3.47 Since the brief recession of 1974, it appears thatt growth has emerged from the uncoordinated policy making process as the first priority of successive administrations, as revealed by their policy decisions. This results in part from the short planning horizons of successive governments. It was politically less risky to resolve hard economic problems by favoring measures which promoted demand and growth in the short run without due consideration being given the longer-term consequences. Implicit in this pattern of policy making is a willingness to accept large economic risks of higher rates of inflation, larger external deficits, and increased financial instability in the future in order to sustain near-term high rates of growth. As long as the foreign exchange resources were available to finance current account deficits and domestic savings deficiencies, this appeared to be the easiest way to satisfy conflicting pressures and avoid taking hard decisions to adjust to changing external factors, particularly rising energy prices. In part, this pattern of decision making was also a reflection of the strong growth orientation of those with a great deal of influence in shaping economic policy. 3.48 Although controlling inflation was nominally a high priority, policy action concentrated on controlling certain highly visible prices /I These problems are discussed in more detail in a report under prepara- tion, Thailand: Development Management Strategy Review. - 37 - rather than restraining aggregate demand, and little attempt was made to educate the public on the necessity of absorbing external price increases. This has at best delayed price increases and at worst led to increased structural distortions. In general, price controls are ineffective as either an anti-inflation policy or an income policy. In the case or Thailand, price controls have led to deficit financing in the public sector and to excess demand, and both of these factors have contributed to overall inflationary pressures on the economy. Controlled prices will have to be raised in any case. Using price controls as a means of protecting the incomes of the poor is highly inefficient because most of the benefits accrue to the middle and upper classes, who are by far the largest consumers of the goods whose prices are controlled, e.g., energy, cement. Many of the poor do not even have access to electricity, in part because low power tariffs have reduced the funds available for extending rural electrification. 3.49 Maintaining internal and external financial stability no longer appears to command the pre-eminent position it once did among Thai policy objectives. Recent administrations have seemed to prefer specific measures to reduce the trade deficits by raising import bans, quotas, and tariffs over general macroeconomic measures to restrain demand. Financial stability has been endangered by budgetary deficits and acquiescence to pressures to expand liquidity in support of the speculative expansion of the SET and the finance companies. 3.50 The Government has placed a high priority on reducing poverty and income differentials throughout the country, even during the adjustment process. In the past, the Government provided infrastructure and promoted aggregate growth in the express belief that the private sector would be more effective than the government in assuring that the benefits of growth were widely spread. To a large extent this has worked in Thailand, and great strides were made in poverty alleviation and raising rural incomes between 1962 and 1975./i There is now growing recognition that there are limits to this strategy, and unaided market factors have not been as effective in areas with poor potential under existing technology. The modern sector, however, remains concentrated around Bangkok and grows in political as well as economic importance. This raises the potential for further "Bangkok bias" in growth and decreases the likelihood that as much growth will spread to rural areas as in the past. 3.51 The emphasis on growth in recent years is not likely to have produced the same degree of positive impact in rural areas as was the case in the past, particularly in the North and Northeast where most of the remaining poverty is concentrated (see Table 3.13)./2 The South has done relatively well due to rising tin and rubber prices. The increasing urban bias in growth /1 See Income Growth and Poverty Alleviation, Report No. 2566-TH, June 20, 1980, for further discussion of these issues. /2 Regional production data may not accurately reflect relative growth of per-capita incomes, but until the next Socio-Economic Survey, they are the only data available. - 38 - Table 3.13: GROWTH OF GROSS REGIONAL PRODUCT (GRP) (% p.a.) Entire Northeast North South Central Bangkok Kingdom 1975-78 /a GRP 4.2 6.0 8.2 9.2 9.4 9.1 GRP/cap 1.6 3.7 5.7 6.9 5.0 6.5 1960-76 GRP 6.5 6.4 6.9 8.2 8.0 7.6 GRP/cap 3.1 3.2 3.2 4.6 3.8 4.2 /a Gross Regional Product Data for 1979 is not yet available. Source: NESDB. can be attributable to price controls, which have tended to favor urban areas where the controlled items are primarily purchased; demand stimulus, which has had a much greater impact on raising modern sector production and incomes in the short run; and protection, which has favored industry and the modern sector at the expense of corsumers and the rural sector. The relative movements of commodity prices have added to this shift. As measured by GDP deflators, the agricultural-nonagricultural terms of trade have declined by more than 1% per year since 1975, which implies a significant redistribution in relative income growth away from agricultural producers. Although direct data is lacking, the indirect evidence of the domestic terms of trade, specific crop prices, and relative growth rates indicates that, despite the high aggregate growth rates in the past five years, it is unlikely that much further reduction in poverty has taken place since 1975, except in the South among rubber growers and tin miners. Several specific programs have been undertaken to supplement the traditional indirect mechanisms of reducing poverty, including the Tambon program, improved extension services, provincial planning funds, etc., but it is too soon to tell whether they have had a lasting effect in alleviating poverty. 3.52 The undercurrents of increased social tension arising from the dissonance between the effective priorities of the government and the stated objectives cannot be ignored, and there may be further serious visible mani- festations of discontent from both rural and urban origins. Recent events have confirmed the political influence of Bangkok-based interest groups in promoting what are essentially Bangkok growth-oriented policies. Although the present government has affirmed the high priority it places on equity and raising rural incomes, there is a question of whether it can take the necessary action to achieve that priority at the expense of Bangkok. Some of the implicit priorities and directions of policies that have evolved over the past several years in response to the "Bangkok bias" would have to be reversed. - 39 - 3.53 The problems faced by the economy on entering the 1980's are serious and not likely to submit to easy solutions. There will inevitably be tradeoffs between different objectives in the adjustment process, and the resulting tensions will test the cohesion of the political economy. Reducing the current account deficit from its estimated level of about 8% of GDP in 1980 will require major adjustments to reduce the growth in demand for imports and to sustain or increase recent high export growth rates. Restraining import demand will imply passing on external price increases, particularly for energy, more fully to the economy; reducing the domestic saving deficit, particularly in the public sector; and slowing some investment, particularly in large, capital-intensive projects. Aggregate demand and the public deficit will have to be reduced by raising taxes to generate more public saving and to effect the transfer of additional resources abroad. More domestic savings will also be necessary to service the growing volume of external debt. Absorbing external price increases will contribute to domestic inflation and slow real income growth, but this will be a necessary part of the adjustment process. Price stability cannot be achieved in the medium term. 3.54 Nevertheless, measures that moderate aggregate demand will have favorable effects on reducing domestic inflationary pressures. lJnless the financial balances can be restored to sustainable levels over the next five years, it will be much more difficult to obtain the necessary external resources to support efforts to raise production in the longer term. It is highly unlikely that the economy can make all the necessary adjustments without some reduction in its aggregate growth rate. Because of the nature of the required adjustments, the impact of the decline in growth will probably fall more heavily on the urban and industrial sectors, and the conflicting claims on incremental income will then become more contentious. 3.55 On the positive side, growth should be aided in the medium term by measures to increase production and efficiency and to expand exports. However, even maintaining recent export growth rates will require continued rapid structural change in the productive sectors and implementing necessary supporting policy. Yields and productivity in agriculture will have to increase in order to expand its marketable surplus. These changes are occurring, but it is doubtful that they will occur fast enough without major modifications in the government-s and private sector's support and marketing structures. Industry will have to continue its shift toward labor-intensive, export-oriented production, and price distortions will have to be reduced. This transformation will have to take place while the sector is adjusting to significant changes in the relative prices of basic inputs and while the growth rates of foreign and domestic demand are declining. Maintaining real per-capita income growth will be easier in the 1980-s because the population growth rate is expected to continue the decline begun in the 1970s. - 40 - IV. POLICY OPTIONS FOR STRUCTURAL ADJUSTMENT 4.01 The above analysis of the current economic situation in Thailand indicates the scope and seriousness of the problems facing the Thai economy. Although recent growth rates have been satisfactory, they have been accom- panied by levels of government and current account deficits that cannot be sustained. It is imperative that action be taken to reduce these deficits in the short term. Fiscal, monetary, and energy policy measures will be particularly important in this regard. There are also underlying structural issues affecting these deficits that need to be addressed at the same time: increasing the competitiveness and efficiency of industry, accelerating the transformation to more intensive agricultural techniques, and reducing the longer-term energy requirements of the economy. The effects of measures to reduce the financial balances should have an immediate impact, while those to improve the productivity of the economy will be felt over a period of years. Both sets of measures are, however, complementary: production increases are necessary to augment the net transfer of goods abroad, which is the counterpart of increased domestic saving, and rising production will reduce the amount of restraint on domestic consumption that will be required. 4.02 Policy action on both shorter-term financial issues and the longer- term production issues should be initiated immediately, since any delay would allow the disequilibria to become more severe. External pressures for adjustment, expressed primarily through increasing reluctance by commercial lenders to finance large external deficits, would then force more abrupt and disruptive short-term adjustments. Major expenditure cuts and other actions which would seriously retard development in the productive sectors could well be required in such circumstances, with adverse effects on Thailand's growth potential. 4.03 Defining a policy package to effect the adjustment without unduly sacrificing other objectives is a demanding task. The policies must reconcile conflicting domestic interests while maintaining a high degree of flexibility in adapting to changing external circumstances. Coordinated policy action will be required in several broad areas to accomplish the necessary structural adjustments while maintaining satisfactory growth rates: (a) resource mobilization, particularly in the public sector; (b) monetary policy, external debt management, and financial sector development; (c) energy policy, particularly energy pricing issues; (d) industrial development policies; and (e) promoting the transformation of agriculture. 4.04 It would be desirable for the adjustment program to be phased over a period of five years. Reasonable targets would be to reduce the current account deficit to about 4% of GDP, to increase public saving so the public sector deficit would fall to about 3% of GDP, and to fully absorb energy price increases. The objective of maintaining growth should not be abandoned, although setting aggregate or sectoral growth targets would not be wise at this point. The strategy should focus primarily on adjusting - 41 - specific disequilibria, but policies should be coordinated to minimize their negative impact on growth and to continue progress toward the objectives of poverty alleviation and development of the country outside of Bangkok. This will imply some major adjustments in the structure and relative distribution of growth compared to the recent past. 4.05 Among the most important elemenlts of the adjustment program will be measures reducing the public sector deficit. There is some urgency in restraining expenditures in the short run, but most of the adjustment in the medium- and longer-term should come from higher tax collections. Higher public enterprise tariffs are also required in both the short- and longer-term. Increasing public and private sector saving will reduce aggregate demand and the savings gap. This will help improve the trade account, which will have to absorb most of the burden of reducing the current account deficit. However, additional measures will be needed to reduce the current account deficit, including adjusting energy prices to curtail the demand for petroleun imports, promoting industrial and agricultural production and exports, and encouraging efficient import substitution. Appropriate price adjustments will be a key element in the program. Price increases will be required for energy and energy products, and other price controls should also be reduced or eliminated. Some structural inflation will be associated with the adjustment process, and it is unlikely that domestic inflation will fall below the projected rate of international inflation in the 1980's, about 8% per annum. However, any domestic contribution to inflation from excess demand or protectionist policies should be curbed to restore as much domestic price stability as possible and to maintain the economy's external competitiveness. 4.06 The evolution of institutions affecting economic activity will have to be accelerated in the course of the adjustment process. Private sector financial institutions will have to adapt to the requirements of the adjustment program. Government institutions will have to be responsive to public needs throughout the country, but they will also have to set and implement national priorities for allocating scarce public financial resources and to design and apply a coherent energy policy./l 4.07 Policies that increase agricultural production and exports will aid rural poverty alleviation objectives, and the promotion of manufactured exports should complement efforts to reduce urban poverty, since most export industries are urban based and tend to be labor intensive in Thailand. /1 More specific recommendations for improving government institutions will be contained in a report which is currently being prepared on Develop- ment Management in Thailand, and recommendations for the institutional development required in the energy sector are contained in Thailand, Energy Issues and Prospects (No. 2813-TH, May 1980, Green Cover). - 42 - However, a number of elements in the program may lower GDP and personal income growth, and this will make these policies difficult to implement. The Government will have to make a strong commitment to a several year program, particularly to the initial fiscal policy and price adjustments, and it will have to educate the public on the necessity of these policies. The Magnitude of the Required Adjustment 4.08 The extent and magnitudes of the current disequilibria were analyzed in Chapter III. The general direction of the necessary adjustments and their interrelations were also discussed in qualitative terms. The rest of this chapter will be devoted to analyzing in greater detail the adjustments required in the five areas identified above, to suggesting policy alternatives, and to evaluating their impact on achieving the adjustment objectives. In order to support the quantitative analysis, a consistent macroeconomic accounting framework and a simulation model were constructed. A reference simulation was made, including positive assumptions about the effects of policy actions already taken by the government and the normal responses of the economy to changes in prices and incomes. This indicates the likely prospects for the macroeconomic variables without further policy action and the magnitude of the remaining adjustments to be accomplished in the Thai economy if no additional policy measures are initiated and if other factors evolve in a relatively favorable manner. Even in this case, significant further adjustment will be required. If the policy actions taken so far are ineffective, or the Government is unable to slow the growth of the budget deficit, or exogenous factors are less favorable, the economy will indeed reach a crisis before 1985. 4.09 A Social Accounting Matrix (SAM) /1 provides the accounting framework to integrate data from the National Accounts, the input-output table, the balance of payments, and the fiscal accounts into a matrix format that presents a consistent and unified picture of all the principal flows in the economy. The macroeconomic simulation model is based on SAM accounting framework and specifies analytical functions for the implicit relations underlying the SAM. This analysis uses a highly aggregated, 23-sector SAM based on 1975 data. The structural parameters were estimated from data for the period 1960-79. 4.10 The SAM describes the income and production flows that the model simulates. Incomes of the institutions (households, companies and the government) are derived from the production activities, tax collections, and transfers among institutions. Incomes are allocated to saving, transfers, and various categories of consumption demand. This allocation exhausts the resources of each of the agents. The consumption demand for different goods /1 See Annex I for further explanation of the SAM and its construction and for the specification of the model. - 43 - depends directly on the level of income, and indirectly on relative prices and historical trends in consumption behavior. Consumption demand plus investment demand generate final domestic demand. Intermediate demands are derived directly from the input-output relations and the level of activity, which depends on final demand. Intermediate demand plus final domestic demand give total domestic demand. The allocation of this demand between imported and domestic goods is determined by their relative prices and the degree of substitution possible between domestic goods and imports. Export demand plus the demand for domestic goods determines the level of domestic production in the industry, energy, and service sectors. With additional assumptions about the growth of agricultural output, the level of incomes accruing to the institutions is determined. Exports of manufactured goods and services are a function of foreign demand and prices, and exports of agricultural goods are a function of supplies available after satisfying domestic demand. Other transfers and factor service payments between Thailand and the rest of the world are included to complete the balance on external current account. The entire cycle of economic activity is recorded in the SAM and simulated in the model. This framework is a major extension of input-output analysis to encompass the relations between the income- generating activities, the distribution of that income to institutions, and the resulting determination of the composition of final demand. Completing the model in this way includes responses to policy or other changes that occur on the demand side and the secondary effects of policies on other variables. 4.11 The model is used in the following analysis to simulate the effects of various policy changes on the prospects for the economy. Values for the exogenous factors, such as prices of imports and exports, are assumed and policy variables, such as tax rates, are modified. The model then simulates consistent evolutions of the economy within the SAM framework and traces the effects of alternate assumptions about policy actions and external develop- ments. When analyzing the simulation results, it is important to note certain features of the model: (a) the a'ctivity level in the agricultural sector (supply) is exogenously specified; (b) production in the industry, energy, and tertiary sectors is demand determined as a function of consumption patterns, income levels, relative prices, and external demand for industrial and service exports. This implicitly assumes that over the medium term, the investment levels are sufficient to provide the capacity increases required to satisfy demand growth;/l /1 This is a Keynesian assumption in the medium term and states that both supply and capacity increments are responsive to demand growth in the medium term. The model does not address short-run stabilization issues of the availability of excess capacity to meet short-run demand fluctuations. - 44 - (c) prices are cost determined;/l (d) demand for imports is a function of aggregate domestic demand levels, relative prices, and the degree of substitutability of domestic goods and imports; (e) demand for goods by the public and household sectors is based on Engel curve relations; (f) investment behavior is exogenous; and (g) the trade and savings gaps are endogenously equated in arriving at a solution. 4.12 The reference simulation indicates how the economy would evolve during the 1980's if no further specific adjustment measures were taken. It will provide a measure of the extent to which additional adjustments will be required and a benchmark to help evaluate quantitatively the effects of the policy actions recommended. It should be emphasized, however, that the results of the model are not predictions; rather, they are internally consistent indicators of how the economy would evolve and of the relative magnitudes of the principal variables, given the specific assumptions that are made. Because of its fully closed structure, the model includes a number of endogenous adjustments: e.g., the demand for imports falls when their prices rise; lower real income growth slows the domestic demand for agricultural production and more is exported; slower domestic inflation increases the competitiveness of manufactured exports and they rise; and conversely in all cases. The accounting equilibrium generated may be judged not acceptable or sustainable because of its implications for certain variables, e.g., external borrowing and debt service payments that are too high. Policy parameters can then be varied to simulate policy measures that should produce a more acceptable equilibrium in the model. 4.13 Selected indicators from the reference simulation are shown in Table 4.1. In this case, it is assumed that the structural parameters of the economy do not change from their current levels; tax rates are not raised, the adjustment to external energy prices remains incomplete, the agricultural growth rate declines somewhat from its rate of the past five years to 4% p.a., export promotion is not accelerated, and current monetary and exchange policies are continued. World Bank price projections are assumed for imports and exports. Nevertheless, this simulation includes /1 Hence the model can analyze cost-push and/or imported inflation, but not demand-pull inflation. This is a drawback, since excess demand is a matter of concern in Thailand; however, price-endogenous models are much more complicated to construct and require strong assumptions about price flexibility, both upward and downward, which may not be valid in the current Thai context. - 45 - a number of elements reflecting adjusttnents already made and the endogenous responses of the economy to price and incone changes. These include implicit assumptions that the public sector deficit does not increase above about 6%. of GDP, that domestic energy prices remain above a level that would require direct subsidies to the sector (but still less than Luill adjustment), and that monetary policy does not allow excess demand to augment domestic inflation and reduce the competitiveness of Thai exports and import substitutes. This simulation does make allowances for reactions by the government and other economic agents to deteriorating economic conditions, but not for major new policy initiatives. 4.14 Under these conditions, real GDP growth remains about 6%1, p.a. and real per capita growth is 3-4% p.a. because of declining population growth. The effects of the energy price increases implemented in 1979-30 have a significant effect on reducing energy imports, as will the use of domestic natural gas beginning in 1982. The decline in investment rates noted in late 1979 and early 1980 is evident. Because of declining growth rates, however, the investment share declines only slightly by 1985. Slower investment growth also reduces import demand. It has been argued that an import-intensive cycle of investments will terminate in the early 1980's, further reducing import demand. As a result of these factors and the effect of rising import prices on the demand for imports, they only grow at 4.7% p.a. in real terms in 1980-85, with an expenditure elasticity with respect to GDP of 0.9. A similar phenomenon occurred in 1970-75 when import growth trailed overall growth in real terms under comparable circumstances. Real export growth of 10% p.a. is imnplied in this simulation, implicitly assuming that the momentum of recent export growth is sustained by continued agricultural growth and dynamism in the manufactured exports despite slow growth abroad. The Thai share of manufactured exports of developing countries would continue to increase as Thai manufactures would grow at 12% p.a. in 1980-85, compared to a projected 9.5% for all LDCs./l Although tax rates are not changed, public revenues and savings shares increase slightly because the shares of industry and services in GDP increase, and these sectors are relatively more heavily taxed. The private domestic savings share also increases, but rising factor service payments abroad (interest payments) result in a decline in the national savings share, despite the increase in domestic saving. Cost-based inflation during the 1980s will average about 7% p.a., and this will have to be absorbed by the economy. In many respects, this simulation shows an economy that is not on the verge of collapse. However, despite the significant changes already under way, the adjustments are inadequate to reduce the current account or fiscal deficits. 4.15 Although export and import performances are both very favorable, further deterioration in the terms of trade and rising interest payments increase the current account deficit to $4 billion in 1985, which is still 7.3% of GDP. Annual borrowing requirenents in that year reach nearly $6 billion and the debt service ratio is nearly 25%.. The trade and current account balances improve somewhat by 1990, but the debt-service ratio continues to climb above 30% and debt accumulation exceeds $42 billion, /1 Based on the projections of the World Development Report, 1980. - 46 - Table 4.1: SELECTED INDICATORS IN THE REFERENCE SIMULATTON 1975-79 1985 1990 GDP growth (% p.a. constant prices) 8.9 5.5 /a 6.0 /a Investment share (% GDP) 25.8 /f 26.7 25.5 Gross national saving (% GDP) 21.0 19.4 20.2 Gross domestic saving (% GDP) 22.2 22.9 24.6 General government revenue /d (% GDP) 15.1 15.7 16.2 General government expenditure (% GDP) 12.7 13.2 14.2 General government saving /d (% GDP) 2.4 2.5 2.0 Public sector saving gap (f rGDP) 5.7 5.5 6.0 Export growth (% p.a. constant prices) 15.2 9.9 /a 7.8 Ia Tmport growth (% p.a. constant prices) 11.6 4.7 7a 5.0 7-a Terms of trade (1975 = 100) 88.5 72.9 70.5 Resource balance ($ billion) -0.3 -2.0 0.9 Current account ($ billion) -1.1 -3.9 -4.9 Current account (% GDP) /e 5.3 7.3 5.3 Required annual borrowing ($ billion) /g 1.0 5.7 9.9 Debt outstanding ($ billion) 3.9 /b 20.2 42.4 Debt service ratio (%) /c 15.4 lb 24.4 31.5 /a For periods 1980-85 and 1985-90. lb End 1979. Ic Including private. 7v Including central Government plus local jurisdictions, but excluding public enterprises. /e Equals total saving-investment gap. If 28% in 1979. /g Gross disbursements excluding use of reserves and IMF funds. a level equal to nearly half of GDP in that year. The current account and fiscal deficits will not be brought under control fast enough to maintain the economy's creditworthiness, and foreign financing in the amounts required are unlikely to be forthcoming on acceptable terms. Even this simulation is not sustainable, and further adjustments will have to be made. 4.16 This reference simulation may well turn out to be optimistic for a number of reasons. Rising domestic production costs may prevent further penetration of Thai manufactured exports into world markets; agricultural production and export growth may not reach even the rate assumed; the budget deficit may continue to grow; continued expansionary deficit financing of budget deficits may lead to further excess demand and more inflation than that due to rising import costs. A significant shortfall in any of these areas would severely aggravate the economic situation before 1985 and force more abrupt and disruptive adjustment. For example, a decline of one percen- tage point in the export growth rate in conjunction with a one-percentage point increase in the import growth rate would add more than $1 billion to the current account deficit in 1985. An increase of the public sector deficit by jO% in 1985 would have a similar impact on the current account deficit. Recent pressures to increase defense and other expenditures are particularly worrisome in this regard. In either case, it is unlikely such deficits can be financed and some corrective action would become absolutely necessary. 4.17 By not taking strong adjustment measures, the Government would be taking a highly risky gamble that nothing worse happens than what is implied in the favorable reference simulation and that financing will continue to be available. The economy would be very exposed to adverse circumstances. The following sections will examine the adjustments that are needed, analyze their implications for the economy s prospects, and present appropriate policy options. Policies for Structural Adjustment 4.18 Fiscal Policy and Public Resource Mobilization. The majority of resource mobilization in Thailand occurs in the private sector, which has typically generated about 19% of GDP in saving and has invested roughly comparable amounts. Both saving and investment have proven to be sensitive to real interest rates. If the financial sector can restore and maintain positive real interest rates on savings, the private sector should be able to generate sufficient savings to meet its investment needs, and possibly a small surplus that can be mobilized by the Government. 4.19 Most of the aggregate savings shortfall is due to the public sector. As discussed above, the central Government's current expenditure growth /1 has exceeded revenue growth, and budgetary savings have disap- peared. The demands for higher levels of government expenditure for defense and security, supporting rural development programs, increasing civil service salaries, providing higher quality social services in rural areas, servicing the growing public debt and maintaining the capital stock that the Government has been building over the past 20 years will make it very difficult to slow expenditure growth in the future. Defense and administration, transfers to local governments, and interest payments now comprise 64% of total central government expenditure, and it is difficult to envisage significant cuts in these areas in the current political and economic situation. Capital expenditures have fallen from 26% of government expenditure in 1971 to 19% in 1979 (5.1% and 3.2% of GDP, respectively). Planned development projects in irrigation, transportation, communications and other infrastructure will all require continued government capital expenditure. While investment in these areas is necessary to support growth and increase production, the investment program must be carefully evaluated to assure that all projects have sufficiently high economic returns. Some, such as the airport extension or elevated rail system, may /1 Including current transfers to local government and public enterprises. - 48 - well have to be postponed. However, blanket curtailment of public investment, to solve the short-run savings gap as occurred in 1974, could have large long-run costs in terms of forgone future growth. There would then be pressure to catch up on all these investments once the immediate crisis were past, and this could lead to a "stop-go" cycle that could further disrupt the economy. 4.20 There is not yet a detailed consolidated government or public sector investment program, and accessible information on current expenditures is not adequate to permit selective reductions to be easily made. It is very difficult to enforce centrally determined priorities for expenditure cuts by operating agencies with the current planning and budgeting processes, and such attempts may result in serious disruptions of the development programs. The prima facie discretionary elements in the budget do not seem to offer much scope for significant reductions in government expenditures. Work is currently under way in the Bureau of the Budget and the Comptroller General's Office to improve the budgeting and monitoring capabilities of the Government and increase its ability to control expenditures better in the future. These improvements should be given high priority, and in the meantime, every effort should be made to cut unnecessary expenditures. Reallocation of expenditures to support adjustment policies should also be possible, and the Government is taking initiatives in this direction to support rural development. Nevertheless in the short run, some expenditure constraint will be necessary as it will take time to increase the revenue share significantly.Tncreasing revenues in the medium term, however, will constitute a more permanent adjustment to the increasing demands for defense and public service expenditures being made on the government. 4.21 These public finance issues have been discussed with Thai authori- ties on a number of occasions and much progress has been achieved. However, it has not resulted in a significant increase in the share of revenues in GDP. Given the severe resource constraints now faced by Thailand, the lack of surplus private sector saving, and the necessity of reducing the aggregate savings gap, total public sector expenditures should not be allowed to rise above their current share of about 21% of GDP, including transfers and - 49 - capital expenditures of public enterprises. Central-government revenues should be increased from the current level of less than 14% of GDP to about 17% /1 over a five-year period. Public enterprise tariffs should be allowed to rise to enable them to contribute a larger share of their own investment programs. Although different factors will determine the contribution of each enterprise, in aggregate they should be able to contribute at least half their investment program, which is expected to run about 3-4% of GDP. This implies a target of public sector resource mobilization of almost 19% of GDP. If this is achieved, the public sector deficit will fall toward 3% of GDP by 1985, compared to 6% in 1979 and 1980. 4.22 Achieving the government revenue target will require major efforts in tax policy over the coming five years. These can be separated into (a) increasing collections under existing taxes; (b) increasing rates of existing taxes; (c) expanding the tax base covered by existing taxes; and (d) instituting major tax reforms to restructure existing taxes and to introduce new taxes. There is potential for increasing revenues in all of these ways, and a coordinated program should include elements from each. 4.23 Increasing collection rates on existing taxes and selective tax rate increases offer the most immediate opportunities for increasing revenues in the short run, and they should be pursued immediately. Improving tax administration and procedures is necessary to any program aimed at raising the share of revenues in GDP, and the Thai government is working in this area. However, measures to expand tax bases and implement tax reforms will also be required to achieve the longer-term target and to improve the efficacy and equity of the tax system. Work should begin promptly on designing these reforms, which should be implemented over the next five years. They should introduce a greater degree of progressivity into the tax structure, increase its buoyancy above the current level of about unity, and provide more equitable treatment of different sources of income. In addition to the revenue and equity objectives, the Government should assure that the tax reforms do not introduce price distortions that adversely affect production and private saving decisions. 4.24 The public enterprise investment program is now nearly as large as that of the Government due to sharply rising costs of capital equipment, expanding coverage throughout the country, and programs to improve service of the utilities (e.g., rural electrification, provincial water supplies, improved internal communications). The contribution of the public enter- prises to their investment programs from their own resources has declined from over 50% in 1970-72 to currently less than 25% because of restrictions on tariff increases and large investment programs. They have had to mobilize more resources abroad. The underpricing of their goods and services /1 This target was established with the Thai authorities in 1974 in discussions of the Report "A Study of Public Finances in Thailand," (No. 574-TH, October 31, 1974). - 50 - has also increased the level of demand and contributed to higher investment requirements. Given the growing constraints on external resources and on central-government funds, the public enterprises' difficulties in mobilizing resources will grow. They should make greater use of domestic resources and increase their contributions to their own investment programs. 4.25 There are several criteria that can be applied to public enterprise tariff structures:/l they can be required to meet quasi-market tests of earning a designated rate of return on assets; they can be used explicitly to mobilize resources for the public sector where they can exploit monopoly or monopsony power;/2 or they can be required to maintain specified and usually low tariffs in the interests of transferring income (or reducing expenditures) to the users, the majority of whom are assumed to be poor, with any losses made up by public subsidies. Various combinations of these criteria occur in Thailand, usually as the result of ad hoc decisions and not as part of a coherent strategy. In view of the importance of public enterprises in a number of key sectors and the impact their tariff policies have on economic activity, a general policy on public enterprise tariffs, the taxes they pay the Government, and their role in for public resource mobilization should be developed. In any event, reducing the public sector savings deficit will have to be achieved partly by raising public enterprise tariffs./3 4.26 Several implications of raising public revenues and saving must be recognized. As the investment-saving gap is reduced, disposable income will also be reduced, which will, ceteris paribus, lower both consumption demand and private savings. This implies disposable income and consumption will have to grow more slowly than GDP, reversing the recent trends. These effects will differ in impact depending on how various taxes and tariffs are adjusted. Raising public enterprise tariffs and certain indirect taxes will also temporarily increase the rate of inflation, since they figure in the CPI calculations. Policy measures in other areas may imply lower revenues from some traditional sources, so a larger total effort to raise revenues will be required to offset revenue losses elsewhere. /1 Particularly for public utilities where natural or regulatory monopolies exist. /2 This can even have a relatively progressive impact when the majority of the users of the enterprise's goods or services are in the higher income groups. /3 The details of a number of these tariff issues are being specifically addressed in energy, water supply, and transportation, and other projects. - 51 - 4.27 The Government has recognized the necessity of raising revenues and improving the tax structure, and it has recently taken several steps in this area. The IMF is providing technical assistance to improve the tax adminis- tration and collection procedures in the Revenue Department, and this effort is bearing fruit. Reforms announced in 1980 have increased the progressivity of the personal income tax, but they have also reduced rates for lower- and middle-income levels and increased standard deductions to help maintain the real disposable incomes of the middle and lower classes. While this improves the nominal income tax structure, it exempts too large a segment of middle- income levels and results in a revenue loss. The corporate income tax rate was raised from 30% to 35% for SET-listed companies and from 35% to 45% for others. Following the 1977 shift from progressive to uniform corporate tax rates, this will increase revenues from this source and may offset the loss on the personal income tax. Petroleum excise taxes have been converted to ad valorem rates, and other excise taxes have been raised. Some business tax rates and public enterprise tariffs have also been increased in the past year. These policy measures move partly in the right direction, and a great deal depends on whether the recent changes will become part of an overall reform of the tax system. 4.28 Increasing public sector saving and maintaining private sector saving at about its current share should reduce a major source of excess demand that has contributed to inflation and the large current account deficit. Raising taxes above their current share in GDP will reduce the disposable income of households and companies, reducing their demand for both domestic and imported goods and services. But, to reduce total demand, the Government's savings behavior must be improved and its expenditure growth restrained. Without such expenditure constraint, raising taxes will have little positive effect, as higher public demand would simply replace the forgone private demand. The simulation model gives some indication of the impacts on the rest of the economy of increasing government revenues and savings behavior./1 4.29 In a sensitivity test, the indirect tax rates /2 were raised in relation to those in the reference simulation to generate general government revenues of about 18.7% of GDP in 1985 and 18.7% in 1990 as shown in Table 4.2./3 The growth of total expenditures, including public and public enterprise investment, was restrained, reaching 21.5% of GDP in 1985 and 22% in 1990. As a result of higher tax rates and lower consumption levels, investment growth was assumed to be slower than in the reference simulation. /1 The model is not sufficiently disaggreated to analyze the impacts of increasing public enterprise tariffs, although it is unlikely the effects would be very different. /2 Direct taxes could also be raised with similar results. The major difference would be a slightly more adverse effect on private saving. /3 This corresponds to the target of 17% of GDP for central-government revenues. - 52 - Table 4.2: IMPACT OF GREATER PUBLIC SECTOR RESOURCE MOBILIZATION AND SAVING (use of indirect tax increases) 1975-79 1985 1990 GDP growth (% p.a. constant prices) 8.9 5.4 /a 5.8 /a Investment share (% GDP) 25.8 /f 26.1 24.7 Gross national savings (% GDP) 21.0 19.6 21.4 General government revenues /d (% GDP) 15.1 18.0 18.7 General government expenditures /d (% GDP) 12.7 13.5 13.8 General government saving /d (% GD?) 2.4 4.5 4.9 Public sector saving gap (%. GDP) 5.7 3.5 3.1 Current account ($ billion) -1.1 -3.5 -3.1 Current account (% GDP) /e 5.3 6.5 3.3 Debt service ratio (%) /c 15.4 /b 23.5 27.7 /a For periods 1980-85 and 1985-90. lb End 1979. Ic Including private. Id Including central Government plus local jurisdictions, but excluding public enterprises. /e Equals total savings-investment gap. If 28% in 1979. Source: Mission estimates. 