(in opbouw / under construction)

Thailand: economie





3. Economie

• 3.1. Economische en financiële ontwikkeling
• 3.1.1. Overheidsfinanciën
• 3.1.2. Munt en bankwezen
• 3.1.2.1. Financiële instellingen
• 3.1.2.2. Geld- en kapitaalmarkt
• 3.1.2.3. Platteland
• 3.1.2.4. Industrie
• 3.1.2.5. Monetair beleid
• 3.1.3. Werkgelegenheid en lonen
• 3.2. Internationale handel en financiën
• 3.2.1. Internationale handel
• 3.2.2. Buitenlandse schuld
• 3.3. Industrie
• 3.3.1. Verwerkende industrie
• 3.3.2. Industriebeleid
• 3.4. Landbouw
• 3.4.1. Bodem en grondgebruik
• 3.4.2. Grondbezit
• 3.4.3. Landhervorming
• 3.4.4. Irrigatie
• 3.4.5. Gewassen
• 3.4.5.1. Rijst
• 3.4.5.2. Rubber
• 3.4.5.3. Maïs
• 3.4.5.4. Maniok
• 3.4.5.5. Andere gewassen
• 3.4.6. Veeteelt
• 3.5. Visserij
• 3.6. Bosbouw
• 3.7. Mijnbouw
• 3.8. Verkeer
• 3.8.1. Binnenwateren
• 3.8.2. Spoorwegen
• 3.8.3. Wegen
• 3.8.4. Havens en scheepvaart
• 3.8.5. Burgerluchtvaart
• 3.9. Energie
• 3.9.1. Elektriciteit
• 3.9.2. Aardolie en aardgas
• 3.10. Telecommunicatie

3.1. Economische en financiële ontwikkeling

In the 1960s and 1970s, the country's abundant natural resources, an enterprising and competitive private sector, and cautious and pragmatic economic management resulted in the emergence of one of the fastest growing and most successful economies among the developing countries. Between 1960 and 1970, the country's average annual growth rate of gross domestic product ( GDP--see Glossary) was 8.4 percent, compared with 5.8 percent for all middle-income, oil-importing countries. Between 1970 and 1980, the GDP rate of growth was 7.2 percent, compared with 5.6 percent for the middle-income oil-importing countries. The world slowdown by the late 1970s was mainly caused by the rise in oil prices. The Thai GDP in 1982 was US$36.7 billion. It rose to US$42 billion in 1985 (see table 5, Appendix). The projected rate of growth for GDP during the early 1980s was around 4.3 percent as a result of falling demand and prices for Thai exports despite a drop in oil price. It was apparent that in the 1980s Thailand had lost its momentum; its Fifth Economic Development Plan targets had not been met because of serious macroeconomic imbalances, such as decreasing savings and investment rates, increasing budget deficits, and increasing debt and debt- servicing obligations. Whether Thailand could regain its former momentum depended on the success of its Sixth Economic Development Plan (1987-91). Between 1970 and 1980, investment represented on the average 25.2 percent of GDP, compared with 24.7 percent by the mid-1980s. This proportion was one of the lowest investment rates in Southeast Asia. The national savings rate had fallen even more, from an average of 22 percent during the 1970s to around 17.8 percent by the mid-1980s. Hence, the average current-account deficit of 7 percent of GDP during the early 1980s had been caused by a declining savings rate rather than by an increase in investment rate. This imbalance was more serious than one caused by rising investment because rising investment could pay for itself with increased output and, possibly, increased savings so that debt could be repaid. With falling savings, foreign borrowing was used not to raise investment but merely to fill the investment-savings gap, which was mirrored in the external debt ratio of 39 percent of GDP and 146 percent of exports by the mid1980s . The total debt service ratio went up from 17.3 percent in 1980 to more than 25 percent by the mid-1980s. The increase was an important factor in the decision of the government to sharply reduce authorization for new commitments of public debt.

Source: Based on information from Bank of Thailand, Quarterly Bulletin, Bangkok, June 1987, 88.

3.1.1. Overheidsfinanciën

By the mid-1980s, government revenues averaged around 14 percent of GDP and consumption averaged around 13 percent, leaving a public savings net of interest payments of 1 percent of GDP. This was low compared with an average savings of 7 percent for the lower middle-income countries and 10 percent for the upper middle-income countries. The financing of public expenditures caused a major imbalance because of high deficit and low public savings. Although not a new problem, increases in public expenditure needed to be matched by increases in revenues. Efforts were made to tackle the problem, and the public capital expenditures annual growth rate had dropped from 64.7 percent in 1980 to 8.5 percent in 1982 and 7.4 percent by the mid-1980s. The problem remained serious, however, because of political unwillingness to raise public revenue to the required level. In fact, the central government managed to finance only its public current expenditures with its revenues. Almost all capital expenditures, which averaged around 3.5 percent of GDP by the mid-1980s, were financed with borrowed funds, and often even some of the current expenditures had been financed with borrowed funds, thus increasing the debt-servicing burden. Total revenue averaged around 13 percent of GDP in the 1970s and remained at the same level in the mid-1980s. In view of the disappointing revenue level, a new tax package was instituted in 1984-85 to raise revenues, including an increase in the tax rates on interest earnings from 10 percent to 12.5 percent, a reduction in the standard deduction for self-employed persons, the introduction of an estate tax, the abolition of preferential rates for companies listed on the stock exchange, the abolition of tax exemptions for selected state enterprises, streamlined exemptions and deductions for business taxes, and other measures. The resulting gains in revenue were, however, partially offset by measures to simplify the personal and corporate tax system. No effort had been made to reduce legal exemptions and illegal evasions. The net revenue effect of the package was therefore negligible. Some experts concluded that a broader tax base, less complicated tax structure, and lower tax rates needed to be considered in the tax reform. Also, contributions and taxes paid by the state-owned enterprises should be increased because they had dropped from 41 percent of profit in the late 1970s to only 23 percent by the mid-1980s. The Ministry of Finance required state enterprises to make specific improvements in their financial condition as a prerequisite for obtaining guarantees for borrowing. The measures included financing 25 percent of new investment from the state enterprises' own resources, forwarding at least 30 percent of their profits to the treasury, privatizing commercial enterprises, introducing corporate-planning systems, and limiting debt financing. Such measures did not lessen the burden of state enterprises on the budget, and their capital expenditure financed by the government had stayed at the same average annual rate of 3.5 percent of GDP in the 1970s and mid-1980s. It was noteworthy, however, that their performance had improved, with savings rising from 0.2 percent of GDP during the Fourth Economic Development Plan period (1977-81) to 1.4 percent of GDP by the mid-1980s. With approximately 68 state-owned enterprises, Thailand had fewer than the average in other Southeast Asian countries, such as the Philippines, with 264. Nevertheless, the government was very concerned with their performance. The largest ones in terms of assets were in public utilities, transport and communication, financial institutions, and petroleum. The smaller ones were in manufacturing, agriculture, commerce, and services. The state enterprises did not represent the entire extent of public ownership in the economy; in the mid-1980s, the government received 75 percent of the shares of 24 troubled finance companies in order to rescue them from bankruptcy. In addition, the Ministry of Finance held minority shares in eighty-eight other private firms. All state enterprises were attached to a parent ministry or to the Office of the Prime Minister, and there were five core agencies and two committees to supervise their activities. Some experts suggested that, in order to improve the efficiency of state enterprises, the enterprises needed to be more decentralized and exposed to free market competition. The government spent approximately US$16 billion during the period from 1982 to 1985 (see table 6, Appendix). In real terms, this represented an increase of about 52 percent over public expenditures from 1977 to 1981, the fourth plan period. Because an increasing percentage of the budget was devoted to recurring obligations, fewer funds were available for capital investment. Close to 70 percent of current expenditure was used for wages, salaries, interest costs, and defense. Investment in energy, transport, and communication had taken nearly 64 percent of total capital expenditure by the mid-1980s. Agriculture received a fairly constant proportion of about 15 percent of total public capital expenditure, and industry dropped from 1.3 percent to 0.9 percent between the end of the 1970s and the mid-1980s. Education, health, and welfare together continued to receive about 12 percent throughout the same period.

Source: Based on information from Bank of Thailand, Quarterly Bulletin, Bangkok, June 1987, 36.

3.1.2. Munt en bankwezen

Thailand's performance in managing its money and banking affairs through successful development and diversification of its financial institutions was impressive in the 1960s and 1970s. However, economic imbalances in the early 1980s and the rising tendency of governmental intervention put the financial sector under stress, thus reducing its efficiency in resource mobilization and allocation. Efforts to remedy the economic imbalances in the Fifth Economic Development Plan included restructuring monetary, exchange rate, and interest rate policies; strengthening the open securities market; and encouraging competition among financial institutions.

3.1.2.1. Financiële instellingen

Thailand had many types of financial institutions, subject to different laws and regulated by different agencies. Most of them were privately owned, but some were state owned. The primary state-owned facility was the Bank of Thailand, which had responsibility and authority for monetary control in its role as the central bank. It served as the fiscal agent and the financier of the government; regulated the money supply, foreign exchange, and the banking system; and also served as the lender of last resort to the banks. Other state-owned facilities included the Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives, the Industrial Finance Corporation of Thailand, the Government Housing Bank, and the Small Industry Finance Corporation of Thailand. By the mid-1980s, the 30 commercial banks had 1,526 branches handling the majority of all financial transactions in Thailand. The 16 largest banks accounted for over 90 percent of assets, deposits, and loans of the commercial banks, indicating a high concentration and little competition in the banking industry. Moreover, despite the impressive growth of banks, entrance by new banks was limited. Finance and security companies comprised the second largest group of financial institutions with assets equaling nearly 22 percent of those of commercial banks. Concentration also existed in the securities industry, the 5 largest companies (out of 112) holding 19 percent of all finance and security assets. The finance companies were created by many domestic and foreign banks to overcome banking restrictions. Although they were intended to increase competition with commercial banks, the objective was not met because many banks used the companies as an extension of their own activities.

3.1.2.2. Geld- en kapitaalmarkt

The money and capital markets were still underdeveloped in the mid-1980s. One striking fact was that the money market was very rudimentary and there was practically no open market for short-term securities; the only investors in treasury bills and government bonds were commercial banks and a few other financial institutions, which had to hold them until maturity. Certificates of deposits did not exist, and, for all intents and purposes, promissory notes issued by the finance companies were nonnegotiable. In order to increase the liquidity aspect of government bonds, in April 1979 the Bank of Thailand established the government bond repurchase market. In reality this was only a brokerage window at the central bank for institutional investors and, therefore, did not help to achieve the desired objective of open-market operation. Thus, Thai interest rates were determined, to a significant degree, by international forces rather than central bank sales and purchases of government securities. The Security Exchange of Thailand (SET) had combined the functions of securities market and securities commission, providing the legal framework for underwriting and trading of corporation shares of common stocks and bonds as well as government securities. In 1974 the SET assumed the functions of the Bangkok Stock Exchange, which never had been very active. In 1976 the SET had an upsurge because of expansionary monetary policy. In 1978 the SET collapsed, however, because of massive speculation, easy margin finance of up to 70 percent of a transaction, unpreparedness and inexperience of the brokers as well as the investors, and inadequate regulation and supervision of the market and such activities as inside trading and manipulation. The government created at that time two special public funds to purchase securities in order to limit the negative effects of price swings in the SET. Many investors, however, held on to their investments that had declined in value in order to wait for a better price, thus decreasing normal stock market activity. The hesitation to trade in the market created a surplus problem for the SET, further damaging investor confidence. Some economists suggested that more specific regulations and supervisory systems were needed in order to revive the SET and restore public confidence.

3.1.2.3. Platteland

Beginning in the late 1960s, the government gave top priority to increasing credit availability to the agricultural sector despite the fact that agricultural performance had been excellent during the previous two decades. The emphasis was on providing credit to agriculture at below market interest rates and channeling credit to poor farmers. In 1975 the central bank imposed a mandatory credit allocation system, under which a required minimum of 5 percent of all outstanding bank loans were allocated to agriculture. This quota was increased to 7 percent, then 9 percent, and finally to 13 percent by the mid-1980s. Moreover, all new rural and provincial branches of banks were required to lend 60 percent of their local deposits in the area served by the branch, with one-third of that amount reserved for farmers. In 1966 the government established the Bank for Agriculture and Agriculture Cooperatives to supply credit for the development of the agricultural sector. In the 1980s, it became the most important single source of credit for farmers, and it had a wide coverage of 62 branches and 514 field units located throughout the country; more than 2 million farm families were reached directly and indirectly via the cooperatives and farmers associations. Noninstitutional sources, such as agriculture and savings cooperatives, supplied 50 percent of agricultural credit, and commercial banks and the agricultural banks each supplied 25 percent. Finance for nonagricultural activities in the rural sector, which provided 50 percent of rural income, was largely neglected.

