Thailand Economic Focus: Building a more equal and sustainable Thailand after COVID-19: A UN perspective

  • It is undeniable that COVID-19 has put Thailand and the rest of the world in an unprecedented difficult situation. Now is also the time, however, for Thailand to reorient its course of development – an opportunity for the country to emerge stronger and more equitable than before.

It is undeniable that COVID-19 has put Thailand and the rest of the world in an unprecedented difficult situation. Now is also the time, however, for Thailand to reorient its course of development – an opportunity for the country to emerge stronger and more equitable than before.

Before COVID-19, Thailand achieved a Human Development Index (HDI) of 0.765, according to UNDP’s 2019 Human Development Report. Thailand is an emerging market with the highest progress in the world from 2013 to 2018, up by 12 ranks, reflecting continued improvements in life expectancy at birth, years of schooling and income per capita. 

Nevertheless, inequality looms large, hindering the country’s progress towards the Sustainable Development Goals (SDGs). Accounting for inequality, Thailand’s HDI declines by 16.9 per cent to 0.635. At the same time, the wealth gap remains significant. A 2016 study from Thammasat University concluded that 80 per cent of the land is owned by the richest 5 per cent, while Credit Suisse’s Global Wealth Report showed that more than two-thirds of the country’s assets is controlled by the richest 1 per cent. On top of this, inequality in Thailand, like in many countries, has been exacerbated by climate change and technological transformation. Increasing incidents of floods and droughts have destroyed crops and depressed the income of farmers, while looming disruptions in various industries have led to factories shutting down and workers losing their jobs.

Thailand’s inequality in land possession is extremely high for a country at this level of development
Thailand’s inequality in land possession is extremely high for a country at this level of development

In most parts of Southeast Asia, economic growth is a major contributor to poverty alleviation. However, inequality remains high as indicated by the World Bank’s GINI index, a measure in which 0 is perfect equality and 100 is perfect inequality. Across the ASEAN membership, the Philippines has a GINI index value of 44.4, making it a country with the widest income gap in the region. Malaysia comes in second at 41.0, followed by Indonesia at 39.0 on the GINI index. In 2018, Thailand's GINI index stood at 36.4, or the fourth in a ranking of income inequality in ASEAN. In terms of the GINI coefficient, Thailand is better than China (38.5) and India (37.8). Moreover, Thailand’s income gap has improved over time, as the GINI index dropped to 36.4 in 2018 from 47.9 in 1992.

Thailand’s income inequality has shown a downward trend during the past 30 years
Thailand’s income inequality has shown a downward trend during the past 30 years

On the heels of these developments came COVID-19 – the worst pandemic in over a century. Despite Thailand’s success in controlling the outbreak, it has been severely hit by a sharp decline in global trade and the sudden stop in air traffic, as exports of goods and services account for about 70 per cent of the country’s GDP with international tourism contributing 12 to 15 per cent to GDP. Consequently, Thailand’s GDP in the second quarter of 2020 declined by 12.2 per cent, the deepest contraction since the 1997 Asian financial crisis.

The pandemic is hitting the poorest and most vulnerable people the hardest. The COVID-19 Socio-Economic Impact Assessment commissioned by UNDP and UNICEF in partnership with the UN Country Team reveals that unemployment rate would hit 3.1 per cent in 2020 – more than twice the usual rate – while women’s unemployment would rise to 4.5 per cent as many are employed in the worst-hit sectors such as tourism. Among those severely affected are informal workers, which account for more than half of the labour force, and vulnerable populations such as people with disabilities, LGBTI people and ethnic community members who have lower access to job opportunities and face difficulties in accessing government assistance. If not addressed, a new generation of inequalities could emerge, leaving more people even further behind.

People with disabilities may be at greater risk of contracting COVID-19 due to barriers accessing health care
People with disabilities may be at greater risk of contracting COVID-19 due to barriers accessing health care

At this juncture, policy-makers and partners have realized the need to use this crisis as an opportunity to rethink the development model of Thailand in view of achieving the SDGs. In addition to the immediate relief package, authorities aim to emphasize local-level economic rehabilitation, target job creation, and continue supporting sustainable sectors such as the Bio-Circular-Green (BCG) economy – an initiative started before COVID-19. Such initiatives are welcome, and more steps need to be taken to transition towards an inclusive, sustainable growth path. UNDP, along with the rest of the UN system, has supported the national COVID-19 response in the following four areas to prepare for, respond to and recover from this pandemic while safeguarding progress towards the SDGs.

First and foremost, the “leave no one behind” principle should be at the heart of the crisis response and recovery policies. This entails building resilience in the social protection system and enhancing economic empowerment to enable people, particularly those who are marginalized and impoverished during the pandemic, to thrive rather than just survive in the face of global disruptions.

Marginalized people should not be left behind as Thailand moves forward to the ‘new normal’
Marginalized people should not be left behind as Thailand moves forward to the ‘new normal’

UNDP Thailand, as part of its COVID-19 crisis response, UNDP’s Offer 2.0, has conducted programmes targeting at-risk communities, such as improving food security among ethnic groups and providing safety training and equipment for barbers and hairdressers. It also plays an active role in supporting businesses to conduct human rights due diligence in their operations to promote more equitable job opportunities. In addition, UNDP, at the request of the National Economic and Social Development Council, will examine the impact of a 400-billion-baht economic rehabilitation package, not just in terms of job creation but also the wider goals of economic recovery and transformation towards the SDGs.

Second, with Thailand’s rich biodiversity as an asset for local communities, models such as eco-tourism and eco-friendly enterprises can be solutions to promote both environmental conservation and equality.  In this aspect, UNDP has conducted programmes such as providing biodiversity-protection jobs for communities in buffer zones of protected areas and cash-for-work initiatives for boat owners in Koh Tao Island to reduce marine debris.

Eco-tourism as a viable alternative for economic development of rural communities in Thailand
Eco-tourism as a viable alternative for economic development of rural communities in Thailand

Third, harness technological disruptions to foster equality. In this respect, UNDP, together with other public and private development actors, has conducted hackathons, bringing youth together to form innovative solutions to address the socioeconomic impacts of COVID-19. In parallel, UNDP is providing support to the government in capacity enhancement using digital tools and platforms. 

Finally, it is necessary for Thailand to ensure sufficient resources to support national development priorities towards inclusive and sustainable growth path. Given that the long-term impact of the pandemic implies a decline in public resources, it is now more important than ever to balance efficiency savings with protection of fundamental services – including health and social protection.  As part of its offer, UNDP supports the analysis of financing gaps, which will inform public and private financing policies – from realigning tax and budgets to utilizing alternative sources of funding. To foster a green recovery, UNDP is also supporting the preparation of a financing strategy for the 2023-2026 National Adaptation Plan.

Although the COVID-19 pandemic poses unprecedented challenges, Thailand still has an opportunity to come out of crisis as a stronger, more resilient country that leaves no one behind. UNDP, together with the entire UN system, is committed to continue support to help decision-makers navigate through the current crisis. All citizens – now and in the future – should have a fair and dignified lot in life, powered by technology, shielded from pandemics and other disasters, and protected from an increasingly unforgiving climate.

 

The authors would like to thank Dr Sweta Saxena for her editorial comments. The views expressed within this publication are solely those of the authors and do not necessarily carry the endorsement of the UN. Please address all correspondences to manop.udomkerdmongkol@un.org.

 

 

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UN
United Nations
UNDP
United Nations Development Programme