Investing in the future OECD MDCR Thailand 2018

1. OECD MULTI-DIMENSIONAL
COUNTRY REVIEW - THAILAND
INITIAL ASSESSMENT REPORT
Bangkok, 9 April 2018
OECD Team for MDCR of Thailand
http://www.oecd.org/eco/surveys/multi-dimensional-review-thailand.htm

2. • Sustained economic growth has brought
about impressive social progress.
• However, there remain development
constraints across each of the 5 pillars of
the sustainable development goals (SDGs).
• Further reform is needed to meet the SDGs
and transition to an inclusive, high-income
country.
2
Main messages

3. People: Towards better lives for all
3

4. 4
Regional inequalities
have narrowed but remain pronounced
0
5
10
15
1995 2000 2005 2010 2015
Thailand’s ratio between the richest and poorest region
Regional GDP
per capita gap
0
5
10
15
20
Korea OECD average China Thailand Malaysia Indonesia
Regional GDP
per capita gap
Ratio between the richest and poorest region, 2015
Source: Panel A: Thailand National Statistical Office (2014), Economic Indicators; Panel B: calculations based on OECD (2013a),
OECD Regional Database, and national statistical office data from Thailand, Malaysia and Indonesia

5. 5
Precarious employment
remains widespread
Source: World Bank, World Development Indicators
% of precarious employment in total employment, 2017
0
10
20
30
40
50
60
Singapore
SouthAfrica
OECD
Poland
Korea
Malaysia
Mexico
Turkey
China
Philippines
Colombia
Thailand
Indonesia
Vietnam

6. 6
The old-age allowance alone cannot
guarantee income security for the elderly
0
200
400
600
800
1000
1200
1400
60 65 70 75 80 85 90 95 100+
Universal old age allowance National poverty line
Monthly universal old-age allowance by age, THB
Source: Schmitt, V., T. Sakunphanit and O. Prasitsiriphon (2013)
Note: The national poverty line refers to the minimum monthly cost of basic food.

7. 7
Social protection is comparatively well targeted
but still disproportionately benefits the non-poor
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
Indonesia Philippines Thailand Viet Nam China Singapore Malaysia Korea
Non Poor Poor
Social Protection Index, 2013
Source: Asian Development Bank (2013), The Social Protection Index Assessing Results for Asia and the Pacific, Mandaluyong.
Note: The Social Protection Index (SPI) is total expenditures on social protection divided by the total number of intended
beneficiaries of all social protection programmes, normalised by poverty-line expenditures (which for cross-country comparability
purposes is set uniformly at 25% of GDP per capita). A SPI of 0.10 would thus be equivalent to 2.5% of GDP per capita.
A higher SPI denotes better social protection.

8. 8
The quality of education
needs to improve
350
390
430
470
510
550
2003 2006 2009 2012 2015
Maths Reading Science
350
390
430
470
510
550
Indonesia Thailand Malaysia OECD
average
Viet Nam China
Maths Reading Science
Source: OECD (2016b), PISA: Programme for International Student Assessment; OECD Education Statistics (database).
Note: China refers to the four PISA-participating Chinese entities: Beijing, Shanghai, Jiangsu and Guangdong. Coverage of Malaysian
schools in PISA 2015 fell short of the standard PISA response rate so results may not be comparable to those of other countries.
PISA scores

9. 9
Too few students graduate
in courses meeting industry needs
0
5
10
15
20
25
30
35
40
45
Thailand
SouthAfrica
Indonesia
VietNam
OECD
Turkey
Poland
Colombia
Mexico
Korea
Malaysia
Singapore
Source: UNESCO-UIS (2017), Education (dataset), UIS Data Centre, http://data.uis.unesco.org/.
Note: STEM courses include natural sciences, mathematics and statistics programmes; information and communication technology
programmes; and engineering, manufacturing and construction programmes.
Enrolment ratio in STEM subjects,
Latest available year, %

10. • Encourage formalisation through tax and
regulatory measures. Harmonise social
protection schemes
Social protection
system excludes many
informal workers
• Index non-contributory allowance for older
people to minimum required living costs
Inadequate pension
benefits
• Strengthen teacher capacity, curriculum
coherence, student assessment procedures
and ICT use in schools
Poor education
outcomes
• Expand co-operation between vocational
institutions, academia and the private
sector in course development
Large skills
mismatches
10
People - key constraints and selected
recommendations

11. Prosperity: Boosting productivity
11

12. 12
Faster growth
is needed to catch up
0
10
20
30
40
50
60
70
80
90
100
1970 1980 1990 2000 2010 2016
Indonesia Malaysia Philippines Korea Thailand Viet Nam
GDP per capita, % of OECD average, computed at 2016 PPP USD
Source: Conference Board (2017), Total Economy Database, Datastream, and OECD calculation
Note: In 2016, Thailand’s per capital GDP in USD PPP was 17 359, versus an OECD average of 41 776