3.1.2.4. Industrie

The government did not use a mandatory allocation system or interest controls to affect the distribution of credit among industrial subsectors or regions or classes of industrial borrowers. The interest rate ceiling, however, did limit credit availability to small and medium industrial firms. Therefore, most credit went to the larger firms, which were mainly engaged in import substitution and were concentrated in the Bangkok metropolitan area. Commercial banks, finance companies, and the Industrial Finance Corporation of Thailand (IFCT) were the main suppliers of credit to the industrial sector. Commercial banks accounted for nearly 70 percent of the total credit granted to the manufacturing sector by the mid-1980s, the finance companies 24 percent, and IFCT the rest. Although the share of the IFCT was modest, it was the only one that offered extensive term-financing on a project basis. It was a private institution, but its mandate was to grant loans for projects having a low financial rate of return, which were unacceptable to commercial banks but were important to the economy as a whole. Such loans were possible because of the government guaranty for liquidity assistance to small borrowers and soft-term loans. The activities of the IFCT were hampered, however, by its being limited to fixed assets financing and by the lengthy project-evaluation procedure. Finance companies tended to deal with smaller borrowers than did commercial banks in their lending to manufacturing firms because they were allowed to charge higher rates to offset the higher risk associated with smaller borrowers. Yet, because of the limited regional spread of their branch networks and their limited resources, they could not fill all the gaps left by commercial banks, such as the supply of long-term loans. Commercial banks provided the widest range of services. Besides credit, they offered checking services, short-term trade credits, guarantees for third-party borrowing, foreign exchange services, and letters of credit. The breakdown of bank loan portfolios showed 19 percent for discount of trade bills, 58 percent for overdrafts, and 23 percent for loans. Because discounting and overdrafts were short-term activities, the 23- percent share for loans meant that long-term financing was scarce relative to short-term financing. Because fixed assets such as land and buildings represented the preferred collateral for banks, smaller borrowers with fewer fixed assets tended to be limited in their access to loans. Once a borrower had pledged its assets to banks for short-term financing, it could not use the assets for collateral with another institution, such as the IFCT, for long-term loans.

3.1.2.5. Monetair beleid

Monetary policy was traditionally passive. Control over the rate of credit extension was the primary means for supporting growth, maintaining price stability, and monitoring the balance of payments. Interest rates were allowed to adjust to the rate of credit expansion and were very much affected by international rates as a result of the Thai open economy. Low returns tended to discourage private savings and encourage high demand for consumer goods. Domestic prices also were largely determined by world price movements as a result of the country's open economy and minimal domestic price controls. In fact the oil price increases in the early 1970s caused inflation to rise from 4.8 percent in 1972 to 24.3 percent in 1974. The deceleration of world prices in the early 1980s caused domestic inflation to decline from 13 percent in 1981 to 5 percent in 1982. Measuring by the price indexes, with 1972 as a base of 100, price increase was less for agricultural products, going from 130.2 in 1973 to 227.7 in 1983 compared with 115.7 to 276.3 for nonagricultural products. The highest increase among agricultural goods was for forest products, which went from 122.9 to 403.2 during the same period. Among nonagricultural goods, mining and quarrying showed the highest increases. The consumer price index, taking 1976 as the base of 100, showed the highest increase in transportation prices with 231.2 in 1982, while the rest of the consumption basket had an increase of about 180 between 1976 and 1982. The Bangkok metropolitan area had the highest increase with 194 in 1983, compared with 188.4 for the Northeast region, 181.6 for the Center, 180 for the North, and 178.4 for the South (these being Thailand's four geographic regions).

3.1.3. Werkgelegenheid en lonen

The average annual rate of employment growth in the 1970s was 2.7 percent, compared with 2.9 percent in labor force growth caused by rapid population growth in the 1950s and 1960s. As a result, unemployment reached 1.7 million in 1985, which corresponded to an unemployment rate of around 6.3 percent. Agriculture was the major employer with about 69 percent of total employment in the mid-1980s, a decline from 84 percent in 1960. Between 1970 and 1983 manufacturing increased its share of the total employed labor force from 4.1 percent to 7.4 percent. Commerce increased from 1.6 percent to 8.7 percent, and services from 7 percent to 10 percent during the same period. The work force had gone through some structural changes in terms of age and sex. The fastest growing age-group in the 1960s was eleven- to fourteen-year-olds. In the 1980s, that age-group dropped as a result of a falling birth rate in the early 1970s and increasing primary and secondary school enrollment. By the mid-1980s, the fastest growing group in the work force was aged between twenty and thirty, with increasing participation by females. The proportion of women employed went from 66 percent in 1971 to around 70 percent by the mid-1980s. Female employment was highest in commerce with 54 percent in 1979, followed by 50 percent in agriculture, 43 percent in industries, and 36 percent in services. In terms of regional distribution, the North had the lowest rate of labor force growth, with 3 percent between 1971 and 1985, followed by the Northeast, with 3.3 percent as a result of limited job opportunities and migration. Bangkok had the highest labor force growth with 6.9 percent. Regional growth of the labor force depended partly on the level of education. An increasing (although still small) number of new entrants in the work force had received a higher education. In 1971 the percentage of the total labor force that had an elementary education was 90.2. This figure declined to 72.6 percent in 1985. For people with lower and upper secondary education, the share went from 4.8 percent to 10.4 percent during the same period. The percentage of the labor force with vocational training jumped from 1.9 percent to 10.4 percent between 1971 and 1985. Yet unemployment in Thailand for those with a college or vocational education rose from 8.4 to 9 percent by the mid-1980s, mostly because of an average increase of 13.7 percent per year in the educated work force between 1977 and 1985. The real wage rate between 1978 and 1985 remained the same for most of the country, but in some regions, such as the North, it dropped from B1.81 per hour to B1.66 (for value of the baht--B--see Glossary). Only in Bangkok did wages increase--from B3.64 to B4.20--during the period. Real wages were stagnant because minimum wage adjustments were not always closely linked to inflation rates, and compliance with the minimum wage laws was not observed by the various sectors of the economy and regions of the country. Minimum wage laws were first introduced in April 1973 after the legalization of unions in 1972. At the outset, the laws covered only Bangkok. They were subsequently applied to the entire country, which was divided into three regions with three different scales for various types of activities; agriculture and government administration were exempted. By 1982 minimum wages in Bangkok had been raised by 100 percent; those in other regions had been raised by 50 to 70 percent.

3.2. Internationale handel en financiën

3.2.1. Internationale handel

Thailand sustained a trade balance deficit from the early 1970s to the mid-1980s. Although the trade balance had improved during the first part of the 1970s, it worsened after the oil shocks of 1973 and 1979. In fact the net value of oil imports went from US$52.5 million in 1970 to US$684.7 million in 1982, with dependence on foreign oil reaching 75 percent in 1980 and declining to 50 percent by 1985. Although there was a general decline in the export performance of developing countries in the early 1980s, Thailand's recovery from the oil shock was further delayed by a loss in export competitiveness, a slowdown in the economies of major trading partners, and a growing debt service obligation resulting in part from rising interest rates. The current account balance deficits were not as severe as the trade deficits as a result of improving service balances. By 1986 the balance of payments had moved into surplus on current account (see table 7, Appendix). The major contribution to the service balance surplus was tourism, which increased from 630,000 tourists in 1970 to 2.6 million in 1986. Tourism was the top foreign exchange earner from 1981 to 1986. The trade deficit was caused in part by a decreasing growth rate of exports between 1980 and 1983, which improved slightly by 1985. The growth rate of imports also declined, but at a slower rate. Despite an increase in tourism, the trade deficit reached a peak in 1983 of US$3.9 billion. In 1985 exports totaled US$7.1 billion and imports US$9.2 billion, leaving an unfavorable trade balance of US$2.1 billion. By 1986 the deficit had decreased even further, with some of the reduction a result of the lower cost of imported oil. The composition or structure of merchandise exports changed substantially between 1965 and 1985. Primary commodities accounted for 95 percent of Thailand's exports in 1965, and manufactured exports accounted for only 4 percent. By 1986 manufactured products comprised 55 percent of total exports, with textile products increasing from less than 1 percent in 1965 to 13 percent by 1986 (see table 8, Appendix). Other major manufacturing exports in the mid-1980s included rubber products, processed foods, integrated circuits, metal products, jewelry, footwear, and furniture. Although agricultural exports as a percentage of total exports declined during this period, rice and other agricultural exports remained important for the Thai economy. By the mid-1980s, rice took the highest share of total agricultural exports. Cassava products, maize, sugar, rubber, fruit, and marine products were the other main exports in this category. Between 1965 and 1985, the destinations of merchandise exports shifted from 54 percent of 1965 exports destined for developing countries to 56 percent of 1985 exports going to industrialized countries. This increase in the percentage of exports to industrialized countries, in combination with the changing structure of merchandise exports from predominantly agricultural to manufactured products, has fueled Thailand's economic growth (see table 9, Appendix). Thailand's major industrialized trading partners included the EEC, the United States, Japan, and the Netherlands. Furthermore, Thailand has developed significant trade relations with the newly industrializing countries (NICs) of Singapore, Hong Kong, the Republic of Korea (South Korea), and Taiwan. Additionally, Thailand has developed trade relations with Malaysia, the Philippines, Indonesia, and China (see table 10, Appendix). Tariff barriers on imports from the developing countries had dropped with the implementation of the Tokyo Round (1973-79) of the General Agreement on Tariffs and Trade ( GATT--see Glossary). Rising nontariff barriers, resulting from domestic and international economic conditions in industrial countries, had more than offset the tariff reductions. In the United States the proportion of imports subject to such barriers more than doubled, and in the other industrial countries it rose by as much as 40 percent. Examples of nontariff barriers were quotas, voluntary exports restraints, the Multifiber Arrangements, sanitation rules, and subsidies. Thai rice exports encountered the stiffest barriers in Japan, where the tariff rate was 15 percent and a global quota was in force. In the United States, tariff on rice was only 2.6 percent, and no explicit nontariff barriers existed except for stringent controls by the United States Food and Drug Administration. In the other industrialized countries, Thai rice exports faced varying levies. Thai agricultural exports to the developing countries met with stiff competition from subsidized United States cereal exports. Thailand entered into a voluntary export restraint with France for its cassava exports because of strong resistance to imports from the French producers of cereal-based animal feed. Rubber did not face major barriers except for quotas imposed by Japan. Maize exports did relatively poorly because of subsidized production and high tariffs in the industrialized countries. Sugar exports also faced subsidy problems in Western Europe and a 50 percent quota reduction by the United States. Despite nontariff barriers, Thai agricultural and manufactured exports faced less protectionism than the NICs in the early 1980s. Of Thailand's manufactured exports, textiles were most affected by barriers because Thailand had to enter into bilateral agreements with industrial countries, which were similar to the voluntary export restraints under the Multifiber Arrangements. In addition, tariffs escalated with the degree of processing. For example, in the United States the average tariff for cotton fabrics was 9.6 percent, whereas it was 18 percent for garments. The United States imposed countervailing duties on Thai textile exports in protest against Thai government subsidies to textile exporters in the form of export packing credits, rediscount facilities for industrial bills, electricity discounts, and tax certificates. Tariffs in Thailand before the 1970s were primarily used to generate revenues rather than to influence domestic production. The rates ranged from 15 to 30 percent, with higher rates applied to finished consumer goods imports. In the 1970s, however, tariff rates on finished consumer goods imports increased 30 to 50 percent. Rising protectionism continued in the late 1970s and early 1980s, with high tariff rates and the application of surcharges, quantitative restrictions, price controls, and domestic contents requirements (see table 11, Appendix).

Source: Based on information from Bank of Thailand, Quarterly Bulletin, Bangkok, June 1987, 54-57.