4.30 Under these assumptions, the aggregate growth rate falls below the reference run as a result of increasing public saving and lower aggregate demand. Some improvement in the current account deficit is evident in 1985, and much more improvement is achieved by 1990. The resource balance becomes positive in that year, but high interest payments keep the current account in deficit. The cumulative impact of lower external deficits on borrowing requirements, debt service ratios and debt outstanding are clear by 1990. The effects are less noticeable in 1985 because of the large size of the initial deficit to be reduced. The Government expenditure share in GDP rises slightly compared to the reference run because of the continuation of current programs and the slower GDP growth. This simulation clearly /1 Most comparisons in this and subsequent simulations will be in relation to the favorable reference simulation, unless otherwise stated. - 53 - indicates that improving public sector saving will have a positive effect on reducing the external deficit, and that effect will grow over time. There will, however, be some cost in lower aggregate growth. But fiscal policies alone are not sufficient to solve the immediate problems unless quite severe measures are taken. They help reduce the savings gap, but unless measures are taken at the same time to improve the real transfer of resources, i.e., raise exports and lower imports, the trade deficit will not be reduced sharply without quite severe measures./l The fiscal measures are necessary, but not sufficient to complete the adjustment. Action will have to be taken in other areas as well. 4.31 Policy Recommendations. These recommendations will focus on means to achieve the five-year targets of raising the share of central government revenue in GDP to 17% (general government to 18%), of increasing the public enterprises- contribution to their investment programs, and of restraining total public sector expenditures to about 21% of GDP. Measures to maintain high private sector saving will be discussed in the next section. A program of tax and fiscal policy reform should be implemented to achieve these targets by 1985, and further improvements should be continued thereafter. This will require careful study and development by the Ministry of Finance in consultation with other government agencies, particularly NESDB. However, initial action should be undertaken as soon as possible towards reducing the large public savings deficit. Because of possible difficulties in implementing measures to raise taxes, particular emphasis should be given to measures to control expenditures and raise public enterprise tariffs in the short run. Appropriate public enterprise tariffs are very important in the energy sector and to assure economic use of public enterprise goods and services. The Mission recommends consideration be given to: (a) reviewing government current and capital expenditures to eliminate wasteful or unnecessary expenditures and assure that the remaining ones conform to the government's priorities for develop- ment and adjustment. A comprehensive analysis and review of the public investment program and adequate economic evaluation of public and public enterprise investments should be a regular part of the planning and budgeting exercise; (b) exerting even more vigorous efforts to increase collections of existing taxes through improvements in tax administration for both direct and indirect taxes, building on the success of initial programs in this area; (c) introducing procedures for more prompt collection of tax liabilities and advance payments of some taxes; /1 This is equivalent to saying, in Cordon's terminology, that not only must the aggregate level of demand be reduced, but also its structure must be shifted from tradables to nontradables. - 54 - (d) discontinuing the present system of treating any corporation as a personal entity for income tax purposes if one of the shareholders owns more than half of the capital;/l (e) expanding the personal income tax base to include all income from property, capital gains, and eventually gifts and transfers; (f) simplifying the rate structure of the business tax into three broad categories with a standard basic rate, reduced rate on essential goods and a higher rate on nonessentials. The basic rate level should be kept high enough to increase revenues signif- icantly, and rates should be applied uniformly to domestic goods and imports. Consideration should also be given to reforming the business tax into a single point tax (probably at the wholesale level) with the possibility of eventually moving to a value added tax; (g) implementing proposed reforms of the excise tax structure to consolidate nine separate excise codes into a single one, to integrate excises with business taxes on selected commodities, to widen the excise tax base to include luxury commodities such as electrical appliances, electronic devices, automobiles, watches, cosmetics, etc., and to convert all remaining specific excise taxes to ad valorem;/2 (h) increasing collections on the existing property tax, which are low because of widespread exemptions, concessional rates, low assessments, and poor administration. Introducing a new property tax should also be considered in the longer term;/2 (i) reducing the "standard deductions" for professional incomes or replacing them with direct accounting of expenses; (j) introducing frequent and automatic tariff adjustments for public enterprises based on their operating costs and investment require- ments so that they can cover a larger portion of their investment programs; and (k) issuing government bonds that offer positive real rates of interest to the public to reduce reliance on deficit financing from the banking system. Public enterprises should also be encouraged to issue bonds to the public. /1 This would reduce tax avoidance arising from changing the juristic form of an enterprise, particularly in view of the recent reductions in the personal income tax and increases in the corporate income tax. Similar treatment should also be considered for some partnerships to increase the distinction between taxes on enterprises and those on individuals and allow for differential tax treatment. /2 Legislation for these measures has been introduced and may be passed by Parliament in the near future. - 55 - 4.32 Monetary Policy, External Balances and Financial Sector Development. The current account deficit is a reflection of the structural disequilibria in the domestic economy: the savings deficiencies, accommodating monetary policy, and inadequate price adjustments. Because of rising interest payments, the relatively large trade deficits of the past two decades cannot be continued, and a surplus may be needed on that account. This will require measures to improve domestic resource mobilization, reduce import demand, and increase exports. Attempts to reduce the deficit directly by quotas, bans, higher tariffs on imports, or by large subsidies to exports will mask rather than redress the fundamental imbalances, aggravate distortions in the productive sectors, and diminish the long-run growth potential of the economy. Thiey should be strictly avoided. 4.33 Monetary policy will have to assume greater responsibility for macroeconomic management of demand, resource mobilization and allocation, and the balance of payments. Restraint in the rate of credit expansion will be necessary to moderate demand pressure on prices and imports. This should complement measures to increase public saving discussed above, since the requirement for deficit financing from the Bank of Thailand and commercial banks should diminish. In addition to the rate of credit creation, interest rate policy will become a more important element in conducting monetary policy and influencing the balance of payments. Maintaining positive real interest rates on time deposits and at least some government securities will encourage more private saving while discouraging some marginal investment, thus helping reduce the savings gap. Interest rates are also important in influencing short-term capital flows in the balance of payments, and they should be kept high enough to prevent large interest-sensitive capital outflows, while other mieasures should be implemented to discourage excessive recourse to short-term private foreign borrowing to finance domestic credit expansion or the current account deficit. While higher interest rates will increase savings, they will also raise the debt servicing payments on the government-s domestic debt, which will require more public resource mobilization. However, this is a necessary part of the adjustment process and higher interest rates reflect the cost of mobilizing domestic saving. Controlling government expenditures is not a sufficient reason for maintaining low interest rates. 4.34 Even with careful macroeconomic management, the magnitudes of the expected financing requirements pose certain problems for the mechanisms of foreign resource mobilization and domestic financial sector adjustments whichl will require direct policy action and improved financial intermediation. Careful management of the capital account and coordination of foreign borrowing, particularly by public enterprises and the private sector, will he required. Annual current account deficits will average about $3 billion per year throughout most of the 1980Os, even with significant adjustment, and gross annual disbursements of foreign loans will rise from $2.4 billion in 1979 to nearly $6 billion in 1985 and possibly as high as $10 billion in 1990. Private sources will be a major source of capital in the 1980-s, and government relations with foreign commercial banks will assume greater importance. - 56 - The level of medium- and longer-term private sector borrowing abroad should also increase, and the private Thai banks will play a role in mobilizing these foreign resources. 4.35 Given the size of the external deficit and the dependence on pri- vate commercial markets, it is important that a coherent debt management program be developed for all public foreign borrowing and that all foreign debt be monitored. The majority of foreign borrowing during the coming five years will be from private, nonconcessionary sources. It will be available only if the Thai economy continues to demonstrate its creditworthiness. Judgments about creditworthiness will depend inter alia on the perceived ability of the economy to manage its external borrowing prudently, to keep its inflation rate within acceptable bounds, to mobilize sufficient domestic resources, to generate exports over the long run, and to sustain the growth rates necessary to achieve these and other important goals. The Bank of Thailand will also have to be able to maintain adequate reserves and follow sound monetary and exchange rate policies to support the creditworthiness of the Thai economy. 4.36 The whole issue of creditworthiness will become more important in world capital markets in view of the high levels of borrowing expected to be undertaken by LDCs over the next five years. The changes occurring in the world economy, the large and continued surpluses that will be generated by oil-exporting nations, and the potentially chronic deficits of oil-importing countries are forcing a re-evaluation of most conventional wisdom on this subject. Higher levels of debt and debt service will probably be tolerated as the international monetary system continues to adapt to the changing economic balances. However, even though the international monetary system will be recycling larger volumes of money, that does not necessarily mean that countries which have large deficits will automatically gain access to those resources. Debtor countries such as Thailand will still have to demonstrate their creditworthiness. If Thailand is not perceived to have its current account deficit under control, its creditworthiness will suffer, and it may not be able to continue borrowing the amounts it desires. 4.37 Another objective of the monetary authorities should be to continue to support the stability and development of financial institutions after the recent difficult period. Several recent actions have increased the Bank of Thailand's control over financial sector development. The revision of the Commercial Banking Act, the Act on Finance Business in 1979, the special fund to stabilize the finance companies, and the Capital Market Development Fund have eased the liquidity situation of finance companies and stabilized the SET. These actions, along with more general credit restraint by the Bank of Thailand and higher interest rates, should help restore the somewhat shaken stability of the financial sector and reduce the pressure of excess demand. The financial sector should now be able to play an important - 57 - role in the adjustment process by continuing to facilitate private resource mobilization and allocation within the framework of appropriate interest- rate and other financial policies. 4.38 The increased integration of Thai financial institutions into international money markets has largely been a benefit to the economy. The banking system's ability to borrow in foreign exchange has helped balance the country's current account deficit; in fact, banks have been encouraged to do so on occasion. Such access to international money markets is not without cost, however. The magnitude of these short-term, uncovered liabilities makes the economy much more sensitive to external financial developmenits. The potential volatility of these liabilities and the size of the current account deficit increase the difficulty of managing international reserves and domestic monetary policy. Rising external interest rates in 1979 forcied suspending taxes levied on interest paid on foreign loans, led to substantial short-term capital flight from early October, and threatened a liquidity squeeze. In January 1980, interest rate ceilings were raised, which relieved these pressures by reducing the domestic demand for funds, encouraging additional domestic saving, and curbing interest sensitive capital outflows. 4.39 The effects on the balance of payments and external borrowing requirements of measures to increase private saving or reduce the growth of aggregate demand through higher interest rates or less credit expansion will, by themselves, be similar to those of raising public sector saving. There will be some reduction in the growth of imports and some slowing in investment rates. In the simulation model, raising private saving by 1% of CDP compared to the reference simulation reduces the current account deficit to 6.4% of GDP in 1985. The growth rate falls slightly to 5.4% p.a. and public saving is little changed. As with the experiment raising public saving, tlhe impact of improved savings behavior alone does not have a large impact on the external deficit without accompanying action to alter the flow of real resources through the trade balance. Given the magnitude of the adjustment, not only must the level of consumption demand be reduced, but its composition must be shifted away from imports, and the production of more exports must be encouraged. These issues will be addressed below. 4.40 Policy Recommendations. Improvements in the current account deficit will largely be the result of policies undertaken in other sectors, but appropriate monetary policy and debt management will be necessary to support these actions. The Bank of Thailand has adequate tools to pursue prudent monetary policy, to manage external borrowing, and to regulate and support financial institutions without having to resort to excessive liquidity creation. The Bank of Thailand, with the support of other government agencies, must use these tools as part of the overall adjustment process. Reducing the public sector deficit and public borrowing from the banking system will be major factors in reducing the pressure for monetary expansion, thereby helping to ensure adequate availability of bank credit to finance private sector requirements within an acceptable rate of total credit expansion. Assuring that interest rates are not artificially - 58 - constrained will be another important element. Stable monetary policy should reduce domestic inflationary pressures and allow the private sector to perform its resource mobilization and allocation functions more effectively. Supporting policies will be needed to guide institutional development with appropriate regulatory action and to assure proper foreign debt monitoring and capital account management. Action should be considered to:/l (a) establish and adhere to guidelines for rates of monetary expansion consistent with expected real growth plus exogenously generated price increases. Interest rates should be allowed to adjust as necessary (further increases in interest ceilings may be required); (b) assure that the Bank of Thailand maintains the interest rates that it regulates positive in real terms, and that other regulated rates move consistently with the overall rate structure./2 (c) adjust interest-rate, reserve, and other financial policies to assure necessary capital account balances consistent with domestic objectives of growth and financial stability; (d) fully implement existing requirements for reporting to the Bank of Thailand all actual and intended foreign borrowing by all agents, public and private, and to develop debt management policies to coordinate public sector borrowing and provide guidelines for private borrowing; (e) improve financial intermediation by measures to increase credit availability for agriculture and small-scale industry through changes in institutional structures and/or regulations; and (f) encourage longer-term lending by commercial banks and the creation of specific institutions with long-term intermediation objectives, such as insurance companies and pension funds. 4.41 Energy Policy./3 Thailand's propensity for high and growing energy imports indicates that Thailand has not adequately adjusted domestic prices /1 Policy measures directly relating to merchandise trade will be addressed in the following sections. /2 Exceptions may be made for certain specific rates which are intentionally kept at low levels for other policy objectives, so long as these excep- tions are not widespread. /3 This section is based on the report Thailand, Energy Issues and Prospects, No. 2813-TH, May 1980 (Green Cover). That report has been discussed with the Government and presents the analysis and policy recommendations much more fully. - 59 - to the external energy price increases. After initial increases in 1974, energy prices remained roughly constant until 1977 and rose sharply only in 1979. This has retarded conservation and reduction of the energy intensity of the Thai economic structure. The combination of continued rapid growth, modernizatior., and a heavy dependence on energy imports has resulted in a large oil import burden on the balance of payments, particularly after the doubling of oil import prices in 1979/80. The exceptionally low GDP elasticity energy consumption in 1978 (the last year for which data are available) is apparently due to transitory factors of very high agriculture led GDP growth and supply shortages of hydroelectricity and some petroleum products. The longer-term trends for higher energy consumption growth are likely to continue unless further price adjustments are made. Maintaining low energy prices has also contributed to the fiscal deficit. Adjustments in energy price policy will be essential to any satisfactory adjustment program. 4.42 Recent discoveries of natural gas, which will be available in 1982, and expanded production capacity of lignite beginning in 1984 will reduce the use of imported energy for power generation through the 1980's and will lower the economy's dependence on imported energy./l However, even with this substitution, the development of remaining domestic hydro potential, and the possible production of alcohol from sugarcane and cassava, some 50% of total energy requirements would still have to be imported by 1990. Without significant increases in domestic energy reserves, a large portion of incremental demand after 1990 will have to be satisfied by imports and the import bill could accelerate sharply in comparison to its slow growth in the 1980s. Thailand will not be able to break its dependence on imported energy in the foreseeable future, and thus will have to adjust its domestic energy policies to external developments in energy markets, including both expected price increases and possible supply shortages./2 /1 There are now indications of significantly larger reserves of both lignite andf natural gas in Thailand than previously believed. If this turns out to be the case, they could meet Thailand's power generation requirements until the year 2000 and supply substantial amounts of energy directly to industry. There is also the possibility of meeting a substantial part of Thailand's incremental power generation requirements by the year 2000 if the potential of the Mlekong and Salaween rivers were to be developed. This would still be quasi- imported energy, as they are international rivers, and there are major political and social obstacles to be overcome. However, even if international hydro or expanded lignite and natural gas supplies could meet all Thailand's power demands, it would still be dependent on imports for liquid fuel after 1990, which amount to about 40% of total energy demand. /2 Intermittent supply shortfalls in recent years have been due more to administrative problems within the Oil Fuel Organization and the activities of domestic oil refineries than to external supply problems. However, these procedures will have to be improved as well. - 60 - 4.43 Energy use must be curtailed. The efficiency of energy use should be increased and demand reduced in order to lower the expenditure elasticity of energy demand to a level consistent with balance of payments equilibrium. This will require a number of difficult decisions. Higher consumer prices are one of the most effective ways of reducing consumption, inducing conservation, and encouraging investment in more energy-efficient equipment, particularly in a market-oriented economy such as Thailand's. However, price policies are also highly visible, and price increases are unpopular with a large part of the population. This is one reason why the Government has been reluctant to move very fast on this issue. Prices for energy products should be adjusted as rapidly as possible to fully reflect the import and processing costs of energy and a reasonable tax structure based on balance- of-payments and conservation objectives. Taking account of the 3% p.a. projected relative increases in oil prices, projected international inflation of about 9% p.a. between now and 1985, and the current price shortfall of 30% below "appropriate" levels based on the pre-1973 tax structure, average annual domestic petroleum price increases of nearly 20% p.a. will be required over the next five years for domestic petroleum prices to catch up with the "appropriate" price level./l More rapid increases are necessary for fuel oil. Higher rates of increase will be required for electricity, averaging about 25% p.a., if the 8% rate of return target is to be achieved./2 The recent increases in power tariffs go about half way toward meeting these objectives of the power sector this year. Energy price increases are externally generated, and the Thai economy cannot avoid absorbing them for any prolonged period of time. The costs of delaying domestic energy price adjustments are larger current account deficits, unavailability of certain energy products, incorrect investment signals to the energy sector and to energy users, lower government revenues, and, at various times, significant levels of subsidies to energy consumers. /1 This "appropriate" level is a first approximation of an appropriate level for the 1980's. Further adjustments may be required, depending on how well these prices slow the growth of energy consumption and imports. It is not yet possible to make more accurate estimates on the basis of available data in the energy sector. /2 Current covenants between EGAT and the World Bank call for increases of 56% in 1980 and 19% in 1981 to restore the 8% rate of return by the end of 1982, plus further increases to match any additional increases in the cost of primary energy. This is approximately 25% p.a. between now and 1985. - 61 - 4.44 In adjusting petroleum prices, taxes should be increased to achieve at least the pre-1973 real level of taxation as a first approxi- mation (appropriate rates A in Table 3.10, adjusted forward). Further requirements will then be required as the overall energy policy is developed. Subsidies to the sector from the government budget, by guaranteed borrowing through the Oil Fund, or by other means, should be eliminated completely./l As more nonrenewable domestic energy sources (such as natural gas and lignite) are included in the energy mix, appropriate price and tax policy will become all the more important. Pressure to lower prices to levels commensurate with the current cost of production of these resources must be resisted, and retail prices must be kept high enough to reflect oroperly the depletion of these resources, to contribute an appropriate portion of public revenues, and to encourage conservation and the further development of alternative domestic energy sources. These alternative sources will be economic to develop only if domestic energy prices reflect world price levels. 4.45 Although energy demand is relatively inelastic in the short run, evidence indicates that demand is responsive to price changes in the medium term when the structure of investment and consumption can adjust to the new higher relative price. Since the energy input into almost all production processes is relatively small, less than 10% of total costs, energy cost increases should not have a very large indirect effect on other prices. Rough estimates indicate that a 10% increase in energy prices would lead to about a 2.3% general price increase. Appropriate energy prices will also improve resource allocation and reduce distortions resulting from low energy prices. Part of the delay in adjusting petroleum product prices has been accommodated by squeezing distribution margins, which also have to be restored in the adjustment process. 4.46 Energy price increases will directly reduce the demand for energy and indirectly reduce aggregate demand. Both factors will reduce the import demand for petroleum and, to the extent energy taxes and tariffs are increased, public saving can be raised. If demand growth can be slowed, some large investments in the power sector can be postponed, reducing future investment demand as well. Since most of the energy used in the economy is by the better-off groups, the taxes imposed may turn out to be slightly progres- sive on average. Special tariffs, such as lifeline electricity rates, can reasonably be used to mitigate the impact of tariff increases on the poor without incurring too great a cost in forgone revenues. 4.47 In addition to price adjustments, domestic energy resources should be developed to substitute for imported energy. This will reduce the burden on the balance of payments and assure more energy independence for the economy. Thailand has already made substantial progress in this direction in /1 The gross share of petroleum revenues in government revenues was 8.9% in 1979. Total subsidies to the sector may have amounted to as much as 5% of total revenues in 1979, so the net effect of these measures on the public sector deficit would be much larger than just the increase in revenue. - 62 - natural gas and lignite and is actively encouraging more exploration for hydrocarbons. It is also investigating biomass alternatives (e.g., alcohol), but further attention should be directed toward other renewable energy resources. 4.48 At whatever level of prices that obtains, it is essential that the relative prices of different energy products be properly structured to re- flect their relative scarcity and economic costs. Different energy products are substitutable to some extent, and deliberate policies to maintain lower prices for certain products to aid certain consumer groups or industries may result in excessive and costly shifting of demand,/l e.g., converting automobiles to diesel if the price differential between gasoline and diesel fuel is too large, or wasteful adjustments to take advantage of a lower- priced but less energy-efficient fuel. In addition to defeating energy conservation objectives, shifting can become costly if it distorts the structure of demand too greatly from the structure of supply. Among petroleum products, if the demand structure exceeds the possible range of supply of the refinery output mix, balance will have to be achieved by trading in the external spot market, which has proved to be costly. The principal issue at the moment concerns the expansion of the oil refineries. The use of domestic energy (gas and lignite) in power generation displaces a large por- tion of fuel oil demand and complicates the issue of balancing supply and demand of petroleum products. At present there is insufficient refinery capacity in Thailand, and any proposed expansion must include greater crackirgcapacity in existing unit to reduce the expected surplus of fuel oil. 4.49 Direct energy conservation measures should be employed to complement the other policies. These should encourage and support retrofitting of energy-saving devices in existing facilities and promote energy-efficient design in new construction and machinery. Policies should also encourage energy saving among individual consumers and reduce energy-using activities in areas where individual action is not feasible, such as measures to improve traffic flows in Bangkok. These objectives can be accomplished by regulatory measures in some instances, education and energy audits in others, and tax or other market incentives in still other cases. 4.50 Thailand has not yet developed a long-run energy strategy for energy development, pricing, and use. As a result, it faces a continuing period of uncertainty about energy, with resulting shortages, contention over prices, demands for preferential allocations, and distruptive ad hoc measures to save energy in periods when energy supplies are simply inade- quate, such as the recent measures to reduce electricity demand in Bangkok by restricting the hours of operation of a number of activities. Other countries have demonstrated that high growth rates can be maintained with lower energy inputs, but this requires long-range planning and a number of specific conservation measures. Without significant progress in this area, the availability of energy and its impact on the balance of payments could become the principal structural constraints on Thailand-s future growth. /1 This should be distinguished from social policies which lower the price of small amounts of certain energy products to poor consumers, such as "lifeline" electricity rates. By their nature, these policies do not permit large shifts in demand. - 63 - 4.51 Although it is not possible to estimate the effects of conservation policies and better energy planning or predict future discoveries of domestic energy, the simulation model can help analyze the impact of higher energy prices and tax rates. In the reference simulation, it was assumed that some of the recent external price increases were passed on, but that tax rates were kept low. This already led to a significant reduction of demand growth compared to 1975-79. In simulating the effects of fully adjusting energy prices, the full effects of external price increases are passed on and tax rates on energy are increased to approximately restore their 1970-73 real rates. Government expenditure growth is restrained so public savings can increase. Other assumptions are the same as in the reference simulation. The results of this simulation are shown in Table 4.3. Table 4.3: IMPACT OF FULL ADJUSTMENT OF ENERGY PRICES 1975-79 1985 1990 GDP growth (% p.a. constant prices) 8.9 5.4 /a 5.8 /a Investment share (% GDP) 25.8 /f 26.1 24.7 Gross national savings (% GDP) 21.0 19.5 21.0 General government saving /d (% GDP) 2.4 2.6 2.7 Public sector saving gap (% GDP) 5.7 5.4 5.3 Export growth (% p.a. constant prices) 15.2 10.0 /a 7.9 /a Import growth (% p.a. constant prices) 11.6 4.6 7a 4.8 /a Resource balance ($ billion) -0.3 -1.7 0.1 Current account ($ billion) -1.1 -3.5 -3.4 Current account (% GDP) /e 5.3 6.6 3.7 Debt service ratio (%) /c 15.4 /b 23.5 28.0 /a For periods 1980-85 and 1985-90. /b End 1979. /c Including private. Id Including central Government plus local jurisdictions, but excluding public enterprises. /e Equals total savings-investment gap. If 28% in 1979. - 64 - 4.52 Raising energy prices and taxes has about the same impact on growth and reducing the current account deficit as improved fiscal policy. This is due to the direct effect of reducing the demand for energy imports in addition to the indirect effects of lower real aggregate demand. The higher energy prices imply slower growth of real incomes as well as some shift in demand away from energy. Raising energy taxes also augments government revenues in 1985, permitting a higher level of public saving than in the reference simulation but not as high as in the simulation of greater public resource mobilization. The impact in 1985 is not yet large because of the lags in response to the price changes and the assumed even phasing of the price increases over the period 1980-85. As in the previous simulation, the resource balance becomes positive by 1990, but the current account balance remains negative because of the debt-service payments. The debt-service ratio, however, remains below 30% and is generally lower than in the reference simulation. This simulation shows the direct effect of raising energy prices on reducing energy imports, and indicates that such price increases will not seriously retard growth. These policy actions improve the resource balance by reducing the demand for energy imports, and they are necessary complements to the policies to raise domestic savings discussed above. They improve the real transfer process by reducing the economy's use of foreign resources. But increasing energy prices alone is not sufficient to accomplish the entire adjustment. 4.53 Policy Recommendations. Energy is becoming a crucial constraint on development, particularly for oil-importing countries such as Thailand, and long-term energy strategies are becoming essential elements in overall development strategies. The importance of energy planning has become apparent only in the past few years, as both supplies and prices are becoming more and more uncertain. Thailand does not have a history of energy planning (neither do most countries), and it is imperative that long-range energy planning capacity be developed and integrated with economic planning. However, in the short run, policies must be undertaken to achieve the targets of reducing the energy elasticity, raising energy prices to fully reflect energy import costs, and raising the share of energy taxes in government revenues. The following recommendations should be considered: (a) announcing and implementing a program of regular and automatic adjustments of petroleum and other energy prices and power tariffs in response to changes in external energy costs; (b) raising excise, business and import taxes on energy products to at least their real pre-1973 level and higher if necessary to reflect the scarcity of energy resources and of the foreign exchange used to import energy; (c) using substitution or opportunity cost pricing of domestic energy resources to reflect the alternate costs of imports, to discourage investment in uneconomic energy-intensive projects and equipment, and to encourage further development of domestic energy resources; - 65 - (d) enforcing a pattern of refinery expansion that assures an appro- priate balance of petroleum product supply and demand; (e) developing adequate consezvait_rn measures for both commercial/ industrial and residential/individual uses, including more energy- efficient machinery, retrofitting to reduce energy losses, and improved energy design in the future; and (f) improving the capacity of energy sector institutions to influence the development of the energy sup[ly structure, to manage demand and purchasing policies of petroleum and product supplies, to develop nonconventional sources, and to allocate scarce energy resources if necessary. 4.54 Industrial Development Policy./1 Restoring the external and fiscal balances is a necessary part of the adjustment process in the short term. However, those adjustments should be designed so as not to interfere with the implementation of policies to raise production and productivity in the industrial and agricultural sectors./2 As the preceding analysis has shown, unless measures to raise savings are complemented by improvements in the underlying structure and distribution of output toward more exports and toward reducing import demand, long-term growth and adjustment will be impaired. The growth record of industry over the past several years has been quite good. The sector is not subject to such severe distortions as in many other developing countries and manufactured exports grew quite rapidly during the 1970's. Their share in total exports is now about 20 percent. Although the industrial share in value added now exceeds that of agriculture, its share in employment is only about one-tenth that of agriculture. As new land is no longer available, agriculture will be less able to absorb labor force growth, and that burden will fall increasingly on industry. 4.55 After falling for over a decade, levels of protection began rising in the middle 1970's as a result of efforts to improve the balance of payments and encourage domestic growth. This has led to more inefficiency in the industrial sector, higher prices for industrial goods, and less labor absorption. In addition, recent initiatives to support large, capital-intensive projects threaten to move the economy toward an industrial structure that is not well suited to Thailand's comparative advantage, that would use disproportionate amounts of scarce investment resources, and that would tend to reduce its competitiveness abroad. Such action should be avoided. The recent growth of manufactured exports has increased labor absorption in some export-oriented branches, which are relatively labor intensive, and helped improve industrial efficiency. The Government is currently reviewing additional policies to promote exports as part of its strategy to reduce the current account deficit. /1 This section is based largely on the report, An Industrial Development Strategy for Thailand No. 2804a-TH, June 5, 1980. That report has been discussed extensively with the government and presents the analysis and policy recommendations more fully. /2 Agricultural policy will be discussed in paragraphs 4.62-4.68 below. - 66 - 4.56 The industrial strategy should concentrate on encouraging efficient domestic production and increasing exports in addition to other development objectives. It should include measures to reduce protection and price controls, promote manufactured exports, increase labor absorption, and improve the regional distribution of industry. The value of increasing manufactured exports to reduce the balance of payments deficit has been widely recognized. Since these industries tend to be relatively labor intensive and use relatively lower amounts of capital per unit of output, they will also contribute significantly to job creation and ease the demand for investment resources per unit of incremental output. The value of lowering protection and eliminating other price and quantity controls in terms of improved efficiency and reduced domestic prices and price-related distortions is not so widely recognized, especially at a time of large balance of payments deficits. Raising protection (including nontariff trade restrictions) may lead to more import substitution in some sectors, but it does not necessarily reduce the overall current account deficit. It may also impair the competitiveness of exports and retard future industrial growth. Reducing and harmonizing the tariff structure is essential to a medium-term development strategy. Lowering tariffs in the short run, however, may lead to higher import demand and adjustment problems for affected industries. Policy adjustments would have to take this into account. 4.57 Increasing industrial output and exports will require continued substantial investment. The structure and processing of current investment incentives can be improved in this regard to assure that necessary rates of investment are maintained and directed toward the most efficient uses. However, major investment projects, even in the private sector, should be carefully reviewed for their impacts on foreign exchange requirements, employment creation, export growth, or import reduction. These projects often end up placing large demands on public resources or foreign exchange reserves and may well need to be postponed unless there is compelling economic justification for proceeding at a time when resources are as scarce as they are now. 4.58 Policies which will raise manufactured exports and improve the effi- ciency of industry will contribute to easing domestic resource constraints on the economy and to reducing the trade deficit. Improved efficiency will also enable the economy to displace some additional imports with comparative domes- tic products. More growth in the industrial sector will help offset the growth-depressing impacts of some of the other policies discussed above. On the other hand, increased export orientation of nonresource-based industries will tend to concentrate export industries in the greater Bangkok area and the Eastern Seaboard where they have best access to complementary inputs, communications, and finance. 4.59 The effects of policies to stimulate exports of manufactured goods and improve efficiency can be estimated with the simulation model. Policy variables were adjusted to increase the competitiveness of Thai exports, and external demand was assumed to increase as a result of increased sales efforts. This implies a growth rate of manufactured exports of about 13.5% - 67 - p.a., compared to about 11% p.a. in the reference simulation for 1980-90. Investment is assumed to increase in response to higher export demand, but other assumptions are as in the reference simulation. The results of this experiment are shown in Table 4.4. 4.60 Export promotion increases overall growth significantly throughout the decade, but the improvement in the current account deficit is less pronounced. Higher earnings from manufactured exports are partly offset by higher imports due to higher intermediate demand from industry and to higher final demand as incomes rise faster. Agricultural exports are somewhat lower as higher domestic demand absorbs a larger share of the available supply. Government savings performance improves slightly as revenues from industry and trade rise and interest payments on the public debt decline relative to the reference run. These policies clearly improve the growth performance of the economy and make moderate improvements in current account and fiscal deficits. However, without improved savings behavior, the contribution of increased manufactured exports to reducing the trade deficit is diminished by higher imports to satisfy a larger consumption demand. Both higher production and lower consumption demand are necessary to make a significant and sustained reduction in the current account deficit in a five-year time horizon. It should be noted that improved export performance depends on developments in importing countries and in third-country competitors. These factors are beyond Thailand's control, and the growth rate for manufactured exports, 14% p.a. in 1980-85, is optimistic. It implies that Thailand's share in manufactured exports of developing countries will increase from 2% in 1978 to nearly 3% in 1985. Table 4.4: IMPACT OF POLICIES TO ACCELERATE MANUFACTURED EXPORTS 1975-79 1985 1990 GDP growth (% p.a. constant prices) 8.9 6.1 /a 6.9 /a Investment share (% GDP) 25.8 /e 26.2 24.5 Gross national saving (% GDP) 21.0 19.6 21.1 Public sector saving gap (%/GDP) 5.7 5.4 5.4 Export growth (% p.a. constant prices) 15.2 10.9 /a 9.3 /a Import growth (% p.a. constant prices) 11.6 5.4 /a 5.9 /a Resource balance ($ billion) -0.3 -1.8 0.2 Current account ($ billion) -1.1 -3.6 -3.4 Current account (% GDP) /d 5.3 6.6 3.4 Debt service ratio (%) /c 15.4 /b 22.5 25.9 /a For periods 1980-85 and 1985-90. /b End 1979. Th Including private. /d Equals savings investment gap. 7e 28% in 1979. - 68 - 4.61 Policy Recommendations. Industrial policy should concentrate on ways to increase manufactured exports, improve the efficiency of domestic production, and promote investment. Some of these measures may involve some contraction of the less efficient import-substitution industries, which will lead to a gradual restructuring of industry with more orientation toward trade and competitiveness in world markets. This will increase the importance of the more labor-intensive industries and augment job creation if Thai wages continue to be relatively low and if capital is not subsidized. This is consistent with the comparative advantage of the economy and will increase employment and accelerate growth. Consideration should be given to: (a) implementing measures currently under review to reduce biases against manufactured exports by full and prompt rebate of all taxes and tariffs paid on intermediate imports used directly and indirectly in the production of exports;/l (b) reducing or eliminating export taxes and other export controls such as export licenses and minimum prices, except where foreign market limitations (e.g., quotas, inelastic demand) require management of Thai exports. Where licenses allocate foreign quotas, they should be easily transferrable among exporters and available to bona fide new exporters; (c) improving the export credit and guarantee schemes, simplifying their administration, and extending the facilities to cover pre-export and export investment credit requirements; (d) expanding institutional promotion measures and making export promotion incentives available to all trading firms; (e) replacing all nontariff restrictions on imports with ad valorem tariffs and moving toward a more homogenous tariff structure by initially reducing tariffs above 50% to 50% and raising tariffs below 10% to 10% as a first step toward a uniform tariff./2 Infant industries could be allowed an additional 15% for limited periods of time, and an additional 20% could be imposed on luxury imports;/3 (f) eliminating domestic price controls; /1 Legislation is currently pending to achieve most of this by eliminating the budget constraint on rebates and specifically authorizing calculation of ad valorem rebates by category. /2 Some ad hoc adjustments in this direction are being made. /3 If necessary, appropriate transitional arrangement could be made for those industries seriously threatened by the tariff reform. - 69 - (g) establishing an authority for economic evaluation of all large projects requiring major public support in the form of equity, credit guarantees, protection, special incentives, or major specific infrastructure construction; (h) granting investment incentives on an automatic basis to all firms which meet certain stated objective development criteria except for specifically excluded industries; (i) implementing more effective measures to promote appropriate development of industry outside of Bangkok; and (j) developing effective ways to encourage higher employment generation per unit of industrial investment. 