OECD MULTI-DIMENSIONAL COUNTRY REVIEW - THAILAND
INITIAL ASSESSMENT REPORT Bangkok, 9 April 2018 OECD Team for MDCR of Thailand http://www.oecd.org/eco/surveys/multi-dimensional-review-thailand.htm
Main messages • Sustained economic growth has brought about impressive social progress. • However, there remain development constraints across each of the 5 pillars of the sustainable development goals (SDGs). • Further reform is needed to meet the SDGs and transition to an inclusive, high-income country. 2
People: Towards better lives for all
3
Regional inequalities have narrowed but remain pronounced 15
Regional GDP per capita gap
Thailand’s ratio between the richest and poorest region
10 5 0
1995
2000
Regional GDP per capita gap
2005
2010
2015
Ratio between the richest and poorest region, 2015
20 15 10
5 0
Korea
OECD average
China
Thailand
Malaysia
Indonesia
Source: Panel A: Thailand National Statistical Office (2014), Economic Indicators; Panel B: calculations based on OECD (2013a), OECD Regional Database, and national statistical office data from Thailand, Malaysia and Indonesia
4
Precarious employment remains widespread % of precarious employment in total employment, 2017 60 50 40 30 20
Source: World Bank, World Development Indicators
Vietnam
Indonesia
Thailand
Colombia
Philippines
China
Turkey
Mexico
Malaysia
Korea
Poland
OECD
South Africa
0
Singapore
10
5
The old-age allowance alone cannot guarantee income security for the elderly Monthly universal old-age allowance by age, THB 1400 1200
1000 800 600
400 200 0
60
65
70
75
80
Universal old age allowance Source: Schmitt, V., T. Sakunphanit and O. Prasitsiriphon (2013) Note: The national poverty line refers to the minimum monthly cost of basic food.
85
90
95
100+
National poverty line 6
Social protection is comparatively well targeted but still disproportionately benefits the non-poor Social Protection Index, 2013
0,18
Non Poor
0,16
Poor
0,14 0,12 0,1
0,08 0,06 0,04 0,02
0
Indonesia
Philippines
Thailand
Viet Nam
China
Singapore
Malaysia
Korea
Source: Asian Development Bank (2013), The Social Protection Index Assessing Results for Asia and the Pacific, Mandaluyong. Note: The Social Protection Index (SPI) is total expenditures on social protection divided by the total number of intended beneficiaries of all social protection programmes, normalised by poverty-line expenditures (which for cross-country comparability purposes is set uniformly at 25% of GDP per capita). A SPI of 0.10 would thus be equivalent to 2.5% of GDP per capita. A higher SPI denotes better social protection.
7
The quality of education needs to improve 550
PISA scores Maths
Reading
Science
550
510
510
470
470
430
430
390
390
350
2003
2006
2009
2012
2015
350
Maths
Indonesia
Thailand
Reading
Malaysia
OECD average
Science
Viet Nam
Source: OECD (2016b), PISA: Programme for International Student Assessment; OECD Education Statistics (database). Note: China refers to the four PISA-participating Chinese entities: Beijing, Shanghai, Jiangsu and Guangdong. Coverage of Malaysian schools in PISA 2015 fell short of the standard PISA response rate so results may not be comparable to those of other countries.
China
8
Too few students graduate in courses meeting industry needs Enrolment ratio in STEM subjects, Latest available year, %
45 40 35
30 25 20 15
10
Source: UNESCO-UIS (2017), Education (dataset), UIS Data Centre, http://data.uis.unesco.org/. Note: STEM courses include natural sciences, mathematics and statistics programmes; information and communication technology programmes; and engineering, manufacturing and construction programmes.