3.2.2. Buitenlandse schuld

The Thai total long-term public and private debt grew from US$728 million in 1970 to US$13.3 billion in 1985. The external debt was increasing at a faster rate during this period than the growing gross national product ( GNP--see Glossary). In 1970 the external debt was 11.1 percent of GNP, increasing to 36 percent of GNP by 1985. The ratio of debt payments or debt service to the total export of goods and services, one indicator of Thailand's ability to meet debt payments, increased from 14 percent in 1970 to 25.4 percent in 1985. The growth of external indebtedness averaged 25.2 percent between 1970 and 1980, compared with an average of 21 percent for Southeast and East Asian middle-income oil-importer countries. Public debt as a percentage of exports went from 47.9 percent to 75.9 percent between 1980 and 1983, but the proportion of public borrowing from foreign sources dropped from 52 percent to 42 percent during the same period. This was indicative of the growing concern of the public sector with the enlarged foreign debt and hence a higher reliance on domestic borrowing, which went from 48 percent to 55 percent during the same period. In the early 1980s, Thailand was characterized by high competition between the government and the private sector for scarce domestic savings, which forced private firms to rely more on external borrowing. The composition of Thai indebtedness in terms of interest rates, maturity, and currency structure appeared to be better than that in most other developing countries. Because of its high credit rating, Thailand could borrow at about 8.4 percent in late 1983, compared with an average rate of 10.1 percent for other middle-income oil-importer countries. It had also the longest loan average maturity, 17.2 years compared with 12.2 years. In terms of currency denomination, the Thai external debt consisted mostly of two currencies: the United States dollar and the Japanese yen, with increasing reliance on the yen because of the willingness of Japanese banks to lend at a lower spread than the other banks. Thailand was exposed to the risk of yen appreciation in the early 1980s because Japan received only 14 percent of Thai exports while accounting for 26 percent of imports. Meanwhile, the value of the yen had appreciated substantially relative to the baht. The baht was pegged to the United States dollar until 1984 when it had a fixed exchange rate of B23 per US$1. Thereafter, the baht was pegged to a basket of currencies and devalued by 14.8 percent against the dollar. According to some observers, Thailand needed to revise its external debt portfolio as well as limit its reliance on external debt.

3.3. Industrie

The industrial sector in Thailand contributed considerably to economic growth during the 1970s and 1980s. As a percentage of GDP, industry accounted for an average of 25.7 percent in the 1970s and about 29 percent in the mid-1980s. The average annual growth rate was 9.3 percent for the 1970s, with a slowdown to 6.7 percent in 1985, which was still very respectable by international standards. Manufacturing constituted the most important industrial subsector, providing an average of 17.9 percent of GDP in the 1970s and about 19.8 percent in the mid1980s . Construction accounted for an average of 4.8 percent of GDP during the 1970s and rose to 5.1 by the mid-1980s. Mining and quarrying represented an average of 1.8 percent of GDP in the 1970s and remained fairly constant. The annual growth rate was the highest for the public utilities industrial subsector in the 1970s and mid-1980s, 13.1 percent and 8.8 percent, respectively. The annual growth rate for manufacturing dropped from an average of 10.1 percent in the 1970s to 7.3 percent in 1985. A decline in the growth rate of mining and construction occurred during the same period.

3.3.1. Verwerkende industrie

Manufacturing was the most important industrial subsector in Thailand, comprising on average 25 percent of each addition to GDP (incremental GDP), or 70 percent of all industrial value added during the 1970s and mid-1980s. Manufacturing was characterized by a high reliance on agricultural products, including rubber products, textile products, food processing, beverages, and tobacco. Thailand's food and agriculture share of manufacturing value added was about 36 percent by the mid-1980s, compared with 20 percent for South Korea and 22 percent for Malaysia. The next most important area of manufacturing was textiles, clothing, and leather products, produced mainly for export, with 23 percent of manufacturing value added. Machinery and transport equipment, which consisted mostly of repair and assembly of motor vehicles, accounted for 11 percent, and chemicals accounted for 7 percent. The remaining 23 percent included processed minerals, wood, rubber, carpets, batteries, rope, gunnysacks, plastic goods, tires, footwear, and an expanding domestic small arms production. The composition of Thai foreign trade reflected the manufacturing sector of the Thai economy. Exports of processed food, leather, wood, rubber, and basic metals represented a considerable share of manufacturing output. The capital and intermediate goods industries were less developed, however, necessitating high levels of imports of those products. Exports of manufactured goods grew from 5.5 percent of total exports in the 1970s to about 30 percent by the mid-1980s. Textiles and garments were the most important contributors in the 1970s, accounting for almost half of the total manufactured exports, but by the mid-1980s they had dropped to about 13 percent because of rising foreign protectionism of textiles. Exports of manufactured goods that grew rapidly during this period were wood products, nonmetallic minerals, electronics, electrical machinery, jewelry, and precious stones. Employment in the manufacturing subsector accounted for 7.9 percent of total employment by the mid-1980s and had absorbed over 16 percent of labor force growth during the 1970s. Textile, apparel, and leather firms had the highest share of manufacturing employment, with 25.8 percent in the early 1980s, followed by processed food, beverage, and tobacco firms, which accounted for 19.9 percent. Furniture and other wood products firms accounted for 15.8 percent of manufacturing employment; minerals, metals, and metal products, 12.6 percent; transportation equipment, 8.5 percent; and other manufacturing firms accounted for the remaining 17.4 percent. The growth in manufacturing employment resulted both from the absolute growth of the subsector itself and from the labor intensiveness of such industries as textiles. Small-scale firms with fewer than 10 workers employed 50 percent more workers at the beginning of the 1980s than all larger firms. However, both groups had the same average annual growth rate of around 10 percent in the 1970s. Manufacturing was heavily concentrated in the Bangkok metropolitan area, as indicated by its share of 35.3 percent of total manufacturing employment. The next highest area of concentration was in the Center. Industries outside Bangkok were based primarily on the processing of agricultural products, such as rubber, sugar, cassava, and rice, or on the repair of agricultural implements. Bangkok's role as the manufacturing center resulted from its position as the leading port, the largest market, and the transportation, communications, and financial center of the country. State-owned manufacturing firms produced tobacco, playing cards, liquor, marble, jute, sugar, paper, textiles, leather goods, glass, batteries, and pharmaceutical products. Each state enterprise was required to submit an annual operational and investment budget to be approved by its board of directors, its parent ministry, the Bureau of the Budget, and the National Economic and Social Development Board under the Office of the Prime Minister. Each firm had on its board of directors between nine and eleven members, all of whom were appointed by the parent ministry. The board was responsible for setting prices with the approval of the parent ministry. State enterprises were more unionized and more powerful than private firms and often had salaries 50 percent higher than those in the civil service and in some private firms. They also offered higher fringe benefits, bonuses, and overtime pay. Planning for privatization of some unprofitable state-owned manufacturing firms was under way in the mid-1980s, but the government faced labor opposition and other difficulties in selling these firms. Foreign enterprises accounted for about 30 percent of capital investment in the form of joint ventures with some twenty foreign countries. Japan provided more than one-third of total foreign investment, the United States more than one-seventh, and Taiwan less than one-eighth. The general attitude of the people toward foreign firms was favorable until the early 1970s. At that time, world commodities prices collapsed, causing hardship in the country. This collapse was popularly perceived as resulting from foreign involvement in the economy. Students and liberal elements demanded that contracts with foreign enterprises be reexamined and renegotiated. To placate these groups, the government revoked the extensive offshore concession of the foreign-owned Thailand Exploration and Mining Company (TEMCO). In the late 1980s, Thailand was considering large-scale industrial development plans, such as the Eastern Seaboard Development Program, which included deep-sea port facilities, a natural gas-based petrochemical complex, a soda ash project, a fertilizer plant, and an integrated steel complex. The petrochemical industries complex was to be developed southeast of Bangkok and was to include a plant to process ethane and propane into ethylene and propylene. It was to be a public and private joint-venture project costing an estimated US$600 million. The site of the Eastern Seaboard Development Program was to be a major center for industrial development that would extend from east of Bangkok toward the Cambodian border. The site was chosen because of its proximity to Bangkok, access to raw materials and labor supplies from the Northeast, availability of an existing deep-sea port on the Gulf of Thailand, and excellent road and communications infrastructure. One objective of the program was to decentralize economic activities away from Bangkok. The other goals were the development of a wide range of industries, including agro-industries, around Si Racha-Laem Chabang and the development of tourism in and around Pattaya, a popular beach resort area. The total capital requirement for the project was estimated at US$4.5 billion: about 66 percent for heavy industrial development; about 20 percent for infrastructure; 7 percent for housing, industrial estates, and urban services; and the remainder for light industries.

3.3.2. Industriebeleid

The Thai industrial sector was under the supervision of seven governmental agencies. The Ministry of Finance administered taxes and duties and provided tax refunds on exports. It was involved in large-scale industrial projects in the role of deciding on government equity participation, arranging public foreign borrowing to support the project, and extending protection through tariffs. The Board of Investment provided investment incentives, and the Ministry of Commerce controlled prices and international trade. The Ministry of Industry issued factory licenses, drew up industrial regulations, and enforced zoning laws. It also provided technical assistance, management training, and financing for small- and medium-sized enterprises. The Industrial Finance Corporation of Thailand lent long-term funds to medium- and large-scale firms from credit given by the government. The Bank of Thailand provided foreign exchange and rediscount facilities to selected industries and exporters at concessionary terms. Finally, the National Economic and Social Development Board established policy guidelines and targets for the industrial sector. In 1982 the Industrial Restructuring Committee was created to coordinate the various agencies and to formulate detailed policy proposals in line with economic development plans. Import tariffs were the most important protective measure used for the industrial sector. In the 1960s, the nominal tariff rates were low, ranging from 25 to 30 percent. In the 1970s, the rate went up to a range of 30 to 55 percent for consumer goods. By the end of 1978, nine import categories had tariff rates above 90 percent, including alcoholic beverages, shoes, perfume, cosmetics, and automobiles. In the early 1980s, the government attempted a more uniform tariff structure and lower protectionism in conformity with the Fifth Economic Development Plan. The adjustments included a reduction in tariffs to 60 percent on 270 categories of imported commodities; a change in tariffs to 30 percent for 1,970 items; and an increase in rate to 5 percent for those nonessential items that had been exempted. Goods considered essential, such as milk for infants or fibers used in textiles, remained exempted. Other protective measures included price controls, which were quite pervasive in the 1970s but were relaxed at the beginning of the 1980s, except on petroleum products, white sugar, and sweetened condensed milk. Quantitative restrictions on imports were increased in the early 1980s to cover forty-six products. Regulations requiring a certain percentage of domestic content in manufactured imports included 30 to 40 percent for commercial vehicles, 45 percent for automobiles, and 70 percent for motorcycles. In order to encourage investment, the Board of Investment provided incentives, such as guarantees against nationalization and price controls, tax exemptions of up to 8 years, and tariff surcharges of up to 50 percent to protect against competing imports. The basic objectives of the board were to promote laborintensive industries, exports, and regional decentralization of industry.