13. 13
Labour productivity
can be boosted
-2
0
2
4
6
8
10
12
14
OECDaverage
SouthAfrica
Mexico
Korea
Colombia
Malaysia
Poland
Singapore
Turkey
Thailand
Philippines
Indonesia
VietNam
China
%
2001-05 2006-10 2011-16
Average labour productivity growth per employee per year
Source: OECD calculations based on data provided by national statistical office and Datastream; OECD, Productivity Statistics database

14. 14
R&D outlays remain below
some comparators
Note: The 2% R&D expenditure target included in the STI Plan was subsequently revised down in the 12th Plan to 1.5%. 2013 for
Indonesia, Philippines, Viet Nam, and South Africa, 2014 for Turkey and Singapore.
Source: UNESCO-UIS (2017), Science, Technology and Innovation (dataset); UIS data Centre; OECD, Gross domestic spending on R&D
Gross expenditure on R&D, % of GDP, 2015
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Indonesia
Philippines
Colombia
VietNam
Mexico
Thailand
SouthAfrica
Poland
Turkey
Malaysia
China
Singapore
OECD
Korea
%
2011 level
2021 target

15. 15
There are high barriers to services trade
Pilot exercise of OECD Services Trade Restrictiveness Index
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
CHL
KOR
JPN
DEU
LVA
IRL
CZE
NZL
GBR
LTU
AUS
NLD
FRA
ZAF
LUX
EST
DNK
SVK
ITA
SVN
POL
ESP
FIN
AUT
CAN
BRA
USA
CRI
SWE
COL
PRT
HUN
MEX
TUR
BEL
CHN
CHE
GRC
NOR
RUS
IND
ISR
THA
IDN
ISL
Construction services
Regulatory transparency Barriers to competition Other discriminatory measures
Restrictions on the movement of people Restrictions on foreign entry Average
STRI 2014
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
LVA
CHL
DNK
JPN
AUS
NLD
KOR
USA
LTU
SWE
NZL
IRL
DEU
COL
CAN
LUX
NOR
MEX
FIN
ESP
CHN
GRC
GBR
ZAF
BRA
CRI
CZE
ITA
TUR
RUS
CHE
IDN
AUT
HUN
ISR
BEL
ISL
SVN
EST
PRT
THA
POL
FRA
SVK
IND
Architecture services
Regulatory transparency Barriers to competition Other discriminatory measures
Restrictions on the movement of people Restriction on foreign entry Average
STRI 2014
Note: Full openness to trade in services gives a score of zero, while complete closure to foreign services providers gives a score of one.
Source: OECD (2017), Services Trade Restrictiveness index database

16. • Invest in lifelong learning and skills
training
• Upgrade business skills and foster greater
ICT use in agriculture
Slow economic
advancement, notably
in the agriculture sector
• Ensure institutional coordination.
• Boost public R&D spending to no less than
1.5% of GDP by 2021, as planned
Low innovation and
commercially viable
research
• Create a lower-cost bourse in the stock
exchange
• Improve co-ordination across agencies
responsible for SMEs development
SME development is
constrained by costly
financing
• Review regulations on foreign business
operations including restrictions on foreign
firms’ entry and movement of people
High cross-border
barriers to services
trade and investment
16
Prosperity - key constraints and
selected recommendations

17. Partnerships: Sustainably financing
development
17

18. 18
The population
is ageing rapidly
0
0.1
0.2
0.3
0.4
0.5
0.6
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
OECD average Regional comparators Thailand
Elderly dependency ratio
Note: The elderly dependency ratio refers to the number persons (aged 65 and above) per working age population (aged 15 to 64).
Regional comparators refers to the average elderly dependency ratio for Malaysia, Philippines, Indonesia and Viet Nam.
Source: UN Population projections, 2017 revision.

19. 19
Fiscal revenue
will need to rise
General government revenue in % of GDP, average over 2011-15
Source: Datastream, OECD Revenue Statistics (2017)
0
5
10
15
20
25
30
35
40
45
Indonesia
Singapore
Philippines
Thailand
Korea
VietNam
Mexico
Malaysia
Colombia
China
SouthAfrica
Turkey
Poland
OECD
% of GDP

20. 20
There is room to improve
PPP processes
20
40
60
80
100
Malaysia
Turkey
Thailand
Poland
Indonesia
China
Singapore
VietNam
Colombia
Korea
Mexico
SouthAfrica
Philippines
PPP preparation PPP procurement PPP contract management Average
Note: The higher the score, the more aligned with international best practice. Scores for unsolicited proposals are not considered in the
above analysis as Thailand, Malaysia, Turkey, Poland and Singapore do not have any regulatory procedures.
Source: World Bank Group/PPIAF (2017), Benchmarking Public-Private Partnerships Procurement 2017.