4.62 Agricultural Policy. The agricultural sector will remain a key factor in Thailand-s development prospects for some time to come. It is an important source of employment, material, and, of course, foodstuffs for the rest of the economy. It is also a major foreign exchange earner. The high growth rate of agriculture and agricultural exports was a key factor in forestalling major balance of payments deficits over the past five years. In the past, the private sector has been the driving force in Thailand's rapid agricultural growth. But this unfettered development has not been without cost. It has led to inappropriate land use and destruction of valuable water sheds (external diseconomies), and it has introduced new techniques with only high, short-term profits. These factors are becoming increasingly detrimental to the objectives of growth and poverty alleviation. The Government will have to take more active measures to reduce external diseconomies and undertake programs where the external economies cannot be captured by the private sector (e.g. soil conservation, extension) or where economies of scale or long payback periods would make private action unlikely (e.g., land development, research and development). 4.63 Although the potential for further expansion of the area under cultivation is rapidly coming to an end, there is still potentially productive land within holdings that is not regularly cultivated, and there are possibilities for increasing crop yields. Realizing this potential will require greater development of research, extension, and supporting systems of marketing and credit; more use of purchased inputs such as fertilizer and pesticides; and better on-farm land development and water use. Appropriate producer incentives in the form of remunerative prices will also be necessary to induce greater production of marketable surpluses. In addition, the overall question of appropriate land classification and use must be faced as land becomes a scarce resource. Many of the necessary support services can and will be provided by the private sector. However, the government will also have to establish a viable policy framework which is conducive to sustained and intensive agricultural development and provide infrastructure, technology, and supplementary credit. In addition to general supporting measures, programs that respond directly to specific local problems will have to be developed, particularly for those areas unlikely to be attractive to private market activity. - 70 - 4.64 There has been little planning of land use and development as agri- culture expanded into uncultivated areas in the past. Large tracts of land are classified as nonagricultural, although they are, and should remain, under agricultural production. By not placing them in the appropriate classifi- cation, they are often deprived of necessary support services, and clear title cannot be granted to smallholders. This discourages fixed investments that would increase production and productivity. Significant sections of the country are also inappropriately cropped in terms of their land capabilities. In some areas, this is due to subsistence requirements of rice production; in others, to lack of adequate knowledge or adequate market outlets for more suitable crops. Appropriate land classification and use will greatly facilitate measures to implement more modern production techniques and raise productivity in agriculture. It will also aid conservation and help present further deforestation. Adjustments to the changing structure of agricultural production will have major implications for the development of appropriate agricultural research and extension in Thailand. More effort must be placed on developing appropriate crops and cropping patterns for all areas of the country (not just the irrigated rice areas) and for rapidly and effectively extending this knowledge to the farmers. 4.65 The largely private agricultural marketing system in Thailand has been a major factor in stimulating agricultural growth in the past two decades. Intensification and modernization in the agricultural sector will impose greater demands on the system, and the government may need to take measures to improve the efficacy of the marketing system, reduce price uncertainties, increase returns to farmers, and assist those parts of the country that are not adequately served by the existing systems. Improving the efficiency of the marketing system could result in higher producer prices without raising costs elsewhere in the economy, but rising energy costs in transport and handling are likely to absorb a signifiant part of these gains within the marketing system itself. Other mechanisms should be investigated for raising farmgate prices for various crops, including reducing and eventually eliminating the rice reserve requirement and the rice premium. 4.66 All of these measures will help raise incomes of rural producers and should bring forth a substantial supply response over time. Agricultural products account for 60% of exports, and continued high overall growth in the sector will be necessary to supply domestic demand and maintain the high export growth rate needed to help reduce the current account deficits. To the extent that poor farmers are able to produce surpluses for market, these measures will also help achieve poverty alleviation objectives. On the other hand, policies to promote agricultural growth may result in some reductions in revenue or increases in expenditure by the government. And they will most probably raise prices faced by consumers of agricultural products. These price increases will be necessary to shift incomes to agricultural producers in order to increase production and exports. - 71 - 4.67 The effects of measures to stimulate agricultural production are simulated in the model by raising the assumed growth of agricultural output to 5% p.a., compared to 4% p.a. in the reference simulation. This also entails some increase in investment, but other assumptions remain unchanged. Export and GDP growth rates increase, but higher incomes without any increase in savings leads to higher import demand, and the current account deficit is only moderately diminished in 1985, as shown in Table 4.5. With this higher rate of agricultural growth, there is sufficient supply to sustain agricultural export growth throughout the decade. With the lower growth rate it began to decline at the end of the decade as a result of continued growth of domestic intermediate and final demand. Table 4.5: IMPACT OF INCREASED AGRICULTURAL PRODUCTION 1975-79 1985 1990 GDP growth (% p.a. constant prices) 8.9 6.1 /a 6.5 /a Investment share (% GDP) 25.8 /e 26.3 24.7 Gross national saving (% GDP) 21.0 19.7 21.5 Public sector saving gap (% GDP) 5.7 5.4 5.3 Export growth (% p.a. constant prices) 15.2 10.9 /a 8.6 /a Import growth (% p.a. constant prices) 11.6 5.2 /a 5.4 /a Resource balance ($ billion) -0.3 -1.8 0.4 Current account ($ billion) -1.1 -3.6 -3.2 Current account (% GDP) /d 5.3 6.6 3.2 Debt service ratio /c 15.4 /b 23.1 26.4 /a For periods 1980-85 and 1985-90. /b End 1979. /c Including private. /d Equals savings investment gap. /e 28% in 1979. 4.68 Policy Recommendations. Agricultural policy is of major importance because of the number of people affected and the key role the sector plays in most economic activity. The transformation to more modern sector production should result in higher growth rates in agriculture and a shift in relative prices between agricultural and industrial output, reversing the decline in terms of trade of agriculture vis-a-vis nonagriculture. Supporting agricultural growth will raise rural incomes and make a positive contribution to further poverty alleviation in rural areas. In the longer run, higher incomes in rural areas will raise the reservation wage and increase wages in the urban areas as well if the labor market remains free of distortions. Policy should be considered to: - 72 - (a) design a national land use and development policy and then implement an extensive program to reclassify land based on a national land suitability classification, to expand and coordinate land settlement and reform in areas reclassified as being suitable for agriculture, to improve credit availability for purchasing and improving land, and to improve accessibility to full land rights; (b) increase forest protection, accelerate reforestation in areas suitable only for foresty, and expand land conservation and improvement programs, especially in areas with low cropping intensities; (c) make better use of available water resources by further develop- ment of major water control and irrigation schemes, by improving existing schemes of on-farm development, by development of viable medium and small water resource projects, especially in the Northeast, by improving the Royal Irrigation Department's planning, monitoring and evalution capacities, and by introducing comprehensive water management systems, including the levying of water charges; (d) coordinate research and extension activities providing applied technology for rainfed agriculture and to encourage changes in cropping patterns to achieve improvements in yields and farm incomes; (e) expand programs of government assistance for specialized crop development (particularly tree crops), livestock raising, and fish farming as supplementary sources of income for low-income farmers; (f) provide adequate institutional credit to farmers through better coordination of the government development agencies with the banking system and more systematic use of the Bank for Agriculture and Agricultural Cooperatives to complement the activities of the commercial banking and informal credit systems; (g) improve the efficiency and stability of the agricultural marketing and pricing system in order to increase returns to farmers, by examining the possibility of phasing out the present premia, taxes and reserve requirements for rice exports, reducing wholesale price fluctuations of major crops, and removing restrictions that introduce inefficiencies in private market development, such as limitation on livestock movement; - 73 - (h) develop adequate mechanisms for grading and quality control for seeds and fertilizers; and (i) develop programs which respond to the specific problems and needs of different areas of the country, especially those which have been left behind in the development process. 4.69 Combined Policy Action. This report has attempted to establish the extent of the structural disequilibria facing the economy, to emphasize the importance of undertaking a coordinated adjustment program, and to suggest appropriate policy measures in five areas of major concern. These policy suggestions cover both actions which will have an immediate impact and programs which will bear fruit over a longer term. Putting together a coherent policy package will be a major undertaking and will require making a number of difficult policy choices. The difficulties stem primarily from two sources: most policies which have beneficial effects in their targeted areas have costs in other areas that will have to be compensated for by other policies or accepted, and the adjustment from a situation of overexpansive growth and high imports will require a certain amount of retrenchment and lowering of expectations, which will not be popular. 4.70 It is clear from the preceeding analysis of policy actions in each specific area that implementing measures in one or two areas alone will not be sufficient to complete the necessary adjustments over even a five-year period. To some extent, this is due to the magnitude of the adjustments required, to the inherent lags involved in implementing and achieving significant structural adjustments, and to the phasing of policies so as not to unduly retard growth by abrupt imposition of severe adjustment measures. However, it is mostly due to the simple economic fact that coordinated adjustments are needed in several complementary areas in order to effect the necessary adjustments. Domestic savings, both public and private, must be increased and investment growth slowed in order to reduce the excess of domestic demand over production. At the same time, the structure of domestic production and demand must be altered so that the reduction in aggregate demand can be translated into reductions in the current account deficit through higher exports and lower imports. Fiscal and monetary policy should aim at improving the savings-investment behavior of the economy in the short run while policies for energy, industry and agriculture should accomplish the adjustment in the real goods flows that will reduce the structural external deficit in the longer run. It is not expected that all the policy recommendations in the previous sections will be implemented as part of the adjustment program, but significant action does need to be taken in each of the principal areas discussed. - 74 - 4.71 While the impacts of all the policy suggestions discussed above cannot be represented in the simulation model, it can demonstrate the combined effects of the various policy measures examined separately in the previous simulations. This will provide a good indication of the economy s prospects when coordinated policy action is taken. In this case, the individual assumptions of the previous simulations are implemented together as part of a combined strategy, and the model's parameters are adjusted accordingly./l The effects of these policies and their interactions are shown in Table 4.6. It should be noted that a number of alternative combinations and levels of the policy variables could also be examined, but the results would not be different enough to warrant extensive analysis at this point. In constructing an actual adjustment program, specific policies and the levels of policy variables would have to be determined as a function of the actual economic and political options and constraints facing the policy makers. That would require much more detailed study by the government. 4.72 With this combination of policies, overall growth is higher than in the reference simulation or the other simulations. The effect of higher agricultural growth and demand for manufactured exports outweigh the effects of fiscal restraint and higher energy prices. Overall savings behavior improves as well as the savings effort of the public sector. Gross national saving increases as a share of GDP by 1985 as well as gross domestic saving. The resource deficit is reduced to $1 billion by 1985 due to high export growth, but the current account deficit is $2.6 billion because of the high factor service payments abroad. This is 4.6% of GDP, but falling in a satisfactory way. By 1990 there is a substantial resource surplus, and the current account deficit disappears in that year. After peaking at 21% in 1987, the debt-service ratio declines thereafter to 16% in 1990, and the debt outstanding is substantially lower than in the reference simulation. Most of the investment burden of adjusting lower energy use, more efficient industrial production, lower import use, and higher export production would have been absorbed by 1985, and thereafter growth could return to nearly its long-run trend. A larger current account deficit could be sustained if that would contribute to higher growth. Although policies in each of the areas discussed above contributed only a little to the adjustment by themselves, together they can have a significant impact on effecting a major structural adjustment. /1 Because of interaction effects, variance of certain assumptions about public saving behavior and investment, and assumed improvements in private saving. The results of this simulation are different from the sum of the effects of the individual policy simulation. - 75 - 4.73 A review of the policy analysis of this chapter and the results of the various simulation experiments points to several important conclusions. First is the difficulty in reducing the level of the current account deficit between 1980 and 1985 in comparison to the reference run, even with coordi- nated policy action. Much of what will happen then is already determined by the events and actions of 1975-79. We have assumed a five-year adjustment horizon, which results in substantial external borrowing during the adjustment period. That will be available only if the foreign creditors are are confident that an adequate adjustment program is being implemented. If sufficient foreign resources do not prove to be available, then Table 4.6: IMPACT OF COORDINATED POLICY ACTION 1975-79 1985 1990 GDP growth (% p.a. constant prices) 8.9 6.5 /a 7.1 /a Investment share (% GDP) 25.8 /f 25.8 23.5 Gross national saving (% GDP) 21.0 21.2 23.7 Gross domestic saving (% GDP) 22.2 24.0 25.8 General Government revenue (% GDP) Id 15.1 18.0 18.5 General Government expenditures (% GDP) /d 12.7 13.3 14.2 General Government saving (% GDP) /d 2.4 4.7 4.3 Public sector saving gap (% GDP) 5.7 3.3 3.7 Export growth (% p.a. constant prices) 15.2 12.1 Ia 9.9 /a Import growth (% p.a. constant prices) 11.6 5.9 Ia 6.4 /a Resource balance ($ billion) -0.3 -1.0 2.4 Terms of Trade (1975=100) 88.5 73.0 70.8 Current account ($ billion) -1.1 -2.6 0.2 Current account (% GDP) /e 5.3 4.6 0.2 Required annual borrowing ($ billion) 1.0 /g 4.3 3.3 Debt outstanding ($ billion) 3.8 20.1 24.9 Debt service ratio (%)lc 15.4 /b 19.4 16.5 /a For periods 1980-85 and 1985-90. 7T End 1979. Ic Including private. /d Including central government plus local jurisdictions excluding public enterprises. /e Equals savings investment gap. /f 28% in 1979. g Excluding use of reserves and IMF funds. - 76 - stronger measures than those assumed in the simulations or more rapid implementation of measures to reduce the fiscal deficit and increase saving will be called for, which will imply accepting further reductions in the growth rate. Second, any successful adjustment depends critically on the ability of the economy to continue export growth rates of 10-11% p.a. while restraining import growth to 5-6% p.a. in real terms over the rest of the decade. This would be a much better sustained trade performance than has been achieved over the past two decades. It is in part necessitated by the increasing service account deficits. Sustaining these rates will require efforts both to stimulate production and to assure the competitiveness of Thai products at home and abroad in terms of price and quality. Third, the external debt that will be accumulated during the coming decade will be substantial in any case, and debt-service ratios will rise. Debt management will be an important part of overall policy formulation in itself and in relation to monetary policy. And, finally, it is possible to sustain satisfactory rates of growth during this adjustment period - at least 4% p.a. real per-capita GDP growth - if a proper mix of policies is pursued, e.g., to increase savings, expand exports, restrain imports, and stimulate production in agriculture and industry. It is not a question of whether appropriate policies exist. They do. It is a question of whether they will be implemented in a timely fashion. - 77 - .Annex I ANALYTICAL TOOLS: THE SOCIAL ACCOUNTING MATRIX AND THE SIMULATION MODEL Introduction A Social Accounting Matrix (SAM) provides the accounting framework for the simulation model. It integrates national accounts, input-output, balance of payments and fiscal data into a matrix format that presents a unified picture of all the principal economic flows in the economy. Factor incomes are generated by the four production activities of agriculture, manu- facturing, energy and services and flow to the different institutions: households, companies, and government. These institutions use their incomes to pay taxes (households and companies only), to save, to consume, and to make transfers to other institutions or to the rest of the world. Their consumption is domestic final demand, and it is added to the intermediate demand of activities to arrive at total domestic demand. This demand is satisfied by the supply of goods from the domestic production activities and by imports. Agriculture, manufacturing and services also export domestic production. Other transfers and factor service payments between Thailand and the rest of the world are included to complete the balance on external current account. In this way, the entire cycle of economic activity is recorded on a single table and the various interactions shown. Because of the matrix format, it is easy to check that all accounts balance simultaneously, and consistency checks are straightforward. The SAM is very much an extension of an input-output table to include flows between institutions, saving-invest- ment activities, production activities, and relations with the rest of the world. It encompasses the important relations between the income generating activities, - 78 - the distribution of that income to institutions, and the resulting determination of the composition of final demand. For our analysis, a base-year SAM was constructed for 1975 to take advantage of the data from the input-output table constructed for that year. This SAM, which has 23 basic accounts, is in fact highly aggregated. There is one factor of production, three institutions, four activities, three commodities and the rest of the world. The current accounts of the institutions, households, companies and government are separated; their capital accounts are consolidated into a single capital account. Agriculture, manufacturing and services activities produce domestic goods which are either mixed with imports, resulting in a com- posite good traded on the domestic market, or which are exported.-/ Energy is produced domestically and imported, and a composite good is traded on the domestic market. There is a single rest of the world account for international trade, net service payments, and transfers. The SAM structure is very flexible however, and any basic account can be expanded into any desired number of subaccounts, each balanced within the structure of the other accounts. The macroeconomic simulation model uses the SAM accounting framework described above. Its structure derives from that of the SAM, and analytical functions have been specified for the implicit relations underlying the SAM. The structural parameters have been estimated from historical data for the period 1960-79, and 1975-79 was used as a reference period to validate the model. Given these paranmeters and a number of exogenous assumptions about future price movements, the potential for agricultural growth, and some other structural variables, the model produces all the elements in the SAM for each year of the 1/ The mix of domestic and imported goods in the composite good is partly a function of their relative prices and partly a function of the degree of substitutability assumed between imports and domestic production. - 79 - simulation. In this way, consistent evolutions of the economy can be traced under alternate assumptions about policy actions and external developments, and the results can be compared. The essential features of the model are that: (a) the activity level in the agricultural sector is supply determined, and its growth rate is exogenously specified; (b) production in the industry, energy, and tertiary sectors is demand deter- mined as a function of the demand patterns of the institutions, their income levels, relative prices and external demand for exports of manufactured goods and services; (c) prices are fixed in the sense that they do not respond to excess demand, but are cost determined. Hence the model can analyze cost-push and/or imported inflation, but not demand-pull inflation;l/ (d) demand for imports is a function of domestic aggregate demand levels and relative prices, but imports are not perfect substitutes for domestic goods and domestic and foreign prices will not generally be equal; (e) demand for goods by the public and household sectors is based on Engel- curve relations; (f) indirect tax collections are based on average tax rates applied to the relevant tax bases, direct taxes are included in the outlay patterns of households and companies (which is equivalent to assuming the taxes are imposed on income); (g) investment behavior is exogenous; and (h) the trade and savings gaps derive from the structure of the model and are endogenously balanced in arriving at a solution. 1/ This is a drawback since problems of excess demand are a matter of concern in Thailand. Furthermore, models where prices are fully flexible may not be relevant for an economy such as Thailand. - 80 - The Social Accounting Matrix A brief description of the SAM The accounting of an economy is best understood with the use of a social accounting matrix (SAI).-/ First, a SAM gives a clear and synthetic picture of the flows in the economy at a point in time. Second, it gives a consistent accounting framework to serve as the basis for direct analysis or to support a modeling effort. Table 1 shows a basic SAM for the Thai economy in the year 1975. As in all SAMs the figure in any cell represents a payment from the column to the row account. For example, the figure in the cell at the inter- section of column 4 and row 5 (6,877 million bahts) is a payment of government to the consolidated capital account and is thus government savings. Another accounting feature of SAMs is that all accounts must balance, hence each row sum has to be equal to the corresponding column sum. For example, the sum of row 2 gives total receipt of households from all services and the sum of column 2 is the total use of these receipts. In column 1 the distribution of GNP at factor cost on the different institutions is shown, while row 1 shows bow GNP at factor cost is generated. In row 1/columns 6,7,8,9 the value added at factor cost of each activity is shown, their sum is GDP at factor cost. When net factor income (-219) in row 1/ column 23 is added, we get the GNP at factor cost. Column 3 distributes the total income of companies. In fact they pay dividends (1,472), corporate taxes (3,629) and they save (26,175). The total income of companies is 31,276 million bahts, the sum of row 3, and is constituted from operating surplus (25,852), interest on consumer debt (1,972) and interest on public debt (3,452). 1/ For a detailed account of the SAM approach, see Pyatt, Roe and associates (1977), Social Accounting for Development Planning, with Special Reference to Sri Lanka, Cambridge, Cambridge University Press. A SOCIAL ACCOWII8II MA4T11 OF THE 7T1R ECO116O4 1975 (to Milli--- of E.ht.) Current AcCoujnt C... lidAted Producti.o Arti,itLt. A4OlClt.ro 14nufetunlot en.rgy StOIC.. F.c or .ou..- Co tnl,o.. Cove- Cov"Cl Ar Anef- -flonu -S.r, Sfio. fp- 7orts Ct o- tpar-I. IoS- Ce- ftO lOrt. Co- Flod. Lpo0rts Odir- oftrho To-a holId. SOot Ac oitot uIn 6. 5it. .1t. alt ?-0 World 1 2 3 4 5 ,,j,, a 9 0 ...JL. ..I 12Ai... ..1L 1.4... is.j, 16 17 la.jj. 19 20 21 222 4 F.cIo., 1 93,628 54.292 6.586 113.191 -21 267.475 2 R-oh. d. 2239.174 1.672 210 1.323 262,129 _ CoupoolCO 3 Z5.852 1.972 3.452 31,776 a CoootnOot 4 2,507 3,639 3.629 31 119 647 41,536 * Cosoldotd 5 0,462 26.175I 6,877 12,253 75.747 AgnIr-lue.- l18.ooo 29,4725 14686Z5 _ vatSponfsItul10 7 168,893 9,13.6 f685 Z106821M 1. 78 1812527 , ong! 8m7°-'- 77.895 IZ2,795 S W * vo- rnl uO 3 16, 835 Z, 7Z0 64 ,06 1 13 149 6 O , 75 1 648 12 * 7V 14 1, 1116 189.861 * -5-L11 t0 711693 9,144 112875 22,105 --0- 6,0 121.24 6 L C l7rort~ 1 32.359 32.30959 IoP-rro 12 1.49S 1,495 C-of7o..It 13 76,035 2,720 64,061 13,149 62751 648 12 8549 2372012 Eurucro 14 14.139 16.139~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1,3 IooFF 5 3722 7.551 Cooo-t a 2 16 6.644 831 7,742 3,627 6.541 t6.812 4.1 55 42.601 KopOtt- 17 -0- -0- oprO 18 16,445 14,445 Cropolt 19 50,715 2 7.4212 26.746 21.28 3,849 47,436 0 8.7 Eota 20 11.316 12.326 loro 21 5.574 5.2574 f.in dret T-0 27 852 1.634 394 12.073 471 7.502 312 -0- 114 1,508 -0- .0- 31,119 otof World 72 109 34 1.101 ~ 9.49 16.022 0.574 71.018 24 27 ~~~~~~~148,623 181,957 2184154111273139 t41279Z l,13013.33 T0.1. 24 267,67 2J2.17 51,776 1,536 75.147 213318.6 1127 639 .9 2787 23 16,445 1862' 15631,119 171.018 St.~ toi.tfr-I dl1-Nlloan aldodt nvt Fo.4Ia~n.drn - 82 -, Government outlays are given in colunmn 4. Reading dow-n the column we see transfers to households (210), interest on public debt (3,452) govern- ment savings (6,877), government expenditure on manufactures (2,720), energy (831) and services (27,412), and transfers abroad (34). Row 4 gives the for- mation of government revenue from factors (2,502), household taxes (3,639), corporate taxes (3,629) and net indirect taxes (31,119). Row and column 5 are, respectively, the receipts and outlays of the consolidated capital account. Row 5 shows the sources of saving and column 5 shows the investment demand. The SAM gives the production activities in rows/columns 6 to 9, and the commodities in rows/columns 10 to 21. The sum of column 6 is the total expenditure of the agricultural sector, which is equal to its total production given as the sum of row 6. This total production (148,625) is either delivered to the domestic market (118,900) or exported (29,725). The deliveries to the domestic market are then combined with imports of agricultural product (1,495) plus indirect taxes (852) and that constitutes the total supply of the composite agricultural good on the domestic market (121,247). This supply is the slim of column 10 and-is equal to the sum of row 10, which is the aggregate demand for the composite agricultural good. The other activities and ccmmodities are orga- nized in the same way except it is assumed there are no energy exports. Indirect taxes are accounted for in row/column 22. in row 22/colunns 10 to 21, the different sources of indirect taxes are given. They are levied on either domestically traded goods, or on internationally traded goods. In the latter case they are tariffs on imports or taxes on exports. Finally, row 23 gives the flows out of the country whether they are transfers (columns 2 and 4), or imports (columns 12, 15, 18, 21). Column 23 accounts for the flows from abroad into the country. They are in row 1, net - 83 - factor income;-/in rows 2 and 4, the transfers to households and government respectively; and in rows 11, 14 and 20, exports. The figure in row 5/colunn 23 is the current account deficit which is also equal to the savings gap. Construction of the SAM The distinctive features of this particular SLM are: i) it is consistent with the national accounts figures of 1975; ii) it distinguishes four activities 2/(sectors of production): - agriculture, - manufacturing, - energy, - services; iii) it distinguishes three commodities for each activity: - composite goods and services traded on the domestic market, - imported goods, - exported goods. The three main sources of data that were used to build the SAM are: (1) the national accounts figures for 1975, as revised in the 1979 issue of the National Accounts of Thailand; (2) the input-output matrix for 1975 published by NESDB. It assumes competitive imports and is presented in purchasers prices and; (3) the Statistical Bulletin of the Bank of Thailand. The main assumptions and procedures used to get a balanced SAM consistent with the national accounts are described below. 1/ The factor income balance is a deficit one and net factor income is actually a flow out of the country, that is why it is entered with a negative sign. 2/ Agriculture includes: crops, livestock, forestry and fisheries. Manufac- turing includes all manufacturing (mining and quarrying and construction included); it excludes petroleum products. Energy includes petroleum Pro- ducts and electricity and water supply. Services include wholesale and retail trade, transportation and communication, banking, insurance and real estate services, public administration and defense. - 84 - There is only one factor of production which receives the value added created by the four activities (row 1/columns 6, 7, 8 and 9). This is gross value added at factor cost: it includes depreciation but excludes indirect taxes. The figures for agriculture and services are those of the national accounts. The split between manufacturing and energy is based on the decomposition of GDP at factor cost given in the input-output table. National accounts do not provide separate constant value GDP at factor cost for manufacturing and services and appropriate adjustments were made. Three types of institutions are considered: households (including private nonprofit institutions); companies and government. Their current accounts are distinguished while their capital accounts are consolidated. The three current accounts and the consolidated capital account are given in rows/columns 2, 3, 4 and 5. Row 2 gives the receipts of households from the different sources. The figures in all the cells of this row are consistent with the national accounts figures. Dividends, however, have been taken out of property income and put as transfer from companies to households (row 2/ column 3). Row 3 gives the receipts of companies. The operating surplus (including provision for the consumption of fixed capital) appears in cell (3,1). It is derived residually. Cells (3,2) and (3,4) give the interest on consumer debt and the interest on public debt, respectively. In row 4, all receipts of government appear: i) (4,1) is government income from property and entrepreneurship; ii) (4,2) is the sum of direct taxes on households and other transfers from households; iii) (4,3) is direct taxes on corporations and; iv) (4,22) is net indirect taxes. - 85 - The consolidated capital account is in row 5. All the figures are from the national accounts and they include: i) the savings of households and private nonprofit institutions (5,2); ii) the savings of corporations, including the provision for the consumption of fixed capital (5,3); iii) the savings of government (5,4) and; iv) "foreign savings" (5,23). Rows 10, 13, 16 and 19 give the aggregate demand for agricultural commodities, manufacturing, energy and services, respectively. Column 2 in rows 10, 13, 16 and 19 gives the allocation of private consumption expenditure between the four sectors considered. We have taken the average propensities to consume out of total private consumption expenditure given in the I-0 table and applied them to the figure of total private consumption expenditure given in the national accounts. This assumes that purchaser prices and market prices used in the national accounts are the same and that over the interval considered, average and marginal propensities are equal. Column 4 in rows 10, 13, 16 and 19 gives the allocation of government consumption expenditure between the different sectors. The assumptions made are the same as for private consumption expenditure, except where government con- sumption of agricultural products has been put to zero. In fact, according to the I-0 table it appears to be negligible. Column 5 in rows 10, 13, 16 and 19 gives the distribution of total gross investment between sectors of origin. The same procedure was used as for private and government consumption. It was, however, performed separately for increases in stocks and for fixed capital formation. No fixed investment uses energy or services production and there is no accumulation of stocks in services. - 86 - The last elements in final demand are exports. It is reasonably assumed that there are no exports of energy.-/ Thus, exports consists of agricultural, manufactured and service exports. Total exports of goods and nonfactor services are given in the national accounts as 57,014 million bahts.- From the Basic Economic Report (September 1, 1978) it is possible to compute the value of agricultural exports (Tables 3.2 and 3.3 of the Appendix) which amount to 31,359 million bahts. Manufactured exports are also obtained from the same source and their value is 14,139 million bahts. Exports of nonfactor services are computed as the difference between total exports of goods and services, and agricultural and manufactured exports. Their value is 11,516 million bahts. These three figures of exports appear in (11,23), (14,23) and (20,23). They include export taxes paid by the rest of the world to exports 3/ which repay them to the account of indirect taxes. The export taxes-on agri- cultural and manufactured exports are assumed to be 1,634 million bahts and 471 million bahts (22,11) and (22,14) respectively. The value of exports from the agricultural sector is thus 31,359 - 1,634 = 29,725 million bahts, and this figure enters (6,11). Likewise, the value of manufactured exports from the manufacturing sector is 25,655 - 471 = 25,184 million bahts, and this figure enters (7,14). It is assumed that no export taxes are levied on exports of ser- vices. Hence, the figure in (9,20) is identical with that in (20,23). To get the aggregate demand for the composite good in the four sectors one must add intermediate demand to the final domestic demand determined in rows 2, 4 and 5 and of columns 10, 13, 16 and 19 above. This implies the use of the 1/ In fact in 1975, 230 million bahts of petroleum products have been exported, this figure being 98 million bahts in 1976 and negligible afterwards. (See BOT Statistical Bulletin, Dec. 1979, p. 54). For 1975 we have considered the 230 million bahts to be exports of manufactures. 2/ These exports include export taxes. 3/ See below. - 87- interindustrial flows. This requires several steps. First,information on indirect taxes and imports is needed. Net indirect taxes as given in the national accounts are 31,119 million bahts. For FY75 import duties are 8,270 and export taxes are 2,105 million bahts (See Table 5.6 of Statistical Appen- dix). Using these three figures, indirect taxes on domestic trade would be 20,744 million bahts. To allocate these taxes between domestic goods and imported goods requires further calculation. For FY75 import duties are allocated according to Table 2 for con- sistency with the SAM classification, it is assumed that duties on foodstuffs and on agricultural imports are the same. Likewise, petroleum products are assumed to cover energy imports. The remaining duties are assumed to fall on imports of manufacturing products. Table 2: Import Duties (million bahts) Petroleum products 374 Foodstuffs 394 Machinery 3,488 Textiles 443 Other 3,571 Total 8,270 Source: Basic Economic Report, Sept. 1, 1978 Import duties on agricultural imports (394) appear in (22,12) of the SAM, those on manufacturing imports (7,502) in (22,15), and finally import duties on energy imports (374) are put in (22,18). Figures for export taxes for FY75 are given in Table 3. - 88 - Table 3: Export Taxes (million bahts) Rice premium 795 Rice duty 514 Rubber 325 Other 471 Total 2,105 Source: Economic mission, Feb. 1980 For consistency with the SAM classification, the rice premium and the rice duty as well as taxes on rubber are considered as taxes on agricultural exports. With these approximations, indirect taxes paid on the agricultural composite good are 852 in (22,10); on the composite manufacturing good, 12,072 in (22,13); on energy, indirect taxes are given in (22,16) with a value of 312; and finally, on services, indirect taxes are given in (22,19) with a value of 7,508 (all figures are in millions of bahts). Even excluding "unallocated" imports given by the 1-0 table, total imports from this source (98,554 million bahts) are still higher than the figure in the national accounts, which is 70,795 million bahts.-/ Furthermore, according to the I-0 table, no imports of nonfactor services occur. A first estimate of imports disaggregated by the four sectors of the SAM is obtained by applying the shares implicit in the 1-0 table to total imports given in the national accounts (Table 4). 1/ Does not include import duties. - 89 - Table 4: Imports Excluding Tariffs - First Evaluation (million bahts) Agriculture 1,101 Manufacturing 55,623 Energy 14,071 Services -0- The figures for agriculture and energy in Table 4 are close to corres- ponding figures given by the BOT (Statistical Bulletin, Dec. 1979, pp. 46-9). The remaining amount, 55,623, includes imports of manufactured goods and implicitly services. Using the balance of total services: 6,160.8 (BOT, Statistical Bulletin. Dec. 1979, p. 76) and the balance of net factor services: -219, the figure for the balance of nonfactor services is obtained: 5,941.8. Given that exports of services are 11,516, imports of services are derived as 5,574.2 subtracting this from the previous figure for imports of manufactures in Table 4, a final figure for imports of manufactures is obtained, 50,048.8 (Table 5). Table 5: Imports Excluding Tariffs - Final Evaluation (million bahts) Agriculture 1,101 Manufacturing 50,049 Energy 14,071 Services 5,574 The figures of Table 5 appear in (23,12), (23,15), (23,18) and (23,21) of the SAM. - 90 - Imports are an addition to supply and their value in that respect has to include import duties. By adding import duties to the value of imports cif, the value of the supply of imported goods is obtained. In (12,10) the value of imported agricultural goods including duties is given. For manu- facturing imports the figure is given in (15,13), for energy imports it is put in (18,16), and for services it is in (21,19). Now we return to the derivation of interindustrial flows, aggregate demand, intermediate demand and gross production. The approach followed is to obtain, as a first step, good estimates of total intermediate sectoral demands and total intermediate sectoral costs. A second step is to use these marginals and estimate a new matrix of interindustrial flows consistent with them by applying the RAS method.- In fact the procedure involves more than two stages because of the need to adjust some figures and ratios to information from dif- ferent sources. The first step was the aggregation of the (33 x 33) interindustrial matrix- /into a (4 x 4) matrix. In fact only the (32 x 32) first sectors were aggregated and the last sectors, "unallocated", was dropped. The matrix obtained in this way and the implied intermediate demand are given in Table 6. Table 6: Interindustrial Flows (million bahts) Agriculture Manufacturing Energy Services Intermediate Agriculture 17,762 52,595 -0- 5,790 76,147 Manufacturing 28,782 77,176 762 17,341 124,061 Energy 6,306 6,417 17,890 7,594 38,207 Services 15,544 9,456 1,202 17,131 43,333 1/ RAS is a method used to update matrices or to balance them. See Bacharach, M. (1970) Biproportional Matrices and Input-Ouput Change, Cambridge University Press. 