3.4. Landbouw

Much of the impressive economic growth recorded by Thailand in the 1970s and the early 1980s was owed to the steady expansion of the agricultural sector. This sector provided adequate food for the rapidly growing population and produced substantial surpluses of some commodities for export. The Thai farmer's ability to adapt to changing market conditions contributed to the country's agricultural success, but even more important was the availability of large areas of virgin land for cultivation. Between 1950 and 1980, agricultural holdings nearly doubled to an estimated 22 million hectares, of which about three-quarters were farmed annually, and much of the rapidly growing population was absorbed in the expansion. By the early 1980s, however, most of the arable land had been occupied, except in the South, and continued growth of the agricultural sector became increasingly dependent on the acceptance of new technologies and the adoption of more intensive cultivation. Observers feared that without these changes growing domestic demand--both from increasing population and from rising expectations--would seriously affect the nation's balance of payments position through the reduction of exportable surpluses of vital major foreign exchange earners, such as rice and sugar. Agriculture--crops, livestock, forestry, and fisheries-- employed about three-quarters of the labor force, and it was estimated that some four-fifths of the total population was dependent on the sector for its livelihood. During the mid-1980s, agriculture accounted for an average of about 25 percent of GDP, and agricultural commodities accounted annually for over 60 percent of the value of all exports. The type of agriculture engaged in--whether cash crop, subsistence, or a combination thereof--varied from region to region and within regions. In the central plain, there were farmers whose sole activity was the raising of such cash crops as maize, sugarcane, vegetables, and fruit. In the rice bowl region of the central plain, farmers grew rice for sale as a main crop. Elsewhere, rice was raised basically for subsistence purposes, but many farmers also cultivated secondary crops for the market. In areas without developed access roads and services, such as parts of the upper Northeast, participation in the market economy was limited. Farmers in these areas practiced subsistence cultivation, selling only an occasional surplus locally. Agriculture was dominated by smallholders, most of whom had either outright title to the land or effective possession of it; tenancy was significant only in parts of the central plain. In the early 1980s, the average holding for the whole country was about 5.6 hectares, but considerable size differences existed within different regions and locales that related in part to terrain, soils, rainfall, and other natural factors. In the North, where nearly a quarter of the nation's more than 4.5 million agricultural households were located (1983 estimate), over half the land is mountainous. In the upper part of the region, which is characterized by narrow valleys, average holdings were only about 2.2 hectares. In the parts of this upper area that had controlled irrigation, the typical farm only had slightly more than one hectare. A farm on nonirrigated land consisted of about two hectares, part of which was rain-fed paddy and part upland. The lower part of the region had areas similar to those in the central plain. Farms were considerably larger, the typical one having close to five hectares. Both paddy and upland crops were grown, and maize had become an important secondary cash crop for many farmers (see table 12, Appendix). In the Northeast, the generally infertile soil required larger holdings to meet subsistence needs. Over half the farms had between 2.4 and 7.2 hectares, and the typical farm had an area of about 4 hectares. In the early 1980s, about 40 percent of the country's agricultural households lived in this region. Holdings in the Center, which contained about 20 percent of the nation's agricultural households, varied considerably. Near Bangkok small farms producing market vegetables might have little more than half a hectare, whereas commercial rice farms outside the city averaged over ten hectares. The typical commercial rice holding on the central plain, however, averaged somewhat over three hectares, and all available land was under cultivation. In the upland to the east of the plain, where maize was grown commercially, the typical farm size was close to 6.5 hectares. Cassava was also grown in this area on somewhat smaller farms, typically of about five hectares. West of the plain, the uplands were devoted in part to sugarcane grown on holdings usually of about three hectares. In the South, the rugged terrain made about two-fifths of the region unsuitable for agriculture. The climate, however, favored the cultivation of rubber trees, and the majority of farms grew rubber as a cash crop along with subsistence rice. A typical household had about three hectares: 1.5 hectares of rubber trees, small areas of coconut or fruit trees, and the rest planted in rice. In the three southernmost provinces holdings were smaller, averaging about two hectares.

3.4.1. Bodem en grondgebruik

Roughly two-fifths of Thailand is covered by mountains and hills, the steepness of which generally precludes cultivation. Nevertheless, perhaps as much as a tenth of this area might also be converted to agricultural purposes once detailed information was obtained through surveys. Estimates in the 1970s of overall land-use suitability classified roughly 58 percent of mountainous and hilly regions as cultivable (compared with 24 percent 2 decades earlier), of which about 19 percent was usable for paddy, 28 percent for upland crops, and 11 percent for both paddy and upland agriculture. Actual holdings of agricultural land--not all of which was under cultivation at any one time--were estimated in the mid-1970s to occupy about 43 percent of the total land area. Soils throughout most of the country are of low fertility, largely as a result of leaching by heavy rainfall. Differences between the various soil types are the result of differences in parent rock material, variations in the amount of rainfall, length of wet and dry seasons, type of vegetable cover, and other natural factors. In general, stony and shallow soils characterize the hill and mountain terrain of the North. Large portions of this mountainous area were traditionally used by hill peoples for shifting cultivation (see Glossary). The Lua (also called Lawa) and Karen cultivated for short periods, then permitted the land to lie fallow for long periods, which allowed forest regrowth and restoration of soil fertility (see The Non-Tai Minorities , ch. 2). As a result of population pressures, however, other groups sometimes failed to follow this practice. The principle crop of many hill peoples was upland rice; maize was an important secondary crop. The Hmong, Lisu, and certain other hill peoples cultivated the opium poppy as a cash crop , but this activity had important implications for internal stability as well as major international repercussions (see Criminal Activity and the Narcotics Trade , ch. 5). Thai authorities, with substantial international assistance, increased efforts in the 1980s to redirect these people to other cash crops, including tobacco and coffee. Many inhabitants of the lowlands in the North also practiced shifting cultivation in hill areas lying not far above the valleys. The valleys usually had better soils, some of fairly high or moderate fertility, which were used mainly to grow irrigated rice. In places where population pressures had developed, the higher areas were often turned to shifting cultivation to supplement lowland production. The principal crop was usually upland rice, although other crops were also grown. Shallow sandy loams cover a large part of the Khorat Plateau. Their generally low fertility partly explains the lower economic level of the region. Soils along the main rivers are more fertile, and alluvial loams of high fertility are found along the Mekong River. Lowland soils covering about a fifth of the Northeast (some 3.5 million hectares) had been converted to rice paddy. The central plain rice-growing area and the delta of the Mae Nam (river) Chao Phraya has clayey soils of high to moderate fertility. Low-lying and flat, much of the area is flooded during the rainy season. Higher areas on the edges of the plain are generally well-drained soils of high to moderate fertility that are suitable for intensive cultivation. These lands are used extensively for maize and sugarcane. Among other highly useful soils are the well-drained clayey and loamy soils in parts of the peninsula where rubber is grown.

3.4.2. Grondbezit

Traditionally, the king owned all the land, from which he made grants to nobles, officials, and other free subjects. If left uncultivated for three years, the land could be taken back by the crown, but otherwise it could be passed on to heirs or mortgaged or sold. At the same time, there was abundant unoccupied cultivable land that by tradition and custom could be cleared and used by a farmer, who after three years of continuous cultivation established informal rights. The concept of individual ownership of the land was introduced during the reign of King Chulalongkorn (Rama V, 1868-1910), and beginning in 1901 formal title could be acquired. The titling of land in the mid-1980s was based on a land code promulgated in 1954. The 1954 code established eight hectares as the maximum permissible holding except where the owner could manage a larger holding by himself. This limitation was generally ignored, however, and was rescinded four years later. A title deed (chanod tidin) giving unrestricted ownership rights ordinarily was issued only after a cadastral survey. At least two prior steps were required before the prospective landholder could obtain a full title deed. Application was first made to occupy and cultivate a piece of unused land, and a temporary occupancy permit (bai chong--reserve license) that carried no title rights was received. After 75 percent of the land had been cultivated, the landholder could secure an exploitation testimonial (nor sor). This gave him the right to occupy the land permanently and to pass the property on to heirs; in effect it was an assurance that a title deed eventually would be forthcoming. Transferring the land through sale, however, was extremely difficult, and the exploitation testimonial was not usually accepted by banks as collateral. In the case of squatters, a special occupancy permit (sor kor) could also be obtained, unless the land was in a permanent reserved forest or was intended for public use. Satisfactory development could then lead to the issuance of an exploitation testimonial and ultimately a full title deed. The issuance of title deeds, which proceeded at a relatively slow pace in the early 1950s, quickened somewhat during the remainder of the decade. By 1960 the total number of title deeds for agricultural land had reached 1 million, although there were 3.4 million agricultural households (this total included an unknown number of tenants' households). The pressure for titles of various kinds increased during the 1960s and 1970s as the number of farm holdings expanded rapidly. In an effort to expedite the processing of title deeds, the Department of Land of the Ministry of Interior resorted in the 1970s to the use of aerial photography in lieu of land surveys. In the 1980s, a substantial component of the nation's dominant smallholder group nevertheless lacked full title to the land it worked. By 1982 the total number of title deeds was 3.9 million. A 1976 estimate placed the proportion of farm holdings having formal title at about 60 percent. The lack of full title by the remaining 40 percent created not only a sense of insecurity for the landholder but also presented a barrier to securing needed credit. A major question in the mid-1980s concerned the legalization of farm holdings outside recognized areas for land acquisition. An unknown but substantial number of holdings had been established by squatters--many of them hill people--in the reserve forests, which, according to the central government, were not eligible for titling, although the de facto possession of such holdings was recognized by local authorities. Observers pointed out that in many cases of forest encroachment the occupied land was incorrectly classified and in fact was suitable for cultivation (some reclassification was reported in the late 1970s). It also appeared that in the drafting of the country's land laws there was an underlying assumption that agricultural land meant the lowlands; in other words, the land in mountainous and hill areas was considered nonagricultural. Thus, a large part of the North was not even included in the land registration system, and the hill peoples of the region were therefore unable to acquire legal title to the land they used.

3.4.3. Landhervorming

Historically, agricultural tenancy nationwide appeared to have been low except in the commercial rice-growing areas of the central plain and in the North. This situation was the result of land reforms instituted by King Chulalongkorn beginning in 1874, the great availability of free land, the absence of population pressures, and the relatively small amount of funds required by the individual farmer to start cultivating rice. Together with customary practices that tended to limit the amount of cultivable land that could be claimed, these factors resulted in a national pattern of small independent farms. Of great significance to this development was the law that the farmer had to cultivate his own land; if it was more than he or his family could handle, the farmer had to supervise cultivation of the excess. Four hectares were considered the maximum tillable by one family, although with hired help up to about eight hectares could be managed, the amount varying with soil differences and climatic conditions. Nineteenth-century legislation set a four-hectare limit on freely acquirable agricultural land and acted as a major deterrent to the accumulation of land into large estates. Nevertheless, large holdings did exist as grants to nobles and officials under the sakdi na (see Glossary) system (see Social and Political Development , ch. 1). Chulalongkorn's reforms played an important part in the breakup of at least some large estates. In such cases the law provided that the uncultivated land would revert to the state after a period of three years. In the area around the capital, however, where many larger holdings were located, land could be rented out, and the landholdings therefore remained intact. Statistical data on tenancy in the mid-twentieth century varied considerably. A problem of classification concerning whether the fairly numerous part owner-part tenant arrangements should be included with owners or tenants also led to different conclusions. The part owner-part tenant group consisted largely of farmers who owned small plots but also worked as tenants on other larger farms. In some areas, 95 percent of the farmers were reported to be deeply in debt. According to the government censuses of agriculture in 1950 and 1963, the rates of full tenancy for the country as a whole were 6.6 percent and 4.1 percent, respectively. Rates varied significantly by region. In 1963 the rate in the Center, the chief agricultural area containing the rice-growing central plain, was 10.7 percent as compared with 1.1 percent in the North. A special 1967-68 survey of the Center determined the full tenancy rate to be 22.5 percent (part owners-part tenants constituted an additional 15.8 percent). A 1973-74 survey of the Center, as well as other regions, showed the full-tenancy rate in the Center to be 12 percent (part owners-part tenants constituted another 28 percent). The remainder were full owners. Tenancy in the Center in areas devoted completely to commercialized agriculture was very high, however, especially in some districts near Bangkok where as many as 75 to 85 percent of the farmers were reported in the mid-1970s to be full tenants. Lower, but still comparatively high, rates of tenancy were also found in certain other districts of the plain. The unusually high tenancy rates were attributed to several factors, including the proximity to Bangkok of estates that were granted to the ancestors of present-day holders under the sakdi na system; large holdings received as remuneration for the digging of canals; and, since the 1950s, acquisition of land as investment by individuals residing mostly in Bangkok. Figures published in 1975 covering 4 provinces in the Bangkok area cited 119 estates ranging in size from 160 hectares to 1,600 hectares and comprising a total of more than 60,000 hectares. Another factor contributing to tenancy in the central plain was the loss of holdings to creditors by farmers unable to repay loans. A large proportion of the small leaseholds was reported to be owned by storekeepers, local craftsmen, and other farmers. The 1973-74 agricultural survey also provided data on tenancy in other regions. In the North, the survey found that 4 percent of the farmer operators were full tenants, 25 percent were part owners-part tenants, and 69 percent were full owners. The southeastern provinces of the North, where conditions resemble those of the central plain, reportedly had a higher percentage of farmers renting some or all of their land. In the Northeast, full tenants constituted only a negligible proportion; 89 percent of farm operators were full owners, and 8 percent were part owners-part tenants. In the South, full tenants likewise were only a very small minority; 83 percent were full owners, and 16 percent were part owners-part tenants. One reason given for the development of the part owner-part tenant situation was the effect of Islamic inheritance laws, which in theory divide the land equally among the children. In such cases, the inherited holding might be inadequate to meet family needs, and supplementary land would be rented. The part owned-part rented condition was not in itself detrimental. There appeared to be many cases in which additional land was rented solely because the farmer family believed it would benefit financially by cultivating it. Unrest among tenants, who constituted a substantial portion of the nation's poorer farmers, began to manifest itself in the early 1970s. Tenant discontent centered chiefly on the amount of rent, but also of great concern was the fact that use of the land was often based on a verbal agreement that rarely exceeded one year and carried no guarantees of renewal. In 1950 a land rent- control act covering part of the central plain was passed but proved generally ineffective. The civilian cabinet that succeeded to power in October 1973 promised rent and land reform. Implementing action was not immediately forthcoming, however, and farmer dissatisfaction mounted, finally erupting in demonstrations in May and June 1974. In December of that year, the government passed a rent reform law known as the Agricultural Land Rent Control Act of 1974, providing for six-year, indefinitely renewable rental contracts. Rents were to be payable once a year only, and procedures for determining the amount were specified. Moreover, if a poor harvest occurred, the rent was to be reduced, and none would be paid if the harvest were less than one-third normal. Associated with tenancy was the equally serious problem of landless farmers, who by the early 1980s numbered an estimated 500,000 to 700,000. In January 1975, the civilian government, over strong opposition, managed to get through the National Assembly a second reform measure of potentially far-reaching effect. This was the Agricultural Land Reform Act of 1975. The legislation called for the establishment of the Agricultural Land Reform Office in the Ministry of Agriculture and Cooperatives to serve as the implementing agency. Under the act, landless and tenant farmers could be allocated up to eight hectares of land that would be paid for on a long-term installment basis. The land to be allocated was to come from purchases from private holders and from forest and crown lands. Individual landowners were required to make available to the program all but eight hectares of their holding. Under certain circumstances, larger holdings could be retained, but such holdings could be expropriated later if the provisions of the exception were not met. Payment for the private land taken was to be 25 percent in cash and the remainder in government bonds. Implementation of land reform slowed after the coup of October 1976, which ousted the civilian government, and the act's goals were subsequently shifted. The government of Prime Minister Thanin Kraivichien, installed as head of a military regime in October 1976, announced that a land reform program covering 1.6 million hectares and taking place over a period of four years would be carried out. Prime Minister Kriangsak Chomanand, who succeeded to office in November 1977 after still another military coup, modified this goal to a more realistic one of 1.3 million hectares over five years. By early 1979, almost eighty areas throughout the country had been designated Land Reform Areas under the program. At the same time, although tenancy remained a major issue, a somewhat different concept of reform seemed to have emerged, based on the belief that the most pressing problem was to improve the situation of the large numbers of illegal squatters in the forests. The Land Reform Areas included some areas of high tenancy, but the new goal of helping forest squatters appeared easier to promote than land acquisition by the Agricultural Land Reform Office in the high-tenancy areas of the central plain. There it was strongly opposed by large landowners, including wealthy aristocrats, businessmen, and senior military officers. The program as projected included furnishing legal titles to squatters and providing them with needed infrastructure and credit. The areas brought under the program were to be organized into self-sufficient cooperatives. Implementation of a given project was expected to take about two years, including about a year and a half to get the basic infrastructure well under way and to provide titles. The latter would permit the landholder to pass on the land to heirs but would not confer the right to sell it to private parties. The title, however, could be used as collateral for credit. According to government sources, by 1978 some 320,000 hectares consisting mainly of public land had been distributed, and another 160,000 hectares were ready to be apportioned.