Singapore
Malaysia
Korea
Mexico
Colombia
Poland
Turkey
OECD
Viet Nam
Indonesia
South Africa
0
Thailand
5
9
People - key constraints and selected recommendations Social protection system excludes many informal workers
• Encourage formalisation through tax and regulatory measures. Harmonise social protection schemes
Inadequate pension benefits
• Index non-contributory allowance for older people to minimum required living costs
Poor education outcomes
• Strengthen teacher capacity, curriculum coherence, student assessment procedures and ICT use in schools
Large skills mismatches
• Expand co-operation between vocational institutions, academia and the private sector in course development 10
Prosperity: Boosting productivity
11
Faster growth is needed to catch up GDP per capita, % of OECD average, computed at 2016 PPP USD
100 90
80 70 60 50 40 30 20 10
0
1970
Indonesia
1980
Malaysia
1990
Philippines
Korea
2000
Thailand
Source: Conference Board (2017), Total Economy Database, Datastream, and OECD calculation Note: In 2016, Thailand’s per capital GDP in USD PPP was 17 359, versus an OECD average of 41 776
2010
2016
Viet Nam 12
Labour productivity can be boosted Average labour productivity growth per employee per year 14
%
12
10 8
6 4
2
2001-05
2006-10
China
Viet Nam
Indonesia
Philippines
Thailand
Turkey
Singapore
Poland
Malaysia
Colombia
Korea
Mexico
South Africa
-2
OECD average
0
2011-16
Source: OECD calculations based on data provided by national statistical office and Datastream; OECD, Productivity Statistics database
13
R&D outlays remain below some comparators Gross expenditure on R&D, % of GDP, 2015 %
4,5 4,0 3,5 3,0 2,5
2,0 2021 target
1,5
2011 level
1,0
Note: The 2% R&D expenditure target included in the STI Plan was subsequently revised down in the 12th Plan to 1.5%. 2013 for Indonesia, Philippines, Viet Nam, and South Africa, 2014 for Turkey and Singapore. Source: UNESCO-UIS (2017), Science, Technology and Innovation (dataset); UIS data Centre; OECD, Gross domestic spending on R&D
Korea
OECD
Singapore
China
Malaysia
Turkey
Poland
South Africa
Thailand
Mexico
Viet Nam
Colombia
Philippines
0,0
Indonesia
0,5
14
There are high barriers to services trade Pilot exercise of OECD Services Trade Restrictiveness Index Construction services Regulatory transparency
Barriers to competition
Other discriminatory measures
Restrictions on the movement of people
Restrictions on foreign entry
Average
STRI 2014
CHL KOR JPN DEU LVA IRL CZE NZL GBR LTU AUS NLD FRA ZAF LUX EST DNK SVK ITA SVN POL ESP FIN AUT CAN BRA USA CRI SWE COL PRT HUN MEX TUR BEL CHN CHE GRC NOR RUS IND ISR THA IDN ISL
0,7 0,6 0,5 0,4 0,3 0,2 0,1 0
Architecture services Regulatory transparency
Barriers to competition
Other discriminatory measures
Restrictions on the movement of people
Restriction on foreign entry
Average
STRI 2014
LVA CHL DNK JPN AUS NLD KOR USA LTU SWE NZL IRL DEU COL CAN LUX NOR MEX FIN ESP CHN GRC GBR ZAF BRA CRI CZE ITA TUR RUS CHE IDN AUT HUN ISR BEL ISL SVN EST PRT THA POL FRA SVK IND
0,7 0,6 0,5 0,4 0,3 0,2 0,1 0
Note: Full openness to trade in services gives a score of zero, while complete closure to foreign services providers gives a score of one. Source: OECD (2017), Services Trade Restrictiveness index database
15
Prosperity - key constraints and selected recommendations Slow economic advancement, notably in the agriculture sector
• Invest in lifelong learning and skills training • Upgrade business skills and foster greater ICT use in agriculture
Low innovation and commercially viable research
• Ensure institutional coordination. • Boost public R&D spending to no less than 1.5% of GDP by 2021, as planned
SME development is constrained by costly financing
• Create a lower-cost bourse in the stock exchange • Improve co-ordination across agencies responsible for SMEs development
High cross-border barriers to services trade and investment
• Review regulations on foreign business operations including restrictions on foreign firms’ entry and movement of people 16
Partnerships: Sustainably financing development
17
The population is ageing rapidly 0,6
Elderly dependency ratio
0,5 0,4 0,3 0,2 0,1 0
1950
1960
1970
OECD average
1980
1990
2000
2010
Regional comparators
2020
2030
2040
2050
Thailand
Note: The elderly dependency ratio refers to the number persons (aged 65 and above) per working age population (aged 15 to 64). Regional comparators refers to the average elderly dependency ratio for Malaysia, Philippines, Indonesia and Viet Nam. Source: UN Population projections, 2017 revision.
18
Fiscal revenue will need to rise General government revenue in % of GDP, average over 2011-15 % of GDP 45 40 35 30 25
20 15 10
OECD
Poland
Turkey
South Africa
China
Colombia
Malaysia
Mexico
Viet Nam
Korea
Thailand
Philippines
Singapore
0
Indonesia
5
Source: Datastream, OECD Revenue Statistics (2017) 19
There is room to improve PPP processes PPP preparation
100
PPP procurement
PPP contract management
Average
80
60
Philippines
South Africa
Mexico
Korea
Colombia
Viet Nam
Singapore
China
Indonesia
Poland
Thailand
Turkey
20
Malaysia
40
Note: The higher the score, the more aligned with international best practice. Scores for unsolicited proposals are not considered in the above analysis as Thailand, Malaysia, Turkey, Poland and Singapore do not have any regulatory procedures. Source: World Bank Group/PPIAF (2017), Benchmarking Public-Private Partnerships Procurement 2017.