21. • Boost tax efficiency, increase compliance
and rely more heavily on less distortive
taxes
Revenue needs to
increase to fund
future commitments
• Make greater use of alternative
infrastructure financing such as Thai baht
infrastructure bonds
• Align PPP policies with OECD Principles
for Public Governance of PPPs
Inefficient and
costly infrastructure
financing
• Invest in preventative and primary care.
• Reduce exemptions to healthcare co-
payments
• Increase pensionable age
Escalating public
healthcare and
pension burdens
21
Partnerships - key constraints and
selected recommendations

22. Planet: Conserving nature
22

23. 23
Droughts and floods affect many areas
40
55
70
85
100
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
%
A. Share of provinces affected by drought or flooding
Drought Flooding
0
10
20
30
40
50
2009 2010 2011 2012 2013 2014 2015
%
B. Share of agricultural land affected by
drought or flooding
Drought Flooding
Source: NESDB (2017), Social and Quality of Life Database System, http://social.nesdb.go.th/social/Default.aspx?tabid=40; OAE (2017),
Agricultural Statistics of Thailand 2016.

24. 24
Towards better
waste management
0
200
400
600
800
1000
1200
1400
1600
Philippines Colombia Poland Mexico Korea Turkey Thailand OECD Singapore
Kilograms per capita
Municipal waste
Source: OECD countries from OECD (2017); Thailand from PCD (2017b); Philippines and Singapore from
http://unstats.un.org/unsd/ENVIRONMENT/qindicators.htm

25. 25
Coal will form a bigger part of power
generation by 2036
2015
Natural gas
Imported coal
Lignite
Renewable
Imported
hydropower
Domestic
hydropower
Nuclear
2036
Source: MOE (2016), Thailand Integrated Energy Blueprint.

26. 26
Emissions have increased
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Colombia
Singapore
OECD
Turkey
Indonesia
Mexico
Philippines
Korea
Poland
Thailand
Malaysia
China
SouthAfrica
VietNam
CO2 per GDP
2015 1990
Kg per 2010 USD
Source: IEA (2017), CO2 Emissions from Fuel Combustion 2017 Edition.

27. • Ensure co-ordination across existing
agencies, at all levels of governance
Management of water resources
is fragmented
• Improve disaster prevention and response
capacity at the local level to effectively
provide services
Floods and droughts often
cause economic disruption
• Make polluters pay more directly, including
wastewater tariffs on water usage
Pollution and inadequate waste
management undermine
environmental quality
• Step up investments in renewables and
consider increasing environmental taxation
Power sector plans will lead to a
more carbon intensive path
• Carry out Strategic Environmental
Assessments more frequently and effectively
Environmental issues are not
well integrated into public
plans and policies
27
Planet - key constraints and selected
recommendations

28. Peace: Strengthening governance
28

29. 29
Improving reform
implementation
Note: Capacity for State reform measures the “authorities’ ability to decide and actually implement reforms” (scores range from 0 for very
low capacity to 4 for strong capacity). Long-term strategies indicate whether “the public authorities have a long-term strategic vision”
(scores range from 0 for very weak strategic vision to 4 for strong strategic vision).
Source: Centre d’Études Prospectives et d’Informations Internationales, Institutional Profiles Database 2016
0
1
2
3
4
SouthAfrica
Thailand
Indonesia
Mexico
Turkey
Singapore
OECDAverage
Korea
China
Poland
Colombia
Malaysia
Philippines
Capacity for State reform Long-term strategies

30. 30
Improving government
online presence
0
10
20
30
40
50
60
70
80
90
100
Indonesia
Thailand
SouthAfrica
VietNam
Turkey
Philippines
Poland
Malaysia
China
Colombia
OECDAverage
Mexico
Korea
Singapore
Government's online service Online e-participation
Note: The higher the score, the closer to world best practice
Source: Cornell University et al. (2017), Global Innovation Index

31. 31
Local governments rely heavily on
revenue from the central government
11%
17%
33%
39%
Local government revenue sources, 2016
Locally collected
revenue
Central government:
VAT redistribution
Central government:
other tax redistribution
Central government:
grant funding
Source: Fiscal Policy Office

32. 32
Corruption persists
Corruption perception index, 2017
Note: Index ranges from 0 (highly corrupt) to 100 (very clean).
Source:Transparency International Corruption Perception Index (2017),
https://www.transparency.org/news/feature/corruption_perceptions_index_2017
0
10
20
30
40
50
60
70
80
90

33. • Review role of ministries and clarify
responsibilities across all levels of
government
Lacking institutional
capacity
• Pursue decentralisation by empowering
local administrations
Imbalance between
central and local
government
• Strengthen capacity of the Trade
Competition Commission
Weak enforcement of
competition law
• Further strengthen existing integrity
measures and streamline the anti-
corruption mandates of various institutions
Corruption remains
problematic
33
Peace - key constraints and selected
recommendations

34. 34
For more information, please see
http://www.oecd.org/eco/surveys/multi-dimensional-review-thailand.htm
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