Economic Background For Investment In Thailand Part 3

The Second Plan (1967-1971): The Foundation of the Infrastructure

The Thai economy was now in a new era of development since the initiation of the First Plan. Toward the end of the First Plan. Toward the end of the First Plan. Thailand had an increase in political conflict. Both internally and externally. These conflicts led to higher government expenditures for bureaucratic administration and for strengthening of internal affairs in order to protect Thailand from external threat. The budget for economic development declined from 30.3 percent of the government expenditure during the First Plan to 17.4 percent in the Second Plan.

The Second Plan. Also of 5 years duration. Continually emphasized the development of infrastructure, especially improvement of transportation and communications. The distribution of economic development to the rural regions was included in the Second Plan. Especially in the remote and draught-stricken areas.

The effectiveness of development projects in the First Plan combined with increases in population caused an expansion of communities. This in turn led to insufficient public services in many communities. This in turn led to insufficient public services in many communities, for example, public health services provided by the government were inadequate to meet public needs. Another social problem which became a concern at the beginning of the Second Plan was education. There were not many people possessing degrees in Thailand at this time. Apparently the education system did not serve the needs of the labour market. More over, the size of the labour market in the rural area was found to be poorly matched to the size of the labour force. This caused an increase in the rate of unemployment and a waste of human resources which blocked economic development in the long run.

The Second Plan was much more detailed than the First Plan as far as financial planning data for development projects were concerned. The primary objectives of the Second Plan were as follows:

1. The need for social development to co-exist with economic development.

2. The need for human resource development so that the education system was consistent with the needs of the labour market.

3. A reduction of the trade deficit by supplementing the import substitution industries.

4. Assisting the private sector so that it could play a major part in the development of industry, commerce and services, as well as strengthening the relationship between government and private sectors.

5. Pushing forward with economic growth, and economic and financial stabilization.

The results of the Second Plan were expected to raise the GDP by 8.5 percent per year, manufacturing 10.9 percent, construction 11.0 percent, transportation and communications 11 percent and banking 17 percent, transportation and communications 11 percent and banking 17 percent. It was expected that per capital income would rise to 3,900 Baht per year. The anticipated increase in income would be generated by two major factors:

1. The expansion of investment expenditures in government and private sectors.

2. The expansion of international trade and international cooperation.

During this Second Plan, the government’s developmental policy which focused initially on economy had changed to include social development into an “ Economic and Social Development Plan”.