THE KRA CANAL AND THE REFORM OF THAILAND

One might say that during the past 50 years, the attempts to develop Thailand had completely failed. The National Economic and Social Development Plans from 1961 until today, altogether 11 National Plans, have not been able to attain the goals they had set out to accomplish.

1. The majority of Thai people still live in the state of poverty.

2. The Thai economy is not self-reliant nor self-sufficient.

3. The Thai economy is not competitive.

4. The development of social stock such as the educational system, the administrative system, etc. Is backward and lacks efficiency.

More than 50 years have passed but the Thai economy has not progressed, especially when compared with other countries in Asia such as Japan, Korea, China, Singapore, Taiwan, Malaysia, etc.
The work efficiency of the Thai population is very low in many ways.

1. The agricultural sector in Thailand employs as many as 14.88 million people or 38.7% of the total labor market. However, the agricultural sector contributes to only 18% of the GDP. The administrative sector employs 15.67 million people or 40.7% of the labor market. As for the industrial sector, it only employs 7.91 million people or 20.6% of the labor market.

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2. If we consider the problem from the standpoint of revenue earned from exports, the industrial sector, especially the automobile industry (both cars and their spare parts), generate the most earnings for Thailand but employ much fewer people in the sector. The service sector together with the industrial sector contribute to 82% of the GDP. The agricultural sector, however, is always in a state of deficit. The Kra Canal and the development of the industrial sector will reduce the number of people employed in in agriculture while increasing the productive value of the sector. This can be accomplished by using more high technology and introducing better organization and management.

3. Of the national budget of Thailand, 70% is used to support the administrative structure of the country. Therefore, only 30% is left for public investment in economic development, For instance, rail communication and public transportation have been neglected for the past 50 years. Only 26 of the planned 360 kilometers of public transportation network have been built in the span of 20 years. The Thai railway system is substandard and lacks efficiency even though it was built more than 100 years before many other countries.

4. The cost of logistics in the Thai economy accounts for 20% of the GDP, making Thai products expensive and not competitive with products from other countries.
A study showed that in 2013, Thailand ranked 27 out 59 countries in economic competitiveness and in terms of competition in economic infrastructure, Thailand ranked 48.

5. Education in Thailand is abysmally low. The majority of workers make up a labor force of generally low quality. The Thai economy is, therefore, still in the labor-intensive rather than in the capital intensive mode.

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The labor force with lower than primary education or no education counts 11.62 million persons or 30.2 % of the country’s work force. Those workers with only primary school education number 8.71 million workers or 22.6% of the work force. 6.15 million workers and boast of the first three years of secondary school education and make up 16% of the work force. Those who completed the entire secondary school education are only 5.42 million persons or account for only 14.1 %. Finally only 6.44 million workers or 16% of the work force actually graduate from college or university. One can conclude that the Thai work force is not well educated and is generally not qualified.

Today, if we compare the Thai GDP to that of 216 other countries, Thailand ranks relatively high, i.e. at 24th. However, if we compare the GDP per capita figures, Thailand ranks 114th, while Singapore is 6th, Hong Kong is 11th and Vietnam 166th. Nevertheless, if we take these figures and compare them with the rate of economic growth, Thailand ranks as low as 194th, as its economy only grew 0.1% ! Laos ranks 17th, India 27th and Malaysia 66th.
The economic growth rate of Thailand dropped to only 0.1%, i.e. ranking 194 out of 216 countries, most probably due to political conflict that affected the stability of its economy.

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Thailand needs to turn its crisis into a situation of opportunity. It is important that Thailand accelerate its economic growth, assuring more economic stability in the long term.

Therefore, a large-scale infrastructure project is key to instigate significant change in the Thai economy:

  1. The Kra Canal Project, during the first ten years following the construction of the canal itself, will be able to create around 3 million jobs. 30,000 persons will be employed in the management of the Canal. Within 5 years, 150,000 persons is expected to be employed in the development of industrial projects in the area, of these will be middle and high level echelons. This number will increase to 400,000 within 10 years. Once the Special Economic Zone is set up, there will be employment for at least one million workers. In reality, the multiple spin-off effect of this large-scale infrastructure project is likely to create employment on all levels for approximately 3 million people. Within 10-20 years following the opening of the Kra Canal, workers that would have been employed in the first phase of the Kra Canal project would naturally act as the catalyst for change in the Thai labor force, changing it from an unqualified and backward labor force to one with high qualifications, from an uneducated work force to one with a high level of education.
  1. The national revenue for the country would be higher because of the ability to collect more taxes from the industrial sector and investments in the Special Economic Zone. As a result, increase in government revenue would necessarily follow. It is interesting to note that the 70% of the national budget that is used to pay monthly salaries of civil servants would drop to only 30%. While the other 70% of the national budget would be used to finance the development of the country, the reversal of the present situation.
  1. Thailand would become more competitive thanks to added value coming from maritime cargo transportation. Thailand would become an important link in the international sea lane of communication. Logistics costs would drop to the level of 8% of the GDP, a rate similar to that of developed countries.
  1. Develop national competitiveness in 4 areas

4.1 Economic Performance

4.2 Efficiency of the Public Sector

4.3 Efficiency of the Business Sector

4.4 Efficiency of the Infrastructures

  1. Development of Special Economic Zone within the Kra Canal Zone would
    lead to a major reform in the administrative system, creating a new administration within the present system. Once recognised as workable, it is likely that the new administrative system would be brought in to bring about reform in other parts of the country, a major reform that would be there to stay. This would be change based on reason and without conflict and violence.
  1. By investing in the Kra Canal project in order to bring about modern reform in Thailand, the country’s educational system would be forced to undergo major change to upgrade the general educational level of the Thai population. There would lead to a generation change, a new generation of Thai people, modern and internationalized world citizens at the same time.
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