3.4.4. Irrigatie

Thai farmers traditionally relied on rain and flood water for crops, but the amount needed for rice cultivation was not always received. By the mid-1800s, a number of canals had been constructed in the central plain to carry floodwaters from the Chao Phraya, and in the latter half of the century other canals were dug. The canals did not form a controlled irrigation system, however, but simply a distribution net, and whether additional water could be made available depended on the level of the rivers. Records covering almost a hundred years to 1930 showed that in about one-third of the years water from the rivers was insufficient, resulting in considerable crop losses. In 1902 the government contracted with a Dutch expert to develop a controlled irrigation plan for the entire country but failed to take further action. Droughts in 1910 and 1911 led to renewed interest and the hiring of a British irrigation specialist. Nevertheless, the first irrigation project was not completed until 1922. By 1938 about 440,000 hectares had been irrigated. Supply problems held up projects during World War II, but work resumed with renewed vigor in the late 1940s. By 1950 the irrigated area totaled nearly 650,000 hectares. In 1950 Thailand secured the first of a series of loans from the World Bank (see Glossary) for the construction of the vital Chainant Diversion Dam on the Chao Phraya and a number of major canals. By 1960 over 1.5 million hectares had been irrigated, almost entirely in the Center and in the North. Systematic development of the irrigation system began with the First Economic Development Plan (1961-66) and was continued in later plans. New assistance from the World Bank included financing of the important multipurpose Phumiphon (Bhumibol) Dam (completed in 1964) on the Mae Nam Ping and the Sirikit Dam (completed in 1973) on the Mae Nam Nan. These dams, both of which have associated hydroelectric power-generating facilities, impound water at two large reservoir locations in the Chao Phraya Basin. Other World Bank-financed projects were also carried out in this basin during the 1970s, and by the end of the decade nearly 1.3 million hectares had controlled water flow in the rainy season, and about 450,000 hectares had it in the dry season. The Chao Phraya Basin's natural features, as well as its size, made it the most important area for irrigation development. The topography and water systems of the Northeast, by contrast, were not well suited to large-scale irrigation projects (except on the Mekong River, which would involve major resettlement problems). Controlled irrigation potentially could encompass about 10 percent of the Northeast's 3.5 million hectares of paddy. Beginning in the 1960s, the Royal Irrigation Department, founded in 1904 and largely responsible for development and maintenance of the country's main irrigation systems, constructed 6 large and about 200 small dams in the region. The associated irrigation system contained design defects, and in the mid-1970s improvement was undertaken with World Bank assistance. Part of the irrigable area was receiving water in the early 1980s, but completion of necessary additional work was not anticipated before the late 1980s, at which time about 160,000 hectares would have irrigation throughout the year. Irrigation work also began in the 1960s in the Mae Nam Mae Klong Basin, which contained nearly 400,000 irrigable hectares of paddy. Regulated wet-season irrigation was furnished during the 1970s for roughly 175,000 hectares. A multiple dam completed in the late 1970s and a distribution system under way in the 1980s was expected to provide adequate water for double cropping on over 250,000 hectares. Small irrigation projects also were started in the 1960s in the South, on the east coast where more than 500,000 of the region's 600,000 hectares of paddy were located. About 75,000 hectares had supplementary wet-season water, and work under way in the 1980s in the Mae Nam Pattani Basin was expected eventually to serve about 52,000 hectares.

3.4.5. Gewassen

Climatic and soil conditions permit the cultivation of a wide range of crops, not only tropical varieties but also many originating in semitropical and temperate zones. Until the late 1950s, however, the major emphasis in agriculture was on rice and, secondarily, on rubber, which together accounted for over half the value of all commodity exports. Other crops regularly grown included maize, cassava, potatoes, yams, beans, sugarcane, fruit, cotton, and various oilseeds, but all were supplementary and intended basically for domestic use. Historically, Thailand's independent status had kept it from being saddled with a colonial plantation economy, in which two or three principal crops were produced for world markets or for the imperial power. Agricultural production, however, had been strongly influenced by the West after the Bowring Treaty of 1855 with Britain, which resulted in crop diversification (see The Bangkok Period, 1767-1932 , ch. 1). Accordingly, when new market conditions-- increased world demand, higher prices, and developing domestic industry--arose during the 1960s and 1970s, Thailand's independent small farmers responded by expanding substantially the output of many secondary crops. The flexibility of the Thai farmer was evidenced by an unprecedented shift from rice production to other crops by a considerable number of households. In other cases, many farmers continued to produce rice for subsistence purposes while expanding their activities to grow market-oriented upland crops. In the mid-1980s, major export crops included not only rice and rubber but also maize, cassava, sugarcane, mung beans, tobacco, and sorghum. Other important crops in which major production increases also had been made were pineapples, peanuts, cashew nuts, soybeans, bananas, sesame, coconuts, cotton, kapok, and castor beans.

Source: Based on information from Bank of Thailand, Quarterly Bulletin, Bangkok, June 1987, 75.

3.4.5.1. Rijst

Rice, the nation's major crop, was grown by about threequarters of all farm households in the early 1980s. Two main types were cultivated: dry, or upland, rice, grown predominantly in the North and Northeast; and wet rice, grown in irrigated fields throughout the central plain and in the South. About half the 1986 production of 19 million tons was grown in the central plain and major valleys in the North; another two-fifths was produced in the Northeast; and about 6 percent came from the South, which was a rice deficient area. Roughly 8.5 million hectares were devoted to rice production in the early 1980s, about 40 percent more than in the early 1960s. The rice yield was highest in the Center, averaging about 1.9 tons per hectare, which was about a third of the yield per hectare in Taiwan and South Korea. Low productivity was attributed in part to longstanding government policies aimed at keeping consumer rice prices low. The so-called rice premium (in fact an export tax) and occasional quantitative export controls were claimed by opponents to have discouraged production expansion by reducing profitability. Although perhaps a valid argument for commercial rice farming, the policies probably had a minimal effect on the large number of subsistence farmers in the Northeast and North, who produced small, if any, surpluses and whose dry rice was not usually exported. Perhaps more significant was the apparent loss of paddy fertility in the North and Northeast because of poor soil management and the extension in those regions of the growth of lower yield upland rice.

3.4.5.2. Rubber

In 1901 British planters introduced rubber trees into the Malay Peninsula, where the soils and climatic conditions were highly suited to rubber cultivation. In Thailand early government restrictions on foreign investment led to development of the industry by local smallholders, usually subsistence rice farmers who were able to start rubber tree stands on the relatively abundant free land in the area. Land under rubber cultivation expanded rapidly in the 1930s, consisting mainly of smallholdings controlled by Chinese, Thai, and Thai Malays rather than large, European-owned plantations, as in other Asian countries. Thailand had about 1.6 million hectares in rubber in the mid-1970s, of which about 10 percent were located in an area along the Gulf of Thailand southeast of Bangkok. Of the 500,000 holdings in the early 1980s, about 150,000 were under 2.5 hectares in size, and another 300,000 were under 10 hectares. The remaining larger holdings were operated more as expanded smallholdings than as plantations. Production was increasing in the early 1980s and had reached about 830,000 tons in 1987. An extensive replanting program, in which old tree stock was replaced with new high-yield varieties, had reportedly been carried out in about half the planted area by the mid-1980s, significantly increasing the potential for expanded production.

3.4.5.3. Maïs

Maize was believed to have been introduced by Spanish or Portuguese traders in the sixteenth century. Export interest and profitability led to increased maize cultivation after World War II and the introduction of the so-called Guatemala strain in 1951. Output rose rapidly thereafter to almost 600,000 tons in 1961, over 1 million tons in 1965, and 2.3 million tons in 1971. A record 5 million tons were produced in 1985. Fertilizer use was limited, however, and there was concern that yields would gradually decline. The grain was grown throughout Thailand, but the uplands around the central plain were especially suitable. Weather conditions usually permitted commercial growers to produce two crops a year.

3.4.5.4. Maniok

Cassava, a root crop from which tapioca is made, was introduced in about 1935. The tubers may also be boiled and eaten as a vegetable or ground into flour. An important food in many tropical subsistence economies, cassava had never been significant in Thailand in the past because of the abundance of rice. Cassava developed into an important export item in the 1950s, and production continued through the 1970s and 1980s as external demand increased. Thai output of cassava root in 1984 was more than 19 million tons, second only to Brazil in world production. The main growing areas were Chon Buri and Rayong provinces, southeast of Bangkok, but substantial quantities were also grown in parts of the Northeast. In 1986 Thailand signed a 4-year tapioca trade agreement with the EEC calling for export of 21 million tons of tapioca during the 1987-91 period.

