Privatization in

Thailand
About Thailand..
 A unified Thai kingdom was established in
the mid-14th century
 Known as Siam until 1939
 Thailand is the only Southeast Asian
country never to have been taken over by
a European power.
 Thailand is currently facing armed violence
in its five Muslim-majority southern
provinces
Geography
 Location: Southeastern Asia, bordering the Andaman
Sea and the Gulf of Thailand, southeast of Burma
 Area: total: 514,000 sq km
water: 2,230 sq km
land: 511,770 sq km
 Border Countries: Burma, Cambodia, Laos, Malaysia
 Climate: tropical
 Natural resources: tin, rubber, natural gas, tungsten,
tantalum, timber, lead, fish, gypsum, lignite, fluorite,
arable land
People
 Population: 64,865,523
 Nationality: Thai
 Ethnic Groups: Thai 75%, Chinese 14%, other
11%
 Religion: Buddhism 95%, Muslim 3%,
Christianity 0.5%, Hinduism 0.1%, other 0.6%
(1991)
 Languages: Thai, English (secondary language
of the elite), ethnic and regional dialects
Government
 Country name: long form: Kingdom of Thailand
short form: Thailand
former: Siam
 Government type: constitutional monarchy
 Capital: Bangkok
 Administrative divisions: 76 provinces
 Legal System: based on civil law system, with
influences of common law; has not accepted
compulsory ICJ jurisdiction
Government
 Executive branch: chief of state: King
PHUMIPHON Adunyadet (since June 6 1946)
head of gov’t: Prime Minister THAKSIN
Chinnawat (since February 9, 2001)
cabinet: Council of Ministers
election: none
 Legislative branch: bicameral National Assembly
consists of the Senate and the House of
Representatives
 Judicial branch: Supreme Court or Sandika
Economy
 Overview: Thailand has a free-enterprise
economy and welcomes foreign investment.
Thailand has recovered from the 1997-98 Asian
Financial Crisis and was one of East Asia’s best
performers in 2002
 GDP: purchasing power parity - $477.5 billion
(2003 est.,)
 GDP – real growth rate: 6.7% (2003 est.)
 Inflation rate: 1.8% (2003 est.)
 Labor force: 34.9 million (2003 est.)
Economy
 Unemployment rate: 2.2% (2003 est.)
 Export Commodities: textiles, footwear, fishery
products rice, rubber, jewelry automobiles,
computers, plastics and electrical appliances
 Import Commodities: capital goods, intermediate
goods and raw materials, consumer goods, fuels
 Debt External: $53.75 billion (2003 est.)
 Currency: baht (THB)
Introduction
 Financial crisis has forced the economy of
Thailand into a severe recession
 Baht was floated then had plunged
 After one and a half years, there were
indications that Thailand is recovering.
 Government has made significant progress in its
short term economic adjustment
 Finance companies have been closed and
assets were put up for sale.
 Regulatory framework for the remaining
financial institutions is being strengthened
 Legal and corporate sector reforms began
thus accelerating PRIVATIZATION
How WORLD BANK responded..

 Lending
 Policy advice
 Guarantees and
 Technical assistance.
 The Bank pledged in monetary terms in loans
*Public Sector Reform Loan
*Follow-up loan for Social Investment
Program
Privatization
 To increase the role of the private sector in the
economy
 The Master Plan for State Enterprise Reform
had been approved by the Cabinet on
September 1998
 The government has also introduced a fast track
schedule for the sale of shares of several state
enterprises such as Thai Airways International
Plc., Airport Authority of Thailand, ESSO
(Thailand), and Ratchburi Power Plant.
 Petroleum Authority of Thailand (PTT) is in the
process of restructuring its subsidiaries before
being privatized in 2000.
Arguments for Privatization in
Thailand
 Privatization will be able to restore economic
growth and improve the efficiency of the Thai
economy to the benefit of firms and consumers.
 Influenced by the European model, public
ownership has been the key mode of economic
regulation in Thailand.
 The Thai government began privatizing state
enterprises in 1961 on a piecemeal basis.
 Prior to the 1997 economic crisis, privatization
was not carried out as planned as an important
strategy of bringing Thailand back on a growth
track.
Communication Sector
 Comprises telecommunications, postal and
broadcasting activities
 Large state owned enterprises :
*Telephone Organization of Thailand (TOT),
* Communication Authority of Thailand (CAT),
* Mass Communication Authority of Thailand
(MCOT)
 Sectoral plan that calls for the creation of an
independent regulator
 Independent regulator should provide the
necessary framework on which
competition, consumer, technical and legal
safeguards will be based
Water Sector
 3 state-owned enterprises:
1) Metropolitan Waterworks Authority
(MWA)
2) Provincial Water Works Authority
(PWA)
3) Waste Water Management
Organization (WWMO)
 MWA Operation was affected by financial
crisis
 There was a proposed independent
regulator to be established – to interpret
contracts or concession agreements; to
regulate established tariff structure; to
concentrate on customer service
standards and social obligations; and to
arbitrate disputes
Transportation Sector
 14 State-Owned-Enterprises
 Three major transportation modes or sub-
sectors: land (road, rail and mass transit);
water; and air
 Private sector – series of concession and
licensing agreements, functions as mixed
economy
Energy Sector
 Steady evolution
 IPP – Independent Power Producer
program
 SPP – Small Power Producer program
 Monopoly: Electricity Generating Authority
of Thailand (EGAT)
Electricity Generating Authority of
Thailand (EGAT)
 The country's first state enterprise in the year 1968,
 Electrifying nearly 95% of the countryside.
 Main problem : EGAT is privatizing the country's
electricity generation business without ensuring
competition and regulatory oversight to protect
consumers.
 EGAT is the one who decides who can generate power,
how much, and at what price.
 EGAT has guaranteed a large share of the electricity
market to its new subsidiaries and private sector allies,
while denying competitive power producers access to
the national transmission grid and market.
 EGAT's powers of prediction slowly
diminished.
 EGAT built the electricity-generating
capacity for an economic boom that never
materialized.
 Partial privatization mirror the Mexican
model. Power-generation assets were
spun off to senior-level EGAT retirees
Setbacks
 a lot of Union protests
 March 3 – biggest demonstration was held
in front of EGAT Headquarters
 People wanted to stop privatization
Reasons for protests:
 The government's privatization policy
would affect and hurt the Thai people with
higher costs, poor service and
 Would only allow politicians, their families
and cronies to grab a majority of shares
 Lack of transparency
Conclusion
 Big Impacts on financial and corporate
sectors
 Impact on society - losses of wages, jobs,
and opportunities
 The Thai government needs to revive the
economy, rebuild a sound financial sector
 Through privatization = Corporate
Restructuring
 Plans of government did not earn approval
of masses