2/ NESDB, Input-Output table, Competitive imports 1975. - 91 - Table 6 gives a first estimate of total intermediate demand. However, the fourth column includes the intermediate demand of the wholesale and retail trade sector, whereas the fourth row does not include any delivery of that sector to other sectors. In fact, total deliveries of wholesale and retail trade are lumped together in the published input-output table. Their value is 71,908 million bahts. This figure should be added to the intermediate demand of services. The figure in the last row and last column of Table 6 which is total intermediate demand of services, becomes 115,241 (43,333 + 71,980). Using the above estimate of total intermediate demand and total non- export final demand, total domestic agg- gate demand for the composite goods are calculated. These aggregate demands have to be equal to aggregate supplies, hence, given imports and taxes, one can compute the domestic supply of domestic goods. With the figures of exports, this allows for computation of the gross production of each sector. Having determined previously the vector of value added it is then easy to czmpuze the vector of total intermediate costs (Table 7). Table 7: Total Intermediate Costs -- First Estimate (million bahts) Agriculture 90,934 Manufacturing 157,430 Energy 26,681 Services 78,611 - 92 - The intermediate costs of Table 7 are consistent with the other figures of the SAM, however, they are not equal to the intermediate costs obtained by adding up the different columns of Table 6. However, before applying the RAS method to the data in Tables 6 and 7 to achieve a complete and balanced SAM, two additional adjustments must be made. (1) The figure used for agricultural exports before taxes (6,11) corresponds to the trade classification used by the Bank of Thailand. However, the class fication underlying the input-output table is the industrial classi- fication. For the latter classification, any processing of an agricultural product is an activity of the manufacturing sector. Hence, when an exportable agriculture good is even slightly processed before export, it becomes a manu- factured export according to the industrial classification. Thus, the figure in row 1/column 2 of Table 6 (52,595) contains deliveries of agricultural goods which are slightly processed by the manufacturing sector and then exported. But, in fact, these goods are already included in agricultural exports in (6,11) of the SAM. Consequently, the intermediate demand of agri- cultural goods as given in Table 6 is an overestimation of actual domestic intermediate demand. (2) Imports of energy in (18,16) of the SAM are 14,445 million bahts. The figure given by the Bank of Thailand (Statistical Bulletin, Dec. 1979, p. 49, "Fuel and Lubricants") for imports of fuel and lubricants is 14,233 million bahts. However, imports of-energy reported in the input-output table are 19,588 million bahts. Given the aggregate demand for energy (obtained by adding final demand for energy, to intermediate demand), the equality between aggregate demand and aggregate supply, and the chosen figure of imports (14,445); there would be an overestimate of domestic demand for domestic energy. Consequently we would over- - 93 - estimate domestic production of energy. In order to take account of the above distortions, a reestimation of the vectors of intermediate demand and of intermediate costs was under- taken. The flows of intermediate demand of manufacturing from agriculture and of energy from energy have also been revised. With the two new marginal vectors, the RAS method was applied on the modified interindustrial matrix in order to get a final matrix of interindustrial flows. In that way the whole SAM is balanced. The new vectors of intermediate demand and of intermediate costs are given in Table 8. The basic assumptions underlying them are: i) Agricultural exports are 20% of gross agricultural production; this implies a gross production of 148,625 million bahts and a domestic demand for domestic goods of 118,900. Consequently aggregate supply and aggregate demand are 121,247 million bahts and total intermediate demand for agricultural goods is then 40,210 million bahts. ii) The first row of Table 6 is modified to take account of the new figure for total intermediate demand. Intermediate demands of agricultural goods are assumed to be 17,191; 17,473; 5,546 for agriculture, manufacturing and energy,and service, respectively. iii) Taking account of the difference between the figure of imports of energy given in the input-output table (19,588) and the figure chosen in the SAM (14,445),1'/gross production of energy is estimated to be 27,895 million bahts. 1/ The 230 million bahts of exports of petroleum products are also taken into account. - 94 - Table 9 gives the matrix of interindustrial flows obtained after application of the RAS method. This matrix is consistent with the rest of the SAM, which is thus balanced. Table 8: Intermediate Demand and Costs (million bahts) Total Intermediate Demand Total Intermediate Costs Agriculture 40,210 54,997 Manufacturing 94,296 127,665 Energy 32,835 21,309 Services 109,300 72,670 Table 9: Matrix of Interindustrial Flows (million bahts) Agriculture Manufacturing Energy Services Agriculture 11,875 22,105 -0- 6,230 Manufacturing 13,149 67,751 648 12,749 Energy 3,227 6,541 16,812 6,255 Services 26,746 31,268 3,849 47,436 - 95 - The SIAM1 Model Economics of the Model Given the SAM accounting framework defined above, a full model is obtained by specifying agents'behavior and market adjustments. This model, SIAMŽ1, is described below. It relies on several behavioral relations within the accounting structure imposed by the SAM. Households, companies and government are assumed to allocate their total receipts across their different expenditure possibilities according to some utility maximization- /principal assuming unchanged relative prices. Thus, Engel-curve relations are used to allocate total receipts of each of these institutions' current account of transfers between institutions, savings and government and private consumption. Firms are assumed to determine inter- mediate demands, household and government consumption, and exogenously given investment, total aggregate demands by sector are thus determined. These are demands for composite goods as demand baskets are composed of both imports and domestically produced goods. Given aggregate demand for the composite goods, the question is then the determination of its composition between imports and domestically produced goods. It is assumed that given a level of the aggregate demand for the com- posite good, the ratio of imports to domestically produced goods is obtained through cost minimization.-/ Agricultural exports are assumed to be the excess of agricultural production over the domestic demand for the domestic agricultural products. Exports of manufactures and services are assumed to be sensitive to the ratio of the world price of exports to the supply price of the Thai exports. These 1/ For companies and government this is more a convenient allocation rule than a truly behavioral assumption. 2/ This is again a convenient allocation rule and not a behavioral assumption. - 96 - are, in fact, demand functions of the rest of the world for Thai manufactures and services. We now turn to the assumptions on market adjustments. Factor mar- kets are not modeled. Net prices or value added coefficients in current prices in manufacturing, energy, and services are assumed exogenously. Production in the products markets is demand determined for manufacturing, energy and services. Agricultural production is assumed exogenous and, for this sector, the model is supply determined. However, the agricultural net price is endogenous. SIAM1 is a fixed-price model. Given import prices, tariffs and net prices in manufacturing, energy and services, domestic prices and prices of the composite goods are determined on a cost basis. This price assumption does not mean that prices are constant. It simply means that they do not react to excess demand; they are purely cost determined. Once the composite goods prices and domestic prices are determined, they jointly determine the net price of agricul- ture. The domestic prices of manufactures and services, with export taxes, determine the supply price of exports of manufactures and services. Subsequently, the ratio of the world price to the corresponding Thai supply price determines exports for manufactures and services. At this stage, prices, investment, exports of manufactures and services and agricultural production are given. The rest of the model is a form of a multisectoral Keynesian model. All the remaining variables are determined simul- taneously in order to find the level of activity which equalizes injections and leakages. The main features distinguishing SIAM1 from a standard Keynesian model are the way agriculture is treated and the way imports are modeled. As mentioned, agriculture is supply determined and is an exception to the usual assumption of demand driven production. Agricultural exports are not - 97 - injections, since they do not contribute to increased aggregate demand and do not raise the level of activity. They adjust to equalize supply and demand. On the import side,l/the main difference is that imports are not considered to be purely competitive. They are not simply added to domestic output to determine total supply. Rather they are more or less substitutable to domestic supply depending on whether an elasticity of substitution is close to infinity or to zero. Furthermore, this specification allows the existence of a difference between world and domestic prices for traded goods. Hence one can obtain a relative autonomy of movements of domestic prices vis-a-vis world prices. This is dependent, however, on the value of the elasticity of substitution. Structural Relations of SIAM1 The above points give a general feeling of the model and of its working. In the following, a description of the variables and the relations is given. All variables with a bar are exogenous variables, and t is the time subscript. PDt-, i=1,2,3,4 are the prices of domestic goods at time t; V.t, j=1,2,3,4 are the net prices, with Vit endogenous and the others exogenous; and Pit, i=1,2,3,4 are the prices of the composite goods aiW, i,j=1,2,3,4 denoting the input-output coefficients, and the prices of domestic goods are given by 4 lt =Vit+ i il Pit 4 (1) PD - + iL Z i Pit j_2,3,4 l/ For an account of this approach, see De Melo and Robinson (1978), "Tradability in Trade Theory," World Bank; and Dervis, De Melo and Robinson, Planning Models and Development Policy, Chapter 7, (forthcoming). - 98 - Let r it, i=1,2,3,4 be the rates of indirect taxation on domestic goods traded domestically, hence the market prices of these goods PDit, i=1,2,3,4 are given by 11 _ PDit =PDit (1 + Tit), i=1,2,3,4 (2) Landed prices of imports are denoted by PM t, i=1,2,3,4 and obtained via the world prices X t, i=i,2,3,4 and the tariff rates Tmit I i=1,2,3,4 -m PMit (1+ Tm it it i=1,2,3,4 (3) This specification assumes that the supply of imports is perfectly elastic at the given prices. The prices of the coumosite goods, Pit , i=1,2,3,4,are obtained using the cost function of the cost minimization rule used to allocate aggregrate demand between imports and domestic goods.- Assuming a constant elasticity of substitution (CES) aggregation of imports and domestic goods, the specification of the cost function is p 1 { t6°i PM(1-(i) + (1-d ) I PD i-1,2,3,4 (4) 'Y where i is a distribution parameter, Yi is a scale parameter and ai is the elasticity of substitution. A ai close to zero means that there is not much scope for substitution between imports and domestic goods regardless of their relative prices. This is a case close to purely complementary imports. When ai goes to infinity,imports and domestic goods become pure substitutes, and their ratio is highly sensitive to their relative prices. 1/ See relations (15) and (16). - 99 - In SIALM1, the domestic price of agricultural goods PDit , is deter- mined by the exogenous world price of exports of these goods, with an allowance for exDort taxes. However, because o' lack of market informati:n, it is assumed that the current domestic price of agriculture PD,t adjusts to both the current it~~- world price and the world price of last period. Hence, with xe t , the world price of agricultural exports and Teit , the export tax on these goods:- 1 ( ee(5) it 2 ( lt + l(t-l)) / + elt) (5) This specification assumes that Thai exporters of agricultural goods are price takers, and they bear the burden of any export taxes. One could argue that Thailand is a major exporter of rice and, hence, can influence its world price. However, considering agricultural exports as a whole, the price taking assump- tion seems reasonable.-/ Exports of manufactures and services are assumed to be sensitive to relative world and Thai prices. World prices are exogenous and the supplier's prices, PE2t and PE4c' respectively, are linked to the corresponding domestic prices PD2t and PD4t with an allowance for export taxes: PE2t (+e2t) PD2t , PE4t ' (l + re4t) P3 4t (6) where re2t and -re4t are the export tax rates. All the preceding relations determine prices without any reference to quantities; this results from the fix-price nature of the model. However, prices intervene in the determination of quantities produced and incomes earned. The relations determining these variables are describedbelow. 1/ This is one version of the model. In another the elasticity of the domestic price with respect to the current world price is assumed to be less than one, 2/ This seems also to be the relevant assumption in "Thailand: Towards a Development Strategy of Full Participation," IBRD. - 100 - Let Z be GNP at factor cost,- it is allocated between the different t recipients of incomes assuming their shares vary with the level of GN?. With Rlt compensation of employees, R2t income from unincorporated enterprise, R3t income from property excluding dividends, R4t operating surplus of companies including the provision for fixed capital consumption, R3t 'government income from property and entrepreneurship, then Rt = i + Pi e r tzt ' i=1,2, .... 5 (7) with P. and pi , i=1,2,...5 parameters satisfying Pi = 1 and Pi . 0 i=11il These constraints ensure that the adding up property JRit Zt is always fulfilled. The allocation of the total of households' resources TRHt ,-/is treated in the same way as above. 1/ For the determination of Zt, see relation (24). 2/ For the determination of TRHt, see relation (20). - 101 - Let Hlt interest on consumers' debt, H2t = personal taxes and other current transfers to government, H3t = households' savings, H4t consumption of the agriculture composite good, H5t consumption of manufactures, H6t consumption of energy, =7t consumption of services, H8t = current transfers to the rest of the world, then the allocation relations are Hit ' + hi e h/ /ItRTHRHt, i=1,2,...8 (8) with again Jh. = 1 and 0hl = ° in order to ensure that i Hit TRHt always holds. The same type of relations are used to allocate the total income of companies-/ TICt. With the notations clt = dividends, =2t = corporate taxes, '3t = corporate savings, then it (Ci + Ci e cCt1TICt i, l,2,3 (9) with ico - 1 and itc = O so that IC TICt. Finally, total government revenue,--/GREV , is allocated again in the same way: 1/ For the determination of TIC, see relation (21). 2/ For the determination of GREV t see relation (22). - 102 - Let Glt = transfers to households, G = interest on public debt, G3t= government savings, G = government consumption of manufactures, 4t G5t government consumption of energy, G6t = government consumption of services, G7t = government transfers to the rest of the world, then G = ( + -1 eg/GREV t3GREVt , i=1,2,...7 (10) with E gi = I and i gi = ° ensuring that iJGit = GREV . 2.l i=l These allocation rules with the above constraints on the parameters do not imply that the government budget is balanced. GREV is allocated between current outlays and savings, but government capital expenditure is not included. Thus, depending on the relative value of government savings and government investment. there may be either a deficit or a surrlus. Some comment on the postulated allocation relations is in order here. First, it is easily seen that the expression between brackets is a budget share -o -0 and that it is dependent on total income (or expenditure). Second, ail Cip -o -0 hi, and Pi have the interpretation of budget shares, for total expenditures shrinking to zero. Hence, for very low levels of total expenditures,the budget shares will tend to be very close to the value of these parameters. Third, for total expenditures becoming very large, the expressions between brackets will tend towards g+ g., c. + c., h° + h., and ai + -1. Hence, these sums can be i i 1 1 103 interpreted as limit budget shares for very high levels of total expenditures. Implicit to this is the idea that g , c.,, hi, and Pi, give the maximum pos- sible variation of the budget shares. Fourth, the latter parameters can be either positive or negative, which allows us to include declining budget shares. Finally, the parameters 6 indicatel/ the level of total expenditures where budget shares are the most sensitive to variations of total expenditures. Near that level, they either increase or decrease more steeply, and beyond that level they start tapering off. Let X.t, j-1,2,3,4 be production in constant prices; Xdt, is the exogenous, agricultural production, and Xdt, i=2,3,4 are endogenous production of manufacturing, energy, and services respectively. Thenthe value of the aggregate demand for the agricultural composite good,PUitlt, is the sum of households' consumption H4t investment demand 4 ~~d Pit ltIt and total intermediate demand i alcPit X. hence lt Pit 4t it lt t jl lji t it where I is total investment demand in constant prices, and e is the share of t it -s it which has to be supplied by agriculture. For manufacturing it is U = LfH + G+ pet + ai PXd 112 2t p9 t5t 4t 2t 2t t jIl 2j 2t itJ (12) where H5t is household consumption of manufactures, G4t is government consumption, P2te tIt is investment demand, and i a2jP2tXjt is intermediate demand. Similarly, j l 1/ There is an inflexion point when total expenditure is equal to aI2. - 104 - aggregate demand for the energy composite good is u ~ ~ ~ + 9I+ (~ 13) 3t P Nt ' 6t 5t 3Jt 3t t jl3i 3t jt (13 3t L J1 j3 The notations are the same as before, but investment demand here covers only changes in stocks. Finally, the aggregate demand for services will be U4t 5 = H7t + G6t + a 4JP4tXjt] (14) 4t ~~~j=1 with no investment demand. It should be noted that It is gross investment in 3 3 constant prices and that the relation e 9 I = I holds, and hence 9it i=lit i=l The next question to be addressed is the share of imports used in satisfying the sectoral aggregate demands. It is treated by assuming the following allocation rule: given prices and aggregate demand, the import intensity is determined by minimizing costs.l/ The problem is then the followirna ontimization: Min (PM.M + PD.D) (M,D} subject to 1 Y[6M3 + (1-5)D1] p _ U = 0 where D is domestic goods, M is imports and a CES function is assumed for the aggregation of the two. This function contains a distribution parameter 6, 1/ See Dervis, DeMelo and Robinson, Chapter 7, (forthcoming). - 105 - a scale parameter y and a substitution one p. The elasticity of substitution, a is defined as 1/(1+P). Solving the above problem leads to the following allocation relations which determine for each vector of prices and each level of aggregate demand the amount of imports and domestic demand required: D i y (1(i (Ft/PD) U (15) -ai Mit = yi (Pi/PMiJ Ui , i-1,2,3,4 (16) In fact, relation (4) determining the prices of the composite goods is obtained as the dual of the cost minimization problem considered here, which is why the parameters used here and there are the same. Exports of agricultural products are obtained as the excess of produc- tion over domestic demand for the domestic goods -d E =X X- (17 ilt xit Dit (7 where the three variables are in constant prices. Exports of manufactures and services are assumed to be sensitive to the ratio of the world price to the domestic suppliers'price: Eit i ( it/ it) ' i-2,4 (18) where w;t is the world price (exogenous), ni is a constant elasticity and - ~~~~~~~~~~~~~~-e EB is a parameter giving the value of exDorts where r = PE EB may it it it it M vary with time in order to catch the movements in the world GDP growth. - 106 - Production is demand-determined in manufacturing, energy and services. It is obtained via the equilibrium condition: Xdt = E + D i=2,4 it it it =D (19) 3t 3t These relations simply equate supply to demand. The remaining relations of the model are accounting relations. Total households' resources TRHt, are defined as 3 TRH =lRit+C lt +Git 2t (20) where F2t are current transfers Lrom the rest of the world to households and are exogenous. This relation states that TREt is equal to factor incomes paid 3 to households R Rit, plus dividends Cit, plus transfers from government G,t, plus transfers from abroad F2t. Total income of companies TICt, is obtained as the sum of their gross operating surplus R4t, the interest on consumers' debt Hlt,and the interest on public debt G2t: TICt = R4t + Hit + G2t (21) Government receives a factor income R5t (which is government income from property and entrepreneurship), direct taxes from households H2t' corporate taxes C2t, net indirect taxes NIT and transfers from abroad F4t Total govern- ment revenue is thus t R5t + H2t + C2t + NITt + 4t (22) F4t is exogenous. - 107 - Net indirect taxes are given as the sum of taxes on domestic goods 4 3 i T PD D, duties on imports TMTr and taxes on. exports it it it, iti.it 2 PD eE.t thus i it eit it' t 4 3 2 1- -M NIT Pit Dit +it TM it Mit it IP it eitit (23) GNP at current factor cost Z is obtained as the sum of value added at factor cost in the four sectors and the net factor income from abroad Fit' d 4 d(4 z~ =v1I~ V x it(24) A characteristic feature of the model is that the sum of leakages must equal the sum of injections at an equilibrium level of activity. Since the economy is open, this can be put another way: equilibrium implies that the "savings gap" is equal to the current account deficit. This is indeed the case here because the preceding relations imply SG = TG t t where SGt is the savings gap defined as 3 sGt Pit itit (3t G3t +c G 3 (25) and TGt is for the current account deficit: Gt 4H8t 7ii) ii llt tt TG 'H G+ T 0I 1 8t +7t' £it-"it + Ft itEit + E2tE2t + E4t 26 - 108 - Domestic savings are equal to the sum of households savings H3t, government savings G3t and savings of corporations C3t. Finally, H8t are transfers from households to the rest of the world and G7t are transfers from govern- ment to the rest of the world. Data Base of the Reference Simulation In order to make a reference simulation on the period 1980-90, assumptions on four sets of variables and parameters are needed: (1) the structural parameters; (2) the policy parameters; (3) the rest of the world. variables; and (4) the domestic variables. The Structural Parameters. These are mainly behavioral and technical parameters which can be classified into three groups: (1) The parameters of the allocation relations 7, 8 and 9. To esti- mate their order of magnitude, the relations are estimated on time series -l -I national account data. The 6's, the p i, i=1,...5, the c., i=1,2,3 and the h., i=l,...8 are held at their estimated values, and the h, i=1,...8, the -0 -0 c., i=1,2,3 and the p i, i=l,...5 are adjusted (using the appropriate entries in the SAM of 1975) in order to reproduce the data of that year (see Tables lOa, lOb, 10c). (2) The input-output coefficients aij3 i,j=l, 2, 3, 4 in relations 1 and 11 to 14 are obtained from the SAM of 1975 by standard procedures. The parameters allocating gross investment demand over sectors are also obtained from the SAM. They are e1, e2, and e3 of the aggregate demand relations 11 to 14. (3) The parameters of the import demand functions (relations 15 and 16) and of the related price functions (relation 4) are the elasticities - 109 - of substitution al. a2, a3, a4;the share parameters 6 a 2' 6 3' 4; and the scale parameters y1, Y2, y3, Y4. The elasticities of substitution for the base scenario were assumed to be .8, 3.0, .15, 3.0 for agriculture, manufacturing, energy and services respectively. Using 1975 as the base year for prices, and the imports ratios implicit in the SAM, the elasticities of substitution deter- mine the share and scale parameters. However, the share parameter for energy is independently changed in 1982 and onward to take account of the coming on stream of domestic gas production. The parameters of the export-demand relations (18) are the elasticities ni and the scale parameters EB. An estimate for n2 of 2.50 is obtained using relative price movements on the period 1975-79. EB2 is determined subsequently using the SAM figure for exports and the ratio of the world price to the Thai price of exports of manufactures, as observed in 1975. The same procedure is followed to estimate EB4, but with n4=2.0. The Policy Parameters. The second set of assumptions is on the policy parameters. These are, on the one side, the indirect tax rates on domestically and inter- nationally traded goods and, on the other side, the parameters allocating govern- ment revenue. Implicit in the SAM of 1975 are all indirect tax rates for that year. These base-year values are either maintained or lowered to take account of recent trends (see Table 11). A first approximation of the parameters allocating government revenue (relation 10) is obtained by estimating that set of relations using a time series (1970-79) and nonlinear least squares. The result is a rapidly declining share of government savings, of transfers to households, and of transfers abroad. For the base scenario the same trend in the shares is maintained but at a much slower rate, and the drop is dampened (see Table 12). This assumption leads to a - 110 - somewhat optimistic view of the savings gap and hence of the current account deficit. The Rest of the World Variables. Linkages between the domestic economy and the rest of the world are captured through export and import prices, parameters reflecting the performance of Thai exports of manufactures and services, and net factor income and other transfers. The import price of agricultural pro- ducts (Xi1) is obtained in the following way. For 1980-82, 1985 and 1990 it is assumed to follow the same trend as a Laspeyres index of projected prices of cereals, fruits and vegetables and coffee, cocoa and tea.l/ Linear interpola- tions are made for the intervening intervals. On average this implies the import price of agricultural products grows at a rate between 10% and 11% after 1982 (see Table 13). The import prices of manufactures and services (7 2, Xr2) are assumed to increase at the same rate as the projected trend in the Inter- national Price Index (IPI). This is a decreasing rate- /from 10.5% between 1979-80, to 5.7% between 1989-90 (see Table 13). The import price of energy (T3) is based on the assumption that oil prices will be $28 a barrel in 1980, $47.3 in 1985, and $73.6 in 1990, or an increase of 63% over the decade- /(see Table 13). The export price of agricultural products (1Te) is assumed to follow the same trend as a Laspeyres index of projected prices of rice, rubber, maize, jute and other agricultural products- /(see Table 14). The world prices of exports of manufactures and services (2, we) are assumed to increase at the same rate as 1/ See Report No. 814/80 Price Prospects for Major Primary Commodities, Jan. 1980, Table 5, p. 14. 2/ See Projections of IBRD, Table 16. 3/ See Report No. 814/80, Table 10, p. 19. 4/ See Report No. 814/80, Table 10, p. 19; Table 6, p. 14. - 111 - the projected IPI- (see Table 14). In relation (18) the world demand for Thai exports of manufactures and services are dependent only on relative prices. However, they should also depend on the overall world activity and on the success of Thai exporters over and above price changes. In order to catch these two aspects, the parameters EB. are assumed to grow at an exponential rate: EBit = EB i(to)( + ri) , i=2,4 The growth rates in the base scenario are assumed to be 11%. Net factor income outflow is obtained via a debt model. It is based on the mission estimates of (a) investment income receipts; (b) interest pay- ments on medium- and long-term debt; and (c) interest payments on short-term debt and profit. Inflow of private transfers are assumed to remain at a nominal value of 300 million bahts. Finally, public transfer nominal inflows are assumed to grow at 13% annually. Domestic Variables. The last set of assumptions concerns the domestic trends within the Thai economy. The relevant variables here are gross investment demand in constant prices, It, gross agricultural production in constant prices, -d Xt, and the net prices of manufacturing, energy and services, V2t' V3t' VW respectively. Gross investment demand in constant prices It is assumed to grow exponentially at an annual rate of 5%. Gross agricultural production in constant prices Rd is also assumed to grow exponentially but at the lower rate, 4%. Net prices are defined as the ratio of sectoral GDP at current factor cost to gross production in constant prices. If L. is employment, K. is capital, W. is the nominal average wage, and r. is the nominal users cost of capital, then: 1/ See Projections of IBRD, Table 16. - 112 - d.. W + r.K. K. =x i iL..z. = _ j d d dt r X , j=2, 3, 3 x. x. xi This means that net prices are determined by the mix of labor-output, the capital- output, wage, and the cost of capital. A complete set of assumptions on the trends of the V., j=2,3,4 would require predictions on all of the mentioned variables, which is not feasible at this point. In the reference simulation a crude but reasonable "reduced form" assumptions are adopted: (a) Net prices of manufacturing and services, V2 and V4 are assumed to grow slower than the GDP deflator for OECD North countries. They move from 86% of the value of that index in 1980 to 78% of its projected value in 1990. (b) The net price of energy, V3, grows also slower than the GDP deflator for OECD North countries, being roughly around 88% of the value of that index over the period 1980-1990. This is lower than the increase in the import prices of energy to reflect the government's delays in allowing domestic energy prices to rise, which has squeezed the value added margins of domestic energy producers. The assumption does roughly allow for the introduction of domestic production of natural gas (see Table 15). - 113 - Table lOa: Parameters of the Allocation Relations Households: i H + hl ehK TR/ ah= 2,769.10 19 T0-1 9 1 1980 - 981-190 la T -1 h~~~~~ +h h. hi 1 Interest on consumer debt .004 .013 .013 .017 Taxes .012 .012 .012 .024 Savings .120 .010 .02 .14 Coonsumption .863 -.034 -.044 .819 Agriculture (.328) -.209 (-.209) (.119) Manufacturing (.292) .196 (.186) (.478) Energy (.033) -.019 (-.019) (.014) Services (.210) -.002 (-.002) (.208) Transfers abroad .001 001 -.001 .000 - 114 - Table lOb: Parameters of the Allocation Relations Companies: C. {c? + cie TIC 8 = 28240 1 sqan-lqq 99Q :m. (O -c+ C. C. C.+ C. 2. 2 1 1 Dividends .042 .013 .055 Corporate taxes .068 .118 .186 Corporate savings .890 -.131 .759 - 115 - Table lOc: Parameters of the Allocation Relations Factors: Ri = fPi+Pie r / 1Z 1294410 1980-1990 1980-1990 1980-1990 -0 -1 -0 -l Pi pi p. + pi Compensati-n of employees .265 .133 .398 Income from unincorporated .532 -.200 .332 enterprise Income from property .097 -.033 .064 Operating surplus of .096 .103 .199 companies Government income from pro- 010 -.003 .007 perty and entrepreneurship - 116 - Table 11: Percentage Rates of Indirect Taxes .1 2 Tm3 TM4 1re Te2 e4 1 2 3 4 1980-1990 10.0 12.0 .03 0.0 3.5 3.4 0.0 .7 7.2 .03 4.3 - 117 - Table 12: Parameters of the Allocation Relations Government: G g + e g GRE = 750,000 r9 n-l9qo 1930 *1981-1990 1981-1990 -0 - -l -0 -l gi gl gi goi + -gi Transfers to households .005 -.005 -.005 .000 Interest on public debt .083 .155 .155 .238 Government savings .166 -.800 -.525 -.359 Consumption: Manufacturing .065 .040 .040 .105 Energy .020 .025 .025 .045 Services .660 .586 .311 .971 Transfers abroad .001 -.001 -.001 .000 I - 118 - Table 13: Import Pricesa/ (1975 = 1) -in Manufacturing Tr -m Year Agriculture 7 1 Ma-nc ing 2 Energy ir3 Services 'Tr4 1980 1.377 1.551 2.569 1981 1.417 (2.90) 1.690 (9.00) 2.935 (14.25) 1982 1.654 (16.72) 1.825 (8.00) 3.275 (11.58) 1983 1.779 (7.55) 1.953 (7.00) 3.597 (9.83) 1984 1.913 (7.55) 2.084 (6.75) 3.950 (9.83) 1985 2.057 (7.55) 2.220 (6.50) 4.338 (9.83) 1986 2.185 (6.72) 2.360 (6.30) 4.740 (9.23) 1987 2.321 (6.22) 2.505 (6.15) 5.178 (9.23) 1988 2.463 (6.22) 2.655 (6.00) 5.656 (9.23) 1989 2.615 (6.22) 2.810 (5.85) 6.180 (9.23) 1990 2.777 (6.22) 2.971 (5.70) 6.752 (9.23) average (7.27) (6.72) (10.14) growth rat ( a/ Figures between brackets are rates of growth. - 119 - Table 14: Export Prices-/ (1975 1) -e YearManufacturing 2 Year | Agriculture Services -e 2 1980 1.208 1.550 1981 1.277 (5.71) 1.690 (9.00) 1982 1.465 (14.72) 1.825 (8.00) 1983 1.581 (7.90) 1.953 (7.00) 1984 1.706 (7.90) 2.084 (6.75) 1985 1.841 (7.90) 2.220 (6.50) 1986 1.965 (6.78) 2.360 (6.30) 1987 2.097 (6.78) 2.505 (6.15) 1988 2.239 (6.78) 2.655 (6.00) 1989 2.391 (6.78) 2.810 (5.85) 1990 2.552 (6.78) 2.970 (5.70) average (7.77) growth rate (6.72) a/ Figures between brackets are rates of growth. -e a e b/ f2 and i-T4 are world prices, not supply prices, of Thai exports. -120 - Table 15: Changes in Net Pricesa/ (1975 = 1) Year ~Manufacturing V2 Energy V Year Services V4 3 1980 1.362 1.401 1981 1.442 (5.87) 1.497 (6.85) 1982 1.528 (5.96) 1.1)2 (7.01) 1983 1.619 (5.96) 1.713 (6.93) 1984 1.718 (6.11) 1.834 (7.06) 1985 1.818 (5.82) 1.960 (6.87) 1986 1.921 (5.67) 2.091 (6.68) 1987 2.028 (5.57) 2.227 (6.65) 1988 2.137 (5.37) 2.370 (6.42) 1989 2.250 (5.29) 2.518 (6.24) 1990 2.365 (5.11) 2.673 (6.15) avg. (5.67) (6.67) growth rate a/ Figures between brackets are rates of growth () - 121 - Assumptions Underlying Selected Simulations with SIAM1 Simulation 1, PRIRM. The purpose of this simulation is to simulate a change in the pattern of households' and corporations' savings behavicr. The changes in parameters are as follows: 1979 1980-83 1984-90 h .010 .030 .04 3 h 1 .196 .176 .166 5 cl .013 .013 .013 1 c2 1.118 .108 .087 1 co 1-.131 -.121 -.100 PRIRM is Private Resource Mobilization Simulation 2, PRMIT. The purpose of this simulation is the increase in govern- ment revenue. PRMIT is Public Resource Mobilization through Indirect Taxes. The modifications in assumptions are: i) a change in the pattern of government current outlays. This is 1. done by changing the g , i = 1,2, ...7 parameters of relations 10, in the following way. 1979 1980 1981-90 1 g1 -.005 -.005 -.005 g2 .155 .100 +.050 g3 -.800 -.300 +.200 1 g4 1.040 -.030 -.050 41 cr5 .025 -.020 -.020 g6 1.586 .256 -.174 g7 1-.001 -.001 -.001 - 122 - ii) an annual 2% increase in tariff rates; iii) an annual 2% increase in indirect tax rates; iv) a reduction in the rate of growth of investment in constant prices from 5.0% to 4.6% is assumed to result from the higher tax measure beginning in 1979/1980. Simulation 3, TMED. The purpose of this simulation is to analyze the outcome of fully passing on the world price increases in energy prices and increasing taxa- tion of domestic consumption. The modifications in assumptions are: i) a change in the pattern of government outlays. This is introduced in order to dampen the effect of the increase in governemt revenues on government consumption. 1979 1980 1981-1990 gl -.005 -.005 -.005 1 g2 .155 .100 .100 2 g I -.800 -.400 .00 g; 1.040 -.035 -.024 g5 .025 -.020 -.020 1 g6 .586 .361 -.050 1 -.001 -.001 -.001 i) a rate of growth of investment in constant prices of 4.6% to reflect the impact of higher energy prices (beginning 1979/80); iii) a rate of growth of the tariff rate on imports of energy of 6%; iv) an indirect tax rate on energy growing at 6%. Simulation 4. EG (Export Growth). In this simulation an optimistic view of the world demand for Thai nonagricultural exports is taken. It is assumed: - 123 - i) the pattern of government outlays is like in Simulation 2; ii) the parameters EB2 and EB4 of relations 18 are growing at 12% and 13% respectively; iii) exports tax rates are decreasing at an annual rate of 6%; iv) investment in constant prices is growing at 5.4% instead of 5% to reflect the demands of the production response to greater export demand; v) it is furthermore assumed that the pattern of government outlays shifts as follows: 1979 1980 1981-90 1 gi ~-.005 -.005 -.005 g1 .155 .100 .100 1 -.80 -.40 .00 `3 1 .04 -.035 -.024 g1 .025 -.020 -.020 g1 .586 .361 -.050 g6 g1 -.001 -.001 -.001 g7 Simulation 5, AGI. In this simulation it is assumed that agricultural production will be able to grow at 4% in 1980, at 4.5% 6n 1981 and at 5% afterwards, instead of the 4% rate assumed in the base run. The rate of growth of investment in constant prices is assumed to rise to 5.2% to support faster agricultural growth and a pattern of government outlays as in Simulation 4. Simulation 6, OVAPI. This is an overall package comprising the previous modifi- cations in assumptions where: i) the pattern of government outlays is - 124 - 1979 1980-82 1981-90 gl -.005 -.005 -.005 1 g2l .155 .100 .050 g3 1-.500 .00 .200 1 g4 1.030 -.024 -.050 4 g5 .020 -.020 -.020 1 g6 .301 -.050 -.174 1 glI -.001 -.001 -.001 ii) the pattern of outlays of households and corporations is: 1979 1980-90 h 1 .020 .040 3 h .086 .066 5 cl .013 .021 1 c2 1.118 .100 c3 1-.131 -.121 iii) rates of tariffs on imports are assumed constant except the rate on energy which is growing at an annual rate of 6%; iv) rates of indirect taxation are growing at 2% except the rate on energy which is growing at 6%; v) exports tax rates are decreasing at an annual rate of 6%; vi) investment in constant prices is growing at 5.25%d vii) agricultural production is growing at 4% in 1980, at 4.1% in 1981 and at 5% afterwards; viii) the parameters EB2 and EB4 of relations 18 are growing at 12% and 13% respectively. - 125 - ANNEX 2 Page 1 THAILAND COPING WITH STRUCTURAL CHANGE IN A DYNAMIC ECONOMY Financial Institutions Introduction 1. This annex will provide a brief history of commercial banks, finance companies, the Securities Exchange of Thailand (SET), and of recent measures to stabilize the financial sector. The organized financial sector in Thailand comprises a variety of institutions, both public and private, as shown in Table 1. The commercial banks and finance companies are the principal institutions of interest for monetary policy issues. Assets of these institutions account for the bulk of assets in the organized financial sector. Table 2 shows the combined assets of five groups of financial institutions and their relative size. The table does not include assets of the Government Housing Bank, insurance companies, mutual funds and credit cooperatives./l However, these omissions do not significantly alter the observation that commercial banks play a dominant role in the organized financial sector and that finance companies are the second largest group of financial institutions. This is confirmed when looking at advances to the private nonbanking sector shown in Table 3. Commercial Banks 2. The first commercial bank in Thailand opened for business in 1888. This was a foreign bank, as were the next two to be established before 1900. The first Thai bank was established in 1906. Fourteen of the existing banks were established between 1939 and 1955, and Thai banks began to dominate the sector. By 1978, Thai banks accounted for more than 95% of bank deposits, and 16 of 29 commercial banking houses operating in Thailand. The first banks were established primarily to facilitate the import and export trade of European merchants. Financing international trade remained the dominant activity through the pre-World War II period. Lending to other sectors only took off in the early 1960s. 3. The bulk of total assets and liabilities of commercial banks are concentrated in relatively few banks. The share of the largest bank (Bangkok Bank) exceeds one third of the total, while the share of the five largest banks approach four-fifths of total assets. Ownership of commercial banks is also fairly concentrated. Of the 16 Thai commercial banks, 9 had less than 10 major shareholders controlling 50% of shares. /1 They are likely to be less than 5% of the total assets of the organized financial sector. - 126 - ANNEX 2 Page 2 4. Savings and time deposits constitute the largest source of funds for banks, exceeding 60% of total liabilities in the 1975-78 period as shown in Table 4. At the end of 1979, the share fell to 57%. Borrowings from foreign banks has been the fastest growing source of funds since 1975. Up from 7% in 1975, such funds comprised 14% of liabilities at the end of 1979. 5. Loans, overdrafts and discounts to the nonbank private sector accounted for 71% of assets at the end of 1979. This share has risen steadil from 64% in 1975. The share of government securities in the portfolio has declined from 15% in 1975 to 9% by end 1979 as the banks expanded credit to meet rising private demand. Private sector lending is for the most part short-term. Lending to the trade and other service sectors still dominates bank lending. There are few term loans, and overdrafts are often used to finance medium and long-term projects. As indicated by the small volume of term loans, collateral requirements tend to discourage the term financing of manufacturing investments. The emphasis on collateral is on land and less weight is given to the future prospects of the enterprise. 6. Commercial banks play a fairly small role in agricultural financing despite credit allocations. This is due to the high processing cost of agri- cultural loans, which tend to be very small, and to the high risk of default. Commercial banks can satisfy their credit allocation to agriculture of 13% of total lending by deposits with the Bank for Agriculture and Agricultural Cooperatives (BAAC), and 2% of the 13% can be satisfied by lending to agro- industries. Most of the allocation requirement is satisfied by deposits with the BAAC: only 5% of commercial bank lending is directly to agriculture. Lending from informal sources still dominates credit to agriculture./I Finance Companies 7. The first finance company was started in 1964. However, it was not until 1969 that the sector started its rapid growth. By 1973, the number of companies had reached 54; at the beginning of 1979, 113 companies were in operation. Their combined assets were at that time equal to one fourth of those of commercial banks. 8. Finance companies came under formal regulatory control by monetary authorities in 1972. They are prohibited from soliciting deposits, and their main source of funds is the issuance of promissory notes. These notes are nonnegotiable debt instruments, carrying fixed terms and rates of interest. The rate depends on the maturity offered. Promissory notes constituted two- thirds of all finance company liabilities at the end of 1979, as shown in Table 5. This share has been stable over the last two years. /1 Details of the informal financial sector are not available, but its share in agricultural financing is likely to be quite substantial, perhaps about three fourths of the total. - 127 - ANNEX 2 Page 3 9. Loans to the private sector constitute the major use of funds. By end 1979, 85% of assets were held in this form, down from 91% at end 1976. This decrase was reflected in increased shares of cash, bank deposits, securities (including government securities) and capital funds. This change was the result of increased prudential concerns about the companies in the regulatory agencies, resulting in regulatory pressures to strengthen liquidity reserves and capital positions. 10. Stock market related lending caused severe liquidity strains on some finance companies in 1979. The Raja Finance Company became insolvent, and the government took extraordinary measures to preserve the stability of the financial sector in face of this collapse and the possibility that the same fate would befall other finance companies. The May, 1979 Act on Finance Business, Securities Business and Credit Froncier Business aimed at strengthening the financial position of finance companies, and circumscribed their opportunities to engage in stock market related activities. Companies now have to choose one major line of business. They can do business either by accepting or guaranteeing commercial bills, by lending medium and long-term funds for industry and agriculture, by financing consumer durables, land and housing purchases, or by establishing themselves as brokers on the SET. SET and Capital Market Development Fund 11. The Securities Exchange of Thailand (SET) opened for stock trading in 1975. It grew quickly in the ensuing three years, both in terms of the paid-up capital of the companies whose shares were traded and in terms of turn-over or volume of sales. The paid-up capital increased from Baht 90 million in 1975 to Baht 2.4 billion in 1978. Market values of the shares exceeded their original paid-up values by a large amount in 1978, reaching Baht 4.3 billion. Traded volume peaked in October 1978 at Baht 15 billion. For the year as a whole, traded volume reached Baht 57 billion. 12. Influenced by some restriction of money policies and weakening economic conditions in general, prices on the SET started to slide in December 1978. By February 1979, the volume traded was down to Baht 0.3 bil- lion. Volume for 1979 as a whole only reached Baht 22 billion. The decline of trade volumes to very low levels squeezed the liquidity of many finance companies and prompted several government support measures. One government- controlled commercial bank purchased stocks from finance companies to ease their liquidity position. These purchases were financed by a Baht 2 billion loan from the Bank of Thailand (BOT), and contributed to improvements in the liquidity situation by the end of 1979. A condition stipulating repurchase of the stocks by the finance companies at the same price and within three years was attached to the sales. 13. In addition, the Capital Market Development Fund (CMDF) was estab- lished in August 1979 to buy stocks on the SET on order to support prices and to motivate other investors to buy stocks. The Ministry of Finance, the Government Savings Bank (GSB), the BOT and 16 commercial banks cooperated in - 128 - ANNEX 2 Page 4 the establishment of the fund. An initial operating fund of Baht 1 billion was established, with commercial banks, BOT and GSB providing Baht 420 million, 300 million and 280 million, respectively. Interest is earned on these contributions. IFCT acts as secretariat for the CMDF, which is not a separate juristic entity. 