3.4.5.5. Andere gewassen

Sugarcane has long been widely grown. Some commercialization was reported by the mid-nineteenth century, but the crop became of major importance only after World War II. In the early 1950s, production averaged 1.6 million tons annually, and in the late 1950s self-sufficiency in sugar was attained. In 1960 Thailand became a net exporter of sugar. Rising world prices led Thailand's market-responsive farmers to expand cropped areas in the 1970s. In 1976 sugarcane production reached a record 26.1 million tons, and sugar output totaled 2.2 million tons, the latter amount being considerably in excess of international and domestic demands. Drought in 1977 greatly reduced output and seriously affected many small growers. Declining world prices after 1975, drought, and lower producer prices in 1978 led many farmers to shift to alternate crops. In 1986 about 24 million tons of sugarcane were produced. Productivity was low compared with other major sugarcane-growing countries (about fifty-three tons of sugarcane per hectare against Taiwan's seventy tons and Indonesia's eighty tons in the mid-1970s). Introduction of new varieties and improved cultivation and cropping practices were needed to raise output levels. The principal sugarcane-growing areas were in and around Kanchanaburi Province and in Chon Buri Province in the Center. Sugarcane was also grown in the Northeast and in the North around Chiang Mai, Lampang, and Uttaradit. Kenaf, a coarse fiber similar to jute but of somewhat lesser quality, is native to the country and has long been grown for local use in making sacks, cord, and twine. Commercial cultivation began in the Northeast in the 1950s, and production was largely concentrated in the central and eastern parts of the region in 1980. World shortages created by the Indo-Pakistani War of 1965 temporarily stimulated Thai production of jute, as did shortages resulting from the 1971 civil war in Pakistan. The recovery of jute cultivation in Bangladesh (formerly East Pakistan) and broad swings in producer prices led many Thai farmers in the late 1970s to replace kenaf with cassava, which commanded a higher return. The 1984 kenaf crop was estimated at about 200,000 tons, compared with an average annual output of over 400,000 tons in the previous decade. Increased world demand, however, was expected to encourage a revival in planting. Tobacco, an important foreign exchange earner, had long been grown by farmers for personal and local use. Virginia flue-cured tobacco had been produced commercially since the 1930s, but export began only in 1956. Some burley and oriental (Turkish) tobacco was also grown. United Nations sanctions against Rhodesia beginning in the mid-1960s opened new markets, and production of Virginia tobacco rose from 13,700 tons in 1967 to more than 50,000 tons in 1981. About half of the commercial tobacco was grown in the North and another quarter in the Northeast. Tobacco growers were licensed, and a large number operated under the aegis of the state-owned Thai Tobacco Monopoly. Pineapples, exported chiefly as canned fruit and juice in the early 1980s, were grown solely as a supplementary crop for local use until the first pineapple cannery was opened in 1967. A shortage of fruit led several canneries to establish large pineapple plantations (ranging up to more than 3,000 hectares--in sharp contrast to the smallholding character of most Thai agriculture), which supplied about 40 percent of cannery needs in the late 1970s. The industry grew dramatically, and by the early 1980s Thailand was one of the world's largest exporters of pineapples, producing about 1.6 million tons in 1984. Production and export of coffee expanded rapidly after Thailand became a member of the International Coffee Organization in 1981. Exports of coffee beans, most of which were grown in the South, reached 20,600 tons in 1985.

3.4.6. Veeteelt

Animal husbandry accounted for about 13 percent of the gross value of agricultural production in the early 1980s. Water buffalo and cattle remained the chief draft animals for cultivation, although tractors were playing an increasing role in some areas, as in the maize-growing regions of the central plain. Buffalo, predominantly of the swamp type well suited to paddy culture, were estimated at between 5.5 and 7.2 million. Able to flourish on coarse fodder and roughage indigestible by other livestock, buffalo were found in all farming areas; even very small paddy farmers usually had at least one animal. After maturing, buffalo were used as draft animals for five or six years, or until too old to work, when they were slaughtered and sold for meat. Cattle, numbering between 4.9 and 5.5 million, were used mainly for upland plowing and hauling carts. About 70 percent of all farms had cattle. Although 30 percent of farms had three or more head, there were few herds of more than 10 animals. Cattle also were slaughtered for meat once their usefulness had ended. Pigs were an important source of meat, and there were about 5 million in the early 1980s. Most farmers raised one or two, and an estimated 150,000 families were engaged in commercial pig raising. Weather conditions were generally unsuitable for using horses except in the North, where the common variety was the so-called Yunnan pony mainly valued as a pack animal. Tame elephants remained important to the forest industry in the 1980s, especially in harvesting teak, where the use of mechanical equipment was economically prohibitive because of the wide dispersal of individual trees. Livestock reproduction rates were low because most animals were bred only when it did not interfere with work. In addition, debilitating diseases, including foot-and-mouth disease, were endemic to all regions except the South. These diseases retarded expansion of the national herd of livestock, which was reported to be growing at only about 2.5 percent annually in the early 1980s. Shortages of meat in Bangkok in the early 1970s led to student demonstrations and the establishment of export quotas in early 1974 (in early 1979 the quotas were 35,000 head of cattle and 15,000 of buffalo annually). Several commercial dairy herds and smallholder dairy cooperatives furnished some milk for sale. Demand for fresh milk and dairy products had grown, especially in Bangkok. Almost all smallholders raised some chickens and ducks for eggs and meat. The commercial production of chickens grew dramatically in the 1970s, and nearly 65,000 tons of frozen chickens were exported in 1986, of which 95 percent went to Japan. A considerable number of commercial operations had flocks of over 20,000. Select breeding stock was used, and modern operational practices were followed. Commercial duck farms were almost entirely Chinese operated.

3.5. Visserij

In the 1980s, the fisheries sector was of major importance to the economy as an earner of foreign exchange, marine products accounting for about 10 percent of total exports in 1986. Fish also accounted for about three-fifths of the protein in the national diet and an even higher proportion among the poorer rural population. Until the early 1960s, the country had been a net importer of fish. This situation completely changed with the introduction of trawl fishing, which resulted in a dramatic rise in the marine catch from 146,000 tons in 1960 to 1 million tons in 1968 and 2.1 million tons in 1985. Thailand became the third largest marine fishing nation in Asia after Japan and China. Of Thailand's 40,000 fishing vessels, nearly 20,000 were deep-sea trawlers, many with modern communication and navigation equipment and refrigeration facilities. By 1980 large-scale fishing operations, based largely in urban areas, were responsible for 88 percent of Thailand's annual catch. The fishing industry was the economic backbone of many Thai coastal cities. The increase in the catch of shrimp was particularly notable, and shrimp exports became a major source of foreign exchange earnings. By about 1972 maximum exploitation of demersal (bottom-dwelling) and pelagic (open-sea) fish appeared to have been reached in the Gulf of Thailand and in the Andaman Sea. In the early 1980s, production remained relatively static, and there was growing concern that these areas were being overfished. Government control of fishing was limited. The use of certain kinds of fishing gear within three kilometers of the coast was banned, but there appeared to be no restriction on trawl net-mesh size, and undersized commercial food fish were being caught and dumped in with trash fish in the production of fishmeal. Moreover, during the 1970s neighboring Cambodia claimed territorial waters extending to 200 nautical miles from its coast. This reduced the area in the Gulf of Thailand available to Thai fishermen and increased the intensity of fishing off the coast of Thailand. Similar claims by Burma had also restricted Thai fishing in the Andaman Sea. Inland fisheries, which included both freshwater and brackish water fish, officially reported annual catches of about 160,000 tons in the early 1980s. The actual catch--principally freshwater fish from flooded rice paddies, swamps, irrigation and drainage ditches, canals, reservoirs, rivers, lakes, and ponds--was estimated to be much higher. It was believed, however, to be declining as population growth resulted in overfishing and as increasing water pollution from industrial waste, insecticides, and siltation caused by forest destruction took its toll. The most promising course for maintenance of fisheries production at the level attained in the 1970s, or for increasing output, was the expansion of aquaculture, including the culture of fish, shrimp, and various mollusks, such as mussels, oysters, and clams. According to the Department of Fisheries, about 4.5 million hectares of inland water areas, mostly rice paddy fields, were suitable for aquaculture. Another 1.3 million hectares, including estuaries, mangrove swamps, and tidal flats, were also usable (see table 13, Appendix).

3.6. Bosbouw

An aerial photographic survey conducted in 1961 showed forests to cover about 54 percent (or if swamp and scrub areas are included, 56 percent) of Thailand. In the succeeding two decades, this area was substantially reduced as a rapidly growing population pushed into the forests seeking new land for agricultural use. Increasing prices for certain upland crops, especially in the 1970s, also acted as a strong incentive for conversion of forests to cultivated lands. By the mid-1980s, the expansion of the cultivated area had resulted in a decrease in the amount of forestland to less than 30 percent. Except for a few small, privately owned, coastal mangrove areas, all forestland was the property of the state. Roughly 32 percent of the 1961 forest area, largely in the North and Northeast, had been designated permanent reserved forest through the end of the 1960s. Government plans called for additions in subsequent years to raise the total to about 51 percent. Clearing or cutting of timber or settling in such land was possible only with an official permit. Many of the stream valleys in these reserve areas, however, were highly suitable for agricultural use. Traditionally, farmers had been able to occupy unreserved public land on a free basis, restrictions in such cases relating only to the cutting of certain timber tree species, which remained the property of the state. As population growth increased the demand for land, farmers in the 1970s also moved into the reserved forests with little or no effective hindrance from government agencies. This situation was generally nonreversible, and observers anticipated that eventually most such holdings suitable for cultivation would be legalized under the agricultural land reform program. Areas of forest usable for permanent cultivation still existed in the early 1980s, mostly in the South. In other regions there were logged-over areas and scrubland (at times included with forestland), part of which could be used for agriculture. Extant forest areas--minus potentially cultivable land--were still considered sufficient to meet domestic timber and other wood requirements and also to provide a surplus of forest products for export. Foreign and Thai forestry specialists were agreed that for this situation to continue, positive steps would have to be taken, including an adequate program of reforestation, prevention of illicit cutting and the use of steep forest slopes for cultivation purposes, and active promotion of more efficient forest exploitation practices. In the early 1970s, the Food and Agriculture Organization recommended a reforestation program of 1 million hectares. The government later approved a plan to replant 120,000 hectares. Major exploitation of the highly valuable teak wood for exportation was begun by European interests in the late 1800s, and by 1895 indiscriminate cutting had largely exhausted the more easily workable stands. About this time, the government established a system of control that included leases and cutting cycles (a teak tree takes from 80 to 150 years to mature fully, depending on local soils and weather). By 1909, when controls were further tightened, almost all of the industry was in European hands, mainly British but also Danish and French. During World War II, a Thai company took over all concessions, and although a few were returned to foreign control for a period after the war, the government's long-term goal of full Thai operation was attained in the late 1950s. Although modern logging equipment was in widespread use, difficult terrain and lack of roads in many areas necessitated the use of elephants in logging operations. In 1982 there were 12,000 working elephants in Thailand, including those trained at the Royal Forestry Department's Young Elephant Training Center. The exploitation of Thailand's forests was the responsibility of the Royal Forestry Department. Through the Forest Industry Organization, a state-owned enterprise, the government controlled nearly all extraction of mature teak. However, illegal felling of teak continued to be a serious problem in the 1980s, although the extent of the cutting was uncertain. A decade earlier, estimates had placed illegal cutting at from one-third to an amount greater than legal cutting. Some idea of the magnitude of the situation was evident in a 1973 report of the Royal Forestry Department, which cited some 7,600 incidents of illegal teak felling. The department was not only unable to patrol adequately all forest areas but authorities also failed to act against illegal logging operations connected with politically influential individuals and families. Major damage to permanent forest areas also occurred, especially in the 1970s and 1980s, through occupation of hillside forestland that was not suitable for cultivation. This practice was carried on throughout the country and resulted not only in destruction of forests but also in erosion and damage to watersheds. Notable forest destruction occurred over time in the North because of shifting cultivation practiced mainly by the hill peoples of the region. Of the roughly 70 percent of this region classified as forests, well over a quarter was being used for such cultivation in the late 1960s, according to a government report. The amount grew tremendously during the 1970s as the population of the hill peoples increased. In addition, many landless Thai were reported to have migrated to the area, and others who were farming agricultural land in the valleys also were practicing shifting cultivation on the hills and mountainsides to supplement production. According to some sources, forested lands in the Northeast declined from about 60 percent in 1956 to less than 20 percent two decades later. Although teak had been a major long-term source of foreign exchange earnings, the output by volume of timber from other commercially valuable species was far greater. Thailand had a large number of such species, of which the most commonly exported one was yang, related to the so-called Philippine mahoganies. Others were of great value domestically, supplying the country's general requirements for timber and wood products of various sorts. In the 1980s, however, the forests failed to meet the demand for raw materials for paper and paper products, and these were being imported in growing quantities. Only limited stands of pine existed, and development of a domestic pulp and paper industry appeared to depend on the establishment of suitable forest plantations.