20
Partnerships - key constraints and selected recommendations Revenue needs to increase to fund future commitments
• Boost tax efficiency, increase compliance and rely more heavily on less distortive taxes
Inefficient and costly infrastructure financing
• Make greater use of alternative infrastructure financing such as Thai baht infrastructure bonds • Align PPP policies with OECD Principles for Public Governance of PPPs
Escalating public healthcare and pension burdens
• Invest in preventative and primary care. • Reduce exemptions to healthcare copayments • Increase pensionable age
21
Planet: Conserving nature
22
Droughts and floods affect many areas A. Share of provinces affected by drought or flooding % 100
Drought
Flooding
85 70 55
40
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
B. Share of agricultural land affected by drought or flooding Drought Flooding
% 50 40 30 20
10 0
2009
2010
2011
2012
2013
2014
2015
Source: NESDB (2017), Social and Quality of Life Database System, http://social.nesdb.go.th/social/Default.aspx?tabid=40; OAE (2017), Agricultural Statistics of Thailand 2016.
23
Towards better waste management Municipal waste Kilograms per capita 1600 1400 1200
1000 800 600 400 200 0
Philippines Colombia
Poland
Mexico
Korea
Turkey
Thailand
Source: OECD countries from OECD (2017); Thailand from PCD (2017b); Philippines and Singapore from http://unstats.un.org/unsd/ENVIRONMENT/qindicators.htm
OECD
Singapore 24
Coal will form a bigger part of power generation by 2036 2015
2036
Natural gas Imported coal Lignite Renewable Imported hydropower Domestic hydropower Nuclear
Source: MOE (2016), Thailand Integrated Energy Blueprint. 25
Emissions have increased CO2 per GDP
Kg per 2010 USD 3,0 2015
1990
2,5 2,0 1,5
1,0
Viet Nam
South Africa
China
Malaysia
Thailand
Poland
Korea
Philippines
Mexico
Indonesia
Turkey
OECD
Singapore
0,0
Colombia
0,5
Source: IEA (2017), CO2 Emissions from Fuel Combustion 2017 Edition. 26
Planet - key constraints and selected recommendations Management of water resources is fragmented
• Ensure co-ordination across existing agencies, at all levels of governance
Floods and droughts often cause economic disruption
• Improve disaster prevention and response capacity at the local level to effectively provide services
Pollution and inadequate waste management undermine environmental quality
• Make polluters pay more directly, including wastewater tariffs on water usage
Power sector plans will lead to a more carbon intensive path
• Step up investments in renewables and consider increasing environmental taxation
Environmental issues are not well integrated into public plans and policies
• Carry out Strategic Environmental Assessments more frequently and effectively 27
Peace: Strengthening governance
28
Improving reform implementation Capacity for State reform
4
Long-term strategies
3
2
Philippines
Malaysia
Colombia
Poland
China
Korea
OECD Average
Singapore
Turkey
Mexico
Indonesia
Thailand
0
South Africa
1
Note: Capacity for State reform measures the “authorities’ ability to decide and actually implement reforms” (scores range from 0 for very low capacity to 4 for strong capacity). Long-term strategies indicate whether “the public authorities have a long-term strategic vision” (scores range from 0 for very weak strategic vision to 4 for strong strategic vision). Source: Centre d’Études Prospectives et d’Informations Internationales, Institutional Profiles Database 2016
29
Improving government online presence 100
Government's online service
Online e-participation
90 80 70 60 50 40 30
20
Note: The higher the score, the closer to world best practice Source: Cornell University et al. (2017), Global Innovation Index
Singapore
Korea
Mexico
OECD Average
Colombia
China
Malaysia
Poland
Philippines
Turkey
Viet Nam
South Africa
Thailand
0
Indonesia
10
30
Local governments rely heavily on revenue from the central government Local government revenue sources, 2016 Locally collected revenue Central government: VAT redistribution
11%
39%
17%
Central government: other tax redistribution
Central government: grant funding
33%
Source: Fiscal Policy Office
31
Corruption persists Corruption perception index, 2017 90
80
70
60
50
40
30
20
10
0
Note: Index ranges from 0 (highly corrupt) to 100 (very clean). Source:Transparency International Corruption Perception Index (2017), https://www.transparency.org/news/feature/corruption_perceptions_index_2017
32
Peace - key constraints and selected recommendations Lacking institutional capacity Imbalance between central and local government Weak enforcement of competition law Corruption remains problematic
• Review role of ministries and clarify responsibilities across all levels of government • Pursue decentralisation by empowering local administrations
• Strengthen capacity of the Trade Competition Commission • Further strengthen existing integrity measures and streamline the anticorruption mandates of various institutions 33
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