14. By March 1980 about Baht 800 million had been used to purchase stocks and book losses of about Baht 60-70 million were sustained. The CMDF is presently seeking increased funding in the amount of Baht 1 billion. The policy of the CMDF is now not to act vigorously against market trends, but rather to moderate declines. The CMDF also tries to increase the volume of stocks traded by both buying and selling in the market. It is CMDF policy only to trade in shares of recognized, substantial companies. - 129 - ANNEX 2 Page 5 Table 1: FINANCIAL INSTITUTIONS IN THE ORGANIZED SECTOR (as of mid-1976) Year Institution started operations /a Banks Government Bank of Thailand 1942 Government savings bank 1946 Bank for agriculture and agricultural 1966 cooperatives Government housing bank 1953 Private Commercial banks 1906 16 incorporated in Thailand 1888 13 incorporated outside Thailand Other Financial Institutions Government Small industry finance office 1964 Government provident fund Private 11 life insurance companies 1929 Industrial Finance Corporation of 1959 Thailand Agricultural credit cooperatives 1916 Nonagricultural credit cooperatives 1938 Mutual funds 1963 97 finance companies 1964 Securities Exchange of Thailand 1975 Credit foncier companies 1969 202 pawnshops (as of September 30, 1973) 1866 /a Year when the first institution in each category started operations. Sources: R.F. Emery, Financial Institutions of Southeast Asia, Praeger Publishers, 1970; P. Wattanasiritham, "Thailand's Financial Institutions", in P. Sondysuvan (ed.), Finance, Trade and Economic Development in Thailand, Sompong Press, 1975. - 130 - ANNEX 2 Page 6 Table 2: MAJOR FINANCIAL INSTITUTIONS: TOTAL ASSETS AND LIABILITIES (end of year, in % of total for institutions listed) 1976 1977 1978 1979 Commercial banks 73 72 71 73 Finance companies 14 16 18 16 GSB 8 7 6 7 BAAC 4 4 4 4 IFCT 1 1 1 1 Sum, percent 100 100 100 100 Sum, Baht billions 192.4 240.9 308.0 356.4 Source: Bank of Thailand (BOT) Table 3: LOANS, OVERDRAFTS AND DISCOUNTS TO THE PRIVATE NONBANKING SECTOR BY MAJOR FINANCIAL INSTITUTIONS (Outstanding at end of year, as % of total for institutions listed) 1976 1977 1978 1979 Commercial banks 72 72 71 76 Finance companies 21 21 23 18 GSB /a - - - - BAAC 6 6 5 4 IFCT 1 1 1 1 Sum, percent 100 100 100 100 Sum, Baht billions 123.2 159.0 210.8 245.7 /a Less than 0.5%. Source: BOT - 131 - ANNEX 2 Page 7 Table 4: COMMERCIAL BANKS ASSETS AND LIABILITIES (Billions of Baht at end of year) 1970 1975 1976 1977 1978 1979 Assets Cash /a 0.9 2.3 2.7 4.0 4.3 5.2 Balances at banks 3.3 9.1 10.9 13.9 16.7 19.6 Government securities 5.9 17.6 20.9 22.3 24.4 23.9 Other securities 0.4 1.5 2.8 2.8 3.2 3.0 Loans, overdrafts, 26.6 75.8 89.0 114.4 150.4 183.1 discounts to private nonbank sector Fixed and other assets 4.1 11.6 13.3 15.9 19.2 24.4 Total assets and 41.2 117.9 139.6 173.3 216.2 259.2 liabilities Liabilities Demand deposits 7.6 14.0 16.8 19.1 23.5 25.4 Savings and time 23.9 71.6 88.5 110.4 132.7 147.5 deposits Borrowings from BOT 0.8 7.3 5.5 6.0 8.1 16.7 Borrowings from banks abroad 3.1 8.1 9.2 14.4 24.8 35.4 Other Liabilities /b 5.9 16.9 19.7 23.1 29.0 34.6 /a Including foreign currency on hand. lb About half of these are paid-in capital and retained earnings. Source: BOT - 132 - ANNEX 2 Page 8 Table 5: FINANCE COMPANIES: ASSETS AND LIABILITIES (Billions of Baht at end of year) 1976 1977 1978 1979 Assets Private credits 25.3 33.7 48.1 47.6 Investment in 1.7 3.0 4.8 5.7 securities /a Cash balance at banks 0.7 1.1 2.0 2.7 and other assets Total assets and 27.7 37.8 54.9 56.0 liabilities Liabilities Local promissory 18.3 24.1 36.6 37.0 notes Borrowings from 3.1 4.1 5.0 5.3 commercial banks Borrowings from 2.7 3.5 3.2 2.9 institution abroad Other liabilities/b 3.6 6.1 10.1 10.8 /a About half in government securities. /b Mostly paid-in capital and retained earnings. Source: BOT - 133 - STATISTICAL APPENDIX Contents Page No. Table 1.1 Population 136 1.2 Employment Estimates 137 2.1 Gross Domestic Product at Current Market Prices 138 by Industrial Origin 2.2 Percentage Distribution of Gross Domestic Product 139 at Current Market Prices by Industrial Origin 2.3 Gross Domestic Product at Current Factor Cost 140 by Industrial Origin 2.4 Gross Domestic Product at Constant Market Prices 141 by Industrial Origin 2.5 Growth of Gross Domestic Product at Constant Market 142 Prices by Industrial Origin 2.6 Implicit Price Deflators for GDP at Market Prices 143 by Industrial Origin 2.7 Expenditure on Gross Domestic Product at Current 144 Mlarket Prices 2.8 Percentage Distribution of Expenditure on Gross 145 Domestic Product at Current Market Prices 2.9 Expenditure on Gross Domestic Product at Constant 146 Prices 2.10 Percentage Growth of Expenditure on Gross Domestic 147 Product at 1972 Prices 3.1 Summary Balance of Payments 148 3.2 Principal Merchandise Exports 149 3.3 Other Merchandise Exports 150 3.4 Merchandise Exports by Countries 151 3.5 Principal Merchandise Exports by Countries 152 3.6 Merchandise Imports 154 3.7 Financing of Merchandise Imports 155 3.8 Merchandise Imports by Countries 156 3.9 Services 157 3.10 Investment Income 158 3.11 Government 159 3.12 Transfers 160 3.13 Capital Movements 161 3.14 International Reserves 166 3.15 Trade Indices and Terms of Trade 167 3.16 Duties on Imports by Economic Classification 168 3.17 Imports and Exports of Crude Oil and Petroleum Products 169 - 134 - Page .No. Table 4. 1 External Debt and Debt Service Obligations 170 4.2 External Public Debt Outstanding Including UJndisbursed 171 as of December 31, 1979 4.3 Projected Service Payments, Disbursements and 172 Outstanding Amounts of External Public Debt as of December 31, 1979 5.1 Consolidated Public Sector Expenditures 173 5.2 Financing of Consolidated Public Sector Expenditures 174 5.3 Central Government Expenditures 175 5.4 Central Government Revenue 176 5.5 Financing of Central Government Expenditures 177 5.6 Local Government Accounts 178 5.7 State Enterprises Gross Fixed Capital Expenditures 179 and Their Financing 5.8 Central Government Receipts, Budget FY77-80 180 5.9 Functional Classification of Central Government; 181 Expenditure Budget, FY79/80 6.1 Evaluation of Monetary Situation - Calendar Years 182 6.2 Evaluation of Monetary Situation - Quarterly 183 6.3 Selected Data of Commercial Banks 184 6.4 Bills, Loans and Overdrafts of Commercial Banks 185 Classified by Purpose 7.1 Area Planted, Field and Production of Miajor Crops, 186 1959-79 7.2 Proportion of Planted Area in Major Crops 187 7.3 Paddy and Rice Supply and Utilization, 1967-80 by 188 Glutinous and Nonglutinous Varieties 7.4 Rice Export Premium 189 7.5 Export and Domestic Wholesale Prices of Rice for 190 Selected Grades 7.6 Average Wholesale Prices (Bankgkok) of Selected 191 Agricultural Commodities 7.7 Development of Producer Prices of Miajor Commodities 192 in Thailand, 1968-78 7.8 Apparent Fertilizer Consumption, 1966-78 193 7.9 Fertilizer Use, by Crop and by Region, 1971 and 1975 194 7.10 Nutrient to Crop Price Ratios for Selected 195 Fertilizers and Crops, 1968-78 7.11 Illustration of Yield Response of Ric-e and Economic 196 Returns to Fertilizer, 1978 7.12 Replanting of Rubber 197 -135- Page No. 8.1 Production and Capacity of Selected Manufacturing 198 Industries 8.2 Gross Domestic Product Originating from Manufacturing 199 at Current Market Prices 8.3 Gross Domestic Product Originating from Manufacturing 200 at Constant Prices 8.4 Statistics of Promoted Investment 201 8.5 Mineral Production 202 8.6 Energy Consumption by Source of Energy 203 8.7 Tourism - Basic Data 204 8.8 Realized Rates of Effective Protection, 1969, 1971, 1974 205 Major Categories and Selected Items 9.1 Price Indices 206 9.2 Consumer Price Index for Whole Kingdom 207 Table R1.1 Regional Population 208 R2.1 Gross Regional Product - Bangkok (Current Baht) 209 R2.2 Gross Regional Product - Center (Current Baht) 210 R2.3 Gross Regional Product - North (Current Baht) 211 R2.4 Gross Regional Product - Northeast (Current Baht) 212 R2.5 Gross Regional Product - South (Current Baht) 213 R2.6 Gross Regional Product - Bangkok (Constant Baht) 214 R2.7 Gross Regional Product - Center (Constant Baht) 215 R2.8 Gross Regional Product - North (Constant Baht) 216 R2.9 Gross Regional Product - Northeast (Constant Baht) 217 R2.10 Gross Regional Product - South (Constant Baht) 218 R7.1 Area Planted, Yield and Production of Major Crops, 219 1959/60 - 1978/79, Central Region R7.2 Area Planted, Yield and Production of Major Crops, 220 1959/60 - 1978/79, Northern Region R7.3 Area Planted, Yield and Production of Major Crops, 221 1959/60 - 1978/79, Northeastern Region R7.4 Area Planted, Yield and Production of Major Crops, 222 1959/60 - 1978/79, Southern Region R9.1 Consumer Price Indices by Region 223 oOo - 136 - Table 1.1: POPULATION (Millions) Mid-year Growth rates (%) for 5-year period 1960 26.3 1970 36.4 3.3 /a Estimates 1971 37.5 1972 38.6 1973 39.7 1974 40.8 1975 41.9 2.9 /a 1976 43.0 1977 44.0 1978 45.0 1979 45.9 Projections 1980 46.5 2.1 /b 1985 51.9 2.2 1990 57.4 2.0 1995 62.8 1.8 /a Growth over 10-year period. lb Fertility decline which began in the late 1960s could not be documented until the mid-1970s when a number of fertility surveys were taken. There- fore, the rate of growth of population between 1970-75 overestimates the real rate of growth and the whole amount of the fertility decline over the 1970s is allocated to the 1975-80 period, probably understating the real rate of growth in this latter period. Note: The Population and Housing Census taken in April 1970 yielded a popula- tion estimate of 34.4 million. Since the census is believed to be an underenumeration, the 1970 population estimate was adjusted upwards to 36.1 million by the Working Group on the Population Projection of the Subcommittee of Population Policy. Source: Population and Manpower Planning Division, NESDB. - 137 - Table 1.2: EMPLOYMENT ESTIMATES Thousands new jobs added Composition of Employment /a ('000) annually work force, 1970 1960 1970 1976 1970-76 % female % age 11-14 Agriculture 11,332 13,202 14,838 273 50 12 Mining and quarrying 30 87 39 -8 27 7 Manufacturing 470 683 1,215 89 43 6 Construction 69 182 255 12 14 3 Electricity, gas, water and sanitary services 16 25 39 2 13 - Commerce 779 876 1,392 86 54 4 Transport, storage and communication 166 268 353 14 6 - Services 654 1,184 1,470 48 36 3 Unknown 234 146 n.a. .. Total 13,749 16,652 19.601 290 47 10 /a Economically active population, age 11 years and older, employed in April. Note: These figures should be used with caution as the 1970 census, which was published in mid-1974, apparently underestimated the population, and per- haps also the work force. The census figures differ significantly from those given in the annual labor force surveys for 1969 and 1971. In addition, sectoral employment reported in 1969 and 1971 to 1973 surveys shows improbably large annual fluctuations. Source: Census Reports, 1960, 1970. Table 2.1: GROSS DOMESTIC PRODUCT AT CURRENT MARKET PRICES BY INDUSTRIAL ORIGIN (Billions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Agriculture 38.5 40.8 49.9 73.2 84.7 94.1 104.7 110.9 131.2 145.6 Crops 26.8 28.1 36.0 56.4 62.2 69.7 77.5 79.1 99.3 109.1 Livestock 4.8 5.5 5.9 6.3 10.6 11.5 12.3 14.4 12.7 16.9 Fisheries 4.1 4.5 5.2 7.0 7.3 8.4 9.8 12.5 14.1 14.6 Forestry 2.8 2.7 2.9 3.5 4.6 4.5 5.0 5.0 5.0 5.1 Mining, quarrying 2.8 3.0 2.9 2.9 4.5 4.1 5.2 8.1 10.6 13.8 Manufacturing 21.8 24.9 27.9 35.6 47.6 53.9 63.0 74.7 87.7 108.9 Construction 8.3 7.3 7.2 8.3 10.7 12.8 15.8 20.3 25.9 31.5 Electricity, water supply 1.6 1.9 2.2 2.7 2.8 3.3 3.7 4.4 5.2 5.7 Transportation, communications 8.6 9.0 10.5 13.2 16.0 18.8 21.8 24.7 29.8 35.3 1 Trade 25.9 26.3 29.9 41.1 53.4 54.7 59.4 74.9 94.6 113.0 Banking, insurance, real estate 5.6 6.3 6.9 8.8 12.2 14.6 16.1 19.5 25.3 31.4 X Ownership of dwellings 2.9 3.1 3.2 3.6 4.2 4.4 4.8 5.3 5.9 6.9 Public administration, defense 6.1 6.7 7.2 8.3 10.5 12.3 13.6 14.8 17.9 21.3 Other services 13.9 15.5 16.8 18.9 23.0 25.9 29.5 35.4 43.3 51.1 Gross Domestic Product 136.1 144.6 164.6 216.5 269.7 298.8 337.6 393.0 477.3 564.4 Net factor income from abroad +0.4 0.0 -0.3 -0.4 +1.1 -0.2 -1.3 -2.0 -3.7 -7.7 Gross national product 136.4 144.6 164.3 216.1 270.7 298.6 336.4 393.0 473.6 556.8 /a Estimate. Note: Totals may not add because of rounding. Source: NESDB. Table 2.2: PERCENTAGE DISTRIBUTION OF CROSS DOMESTIC PRODUCT AT' CURRENT MARKET PItICES BY INDUSTRIAL ORIGIN 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Agriculture 28.3 28.2 30.3 33.8 31.6 31.5 31.0 28.2 27.5 25.8 Crops 19.7 19.4 21.8 26.1 23.5 23.3 23.0 20.1 20.8 19.8 Livestock 3.6 3.8 3.6 2.9 3.8 3.8 3.6 3.7 2.7 3.0 Fisheries 3.0 3.1 3.2 3.2 2.8 2.8 2.9 3.2 3.0 2.6 Forestry 2.0 1.9 1.7 1.6 1.5 1.5 1.5 1.3 1.0 0.9 Mining, quarrying 2.0 2.1 1.8 1.3 1.8 1.4 1.5 2.1 2.2 2.4 Manufacturing 16.0 17.2 16.9 16.5 17.2 18.0 18.7 19.0 18.4 19.3 1 Construction 6.1 5.1 4.4 3.9 3.9 4.3 4.7 5.2 5.4 5.6 Electricity, water supply 1.2 1.3 1.4 1.2 1.0 1.1 1.1 1.1 1.1 1.0 L Transportation, communications 6.3 6.2 6.4 6.1 5.9 6.3 6.5 6.3 6.2 6.3 Trade 19.1 18.2 18.1 19.0 19.9 18.3 17.6 19.1 19.8 20.0 Banking, insurance, real estate 4.1 4.3 4.2 4.1 4.6 4.9 4.8 5.0 5.3 5.6 Ownership of dwellings 2.2 2.1 1.9 1.6 1.6 1.5 1.4 1.3 1.2 1.2 Public administration, defense 4.5 4.6 4.4 3.8 3.9 4.1 4.0 3.8 3.8 3.8 Other services 10.2 10.7 10.2 8.7 8.6 8.7 8.7 9.0 9.1 9.1 Gross Domestic Product 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 /a' Estimate. Source: NESDB. - 140 - Table 2.3: GROSS DOMESTIC PRODUCT AT CURRENT FACTOR COST BY INDUSTRIAL ORIGIN (Billions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Agriculture 38.2 40.4 49.6 73.0 84.7 93.6 104.2 110.4 130.6 145.0 Crops 26.6 27.9 35.7 56.3 62.4 69.4 77.3 78.8 99.0 108.7 Livestock 4.8 5.5 5.9 6.3 10.6 11.5 12.4 14.4 12.7 16.9 Fisheries 4.1 4.5 5.2 7.0 7.3 8.5 9.8 12.5 14.1 14.6 Forestry 2.7 2.6 2.7 3.4 4.5 4.3 4.8 4.8 4.8 4.9 Mining, quarrying 2.4 2.6 2.5 2.4 3.7 3.5 4.4 6.5 8.1 10.1 Manufacturing 16.7 19.2 21.4 27.9 35.3 41.5 50.4 57.4 68.7 89.3 Construction 8.1 7.2 7.0 8.1 10.4 12.6 15.6 19.9 25.4 30.9 Electricity, water supply 1.6 1.9 2.2 2.7 3.0 3.3 3.8 4.6 5.4 6.0 Transportation, communications 8.3 8.7 10.1 12.8 15.5 18.2 21.2 24.1 29.1 34.8 Trade 17.5 18.3 21.5 29.3 37.3 40.6 43.7 55.0 70.6 83.2 Banking, insurance, real estate 5.3 5.9 6.5 8.2 11.5 13.5 14.9 18.2 23.4 28.9 Ownership of dwellings 2.7 2.8 2.9 3.2 3.8 4.0 4.3 4.6 5.1 5.9 Public administration, defense 6.1 6.7 7.2 8.3 10.5 12.3 13.6 14.8 17.9 21.3 Other services 13.2 14.7 16.0 17.9 22.0 24.6 28.2 33.8 41.3 48.8 Gross domestic product at factor cost 120.3 128.4 146.8 193.8 237.3 267.7 304.2 349.3 425.6 504.3 Plus indirect taxes 15.8 16.2 17.8 22.7 33.4 31.1 33.4 43.7 51.7 60.1 less subsidies Gross domestic product at market prices 136.1 144.6 164.6 216.5 270.7 298.6 336.4 391.0 473.6 556.8 Gross domestic product at factor cost 120.3 128.4 146.8 193.8 237.3 267.7 304.2 349.3 425.6 504.3 Plus net factor income from rest of world 0.4 0.0 -0.3 -0.4 1.1 -0.2 -1.3 -2.0 -3.7 -7.7 Less provision for consump- tion of fixed capital 10.3 11.6 12.8 14.8 17.7 21.0 24.0 28.6 34.4 42.0 Net National Income 110.4 116.9 133.7 178.6 219.9 246.5 278.9 318.7 387.5 454.7 /a Estimate. Note: Totals may not add because of rounding. Source: NESDB. - 141 - Table 2.4: GROSS DOMESTIC PRODUCT AT CONSTANT tARKET PRICES BY INDUSTRIAL ORIGIN (Billions of 1972 baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Agriculture 48.3 50.5 49.9 56.2 57.0 62.1 65.9 65.5 75.1 73.6 Crops 373 765 TIE T7 1.8 4T5.6 T9.0 46.8 555 ;54-. Livestock 5.0 5.6 5.9 6.3 6.7 7.4 7.6 8.1 8.2 8.6 Fisheries 5.0 5.0 5.2 5.4 5.3 5.7 5.9 7.5 8.4 8.1 Forestry 2.8 3.0 2.9 2.9 3.2 3.3 3.4 3.1 2.9 2.9 Nonagriculture 101.8 106.6 114.7 123.9 132.2 141.4 156.6 173.3 191.8 211.1 Mining, quarrying 2.6 2.9 2.9 2.7 2.9 2.5 2.9 3.5 4.1 4.6 Manufacturing 23.3 25.2 27.9 31.5 33.6 36.8 42.5 48.1 52.8 58.0 Construction 8.7 7.7 7.2 7.2 7.5 8.5 10.0 12.0 14.1 15.4 Electricity, water supply 1.6 1.9 2.3 2.6 2.8 3.2 3.6 4.1 4.5 5.1 Transportation, communications 9.2 9.4 10.5 11.3 12.1 13.4 14.6 16.1 18.4 20.8 Trade 26.5 27.2 29.9 33.4 33.7 35.8 38.8 41.2 43.5 47.0 Banking, insurance, real estate 5.8 6.6 6.9 7.6 3.6 9.6 10.2 11.6 13.8 15.3 Ownership of dwellings 3.0 3.1 3.2 3.3 3.5 3.6 3.7 3.8 4.1 4.4 Public administration, defense 6.5 7.0 7.2 7.7 7.9 8.4 8.9 9.6 10.2 11.4 Other services 14.5 15.7 16.8 18.5 19.8 19.7 21.3 23.3 26.3 29.1 Gross domestic product 150.1 157.1 164.6 180.1 189.2 203.5 222.5 238.8 266.8 284.7 Net factor income from abroad 0.3 0.0 -0.3 -0.4 0.9 -0.2 -1.0 -1.6 -2.7 -5.4 Gross national product 150.4 157.1 164.3 179.8 190.1 203.3 221.5 237.3 264.1 279.3 /a Estimate. Note: Totals may not add because of rounding Source: NESDB. - 142 - Table 2.5: GROWTH OF GROSS DOMESTIC PRODUCT AT CONSTANT MARKET PRICES BY INDUSTRIAL ORIGIN (1972 Baht, %) 1971 1972 1973 1974 1975 1976 1977 1978 19791a Agriculture 4.6 -1.2 12.7 1.3 9.0 6.1 -0.5 14.5 -1.9 Crops 4.0 -2.7 16.0 0.1 9.3 7.4 -4.5 18.7 -2.7 Livestock 11.5 4.8 6.7 6.7 10.1 3.3 6.3 1.2 4.7 Fisheries 0.9 4.0 3.0 -1.2 8.6 2.9 27.1 11.9 -3.5 Forestry 6.3 -3.3 0.2 11.8 3.5 1.0 -6.6 -6.5 -1.7 Nonagriculture 4.7 7.7 8.0 7.3 6.8 10.7 10.7 10.7 10.1 Mining, quarrying 11.8 1.1 -7.0 8.8 -14.8 16.9 21.3 16.3 12.8 Manufacturing 8.1 10.6 13.1 9.1 8.0 15.6 13.0 9.7 10.0 Construction -11.6 -6.9 0.7 3.3 14.1 17.7 19.7 17.9 8.7 Electricity, water supply 14.7 19.8 16.7 6.1 13.7 14.5 13.8 8.6 12.4 Transportation, communications 1.9 12.2 7.7 7.0 2.8 9.0 10.2 14.4 13.0 Trade, wholesale and retail 2.5 9.9 5.1 9.1 5.5 8.5 6.2 5.4 8.2 Banking, insurance, real estate 13.0 5.5 10.0 17.4 10.7 6.0 13.4 19.5 10.7 Ownership of dwellings 3.5 3.0 3.6 4.2 3.0 3.1 4.3 6.7 7.3 Public administration, defense 8.0 2.6 7.2 2.3 6.3 6.4 7.4 6.4 12.3 Other services 8.0 7.5 9.7 1.5 18.4 8.0 9.3 13.1 10.5 Gross domestic product 4.7 4.8 9.4 5.4 7.4 9.3 7.3 11.7 6.7 /a Based on preliminary data. Source: NESDB. - 143 - Table 2.6: IMPLICIT PRICE DEFLATORS FOR GDP AT MARKET PRICES BY INDUSTRIAL ORIGIN (1972 = 100) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Agriculture 79.6 80.7 100.0 130.2 148.8 151.5 158.8 169.3 174.8 197.8 Crops 75.3 76.0 100.0 135.3 149.1 152.6 158.1 169.0 178.9 201.9 Livestock 96.2 97.6 100.0 100.0 158.0 155.5 162.1 177.8 171.9 169.9 Fisheries 82.1 89.7 100.0 130.1 137.3 147.4 166.0 166.1 168.0 180.0 Forestry 100.3 92.3 100.0 122.9 144.5 134.2 148.6 159.0 170.2 176.3 Nondgriculture 95.9 97.4 100.0 115.7 139.1 144.8 148.8 162.8 180.2 198.4 Mining, quarrying 108.0 103.7 100.0 106.5 155.2 163.5 178.0 230.8 258.6 298.2 Manufacturing 93.5 98.8 100.0 113.0 138.4 146.5 148.2 155.3 166.2 137.6 Construction 94.9 95.3 100.0 115.5 143.5 151.2 157.5 168.8 182.9 204.8 Electricity, water supply 99.2 101.3 100.0 102.1 100.1 103.4 102.8 105.8 114.8 113.2' Tradisportation, communications 93.4 95.5 100.0 116.9 132.1 139.6 149.0 153.1 161.6 169.5 Trade 97.7 96.6 100.0 130.8 155.8 152.9 153.0 181.8 217.8 246.3 Banking, insurance, real estate 96.9 95.3 100.0 115.5 137.4 151.2 157.5 168.8 182.9 204.3 Ownership of dwellings 97.8 99.8 100.0 107.2 120.9 124.2 132.1 137.8 143.8 157.0 Public administration, defense 94.9 95.3 100.0 107.8 133.9 147.4 152.6 155.0 176.5 186.5 Other services 95.7 98.6 100.0 101.9 122.2 131.3 138.9 152.2 164.7 1 Gross domestic product at market prices 90.7 92.1 100.0 120.2 142.0 146.8 151.7 164.6 178.9 198.2 Implicit terms of trade - agriculture and nonagriculture 83.0 82.9 100.0 112.5 107.0 104.6 106.7 104.0 97.0 99.7 /a Prelirainary. Source: NESDB. - 144 - Table 2.7: EXPENDITURE ON GROSS DOMESTIC PRODUCT AT CURRENT MARKET PRICES (Billions of baht) 197( 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Consumption 108.0 116.0 128.1 159.3 203.4 229.5 262.1 302.2 358.2 427.9 Private 92.4 99.1 110.3 138.0 177.4 198.5 225.0 260.5 304.6 362.0 Durable goods 4.4 4.1 4.6 6.5 9.4 9.8 11.2 15.3 16.4 21.1 Nondurable goods 69.8 75.1 84.2 105.8 136.4 152.7 171.3 197.1 232.0 273.4 Services 18.2 19.8 21.5 25.8 31.6 36.0 42.5 48.1 56.2 67.5 General government 15.6 17.0 17.9 21.2 26.0 31.0 37.1 41.7 53.6 65.8 Gross investment 35.6 34.9 33.7 51.7 65.9 75.7 78.4 102.2 126.5 157.2 Private fixed capital /b 22.2 22.3 23.2 33.5 48.9 50.7 50.1 69.0 79.7 103.0 Public fixed capital 10.5 10.4 11.4 10.7 10.2 15.4 23.2 29.7 36.8 43.0 Change in stocks 2.9 21 -0.9 7.5 6.8 9.6 5.2 3.6 10.0 11.2 Exports of goods and services 22.7 25.2 31.9 42.5 61.7 57.0 71.2 82.2 99.6 128.3 Goods 14.3 16.7 21.8 31.2 49.0 44.5 60.4 70.6 82.3 Nonfactor services 8.4 8.5 10.1 11.3 12.7 12.7 10.8 11.2 17.3 Imports of goods and services 29.3 29.7 33.8 46.1 68.4 70.8 79.4 103.4 119.9 163.0 Goods 26.5 26.6 30.6 42.1 63.3 64.7 71.4 96.1 110.0 Nonfactor services 2.8 3- 1 3.2 4.0 5.1 6.1 8.0 7.3 9.9 Expenditure on gross domestic product 137.1 146.4 i59.8 207.4 262.6 291.4 332.4 383.2 464.4 550.4 Statistical discrepancy -1.0 -1.8 4.8 9.1 7.0 7.4 5.2 9.8 12.9 14.0 Gross domestic product 136.1 144.6 164.6 216.5 269.7 298.8 337.6 393.0 477.3 564.4 Memo: Gross domestic savings 29.1 30.4 31.7 48.1 59.2 61.9 70.3 81.0 106.2 122.5 Public 2.9 1.8 2.1 3.8 11.4 6.9 3.5 9.9 9.1 8.7 Private 26.2 28.6 29.6 44.3 47.8 55.0 66.8 71.1 97.1 113.8 /a Estimate. /b Excludes private on-farm investment other than purchases of agricultural machinery. Note: Totals may not add because of rounding. Source: NESDB Table 2.8: PERCENTAGE DISTRIBUTION OF EXPENDITURE ON GROSS DOMESTIC PRODUCT AT CURRENT MARKET PRICES 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Consumption 79.4 80.2 77.8 73.6 75.4 76.8 77.6 76.9 75.0 75.8 Private 67.9 68.5 67.0 63.7 65.8 66.4 66.6 66.3 63.8 64.1 General government 11.5 11.8 10.9 29.8 9.6 10.4 11.0 10.6 11.2 11.7 Gross investment 26.2 24.1 20.5 23.9 24.4 25.3 23.2 26.0 26.5 27.9 Private fixed capital 16.3 15.4 14.1 15.5 18.1 17.0 14.8 17.6 16.7 18.2 Public fixed capital 7.7 7.2 6.9 4.9 3.8 5.2 6.9 7.7 7.7 7.6 Change in stocks 2.1 1.5 -0.5 3.5 2.5 3.2 1.5 0.9 2.1 2.0 Exports of goods and services 16.7 17.4 19.4 19.6 22.9 19.1 21.1 20.8 20.9 22.7 Goods 10.5 11.5 13.2 14.4 18.2 14.9 17.9 18.0 17.2 18.9 Nonfactor services 6.2 5.9 6.1 5.2 4.7 4.3 3.2 2.8 3.6 3.8 Imports of goods and services 21.5 20.5 20.5 21.3 25.4 23.7 23.5 26.3 25.1 28.9 Goods 19.5 18.4 18.6 19.4 23.5 21.7 21.1 24.5 23.0 27.2 Nonfactor services 2.1 2.1 1.9 1.8 1.9 2.0 2.4 1.9 2.1 1.7 Expenditure on gross domestic product 100.7 101.2 97.1 95.8 97.4 97.5 98.5 97.5 97.3 97.5 Statistical discrepancy_/b -0.7 -1.2 2.9 4.2 2.6 2.5 1.5 2.5 2.7 2.5 Gross domestic product 100.0 100.0 100.0 100.0 100.0 10(.0 100.0 100.0 100.0 100.0 Memo: Gross domestic savings 21.4 21.0 19.3 22.2 22.5 20.7 20.8 20.6 22.3 21.7 Public 2.1 1.2 1.3 1.8 4.2 2.3 1.0 2.5 1.9 1.5 Private 19.3 19.8 18.0 20.5 18.3 18.4 19.8 18.1 20.3 20.2 Note: Totals may not add up because of rounding. /a Preliminary. Tb Probably unrecorded private consumption. Source: NESODB. Table 2.9: EXPENDITURE ON GROSS DOMESTIC PRODUCT AT CONSTANT PRICES (Billions of 1972 baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Consumption 114.4 121.2 128.2 139.2 145.5 155.3 171.2 185.7 200.5 219.5 Private 98.0 103.7 110.3 119.6 125.7 134.4 146.2 158.5 168.7 183.0 General government 16.4 17.5 17.9 19.7 19.8 21.9 25.0 27.3 31.8 36.5 Gross investment 43.0 42.0 32.7 43.2 46.1 50.1 49.5 63.9 66.3 78.6 Private fixed capital /b 27.9 27.5 23.2 28.9 35.3 32.9 31.6 43.2 45.5 52.2 Public fixed capital 12.1 11.8 11.4 9.0 6.4 9.5 13.5 16.7 19.4 20.1 Change in stocks 3.2 2.6 -0.9 5.3 4.0 7.7 4.4 4.0 1.4 6.3 Exports of goods and nonfactor services /c 24.0 26.8 31.9 30.5 30.0 28.9 36.4 40.7 45.8 48.8 Goods 14.1 18.3 21.8 20.3 23.1 22.3 31.1 35.6 38.4 41.1 Nonfactor services 9.9 8.5 10.1 10.2 7.0 6.6 5.3 5.1 7.4 7.7 Imports of goods and nonfactor services /c 34.4 29.6 33.8 41.7 37.7 36.8 39.2 47.4 51.0 58.6 Goods 31.1 26.5 30.6 38.1 34.9 33.7 35.2 44.1 46.8 55.2 Nonfactor services 3.3 3.1 3.2 3.6 2.8 3.2 3.9 3.3 4.2 3.4 Expenditure on gross domestic product /c 147.0 160.4 159.0 171.2 183.9 197.5 217.9 242.9 261.6 288.3 Statistical discrepancy 3.1 -3.3 5.6 8.9 6.1 6.0 4.6 -4.1 5.2 -3.6 Gross domestic product 150.1 157.1 164.6 180.1 190.0 203.5 222.5 238.8 266.8 284.7 /a Preliminary. /b Excludes private on-farm investment other than purchases of agricultural machinery. /c IBRD mission estimates. Derived from Table 2.7 and unit value indices, Table 3.15, assuming deflator for exports of nonfactor services deflated by import unit value index. Note: Totals may not add because of rounding. Source: NESDB and IBRD mission estimates. Table 2.10: PERCENTAGE GROWTH iE EXPENDITURE ON GROSS DOMESTIC PRODUCT ATl 1972 PRICES 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Consumption 5.9 S.8 8.6 4.5 6.7 10.2 8.5 8.0 9.5 Private 5.8 6.4 8.4 5.1 6.9 8.8 8.4 6.4 8.5 General government 6.7 2.) 10.1 0.5 10.6 14.2 9.2 16.5 11.9 Gross investment -2. a -19.8 28.2 6.7 8.7 -1.2 29.1 3.8 18.6 Private fixed capital - .4 -15.6 24.6 22.1 -6.8 -4.0 36.7 5.3 14.7 Public fixed capital -2.5 - 3.4 -21.1 -23.3 37.7 42.1 23.7 16.2 3.6 Change in stocks Exports of goods and nad itor services 11 1 19.0 -4.4 -i.6 -3.7 26.0 11.8 12.5 6.6 Goods 9.8 19.1 -6.1 13.8 -3.5 39.5 14.5 7.9 7.0 Nonfactor services -L'.1 18.8 1.0 -31.4 -5.7 -19.7 -3.8 45.1 4.1 Imports of goods and nonfactor services -14.0 14.2 23.4 -9.6 -2.4 6.5 20.9 7.6 14.9 Goods -14.8 15.5 24.5 -8.4 -3.4 4.5 25.3 6.1 17.9 Nonfactor services -6.1 3.2 12.5 -22.2 14.3 21.9 -15.4 27.3 -19.0 Expenditure on gross domestic product 9.1 -0.9 7.7 7.4 7.4 10.3 11.5 7.7 10.2 Gross domestic product 4.7 4.8 9.4 5.5 7.1 9.3 7.3 11.7 6.7 /a Preliminary Sources: NESDB a ad IBRD mLssi,)f esLimates. Table 3.1: SUMMARY BALANCE OF PAYMENTS (Millions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Merchandise exports, f.o.b. 14,269.7 16,692.1 21,750.2 31,252.5 49,002.4 44,382.4 60,361.2 70,462.8 82,250.8 106,879.0 Merchandise imports, c.i.f. 26,406.7 26,606.4 30,634.8 42,054.9 63,304.6 64,527.0 71,446.1 96,004.8 109,956.1 153,463.5 Nonmonetary gold imports /a 107.8 26.4 - - - - - 56.8 834.7 470.8 Trade balance -12,244.8 -9,940.9 -8,884.6 -10,802.4 -14,302.2 -20,144.6 -11,084.9 -25,598.8 -28,540.0 -47,055.3 Service receipts 10,094.8 9,899.6 11.322.7 12,723.1 15,634.2 16,551.6 13,993.3 14,771.7 22,123.9 29,815.7 Service payments 4,058.6 4,495.5 4,739.7 5,886.7 8,033.5 10,390.8 12,350.8 12,336.5 17,844.8 26,274.5 Net service 6,036.2 5,404.1 6,583.0 6,836.4 7,600.7 6,160.8 1,642.5 2,405.2 4,279.1 3,541.2 Transfers (net) 1,011.7 904.1 1,238.8 2,968.8 4,916.9 1,632.1 464.5 801.9 816.0 1,255.8 Private (57.4) (131.1) (630.7) (2,398.9) (4,375.6) (1,134.5) (100.8) (443.3) (128.0) 487.0 Government (954.3) (773-0) (608.1) (569.9) (541.3) (497.6) (363.7) (358.6) (688.0) 768.8 Current account balance -5,196.9 -3,632.7 -1,062.8 -997.2 -1,784.6 -12,351.7 -8,977.9 -22,391.7 -23,444.9 -42,258.3 Capital inflow (net) 2,478.8 1,733.1 3,643.2 2,937.6 9,054.7 7,754.7 9,263.6 13,966.9 14,858.3 33,769.1 Private sector 2,326.0 1,463.1 3,406.6 1,910.1 ;',801.0 5,696.3 5,060.4 8,360.9 3,595.3 13,077.5 Direct investment (890.5) (808.4) (1,427.1) (1,604.9) (3,836.3) (1,744.8) (1,614.1) (2,163.8) (1,010.8) (1,047.7) Medium & long-term loans and credits (1,007.7) (397.0) (1,392.5) (-1,199.0) (2,637.1) (1,316.7) (689.3) (867.2) (689.3) (6,314.5) Other (427.8) (257.7) (587.0) (1,504.2) (1,327.6) (2,634.8) (2,757.0) (5,329.9) (1,895.2) (5,715.3) Public sector 152.8 270.0 236.6 1,027.5 1,253.7 2,058.4 4,203.2 5,606.0 11,263.0 20,691.6 Loans to the Central Gov't (445-1) (360.3) (214.7) (387.2) (126.4) (-105.0) (2,157.2) (770.8) (6,057.8) (8,890.8) Loans & credits to state enterprises (90.7) (60.2) (388.3) (372.7) (1,173.9) (2,203.0) (1,839.3) (4,767.3) (5,170.8) (12,143.6) Other Central and Local Gov't (-383.0) (-96.5) (-316.4) (267.6) (-46.6) (-39.6) (206.7) (67.9) (34-4) (-342.8) Allocation of SDR - - - - - - - - - 493.6 Errors and omissions 66.1 1,266.2 1,009.3 -1,076.2 741.9 1,739.0 -368.5 886.9 -4,711.4 70.6 Change in reserves (increase = -) 2,652.0 633.4/a -3,670.7/a -864.2/a -8,012.0Ob 2,858.0/b 82.8 7,537.9 13,298.0 7,925.0 /a Including timing adjustments and official gold imports for the minting of commemorative coins. /b Excluding SDR allocations of $14.3 million (B 298.2 million) in 1971 and $15.4 million (B 320.7 million) in 1972, and reserve valuation adjustments. Source: Bank of Thailand. Table 3.2: PRINCIPAL MERCHANDISE EXPORTS 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1. Rice Value (million of baht) 2,517 2,909 4,437 3,594 9,778 5,852 8,603 13,382 10,425 15,592 Volume (thousands of tons) 1,064 1,576 2,112 849 1,029 951 1,973 2,946 1,607 2,797 Unit value (baht per ton) 2,366 1,846 2,101 4,Z35 9,500 6,152 4,359 4,542 6,488 5,575 2. Rubber Value (million of baht) 2,232 1,905 1,862 4,573 5,035 3,474 5,297 6,164 8,030 12,351 Volume (thousands of tons) 276 308 318 391 363 332 373 402 442 521 Unit value (baht per ton) 8,098 6,188 5,861 11,710 13,887 10,458 14,184 15,339 18,160 23,706 3. Maize /a Value (million of baht) 1,969 2,286 2,085 2,969 6,078 5,705 5,676 3,345 4,275 5,643 Volume (thousands of tons) 1,448 1,873 1,844 1,386 2,302 2,105 2,419 1,542 1,972 2,014 Unit value (baht per ton) 1,360 1,220 1,131 2,142 2,641 2,711 2,346 2,169 2,167 2,802 4. Tin (metal) Value (million of baht) 1,618 1,569 1,664 2,035 3,096 2,247 2,972 4,541 7,229 9,253 Volume (thousands of tons) 22.2 21.9 21.8 22.7 20.8 16.7 20.0 21.4 28.9 31.3 Unit value (baht per ton) 72,732 71.738 76,190 89,762 149,083 134,842 148,244 211,830 249,767 295,623 5. Tapioca Products Value (million of baht) 1,223 1,240 1,547 2,537 3,836 4,597 7,527 7,720 10,892 9,891 Volume (thousands of tons) 1,327 1,123 1,311 1,836 2,396 2,385 3,721 3,954 6,288 3,961 Unit value (baht per ton) 922 1,104 1,180 1,381 1,601 1,927 2,023 1,952 1,732 2,497 6. Kenaf and Jute Value (million of baht) 719 935 1,087 1,054 845 643 579 418 448 391 Volume (thousands of tons) 258 272 255 264 247 158 138 81 91 79 Unit value (baht per ton) 2,790 3,442 4,261 3,991 3,421 4,080 4,185 5,146 4,920 4,949 7. Sugar Value (million of baht) 94 382 1,264 1,161 3,757 5,696 6,843 7,445 3,969 4,797 Volume (thousands of tons) 56 175 408 275 444 595 1,124 1,655 1,040 1,190 Unit value (baht per ton) 1,671 2,188 3,102 4,216 8, 462 9,566 6,088 4,500 3,816 4,031 8. Shrimp Value (million of baht) 224 247 340 804 602 891 1,347 1,170 1,500 2,372 Volume (thousands of tons) 6.4 5.6 6.7 14.9 10.3 13.5 15.2 13.7 15.4 18.6 Unit value (baht per ton) 34,886 44,162 50,558 54,050 58,726 65,800 88,514 85,645 97,542 127,527 9. Teak Value (million of baht) 156 183 208 422 402 445 749 545 253 118 Volume (thousands of cu m) 29 40 52 35 43 72 39 15 6 Unit value (Baht per cu m) 5,424 4,868 5,161 8,168 11,434 10,344 10,380 13,842 16,432 19,667 10. Tobacco Leaves Value (million of baht) 197 236 284 309 445 596 699 924 1,160 1,243 Volume (thousands of tons) 11 13 18 16 15 17 22 28 35 34 Unit value (baht per ton) 18,266 17,936 15,689 18,761 30,454 32,359 31,735 33,022 33,323 36,559 Value of principal exports 10,949 11,892 14,778 19,458 33,874 30,146 40,292 45,654 48,181 61,651 Other exports 3,823 5,383 7,713 12,768 15,925 14,861 20,505 25,544 34,884 46,528 Total merchandise exports 14,772 17,275 22,491 32,226 49.799 45,007 60,797 71,198 83,065 108,179 AdjtLstments for B/P -502 -583 -741 -974 -797 -642 -800 -735 -814 -1 ,300 Merchandise exports, f.o.b. 14,270 16,692 21,750 31,252 49,002 44,365 60,361 70,463 82,251 106,879 /a Including maize groat and meal. Source: Bank of Thailand - 150 - Table 3.3: OTHER MERCHNNIDSE EXPORTS (Million of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Agricultural Products 1,114 1,301 1,522 2,178 2,542 2,323 3,150 _3,645 4,Ci 4,839 Mungbeans and block matpe beans 255 255 277 374 454 464 945 1,058 1,161 1,375 Soybeans 16 17 23 76 47 133 49 81 51 68 Sorghun 103 157 138 241 426 482 374 300 372 495 Kapok fibre 134 141 149 179 195 169 272 245 237 264 Castor seeds 93 124 97 272 215 103 251 515 281 205 Seedlae and stick lac 36 60 107 191 287 95 91 56 57 86 Hides and skins 52 47 102 98 70 34 55 50 76 143 Cattle 73 91 115 139 120 111 146 215 251 207 Other agricuLltural products 352 409 514 608 728 732 952 1,125 1,515 1,996 Fishery Products 143 249 430 779 786 957 1,360 1,867 2,687 3,481 Cuttle fish, fresh t 38 t 96 141 273 340 05 602 622 944 6 Cuttle fish, salted in brine t t 68 56 83 102 125 195 301 12 Other fishery products 105 153 221 450 363 350 633 1,050 1,442 3,463 Forestry Products 63 83 108 260 214 223 306 240 89 45 Mineral Products 440 795 673 737 1,174 791 1,056 1,267 1,522 1,549 Fluorite 2222 311 222 224 289 204 267 229 206 252 Tungsten 83 329 322 260 467 376 531 799 1,020 620 Iron ores and concentrates 8 1 - - - - - - - - Other mineral products 127 154 129 253 418 211 258 239 296 677 Manufacturing Products 808 1,344 2,618 5,509 6,906 6,423 8,977 10,449 14,853 19,570 Pineapple, canned 55 44 51 75 280 346 561 897 n.a. 1,244 Garaents 18 67 258 660 795 987 1,535 1,495 2,562 3,541 Molasses 45 86 91 312 500 479 498 746 507 528 Cement 83 90 218 314 650 506 378 217 33 33 Petroleum products 36 132 248 379 303 230 99 1 71 191 Spinning 5 27 112 159 166 141 337 618 n.a. 776 Silk, fabrics 34 30 29 39 34 26 29 29 34 39 Textiles 23 62 271 1,027 787 803 2,040 2,162 n.a. 4,378 Jute yarn & jute fabrics, twine cordage rope, cable of jute 16 63 81 198 485 314 430 308 n.a. 732 Gunnv bags 63 178 170 312 330 283 116 159 425 624 Iron & steel products 41 46 118 174 335 165 217 235 n.a. 684 Household utensils of wool 18 33 72 135 16 205 238 324 n.a. 355 Precious stones and jewelry 137 232 383 641 763 768 882 969 1,711 2,753 Other manufactuiring products 215 249 516 1,084 1,312 1,170 1,620 2,289 n.a. 3,692 Temporary exports 366 625 916 989 801 858 951 1,389 1,871 2 Re-Exports 522 598 875 I O80 1,161 935 608 801 1,813 1,882 Diplomatic Shipments 63 82 92 165 135 27 23 60 56 112 Personal Houshold Effects 32 53 55 66 74 83 74 110 85 94 Others 272 253 424 1,005 2,132 2,304 4,005 5,716 7,907 12,399 Total 3,823 5,383 7,713 12,768 15,925 14,891 20,510 25,544 34,884 46,528 Source: Bank of Thailand. - 151 - Table 3.4: MERCHANIDISE EXPORTS BY COUNTRIES 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 ------------------------ Millions of baht ------------------------------------- Japan 3,770 4,274 4,660 8,410 12,853 12,420 15,686 14,029 16,866 22,901 United States 1,985 2,261 2,834 3,261 3,945 4,968 6,098 6,929 9,153 12,106 Netherlands 1,276 1,386 1,794 2,927 4,328 4,547 8,064 9,564 12,185 12,260 Singapore 1,018 1,225 1,955 2,661 4,142 4,068 4,114 4,505 6,723 9,222 Hong Kong 1,113 1,152 1,674 2,362 3,171 2,716 3,036 3,342 4,436 5,260 Malaysia 830 731 1,120 1,952 2,433 2,099 2,552 3,769 4,296 4;>? Germany, Fed. Rep. 533 604 556 770 1,115 1,116 1,979 2,491 3,441 4, ,91 Taiwan 720 498 830 1,308 3,316 1,070 1,871 3,167 1,088 1_,!3u5 United Kingdom 305 435 368 622 664 529 980 1,017 1 283 1,98 Other 3,222 4,673 6,700 7,953 13,832 11,474 16,417 22,375 23,594 33,9i6 Total Mechan- dise Exports 14,772 17,275 22,491 32,226 49.799 45,027 60,797 71,198 83,065 108,179 …----------------------Percentage of total -------------------------------- Japan 25.5 24.7 20.7 26.1 25.8 27.6 25.8 19.7 20.3 21.2 United States 13.4 13.1 12.6 10.1 7.9 11.0 10.0 9.8 11.0 11.2 Netherlands 8.6 8.0 8.0 9.1 8.7 10.1 13.3 18.4 14.7 11.3 Singapore 6.9 7.1 8.7 8.3 8.3 9.0 6.8 6.3 8.1 8.5 Hong Kong 7.5 6.7 7.4 7.3 6.4 6.1 5.0 4.7 5.3 4.9 Malaysia 5.6 4.2 5.0 6.0 4.9 4.6 4.2 5.3 5.2 4.4 Germany, Fed. Rep. 3.6 3.7 2.5 2.4 2.2 2.5 3.3 3.5 6.1 4.1 Taiwan 4.9 2.9 3.7 4.1 6.7 2.4 3.1 4.5 1.3 1.3 United Kingdom 2.9 2.5 1.6 1.9 1.3 1.2 1.6 1.4 1.5 1.8 Other 21.9 27.1 29.8 24.7 27.8 25.5 27.0 31.4 28.5 31.4 /a Preliminary. Source: Bank of Thailand. - 152 - Table 3.5: PRINCIPAL MECHANDISE EXPORTS BY COUNTRIES 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 …---------------------------------- Millions of baht -----------------------------…----- Rice 2,516 2,909 4,437 3,594 9,778 5.852 8,603 13,382 10,425 15.592 Hong Kong 552 482 627 526 1,153 900 654 600 660 723 Singapore 392 432 839 438 867 716 906 1,082 1,017 1,324 Malaysia 300 210 274 172 748 121 524 881 891 667 Indonesia 277 175 371 797 1,168 74 2,243 3,683 813 3,056 Saudi Arabia 296 171 61 324 601 317 479 155 298 274 India 54 138 184 - - 679 1 - 2 - Philippines - 328 519 91 383 405 278 61 - - Sri Lanka 50 89 - - - 615 328 529 - 2 Japan 66 45 30 78 224 45 20 147 134 69 Other 529 839 1,532 1,168 4,634 1,980 3,170 6,244 6,610 9,477 Rubber 2.232 1,905 1,862 4.573 5,035 3,474 5.297 6,164 8,030 12,351 Japan 1,153 996 1,091 2,464 2,354 1,923 2,805 3,271 4,391 7,220 United States 210 216 162 250 342 312 842 854 910 1,123 Singapore 134 138 235 707 1,031 446 619 800 1,515 1,816 Malaysia 140 127 190 650 508 296 396 423 501 622 Italy 207 124 32 96 118 17 2 10 - - Other 388 304 152 406 682 480 633 806 713 1,570 Maize 1,969 2,286 2,085 2.969 6,078 5,705 5,676 3,345 4,275 5,643 Japan 878 1,109 899 966 2,653 2,252 2,226 754 1,068 1,140 Taiwan 599 398 570 691 1;39q 355 1,076 804 - 203 Singapore 152 204 278 366 722 1,337 839 420 686 778 Hong Kong 160 178 155 318 384 355 342 382 411 666 Malaysia 130 116 132 248 377 433 296 484 773 1,217 Other 50 281 51 350 603 973 897 501 1,337 1,634 Tin (metal) 1,618 1,569 1,664 2,035 3,096 2.247 2,972 4,541 7,229 9,253 United States 1,104 1,119 1,003 650 775 1,044 1,064 1,491 1,832 3,185 Netherlands 445 405 380 681 1,217 330 983 1,760 3,857 4,341 Japan 69 45 281 492 774 780 925 1,290 1,530 1,727 Other - - - 212 330 93 0 0 10 - Tapioca Products 1,223 1,240 1,547 2.537 3,836 4,597 7,527 7,720 10,892 9,891 Netherlands 723 827 1,190 1,753 2,483 3,664 6,140 6,216 7,053 6,464 Germany, Fed. Rep. 267 126 81 145 167 181 188 345 750 546 United States 113 114 89 102 142 115 121 126 117 97 Japan 78 93 77 183 538 256 293 313 267 243 Other 42 80 110 354 506 381 785 720 2,705 2,541 Kenaf & Jute 719 935 1.087 1.054 845 643 579 418 448 391 Japan 207 188 163 116 103 25 66 78 15 24 Belgium 71 126 90 71 58 34 25 5 8 3 France 56 72 70 56 65 50 37 1 - - United Kindom 54 68 64 25 37 9 10 6 - 4 Germany, Fed. Rep. 23 58 40 21 22 13 12 6 5 7 United States 21 23 19 42 37 34 48 25 40 29 Italy 36 40 10 16 21 8 10 1 2 1 Portugal 21 28 32 21 6 6 4 - - - Spain 42 7 51 53 4 2 17 14 13 9 Poland 20 24 25 22 18 33 19 19 20 9 Other 168 301 523 611 474 429 331 263 345 305 Sugar 94 382 1,264 1,161 3,757 5.696 6,843 7,445 3.969 4,797 Malaysia - 11 240 481 131 633 634 695 418 456 Viet Nam - 111 178 247 - - - - - I Japan 62 69 85 - 2,120 3,098 4,243 2,753 1,532 2,740 United States 32 59 93 60 156 1,041 427 - 267 129 Hong Kong - - 43 - 9 1 1 1 - 38 Other - 76 625 373 1,341 923 1,538 3,996 1,752 1,433 Table 3. Page 2 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 ------------------------------- Thousands of metric tons ----------------- Rice 1.063.6 1,576.1 2,112.1 848.7 1,029.3 951.3 1,973.4 2,946.4 1,606,7 2l96.5, Hong Kong 195.6 210.3 245.2 97.5 113.9 121.8 125.8 113.6 93.0 109.6 Singapore 139.4 202.4 342.2 84.6 86.5 103.6 178.9 220.3 141.4 192.6 Malaysia 127.9 117.5 113.0 38.3 74.3 18.0 120.4 204.6 160.3 103.7 Indonesia 144.0 104.8 164.4 266.9 129.1 11.5 530.2 851.2 170.] 