3.7. Mijnbouw

Thailand's mineral reserves had not been well assessed in the 1980s. Mining and quarrying accounted for only a small share of GDP, in 1986 amounting to about 2 percent of the total in real terms. About thirty minerals were exploited commercially, but many were of minor significance. Tin, tungsten, fluorite, and precious stones were important foreign exchange earners in the early 1980s and so, to a lesser extent, was antimony. Minerals of substantial value to the domestic economy included lignite, gypsum, salt (which was also exported), iron ore, lead, manganese, limestone, and marble. Tin was the leading mineral. The existence of tin in the area of present-day Thailand was known at least by the thirteenth century, when it was alloyed with copper in casting bronze images of the Buddha. In the 1980s, major workings were located in the southern peninsula, although deposits were also found and worked in several other parts of the country. The ore was obtained from onshore alluvial deposits, weathered and disintegrated formations, river beds, and offshore deposits along the seacoasts. Production of tin concentrates averaged over 29,000 tons annually in the early 1970s, dropped to about 22,000 tons in the mid-1970s, and then rose to 46,000 tons in 1980. By 1985 tin production had dropped to about 23,000 tons as a result of export controls imposed by the International Tin Council and the indefinite closing of a major offshore mining company. The actual output of concentrates in the 1980s was believed to have been at least 10 percent higher than officially reported. The additional quantity represented tin concentrates smuggled from the country to escape payment of both business taxes and the statutory royalty deducted from the price paid to the seller by the foreign-controlled Thailand Smelting and Refining Company (THAISARCO). The export of tin ore and concentrates was banned by the government after THAISARCO began smelting tin in 1965 at a newly constructed plant on Phuket Island. Most of the smuggled concentrates originally went to Penang, but this trade had been largely halted by the Malaysian authorities; in the 1980s, the illegal ore was sent to Singapore for smelting. Since the mid-1970s, the tin-mining industry has generated a large amount of political controversy, social unrest, and illegal activity that continued into the mid-1980s. Onshore mining operations were carried on mostly by small miners who were predominantly Thai. Offshore operations included a number of large dredges owned by both Thai enterprises and foreign firms, as well as thousands of suction boats. Both kinds of operations were supposed to be registered with local provincial authorities. The tin fields had attracted large numbers of the unemployed or persons seeking fortunes, however, who mined illegally. Reports of a new tin strike brought thousands of individuals to the area, resulting in such attendant social problems as claim jumping, forged registration certificates, frequent violence, and the like. In 1975 the government-owned Offshore Mining Organization (OMO) was set up to replace large offshore oil concessions owned by foreign corporations and ousted Thai government leaders. A substantial amount of illegal dredging was also reported in the OMO concession area, whose size and restrictions of exploitation to subconcessionaires had created strong resentment among independent small operators, even though the OMO had given concession rights to a considerable number of them. In late 1979, a group of nonconcession-holding small dredgers pressed the provincial authorities of the area to urge the central government to revoke all restrictions on mining in the OMO holdings. The overall magnitude of illegal operations appeared in the early 1980s to be beyond the ability of the local authorities to control. Official action, moreover, was often deterred by public sympathy for the poor person struggling to eke out a living. Thus, illegal mining was an important source of employment in the southern peninsula and, in conjunction with related illegal operations, created numerous ancillary jobs. From the national viewpoint, however, a great loss of natural wealth occurred because of haphazard and inefficient exploitation. Onshore miners, legal and illegal, tended to take out only the readily accessible richer ore, leaving varying amounts of lower grade ore that, mined separately, was uneconomic. Large numbers of small dredges sent divers down to find rich spots that were sucked up, avoiding large nearby areas containing ore that was costly to mine. Many of the dredges also had poor separation equipment, and considerable quantities of ore were lost in the tailings. Because of potential political problems, decisive action by the central government (or provincial governments) to resolve this problem did not appear imminent in the late 1980s. Thailand is a rich source of sapphire, ruby, zircon, garnet, beryl, quartz, and jadeite, and in 1986 gems and jewelry were a large export item in terms of value. Significant deposits of rubies were located in Chanthaburi and Trat provinces in the southern part of the Center, and deposits of sapphire were found in Kanchanaburi Province. Stones were also imported from Sri Lanka, Australia, Africa, and South America for cutting and setting into jewelry. By the mid-1980s, Thailand had become one of the world's major gemcutting centers, and the craftsmanship of Thai gemcutters was widely recognized. Tungsten, an important source of foreign exchange earnings beginning in the early 1970s, was found in the mountains in the North and in the Bilauktaung Range along the Burmese border. In 1970 a major find of the tungsten mineral wolframite was made in Nakhon Si Thammarat Province in the South. Antimony, also an important export, was found in many parts of the country. Mining was carried on almost entirely by small operators, but in the mid-1970s cumulative annual production was about 6 percent of total world output. Fluorite, one of Thailand's principal exports, was mined mainly in the North in Chiang Mai and Lamphun provinces, where large reserves existed. Relatively large deposits of rock salt of approximately 97 percent purity underlay areas in the Northeast. Reserves were estimated to be at least 2 billion tons. Although having great future export potential, the lack of an adequate transportation infrastructure posed a major problem for exploitation of the rock salt reserves. Offering a hopeful promise of a new source of foreign exchange earnings and savings on imports in the 1980s was the long-delayed development of zinc mining and refining. This involved exploitation of a large ore deposit, estimated at 3.5 million tons of 25 percent content, at Mae Sot in Tak Province near the Burmese border. A zinc smelter constructed by a ThaiBelgian consortium began operation in 1984.

3.8. Verkeer

Thailand's transportation system of inland waterways, railroads, and roads was centered on Bangkok (see fig. 11). Historically, waterways had served to carry agricultural products from the central plain to the capital for export or domestic processing and to transport foreign or locally made goods back to rural areas. In the 1980s, the railroads and roads radiating from the city to all parts of the country served the same purpose. Bangkok's accessibility through the Chao Phraya made it the chief port for foreign oceanborne trade. Since World War II, Bangkok's strategic location in Southeast Asia has made the city the principal regional center for international air travel. The existing system of main roads, railroads, and waterways in the late 1980s was considered by foreign experts to be generally adequate for the country's overall transport requirements. Considerable upgrading of provincial roads would be needed in the coming decade to handle growing traffic as commercialization spread through the rural areas. In particular, substantial improvement and development were required for subsidiary roads to provide villages and hamlets access to the main transport arteries.

3.8.1. Binnenwateren

Historically, about 4,000 kilometers of inland waterways consisting of the rivers and canals of the central plain and the Chao Phraya Delta formed the backbone of the transportation system. Although in the twentieth century railroads and roads assumed a dominant position in the central plain, waterways still carried a sizable portion of the total traffic. Waterborne freight, chiefly consisting of rice, accounted for about 17 percent of total freight transported countrywide in the 1980s. Large numbers of small craft also transported passengers. During the rainy season about 1,600 kilometers of waterways were navigable by barges of up to 80 tons and 1.8-meter draft, which could travel from the Gulf of Thailand to as far north as Uttaradit. Navigation was reduced to about 1,100 kilometers of waterways in the dry season, and traffic could navigate only to Nakhon Sawan, roughly halfway to Uttaradit. Shallow-draft vessels could navigate the interconnected network of canals throughout the year, and Bangkok, Ayutthaya, and other towns had floating markets where a great deal of trading activity took place. Some sections of the Mekong River were also navigable.

3.8.2. Spoorwegen

The state-operated national rail system was started by King Chulalongkorn, and the first section--from Bangkok to Ayutthaya-- was inaugurated in 1896. The line was extended to Nakhon Ratchasima in 1910, and during the first decade of the century work had already begun on other lines to the north and south. By 1941 well over four-fifths of the present-day rail system had been opened. After 1951 control of the railroads was vested by law in the State Railway of Thailand (SRT), an autonomous agency. Through 1979 SRT had received a number of assistance loans from the World Bank, as well as bilateral aid with which the line was first rehabilitated and later modernized, including replacement of steam locomotives by diesel units. In the early 1980s, SRT had about 4,000 kilometers of meter-gauge track, all of it single track except for a 90-kilometer section of double track running north of Bangkok to near Ayutthaya. Four main interconnecting lines originating in Bangkok ran to Chiang Mai (Northern Line), Aranyaprathet (Eastern Line), Nong Khai and Ubon Ratchathani (Northeastern Line), and the Malaysian border (Southern Line). A number of branch lines were also in operation, including a line constructed in the 1980s to link the Lan Krabu oil field in Kamphaeng Phet Province to the Northern Line. Also under construction in the mid-1980s was a link from Bangkok down the eastern seaboard to Rayong, which was completed as far as Sattahip in 1984. Competition from developing road services had cut heavily into railroad passenger and freight traffic, and the proportional share of freight declined between 1968 and 1976 from 19 percent to 11 percent. In the 1980s, however, the rail lines remained of major importance in the transport of bulk commodities, such as petroleum products, cement, and rice, over long distances.

3.8.3. Wegen

Extensive development of the road network did not start until after World War II. By the 1980s, however, roads were the most important part of the transportation system. Before the war the few existing roads had been intended primarily as feeders to the railroad system, which had been built largely with foreign funds that needed to be repaid. Profit from rail transportation was vital, and the construction of competing roads was deemed uneconomic. From the mid-1950s to the mid-1960s, however, substantial United States aid was provided, along with technical assistance, to develop a national highway system that by 1965 totaled almost 9,500 kilometers. Thereafter, assistance for highway development came mainly from the World Bank, although in the late 1960s United States military forces also furnished substantial funds for road construction. In the 1980s, the primary road system consisted of a net of national highways that started at Bangkok and extended in all directions to the country's frontiers. They totaled about 20,000 kilometers, of which well over 90 percent were paved. Provincial roads totaling over 24,000 kilometers formed a secondary system that tied provincial towns and population centers to the national roads. About two-fifths were unimproved and often impassable during rainy weather. In addition to the main and provincial roads, there were tertiary roads--consisting of village roads, footpaths, tracks, and the like--variously estimated at from 40,000 to 60,000 kilometers. These roads and trails were important because they represented in many cases the only link between a village or hamlet and the provincial system or possibly a railroad stop or inland waterway point. Several thousand kilometers of tertiary roads had been improved, but in general they were poorly maintained. Their administration was spread over a number of government agencies, in contrast to national and provincial roads, which were administered by the Department of Highways in the Ministry of Communications. In the early 1980s, no restrictions existed on the importation of motor vehicles, although taxes and duties on imported vehicles were higher as a measure to protect the domestic automobile assembly industry. Under guidelines set in 1986, local automobile assembly plants were required to use at least 54 percent domestic parts. Motor vehicles registered in 1984 included 688,000 automobiles, 600,000 commercial vehicles, and nearly 2 million motorcycles. In the 1980s, about a third of all vehicles registered were in the Bangkok metropolitan area, but this included almost two-thirds of the automobiles. The relatively massive concentration of trucks, buses, and automobiles in the capital area regularly created enormous traffic jams. Construction of an elevated expressway was under way, the first part of which had been completed by the early 1980s.

3.8.4. Havens en scheepvaart

The country's preeminent port was Bangkok, which in the early 1980s handled 98 percent of imports and 65 percent of exports as well as about 40 percent of coastal traffic. More than 4,000 foreign vessels were reported to have called at Bangkok in 1983, and about 24 million tons of cargo were handled, including coastal cargo. Two other ports of some significance in international trade were Si Racha and Sattahip, both located southeast of Bangkok on the Gulf of Thailand. Both ports were used primarily for exporting agricultural products. Sattahip's deep-water naval facility was also used to handle imports of heavy equipment. The port of Bangkok had experienced continuous growth since the 1950s, and, through loans from the World Bank, its facilities had been substantially expanded to handle the increased traffic. A major drawback of the port was its limitation on vessel size and draft, which forced ships of more than 10,000 tons or 8.5- meter draft to offload at the mouth of the Chao Phraya, some 27 kilometers downstream. As part of the Eastern Seaboard Development Program, the government in 1986 approved plans to build a new deep-water port at Laem Chabang in Chon Buri Province to supplement Bangkok's Khlong Toei port. An industrial estate was to be built close to the port area for export-oriented industries, such as electronics, and for agro-based industries, such as food processing and rubber products. Under the same program, a new port and industrial park was to be constructed at Mapthaphut to serve the petrochemical, fertilizer, and soda ash industries. Some thirty smaller ports were found along the Gulf of Thailand and the Andaman Sea. About half were fishing ports, and the remainder served multiple purposes, including coastal services, export and import functions, and fisheries operations. Coastal operations were in general small. In the early 1980s, the government also had under consideration development of deep-water ports at Songkhla on the east coast of the peninsula, through which rubber was exported, and Phuket on the west coast. Phuket served as an outlet for both tin and rubber exports. In 1985 the Thai merchant fleet consisted of 71 freighters, 2 bulk carriers, and 25 tankers, totaling roughly 700,000 tons. Regular cargo service was provided between Thailand and Japan, and one shipping company made regular calls at West European ports. An unknown number of small coastal vessels conducted trade with Malaysia and Singapore.

3.8.5. Burgerluchtvaart

Domestic air service was furnished by Thai Airways Company (TAC), a government-owned entity established in 1951. There were some 130 airfields of all categories throughout the provinces, 104 of which were in usable condition, in addition to the major airport at Bangkok. In the early 1980s, service was provided to about twenty airports. In addition to domestic service, TAC also flew to Penang in Malaysia, Vientiane in Laos, and Hanoi in Vietnam. The principal Thai-flag international service was provided by Thai Airways International (THAI), founded in 1959 by TAC jointly with the Scandinavian Airlines System (SAS); TAC held 70 percent of the shares and SAS 30 percent. THAI's routes included flights to Asia, the Middle East, Europe, North America, and Australia. Approximately thirty international airlines flew into Thailand. Both TAC and THAI had greatly expanded and upgraded their fleets by the mid-1980s. In 1985 THAI placed orders with the European aircraft manufacturing consortium Airbus Industrie for four A300-600 medium-range jumbo jets, making the airline the third largest Airbus user in the world, with sixteen airplanes. Also in 1985, THAI ordered two more Boeing 747s, making a total of eight, for use on its long-distance routes to Europe, North America, and Australia. In 1987 Prime Minister Prem Tinsulanonda approved the proposed merger of THAI and TAC, which was expected to be carried out by 1989. The principal international airport was Don Muang outside Bangkok. The airport had long been Southeast Asia's main air traffic center for flights between Asia and Europe (although at the beginning of the 1980s it was experiencing strong competition from Singapore). The airport was used jointly by civilian airlines and the Royal Thai Air Force, resulting in growing congestion as international flights increased. During the mid-1970s, consideration was given to building a new civilian airport, but in 1978 a decision was made to move some military operations to other airports. A two-year expansion program for Don Muang was then initiated, and a new state enterprise, the Airport Authority of Thailand (AAT), was legislated and took over administration of the airport in July 1979. In 1979 the airport at Chiang Mai was upgraded to become an international airport. In 1985 THAI opened a new cargo terminal at Don Muang International Airport as part of its plan to expand its cargo business. That same year a new wide-body aircraft maintenance center was inaugurated at Don Muang as a bid to make Bangkok a regional service center for Airbus and Boeing planes.

Suvannabhumi (Land van Goud, vermoedelijk overeenkomend met een zeer vruchtbaar gebied dat zich uitstrekte van Zuid-Myanmar over Centraal-Thailand naar Oost-Cambodja. Twee steden in Thailands centrale laagvlakte heetten gedurende lange tijd Suphanburi (Stad van Goud) en U Thong (Wieg van Goud).)

3.9. Energie

Historically, the population has had adequate supplies of fuel in the form of wood charcoal, which was usually available for the taking from nearby forests and thickets. Until the midtwentieth century, the chief energy source for the country's limited industry was wood, supplemented by rice husks and bagasse (the dry pulp remaining from sugarcane after the juice is extracted). Even into the 1960s, wood was a major source of fuel for the railroads. Electricity, which was used for power beginning in 1887 with the establishment of the Siam Electric Company, was generated as late as the early 1950s largely by steam produced through burning rice husks. Other natural energy sources existed, although they were underexploited, in the large hydroelectric potential of the Chao Phraya and to a lesser extent of the Mae Klong and other smaller rivers. There were also deposits of lignite, which was used to fuel a number of power plants. Since 1950 small oil deposits have been found and exploited in the North. Oil shales have also been discovered, but exploitation remained economically unfeasible in 1980. The greatest potential for domestic hydrocarbon production in the late 1980s consisted of large natural gas deposits, which had been discovered in the 1970s in the Gulf of Thailand.

3.9.1. Elektriciteit

As industry revived and began to expand after World War II, the need for electricity grew. The supply was limited and unreliable, and some industrial firms and businesses installed their own generators, mostly fueled by imported oil. In 1958 the Metropolitan Electricity Authority (MEA) was established to generate and supply power to Bangkok and adjacent provinces. A year earlier the government had also set up the Yanhee Electricity Authority (renamed in 1969 the Electricity Generating Authority of Thailand--EGAT) to promote development of hydroelectric power. The first hydroelectric generating facility was the Phumiphon Dam. Completed in 1964 on the Mae Nam Ping, it had an installed capacity of 420 megawatts in 1979 and a potential of 560 megawatts. Escalating power demand led to construction of a major oil-fired plant, the North Bangkok Power Station, which went into operation in 1961. Installed capacity from 1968 totaled 237 megawatts. The capital area became adequately supplied with the construction of a new oil-fired plant in Bangkok. The South Bangkok Thermal Power Plant started up in late 1970 with a 200- megawatt capacity; by 1977 this was increased to 1,300 megawatts. The country's second major hydroelectric plant, at the Sirikit Dam (potential generating capacity of 500 megawatts) on the Mae Nam Nan, a major tributary of the Chao Phraya, started generation with an installed capacity of 375 megawatts in 1974. A third large hydroelectric facility, part of a multipurpose irrigation, flood control, and power project at Ban Pho on the Mae Nam Mae Klong northwest of Kanchanaburi, was completed in the 1980s with an initial capacity of 360 megawatts and an estimated potential of 720 megawatts. Generating capacity to other parts of Thailand was on a much smaller and regionally unequal scale. Increased oil prices in the 1970s stimulated a new interest in lignite, and a lignite-fueled plant installed at Mae Mo, the site of a major lignite deposit, was producing 825 megawatts by 1987. Lignite reserves were estimated to be 865 million tons in 1985. In the South a lignite-fired plant at Krabi with an installed capacity of sixty megawatts commenced generation in 1964. A major purpose of this plant was to furnish power for tin mines in the area and the tin smelter on Phuket Island, in addition to meeting local needs. In 1968 additional generating capacity was installed on Phuket through a ten- megawatt-capacity diesel plant, and between 1971 and 1977 three gas turbine units totaling forty-five megawatts were installed on Hat Yai. In the late 1970s, three additional gas turbine units having a combined capacity of fortyfive megawatts were also located at Surat Thani. Development of power facilities in the Northeast received little attention until the mid-1960s, at which time the region had an estimated generating capacity provided by small diesel units of perhaps one megawatt. By the early 1970s, however, four hydroelectric plants had been installed at dams in different parts of the region, with an installed capacity of ninety-five megawatts. New gas turbines furnished an additional thirty megawatts, and diesel units produced an additional four megawatts. In 1987 the power sector was composed of three governmentowned enterprises: EGAT, under the Office of the Prime Minister, was the national power production agency; MEA, under the Ministry of Interior had responsibility for power distribution in Bangkok and the provinces immediately around the city; and the Provincial Electricity Authority (PEA), also under the Ministry of Interior, distributed power throughout the rest of the country. There were also a number of privately held distribution franchises that bought power from PEA or EGAT. Some privately owned industries also generated their own power. Installed generating capacity in 1986 was 7,570 megawatts, of which 70 percent was thermal and 30 percent hydropower. In 1985 industry used nearly 50 percent of the 20 million megawatt-hours of energy consumed. Residential consumption was 25 percent, commercial establishments used 25 percent, and street lighting and miscellaneous uses accounted for less than 1 percent. By the end of 1986, nearly 43,000 villages of the more than 48,000 throughout the country had been supplied with power. It was projected that 95 percent of all villages would have electricity by 1991 and essentially all villages by 1999.

3.9.2. Aardolie en aardgas

Oil was discovered near Fang in the far north of the country in the early 1950s, but by the late 1970s the principal field was reported close to depletion. Onshore deposits were believed to exist in other parts of the country, and several foreign firms had exploration concessions in the 1980s. Exploration in the 1970s in the Gulf of Thailand uncovered oil in limited quantities. Oil shales were found at Mae Sot in Tak Province in the North. Surveys in the mid-1970s indicated a reserve of about 2.5 billion tons. A smaller deposit, estimated at about 15 million tons, existed in Lamphun Province, also in the North. Surveys in the Northeast from the mid-1970s showed the existence of about 2.5 billion tons of oil shale in that region. Although 4 million barrels of petroleum were produced in 1983, extensive commercial exploitation still seemed remote because of comparatively high production costs. In the early 1980s, petroleum products provided about 68 percent of the annual energy requirement. The country was highly dependent on petroleum imports, and increasing world petroleum prices had a serious impact on the country's balance of payments. In 1980 there were three large, privately operated, oil refineries having a combined design capacity of 165,000 barrels per day (bpd); government sources estimated maximum capacity at 188,000 bpd. The Thailand Oil Refining Company (TORC) started operations in the mid-1960s with a capacity of 42,000 bpd. This was expanded to 65,000 bpd in 1971 under an agreement whereby the entire operation was to become the property of the Thai government in 1981. A second fully integrated plant was government owned but was leased for operation to the private Summit Industrial Corporation; the lease was due to expire in 1990. This plant had a design capacity of 65,000 bpd. A third plant was owned and operated by Esso Standard of Thailand and could handle 35,000 bpd. A very small 1,000 bpd plant was operated in the far north by the Ministry of Defense to refine domestic oil produced in the area. Natural gas was found by international firms in offshore concessions in the Gulf of Thailand in the mid-1970s, and subsequent explorations determined that large quantities were recoverable, sufficient to alter favorably Thailand's energy position. By 1979 two major gas fields had been generally delineated, one located approximately 425 kilometers south of a proposed pipeline terminal east of Sattahip at the upper end of the gulf, the other 170 kilometers farther south. Proven recoverable reserves in the first field were estimated at nearly 1.6 trillion cubic feet and probable recoverable reserves at 220 billion cubic feet. In the second field, proven recoverable reserves were 1.3 trillion cubic feet and probable reserves 4.5 trillion cubic feet. Two smaller fields about 365 kilometers south of the terminal site were estimated to have about 500 billion cubic feet of recoverable reserves. The country's total proven reserves of natural gas were estimated at 8.5 trillion cubic feet in 1984. Thailand's production of natural gas in 1987 was 162.3 billion cubic feet. In late 1979, the World Bank approved a loan of US$107 million to the Petroleum Authority of Thailand, a state enterprise, to assist in the first-phase exploitation of the discoveries. A submarine pipeline was built from the terminal near Mapthaphut to a production platform at the major field 425 kilometers south in the gulf. When completed in the early 1980s, it was the world's longest submarine pipeline. Additional pipelines were built to transport the gas overland, initially to the South Bangkok Thermal Power Plant and later to a new thermal power plant at Bang Pakong southeast of Bangkok, built in the early 1980s under EGAT's 1978-85 power generation development plan. Gas was also distributed to industrial users along the pipeline route.

3.10. Telecommunicatie

Two major entities were responsible for the Thai telecommunication and postal services under the supervision of the Ministry of Communications. The Telephone Organization of Thailand (TOT) was responsible for the domestic telephone services; for international telephone services to several neighboring countries, such as Malaysia and Laos; and for leasing circuits for domestic point-to-point transmission of voices, telegraph, radio, and television. The Communication Authority of Thailand (CAT) was responsible for postal service, international telephone service to countries not served by TOT, all telegraph and telex services international lease circuits, domestic radiotelephone links to some isolated areas, and telephotographic and facsimile services. A committee in the Ministry of Communications coordinated the services and investment of TOT and CAT, although the two were state-owned autonomous operations. Numerous government agencies and large private industrial and commercial entities operated their own radio-telephone networks. By the mid-1980s, Thailand had an average density of one telephone per hundred inhabitants. This density was better than the average of 0.7 for the developing countries in the East Asia region, although it was still lower than Malaysia with 3.3, South Korea with 7.8, Taiwan with 14.6, and Singapore with 26.5. Even Bangkok, which had the most developed telephone service in the country, had only a density of 5.4 telephones per 100 inhabitants. Overall, only 25 percent of the population had access to telephone services. There were about 5,800 local and long- distance pay (coin box) telephones in the capital city and 750 in provincial towns. About 4,500 pay telephones were to be added in Bangkok and 1,500 in provincial towns. About 62 percent of the country's telephone lines were connected to business and government subscribers and the rest to residential subscribers. Business lines accounted for 83 percent of total calls and revenues. As a rapidly modernizing nation, Thailand in the late 1980s faced many problems related to the growth and expansion of its economy. The development of its industrial base and the continuing need for new cultivable land placed increasing pressure on urban and rural areas alike. However, the abundance of the country's resources, the adaptability of its workforce, and the stability of its polity boded well for Thailand's successful transition to the role of newly industrialized country.

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