633.2 Saudi Arabia 120.6 95.1 27.3 48.8 73.8 56.5 108.3 26.0 41.4 63.2 India 33.5 78.4 106.6 - - 142.6 0.3 - 0.3 - Philippines 0.1 213.1 310.0 14.0 47.2 74.8 55.9 19.4 - - Sri Lanka 22.8 49.2 - - - 103.7 86.2 163.6 - 1.1. Japan 31.5 30.4 15.6 18.9 23.7 8.4 6.8 42.0 19.0 14.'5 Other 248.1 474.9 787.8 279.7 480.8 310.4 760.6 1,305.7 981.2 1,698.5 Rubber 275.6 307.9 317.7 390.5 362.6 332.2 373.5 401.9 442.2 521.0 Japan 142.8 161.7 189.5 216.1 178.2 185.3 193.3 213.0 246.8 303.4 United States 25.9 34.3 27.4 22.6 23.0 27.7 58.4 55.2 48.5 46.5 Singapore 16.7 22.7 37.8 58.4 72.5 44.3 44.8 53.2 80.3 75.1 Malaysia 17.9 21.7 31.8 53.4 36.0 29.8 29.2 28.2 28.0 27.3 Italy 24.3 19.2 5.7 6.9 7.2 1.7 0.3 0.6 - - Other 48.0 48.3 25.5 33.1 45.7 43.4 46.3 51.7 38.1 67.93 Maize 1,448.0 1,873.5 1,843.6 Li386.4 2,301.6 2,104.7 2,419.2 _L542.0 1,972.4 2,014.0 Japan 649.9 925.3 842.2 468.6 978.4 826.5 989.6 400.0 545.4 468.3 Taiwan 447.3 322.1 502.8 311.2 468.0 119.8 457.9 389.7 - 71.9 Singapore 109.7 169.5 226.0 172.8 351.3 516.4 344.3 176.6 314.8 29Q.3 Hong Kong 112.1 143.8 120.0 147.6 1/9 / 130.8 139.7 158.4 186.6 231.0 Malaysia 92.8 92.8 108.0 121.9 143.3 161.5 120.0 205.2 349.9 411.4 Other 36.2 220.0 44.6 169.3 216.2 349.7 367.7 212.1 575.7 561.5 Tin (metal) 22.2 21.9 21.8 22.7 20.8 16.7 20.0 21.4 28.9 31.3 United States 15.3 15.6 13.2 7.4 5.3 7.8 7.3 7.2 7.2 10.3 Netherlands 6.0 5.6 4.9 7.7 8.0 2.4 6.6 8.2 15.6 14.6 Japan 0.9 0.6 3.7 5.4 5.1 5.8 6.1 6.1 6.1 5.8 Other - - - 2.2 2.4 0.7 - - - Tapioca Products 1,326.9 1,123.2 1311.0 1_,836.5 2,395.7 2,385.4 3,720.7 3_954.4 6,288.0 3,961.2 Netherlands 845.9 816.0 1,068.9 1,360.4 1,732.2 1.968.8 3,173.2 3,299.6 4,208.7 2,404.1 Germany, Fed. Rep. 308.8 125.4 75.8 114.9 116.3 101.3 93.2 186.6 435.9 223.9 United States 76.7 68.9 49.2 48.2 52.8 35.5 35.2 33.6 33.0 20.8 Japan 57.0 59.0 42.6 82.0 187.2 100.5 94.9 97.0 94.3 56.9 Other 38.5 53.8 74.5 231.0 307.2 179.3 320.2 337.6 1,516.1 1,255.5 Kenaf & Jute 257.7 271.7 255.1 264.1 247.0 157.6 138.4 81.2 91.i 79.0 Japan 77.6 52.7 39.6 27.3 32.3 5.8 14.3 13.9 2.9 5.5 Belgium 25.6 37.8 23.6 18.5 17.0 8.3 5.8 1.3 2.1 0.7 France 17.3 21.2 15.6 12.8 16.5 12.3 8.4 0.2 - - United Kindom 18.2 17.4 14.0 6.7 10.4 3.2 2.3 1.2 0.4 1.1 Germany, Fed. Rep. 9.4 19.9 11.6 6.3 7.4 3.6 2.6 1.2 1.2 1.4 United States 11.6 8.5 6.0 15.8 16.2 12.4 15.8 11.2 17.5 10.9 Italy 12.4 12.1 2.5 3.9 6.7 2.2 2.0 0.2 0.4 0.2 Portugal 7.9 7.4 7.2 5.1 1.7 1.5 0.7 - - - Spain 13.4 1.9 11.5 12.0 1.1 0.4 3.5 2.6 2.0 1.5 Poland 6.6 6.4 5.4 5.3 5.0 7.8 4.4 3.6 3.0 1.7 Other 57.7 86.4 118.1 150.4 132.7 100.0 78.6 45.8 61.6 56.0 Sugar 56.2 174.5 407.5 275.4 443.8 595.4 1,124.0 _1,64.6 1,040.1 1,189.8 Malaysia - 5.1 78.8 112.5 26.2 69.6 110.7 173.7 108.4 123.3 Viet Nam - 55.3 48.7 54.2 - - - - - 0.2 Japan 38.0 32.9 37.4 - 244.5 318.4 693.1 627.1 411.4 657.9 United States 18.2 21.0 30.2 17.8 23.7 118.6 66.7 - 65.0 33.8 Hong Kong - - 16.3 - 2.7 0.5 0.6 0.7 0.1 9.2 Other - 34.6 196.1 91.0 146.7 88.3 252.9 853.1 455.2 365.5 /a Preliminary. Source: Department of Customs. - 154 - Table 3.6: MERCHANDISE IMPORTS (Millions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Capital Goods 9.371 8.628 9,783 12.826 19.808 22,239 19.405 24.393 31,317 39,835 Machinery and parts 6,142 5,770 6,420 8,2L5 13,458 14,703 12,946 L6,147 21,730 25,94L Nonelectrical (4,723) (4,558) (5,087) (6,386) (10,978) (11,973) (9,861) (12,592) (15,894) (18,627) glectrical (1,419) (1,212) (1,333) (1,829) (2,480) (2,730) (3,085) (3,555) (5,836) (7,314) Metal manufactures 1,047 860 1,003 1,019 1,398 1,544 1,436 1,887 2,272 2,986 Fertilizers and pesticides 582 503 877 1,142 1,710 1,933 1,861 2,736 2,937 3,948 Scientific and optical instruments 415 421 465 541 694 742 831 1,074 1,365 1,692 Construction material /a 185 109 91 105 223 144 160 198 587 1,731 Other 1,000 965 927 1,804 2,325 3,173 2,171 2,351 2,426 3,537 Intermediate Products & Raw Materials 6,725 7,764 9_131 13,621 18,370 16,105 20.219 26,921 29,598 43_462 Chiefly for consumer goods 4,139 4,996 5,880 8,538 11,345 10,318 12,530 16,060 16,937 26,086 Chemicals (1,962) (2,293) (2,713) (4,136) (5,893) (5,522) (6,795) (8,363) (9,573) (14,848) Textile fibres (602) (849) (1,046) (1,749) (1,878) (1,902) (2,475) (3,134) (2,236) (3,183) Paper and paperboard (509) (558) (504) (781) (970) (935) (988) (1,206) (1,356) (1,921) Tobacco (279) (507) (588) (382) (628) (693) (539) (896) (730) (811) Textile yarn and thread (435) (406) (503) (725) (696) (393) (459) (366) (441) (729) Other (352) (383) (526) (765) (1,280) (873) (1,274) (2,095) (2,601) (4,594) Chiefly for capital goods 2,586 2,768 3,251 5,083 7,025 5,787 7,686 10,861 12,661 17,376 Iroa and steel (1,647) (1,704) (2,046) (3,037) (4,322) (3,236) (4,669) (6,352) (7,765) (10,029) Other base metals (813) (854) (1,043) (1,838) (2,400) (2,131) (2,301) (3,454) (3,842) (6,104) Other (126) (210) (162) (208) (303) (420) (716) (1,055) (1,054) (1,243) CDnsumer Goods 5,229 4,390 ._295 6.311 7,955 8,455 9,418 151114 12,942 92 Nondurable goods 3,486 2,859 3,291 4,066 5,167 5,148 5,586 6,346 7,544 9,327 Food and beverages (1,114) (1,044) (1,224) (1,403) (1,851) (2,005) (2,377) (2,644) (3,104) (4,266) Clothing and footwear (1,427) (909) (966) (1,345) (1,695) (1,585) (1,475) (1,658) (2,122) (2,224) Medicinal & pharmaceutical products (741) (715) (859) (977) (1,208) (1,198) (1,280) (1,511) (1,615) (1,937) Other (204) (191) (242) (341) (413) (360) (454) (533) (703) (900) Durable goods 1,743 1,531 1,659 2,245 2,828 3,307 3,832 4,768 5,398 6,665 Household goods (506) (534) (627) (722) (902) (969) (1,117) (1,348) (1,616) (2,012) Electric appliances (637) (503) (581) (874) (994) (1,054) (1,312) (1,655) (2,045) (2,463) Cycles, motorcycles, carts (305) (237) (246) (405) (591) (810) (919) (1,257) (1,037) (933) Other (295) (257) (205) (244) (341) (474) (484) (508) (700) (1,257) Other Imports 5,684 6,012 7_Q.l 9,426 17.871 20,036 23.838 31,749 35,042 46,841 Fuels and lubricants 2,329 2,721 3,115 4,661 12,571 14,233 16,695 20,889 22,851 32,650 Vehicles and parts 2,204 2,191 2,213 3,399 4,182 4,542 5,174 7,958 7,550 7,030 Other /b 1,151 365 L,683 1,366 1,118 L,261 1,969 2,902 4,641 7,161 Total Imports 27,009 26, 794 3 42,184 64,044 66,835 72,877 94.177 108,899 146,130 Adjustment for B/P /c -494 -554 -559 -492 -739 -2,309 -1,431 -1,094 -1,187 -1,682 Gold imports -108 -26 - - - - - -57 -834 -471 Thai military imports /d - 392 126 363 - - - 416 1,691 5,625 Other imports /d - - 193 - - - - 2,563 1,382 3,827 Merchandise imports, c.i.f. 26.407 26,606 30_635 42,055 63,305 64,526 71.446 96,005 109.951 153_429 /a Including cement. /b Including gold bullion imports /c Diplomatic shipments, personal effects, temports, etc. /7d Not included in customs return, e.g. aircraft for Thai International Source: Bank of Thailand. Table 3.7: FINANCING OF MERCHANDISE IMPORTS (Millions of US dollars) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979p Imports under grants 33.3 25.9 21.1 19.0 17.6 17.7 12.7 11.4 22.9 20.5 US grants 17.9 14.5 12.5 9.1 6.8 4.7 3.0 0.9 3.5 3.1 UN & other special- ized agencies 11.8 6.8 6.1 5.6 8.7 9.3 5.6 4.7 8.5 6.7 Colombo Plan 3.6 4.6 2.5 4.3 2.1 3.7 4.1 5.8 10.9 10.6 Impprts under project loans 42.4 35.1 55.3 68.9 145.8 147.3 246.9 322.2 661.0 L077.9 Official 42.1 34.5 47.6 59.6 88.0 130.7 220.0 305.9 585.5 1,057.1 Private 0.3 0.6 7.7 9.3 57.8 16.6 26.9 16.3 75.5 20.8 Imports under suppliers' credits 175.0 139.2 103.2 67.9 129.3 110.3 71.4 80.0 59.9 111.0 Official /a 16.4 7.4 0.7 0.7 - - - 1.7 - - Private: 158.6 131.8 102.5 67.2 129.3 110.3 71.4 78.3 59.9 111.0 Machinery & parts 88.8 55.0 51.8 53.0 110.1 88.3 50.3 48.2 35.3 93.1 (of which: weaving machinery) (50.9) (38.9) (37.8) (25.1) (61.0) (57.4) (40.3) (3.6) (2.4) (32.2) Cars, buses and trucks 48.9 31.9 29.8 7.4 8.2 9.3 5.8 5.0 6.1 4.6 1 Tractors, rollers, graders 6.0 5.0 5.0 3.1 5.2 7.8 9.3 20.5 15.1 10.2 . Other 14.9 39.9 15.9 3.7 5.8 4.9 6.0 4.6 3.4 3.1 @ Imports under foreign investment 0.5 0.5 0.1 - 0.1 - - - - - Imports induced by US military expenditures 106.5 96.3 112.8 109.7 90.3 70.3 20.2 - 0.1 1.1 Direct 20.0 18.1 21.2 20.6 17.0 13.2 3.8 - - 0.2 Indirect 86.5 8.2 91.6 89.1 73.3 57.1 16.4 - 0.1 0.9 Imports not subjected to foreign exchange payments 23.8 26.6 26.9 24.3 37.0 115.4 71.5 54.7 58.1 82.2 Subtotal 381.5 323.6 319.4 289.8 420.1 461.0 422.7 468.3 802.0 1,292.7 Imports financed by own resources 917.0 964.6 1,165.0 1,784.0 2,782.1 2,880.8 3,221.1 4,389.5 4,703.0 6,327.9 Total Imports 1,298.5 1,288.2 1,484.4 2,073.8 3,202.2 3,341.8 3,643.8 4,859.8 5,505.0 7.620.6 /a Including local governments. Source: Bank of Thailand. - 156 - Table 3.8: MERCHANDISE IMPORTS BY COUNTRIES 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 ------------------------ Millions of baht ------------------------------------- Japan 10,107 10,093 11,401 15,078 20,102 21,085 23,649 30,469 33,461 37,636 United States 4,011 3,807 4,838 5,915 8,642 9,566 9,739 11,570 14,831 22,754 Germany, Fed. Rep. 2,288 2,075 2,279 3,211 4,676 .3,482 3,469 5,194 6,300 7,936 United Kingdom 2,014 2,054 1,620 2,715 2,970 3,032 2,623 3,808 4,164 4,708 Australia 852 864 981 1,392 1,904 1,536 1,560 1,882 2,457 3,268 Saudi Arabia 536 752 967 982 3,062 6,012 5,538 7,789 6,076 9,403 Taiwan 603 747 1,058 1,383 1,541 1,608 1,759 2,336 3,690 4,027 Italy 488 428 475 601 1,105 1,226 940 1,184 1,305 2,182 Netherlands 368 316 349 508 743 681 815 1,189 1,314 1,749 Hong Kong 374 314 417 589 867 640 756 1,086 1,230 1,546 Other 5,368 5,344 6,490 9,810 18,432 17,967 22,029 27,670 34,071 50,952 Total Mechan- dise Imports 27,009 26,794 30,875 42,184 64,044 66,835 72,877 94,177 108,899 146,161 -----------------------Percentage of total ------------------------------------ Japan 37.4 37.7 36.9 35.8 31.4 31.6 32.5 32.4 30.7 25.7 United States 14.8 14.2 15.7 14.0 13.5 14.3 13.4 12.3 13.6 15.6 Germany, Fed. Rep. 8.5 7.7 7.4 7.6 7.3 5.2 4.8 8.5 5.8 5.4 United Kingdom 7.5 7.7 5.3 6.4 4.6 4.5 3.6 4.0 3.8 3.2 Australia 3.2 3.2 3.2 3.3 3.0 2.3 2.1 2.0 2.3 2.2 Saudi Arabia 2.0 2.8 3.1 2.3 4.8 9.0 7.6 8.3 5.6 6.4 Taiwan 2.2 2.8 3.4 3.3 2.4 2.4 2.4 2.5 3.4 2.8 Italy 1.8 1.6 1.5 1.4 1.7 1.8 1.3 1.2 1.2 1.5 Netherlands 1.4 1.2 1.1 1.2 1.2 1.0 1.1 1.2 1.2 1.2 Hong Kong 1.4 1.2 1.4 1.4 1.3 1.0 1.0 1.1 1.1 1.1 Other 19.8 19.9 21.0 23.3 28.8 26.9 30.2 29.4 31.3 34.9 /a Preliminary. Source: Bank of Thailand. Table 3.9: SERVICES (Millions of baht) 1970 1971 1972 1973 L974 1975 1976 1977 1978 1979/c Receipts 10,094.8 9,899.6 11,322.7 12,723.1 15,34.2 16.551.6 13,993.3 14,771.7 22,123.9 29,815.7 Freight & insurance on merchandise 313.4 494.2 639.0 925.5 1,453.7 1,229.3 1,604.9 1,730.1 2,144.1 2,593.6 Other transportation 298.6 330.8 455.9 513.7 1,200.1 1,269.0 1,131,3 1,468.6 1,384.9 2,343.3 Travel 2,170.0 2,208.9 2,718.0 3,393.8 3,B05.1 4,482.2 3,990.0 4,606.9 8,894.5 11,232.1 R & R /a (389.8) (239.7) (62.8) (13-3) (10.9) (-) (-) (-) (-) (-) Other /b (1,780.2) (1,969.2) (3,380.5) (3,794.2) (4,482.2) (3,482.2) (3,990.0) (4,606.9) (8,894.5) (11,232.1) Investment income 1,636.6 1,423.2 1,206.7 1,448.1 2,919.6 3,887.0 3,145.8 3,036.1 3,366.5 4,227.8 Government, n.i.e. 4,839.8 4,514.2 5.262.5 5,034.3 4,238.3 3,519.8 2,052.9 1,081.4 1,336.2 2,206.4 Other 836.4 928.1 1,040.6 1,407.7 2,017.4 2,164.3 2.069.3 2,848.6 4,997.7 7,212.5 Workers' remittances (24.9) (35.7) (29.4) (113.5) (265.0) (375-3) (485.1) (911.7) (2,111.6) (3,818.3) Payments 4,058.6 4,495.5 4,739.7 5,886.7 8,033.5 10,390.8 12,350.8 12,366.5 17,844.8 26,041.7 Freight & insurance on merchandise 202.9 338.7 431.9 504.1 1,005.0 822.0 1,039.9 1,289.5 1,720.8 2,078.8 Other transportation 186.4 202.8 204.5 386.7 749.0 643.5 544.5 690.0 974.4 1,635.9 Travel 1,267.4 1,294.5 1,286.8 1,449.4 1,634.0 2,735.3 3,881.3 3,183.7 3,579.0 4,647.9 @ Investment income 1,257.3 1,393.8 1,534.0 1,872.4 2,933.9 3,775.9 3,993.3 4,513.5 8,178.2 13,439.9 Government, n.i.e. 395.3 399.0 336.8 444.8 318.5 303.7 457.2 448.4 523.0 563.8 Other 749.3 866.7 945.7 1,229.3 1,393.1 2,110.4 2,380.6 2,234.4 2,869.4 7,675.4 Net Services 6,036.2 5,404.1 6,583.0 6,836.4 7,600.7 6,160.8 1,642.5 2,405.2 4,279.1 3,774.0 Freight & insurance on merchandise 110.5 155.5 207.1 421.4 448.7 407.3 510.1 440.6 423.3 314.8 Other transportation 112.2 128.0 251.4 127.0 451.1 625.5 586.8 778.6 410.5 707.4 Travel 902.6 914.4 1,431.2 1,944.4 2,171.1 1,746.9 108.7 1,423.2 5,315.5 6,584.2 Investment income 379.3 29.6 -327.3 -424.3 -14.3 111.1 -847.5 -1,479.4 -4,811.7 -9,212.1 Government, n.i.e. 4,444.5 4,115.2 4,925.7 4,589.5 3,919.8 3,216.1 1,595.7 633.0 813.2 1,642.6 Other 87.1 61.4 94.9 178.4 624.3 53.9 -311.3 609.2 2,128.3 3,537.1 /a Estimated expenditures of US soldiers on rest and recreation leave. /b Estimated expenditures of other tourists made by the Tourist Organization of Thailand. /c Preliminary. Source: Bank of Thailand. Table 3.10: INVESTMENT INCOME (Millions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 ., Receipts 1,636.6 1,423.4 1,206.7 1,448.1 2,919.6 3,887.0 3,145.8 3,036.1 3,366.5 4,227.8 Private sector 104.2 12.55 126.3 198.1 508.5 468.8 508.3 482.0 431.5 743.5 Interest 63.1 64.1 50.2 87.4 285.6 285.5 229.0 193.7 166.0 336.0 Profits of branches 38.9 59.1 69.6 108.8 222.2 181.6 278.6 286.0 261.1 402.6 Other 2.2 2.3 6.5 1.9 0.7 1.7 0.7 2.3 4.4 4.9 Public sector 1,532.4 1,297.9 1,080.4 1,250.0 2,411.1 3,418.2 2,637.5 2,554.1 2,935.0 3,484.3 Interest 1,532.4 1,297.9 1,080.4 1,250.0 2,411.1 3,418.2 2,637.5 2,554.1 2,935.0 3,484.3 Payments 1,257.3 1,393.8 1.534.0 1,872.4 2,933.9 3,775.9 3,993.3 4,515.5 8.178.2 13,517.1 Private sector 962.8 1,086.3 1,114.9 1,349.9 2,350.2 3,045.2 3,058.6 3,198.7 5,938.6 10,009.8 Interest /a 378.2 477.6 510.1 663.7 1,391.6 1,587.1 1,409.5 1,512.0 4,181.5 7,998.7 Profits of branches 404.9 383.7 355.5 330.5 428.8 690.3 629.3 654.0 540.5 731.8 Dividends 170.9 200.9 210.0 315.0 474.0 719.9 983.5 983.7 1,120.3 1,240.4 Other 8.8 24.1 39.3 40.7 55.8 47.9 36.3 49.0 90.3 38.9 u Public sector 294.5 307.5 419.1 522.5 583.7 730.7 934.7 1,316.8 2,245.6 3,507.3 Interest /a 294.5 307.5 419.1 522.5 583.7 730.7 934.7 1,316.8 2,245.6 3,507.3 - Central Government (244.5) (238.4) (352.9) (426.2) (478.4) (481.0) (386.0) (601.8) (941.0) (1,813.9) - State enterprises (50.0) (65.1) (59.6) (91.8) (102.1) (247.8) (548.2) (715.0) (1,304.6) (1,693.8) - Local Government (-) (4.0) (6.6) (4-5) (3.2) (1.9) (0.5) (-) (-) (-) Net Investment Income 379.3 29.6 -327.3 -424.3 -14.3 111.1 -847.5 -1,479.4 -4,811.7 -9.289.3 Private sector -858.6 -960.8 -988.6 -1,151.8 -1,841.7 -2,576.4 -2,550.3 -2,716,7 -5,501.1 -9,266.3 Public sector 1,237.9 990.4 661.3 727.5 1,827.4 2,687.5 1,702.8 1,237.3 689.4 -2.3 /a Excluded interest on suppliers' credits, information on which is not available. lb Preliminary. Source: Bank of Thailand. Table 3.11: GOVERNMENT, n.i.e. (Millions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Receipts 4,839.8 4,514.2 5_,2625 5.034.3 4.238.3 3,519.8 2,052.9 1,081.4 1,336.2 2,206.4 Military 4,192.6 3,788.7 4,413.2 4,210.3 3,393.4 2 643.7 763.2 4.6 5.7 42.8 US military person- nel and agencies (4,159.4) (3,755.1) (4,398.2) (4,130.5) (3,373.5) (3,601.7) (2,601.7) (3.1) (5.7) (41.5) US contractors for military projects (4.6) (11.0) (12.7) (74.2) (19.6) (40.8) (1.2) (0.8) (-) (-) Other military (28.1) (22.6) (2.3) (5.6) (0.3) (1.2) (1.0) (0-7) (-) (-) Nonmilitary 647.7 725.5 849.3 844.9 876.1 1,844.9 876.1 1,076.8 1,330.5 2,163.6 Payments 395.3 399.0 336.8 444.8 318.5 303.7 457.2 448.4 523.0 563.8 Military 14.9 24.8 2.0 4.0 0.2 0.2 - 28.6 95.3 182.2 Nonmilitary 380.4 374.2 334.8 440.8 315.3 303.5 457.2 419.8 427.7 381.6 Services under ai1 programs (193.0) (162.7) (106.2) (113.3) (43.4) (25.3) (17.9) (19.0) (19.9) (13.6) Other (187.4) (211.5) (228.6) (327.5) (271.9) (278.2) (439.3) (400.8) (407.8) (368.0) Net Government, n.i.e. 4,444.5 4,115.2 4,925.7 4,589.5 3,919.8 3,216.1 1,595.7 633.0 813.2 1,642.6 Military 4,177.2 3,763.9 4,411.2 4,206.3 3,390.2 2,643.5 763.2 -24.0 -79.6 -139.4 Nonmilitary 267.3 351.3 514.5 383.2 529.6 572.6 832.5 657.0 898.8 1,782.0 /a Preliminary. Source: Bank of Thailand. Table 3.12: TRANSFERS (Millions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979Ab Private transfers 57.4 131.1 630.7 2,398.9 4,375.6 1,134.5 100.8 443.3 128.0 487.0 Inflow 203.7 280.1 761.1 2,528.7 4,527.5 1,323.2 331.0 675.0 371.4 755.2 Outflow 146.3 149.0 130.4 129.8 151.9 188.7 230.2 231.7 243.4 268.2 Government transfers 954.3 773.0 608.1 569.9 541.3 497.6 363.7 358.6 688.0 768.8 US grants 613.0 519.0 417.9 356.3 228.9 166.3 105.8 53.8 107.3 93.5 Other grants /a 320.2 238.3 179.9 201.3 215.8 258.7 193.6 210.0 394.5 352.6 Other (net) 21.1 15.7 10.3 12.3 96.6 72.6 64.3 94.8 186.2 322.7 Total transfers a (net) 1,011.7 904.1 1,238.8 2,968.8 4,916.9 1,632.1 464.5 801.9 816.0 1,255.8 C /a Breakdown by countries not available lb Preliminary. Source: Bank of Thailand. - 161 - Table 3.13 Page 1 Table 3.13: CAPITAL MOVEMENTS (Millions of baht) 1970 1971 Credit Debit Net Credit Debit net A. Private Medium- & Long-term 5,329.1 3,186.5 2,142.6 5,041.4 3,733.1 1,308.3 1. Direct investment 1,014.1 123.6 890.5 1,027.8 219.4 808.4 1.1 Equity capital (685.3) (23.7) (661.6) (793.1) (101.1) (692.0) 1.2 Loans (328.8) (99.9) (228.9) (234.7) (118.3) (116.4) 2. Loans to private enterprises 736.6 515.6 221.0 1,100.3 1,036.7 63.6 3. Suppliers' credits to private enterprises 3,298.9 2,512.2 786.7 2,742.4 2,409.0 333.4 4. Portfolio investment 272.1 35.1 237.0 168.5 68.0 100.5 5. Other 7.4 - 7.4 2.4 - 2.4 B. Public Medium- & Long-term 1,314.2 1,156.4 157.8 1,356.2 970.5 385.7 1. Loans to state enterprises 138.2 249.1 -110.9 218.0 238.0 -20.0 2. Suppliers' credits to state enterprises 289.1 87.5 201.6 153.7 73.5 80.2 3. Loans to the Centeral Governemt 833.8 388.7/a 445.1 579.5 273.2/a 306.3 4. Other Central Gov't - 431.1 -431.1 341.4 373.1 -31.7 4.1 Import credits (-) (35.4) (35.4) (-) (-) (-) 4.2 Export credits (-) (-) () () (-259.4) (-259.4) 5. Suppliers' credits to local Governments 53.1 - 53.1 63.6 12.7 50.9 C. Total Medium- & Long-term 6,643.3 4,342.9 2,300.4 6,397.6 4,703.6 1,694.0 D. Short-term /b 607.0 428.6 178.4 605.9 566.8 39.1 1. Private 586.2 402.8 183.4 483.1 328.3 154.8 1.1 Trade credits (586.2) (402.8) (183.4) (483.1) (328.3) (154.8) 2. Public 20.8 25.8 -5.0 122.8 238.5 -115.7 E. Total Capital Movements 7,J250.3 4,771.5 2,478.8 7,003.5 5,270.4 1,733.1 /a Including Bank of Thailand participation in IBRD Loans (Sirikit Dam and Third High- way Project) of B 357.3 million in 1969, B 236.4 million in 1970, B 98.6 million in 1971 and B 44.3 million in 1972. /b Less than one year. Source: Bank of Thailand. - 162 - Table 3.13 Page 2 1972 1973 Credit Debit Net Credit Debit Net A. Private Medium- & Long-term 6,640.5 3,543.0 3,097.5 5,332.5 4,704.8 617.7 1. Direct investment 1,553.9 126.8 1,427.1 2,172.0 567.1 1,604.9 1.1 Equity capital (1,165.7) (11.0) (1,154.7) (1,408.8) (33.0) (1,375.8) 1.2 Loans (388.2) (115.8) (272.4) (763.2) (534.1) (229.1) 2. Loans to private enterprises 2,622.7 1,142.0 1,480.7 1,516.4 2,030.4 -514.0 3. Suppliers- credits to private enterprises 2,132.6 2,220.8 -88.2 1,370.0 2,055.0 -685.0 4. Portfolio investment 330.7 53.4 277.3 263.0 52.0 211.0 5. Other 0.6 - 0.6 1.1 0.3 0.8 B. Public Medium- & Long-term 1,287.3 1,120.5 166.8 1,750.8 723.3 1,027.5 1. Loans to state enterprises 661.0 261.4 399.6 763.8 319.5 444.3 2. Suppliers credits to state enterprises 13.9 75.2 -61.3 13.5 85.1 -71.6 3. Loans to the C-ntral Government 437.8/b 223.1/a 214.7 610.1/b 222.9 387.2 4. Other Central Gov't 174.6 535.4 -360.8 363.4 70.3 293.1 4.1 Import credits (-) (-) (-) (-) (-) (-) 4.2 Export credits (-) (-) (-) (-) () () 5. Suppliers' credits to local Governments - 25.4 -25.4 - +25.5 -25.5 C. Total Medium- & Long-term 7,927.8 4,663.5 3,264.3 7,073.3 5,428.1 1,645.2 D. Short-term /c 634.7 255.8 378.9 4,285.6 2,993.2 1,292.4 1. Private 544.8 235.7 309.1 4,285.6 2,993.2 1,292.4 1.1 Trade credits (544.8) (235.7) (309.1) (4,285.6) (2,993.2) (1,292.4) 2. Public 89.9 20.1 69.8 - - - E. Total Capital Movements 8,562.5 4,919.3 3,643.2 11,358.9 8,421.3 2,937.6 /a Including Bank of Thailand participation in IBRD Loans (Sirikit Dam and Third High- way Project) of B 357.3 million in 1969, B 236.4 million in 1970, B 98.6 million in 1971 and B 44.3 million in 1972. /b Including refund from Bank of Thailand participations in IBRD Loans (Third Highway Projects) of B 1.4 million in 1972, B 18.9 million in 1973 and B 30.9 million in 1974. /c Less than one year. Source: Bank of Thailand. - 163 - Table 3 13 Page 3 1974 1975 Credit Debit Net Credit Debit Net A. Private Medium- & Long-term 11,593.1 4,923.1 6,669.7 9,567.0 6,471.0 3,096.0 1. Direct investment 4,683.3 847.0 3,836.3 3,391.4 1,646.6 1,744.8 1.1 Equity capital (3,026.3) (289.0) (2,737.2) (1,654.1) (358.0) (1,296.1) 1.2 Loans (1,657.1) (558.0) (1,099.1) (1,737.3) (1,288.6) (448.7) 2. Loans to private enterprises 4,073.3 2,012.3 2,061.1 3,907.0 2,726.3 1,180.7 3. Suppliers' credits to private enterprises 2,586.9 2,010.9 576.0 2,205.6 2,069.6 136.0 4. Portfolio investment 248.5 53.3 195.2 55.9 28.5 27.4 5. Other 1.1 - 1.1 7.1 - 7.1 B. Public Medium- & Long-term 1,986.0 732.3 1,253.7 2,986.1 927.7 2,058.4 1. Loans to state enterprises 1,586.8 314.4 1,272.4 2,739.1 451.0 2,288.1 2. Suppliers- credits to state enterprises 0.2 98.7 -98.5 - 85.1 -85.1 3. Loans to the Central Government 399.0/a 272.6 126.4 213.2/a 318.2 -105.0 4. Other Central Gov't - 22.5 -22.5 33.8 50.4 -16.6 4.1 Import credits (-) (-) (-) (-) (-) (-) 4.2 Export credits (-) (-) (-) (32.2) (-) (32.2) 5. Suppliers' credits to local Governments - 24.1 -24.1 - 23.0 -23.0 C. Total Medium- & Long-term 13,579.1 5,655.7 7,923.4 12,553.1 7,398.7 5,154.4 D. Short-term /b 9,835.8 8,704.5 1,131.3 12,893.0 10,292.7 2,600.3 1. Private 9,835.8 8,704.5 1,131.3 12,893.0 10,292.7 2,600.3 1.1 Trade credits (9,835.8) (8,704.5) (1,131.3)(12,694.2)(10,292.7) (2,410.8) 2. Public - - - - - - E. Total Capital Movements 23,414.9 14,360.2 9,054.7 25,446.1 17,691.4 7,754.7 /a Including refund from Bank of Thailand-s participation in IBRD Loans (Third Highway Projects) of B 1.4 million in 1972, B 18.9 million in 1973, B 30.9 million in 1974, B 47.1 million in 1975, B 40.6 million in 1976 and B 42.2 million in 1977. /b Less than one year. Source: Bank of Thailand. - 164 - Table 3.13 Page 4 1976 1977 Credit Debit Net Credit Debit Net A. Private Medium- & Long-term 8,834.7 6,552.8 2,281.9 10,646.1 7,511.6 3,134.5 1. Direct investment 3,063.9 1,449.8 1,614.1 4,286.0 2,122.2 2,163.8 1.1 Equity capital (1,565,5) (238.7) (1,326.8) 1,325.3 209.2 1,116.1 1.2 Loans (1,498.4) (1,211.1) (287.3) 2,960.7 1,913.0 1,047.7 2. Loans to private enterprises 4,277.0 2,961.0 1,316.0 4,620.6 3,291.0 1,329.6 3. Suppliers' credits to private enterprises 1,428.1 2,054.8 -626.7 1,565.1 2,027.5 -462.4 4. Portfolio investment 65.7 87.2 -21.5 71.4 69.9 1.5 5. Other - - - 103.0 1.0 102.0 B. Public Medium- & Long-term 5,152.7 949.5 4,203.2 7,396.1 1,790.2 5,606.0 1. Loans to state enterprises 2,423.4 500.9 1,922.5 5,465.1 648.3 4,816.8 2. Suppliers' credits to state enterprises - 83.2 -83.2 33.8 83.3 -49.5 3. Loans to the Central Government 2,504.2/a 347.0 2,157.2 1,372.7/a 601.9 770.8 4. Other Central Gov't 225.1 5.3 219.8 524.6 456.7 +69.9 4.1 Import credits (-) (-) (-) (447.1) (447.1) () 4.2 Export credits (73.9) (-) (83.9) (74.0) (-) (74.0) 5. Suppliers' credits to local Governments - 13.1 -13.1 - - - C. Total Medium- & Long-term 13,987.4 7,502.3 6,485.1 18,042.3 9,301.8 8,740.5 D. Short-term /b 16,979.6 14,201.1 2,778.5 21,105.8 15,879.4 5,226.4 1. Private 16,979.6 14,201.1 2,778.5 21,105.8 15,879.4 5,226.4 1.1 Trade credits 16,477.2)(14,201.1) (2,276.1)(20,248.6)(15,879.4) (4,369.2) 2. Public - - - - - E. Total Capital Movements 30,967.0 21,703.4 9,263.6 39,148.1 25,181.2 13,966.9 /a Including refund from Bank of Thailand's participation in IBRD Loans (Third Highway Projects) of B 1.4 million in 1972, B 18.9 million in 1973, B 30.9 million in 1974, B 47.1 million in 1975, B 40.6 million in 1976 and B 42.2 million in 1977. /b Less than one year. Source: Bank of Thailand. - 165 - Table 3.13 Page 5 1978 1979 Credit Debit Net Credit Debit Net A. Private Medium- & Long-term 16,749.9 14,850.8 1,899.1 26,324.3 16,816.3 +9,508.0 1. Direct investment 6,364.8 5,354.0 1,010.8 5,999.5 4,951.8 +1,047.7 1.1 Equity capital (1,111.8) (427.0) (+684.8) (1,412.7) (227.6)(+1,185.1) 1.2 Loans (5,253.0) (4,927.0) (+326.0) (4,586.8) (4,724.2) -137.4) 2. Loans to private enterprises 8,908.3 7,587.4 1,320.9 15,899.3 9,831.2 +6,068.1 3. Suppliers credits to private enterprises 1,218.2 1,849.8 -631.6 2,266.9 2,020.5 +246.4 4. Portfolio investment 184.0 59.6 124.4 2,144.1 12.8 +2,131.3 5. Other 74.6 - +74.6 14.5 - +14.5 B. Public Medium- & Long-term 13,392.0 2,129.0 11,263.0 24,067.5 3,400.3 +20,667.2 1. Loans to state enterprises 6,24713 982.2 5,264.9 13,862.9 1,628.9 +12,234.0 2. Suppliers' credits to state enterprises 1.4 95.5 -94.1 - 90.3 90.3 3. Loans to the Central Government 7,024.7/a 984.9 6,057.8 10,123.3/a 1,232.5 +8,890.8 4. Other Central Gov't 100.8 60.1 40.7 81.3 448.6 -367.3 4.1 Import credits (-) (-) (-) (-) (-) (-) 4.2 Export credits (74.2) (-) (74.2) (81.3) (-) (+81.3) 5. Suppliers' credits to local Governments - 6.3 -6.3 - - - C. Total 'Medium- & Long-term 30,141.9 16,979.8 13,162.1 50,391.8 20,216.6 +30,175.2 D. Short-term /a 24,331.1 22,634.9 1,696.2 32,847.4 29,253.4 +3,594.0 1. Private 24,331.1 22,634.9 1,696.2 32,695.3 29,125.8 +3,569.5 1.1 Trade credits (22,986.8)(22,632.4) (+354.4)(31,049.8)(29,024.2)(+2,025.6) 2. Public - - - 152.1 127.6 +24.5 E. Total Capital Movements 54,473.0 39,614.7 14,858.3 83,239.2 49,470.0 +33,769.2 /a Including refund from Bank of Thailand's participations in IBRD loans (Third Highway Projects) of B 45.9 million in 1978 and B 34.6 million in Jan-Sep 1979. /b Less than one year. Source: Bank of Thailand. - 166 - Table 3.14: INTERNATIONAL RESERVES (Millions of US dollars) Monetary authorities Commercial banks IMF gold End of tranche Foreign Liabil- period Gold SDRs position exchange Total Assets ities /a Net Total net Change 1960 104.3 - 11.3 256.0 371.6 35.4 53.0 -17.6 354.0 +44.9 1961 104.2 - 11.3 338.9 454.4 45.5 67.3 -21.8 432.6 +78.6 1962 104.2 - 11.3 407.9 523.4 43.9 72.4 -28.5 494.9 +62.3 1963 104.2 - 11.3 460.6 576.1 57.4 93.0 -35.6 540.5 +45.6 1964 104.2 - 11.3 544.8 660.3 66.3 117.0 -50.7 609.6 +69.1 1965/a 96.4 - 19.0 623.9 739.3 82.9 117.2 -34.3 705.0 +95.4 1966 91.7 - 23.8 808.1 923.6 95.0 154.7 -59.7 863.9 +158.9 1967 91.7 - 23.8 893.0 1,008.5 76.7 168.8 -92.1 916.4 +52.5 1968 91.7 - 23.8 905.5 1,021.0 108.0 191.0 -83.0 938.0 +21.6 1969 91.7 - 23.8 869.4 984.9 129.1 220.0 -90.9 894.0 -44.0 1970 82.0 - 33.5 790.3 905.8 126.0 265.3 -139.3 766.5 -127.5 1971/b 81.9 14.3 36.4 736.1 877.0 181.8 281.8 -100.0 765.8 +10.5 1972 88.9 31.0 36.4 896.2 1,052.5 213.2 301.9 -83.7 968.8 +191.8 1973kc 98.8 34.4 40.4 1,121.6 1,295.2 274.9 488.1 -213.2 1,082.0 d +113.2 1974/e 100.3 36.2 41.0 1,680.9 1,858.4 279.7 573.9 -294.2 1,564.2 +482.2 1975 95.9 34.6 39.2 1,605.4 1,775.1 257.9 664.2 -406.3 1,368.8 -195.4 1976 95.2 33.6 38.9 1,725.2 1,892.9 344.5 753.0 -408.5 1,484.4 +115.6 1977 101.9 37.1 40.7 1,735.2 1,914.9 435.5 1,131.0 -695.5 1,214.4 -265.9 1978/f 548.3 34.6 - 1,974.4 2,557.3 513.5 1,776.9 -1,263.4 1,293.9 +74.5 1979 1,286.2 48.8 - 1,794.0 3,129.0 718.2 2,098.1 -1,379.9 1,749.1 +455.2 /a Starting with 1965, figures for commercial banks' liabilities exclude capital funds of branches of foreign banks. /b Beginning December 1971, gold, SDRs and IMF gold tranche position are valued at US$38 per fine ounce and foreign currencies are converted to dollars at realigned rates. /c From February 1973, gold, SDRs and IMF gold tranche position are valued at US$42.22 per fine ounce and foreign currencies are converted to dollars at newly realigned rates. /d Of total net increase of US$113.2 million in 1973, US$76 million was due to revaluation of reserve assets after exchange rate changes. /e Beginning July 1974, gold, SDRs and IMF gold tranche position are valued at the respective US$/SDR transaction value, as measured by the "basket" valuation of the SDR. Foreign curren- cies are valued at end-of-month market rates. /f Beginning December 1978, gold holdings are revalued monthly on the basis of the London gold price on the last working day of each month. Source: Bank of Thailand. - 167 - Table 3.15: TRADE INDICES & TERMS OF TRADE (1975 = 100) Terms Exports Imports of Period Volume Unit value Value Volume Unit value Value trade (1) (2) (3) (4) (5) (6) (7) 1966 59.94 52.27 31,33 58.86 47.05 27.69 111.09 1967 60.72 51.85 31.48 70.84 46.87 33.20 110.63 1968 58.74 51.74 30.39 80.66 44.71 36.06 115.72 1969 61.04 53.54 32.68 88.66 43.82 38.85 122.18 1970 64.71 50.72 32.82 91.14 44.34 40.41 114.39 1971 84.23 45.58 38.39 76.72 52.26 40.09 87.22 1972 99.80 50.06 49.96 88.83 52.01 46.20 96.25 1973 93.27 76.78 71.61 109.85 57.46 63.12 133.62 1974 104.39 105.99 110.64 101.67 94.25 95.82 112.46 1975 100.00 100.00 100.00 100.00 100.00 100.00 100.00 1976 138.86 97.26 135.06 103.40 105.46 109.04 92.22 1977 159.14 99.40 158.19 124.24 113.42 140.91 87.64 1978 171.83 107.41 184.56 133.23 122.30 162.94 87.83 1979 184.67 130.16 240.36 151.13 144.70 218.69 89.98 Source: Bank of Thailand, Annual Report. - 168 - Table 3.16: DUTIES ON IMPORTS BY ECONOMIC CLASSIFICATION /a 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 -------------------- (Receipts in millions of baht) -…-- …------------- 1. Consumer Goods Nondurable 1,188 932 968 1,007 1,026 1,172 1,387 1,571 1,934 1,893 Durable 476 429 469 597 799 962 1,165 1,471 1,602 1,581 Subtotal 1,664 1,361 1,437 1,604 1.825 2,134 2,552 3,042 3.536 3,474 2. Intermediate Products and Raw Materials Chiefly for consumer goods 967 1,272 1,330 1,607 1,867 1,710 2,041 2,639 2,794 3,728 Chiefly for capital goods 258 275 269 381 391 314 393 534 559 640 Subtotal 1.225 1,547 1,599 1,988 2.258 2.024 2,434 3.173 3.353 4,368 3. Capital Goods 1,175 1,165 1.327 1,550 2,129 1,893 2.263 3,179 4.009 4,312 4. Other Imports Vehicles and parts 724 787 830 1,298 1,561 1.621 1,642 2,254 2,696 2,221 of which: Passenger cars (302) (215) (205) (364) (381) (227) (201) (332) (200) (58) Buses & trucks (234) (368) (396) (656) (780) (974) (863) (1,169) (1,721) (1,391) Chassis & bodies (148) (175) (206) (254) (366) (394) (537) (697) (731) (729) Tires (40) (29) (23) (24) (34) (26) (41) (56) (44) (43) Fuels & lubricants 524 257 239 301 451 364 369 531 891 1,138 Miscellaneous 33 30 72 28 55 77 148 37 51 51 Subtotal 1,281 1.074 1,141 1.627 2,067 2,062 2,159 2.822 3,638 3,410 Total 5,345 5.147 5,504 6,769 8,279 8,114 9.408 12.216 14,536 15.561 ---------------- Receipts as percentage of imports) -------------- 1. Consumer Goods Nondurable 34.1 32.6 29.4 24.8 19.9 22.8 24.8 24.8 25.6 22.5 Durable 27.3 22.6 19.3 20.0 24.9 26.1 30.4 30.9 29.7 25.7 Subtotal 31.8 28.6 25.1 22.7 21.8 24.2 27.1 27.4 27.3 23.8 2. Intermediate Products and Raw Materials Chiefly for consumer goods 23.4 25.5 22.6 18.8 16.5 16.6 16.3 16.4 16.5 15.5 Chiefly for capital goods 10.0 9.9 8.3 7.5 5.6 5.4 5.1 4.9 4.4 4.0 Subtotal 18.2 19.9 17.5 14.6 12.3 12.6 12.0 11.8 11.3 10.9 3. Capital Goods 12.5 13.5 13.6 12.1 10.7 8.5 11.7 13.0 12.8 11.9 4. Other Imports Vehicles and parts 32.8 35.9 37.5 38.2 37.3 35.8 31.7 28.3 35.7 33.0 of which: Passenger cars n.a. (66.4) (65.7) (66.9) (68.0) (72.3) (70.5) (71.7) (93.0) (37.4) Buses & trucks n.a. (30.6) (38.5) (38.7) (40.8) (40.6) (42.6) (43.1) (53.6) (54.7) Chassis & bodies n.a. (29.0) (25.0) (23.0) (22.5) (22.4) (19.7) (15.1) (18.3) (19.9) Tires n.a. (47.5) (46.9) (41.4) (40.0) (28.9) (31.8) (34.1) (33.9) (27.0) Fuels & lubricants 22.5 33.0 35.0 27.6 20.6 16.9 13.0 12.0 14.1 13.9 Miscellaneous 2.9 4.2 7.9 4.5 7.5 8.9 7.5 1.3 1.1 0.8 Subtotal 22.5 29.2 30.0 31.8 29.1 27.3 21.6 18.4 19.7 16.1 Total 19.8 20.7 19.4 17.5 15.4 14.8 15.9 15.7 15.7 13.9 /a Figures are on calendar year basis. Source: Bank of Thailand. Table 3. 17: IMPORTS AND EXPORTS OF CRUDE OIL AND PETROLEUM PRODUCTS 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Imports c.i.f. Crude oil Volume (mn barrels) 27.8 39.6 47.9 56.0 50.2 52.6 55.4 61.0 61.2 64.4 Average price (US$/barrel) 2.05 2.33 2.41 3.15 10.33 11.48 12.51 13.22 13.20 17.82 Value (mn US$) 57.1 91.4 115.8 175.0 518.6 603.8 692.8 806.3 808.1 1,147.2 Petroleum products Volume 10.5 7.4 5.4 8.0 6.9 5.5 7.4 11.0 17.7 16.1 Average price (US$/barrel) 5.16 5.24 6.15 6.75 11.6 14.89 15.1 14.98 17.47 28.06 Value (mn US$) 54.2 38.8 33.2 54.0 79.5 81.9 111.8 164.8 309.2 451.8 Exports f.o.b. Petroleum products Volume 0.3 1.3 3.2 4.1 0.9 0.7 0.3 - - - Average price (US$/barrel) 5.67 4.85 3.69 4.46 15.0 15.9 16.7 - - - Value (mn US$) 1.7 6.3 11.8 18.3 13.4 11.1 5.0 - - - Net Imports Petroleum products Volume (mn barrel) 10.2 6.1 2.2 3.9 6.0 4.8 7.1 11.0 17.7 16.1 Value (mn US$) 52.5 32.5 21.4 35.7 66.1 70.8 106.8 164.8 309.2 451.8 Source: Bank of Thailand. - 170 - Table 4.1: EXTERNRL DEBT AND DEBT SERVICE OBLIGATIONS la (US S'000) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1970 PRIVATE SECTOR Loans Disbursements 38,185 47,675 108,556 83,809 214,890 211,661 216.577 2R4,296 522,170 702,267 Repayn nts 16,863 39,637 24,282 97,775 56,880 130,191 136,412 165,432 441,204 411,832 Interest payments 16,910 21,217 21,091 29,736 57,056 69,277 62,611 65,892 102,037 16R,318 Amount disbursed and outstanding 177.074 185,112 269,396 255,430 413,440 494,910 575.075 693,939 774,905 1,065,340 Suppliers' Credit Dieburue--eots tb 131,116 111,886 87,199 55,666 109,901 92,328 60,900 64,603 50,659 06,720 Repayments lb, /c 90,544 95,847 91,443 85,894 81,102 85,524 92,334 88,715 80,820 74,504 Amount disbursed and outstanding 224,159 240,198 235,954 205,726 234,525 241,329 209,995 185,883 1]S,72? 178,438 Loans & Suppliers' Credits Disbursements 169,301 159,561 195,765 139,475 324,791 303,989 277,477 348,899 572,829 799,087 Debt service payments 124,317 156,701 136,816 213,405 195,038 284,992 291,157 320,039 624,061 694,654 Amount disbursed and outstanding 401,233 425,310 505,350 461,156 647,965 736,239 785,070 87Q,822 930,627 1,243,378 PUBLIC SECTOR Central Government /e, /f Disbursements 28,723 23,120 18,709 28,960 18,407 9,386 123,179 66,523 343,698 493,356 Repayable in foreign currencies (28,723) (23,120) (18,709) (28,960) (18,407) (8,306) (123,179) (66,523) (343,698) 493,356) Repayable in baht (-) (-1 (-1 (-1 (-1 (") 2-) (' (-' () Repoym-nts 9,022 8,396 8,384 10,017 12,086 13.557 15,319 27,984 46,202 57,04n In foreign currencies (8,916) (8,271) (8,241) (9,854) (11,903) (13,354) (15,094) (27,737) (45,932) (57,646) In baht (106) (125) (143) (163) (183) (203) (225) (247) (270) (294) Interest payments 7,795 9,368 10,603 12,955 13,727 14,448 16,584 25,287 3R,144 (6n,265) In fureign currencies (7,566) (9,142) (10,381) (12,738) (13,516) (14,244) (16,278) (25,898) (37,964) (69,095) In baht (230) (226) (222) (217) (211) (204) (386) (189) (180) (170) Amount disbursed and outstanding 176,505 191,229 210,060 /d 238,563 243,819 235,660 348,220 402,187 729,156 1,134,390 Repayable in foreign currencies (170,007) (184,856) (203.831)jd(232,497) (237,936) (229,980) (342.764) (396,978) (724,217) 1,129,741, Repayable Rn baht (6,498) (6,373) (6,229) (6,066) (5,883) (5,680) (5,456) (5,209) (4,939) (4,646) State Enterprises /e Disbursements 0,545 17,871 21,446 37,934 79,348 136,954 211.169 274,947 387,004 678,929 Repayable in foreign currencies (20,545) (17,871) (21,446) (37,934) (79,348) (136,954) (211,169) (274,947) (3n7,004) (678,9291 Repayable in baht (-5 (-) (-) (-) (-' '-' (-) (-' (-' '-' Repayments 16,183 14,976 16,216 19,848 20,655 26.804 29.281 36,583 53,837 84,197 In foreign currencies (14,931) (13,677) (14,837) (18,393) (19,120) (25,184) (27,577) (34,956) (51,319) (82,381) In baht (1,252) (1,299) (1,379) (1,455) (1,535) (1,620) (1,624) (1,627) (1,718) 1,814 interest payments 9,497 9,996 10,617 12,833 15,534 22,136 27,412 35,751 64,21I 87,208 In foreign currencies (8,699) (9,190) (9,885) (12,177) (14,958) (21,6451 (27,011) (35,438) (63,487) 87,081 Tn bt ' (8065 (732) (65' (576) (4.9! (401) (313) (223) 127 Amount disbursed and outstanding L67,849 170,733/d 191,8031d 217,018 282,125 386,635 481,909 748,731 1,059,199 1,578,778 Repayable in foreign currencies (152.833) (157,016)/d(179.464)/d(206.135) (272,777) (378.907) (475.806) (744,255) (1,056,441) 1,577,834 Repayable in baht (15,016) (13,717) (12,338) (10.883) (9,348) (7,728) (6,103) (4,476) (2,758) (944) Local Covornnnnt /a Disbursements 2,552 3,060 - - - - - - - Repayments - 611 1,327 1,249 1.204 1,150 656 _ 308 Interest payments - 160 315 220 162 93 23 - 126 Amount disbursed and outstandinE 3,662 6,111 5,308/d 3,549 2,390 1,031 262 296 - - Total Public Sector 1e Disbursements 51,820 44,051 51,155 66,894 97.755 145,260 244,348 341,770 650,702 1.'72,285 Repayable in foreign currencies (51,820) (44,051) (51,155) (66,894) (97,755) (145,260) (244,348) (341,770) (650,702) (1,172,285) Repayable in baht (-) (-) (-) (-) (-) (-) (_) (-) (-5 (-5 Repayments 25,205 23,983 25,927 31,114 33,945 41,511 45,176 64,567 99,547 142,137 In foreign currescies (23,847) (22,559) (24,405) (29,496) (32,227) (39,6S8) (43,327) (62,693) (97,559) 140,02Q In baht (1,358) (1,424) (1,522) (1,61R) (1,71R) (1,823) (1,849) (1,874) (1,988) 2,108 Interest payments 17,293 19,524 21,535 26,008 29,423 36,677 44,019 61,038 In2,480 156.473 In foreign currencies (16,185) (18.492) (20,581) (25,135) (28,636) (35,982) (43.312) (60,536) (102,077) 156,176 In baht (1,108) (1,032) (954) (873) (787) (695) (707) (502) (403) (297) Amount disbursed and outstanding 348,016 368,073Jd 407,171/d 459,130 528,334 623,326 830,391 1,151,214 1,788,355 2,713,168 Repayable in foreign currencies (326,502) (347,983)/d(388,605)/d(442,181) (513,103) (609,918) (811,832) (1,141,529) (1,780,658) 2,707,578 Pepayable in baht (21,514) (20,090) (18,566) (16,949) (15,231) (13,408) (11,559) (9,685) (7,697) (5,590) TOTAL EXTERNAL DEBT & DEBT SERVICES /h Aoount disbursed and outstanding 727,735 773,293 893,955 903,337 1,161,068 1,346,157 1,603,902 2,021,351 2,711,28S 3,950,956 Debt service payments 164,349 197,752 181,802 268,036 255,901 360,662 377,796 443,268 823,697 950.859 Private sector (124,317) (156,701) (136,816) (213,405) (195,038) (284,992) (291,157) (320,039) (624,061) (654,654) Public sector (40.032) (41,051) (44,986) (54,631) (60,863) (75,670) (06,639) (123,229) (199,636) (296,250) Debt service payments as percentage of eaports L4 13.0 16.3 11.8 12.8 8.3 12.6 10.6 10.8 16.8 14.7 Private sector (11.3) (12.9) (8.9) (10.2) (6.3) (10.0) (8.2) (7-8) (12.7) (10.1) Public sector (3.7) (3.4) (2.9) (2.6) (2.0) (2.6) (2.4) (3.0) (4.1) (4.6) /a Debt with a maturity of over one year. /b Net of downpayments and prepayments. /c Including interest payments. /d Reflects revaluation of lenders' currenries. /e Loans and suppliers' credits. If Net of Bank f Thailand perticipatimn in I8RD loans. TR Suppliers' credit. /h Repayable in foreign currencies. /i Couds and nonfactor services. Source: bank of Thailand. - 171 - Table 4.2: EXTEPNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECE,BER 31, 1979 (US$QQ0) Type of creditor/ Debt OutstandinR Creditor country Disbursed Undisbursed Total Suppliers Credits Belgium 801 S VI Germany, Fed. Rep. of - 79,680 79,680 India 286 - 286 Italy 99 99 Japan 45,584 - 45,584 Sweden - 14,655 14,655 United Kingdom 222 - 2~2 Total Suppliers Credits 46,992 94,335 141,327 Financial 'nstitutions Austria 9,609 6,096 15,705 Canada 8,628 5,923 14,551 France 57,846 13,795 71,641 Germany, Fed. Rep. of 112,704 44,092 156,796 Japan 148,576 121,354 269,930 Netherlands - 9,457 9,457 Switzerland - 32,278 32,278 United Kingdom - 4,619 4,619 United States 35,670 14,042 49,712 Multiple lenders 611,443 237,533 848,976 Total Financial Institutions 984,476 489,189 1,473,665 Bonds Multiple lenders 30,000 - 30,000 Total Bonds 30,000 - 30,000 Multilateral Loans Asian Development Bank 211,671 259,440 471,111 IBRD 556,210 619,775 1,175,985 IDA 28,053 96,957 125,010 IMF Trust Fund 126,650 - 126,650 OPEC Special Fund 599 13,401 14,000 Total Multilateral Loans 923,183 989,573 1,912,756 Bilateral Loans Canada 11,942 9,419 21,361 Denmark 4,063 11,390 15,453 France 21,024 436 21,460 Germany, Fed. Rep. of 59,835 125,838 185,673 Japan 399,728 609,301 1,009,029 Kuwait 4,006 43,593 47,599 New Zealand - 5,917 5,917 United Kingdom 4,081 9,040 13,121 United States 209,925 82,571 292,496 Total Bilateral Loans 714,604 897,505 1,612,109 Total External Public Debt 2,699,255 2,470,602 5,169,857 La Only debts with an original or extended maturity of over one year. Includes only debt repayable in foreign currency and goods committed January 1, 1900- December 31, 1979. Source: World Bank. - 172 - Table 4.3: PROJECTED SERVICE PAYMENTS, DISBURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL PUBLIC DEBT AS OF DECEMBER 31, 1979 /a (US$'000) Debt outstanding at beginning of period Total transactions during period Other changes Disbursed Including Commit- Disburse- Service payments Cancel- Adjust- Year only disbursed ments ments Principal Interest Total lations ment lb Actual 1975 512,799 1,122,060 231,366 150,050 38,705 34,483 73,188 21,079 -12,380 1976 615,538 1,281,262 408,986 241,703 43,425 44,263 87,688 - 16,311 1977 821,689 1,663,134 793,911 268,415 63,414 58,311 121,725 884 95,755 1978 1,067,613 2,488,502 1,109,756 742,606 98,159 96,799 194,958 17,694 169,672 1979 1,700,492 3,652,077 1,844,230 1,124,378 132,291 145,695 277,986 1,840 192,320 1980 2,699,255 5,169,856 Projected 1980 2,699,255 5,169,856 - 737,495 216,187 232,761 448,948 - 5 1981 3,220,568 4,953,674 - 601,067 248,018 269,386 517,404 - 15 1982 3,573,625 4,705,671 - 468,627 300,656 282,531 583,187 - 3 1983 3,741,600 4,405,018 - 310,115 323,189 273,865 597,054 - 5 1984 3,728,530 4,081,834 - 176,587 395,449 254,270 649,719 - 6 1985 3,509,672 3,686,391 - 100,217 383,387 226,243 609,630 - 15 1986 3,226,516 3.303,019 - 47,942 351,311 198;921 550,232 - 4 1987 3,923,152 2,951,712 - 21,233 317,546 174,375 491,921 - 8 1988 2,626,845 2,634,174 - 5,676 325,744 150,951 476,695 - 8 1989 2,306,785 2,308 438 - 15263 304,244 127,707 431,951 - 7 1990 2,003,816 2,004,201 - 318 218,237 106,484 324,721 - 6 1991 1,785,903 1,785,970 - 62 203,068 92,827 295,895 - 9 1992 1,582,906 1,582,911 - 5 189,610 79,908 269,518 - 5 1993 1,393,306 1,393,306 - - 166,257 68,643 234,900 - 8 1994 1,227,057 1,227,057 - - 162,831 58,551 221,382 - 10 1995 1,064,236 1,064,236 - - 150,210 48,799 199,009 - 3 1996 914,029 914,029 - - 141,531 39,908 181,439 - 4 1997 772,502 772,502 - - 125,682 31,768 157,448 - 4 1998 646,824 646,824 - - 117,598 24,563 142,161 - 4 1999 529,230 529,230 - - 83,898 18,396 102,294 - 5 /a Includes only debt committed January 1, 1900 - December 31, 1979. Debt repayable in foreign currency and goods. /b This column shows the amount of arithmetic imbalance in the amount outstanding including undisbursed from one year to the next. The most common causes of imbalances are changes in exchange rates and transfer of debts from one category to another in the table. Source: World Bank. - 173 - Table 5.1: CONSOLIDATED PUBLIC SECTOR EXPENDITURES /a (Millions of baht) FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Actual Actual Actual Actual Actual ActulnA Actual Actual Actuol Actual Fstimate Current Expenditures 17,590 19,629 21,972 24,784 29,122 35,955 41,606 48,577 60,950 73,858 96_022 Defense, Admin., etc. 8,836 10 041 10,444 12,513 13,739 16,293 18,709 22,807 30,897 37,381 43,649 General admin. /b 1,755 2,128 2,090 2,047 2,464 2,956 3,509 3,456 4,005 5,000 6,876 Defense & police 5,241 6,369 6,930 7,340 8,840 10,102 12,480 15,312 20,774 27,128 30,375 Pensions 860 580 747 764 908 1,143 1,155 1,421 1,333 1,735 2,845 Miscellaneous 980 964 677 2,362 1,527 2,092 1,565 2,618 4,785 3,518 3,553 Economic Services 1,968 2,063 2,031 2,275 2,770 3,332 4,059 4.813 5,103 5,717 7,745 Agriculture /c 1,012 1,046 1,003 1,103 1,399 1,671 2,008 2,229 2,667 3,116 4,361 of which: Irrigation (398) (402) (392) (409) (538) (572) (702) (739) (807) (1,049) (1,723) industry and mining 74 76 85 92 129 182 193 213 214 259 396 Power 9 17 9 13 18 22 31 82 70 67 87 Trans. & Communications 727 781 799 920 1,052 1,262 1,569 1,390 1,584 1,852 2,376 of which: Highways (609) (667) (684) (817) (905) (1,078) (1,112) (1,168) (1,348) (1,568) (1,868) Other economic services 146 143 135 147 172 195 258 899 568 423 525 Social Services 2,481 2,554 3.573 3,254 4,184 5,235 5,955 7,321 8,265 10,388 13,482 Education 1,332 1,268 2,202 1,896 2,481 2,991 3,716 4,177 4,827 6,189 8,370 Health 638 720 735 825 1,065 1,227 1,657 2,213 2,374 3,025 3,647 Other social services 511 566 636 533 638 1,017 582 931 1,064 1,174 1,465 Local Government /d 2,606 2,822 3,150 3,531 4,712 7,195 8,655 8,586 10,041 11,472 19,537 TA Trust Fund /d Ie 92 72 67 54 41 28 10 4 1 - - Non-US external grants /d /f 235 287 287 305 332 372 385 369 659 996 1,083 Interest payments 1,372 1,790 2,420 2,85 3,344 3,501 3,832 4,677 5,984 7,914 10,526 Internal debt 1,193 1,590 2,183 2,596 3,072 3,217 3,511 3,827 5,136 6,496 8,249 External debt 179 200 237 256 272 284 321 850 848 1,408 2,279 Capital Expenditures 9,525 11.122 11,783 11,546 11.699 14,599 21,027 27,033 35,791 36,645 59,118 Agrictulture /c 1,656 1,925 1,440 1,221 1,125 1,379 2,765 3,954 4,614 5,691 7,329 of which: Irrigation (1,368) (1,656) (1,201) (989) (883) (1,128) (2,233) (2,732) (3,281) (3,949) (5,106) Indtustry and mining 127 86 101 136 200 239 293 647 471 442 951 Power 1,283 1,476 1,955 2,390 1,991 2,525 3,284 3,666 6,115 4,738 15.199 Trans. & Communications 3,561 3,566 5,620 3,236 3,442 4,067 5,546 8,417 10,848 12,498 16,537 of which: Highways (2,273) (2,349) (2,845) (2,336) (2,092) (2,551) (3,653) (5,057) (5,025) (5,597) (8,227) Education 697 1,259 735 974 1,043 671 1, 678 2, 505 3,042 3,192 3,872 Health 95 170 224 163 165 160 272 464 792 826 863 Water supply & sewerage 283 430 504 555 353 160 497 1,266 2,105 1,580 2,620 Miscellaneous 890 956 1,461 1,200 1,407 1,629 1,503 2,457 2,745 3,415 4,610 of which: Land settlement (25) (21) (19) (25) (33) (33) (60) (83) (133) (162) (252) Admin. bldgs. etc. (865) (935) (1,142) (1,175) (1,374) (1,596) (1,443) (2,373) (2,612) (3,253) (4,358) Local Government /d 670 1,020 1,558 1,493 1,765 3,536 4,959 3,445 4,708 3,890 6,496 Non-IJS external grants /d _g 670 234 185 178 208 233 230 212 351 373 641 Transfers 433 313 486 430 -1 608 211 1.206 1,660 1,922 -735 Central Gov't transfers to state enterprises to fInance operating deficits 433 313 486 430 -1 608 201 1,206 1,545 850 -891 Other - - - - - - - - 115 1.072 156 Ndjustments for double counting etc. -13 -16 -8 -15 - - - - - - - Total Expenditures 27,535 31,048 34I233 36.745 40,820 51,163 62,834 76,816 98,401 112,425 154,405 La Consolidated expenditures of the Central and Local Governments plus gross fixed capital expenditures of state enterprises, including those financed out of external loans and grants. Figures are for disbursements during Thai fiscal years running from October I to September 30. Expenditures financed out of external loans and US grants are entered under the functional line headings. Local Government expenditures and expenditures financed out of non-!IS external grants are entered as separate items because no functional breakdown is available. 'b Including Justice. c Including Forestry, Fishing, and Hunting. /i Funictional breakdown not available. /e Expenditure financed ouit of the technical assistance counterpart fund account. /f Expenditure on services of experts and technicians, fellowships, foreign voluntary services, and other costs of a current mat,,re. ig Expenditure on equipment imported into Thailand. Note: Details do not add to total due to rounding. So)urce: Bank of Thailand. Table 5.2; FINANCING OF CONSOLIDATED PUBLIC SECTTOR EXPFCNDITT¶RFS /a (1Millions of baht) FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Actual Actual Actual Actuial Actual Actuial ActuJal Actuta1 Actual Actual Fstimate Total Expenditures 27,535 31,048 34,233 36,745 40,820 51,163 62,834 76,816 98,401 112,425 154,405 Revenues Central Government 19,744 20,263 22,036 26,192 38,688 39,034 43,004 52,349 63,120 76,33 96,452 Tax revenue 16,969 17,274 13,872 22,721 35,240 34,410 37,874 47,286 57,442 69,783 88,271 Nontax revenue 1,753 1,824 2,272 2,625 2,685 3,838 4,349 4,428 4,580 5,128 6,379 Foreign grants 1,022 1,165 892 845 763 787 781 635 1,098 1,427 1,802 Local government revenuIe 1,159 1,338 1,191 1,450 2,209 2,809 3,154 3,806 4,523 5,035 5,811 Extra budgetary receipts 773 1,559 654 1,225 991 1,033 753 -162 1,073 -1,108 -1,000 State enterprise self- financing /b 1,994 1,850 2,028 1,972 2,141 2,172 1,190 4,643 5,306 4,976 9,341 Total Re.venUes 23,670 25,010 25,909 30,847 44,029 45049 48,101 60,636 74,022 85,241 110,604 Cash Deficit -3,865 -6,038 -8,324 -5,898 +3,209 -6,114 -14,733 16,180 -24,379 -27,184 -43,801 Financing by: External Borrowing Drawings 623 657 975 1,494 1,574 2,042 4,196 4,713 11,300 16,250 23,500 Repayments services -634 -469 -461 -507 -529 -671 -721 -1,256 -1,799 -2,_057 3,208 Net external borrowing -11 188 514 987 1,045 1,371 3,475 3,457 9,501 14,193 20,292 Domestic Financing (Net) Borrowing from public 81 8 138 668 108 392 991 1,783 1,859 2,086 2,422 Borrowing from Banking System 591 2,886 6,638 4,793 2,224 3,267 5,203 4,747 7,159 2,533 10,155 Government savings bank 435 766 1,454 2,211 1,929 457 1,223 2,361 1,898 1,600 3,200 Commercial banks 156 2,120 5,184 2,582 295 2,810 3,980 2,386 5,261 933 6,955 Monetary Authorities anid Currency Issue 3,204 2,956 1,034 -550 -6,586 1,084 5,064 6,193 5,860 8372 ,932 Bank of Thailand 3,405 2,167 174 1,525 -838 639 4,465 7,687 7,086 9,468 7,479 Exchange Equalization Fund 15 191 244 -370 -119 137 128 259 331 - - Counterpart Fund -120 51 -94 -17 27 28 3 12 9 6 7 Coin issue 55 138 17 121 149 100 53 Q2 116 135 240 Net use of cash balances 170 1,101 641 -1,598 -5,366 43-1 762 -1,547 -1,225 -244 3,496 Other -321 -692 52 -211 -439 -251 -347 -310 -457 -993 -240 /a Figures are for receipts and disbursement duiring Thai fiscal years (October 1 to September 30). /b Includes external loan repayment. Source: Bank of Thailand - 175 - Table 5.3: CENTRAL GOVERNMIENT EXPENDITUJRES /a (Millions of baht) FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimate Total Expenditures 24,791 28,449 30,325 32,177 35,658 44,453 55,028 64,526 80,362 94,124 123,742 Current Expenditures 14,984 16,807 18,822 21.252 24,410 28,761 32,951 39.991 50,909 62,386 76,485 Defense, Admin., etc. 8,836 10,041 10.444 12,513 13.739 16,210 18,709 22,807 30,897 37,381 43,648 Defense & police 5,530 6,369 6,931 7,340 8,840 10,102 12,480 15,313 20,774 27,128 30,374 General admin. /b 1,755 2,128 2,090 2,047 2,464 2,955 3,509 3,456 4,005 5,000 6,876 Penstons 571 580 747 764 908 1,060 1,155 1,420 1,333 1,735 2,845 Miscellaneous 980 964 677 2,361 1,527 2,093 1,565 2,618 4,785 3,518 3,553 Economic Services 1,968 2,064 2,030 2.276 2,770 3,332 4,059 4,813 5,103 5,716 7,745 Agriculture /e 1,012 1,046 1,003 1,104 1,399 1,671 2,008 2,229 2,667 3,116 4,361 of which: Irrigation (398) (402) (392) (409) (538) (572) (702) (739) (807) (1.049) (1,723) Industry and mining 74 76 85 92 129 182 193 213 214 259 396 Power 9 17 9 13 18 22 31 82 70 66 87 Trans. & Communications 727 781 798 920 1,052 1,262 1,569 1,390 1,584 1,852 2,376 of which: Highways (609) (667) (684) (817) (905) (1,078) (1,112) (1,168) (1,348) (1,568) (1.868) Other economic services 146 143 135 147 172 195 258 899 568 423 525 Social Services 2,481 2,553 3,574 3,254 4,184 5,318 5,956 7,321 8,265 10,388 13,483 Education 1,332 1,268 2,202 1,896 2,481 3,074 3,716 4,177 4,827 6,189 8,371 Nealth 638 720 736 825 1,065 1,227 1,657 2,213 2,374 3,025 3,647 Other social services 511 565 636 533 638 1,017 583 931 1,064 1,174 1,465 TA Trust Fund (Counterpart Fund Account) 92 72 67 53 41 28 10 4 1 - - Expenditures financed by non-US external grants /c 235 287 287 305 332 372 385 36a 659 997 1,083 Interest payments /f 1,372 1,790 2,419 2,852 3,344 3,501 3,832 4,677 5,984 7,904 10,526 Internal debt 1,193 1,590 2,182 2,596 3,072 3,217 3,511 3,827 5,136 6,496 8,249 External debt 179 200 237 256 272 284 321 850 848 1,408 2,277 Capital Expenditures 6,211 7.372 7,245 6,310 6,164 6,593 10,203 14,189 15,936 17,338 23,601 Agriculture /e 1,623 1,888 1,426 1,201 1,103 1,347 2,534 3,764 4,418 5,154 6,559 of which: Irrigation (1,368) (1,656) (1,201) (989) (883) (1,128) (2,037) (2,586) (3,281) (3,949) (5,106) Industry and mining 24 15 16 18 22 28 52 130 119 OR 104 Power 125 83 57 55 8 7 205 10 17 43 78 Trans. & Communications 2,444 2,606 2,987 2,464 2,224 2,750n 3,856 5,336 5,208 5,511 8,554 of which: Highways (2,274) (2,439) (2,845) (2,336) (2,092) (2,551) (3,653) (5,057) (4,942) (5,083) (7,810) Education 697 1,259 735 974 1,043 671 1,677 2,505 3,042 3,192 3,872 Hlealth 95 170 224 163 165 160 273 464 792 826 863 Water supply & sewerage 207 302 277 197 175 160 184 376 449 317 284 Miscellaneous 733 815 1,347 1,060 1,216 1,237 1,194 1,392 1,540 1,824 2,646 of which: Land settlement (25) (21) (19) (25) (33) (33) (60) (83) (133) (162) (252) Admin. bldg. etc. (708) (794) (1,328) (1,035) (1,183) (1,204) (1,132) (1,309) (1,407) (1,662) (2,394) Expenditures financed by non- US external grants /d 263 234 185 178 208 233 230 212 351 373 641 Transfers 3,609 4,286 4,257 4,630 5,084 9,099 11,874 10,346 13,517 14,400 23,656 To Local Governments 2,482 3,201 3,319 3,727 4,652 8,080 11,285 8,535 10,797 12,392 20,668 To state enterprise 1,127 1,079 938 903 432 1,019 589 1,811 2,720 2,108 2,988 Other - - - - - - - - - - Adjustments for double counting etc. -13 -16 -8 -15 -- /a This table presents the accounts of the Central Government inclusive of expenditure financed out of external loans and grants. Expenditures financed out of external loans and US grants are included under the respective headings. The break- down of expenditures financed out of non-US grants is not available. Figures are for dishursements made during Thai fiscal years ending Septebmer 30. /b Including Justice. /c Expenditure on hiring services of experts and technicians, fellowships, foreign voluntary services, and other costs of cuirrent nature. /d Expenditure on equipment imported into Thailand. /e Includes Forestry, Fishing and Hunting. /f Figures do not include principal repayments of the following amounts: FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Principal Repayment Internal Debt 40 516 860 701 1,665 2,384 2,990 1,123 3,159 2,142 498 External Debt 266 181 172 180 232 281 276 276 778 1,009 1,370 Source: Bank of Thailand. - 176 - Table 5.4: CENTRAL GOVERNKENT REVENUE /e (Millions of baht) FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Actual Aetuial Actuial Actual Actual Actual Actual Actual Actual Actual Estimate TOTAL REVENUE 18,722 19.098 21,144 25.346 37,925 38.248 42,223 51,714 62.022 ^74911 94,650 Tax Revenue 16,969 17,274 18,B72 22,721 35,240 34,410 37,874 47,286 57,442 69,783 88,271 Taxes on income 2,169 2,363 2,550 3,168 4,729 6.102 6,806 8,163 11,440 13,736 16,780 Personal 1,272 1,407 1,556 1,700 2,045 2,593 3,037 3,605 5,048 6,103 6,780 Corporate 897 956 994 1,468 2,684 3,509 3,769 4,558 6,392 7,033 10,000 Taxes on consumption 6,357 7.217 7,839 9.570 13,593 14,761 16.938 20,776 24,022 29,448 39,410 Business taxea 3,577 3,927 4,307 5,097 7,288 7,770 8,895 10,973 13,106 14,809 17,500 Excise taxes 2,686 3,192 3,413 4,341 6,162 6,810 7,776 9,490 10,548 14,267 21,510 Beverages (647) (716) (874) (1,455) (1,767) (2,262) (2,712) (3,188) (3,828) (4,778) (5,672) Petroleum products (1,066) (1,399) (1,382) (1,625) (2,496) (2,258) (2,204) (3,080) (3,378) (5,669) (10,840) Tobacco and snuff (896) (1,003) (1,082) (1,180) (1,813) (2,200) (2,761) (3,098) (3,208) (3,681) (4,857) Other (77) (74) (75) (81) (86) (90) (99) (124) (134) (139) (141) Entertainment tax 94 98 119 132 143 181 267 313 368 372 400 Profits of fiscal monopolies 672 748 864 993 1,020 1,370 1,728 2,163 2.088 2,106 2,520 Tobacco monopoly 500 579 650 771 795 735 931 1,417 1,292 1,260 1,280 State lottery 170 168 211 220 222 628 788 744 783 846 1,240 Other 2 1 3 2 3 7 9 2 13 - - Taxes on international trade 6,440 5,616 6.026 7,187 12,936 10,375 10.342 13.482 15,929 19,242 23,050 Import duties 5,393 5.185 5.617 6.366 8,563 8,270 9,052 11,802 14.154 16,488 19,650 Petroleum products 544 275 286 280 529 374 425 509 734 1,124 2,138 Foodstuffs 380 399 352 390 358 394 531 656 669 n.a. n.a. Machinery, equip. & vehicles 1,614 1,618 1,830 2,356 3,390 3,488 3,486 4,911 6,159 n.a. n.a. of which: Passenger cars (326) (204) (221) (279) (441) (259) (201) (332) (200) (n.a.) (n.a.) Textiles, yarn, thread 634 454 394 381 506 443 600 656 841 n.a. n.a. Other 2,221 2,439 2,755 2,959 3,780 3,571 4,010 5,070 5,751 n.a. n.a. Export taxes 1,047 431 409 821 4,373 2,105 1,290 1,680 1,775 2,754 3,400 Rice premium 654 262 163 276 2,752 795 42 Rice duty 135 117 192 151 583 514 415 576 524 608 710 Rubber 195 22 15 320 817 325 675 1,033 1,177 n.a. n.a. Other 63 30 39 74 221 471 158 71 74 n.a. n.a. Other taxes 1.331 1,330 1,593 1,803 2,962 1,802 2,060 2,702 3, 963 5,251 6,511 Taxes on properties & property transfers 564 557 744 890 582 617 680 905 1,230 1,504 1,796 Automobile registration /b (239) (262) (416) (468) (6 Transfer to immovable ) (-) (-) (-) (-) (-) (-) properties (201) (172) (188) (271) (407) (433) (470) (638) (839) (1,041) (1,296) Stamp duty (124) (122) (140) (151) (169) (184) (210) (267) (391) (463) (500) Other () (1 ) (- (- (- (- (- (- () ()() Royalties 398 411 433 445 798 740 833 1,397 2,297 3,180 3,926 Other 369 362 416 468 1,582 445 547 400 436 567 789 Nontax Revenue 1,753 1,824 2,272 2,625 2,685 3,838 4,349 4,428 4,580 5,128 6,379 Contribution of Bank of Thailand 300 450 435 450 523 997 1,230 900 722 1,000 1,200 Contribution of State Enterprises/c 313 338 387 442 439 839 868 698 637 758 1,040 Other nontax revenue 1,140 1,036 1,450 1,733 1,723 2,002 2,251 2,830 3,221 3,370 4,139 of which: Extraordinary revenue (12) (9) (5) (3) (5) (19) (-519) (4) (-) (-) (-) /a CollectiDns during the fiscal years ending September 30. /b Prior to FY74 these taxes were collected by the Central Government, with part of the proceds earrarked for transfer to local governments. In FY74 these taxes became a Local Government tax. /c Excludes the negative net contribution of public utilities. (Government expenditures on social services have been increased correspondingly.) Source: Bank of Thailand. Table 5.5: FINANCING OF CENTRAL GOVERNIAENT EXPENDITTRRES /a (Millions of baht) FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY70 FY80 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actu1al Fstimate TOTAL EXPENDITURES 24.791 28.499 30,325 32,177 35,658 44,453 55,028 64,526 80,362 94,124 123,742 Total R.evenues ~21,834 22~._544 27,366 39,624 39,975 44,235 52,187 64,193 75,230 95,452 Tax revenue 16,969 17,274 18,872 22,721 35,240 34,410 37,874 47,286 57,442 69,783 88,271 Nontax revenue 1,753 1,824 2,722 2,625 2,685 3,838 4,349 4,428 4,580 5,128 6,379 Extra btudgetary receipts 817 1,571 508 1,175 936 940 1,231 -162 1,073 -1,108 -1,000 Foreign grants 1,022 1,165 892 845 763 787 781 635 1,098 1,427 1,802 Cash Deficit -4,230 -6,615 -7,781 -4,811 ±3966 -4,478 -10,793 -12,339 -16,169 -18,894 -28,290 Financed by: External borrowing Drawings 300 272 195 433 311 161 594 1,074 4,871 6,774 7,951 Repayment -266 -181 -172 -193 -201 -214 -239 -234 -939 -960 -1,349 Net external borrowings 34 91 23 240 110 -53 355 840 3932 5,814 6,602 Domestic financing (net): Borrowing from public 80 -10 138 365 69 385 972 1,068 1,047 1,464 2,100 Borrowing from banking systec 591 6,638 4,545 2,002 2,811 4,055 3,928 4,873 2,251 8366 Government savings bank 435 766 1,454 2,073 1,929 446 1,223 2,257 1,890 1,600 3,200 Commercial banks 156 2,120 5,184 2,472 73 2,365 2,832 1,671 2,983 651 5,166 Mlonetary authorities & currency issues 3,525 3,648 982 -339 -6,147 1,335 5,411 6,503 6,317 9,365 11,222 Bank of Thailand 3,405 2,167 174 1,52'5 -838 639 4,465 7,687 7,086 9,468 7,479 Exchange equalization fund 15 191 244 -370 -119 137 128 259 331 - - Counterpart fund -120 51 -94 -17 27 28 3 12 9 6 7 Coin issue 55 138 17 121 149 100 53 92 116 135 240 Net use of cash balances 170 1,101 641 -1,598 -5,366 431 762 -1,547 -1,225 -244 3,496 Total Domestic Financing (net) 4,196 6,52 775 411,438 11,499 1, 13,080 21 688 Source: dank of Thailand. Table 5.6: LOCAL GOVERNMENT ACCOUNTS /a (Millions of baht) FY70 FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Actual Actual Actual Actual Actual Actual Actual Actual Actual ActIal Estimated Taxes and other revenue 1,159 1,338 1,191 1,459 2,209 2,809 3,154 3,806 4,523 5,035 5,811 Current expenditure 2,606 2,822 3,150 3,531 4,712 7,195 8,655 8,586 10,041 11,472 19,537 Current surplus -1,447 -1,484 -1,959 -2,072 -2,503 -4,386 -5,501 -4,780 -5,518 -6,437 -13,726 Capital expenditure 670 1,020 1,558 1,493 1,765 3,536 4,959 3,445 4,708 3,890 6,496 Deficit -2,117 -2,504 -3,517 -3,565 -4,268 -7,922 -10,460 -8,225 -10,226 -10,327 -20,222 Financed by: Transfer froma Central Gov't 2,438 3,196 3,463 3,777 4,706 8,173 10,807 8,535 10,683 11,320 20,512 Grants and loans |b (2,212) (2,922) (3,298) (3,245) (4,706) (8,173) (10,807) (8,535) (10,683) (11,320) (20,512) Automobile registration fee /c (226) (274) (167) (532) - - - - - - - Loans and reserve funds /d 122 91 344 106 140 116 147 192 420 130 294 Cash balances -443 -783 -298 -313 -578 -367 -494 -502 -877 -1,123 -584 e cn /a Thai fiscal years ending September 30. /b Grants and loans fo- financing fixed cppital expenditure prior to FY74. /c Automobile registration fees were collected by the Central Government and part of the proceeds were earmarked for transfer to Local Governmaents. In FY74 the entire fees were transferred to Local Governments. /d Reserve funds held at Ministry of Interior against which Local Governments may borrow to finance approved projects. Sources: Department of Local Administration (Ministry of Interior) and Bank of Thailand. - 179 - Table 5.7: STATE ENTERPRISES GROSS FIXED CAPITAL EXPENDITURES AND THEIR FINANCING (Millions of baht) FY70 FY71 FY72 1973 FY74 FY75 FY76 FY77 FY78 FY75 FYP( Actual Actual Actual Actual Actual Actual Actual Actual Actual Prellm. Estim. Power 1,158 1,393 1.939 2,394 2.014 2,582 3.275 3,655 6.091 5,242 15,625 Electricity Generating Authority /a 652 959 1,417 1,971 1,293 1,558 2,043 2,343 4,459 1,022 7,987 Iletropolitan Electricity Authority 278 260 323 206 359 560 460 351 549 756 963 Provincial Electricity Authority 159 113 158 158 333 400 719 902 1.051 1,319 2,742 Petroleum Authority of Thailand /a 69 61 41 59 30 64 53 59 38 145 4,033 Transport and Communications 1,116 960 547 710 1.208 1,305 1.688 3.080 5,744 6,987 7984 Airport Authority of Thailand /a - - - - - - - - - - 4.2 Thai Airways International Co., Ltd. - - - - - - 423 1,400 3,318 3,835 3,061 Thai Airways Co., Ltd. 83 35 73 1 3 4 3 164 56 73 257 State Railways of Thailand 276 251 129 202 471 418 225 182 111 630 651 Expressway and Rapid Transit Authority - - - - - - 18 28 173 514 1,017 Bangkok 11ass Transit Authority - - - - - - - 402 766 5 13 Port Authority of Thailand 125 53 79 178 155 263 139 105 51 125 171 telephone Organization of Thailand 306 479 200 231 493 546 800 723 t,162 1,421 1,931 Communication Authority of Thailand /a 214 80 - - - - - 31 72 241 253 Ot her 112 62 66 98 86 74 80 45 35 143 218 lanufacturing 103 71 85 119 191 213 241 517 352 344 848 Thai Tobacco MIonopoly 49 28 30 55 89 102 71 362 155 42 160 Thai Plywood Co., Ltd. 8 7 9 19 6 7 12 18 24 53 136 lining Organization - - - - - - 8 8 8 8 10 Offshore liining Organization /a - - - 5- 128 236 Industrial Estate Authority of Thailand - - - - 1 1 27 26 9 36 151 Otrher 46 36 46 44 85 103 123 103 98 77 153 Agriculture 33 37 15 21 20 33 36 44 196 537 770 Forest Industry Organization 20 17 10 10 7 7 20 15 87 141 315 Cold Storage and Ice Factory - - - - - 10 5 7 13 223 191 gubber Estate Organization - - - - - 4 4 8 86 30 Other /b 13 20 5 11 13 16 7 18 88 87 234 Others 95 135 241 377 262 244 821 2,102 3,564 2,811 4.300 National Housing Authority - - - - 64 93 281 1,016 1,112 1,406 1,644 lletropolitan Uater Works Authority - 128 227 358 179 120 312 889 1,657 1,169 ?,001 Provincial Waterworks Authority /a - - - - - - 195 146 703 94 334 Other 95 7 14 19 19 31 33 51 92 141 321 Total 2,505 2,596 2,827 3,620 3,685 4,377 6.061 9,398 15,947 15,921 29,525 Financed by: Own resources 1,643 1,429 1,052 955 1,467 1,163 1,419 3,410 4,461 3,877 7,482 Government grants and loans /c 539 746 449 473 430 408 1,799 709 1.968 1,663 4,383 Domestic borrowing /d - 18 273 552 262 463 1,168 1,741 3.089 905 2,111 Government savings banks - - 8 139 - 11 - 104 8 - - Commercial banks - - 30 110 223 445 1,148 1,423 2,269 282 1,789 Other - 18 235 330 39 7 20 214 812 623 322 External grants and loans 323 385 780 1,061 1,264 1,880 507 3,538 6,429 9,476 15,549 /a Yanhee Electricity Authority, Northeast Electricity Authority were merged into the Electricity Authority of Thailand (ECAT) on Ifay 1, 1969. Oil Fuel Organization and Natural Gas Organization merged to Petroleum Authority of Thailand on December 2n, 1978. Post and Telegraph had changed its name to be Communication Authority of Thailand on February 25, 1977. Provincial Waterwork Authority was established on December 24, 1979. Offshore Mining Organization was established on July 26, 1977. /b Including expenditures on the Central Government's irrigation project administered by EGAT B 1n5 nillion, 146 million, 703 million, 461 million and 157 million in FY 1976-80. /c Including disbursement from Syndicated loan B 1,104 million, 136 million, 925 million, 562 million and 2,571 million in FY1976-80, of which the Government repaid B 195 million, 371 million, 793 million, 504 million an 1,131 million in FY1976-80. /d Bonds issued by EGAT for B 50 million in FY1972, B 234 million in FY1973, B241 million in FY1974, B 262 million in FY1975 and B 140 million in FY1976, and by National Housing Authority for B 500 millionin FY1976 and B 500 million in FY1977 and by Telephone Organization of Thailand for B 18 million in FY1976, B 214 million in FY1977, B 216 in FY1978 B0.013 million in FY1979 and B 500 million in FY1980. Source: Bank of Thailand. Table 5.8: CENTRAL GOVERNMENT RECEIPTS, BUDGET FY 1977-80 (Millions of baht) /c % /c % /c X 1977 % 1978 % Change 1979 % Change 1980 % Change Income 50,372 73 62,000 77 23 72,000 78 16 88,000 81 22 Taxes and duties 43,002 63 54,352 67 27 62,959 68 16 78,878 72 25 Sales of goods & services 1,618 2 1,600 2 -1 2,382 3 49 2,230 2 6 Income from state enterprises /a 3,766 6 3,338 4 -11 3,635 4 9 4,102 4 13 Loans 13,730 20 16,800 21 22 16,700 18 -1 17,500 16 5 Bank of Thailand 7,730 11 8,600 11 11 7,600 8 -12 8,000 7 5 Government Savings Bank 1,700 3 2,400 3 41 2,500 3 4 3,200 3 28 Commercial banks, foundations, H companies, private institutions 4,300 6 5,800 7 35 6,600 7 14 6,300 6 4 X Treasury Reserves /b 4,590 7 2,200 3 -52 3,300 4 50 3,500 3 6 Total 68.692 100 81,000 100 18 92,000 100 14 109,000 100 18 /a Before netting subsidies to state enterprises budgeted for B 1,020 million in FY77 and 1,093 million in FY78. /b In 1977 the amounts budgeted were B 2,590 reduction in cash balances and expenditure shortfall of B 2,000. /c Based on budget estimates. Source: Bureau of the Budget. - 181 - Table 5.9: FUNCTIONAL CLASSIFICATION OF CENTRAL GOVERNMENT EXPENDITURE BUDGET, FY79/80 (Millions of baht) FY79 FY80 Functional classification Capital Current Total Capital Current Total Economic services 11,903 6,021 17,924 15,773 7,051 22,824 Education 5,340 12,459 17,799 6,779 15,804 22,583 Public health 894 2,986 3,880 1,037 3,503 4,540 Social security and welfare 1,441 4,596 6,037 2,244 5,439 7,683 Defense - 19,001 19,001 - 22,350 22,350 Internal security 647 4,381 5,028 751 5,295 6,046 General administration 405 2,530 2,935 524 2,966 3,490 Debt services - 10,033 10,033 - 12,393 12,393 Miscellaneous 900 8,463 9,363 900 6,191 7,091 Total 21,530 704470 92,000 28.008 80,992 109,000 Source: Bureau of the Budget. Table 6.1: EVALUATION OF MONETARY SITUATION - CALENDAR YEARS /a (Millions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Monetary Position at Years' End Claims on Central Government 21,206 26,423 35,768 40,187 39,238 41,285 51,819 61,280 73,986 85,243 Less: Deposits of Central Government 8.183 6,767 8,764 10,627 13,584 10,490 10.,290 10,041 11,850 13,576 Net Claims on Central Government 13,003 19,656 27,004 29,561 25,654 30,795 41,529 51,239 62,136 71,667 Claims on private sector 27,842 30.816 34,578 49,406 66,211 81,448 96,876 124,869 160,911 196,535 Domestic credit 40,865 50,472 61,582 78,967 91,865 112,243 138,405 176,108 223,047 268,202 Net foreign assets /b 15,916 15,581 19,950 21,644 29,788 28,400 27,475 20,857 9,878 14,848 Money 19,477 21,446 24,831 29,936 33,208 34,983 40,627 44,296 52,905 61,247 Quasi-money 26.723 32,249 41,755 51,976 65,405 78,634 95,720 119,338 140,973 161,253 Monetary resources 46,170 53,695 66,586 81,912 98,613 113,617 136,347 163,634 193,878 222,500 Capital accounts 10,955 12,539 14,273 17,113 21,651 27,245 29,487 34,494 42,366 63,035 of which: Bank of Thailand (7,359) (8,261) (9,417) (11,088) (13,325) (17,028) (17,924) (20,989) (25,551) (43,607) Counterpart funds 295 216 345 384 340 298 319 303 - - Savings Bonds & Premium Bonds /c 1,231 1,308 1,406 1,551 1,530 1,515 1,539 1,585 1,683 1,765 Other (net) /d -1,871 -1,706 -1,078 -349 -481 -2,032 -1,812 -3,051 -5,002 -4,250 Change During Year Net Claims on Central Government 4,550 6,633 7,348 2,557 -3,907 5,141 10,734 9,710 10,897 9,531 1 Claims on private sector 4,920 2,974 3,762 14,828 16,805 15,237 15,428 27,993 36,042 35,624 Domestic credit /b 9,470 9,607 11,110 17,385 12,898 20,378 26,162 37,703 46,939 45,155 Net foreign assets -2,660 -335 4,369 1,694 8,144 -1,388 -925 -6,618 -10,979 4,970 1 Money 1,459 1,998 3,385 5,106 3,272 1,775 5,644 3,669 8,609 8,342 Quasi-money 3,837 5,526 9,506 10,220 13,428 13,230 17,086 23,618 21,635 20.280 Monetary resources 5,295 7,525 12,891 15,326 16,417 16,700 22,870 27,287 30,244 28,622 Capital accounts 1,817 1,584 1,734 2,840 4,538 5,594 2,242 5,007 7,872 20,669 of which: Bank of Thailand (1,248) (901) (1,156) (1,671) (2,237) (3,703) (896) (3,065) (4,562) (18,056) Other (net) lb -302 163 854 914 -196 -1,609 265 -571 -1,853 752 /a The term Central Government as used here includes the deposits and liabilities of some State enterprises (primarily public utilities and quasi-government agencies) at the Bank of Thailand. Deposits and liabilities of these enterprises at commercial banks are treated as part of the private sector, as are all the deposits and liabilities (i.e. both those at the Bank of Thailand and at the commercial banks) of the other State enterprises. Because of this method of classification, the statistics given here differ somewhat from those given for Central Government and public sector borrowing in Tables 5.5 and 5.2. /b Beginning in 1971 Special Drawing Rights are included. /c These bonds are held by private individuals and are therefore liabilities of the Government Savings Bank to the private (nonbank) sector. /d Includes fixed assets and immovable properties of commerical banks, miscellaneous nonmonetary assets and liabilities of commercial banks, and adjustment for differences between exchange control and bank reporting figures. Source: Bank of Thailand Table 6.2: EVALUATION OF MONETARY SITUATION - QUARTERLY /a (Millions of baht) 1977 1978 1979 Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Monetary Position at End of Quarter Claims on Central Government 54,935 53,659 64,642 61,280 65,532 63,307 76,531 73,986 76,660 74,610 87,464 85,243 Less: Deposits of Central Government 13,389 13,593 20,307 10,041 13,880 13,592 21,739 11,850 13,763 14,411 24,055 13,576 Net Claims on Central Government 41,546 40,066 44,335 51,239 51,652 49,715 54,792 62,136 62,897 60,199 63,409 71,667 Claims on private sector 104,408 109,811 116,745 124,869 133,989 141,108 148,273 160,911 173,795 180,563 186,881 196,535 Domestic credit 145,954 149,877 161,080 176,108 185,641 190,823 203,065 223,047 236,692 240,762 250,290 268,202 Net foreign assets /b 29,577 28,072 23,502 20,857 23,586 20,922 13,797 9,878 20,250 18,193 14,448 14,848 Money 43,775 40,985 40,612 44,296 49,597 46,161 46,833 52,905 58,566 53,541 54,824 61,247 Quasi-money 101,215 107,220 113,506 119,338 123,797 130,558 133,489 140,973 145,290 151,746 153,915 161,253 l1onetary resources 144,990 148,205 154,118 163,634 173,394 176,719 180,322 193,878 203,856 205,287 208,739 222,500 Capital accounts 31,708 31,521 32,869 34,494 37,814 38,771 40,583 42,366 57,953 58,489 60,822 (3,035) of which: Bank of Thailand (19,831) (19,451) (20,440) (20,989) (23,341) (23,688) (24,807) (25,551) (40,165) (39,913) (41,601) (43,607) Counterpart funds 314 309 308 303 300 - - - - - - - Savings Bonds and Premium Bonds 1,552 1,558 1,572 1,585 1,626 1,651 1,672 1,683 1,723 1,736 1,764 1,765 Other (net) -3,032 -3,646 - 4,284 - 3,051 -3,907 -5,396 -5,715 -5,002 -6,590 -6,557 -6,587 -4,250 m Change During Quarter Claims on Central Government +3,116 -1,276 +10,983 - 3,362 4,252 -2,225 13,224 -2,545 2,674 -2,050 12,854 -2,222 Less: Deposits of Central Government +-3,099 + 204 + 6,714 -10,266 3,839 - 288 8,147 -9,889 1,913 648 9,644 -10,479 Net Claims on Central Government + 17 -1,480 + 4,269 6,904 413 -1,937 5,077 7,344 761 -2,698 3,210 8,258 Claims on private sector +7,532 +5,403 + 6,934 8,124 9,120 7,119 7,165 12,638 12,884 6,768 6,318 9,654 Domestic credit +7,549 +3,923 +11,203 15,028 9,533 5,182 12,242 19,982 13,645 4,070 9,528 17,912 Net foreign assets /b +2,102 -1,505 - 4,570 - 2,645 2,729 -2,664 -7,125 -3,919 10,372 -2,057 -3,745 400 Money +3,148 -2,790 - 373 3,684 5,301 -3,436 672 6,072 5,661 -5,025 1,283 6,423 Quasi-money +5,495 +6,005 +6,286 5,832 4,459 6,761 2,931 7,484 4,317 6,456 2,169 7,338 Ilonetary resources +8,643 +3,215 +5,913 9,516 9,760 3,325 3,603 13,556 9,978 1,431 3,452 13,761 Capital accounts +2,221 - 187 +1,348 1,625 3,320 957 1,812 1,783 15,587 536 2,333 2,213 of which: Bank of Thailand (+1,907) (- 380) (+ 989) (549) (2,352) (347) (1,119) (744) (14,614) (-252) (1,688) (2,006) Other (net) -1,202 - 613 - 625 1,241 -818 -1,764 -298 724 -1,548 46 -2 2,337 /a The term Central Government as used here includes the deposits and liabilities of some State enterprises (primarily public utilities and quasi-government agencies) at the Bank of Thailand. Deposits and liabilities of these enterprises at commercial banks are treated as part of the private sector, as are all the deposits and liabilities (i.e. both those at the Bank of Thailand and at the commercial banks) of the other State enterprises. Because of this method of classification, the statistics gi-ven here differ somewhat from those given for Central Government and public sector borrowing in Tables 5.5 and 5.2. /b Beginning in 1971 Special Drawing Rights are included. Sot1rce: Bank nf Thailand. Table 6.3: FSF1Fr-FFD DACA oP C010F PCS8I RA8VP (Ifi1 lions of haht) 1970 1971 1972 1973 1974 1975 1976 1977 197R 1979 Dec. De. De Doc. Dec. nec. Sec. "at. JIn. Se Ma. ToJ. Sep. lec. Mar. Jun. Sep. Dec. Total assets - total liabilities 41,187 48,8334 60, 06 78,363 9,7752 117,879 139,631 140,783 159,056 161,285 173.277 196,170 104,Q20 7n2,263 218,241 725,19 712,2325 243,239 252,731 Total deposits /a 31,P85 37,759 47,746 58,372 73.484 P6,55o 106,41P 11 I.977 IP,772 124,364 131,.PO IR,649 141,8l9 149,119 19S8,24 163,732 166,755 166,880 175,625 Time deposits 2, 931 25,771 33,293 3l,741 57,n63 63,R93 70,01,4 83,034 on,073 95,96P 9on,72 103,974 10P,7n3 I11,85n 117,77S 119,782 123,557 174,019 129,364 As perceot of total deposits 65. 0 62.3 69.7 69.8 70.S 73.P 73.n 75.P 79.8 77.? 79.7 74.7 75.1 76.1 74.3 73.7 74.1 74.9 73.7 .orro ..-og froe BOT 797 1,296 1,26.1 2,882 3,985 7,297 5,53n 6,771 6,61, 5,311 5,052 7,665 7,4RO 6,638 R,141 12,744 9,P75 9,875 16,733 As percent of total liobiities 1.9 2.7 2.1 3.7 4.n 6.7 4.9 4.6 4.3 3.3 3.4 4.1 3.8 3.3 3.7 5.4 4.2 4.1 6.6 iorow-ing froe abroad 3,053 3,284 3,486 6,R0n 7,574 8,057 9,205 In,40 In,636 11,475 IA,703 16,003 19,061 21,101 ?4,n05 27,209 34,764 35,675 35,422 As perceot of total liabilities 7.4 67 5.8 P.S 7.7 7.4 6.9 7.1 6.- 7.1 8.5 P., 9.0 I.4 11.7 12.1 15.8 14.7 14.0 Cash and balancea ,,ith POT 2,466 2.9P6 3,456 3,682 5,314 6,953 6,377 6,822 6,897 6,796 7,097 7,294 -,134 7,559 P,594 7,972 7,900 7,377 7,894 As perce-t of total deposits 7.7 7.9 7.2 6.3 7.2 7.6 6.0 5.P 5.8 5.1 5.4 5.3 5.6 5.1 5.4 4.9 4.7 4.4 4.5 Covernsent secrities 5,897 8,261 13,792 14,897 15,772 17,581 28,911 71,573 22,133 22,311 7?,263 24,919 23,776 25,324 24,439 25,854 74,476 22,769 23,862 As percent of total deposits 13.5 21.9 28.9 25.5 21.5 21.3 15.7 15.0 IR.6 17.9 17.0 18P. 16.4 17.0 15.4 15.8 14.7 13.6 13.6 Liquid assets /b 7,732 11,228 17,810 1 7,90 18,828 21,45 20, 662 31,3S 72,091 11,672 32,344 15,059 35,913 35,310 36,283 39,62n 39,415 37,388 38,877 As percent of total deposits 24.2 29.7 37.3 30.6 24.5 24.8 26.9 27.3 26.2 25.4 24.A 79.3 24.8 23.7 22.9 21.8 23.8 22.4 22.1 Loans, overdrafts and disco-nts 28,039 31,564 35,653 51,184 55,065 P1,302 95,145 177,744 107,17c 113,068 1'1,769 131,037 137,402 144,359 158,600 171,087 177,972 184,144 195,072 As percent of total deposits 87.9 83.6 74.7 87.7 92.n 93.9 89.4 90.5 Q0.2 93.8 972. 94.5 94.0 96.8 100.0 I04.5 106.7 110.3 111.1 Capital accounts 3,065 3,602 4,082 5,096 7,195 8,917 I1,094 In,434 10,672 I1,09? 12,n53 12,847 13,445 14,157 14,9P9 15,954 16,724 17,346 18,125 As percent of risk assets In.5 I1.0 11.5 In.S 18.0 11.3 11.7 1n.9 I0.6 10.4 10.7 In.8 In.7 10.7 10.4 10.5 10.6 10.7 10.7 /a Excludes inter-hak deposits /b Comprises rash in hand, balasce at BO-, halances at other sonco-ercial ban9s in ¶heiland, halseres at ,anb, abroad, p-ld and soonroenot sectirfties other than those pledged or deposited as guarsntee with the Bank of Thailand. Source- i3ank of Thailand Table 6.4: RILLS, LOAMS A1D OVFPOPAFTS OF COI'?D8D,SIAT BAISS CLASST'TFD BY PUSPPnSF /a (ri]linns of baht) 1970 1971 172 I173 1974 1975 1976 197' 1978 1979 DDec. ec. DDec. ec. Dec. nec. Dec. 'far. Jun. Sep. Dec. bar. Jun. Pep. Dec. Mar. Jun. Sep. T)ec. Agriculture 638 743 771 ng0 1,305 2,P?4 4,121 4,478 4,8?4 5,8n6 6,341 6,931 7,533 P,116 P,657 P,613 9,112 10,IP3 10,775 Mining 408 427 419 465P 547 608 1,116 717 nO3 786 668 1,0q8 816 861 1,079 1,428 1,022 1,143 1,252 Manufacturing 4,352 5,161 5.687 8,358 12,763 16,479 17, 586 1), 170 21,784 .'2,670 23,R46 25,32' 25,784 2P,204 2°,578 12,333 32,997 33,12A 34.299 Construction 1,596 1,770 2,151 2,608 3,251 3,R23 4,371 4,833 5,428 5,669 6,0n4 6,5?8 6,903 7,764 8, 419 8,212 8,811 9,729 10,186 Real estate business 1,717 1,620 1,548 2,412 3,27R 3,384 3,653 3,784 3,732 3,S07 3,942 4,081 4,47n 4,520 4,397 4,855 5,402 5,492 6,003 Inports 6,050 6,007 6,358 9,138 12,305 17,477 13,368 13,834 14,480 16,071 15,585 15,545 17,21n 15,881 IP,319 20,962 23,384 24,055 26,407 Exports 2,794 3,152 3,323 4,887 8,0l2 10,182 12,579 14,255 13,239 11,004 13,l19 15,n66 14,526 14,308 17,854 2n, 802 2n,292 21,159 25,289 lUholesale 6 retail trade 6,038 7,229 8,226 12,219 13,569 16,175 2n,813 22,801 23,??02 26,253 28,'30 3n,740 32,686 35,840 38,498 42,650 44,379 45,359 44,398 Public utilities 324 474 1R8 605 704 920 1,306 1,346 1,579 2,045 2,631 3,118 3,313 3,678 3,959 4,167 3,279 4,804 4,503 Banking 6 other financial bu1siness 61 8013 1,606 2,R.02 6,744 5,3'6 5,R47 5,105 5,917 5,'77 7,017 5,2n2 7,225 4,501 9,591 7,488 n,677, 10,63P 12,475 Services 1,527 1,969 2,074 2,319 3,079 3,542 4,067 4,186 4,913 4,799 5,476 5,554 ;,640 5,003 6,312 6,772 7,971 6,857 6,-13 Pecronal consunption 2,155 2,373 3,066 4,458 5,153 7,057 7,5Pn q,176 8,777 9,346 In,156 11,90R !',?073 31,24 14,191 14,071 14,91I 14,567 15,745 Others 9 23 In 31 21 92 Iq 11 11 'A 695 ?09 9 47 ?76 13 77 °7 159 Total 28,219 31,71n 39, R46 51,291 6R.816 R12.Rqo 96.377 UIn, 562 ln7,n4lh I I I _4 121,Rl( 1R11611 IIP,?Ol 145,101l 6n,P79 177,4R6 I Sn, 3 6i IP7, 186 19R,363 /a Including interbank trsnsac4ions. Soecre: Bank of Thailand. 1Ž -< 0 N 000 OOOOn 010000000 0,0700 OOln.-00001000 00000 -.on0.o000.0o00,"b0 0'010 '1 0000000000000000. 0000000000000000.-' 0000000000000000 000000000000000000000.0 0000 o00000000000'0- 0000 00000 0000>0.0 0 0 0 00 0'000000000'00'00 00 >000000>00.00.- 00 0000000.0000-0- - 0 - 00000.0000 000. 00000.0000< 0 0 0.0000.0000< 0 0 0 0 - 000 000 000 00 000 0000 0 0>>> 0 0 - 0000 100.000 0000 000 0- 0000 000 ogOoOo - 0 0 0 00 0 00 00 0 '0 0 00 0 0000 0 0 0 - 0 - I> - 0000000 0 00 0 0 0 00 - 0 > 0' 0 -0000 0. I - 00000'- 0 -< - - - - - 0 0000 0 - 000000000000.00000 -. 00.,000.0000'000 000000000000,-03.0 '0-> 0 000000 00 0 0000>00.00000.0001 -.000 00000>0.0.000>000> 00000000000000010000 0 0.0.0.0 0 - 0.. .0 000000 >00>000000 0 '0 '0>0>0 - - - - . 0' 00000 - 00000.-.o0 00 0000-000000000000000' .'0000000000 0 10 0000000 0 0000>0000000.00000.00.00 0000000000>000' 0' 0000000000>000000.0.00 0000-000 0000.00000.00000. .0' 000000000>0000.0..00000000000000000 00 0. 00 '00 0'-000". . . . . . 00 00c-z-t00-'0 000000» 000000000000000000. 0000 00 -'0 >00>000,- 0.-.0'00000000 0000000000000>0000000 0>000000000000000000000 0- 000000000000.0000 00-..0000000000000000 00 000000000000 -0 000000000000000000. 000 00000>>000000 00.00000000000000000000000.0000.0 '00 00>0000000000000 000 0000000000000>000> 00,0000000000 0000 0' 00 000000000 0000 000000000000000>0000 00 0000000000000 00 00000000000000000000000000-000000000>00 000000000000000000000000 0 -. 00.00 00 0 000000 0 000000-000 00 0 0 0 00000000.00000 00000000000000000000> 00 00 "00> -000 0 >0000000>0000>000>00000 00000000000000000000000 000000000000000000000000 '0000000000000>000000000 00000000000000000>0000 '00 0 00 oo 0000000>000000 .. 0000000000000000000000000000000000000000 00000000000 >000 00000000000000000000000000000000000000000000000>000 00000.00-00000000 000000000.000000000,00000.00000 0000000000000>0000000000000000000000 000000000000>00000000070 00000000000000000000000 0> oo000-0000-00> 0000000000.000000>000000000000000000> .,,...0 000000 000 0000>00000.00000000000000000000000000> 0000000000 00 000.00000.0000000000000o000000000000000000 000000.>000000000 00-00 >0>0.00000>000000000000000000000 00000.000000000>0.0>0 00>000000>000000000>000000000000000.000000000> '00 0000000000000000000000>000>0>000000000000 000 ooooOo>oo>oooo.0 00 000000 >00000000000 00000000000000000000> 000000 0000000000 0 000000>000,00000000 00000000000000000000 ,000000000000000000 '00 000000000000000000000000>00000000000000.00>0000 >00000000000>000.00-0>00 00 000000 0 0000000000 >0000000000>000000000 0000 0000000000 0 0000000000000000000000000000000000000000000000>0000 00000>000000>>>> 000000>0000000>00 00000000000000000000000 00,-'.-.0 00000000000' 00000,0000000000000000>000000000000000000000000000000000000>0000 000000000000.0000000 0>0000>0000000000000 000000000000>00000000 00 00 0' 000000000 >000>000.0000000000000 0000000.0000 000' 000000000000.0000000000000.0000000>0000> 00000. 000000000.00>0-000 0000000>000.000000>00000000>00.000000000000.0000 000000000.000>0000000 000000 > 00000000000>000000000000000000.0000000000000 0000000000000000000 000000000000000>00 0000>>00000000000 000000000000000000 000000000>0000> 000000000000 000 00000. . 00000. . 0>00. 000000000>0000000 0000000000000000 00000000000000000 - gal - Table 7.2: PROPORTION OF PLANTED AREA IN MAJOR CROPS (in percentages) 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 Paddy 70.0 69.7 66.2 67.4 68.6 66.4 65.3 63.1 64.0 61.5 63.6 62.4 60.5 Rubber 10.0 9.2 11.8 11.3 11.2 11.3 11.4 11.5 10.5 10.8 10.1 10.6 9.9 Maize 6.1 6.1 6.7 6.3 6.2 7.4 8.8 8.6 8.8 9.6 9.4 9.4 8.1 Kenaf 4.1 5.0 3.5 2.4 3.4 3.7 4.0 4.1 3.3 3.1 2.3 1.2 1.7 Cassava 1.1 1.2 1.4 1.6 1.7 2.0 1.9 2.9 3.3 3.7 4.3 5.1 6.4 Sugarcane 1.5 1.2 1.5 1,7 1.1 1.2 1.2 1.6 2.0 2.4 2.8 3.6 3.8 Coconut 2.6 2.3 2.7 2.7 2.7 2.8 2.8 2.9 2.4 2.5 2.3 2.4 2.9 Other major crops 4.6 5.3 6.2 6.6 5.1 5.2 4.6 5.3 5.7 6.4 5.2 5.3 6.7 l Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Table 7.1. Table 7.3: PADDY AND RICE SUPPLY AND UTILIZATION. 1967-S0 BY GLUTINOUS AND NONGLUTINOUS VARIETIES (Million metric tons) Apparent domestic rice Milled Stock Exports /d Seed-feed-loss Popul. Rice available for utilization for food + Crop Paddy Production rice equivalent lb change/c milled rice (15% milled product) mid-year/e food & industry use industry (kilos per year /a Total Ng. GI. Total Ng. Gl. Total Total Ng. GI. Total Ng. GI. millions Total Ng. Gi. capita) Ng. + G1. 1967/68 9,625 6.80 2.80 6.25 4.05 2.20 -0.10 1.10 1.00 0.10 0.95 0.60 0.35 34.0 4.10 2.35 1.75 120 1968/69 10,430 6.85 3.55 6.80 4.45 2.35 -0.25 1.05 0.95 0.10 1.00 0.65 0.35 35.1 4.50 2.60 1.90 128 1969/70 13,410 8.60 4.85 8.70 5.60 3.10 -0.35 1.10 1.00 0.10 1.30 0.85 0.45 36.4 5.95 3.40 2.55 163 1970/71 13,570 8.40 5.15 8.80 5.45 3.35 +0.30 1.60 1.45 0.15 1.30 0.80 0.50 37.5 6.20 3.50 2.70 165 1971/72 13.744 8.90 4.85 8.95 5.80 3.15 +0.25 2.15 1.95 0.20 1.35 0.85 0.50 38.5 5.70 3.25 2.45 148 1 1972/73 12,413 8.35 4.05 8.05 5.40 2.65 +0.50 0.90 0.80 0.10 1.20 0.80 0.40 39.7 6.45 4.30 2.15 162 1973/74 14,898 10.10 4.80 9.70 6.55 3.15 -0.60 1.05 0.95 0.10 1.45 1.00 0.45 40.8 6.60 4.00 2.60 162 m 1974/75 13,386 9.00 4.40 8.70 5.85 2.85 -0.15 1.00 0.90 0.10 1.30 0.90 0.40 41.9 6.25 3.90 2.35 149 1975/76 15,300 10.10 5.20 9.95 6.55 3.40 +0.35 2.10 1.90 0.20 1.50 1.00 0.50 43.0 6.70 4.00 2.70 156 1976/77 15,070 10.30 4.80 9.80 6.70 3.10 +0.10 3.00 2.80 0.20 1.45 1.00 0.45 44.0 5.45 3.00 2.45 124 1977/78 14,010 10.10 3.90 9.10 6.55 2.55 - 1.60 1.45 0.15 1.35 1.00 0.35 45.1 6.15 4.10 2.05 136 1978/79 17,470 11.85 5.60 11.35 7.70 3.65 -0.10 3.00 2.80 0.20 1.70 1.15 0.55 46.1 6.55 3.65 2.90 142 /a Crop year begins July and ends June 30. /b Paddy converted to rice at 0.65 x paddy production. /c A minus change means a stock build-up during the CY; a plus change means a stock drawclown of nonglutinous rice only. /d Exports are for calendar year; i.e., 1967/68 - 1968 CY exports; Glut. rice normally is less than 10% of total exports. /e National Economic and Social Development Board. Source: Ministry of Agriculture, Projects Division. - 189 - Table 7.4: RICE EXPORT PREMIUM (Baht per metric ton) Mar 22, 1974 Jun 26, 1974 Oct 30, 1974 Dec 25, 1974 Jun 03, 1975 Dec 04, 1975 Jan 22, 1976 Dec 16, 1977 to to to to to to to to Jun 25, 1974 Oct 29, 1974 Dec 22, 1974 Jun 02, 1975 Dec 03, 1975 Jan 21, 1976 Dec 15, 1977 date White rice 100% 5,100 4,500 3,750 2,100 1,700 1,000 700 900 White rice 5% 5,100 4,500 3,750 2,100 1,700 800 700 900 White rice 10% 4,600 4,000 3,250 1,700 1,300 700 500 700 White rice 15% 4,600 4,000 3,250 1,700 1,300 700 500 700 White rice 20% 4,600 4,000 3,250 1,700 1,300 700 500 700 White rice, lower than 20% 4,100 3,500 2,750 1,300 .900 500 400 700 White broken rice, Al super spezial 3,400 2,800 2,050 900 500 500 400 600 White broken rice, Al super and special 2,350 2,000 1,250 600 200 200 200 500 White broken rice, Al ordinary 2,350 2,000 1,250 600 200 200 200 500 White broken rice, Cl super, special & ordinary 2,050 1,700 1,000 500 100 100 100 500 White broken rice, C3 2,050 1,700 1,000 500 100 100 100 500 White broken rice, others - - - - - - - - Glutinous rice, long grain 10% 4,100 3,500 3,000 1,600 1,200 700 400 900 Glutinous rice, long grain 15% - - - - - - - 900 Glutinous rice, short grain 10% 4,100 3,500 3,000 1,600 1,200 700 400 900 Broken glutinous rice, Al special 2,550 2,200 1,700 750 350 200 200 900 Broken glutinous rice, Cl special 2,550 2,200 1,700 750 350 200 200 900 Cargo rice, 100% 4,100 3,500 2,750 1,300 900 700 450 700 Cargo rice, 5% 4,100 3,500 2,750 1,300 900 700 450 700 Cargo rice, 10%, 15% and 25% 3,800 3,200 2,450 1,100 250 500 400 700 Cargo rice, lower than 20% - - - - - - - 700 Broken cargo rice of all grades 2,050 1,700 1,000 500 100 100 100 500 Parboiled rice, 100% & 5% 3,600 3,000 2,250 1,050 450 400 400 700 Parboiled rice, 10% & 15% 3,400 2,800 2,050 1,050 450 200 200 700 Parboiled rice, 251' 3,400 2,800 2,050 1,050 450 200 200 700. Parboiled rice, lower than 25X - - - - - - - 700 Broken parboiled rice of all grades 2,050 1,700 1,000 500 100 100 100 700 White rice flour 1,150 800 600 500 100 100 100 200 Glutinous rice flour: Fine 1,150 800 600 500 100 100 100 200 Ordinatry 1,150 800 600 500 100 100 100 200 Vermicelli made from rice 600 400 300 200 - - - 100 Notes: 1. Since January 22, 1976 the premium on exports of glutinous rice to Laos has been exempted. 2. Exporters were required to reserve rice for sale to the Government (mainly for domestic consumption) at a fixed price. (a) From December 25, 1974 to November 6, 1975 reserve 100% at B 2,750 per ton for white rice 5% and B 2,650 for white rice 10%. (b) From November 7, 1975 to December 3, 1975 reserve 50% at B 2,750 per ton for white rice 5% and B 2,650 for white rice 10%. (c) From December 4, 1975 to January 1, 1976 reserve 50% at B 3,150 per ton for white rice 5% and B 3,050 for white rice 10%. (d) From January 22, 1976 to October 18, 1976, there were no reserve requirements. (e) From October 19, 1976 to March 29, 1977 reserve 30% for white rice 100% and 5%, 15% for other rice rice, and 10% for broken rice to be delivered in the ratio 40% of 5% white rice at B 3,800 per ton and 60% of 15% white rice at B 3,000 per ton. (f) From March 30, 1977 to July 29, 1977, 20% for white rice 100% and 5%, 10% for others, except 5% for broken rice other than A-l special delivered in same proportion and prices as (e). (g) From July 21, 1977 to November 18, 1977, 40% for white rice 100% and 5%, 20% for others except 10% for broken rice other than A-I special delivered in 15% white rice at B 3,000 per ton. (h) From November 18 onwards, 50% for white rice 100% and 5%, 30% for other white rice, broken A-I prime -cecial, gltinous rice, d-d 20h of others delivered at 15X white rice at B 3,000 per ton. - 190 - Table 7.5: EXPORT AND DOMESTIC WHOLESALE PRICES OF RICE FOR SELECTED GRADES (B/metric ton) White rice 5% White rice 25% Price difference 5-25% Year f.o.b. Wholesale f'o.b. Wholesale f.o.b. Wholesale 1969 3,860 2,205 3,324 1,724 536 481 1970 2,989 1,905 2,591 1,580 398 325 1971 2,706 1,578 1,959 1,398 747 180 1972 3,092 1,974 2,163 1,697 929 277 1973 3,884 2,865 2,914 2,371 970 494 1974 10,976 3,773 10,001 3,646 975 127 1975 7,370 3,723 6.340 3,558 1,030 165 1976 n.a. 3,823 n.a. 3,600 n.a. 223 1977 5,417 3,866 4,326 3,569 1.091 297 1978 7,186 4,250 4,708 3.798 2,478 452 1979 6,956 4,522 4,893 4,195 2,063 327 Sources: Ministry of Commerce, Department of Business Economics (f.o.b. prices). Department of Internal Trade (wholesale prices). Table 7.6: AVERAGE WHOLESALE PRICES (BANGKOK) OF SELECTED AGRICULTURAL COMMODITIES 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Crop Nonglutinous, paddy, No. 2/a 1,093 1,011 848 1,101 1,538 2,248 2,310 2,254 2,261 2,469 2,584 Nonglutinous, rice (5%) /a 2,205 1,905 1,578 1,822 2,865 3,773 3,723 3,822 3,866 4,250 4,522 Nonglutinous rice (20%) /a 1,747 1,614 1,429 1,718 2,408 3,680 3,520 3,641 3,610 3,849 4,263 Al broken (super) /a 1,186 1,197 1,022 1,513 1,962 2,808 2,682 2,480 2,733 2,842 3,026 Glutinous, rice (10%)/a 1,730 1,172 1,136 1,762 3,055 3,440 3,540 3,740 3,737 n.a. n.a. Maize /a 1,105 1,230 1,189 1,160 1,785 2,558 2,482 2,208 2,091 2,165 2,651 Mungbean, large /b 2,520 2,650 4,050 4,050 4,860 5,480 7,240 10,150 n.a. n.a. n.a. Cassava, (tapioca flour), high grade /a 1,757 1,813 2,140 2,236 2,717 3,747 3,506 3,429 3,685 3,217 5,884 Cassava, pellets /a 699 762 817 828 1,033 1,195 1,571 1,688 1,543 1,450 2,493 Sesame (black), good /b 4,990 4,940 4,896 6,034 8,060 7,760 10,450 13,190 n.a. n.a. n.a Groundnuts (shelled), good /b 4,200 4,010 4,290 5,470 6,510 8,930 9,130 8,888 n.a. n.a. n.a. Cotton, large /b 4,090 4,020 4,910 5,550 7,230 10,080 7,340 10,200 n.a. n.a. n.a. Kapok (ginned), good /b 7,642 7,770 8,330 8,320 7,820 10,230 10,490 n.a. n.a. n.a. n.a. Kenaf, high grade /a 3,040 2,967 3,650 4,861 3,765 3,630 3,981 4,500 5,838 5,148 5,784 Sugarcane /b 136 145 150 180 200 299 300 300 n.a. n.a. n.a. Rubber No. 1 /a 8,139 6,740 5,495 5,500 9,880 9,753 8,510 10,941 11,870 13,950 17,620 Rubber No. 3 /a 7,995 6,580 5,295 5,300 9,680 9,553 8,310 10,841 11,756 13,850 17,520 Sources: /a Bank of Thailand, Monthly Bulletin, various issues. /b Ministry of Commerce, Department ot Business Economics. Table 7.7: DEVELOPMENT OF PRODUCER PRICES OF MAJOR COMMODITIES IN THAILAND, 1968-78 Producer Prices, B/kg Year Rice Sugarcane Rubber Tobacco Cassava Maize Sorghum Mungbeans Kenaf Cotton 1968 0.97 0.11 5.49 13.46 0.33 0.71 0.75 2.73 1.89 3.75 1969 0.86 0.11 6.94 15.27 0.54 0.76 0.79 1.81 1.31 3.64 1970 0.63 0.11 5.72 15.18 0.47 0.84 0.84 2.30 1.68 3.85 1971 0.80 0.11 4.74 15.09 0.52 0.70 0.75 2.24 2.24 3.87 1972 1.31 0.11 4.77 15.74 0.47 0.86 0.91 2.57 2.83 4.45 1973 1.96 0.13 6.86 21.69 0.34 1.35 1.16 2.68 2.62 5.46 1974 2.23 0.18 7.38 21.74 0.30 2.06 1.85 1.54 2.35 6.75 1975 1.98 0.25 6.42 23.50 0.41 1.85 1.69 3.74 2.65 6.39 1976 1.87 0.28 9.15 24.14 0.46 1.67 1.49 4.98 2.99 6.07 1977 2.12 0.27 9.49 29.98 0.46 1.61 1.51 6.99 2.63 7.57 1978 2.53 0.27 10.74 30.24 0.36 1.64 1.53 5.64 2.91 - Source: Ministry of Agriculture, Office of Agricultural Economics. Table 7.8: APPARENT FERTILIZER CONSUMPTION, 1966-78 (metric tons) Opening Domestic Industrial Clos.ing Apparent Nutrient Content Year inventory /a Imports production /b use inventory /a consumption /c N P205 K20 1966 n.a. 141,428 20,275 1,383 n.a. 160,320 24,595 16,235 7,748 1967 218,244 36,187 1.696 252,738 44,485 28,056 13,152 1968 265,686 28,635 2 939 291,382 47,962 39,010 15,652 1969 265,830 20,049 3,965 281,914 42,839 41.480 20,272 1970 249,641 43,522 5,029 288,134 44.097 37,741 27,990 1971 226,544 39,568 7,189 " 258,923 44,242 26,933 21,728 1972 " 383,303 40,762 6,300 417,765 66,617 60,436 25,277 1973 398,863 34,351 7,246 425,968 67,914 62,870 23,732 1974 342,934 44,804 8,300 379,438 60,012 52,746 17,433 1975 50,000 465,958 54,695 12,300 125,000 433,353 70,394 56,916 18,996 1976 125,000 679,484 74,192 13,250 250,000 615,426 105,541 73,650 21,565 1977 250,000 952,476 74,211 13,020 400,000 863.667 149,553 110,547 30,402 1978 400,000 846,366 70,558 15,380 337.000 964,544 167,940 134,304 37,423 /a For 1975-78, opening inventory and closing inventory are IFDC estimates. lb Data include Mae Moh, Bureau of Bangkok Mlunicipal Fertilizer and estimated phosphate rock production. The years 1975, 1976, 1977 and 1978 include filler (clay) used in granulation plants - estimated at 20,000; 26,000; 25,000; and 33,000 tons, respectively. /c No provision is made for product losses in handling in calculating apparent consumption. Source: Ministry of Agriculture, Office of Agricultural Economics and IFDC estimates. - 194 - Table 7.9 FERTILIZER USE, BY CROP AND BY REGION. 1971 AND LQ75 ('000 metric tons) Central % of North Northeast Plain /a South Kingdom Kingdom Rice 1971 4.12 80.61 61-60 16.28 180.25 69 1975 6.87 86.81 136.91 12 18 242.77 51 Annual growth (%) 13.60 1.90 22.10 -7.00 7.70 Field crops /b 1971 7.24 7.09 29.57 2.08 51.33 20 1975 27.71 15.61 73.51 2.06 118.89 25 Annual growth (x) 39.90 21.80 25.60 -0.20 23.40 Other /c 1971 2.84 0.89 10.03 16.28 29.04 11 1975 1.94 3.57 56.88 53.97 116.36 24 Annual growth (%) -9.10 41.50 54.30 34.90 41.50 Total 1971 14.20 88.59 123.20 34.64 260.62 100 1975 36.52 105.99 267.30 68.21 478.02 100 Annual growth (%) 26.60 4.60 21.40 18.50 16.40 % of Kingdom 5.40 34.00 47.30 13.30 100.00 /a Includes Lower North. /b Maize, sorghum, sugarcane, cassava, kenaf, cotton, tobacco, mung beans, soybeans, peanuts, watermelon pineapple, yam, sweet potato, potato. /c Coconut, rubber, oil palm, fruit trees and flowering plants. Source: Ministry of Agriculture, Office of Agricultural Economics. Table 7.10: NUTRIENT TO CROP PRICE RATIOS FOR SELECTED FERTILIZERS AND CROPS, 1968-78 Nutrient Price, B/kg Nutrient:Crop Price Ratio 16-20-0: 21-0-0: 13-13-21: 21-0-0: 15-15-15: Year 21-0-0 16-20-0 13-13-21 15-15-15 Rice Sugarcane Sugarcane Cassava Cassava 1968 9.76 6.75 5.62 6.20 6.96 88.73 51.09 29.58 18.79 1969 8.90 6.39 5.51 6.04 7.43 80.91 50.09 16.48 11.19 1970 8.90 6.61 5.51 6.04 10.49 80.91 50.09 18.94 12.85 1971 8.81 6.25 5.64 5.84 7.81 80.09 51.27 16.94 11.23 1972 8.81 6.72 6.26 6.11 5.13 80.09 56.91 18.74 13.00 1973 12.14 9.36 8.47 7.76 4.78 93.38 65.15 35.71 22.82 1974 20.05 15.39 11.17 11.38 6.90 111.39 62.06 66.83 37.93 1975 18.38 13.89 11.98 12.42 6.51 73.52 47.92 44.83 30.29 1976 12.00 10.50 10.06 10.40 5.61 42.86 35.93 26.09 22.61 1977 12.29 10.36 9.66 10.04 4.89 45.52 35.78 26.72 21.83 1978 14.19 11.11 10.60 10.69 4.39 52.56 39.26 39.42 29.69 Source: Ministry of Agriculture, Office of Agricultural Economics. Table 7.11: ILLUSTRATION OF YIELD RESPONSE OF RICE AND ECONOMIC RETURNS TO FERTILIZER, 1978 Nutrient rate, kg/ha Nutrient Yield increase Increased Avg value: Region N P205 K20 Cost, B/ha kg/ha kg/kg N value, B/ha Cost ratio Local Varieties Central 32 20 - 627 550 10.6 1,392 2.22 Central 41 20 32 1,061 890 9.6 2,252 2.12 Northern 41 20 32 1,061 645 6.9 1,632 1.54 Northeastern 50 26 42 1,337 730 6.2 1,847 1.38 Southern 39 18 29 987 558 6.5 1,412 1.43 High-Yielding Varieties 0 Central 30 10 - 512 465 11.6 1,176 2.30 Central 74 - - 1,050 980 13.2 2,479 2.36 Central 71 20 - 1,181 750 8.2 1,898 1.61 Northern 26 13 21 682 680 11.3 1,720 2.52 Northern 48 - - 682 530 11.0 1,341 1.97 Northeastern 32 16 25 831 475 6.5 1,202 1.45 Southern 77 20 - 1,066 1,065 11.0 2,694 2.53 Source: Fertilizer rates and yields reported by NESDB; economic returns recalculated based upon 1978 prices. - 197 - Table 7.12: REPLANTING OF RUBBER Total Replanting Rubber Other Crops Year of No. of Area No. of Area No. of Area approval holdings (ha) holdings (ha) holdings (ha) 1961 1,311 3,910 1,219 3,822 92 88 1962/a 7,420 12,348 7,140 12,121 280 227 1963 1,782 3,574 1,640 3,445 142 129 1964 3,886 6,004 3,658 5,829 228 175 1965 3,377 4,937 3,060 4,681 317 256 1966 2,773 3,869 2,493 3,655 280 214 1967 4,393 6,071 3,920 5,691 473 380 1968 7,511 10,959 6,629 10,242 882 717 1969 8,787 12,340 7,962 11,535 825 805 1970 9,187 12,904 8,685 12,373 502 531 1971 13,799 19,143 12,877 18,092 922 1,051 1972 18,853 24,826 17,596 23,514 1,257 1,312 1973 21,159 26,086 19,731 24,756 1,428 1,330 1974 16,737 21,437 15,732 20,503 1,005 934 1975 18,644 23,542 17,670 22,677 974 865 1976 19,363 25,764 18,442 24,887 921 877 1977 29,480 36,473 28,911 36,021 569 452 1978 36,847 44,729 34,136 42,493 2,711 2,236 1979/b 40,167 50,000 38,159 47,500 2,008 2,500 Total 265,476 348,916 249,660 333,837 15,816 15,079 /a 1962 replanting includes 5,412 holdings damaged by windstorm and given priority assistance. /b Estimate. Source: Oftice of the Rubber Replanting Aid Fund. Table 8.1: PRODUCTION AND CAPACITY OF SELECTED MANUFACTURING INDUSTRIES Production Production capacity 1965 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1972 1973 1974 Sugar (1,000 metric tons) 320.0 406.6 580.0 585.6 725.0 968.0 1,105.8 1,603.6 2,212.3 1,584.5 1,795.2 675.0 988.0 1,666.0 Beer (million liteTs) 14.4 36.3 32.1 33.9 43.2 44.5 61.3 75.0 103.0 108.4 156.2 100.0 100.0 100.0 Tobacco (1,000 metric tons) 10.1 15.3 16.1 16.8 19.4 20.2 22.6 24.6 23.5 23.9 27.2 22.4 n.a. n.a. Man-made fabrics, woven (million sq yds) 2.7 77.4 145.4 208.5 287.0 278.0 337.5 437.5 463.1 628.0 656.0 n.a. n.a. n.a. Cotton fabrics (million sq yds) 227.9 365.5 450.2 481.3 566.9 529.4 574.4 699.7 806.6 758.0 781.0 6lO.0 645.0 710.0 Gunny bags (million units) 40.4 52.7 63.7 81.6 91.2 110.1 107.4 97.0 111.0 144.9 n.a. 84.0 150.0 150.0 Knitting (million sq yds) /a - 53.0 70.4 110.5 168.7 203.7 237.8 278.8 318.6 376.5 366.0 n.a. n.a. n.a. Plywood (million sheets) n.a. 3.0 3.2 3.5 3.6 3.1 3.0 2.9 4.3 2.3L/ n.a. 10.8 10.8 10.8 Paper (100 metric tons) n.a. 31.7 37.7 42.4 39.7 33.8 25.1 26.4 30.9 33.4 n.a. 43.3 45.0 45.0 Cement (million metric tons) 1.2 2.6 2.8 3.4 3.7 3.9 4.0 4.4 5.1 5.0 n.a. 4.2 4.2 4.2 Galvanized iron sheets (1,000 metric tons) 65.5 85.5 97.3 103.8 86.1 72.1 83.1 88.8 101.7 84.8 101.5 192.0 192.0 192.0 Detergents (1,000 metric tons) n.a. 27.1 32.2 40.0 46.6 37.2 44.6 53.6 59.0 60.9 n.a. 54.3 54.3 54.3 Chemical fertilizers (1,000 metric tons) n.a. 39.8 38.0 31.1 23.2 30.6 153.3 17.6 144.5 n.a. n.a. 88.2 n.a. n.a. Acetylene (metric tons) n.a. 79.0 143.0 131.0 110.0 55.0 80.0 157.0 230.0 78. 0 n.a. 80.0 n.a. n.a. Sulphuric acid (1,000 metric tons) n.a. 15.0 14.3 47.3 47.1 46.9 37.8 41.7 48.2 25. 7jL n.a. 48.0 n.a. n.a. Petroleum products (billion liters) n.a. 3.9 5.4 6.6 7.8 6.8 7.6 8.4 8.8 8.9 9.4 7.9 8.7 8.7 Motor vehicle assembly (1,000 units) 10.1 10.6 15.0 19.4 17.4 27.1 31.0 47.6 65.2 37.3 n.a. 53.0 53.0 53.0 Motorcycle assembly (1,000 units - - - 34.4 56.6 66.8 83.9 99.0 148.6 133.7k n.a. 68.0 68.0 68.0 n.a. = not available. /a Total man-made and cotton fabrics. /b 6 months. /c 9 months. Sources: Ministry of Industry and Bank of Thailand. - 199 - Table 8.2: GROSS DOIMESTIC PRODUCT ORIGINATING FROM MAN UFACTURING AT CURRENT 'MARKET PRICES (Billions of baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a Food 5.0 5.3 5.0 6.7 10.0 12.5 14.1 15.0 14.5 15.9 12cver a Z 2.2 2.? 3.5 32 4.3 4.3 5.3 .A 7.7 9.6 Tobacco and snuff 2.0 2.4 2.6 2.9 3.7 4.1 4.8 5.7 6.0 6.5 Textiles 1.7 2.3 3.4 4.1 5.0 4.7 5.3 6.5 8.0 9.5 Wearing apparel and made-up textile goods 1.1 1.6 1.8 2.5 3.0 4.2 5.1 6.0 8.5 10.8 Iiood and cork 0.6 0.6 0.7 1.0 1.5 1.4 1.7 1.8 1.7 1.9 Furniture and fixtures 0.3 0.3 0.3 0.4 0.5 0.6 0.6 0.8 1.0 1.2 Paper and paper products 0.2 0.2 0.2 0.2 0.3 0.4 0.5 0.7 0.9 0.9 Prinrting, publishing and allied industries 0.6 0.6 0.7 1.0 1.5 1.5 1.6 1.6 1.9 2.1 Leat'her and leather products (and footwear) 0.1 0.2 0.2 0.3 0.3 0.4 0.3 0.3 0.3 0.4 Rubber and rubber products 0.4 0.5 0.5 0.6 1.0 1.1 1.5 1.9 2.2 3.0 17heuicals and chemical products 1.5 1.6 1.8 2.0 2.4 2.9 3.3 4.3 5.0 5.7 euroleun refining and coal 1.6 2.1 2.4 3.0 4.2 4.9 5.3 6.1 7.5 13.3 ,onmetallic mineral products 1.4 1.5 1.6 2.0 2.4 2.8 3.4 4.7 5.8 6.9 Basic metals 0.3 0.3 0.4 0.8 1.1 1.0 1.2 1.6 2.0 2.6 11etal products (excl. machin- ery and transport equipment). 0.5 0.6 0.7 1.1 1.1 0.8 1.0 1.3 1.9 29.8 ,onelectrical machinery 0.4 0.5 0.6 0.7 0.9 0.8 1.0 1.1 1.3 1.6 Electrical machinery and supplies 0.3 0.3 0.4 0.5 0.6 0.7 1.2 1.5 1.9 2.7 Transport equipment 1.1 1.1 1.4 2.3 3.3 3.7 4.4 5.8 7.7 9.0 M!iscellaneous, n.e.s. 0.5 0.6 0.6 0.7 0.6 1.2 1.5 1.6 1.9 2.4 Total Value Added 21.8 24.9 27.9 35.6 46.4 53.9 63.0 7477 87.7 108.9 /a Preliminary. Note: Totals may not add because of rounding. Source: NESDB. Table 8.3: GROSS DOMESTIC PRODUCT ORIGINATING FROM MANUFACTURING AT CONSTANT PRICES (Billions of 1972 baht) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979/a ) Food 4.8 5.2 5.2 5.4 6.0 6.3 7.3 8.4 8.6 8.9 Beverages 3.0 2.2 2.5 3.0 3.7 3.3 4.0 5.0 5.5 6.7 Tobacco and snuff 2.4 2.5 2.6 3.0 3.1 3.4 3.7 3.5 3.6 3.8 Textiles 2.2 2.7 3.4 4.2 4.5 5.1 5.7 6.3 7.5 8.3 Wearing apparel and made-up textile goods 1.1 2.5 1.7 1.9 1.9 2.7 3.3 3.6 4.8 5.8 Wood and cork 0.7 0.8 0.7 0.8 0.9 0.9 1.0 1.0 0.8 0.8 Furniture and fixtures 0.3 0.3 0.3 0.3 0.2 0.3 0.3 0.4 0.4 0.5 Paper and paper products 0.2 0.2 0.2 0.2 0.2 0.3 0.5 0.6 0.7 0.7 o Printing, publishing and allied industries 0.5 0.6 0.7 0.8 1.0 1.0 1.3 1.3 1.4 1.5 Leather and leather products (and footwear) 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Rubber and rubber products 0.4 0.5 0.5 0.6 0.7 0.9 1.0 1.3 1.4 1.5 Chemicals and chemical products 1.5 1.5 1.6 1.7 1.6 2.0 2.3 3.1 3.4 3.8 Petroleum refining and coal 1.4 2.0 2.4 2.8 2.5 2.8 3.1 3.2 3.3 3.4 Nonmetallic mineral products 1.2 1.3 1.6 1.9 2.0 2.2 2.4 2.9 3.2 3.4 Basic metals 0.4 0.4 0.5 0.5 0.4 0.4 0.5 0.5 0.6 0.7 Metal products (excl. machin- ery and transport equipment) 0.4 0.5 0.6 0.7 0.6 0.5 0.5 0.5 0.5 0.5 Nonelectrical machinery 0.5 0.6 0.6 0.6 0.7 0.6 0.8 0.9 0.9 1.0 Electrical machinery and supplies 0.3 0.3 0.4 0.4 0.4 0.5 0.7 0.8 0.9 1.0 Transport equipment 1.2 1.2 1.4 1.8 2.4 2.4 3.0 3.8 4.2 4.5 Miscellaneous, n.e.s. 0.5 0.6 0.6 0.6 0.4 0.8 1.0 1.0 1.0 1.2 Total Value Added 23.3 25.2 27.9 31.5 33.6 36.8 42.5 48.1 52.8 58.0 /a Preliminary. Note: Totals may not add because of rounding. Source: NESDB. Table 8.4: STATISTICS OF PROMOTED INVESTMENT /a Registered Number of capital of promoted Number of Number of Number of Number of promotion firms (million baht) projects new firms applications applications certificates Investment /d Thai Foreign starting starting received approved /b issued /c (million baht) owned owned Total operations operations Oct 1960- Dec 1967 n.a. n.a. 340 12,466 2,627 1,145 3,772 n.a. n.a. 1968 252 149 105 2,562 336 279 615 82 73 1969 242 121 86 4,157 801 445 1,246 89 80 1970 117 94 91 2,605 590 263 852 67 56 1971 103 52 76 1,496 410 178 588 59 43 1972 180 116 70 4,079 772 236 1,008 47 36 1973 552 325 116 7,773 988 296 1,284 58 40 1974 228 176 251 18,021 2,804 939 3,740 108 84 1975 111 83 86 4,638 907 311 1,217 69 52 1976 119 61 66 1,987 718 152 870 n.a. 83 1977 264 102 69 2,642 542 114 657 n.a. 48 1978 342 202 128 15,918 2,207 377 2,584 n.a. 54 1979 338 233 154 24,348 6,112 1,359 7,471 n.a. n.a. _ - n.a. = not available. /a Includes hotels and service industries such as cold storage, and, in recent years, mineral exploration. Over the past ten years, such nonmanufacturing investments have accounted for 8.7% of total investment in promoted indus- tries. /b When an application for investment promotion has been approved, the applicant is notified in writing of the pri- veleges and conditions under which promotion is granted. The letter of notification will usually specify a six- month time limit for the applicant to satisfy the qualifying conditions (incorporation of the company, commercial registration, etc.). Two months are generally required, after submission of the application, to be notified of the Board's decision. /c The Promotion Certificate, which is, in effect, the contract for investment promotion between the investor and the Royal Thai Government, is issued to the investor once he has complied with all the terms and conditions specified in the notification of approval. A two-year period is usually allowed to start operations. If operations do not start during this period, the certificate may be withdrawn. Id Refers to projects approved and granted a promotion certificate; figures for investment projects actually imple- mented are not available. /e January-June. Source: Board of Investment. Table 8.5: MINERAL PRODUCTION (Thousands of metric tons) 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Tin concentrates 31.2 32.8 28.8 29.7 29.6 30.1 28.6 27.8 22.4 27.9 33.0 41.2 46.4 Wolfram ore (tungsten) 0.8 1.0 1.3 1.4 4.9 6.5 5.0 4.3 3.5 4.0 4.3 6.2 3.5 Iron ore 549.2 499.5 477.4 22.5 39.5 27.8 36.3 36.3 32.5 25.0 63.5 88.1 10.3 Lead ore 8.2 6.5 4.2 3.0 5.5 4.3 8.7 3.6 3.6 2.1 1.3 3.9 20.5 Antimony 2.4 0.8 1.7 5.7 5.4 11.3 8.2 10.3 7.7 9.1 6.1 6.8 6.9 Manganese ore 79.1 41.0 29.9 23.9 14.0 19.8 36.3 30.2 25.2 50.2 77.0 67.2 35.3 o Gypsum 61.7 128.1 92.0 144.2 167.9 87.8 236.3 311.8 255.2 267.8 380.1 280.9 595.4 Lignite 335.3 305.3 347.8 399.9 445.1 345.5 361.0 484.7 462.3 680.3 438.6 638.9 1,536.5 Fluorite ore 133.2 245.1 297.6 317.8 426.5 395.0 398.0 420.2 286.2 200.4 239.8 259.8 236.4 Marl 1,213.6 1,624.2 1,533.9 622.8 489.7 372.2 245.8 226.7 467.5 435.0 584.7 1,459.7 2,261.7 Source: Bank of Thailand. - 203 - Table 8.6: ENERGY CONSUMPTION BY SOURCE OF ENERGY (Kilo calories x 1012) Petroleum Hydro- Fuel Paddy Year products electric Coal wood Charcoal husk Bagasse Total 1967 29.8 4.5 1.2 0.7 0.7 0.5 1.0 38.4 1968 39.4 4.1 1.3 0.7 0.6 0.4 1.9 48.3 1969 42.6 3.1 1.4 0.4 0.5 0.3 2.2 50.6 1970 46.5 5.3 1.5 0.5 0.6 0.4 2.7 57.5 1971 58.4 6.1 1.7 0.6 0.6 0.4 2.6 70.4 1972 68.3 5.6 1.4 0.5 0.4 0.3 3.1 79.6 1973 77.8 6.1 1.4 0.5 0.4 0.4 4.2 90.8 1974 75.4 7.8 2.2 0.4 0.2 0.4 5.6 91.9 1975 78.0 10.6 2.2 0.4 0.1 0.4 5.9 97.6 1976 88.1 11.3 2.5 0.4 0.2 0.4 8.4 111.3 1977 98.6 10.2 2.3 0.4 0.2 0.4 8.3 120.4 1978 106.1 6.9 2.9 0.3 0.2 0.4 10.4 127.3 Source: National Energy Authority. Table 8.7: TOURISM - BASIC DATA 1965 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 Foreign visitors (in thousands) 225.0 469.8 628.7 638.7 820.8 1,037.7 1,107.4 1,180.1 1,098.4 1,220.7 1,453.8 Nationality United States 73.8 133.3 159.2 147.0 151.6 161.4 156.8 116.2 116.7 124.1 131.4 of which: R&R (15.0) (70.7) (44.3) (26.6) (7.7) (4.4) (3.5) - - - - Japan 17.3 42.9 47.0 55.8 93.5 151.9 132.7 147.0 150.5 174.0 193.7 Malaysia 18.4 59.6 105.0 128.9 162.6 190.8 197.5 227.8 161.2 217.4 243.4 Germany 7.4 20.2 28.0 35.8 52.7 62.7 69.4 78.1 86.0 79.1 91.5 UK 20.3 31.3 37.0 37.7 46.9 58.3 65.4 76.4 72.7 72.0 98.5 France 6.7 12.7 21.1 17.9 31.7 45.0 42.6 46.9 48.5 51.1 64.0 Australia 10.1 22.2 28.2 26.4 31.9 48.2 75.8 78.9 80.5 69.5 67.5 Other 66.5 147.5 203.2 188.6 250.0 319.4 367.2 408.8 382.3 433.5 563.8 Nverage length of stay (days) 4.8 4.9 4.8 4.9 4.9 4.7 4.8 5.1 5.1 4.5 4.8 > lotel capacity in Bangkok (rooms) 2,469 7,984 8,763 9,127 9,028 9,746 9,861 10,331 10,485 11,104 11,286 Foreign exchange earnings (millions of Baht) 506 1,770 2,175 2,214 2,718 3,457 3,852 4,538 3,990 4,607 8,895 of which: R&R of US troops (50) (459) (390) (240) (63) (13) (11) - - - - Source: Tourist Organization of Thailand. - 205 - Table 8.8: REALIZED RATES OF EFFECTIVE PROTECTION, 1969, 1971, 1974 /a MAJOR CATEGORIES AND SELECTED ITEMS (percent) 1969 1971 1974 1978 Balassa Corden Balassa Corden Balassa Corden Corden Processed Food -66.5 -48.3 -10.1 -0.3 - - - Sugar - - -9.8 2.9 -90.4 -84.0 -20.3 Sweet ondensed milk - - 3.9 3.4 /b 1,766.1 33.6 Wheat flour - - /b 186.6 153.9 30.3 466.6 Fruit canning - - -56.7 -28.4 -34.2 -8.0 n.a. Animal feeds - - -10.6 -8.0 -11.0 -8.4 -2.1 Beverages and Tobacco -18.9 -16.5 177.9 107.4 - - - Beer - - 234.3 35.6 115.9 65.3 39.7 Cigarettes - - n.a. n.a. -12.2 -12.1 -25.3 Construction Materials -6.9 -5.8 -17.6 -16.1 - - - Cement (Domestic sales) - - -17.6 -16.1 -45.0 -42.9 n.a. (Export sales) - - -17.6 -16.1 -12.6 -11.7 - Intermediate Products 1 0.7 0.8 9.9 5.3 - - Veneer and plywood - - 264.2 90.2 144.5 62.7 Thread and yarn - - 49.2 39.3 23.6 19.9 Glass sheet - - 22.1 18.7 -8.1 -6.8 Iron and steel - - 44.0 18.4 97.9 37.7 Vegetable fibers - - -1.9 -1.6 -1.6 -1.2 lntermediate Products II 57.5 45.5 72.2 44.9 - - Textile fabrics (noncotton) - - 95.3 64.0 -20.1 -16.0 Cotton fabrics - - 10.5 7.5 -33.5 -25.8 Rubber tires and tubes - - 44.3 25.2 012.7 -12.7 Paints and varnishes - - 70.2 13.7 /b 57.8 Chemical products, plastics and synthetics - - 32.6 25.0 45.4 34.8 Finished structural metal - - 29.6. 24.9 58.6 49.1 Other metal products - - 19.7 18.6 61.3 57.6 Consumer Nondurables 18.2 13.0 27.7 20.5 - - Clothing - - -10.4 -7.1 11.9 7.3 Textile articles - - 63.6 44.1 -5.5 -4.4 Shoes - - 77.9 60.1 8.0 6.8 Drugs and medicines - - 122.4 48.8 -19.2 -12.9 Soap and detergents - - 36.3 20.7 -16.6 -10.6 Electric bulbs - - 331.0 121.8 0.0 0.0 Flashlight batteries - - - - 29.2 -22.0 Consumer Durables 132.1 69.1 21.4 17.2 - - Motorcycle assembly and parts - - 78.7 56.3 48.4 36.4 TV and household appliances - - 79.8 58.6 /b 830.2 Machinery 43.9 30.6 9.9 7.6 - - Trrctor essembly - - 9.9 7.6 6.6 5.9 Sewing machines - - 5.9 5.3 -11.2 -8.2 Nonelectrical machinery - - n.a. n.a. 4.0 3.4 Transport Equipment 64.5 34.9 344.1 146.4 - - Car assembly - - /b 236.4 /b 353.9 Truck assembly - - 201.3 95.4 219.2 100.6 /a Calculated on the basis of selling market prices in Thailand. In many cases, the nominal tariffs would permit higher selling prices, but domestic competition keeps actual prices lower. Thus, the potential effective protection is higher than what is realized. lb Very large. Source: Mission estimates. Table 9.1: PRICE INDICES (ANNUAL) Old index (1968=100) New index (1968-100) 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1974 1975 1976 1977 1978 1979 Wholesale Price Index for Thailand /a Agricultural products 104.5 100.5 98.4 109.4 134.6 170.4 190.0 199.5 204.6 206.6 - 85.4 95.2 100.0 110.0 112.2 118.8 Foodstuffs 98.9 93.7 95.1 106.8 134.4 180.1 184.4 192.9 205.2 203.4 - 93.4 95.6 100.0 104.8 115.0 120.3 Beverages 99.8 105.4 111.0 113.4 117.2 131.8 142.5 145.0 139.8 149.0 - n.a. n.a. 100.0 101.0 107.3 113.2 Textiles and textile products /b 104.6 106.8 107.6 110.9 129.3 160.6 140.9 145.6 155.6 163.9 - 110.3 96.8 100.0 112.5 117.9 135.5 Construction materials 103.2 105.7 102.6 106.7 143.3 196.4 199.9 202.8 212.9 220.6 - 96.8 98.6 100.0 108.0 118.4 146.1 Chemicals and chemical products /c 108.8 116.1 120.0 127.8 158.0 211.1 217.9 198.9 194.9 204.2 - 106.1 109.5 100.0 106.1 112.2 128.5 Petroleum products 99.8 99.1 103.7 104.9 116.7 214.4 219.4 219.1 243.8 262.7 - 97.9 100.1 100.0 108.2 118.4 163.7 Paper and paper products 103.8 104.1 105.7 108.0 137.9 181.3 188.7 182.3 183.4 184.9 - 99.4 103.5 100.0 101.0 103.3 119.0 Hide and leather products /d 102.1 99.5 98.3 114.5 152.4 160.5 155.5 156.7 165.1 188.2 - 102.4 99.2 100.0 104.1 119.4 165.3 Rubber and rubber products 119.2 103.4 88.6 89.3 143.8 147.8 133.0 163.0 168.2 173.8 - 90.7 81.6 100.0 102.0 102.8 117.7 Transportation equipment 100.3 108.9 120.0 132.2 155.9 189.7 209.2 216.9 223.2 234.5 - 87.5 96.4 100.0 104.5 120.9 131.2 liachinery and equipment 100.4 104.2 106.8 110.2 129.9 158.3 162.2 175.7 199.2 213.9 - 90.1 92.3 100.0 107.0 116.4 119.1 Miscellaneous 107.7 117.1 112.1 117.2 134.2 176.5 159.3 170.7 205.3 283.6 - 103.4 93.3 100.0 126.8 165.9 165.1 Special Groups Domestic commodities 103.3 99.3 98.4 107.8 133.6 175.4 182.6 191.4 202.8 216.7 249.8 - - - - - Imported commodities 103.3 110.8 113.4 118.9 143.9 177.8 182.4 186.0 193.0 192.4 204.4 - - - - - - Exported commodities 112.5 107.8 103.9 111.7 154.9 195.4 190.4 202.4 218.5 246.3 292.7 - - - - - - All items 103.3 102.8 103.1 111.2 136.6 176.1 182.6 189.8 199.9 209.4 236.5 92.8 96.2 100.0 107.8 115.8 128.8 /a The new wholesale price index with base year 1968 has been reported by the Department of Business Economics since January 1971. This index includes the prices of 256 representative commodities, which are collected from markets in Bangkok-Thonburi and nine major provinces. The new series are not available for the years before 1968. The old index with base year 1958 inclitdes the prices of 55 items, of which 21 are agricultural products and foodstuffs. These prices were collected in the Bangkok-Thonburi area. /b Heading for old index is "Cloth." /c Heading for old index is "Chemical Products." /d Heading for old index is "Leather." /e Weights and selected items are derived from a family expenditure survey conducted in 1962-65 among families of two or more persons in all occupational groups (except those whose main source of income is from agriculture) with annual income ranging from 3,000 baht to 60,000 baht. Table 9.2: CONSUMER PRICE INDEX FOR WHOLE KINGDoM Old Series (October 1964-September 1965 - 100) New Series (1976 = 100) Weights /a 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 Weights /b 1974 1975 1976 1978 1978 1979 All items 100.0 113.6 113.5 114.0 119.6 138.1 171.7 180.8 188.4 201.9 218.8 100.00 91.2 96.0 100.0 107.6 116.1 127.6 Food 49.5 123.6 121.6 119.3 127.8 153.7 198.8 209.1 218.4 236.6 260.2 43.68 91.0 95.7 100.0 109.4 119.1 129.9 Nonfodd 56.32 91.1 96.2 100.0 104.9 112.0 123.8 Clothing 12.1 101.6 103.1 106.2 108.7 125.9 149.7 158.0 163.0 171.4 179.2 8.10 91.8 96.9 100.0 104.3 109.6 124.6 Housing 15.5 106.2 108.2 110.5 112.9 125.8 146.0 151.4 156.0 165.3 174.5 22-32 93.6 97.0 100.0 105.5 111.2 122.1 Personal & medical care 7.0 105.2 105.6 109.8 114.4 118.7 134.1 144.8 146.5 154.9 169.6 6.40 91.5 98.8 100.0 106.4 115.1 123.0 Transpor- tation 4.9 99.4 100.1 104.3 106.1 115.0 159.0 169.2 185.3 191.7 208.3 7.37 85.8 91.3 100.0 103.1 118.4 138.2 Recreation, reading & education 6.1 103.0 103.9 109.4 112.5 121.2 138.4 148.3 155.1 161.4 168.0 8.18 89.2 95.6 100.0 102.9 109.5 120.9 Tobacco & alcoholic beverages 4.9 100.6 100.9 102.0 102.4 105.4 121.8 126.8 133.7 142.3 146.6 3.95 91.4 96.2 100.0 107.1 110.0 113.0 La Weights and selected items are derived from a family expenditure survey conducted in 1962 among families of two or more persons in all occupational groups - except those whose main source of income is from agriculture - with annual income ranging from B 3,000 to B 60,000. lb Weights and selected items are derived from a socio-economic survey conducted only in urban areas in 1975/76 among families of two or aore persons, but not over 10, annual income ranging from B 1,000 to B 5,000. Source: Department of Business Economics, Ministry of Commerce. - 208 - Table Rl.1: REGIONAL POPULATION ('000) Annual growth rates (%) 1960 1970 1976 1978 1960-70 1970-78 Bangkok 2,136 3,253 4,343 4,736 4.3 4.8 Center 6,135 7,966 8,948 9,319 2.6 2.0 North 5,723 7,919 9,174 9,544 3.3 2.4 Northeast 8,992 12,715 15,169 15,941 3.5 2.9 South 3,272 4,517 5,323 5,558 3.3 2.6 Whole Kingdom 26,258 36,370 42,957 45,098 3.3 2.7 Source: 1960 and 1970 Census, NESDB. - 209 - Table R2.1: GROSS REGIONAL PRODUCT - BANGKOK (MLillions of current Baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 180 188 210 266 1,236 1,359 1,724 1,983 2,25:3 Livestock 254 211 229 255 18 22 24 21 21 Fisheries 3 1 1 1 2 3 3 3 Forestry - - - - - - - - Subtotal 437 400 440 522 1,256 1,384 1,751 2,007 2,274 MIining & quarrying - - - - - - - - ianufacturing 8,588 9,946 11,132 14,317 19,220 21,040 23,674 26,066 31,421 Construction 2,867 2,560 2,235 2,597 4,285 5,823 6,225 8,406 10,751 Electricity & water supply 453 458 588 850 821 811 808 1,033 1,223 Transportation & communi- cation 4,379 4,700 5,401 6,637 6,109 6,476 7,886 8,988 9,974 Wholesale & retail trade 9,315 9,312 10,960 14,075 17,138 17,068 19,274 22,599 27,293 Banking, insurance & real estate 4,662 4,981 5,506 7,038 10,425 12,014 12,769 15,425 17,722 Ownership of dwellings 558 606 614 651 747 819 895 964 1,030 Public adminis- tration & defense 2,418 2,553 2,723 2,986 3,704 4,275 4,740 5,614 7,075 Servi_es 5,830 6,500 6,972 7,929 10,005 11,404 13,342 15,787 18,071 Gross Regional Product (GRP) 39,507 42,016 46,571 57,602 73,712 81,114 91,379 106,889 126,834 Source: NTESDB. - 210 - Table R2.2: GROSS REGIONAL PRODUCT - CENTER (Millions of current Baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 7,427 8,914 11,966 18,948 22,145 22,969 25,682 25,637 29,702 Livestock 1,440 1,452 1,483 1,596 3,357 3,723 3,851 4,751 4,750 Fisheries 1,975 2,045 2,498 3,223 3,345 3,780 4,473 5,067 5,624 Forestry 1,075 825 903 862 964 935 1,052 1,001 973 Subtotal 11,917 13,236 16,850 24,629 29,814 31,407 35,058 36,456 40,869 Mining & quarrying 949 1,034 1,004 978 1,349 1,508 1,756 2,724 3,122 lianufacturing 8,202 9,809 11,132 14,470 21,284 23,258 28,318 33,182 38,224 Construction 2,026 1,596 1,707 2,064 1,970 1,815 2,918 3,408 4,017 El-ectricity & water supply 322 808 932 917 1,039 757 1,039 1,116 1,269 Transportation & comuni- cation 1,655 1,605 1,811 1,988 5,012 5,561 6,102 7,152 8,100 ,4holesale & retail trade 6,450 7,069 7,904 10,732 15,002 14,326 17,493 20,621 25,328 Banking, insurance & real estate 307 341 390 533 748 873 1,042 1,206 1,376 Ownership of dwellings 1,374 1,444 1,501 1,694 2,041 2,149 2,358 2,570 2,837 Public adminis- tration & defense 1,320 1,466 1,592 1,912 2,465 2,911 3,172 3,585 4,260 Services 3,188 3,416 3,810 4,474 3,692 4,250 4,826 5,618 6,166 Gross Regional Product (GRP) 37,710 41,824 48,633 64,391 84,415 88,815 104,082 117,638 135,568 Source: NESDB. - 211 - Table R2.3: GROSS REGIONAL PRODUCT - NORTH (Millions of current Baht) Industrial origin 1970 1971 1.972 1973 1974 1975 1976 1977 1978 Agriculture Crops 7,410 7,984 10,778 16,227 15,722 18,949 19,407 18,975 22;038 Livestock 1,038 1,376 1,495 1,614 2,516 2,443 2,614 3,137 2,886 Fisheries 134 192 85 183 302 295 304 397 435 Forestry 836 983 865 1,230 1,679 1,558 1,872 1,828 1,805 Subtotal 9,418 10,535 13,223 19,254 20,219 23,245 24,197 24,337 2.7164 Mining & quarrying 494 526 479 506 734 552 596 825 972 Manufacturing 1,732 1,741 1,867 2,272 2,858 3,734 4,238 4,810 5,621 Construction 1,257 1,074 1,107 1,264 1,446 1,536 2,027 2,466 2,972 Electricity & water supply 613 453 491 574 674 1,383 1,549 1,797 2,089 Transportation & communi- cation 869 825 1,104 1,608 1,451 1,784 1,915 2,128 2,527 Wholesale & retail trade 3,318 3,110 3,227 4,797 6,843 7,481 8,441 9,346 11,083 Banking, insurance & real estate 244 349 397 451 608 769 934 1,108 1,286 Ownership of dwellings 277 289 293 326 389 408 448 489 570 Public adminis- tration & defense 800 878 974 1,164 1,504 1,775 1,945 2,191 2,642 Services 1,486 1,567 1,723 1,819 2,633 3,078 3,539 4,091 4,588 Gross Regional Product (GRP) 20,508 21,347 24,885 34,035 39,359 45.745 49,829 53,588 61,514 Source: NESDB. - 212 - Table R2.4: GROSS REGIONAL PRODUCT - NORTHEAST (Millions of current Baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 7,415 7,448 8,037 13,371 15,522 18,691 19,831 19,482 22,313 Livestock 1,592 1,833 1,966 2,000 3,443 3,745 4,245 4,334 4,408 Fisheries 251 246 369 572 910 952 985 1,257 1,290 Forestry 551 457 436 498 865 1,018 992 1,183 1,300 Subtotal 9,809 9,984 10,808 16,441 20.740 24,406 26.061 26.556 29.331 Mining & quarrying 207 214 190 178 113 165 320 321 419 Xanufacturing 1,861 1,900 2,081 2,561 3,312 3,576 3,850 4,592 5,145 Construction 1,347 1,320 1,206 1,453 1,861 2,360 2,841 3,646 4,424 ectricity & water supply 105 95 136 207 158 200 208 263 258 Transportation & cormuni- cation 885 979 1,213 1,622 1,764 1,542 1,679 1,827 2,045 Wholesale & retail trade 3,362 3,205 3,577 5,208 7,102 7,770 8,510 9,529 11,021 Banking, insurance & real estate 200 303 337 413 558 689 806 969 1,111 Ownership of dwellings 439 461 482 539 611 627 689 757 858 Public adminis- tration & defense 1,050 1,150 1,231 1,432 1,841 2,161 2,391 2,631 3,089 Services 2,163 2,488 2,719 2,940 3,289 3,816 4,209 4,954 5,478 Gross Regional Product (GRP) 21,428 22,099 24,060 32,994 41,349 47,312 51,564 56,045 63,159 ource: NESDB. - 213 - Table R2.5: GROSS REGIONAL PRODUCT - SOUTH (Millions of current Baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 4,344 3,550 4,969 7,631 7,605 7,698 8,959 10,775 12,412 Livestock 519 602 709 813 1,249 1,540 1,523 1,951 1,906 Fisheries 1,711 2,005 2,253 2,996 2,711 3,424 4,027 4,410 5,321 Forestry 338 474 667 947 1,142 959 1,194 1,187 1,168 Subtotal 6,912 6,631 8,598 12,387 12,706 13,621 15,703 18,323 20,807 Mining & quarrying 1,109 1,189 1,213 1,195 2,334 1,837 2,502 4,281 5,310 Manufacturing 1,431 1,512 1,652 1,994 2,685 2,745 3,456 4,119 4,626 Construction 764 777 833 962 1,140 1,339 1,773 2,241 2,787 Electricity & water supply 132 90 104 134 97 123 128 159 165 Transportation & communi- cation 800 846 985 1,382 1,630 1,887 2,404 2,568 3,012 Wholesale & retail trade 3,458 3,573 4,213 6,259 7,879 7,764 9,228 10,924 13,373 Banking, insurance & real estate 213 277 292 362 497 623 724 869 989 Ownership of dwellings 286 300 309 342 386 412 452 490 549 Public adminis- tration & defense 558 617 658 798 1,019 1,199 1,323 1,510 1,793 Services 1,244 1,509 1,620 1,706 2,160 2,676 2,944 3,413 3,710 Gross Regional Product (GRP) 16,907 17,321 20,477 27,521 32,533 34,226 40,637 48,897 57,121 Source: NESDB. - 214 - Table R2.6: GROSS REGIONAL PRODUCT - BANGKOK (Millions of 1962 baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 166 168 148 148 138 129 101 Livestock 205 171 179 197 180 175 165 Fisheries 3 1 1 1 - 1 - Forestry - - - - - - - Subtotal 374 340 328 346 318 305 266 Mining & quarrying - - - - - - - Manufacturing 7,926 9,279 10,324 12,177 12,249 13,324 14,294 Construction 2,429 2,129 1,784 1,858 1,944 2,175 2,372 Electricity & water supply 485 719 845 967 985 1,100 1,246 Transportation & communi- cation 4,061 3,955 4,342 4,316 4,780 4,943 5,327 Wholesale & retail trade 7,474 7,935 8,537 9,182 9,445 9,593 9,951 Banking, insurance & real estate 3,956 4,195 4,433 4,956 5,531 6,192 6,961 Omnership of dwellings 439 466 469 492 511 533 554 Public adminis- tration & defense 2,052 2,126 2,177 2,283 2,297 2,458 2,623 Services 5,016 5,488 5,897 6,619 6,929 7,638 8,293 Gross Regional Product (GRP) 34,212 36,632 39,136 43,196 44,989 48,261 51,887 Source: NESDB - 215 - Table R2.7: GROSS REGIONAL PRODUCT - CENTER (Millions of 1962 baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 6,677 7,518 7,615 8,795 9,604 10,063 10,542 Livestock 1,213 1,240 1,286 1,394 1,545 1,654 1,665 Fisheries 2,064 2,119 2,439 2,369 2,129 2,291 2,459 Forestry 993 817 814 642 751 668 615 Subtotal 10,947 11,694 12,154 13,200 14,029 14,676 15,281 Mining & quarrying 602 644 632 603 726 634 677 Manufacturing 7,460 9,305 10,502 11,932 12,231 13,354 14,440 Construction 1,692 1,350 1,386 1,431 1,398 1,474 1,599 Electricity & water supply 405 1,232 1,558 1,797 2,065 2,411 2,785 Transportation & communi- cation 1,539 1,543 1,670 1,623 1,829 1,894 2,044 Wholesale & retail trade 5,102 6,126 6,259 6,789 7,017 7,113 7,460 Banking, insurance & real estate 257 292 319 364 423 498 575 Ownership of dwellings 1,087 1,124 1,176 1,199 1,253 1,295 1,343 Public adminis- tration & defense 1,104 1,241 1,294 1,417 1,449 1,671 1,841 Services 2,706 2,920 3,142 3,606 3,758 4,160 4,526 Gross Regional Product (GRP) 32,901 37,471 40,092 43,961 46,178 49,183 52,571 Source: NESDB - 216 - Table R2.8: GROSS REGIONAL PRODUCT - NORTH (Millions of 1962 baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 7,004 6,809 6,257 7,265 7,476 7,406 7,792 Livestock 874 1,164 1,237 1,344 1,444 1,673 1,754 Fisheries 140 196 83 128 213 163 165 Forestry 781 975 751 870 775 797 803 Subtotal 8,799 9,144 8,328 9,607 9,908 10,039 10,514 Mining & quarrying 317 328 290 296 378 319 281 Manufacturing 1,594 1,655 1,695 1,778 2,042 1,996 2,199 Construction 1,063 910 866 831 785 976 1,069 Electricity & water supply 704 698 776 897 971 987 1,038 Transportation & communi- cation 775 741 904 1,135 1,099 1,267 1,419 Wlholesale & retail trade 2,655 2,700 2,461 2,877 3,266 3,276 3,389 Banking, insurance & real estate 207 299 313 292 310 329 374 Ownership of dwellings 231 237 240 247 254 263 271 Public adminis- tration & defense 677 745 762 819 855 884 954 Services 1,185 1,201 1,291 1,358 1,480 1,518 1,610 Gross Regional Product (GRP) 18,207 18,658 17,926 20,137 21,348 21,854 23,118 Source: NESDB - 217 - Table R2.9: GROSS REGIONIAL PRODUCT - NORTHEAST (Millions of 1962 baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 7,156 7,347 6,711 8,009 7,789 8,254 8,353 Livestock 1,262 1,430 1,542 1,646 1,782 1,997 2,050 Fisheries 247 233 357 396 526 524 572 Forestry 528 460 396 382 493 415 398 Subtotal 9,193 9,470 9,006 10,433 10,590 11,190 11.373 Mining & quarrying 136 135 121 113 140 117 101 Manufacturing 1,756 1,836 1,982 2,176 2,577 2,532 2,668 Construction 1,167 1,136 1,054 1,037 1,077 1,081 1,184 Electricity & water supply 120 146 215 322 331 370 435 Transportation & communi- cation 833 938 1,093 1,278 1,265 1,466 1,493 Wholesale & retail trade 2,759 2,827 2,860 3,394 3,817 3,607 3,757 Banking, insurance & real estate 173 264 279 290 332 481 572 Ownership of dwellings 318 326 334 357 370 384 399 Public adminis- tration & defense 911 991 1,011 1,093 1,140 1,264 1,377 Services 1,774 1,872 2,006 2,040 2,300 2,353 2,508 Gross Regional Product (GRP) 19,140 19,941 19,961 22,533 23,939 24,845 25,867 Source: NESDB - 218 - Table R2.10: GROSS REGIONAL PRODUCT - SOUTH (Millions of 1962 baht) Industrial origin 1970 1971 1972 1973 1974 1975 1976 1977 1978 Agriculture Crops 4,211 4,449 4,765 5,197 4,995 5,332 5,452 Livestock 459 508 538 579 628 697 712 Fisheries 1,876 2,051 2,110 1,796 1,434 1,488 1,422 Forestry 326 489 623 715 865 977 1,093 Subtotal 6,872 7,497 8,036 8.287 7,922 8,494 8,679 Mining & quarrying 737 772 791 747 929 792 703 Hlanufacturing 1,361 1,494 1,614 1,662 1,880 1,894 1,974 Construction 668 685 700 675 726 658 727 Electricity & uiater supply 151 139 165 210 188 208 233 Transportation & communi- cation 751 804 885 1,116 1,203 1,327 1,497 Wholesale & retail trade 2,863 3,228 3,458 4,009 3,874 4,033 4,235 Banking, insurance & real estate 187 247 248 250 288 325 370 Ownership of dwellings 244 246 254 266 274 284 294 Public adminis- tration & defense 487 544 554 599 610 687 751 Services 1,072 1,259 1,349 1,420 1,634 1,737 1,960 Gross Regional Product (GRP) 15,393 16,915 18,054 19,241 19,528 20,439 21,423 Source: NESDB Table R7.1: ARrA Pl.ANTFr, YIELD ANT1 PROODICTTON OF MAJnR CROPS, 3959/60-jq7R/79 CFNTRAI. RFrIOnv 1959/60 IQ60/61 1961/62 1962/63 1963/64 1964/55 196S/66 IQ66/67 1067/6A 196R/69 1969/7n 1970/71 1171/7? 1072/73 1q73/74 1974/75 1q7S/76 1976/77 1]77/78 1979/79P IQ79/80P Area Planted (000 rai) Paddy 12,588 12,563 12,825 12,525 13,225 13 ,477 13,76 13,98 11,789Q 14,194 13,410 13,04n 11 I70 14,963 15,494 14,960 15,055 15,149 15 ,277 17,276 13,699 Rubber n.a. n.a. na. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a n.a. Malze 412 762 1,(0)11 1,n1 1,088 1,545 1,494 1,694 1,9q9 1,937 n.a. n.a. n.a. n.a. 1,903 2 011 2,'024 1,857 1,581 1,796 n.a. Sorghae - - - - - 0 123 311 172 74 110 1?6 . Q7 159 349 -S0 61S n.a. n.a. 537 n.a. Kenaf - 12 24 2 - 2 - 22 7 3 n.a. n.a. n.a. n.a. 51 36 28 - 5 30 17 Cassava 342 376 947 659 738 525 451 619 679 883 n.a. n.a. n.a. n.a. 1,624 1,627 1,888 2,151 2,168 2,426 2,146 Sugarcane 376 462 301 306 564 552 921 458 622 753 n.a. n.a. n.a. n.a. 1,391 1,569 2,029 2,365 2,R03 2,397 2,061 Tobacco (Virginia) - - - - - - - - - - - - _ _ _ _ - _ _ _ Coconut n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a n.a. Cotton 33 46 92 86 1n3 45 55 64 101 n.a. n.a. n.a. n.a. n.a. 37 32 29 27 171 130 n.a. Croundnuts 209 311 141 127 93 97 105 146 125 11 n.a. n.a. n.a. n.a. 146 142 129 118 87 130 n.a. Soybeans 11 16 19 17 31 25 42 46 23 21 n.a. n.a. n.a. n.a. 86 118 52 15 142 133 n.a. Mung beans 74 99 9h 75 72 77 144 225 207 166 220 n.a. n.a. n.a. 302 227 302 184 624 503 n.a. Yield (kg/ral) Paddy 226 277 296 294 322 "39 305 2-8 277 252 209 285 296 312 352 322 309 337 350 351 337 Rubber n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.e. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a n.a. Maize 257 314 120 344 135 286 326 247 277 3n2 n.a. n.a. n.a. n.e. 341 134 355 376 179 332 n.a. Sorghum - - - - - 5R9 402 30S 371 314 287 294 284 229 216 356 754 n.e, n.a. 190 n.a. Kenaf 193 173 169 190 274 20n 155 149 149 285 n.a. n.e. n.a. n.a. 161 148 167 - 163 189 176 'o Cassava 2,971 2,933 2,933 2,107 2,542 2,511 2,531 7,52R 7,516 2,5Al n.a- n.a. n.n. n.a. 3,174 ?,165 2,198 2,144 2,341 2,717 1,719 Sugarcane 6,R16 6,593 6,118 6,049 5,556 5,7*? 5,91n 5,737 ,l321 5,839 n.a. n.a. n.a. n.a. 8,477 7,711 9,513 8,698 5,494 6,911 4,Iq3 Tobacco (VirgInia) - - - - - - - - - - - - - - - - - - - Coconut n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.e n.a. Cotton 118 126 RR 106 70 19 13P 199 64 n.a. n.a. n.a. n.a. n.a. 157 20? 144 201 167 192 n.a. Croundnuts 216 218 215 215 202 215 197 196 lJn 2n3 n.a. n.e. n.a. n.a. tR7 211 19n 191 161 190 n.a. Soybeans 126 129 135 142 156 15 157 155 144 147 n.a. n.a. n.a. n.a. 141 107 157 161 111 151 n.a. Mung beans 159 178 169 174 158 159 15F 160 111 171 124 n.a. n.. n.a. 119 163 107 7n 76 92 n.a. Production (000 tons) Paddy 2,845 3,476 3,668 3,691 4,265 4,145 4,141 4,r 1 3,819 3,57n 4,n01 3,70 1 ,980 4,491 5,451 4,R29 4,647 5,1 13 5,351 6,059 4,617 Rubber n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.-. n.a n.a n.a. n.a. Maize 106 239 323 34Q 164 457 487 419 471 555 n.a. n.a. n.a. n.a. *49 671 71R 699 284 596 n.e. Sorghm - - - - - 5 50 64 64 223 34 17 56 36 76 141 156 n.a. n.a. 102 n.a. Kenaf - 2 4 - - - - 3 - I n.a. n.a. n.a. n.a. 8 5 5 - 1 6 3 Cassava 1,016 1,104 1,607 1,914 1,877 1,317 1,137 1,S63 1,700 2,282 n.a. n.a. n.a. n.a. 1,531 3,522 4,133 5,044 5 075 6S590 4,033 Sugarcane 2,565 3,047 1, 38R 1,847 3,132 3,179 3,n25 2,619 3,309 4,I97 n.a. n.a. n.a. n.a. 11,714 13,094 17,274 20,S550 15,399 16,563 9,053 Tohacco (VirgInia) - - Coconut n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a n.a. Cotton 4 6 A 9 7 .3 7 12 6 n.a. n.a. n.a. n.a. n.a. 6 6 4 5 29 25 n.a. Groundnuts 44 69 30 27 Iq 21 21 29 22 24 n.a. n.a. n.a. n.a. 27 30 15 76 14 25 n.a. Soybeans 1 2 3 2 5 4 7 7 3 3 n.a. n.a. n.a. n.a. 12 13 8 2 16 20 n.a. Mung beans 12 18 16 13 11 13 23 36 27 2R 28 n.a. n.a. n.a. 39 37 21 13 47 46 n.ae Source: Office of Agricultural Econonics, MOAC. 'Table 17 .2 AREA PT.MTIiO, VITILD ANSi PPOnPITCP1 OP M.9105 CPor's 195 9/60-197R/79 IIORT9iPTP REGIOTfN 1 95 9/6 0 1960/6 1 196 1/6 2 1962 /6 3 1963/64 19)64 /65 1 965 /6 6 1966)/6 7 196 7/6 9 1969 /694 19691/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79P 1979/8nP Area Planted (000 rat) Paddy 7,050 7,081 7,394 7,673 7,906 9,775 9,714 n,446 9,095 9,569 10,030 9,990 0,20l3 9,471 11,496 10,390 12,004 10),7 95 11,952 13,212 17 1.85 Rabbe r - - - - - - - - - - Ma ize 308 399 5 35 7 32 L1, 249 1,616 1,749 1,975 7,329 2,157 n.e. n... n.a. n.a. 3,503 3,624 4,032 3,502 3,757 4,795 n.a. So rghnm - - - - - 4 46 112 208 100 g0 114 l1i 193 185 701 820 n.ea. n.e. 545 n.a. Kenaf 5 16 65 19 33 26 33 50 3 3 153 ..a. n.a. n... n.e. 71 1 3 - 13 11 - Casee-a 3 7 11 12 19 19 19 34 33 27 n.a. n.a. n.a. n.a. 157 92 1 S 105 186 1515 161 Sugarcane 2733 19 7 2 22 12 1 125 15 1 1 01 1 20 14 7 145 n.e. n.e. n.a. n.e. 144 225 2431 4 39 462 3 92 369 Tnbacco (Virginia) n.e. n.e. n.e. n.e. n.a. n.e. n.a. n.a. n.a. n.a. n.e. ..a. n.a. n.a. n.a. n.e. n.e. n.a. n.a. n.e. n.a. C-ennut n.e. n.a. n.a. n.e. n.a. n.a. n.e. n.a. n.a. n.a. n.a. n.a. n.a. n.e. n.a. ..a. ..a. n.a. n.e. n.a. n.a. nitton 106 1 15 1 35 156 236 25 1 294 3 33 401 n.e. n.a. n.a. n.a. n.e. 96 705 77 66, 214 159 n.a. Cr-nodnuts 770 199 191 2 71 24R 292 327 639 336 372 n.e. n.a. n.a. n.e. 374 369 329 3174 416 360 n.a. Soybeans I117 119 12 7 15 4 175 196 7 1 233 3 73 301I n.e. n. a. n.ea. n.e. 669l 69 7 6 74 558t 796 83 7 n.e. Mang beans 163 1 72 99 705 5 32 5 03 579 5 79 5 63 4,004 492 ..a. n.a. n.e. 1, 1 0 866 7354 1, 173 3, 030 2,01R n.a. Yield (kg/rai) Paddy 3 23 3 46 3 45 360 36A 25 2 369 35 3 01 267 393 409 397 796 34 7 3 73 3 60 391 309 4 16 35 1 Robber - - - - - --- - - - --- Maize 753 296 35 1 331 3 37 74 1 259 3 06 25 7 7 93 n.e. n.a. n.a. n.e. 379 3331 397 34 6 744 34 1 n.e. Sorghum - - - - - 500 376r 339 799 270 2 67 6 1 7 74 376r 3 14 I1? 18I3 n.e. n.e. 702 n. .a. Kenef 700 199 1 69 16 7 2 12 192 21 1 90lp 712 iSO0 n.a. n.e. I... n.e. 3 75 Is? 118 - 179 14 7- C.ssn-a 1,337 1,95 7 1 , 951 1, 41'2 1,9895 1, 637 2000 1, 7 94 1,8A44 2,2717 n.e. n... n. .. n.e. ,2 69 2,428 7,559 9,94 2,399 2,3'95 1,957 Sugarcase 4 ,65 7 5,2 94 5 ,3 47 4 ,3 72 4 ,3 04 4 ,305 4,119 4,209 3,979 4,53 1 n.e. n.ea. n.. n.e -. 8,456 7, 129 6,649 9 ,146 5,099 5,365 6 ,23R Tnheres (Virglini) n.a. n.e. n... n.a. n.a. n.e. n.a. n.a. n.a. n.a. n.e. n.a. n.a. n.a. n.a. n.e. n.e. n.a n.e n.e .e.a Coconut n.e. n.a. n.a. n.e. n.a. n.a. n.a. n.a. n.e. n.8. n.e. n.a. n.a. n.a. n.a. n.a. n.e. -ae -.a n.a n.a. Cotton 123 122 111 109 119 104 127 177 132 n.e. n.a. n... n.a. n.e. 149 171 139 13 6 164 165, n.e. Gros,ndnutn 195 201 7 10 20 7 710 2 23 2 17 738 2 17 226 n.ea. n.a. n.a. n.e. 186 2 13 206 2 11 164 203 n.e. Soybeans 7722 196 165 1 79 160 145 169 179 13 1 13 6 n.e. n.e. n.e. n.ea. I-3, 13 9 1591 192 98t 15 9 n.e. Mung heaun 160 199 i94 176 198 191 166 15 7 15 6 142 130 n.ea. n.a. n.e. 138 146 123 93 7 6 100 n.e. Production (000 inns) Paddy 2,290 2,450 2,554 2,26F,1 2 ,99'7 2,213 3,210 3,335 2,73 7-4F ,959 3,940 4,070 35 57 7,710 3 , 994 3 ,977, 4,322 4,111 3,692 5,501 4,385 Rubber - - - - - - - - - - - -------- Maeize 78 119 199 2472 471 406 45 1 574 599 610 n.e. n.e. n.a. n.e. 1,154 1,207 1,441 1,312 917 1,633 n..a Sorghum - - - - - 2 15 39 62 2 7 24 7 9t6 63 58 107 150f n.a. n.e. 110 n.e. Kenaf 1 3 11 3 7 5 7 9 7 23 n.e. n.e. n. n. n.. 4 - - - 2 2 - Casse-a 4 13 20 24 36 31 36 61 59 49 n.e. n.e. n.a. n.a. 3 551 224 330 272 446 370 299 Sugareene 1,095 1,043 1,197 529 538 650 416 505 579 657 n.e. n.e. n.a. n.e. 1,216, 1,604 1,619 3,579 3,,355, 210' 2,302 Toheeco (Virginia) n1.e. n... n.e. n.e. n.e. n-e n.e. n.a. n.e. n.e. -.e. n.e. n.a. n.a. n.e. n.a. n.a. n.a n.. n-e n.e. Coconut n... n.e. n... -.e. n.a. -ae. n.e. n.e. n-e n.e. n. n. n.. n.e. n.e. n.e. n.a. -ae. n.a ..e n.e n.e. Cotton 13 1 4 15l 17 78 74 36 59 53 n.e. -A. .. n-e n.e. 13 351 11 9) 15 96 n.a. Oronundots 4.3 40 39 56 57 631 71 152 73 14 n.e. n... n.e. n.e. 703 79 66; 79 68 73 n.e. Soybeans 7 6 22 7 1 7 7 29 7 7 1 2 0( 4 9 41I n..e. n.ea. n.e. n... Q(3 95 104 107 78 13 3 n.a. bong beans 76 34 1 9 36 10 91 g 96( q I 89 143 129) n.e. n.a. n.e. 153 12 6 91 1094 i 19 '02 n.e. Source: Office of Agricult,ral Fconomle-, MaOAC. Table R7.3: AREA PLANTED, YIELD AND PROVOCTPIO! OP MfAJOR CRZOPS, 1959/60-1978/79 NO2RTHFA9;TETJIN REGTON 195 9/60 196016 1 1961/62 1962/63 1963/64 1964 /65 1965 /66 1966/67 1967/69 1969/69 1969/70 1970/71 1971/72 1972/73 1Q73/74 1974/75 1975/76 1976/77. 1977/78 1978/79P 1979/SOP Area Planted (000 rai) Paddy 15,419 14,556 15,406 17,820 16,970 15,471 15,332 16,630 15,160 17,A60 70,240 20,460 21,471 19,741 72,199 20,633 25,017 23,760 24,794 27,q79 2q,159 Rubber n.a. n.9. n.a. n.a. n.a. n.a. 0.a. n.a. n.a. -.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.9. n.a. n.9. Maize 440 506 329 277 247 253 296 43-16 524 647 n.a. n.9. n.a. n.a. 1,536 1,974 2,143 2,596 1,960 2,048 n.a. Sorghum - - - - - 21 26 26 17 13 6 7 6 16 9 13 n.a. n.a. 17 n.a. Kenaf 273 849 1,632 692 925 1,337 2,366 3,243 2,429t 1,429 n.a. n.a. n.a. n.a. 2,647 2,486 2,007 1,006 1.,585 1,062 1,401 C.assava 26 34 32 39 53 51 79 71 91 57 105 127 211 n.a. 616 1,195 1,9985 2,117 3,621 5,694 4,003 Sugarcane 275 -~293 226 197 230 29)6 244 169 14Q 211 176 n.a. n.a. n.a. 91 142 171 314 276 296 301 Tobacco (Virginia) o.a. n.a. n.a. n.a. n.a. n.9. n.a. n.a. n.a. 0.a. n.a. n.a. o.a. n.a. nl.a. n.a. n. a. n.9 n.9 n.a fl.a. Coconut n.9. n.a. 0.9. n.a. n.a. n.a. n.a. 0.9. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. fl.a n.9 n.a 0.9. Cotton 161 186 130 130 116 122 1?2 135 200 n.a. n.a. n.a. n.a. 0.9. 59 96 83 61 141 140 0.9. Croundnuts 179 208 1 79 131 161 142 164 170 194 214 n.a. n.a. n.a. n.a. 210 259Q 227 196 106 142 0.9. Soybeans 9 5 4 3 3 2 4 5 3 7 n.a. n.a. n.a. n.a. 10 17 12 62 20 40 n.a. Iluflg beans 51 55 33 27 20 24 24 20 35 31 30 0.a. 0.9. 0.9. 29 22 21 35 55 73 n.9. Yield (kg/rai) Paddy 163 191 182 206 207 152 179 163 155 179 226 240 253 230O 209 164 213 197 143 173 194 Rubber n.a. n.a. n.a. 0.9. 0.9. 0.9. n.a. n.a. n.a. 0.9. 0.a. 0.a. n.a. 0.9. 0.9. 0.9. n.a. n.a. n.a. n.a. n.9. , Maize 255 304 230 246 261 25 1 234 254 234 200 n.a. n.a. n.a. o.a. 397 2Z95 329 289 212 272 n.a. . Sorghum - - - - - - 346 350 343 248 266 167 170 247 298 265 265 n.9. n.a. 256 n.a. Kenaf 180 208 199 187 221 222 220 200 200 205 0.9. 0.9. n.a. n.a. 173 152 15 1 192 154 169 156 Cassava 1,5 37 1,780 1,776 1,579 1,755 1, 95 3 2,131 1,798 1,955 1,034 7,4 39 2,693 2,300 n.a. 1,929 1,970 2, 195 2 ,2 79 1,961 2,009 1,700 Sugarcane 4,405 4,006 3,1920 3,724 4,447 4,054 4,038 3,699) 3 ,6975 3,586 n.a. 0.9. 0.a. 0.9. 4,5 10 6,307 5,947 6,261 4,298 4,806 4,887 Tobacco (Virginia) n.a. n.9. n.a. n.a. n.a. n.a. 0.9. 0.9. 0.a. n.a. n.a. 0.9. 0.9. n.a. 0.9. 0.a. n.9. n.9 0.9 n.a 0.9. Coconut n.a. n.a. n.a. n.a. 0.a. n.9. n.a. n.a. n.9. 0.9. n.a. n.9. n.a. n.a. n.9. n.a. v.a. n.a n.a 0.9 0.9, Cotton 129 138 116 113 117 127 130 139 102 0.9. 0.9. 0.9. 0.9. n.9. 169 174 169 205 190 167 0.9. Croundnuts 199 197 197 199 233 226 214 200 176 197 n.a. 0.9. 0.a. n.a. 199 165 179 193 15 8 164 n.a. Soybeans 178 176 159 163 170 164 154 159 125 91 n.a. n.a. c.9. -.a. 133 143 116 154 117 140 0.a. M.ng beans 154 167 175 176 162 149 187 153 137 161 146 n.a. n.9. o.a. 139 142 126 93 93 112 n.a. Production (000 tons) Paddy 2,521 2,775 2,809 34,666 3,516 3,302 2,734 3,796 2,350 3,107 4,590 4,620 5,432 4,198 4,639 3,795 5,326 4,696 3,5 56 4,836 5,661 Rubber n.9. 0.0. n.9. 0.9. n.a. n.a. n.9. 0.9. 0.a. 0.a. 0.9. 0.0. 0.9. 0.9. 0.9. 0.9. n.a. n.9. 0.9. n.a. 0.9. Maize 112 154 76 68 64 63 69 ill 123 129 n.a. n.9. n.9. 0.9. 456 553 704 744 394 557 0.9. Sorghum - - - - - - 7 10 9 4 3 1 1 1 5 2 3 n... 0.9. 4 n.a. Kenaf 46 176 324 1310 204 297 521 646 495 293 0.9. 0.9. n.9. n.9. 457 379 303 183 243 331 219 Cassava 40 60 57 61 92 100 167 126 15 8 106 256 342 495 n.a. 1,574 2,335 3,479 4,922 6,739 11,420 6,904 Sugarcane 1,211 1,134 873 698 1,022 1,201 99 622 592 75 7 0.9. n.9. 0.9. 0.9. 409 994 1,016 1,669 1,197 1,399 1,471 Tobacco (Virginia) n.a. 0.9. 0.a. 0.9. n.9. n.a. n.9. 0.9. 0.9. 0.9. n.9. 0.9. n.9. 0.a. n.9. 0.9. n.a. 0.9 n.9 0.9 n.9. Coconut n.9. 0.9. n.9. 0.9. n.a. n.9. n.a. 0.9. 0.9. -.9. n.9. 0.9. n.a. 0.9. 0.9. 0.a. n.9. n.9 0.9 n.a n.9. Cotton 21 26 15 15 14 15 16 17 20 n.a. o.a. 0.9. 0.9. 0.9. 10 15 14 12 27 23 0.9. Groundnuts 32 41 35 26 38 32 35 34 32 42 0.9. 0.9. 0.9. 0.9. 42 43 10 36 17 23 n.a. Soybeans 2 1 1 - I - 1 1 - 1 n.a. 0.9. 0.9. n.a. 1 2 1 9 2 6 n.a. Miung beans 9 9 6 5 3 4 4 3 4 5 4 0.9. n.a. n.9. 4 3 3 3 5 8 n.a, Source: Office of Agricultural Economics, MOAC. Table R7.4: AREA PLANTEn, YIELTl AND PROOICTC1rtM OF MAJOR CROPS, 1959/60-1978/79 SOh!THCRN REriON, 1959/60 1960/61 1961/62 1962/63 1963/64 1964/65 1h65/66 1966/67 1067/68 1968/69 1969/70 1970/71 tQ71/72 1072/73 1971/74 1974/75 1975/76 1976/77 1977/7R IQ78/7mP 1979/gop Area Planted (000 rai) Paddy 2,850 2,813 2,994 3,150 3,129 3,149 1,340 3,441 3,57R 3,590 1,720 3,360 3,199 3,856 3,081 3,836 3,526 3,R91 4,421 4,020 3,638 Rubber n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Maize - - - - - - - - - - 83 86 23 n.a. Sorghum - - - - - - 5 8 9 9 4 4 5 2 2 3 4 n.a. n.a. - n.a. Kenaf - - - - - - - - - - - - - - - - - - - - n.a. Cassava 20 30 32 52 65 61 90 92 89 104 n.a. n.a. n.a. n.a. 128 96 113 - 25 5 n.e. Sugarcane 41 44 25 23 14 16 18 31 18 29 n.a. - - - - - - - - - n.a. Tobacco (Virginia) - - - - - - - - - - - - - - - - - - - - n.a. Coconut n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a. Cotton - - - - - - - - - - - - - - - - - - I - n.a. Groundnuts 17 18 21 15 18 24 24 29 28 38 n.a. n.a. n.a. n.a. 44 44 52 52 32 29 n.a. Soybeans - - - - - - - - - - - n.a. n.a. n.a. 2 1 - - - - n.a. Mung beane - - 2 3 5 27 8 15 26 48 55 n.a. n.a. n.a. 160 178 60 - 10 43 n.a. Yield (kg/rai) Paddy 284 275 286 281 290 223 267 234 201 286 263 256 268 265 268 232 285 300 299 267 301 Rubber n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Maize -- - - 252 334 196 n.a. Sorgbum r - - - - - 291 260 258 239 214 260 274 242 15n 151 164 n.a. n.a - n.a. Kenaf - - 175 - n.a. Cassava 1,192 1,516 1,367 1,468 1,655 1,778 1, 492 1,510 1,538 1,65n n.a. n.a. n.a. n.a. 1,623 1,660 1,403 - 4,474 3,443 n.a. Sugarcane 3,629 3,625 3,418 3,476 3,001 2,856 2,907 2,527 2,588 7,451 n.a. - - - - - - - - - n.a. Tobacco (Virginia) - - n.e. Coconut n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a. Cotton - - - - - - - - - - - - - - _ - _ - 200 - n.a. Groundnuts 189 226 212 204 199 172 172 183 162 196 n.a. n.a. n.a. n.a. 176 219 213 194 206 222 n.a. Soybeans 156 153 148 148 152 141 92 114 104 153 n.a. n.a. n.a. n.a. 104 110 114 114 96 - n.a. Mung beans 149 160 158 166 146 147 113 117 119 154 151 n.a. n.a. n.a. 85 120 106 - 92 73 n.a. Production (000 tons) Paddy 808 774 855 884 907 702 893 806 719 1,027 980 860 858 1,022 825 890 1,005 1,168 1,322 1,073 1,095 Rubber n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a. Maize - - - - - - - - - - - - - - - - - 21 29 5 n.a. Sorghum - - - - - - 2 2 2 2 1 1 1 - - - 1 n.a. n.a. - n.a. Kenaf - - - - - - - - - - - - - - - - - - - - n.a. Cassava 24 45 43 76 107 109 134 141 136 172 n.a. n.a. n.a. n.a. 208 159 158 - 11i 18 n.a. Sugarcane 149 159 85 80 41 45 52 79 47 71 n.a. - - - - - - - - - n.a. Tobacco (Virginia) - - - - - - - - - - - - - - - - - - - - n.a. Coconut n.a. n.n. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a n.a. Cotton - - - - - - - - - - n.a. Groundnuts 3 4 4 3 4 4 4 5 5 7 n.a. n.a. n.a. n.a. 8 10 9 10 7 6 n.a. Soybeans - - - - - - - - - - - n.e. Mung beans - - - - 1 4 1 2 3 7 8 n.a. n.a. n.a. 14 21 16 - 1 3 n.a. Source: Office of Agricultural Economics, MOAC. - 223 - Table R9.1: CONSUMER PRICE INDICES BY REGION /a (1976 = 100) Weights 1974 1975 1976 1977 1978 1979 Whole Kingdom 100.0 91.2 96.0 100.0 107.6 116.1 127.6 Bangkok Metropolis 35.0 91.5 95.3 100.0 108.4 117.9 130.0 Center & East 23.0 90.8 95.6 100.0 107.0 113.4 125.0 North 16.0 89.8 96.1 100.0 106.7 115.0 124.1 Northeast 15.0 93.6 97.7 100.0 105.7 114.0 123.3 South 11.0 88.9 96.2 100.0 106.0 113.6 125.2 /a Derived from a Socio Economic survey conducted only in Urban areas in 1975/76. Sub-indices are compiled for each region separately and are weighed by municipal population to arrive at the overall index for the Kingdom.