H. E. Thaksin Shinawatra
Permit me to highlight a few priority concerns and share some of Thailand's own experiences in our collective efforts to reform and strengthen the global economic system to enable the achievement of truly viable and sustainable development growth in the new millennium.
The draft of the Monterrey Consensus already encompasses the broad strategies and outlines the requirements to eradicate poverty, promoting sound economic growth and sustainable economic development in a holistic and comprehensive manner.
The Monterrey Consensus enshrines all the basic tenets necessary for economic and social development, namely domestic mobilization of resources or self reliance and a conducive external economic environment through free and fair trade, improved investment and capital flows, and better standards of conduct and government transparency.
The Consensus highlights the need for an increase in the level of official development assistance (ODA) that truly addresses the social, human and financial needs of the poor and individual national requirements as well as the thorny issues of high indebtedness and improved external debt management, debt relief and debt forgiveness, where appropriate. However, not enough priority is given to the monitoring and management of rapid, destabilizing outflows of private capital from developing economies, which were the primary cause of past financial crises. The failure of the international financial system to prevent and respond to such crises should remain a high priority concern.
The identification of basic and continuing systemic development issues, in particular the need for greater coordination and surveillance of all key players to maintain global economic and financial stability, and reduced exchange rate volatility among the developed economies, as well as improved mechanisms to prevent future potential financial crises, remain key priority issues. The role of international financial institutions and new regional arrangements to provide timely and adequate support in times of financial crisis, and adjustments to ensure effective rescues, remain paramount. At the same time, we must also ensure that the needs and requirements of the poor are not unduly compromised, particularly in the transition and crisis reform phase.
To avoid future crises, there is a need to properly sequence and formulate fair, effective and realistic codes of financial standards, transparency and governance codes appropriate to the level of economic and financial maturities of individual economies. Such measures would reduce the vulnerability to financial crisis and mitigate the social costs of required structural adjustment programmes.
Towards this end, Thailand fully supports and strongly urges that the highest priority be given to create a new forum to study, examine and propose new and innovative ways for developing countries and transition economies to engage equitably and properly with the international financial community in a new globalized context. Globalization and liberalization in trade, development and investment are issues that require a reassessment of standards and safeguards to ensure that all can participate meaningfully and fairly at appropriate levels. One standard, while desirable, may not be suitable for all at the same time. A handicapping system is a possible alternative that merits serious consideration.
From Thailand's experience, one of the lessons of the 1997 Financial Crisis is that liberalization of any sector must be well sequenced, appropriately timed, and accompanied by appropriate rules, regulations, and supervisory frameworks. As a consequence of the Crisis and contagion, the developing economies in Asia have undertaken a number of measures to reform and adjust their financial systems to the new demands of globalization. These efforts are, however, inadequate without the cooperation and strong financial support of the international community and international organizations concerned.
The continuing worries of volatility of international capital flows, more equitable burden-sharing between debtors and creditors, as well as flexibility of policy options for economies experiencing financial difficulties, need to be seriously considered. One solution cannot solve every crisis. A more flexible crisis management paradigm is a must.
The issue of moral hazards has yet to be fully addressed since one of the primary concerns was the IMF requirement for crisis economies to maintain liberal capital transfers. This, in effect, was a bailout of private creditors and investors under the guise of government and international guarantees of free and unrestricted financial transfers. The need to have an immediate time-out or short circuit, such as the measures in the NYSE, would be a viable solution in future crises.
Greater dialogue between developed and developing countries is clearly needed on these key issues, based on mutual interests and shared responsibilities. The issue of immediate corrective actions, such as restrictions on capital outflows and limited exchange controls for an initial adjustment period, needs to be seriously reexamined and allowed in times of severe financial duress.
International trade remains another major source of financing for development. Thailand believes that all countries must strengthen their cooperation to ensure that the new round of Multilateral Trade Negotiations (MTN) seriously addresses the needs and concerns of developing countries in the negotiation and implementation of the WTO Agreement.
The primary and major concerns are continued unrestricted market access for goods and services, reduction of tariff and non-tariff barriers for agricultural goods and textiles, and liberalization of important service sectors. We are also concerned about how the TRIPS agreement should be implemented in a way that will ensure the rights of less developed countries to technology transfer, affordable medicine, and equitable sharing of benefits from the utilization of natural resources and indigenous knowledge. The fight to eradicate diseases, and ensure appropriate health and sanitation for the population especially the poor, requires a new rethink, not merely based on financial but also human dimensions. No one should have the right to suffer because they cannot afford the latest and most effective cure.
Thailand believes that the special and differential treatment and technical cooperation provisions of the WTO Agreement need to be strengthened and effectively implemented. Meanwhile, the more developed partners as well as related intergovernmental organizations such as the WTO, UNCTAD and ITC, could help provide technical assistance to developing countries in building up their capacity in the areas of trade negotiation and promotion, trade and investment policy, and legislative adjustment for liberalization of trade in goods and services.
Foreign direct investment is and remains one of the most important sources of financing for development. The current declining trend of foreign direct investment to the developing countries therefore needs urgent consideration.
As in international trade, the imbalances and uneven distribution of foreign investment are caused by the weak economic and technological infrastructure and supply side capacity limitation of developing countries. To help address this shortcoming, the more developed partners and related intergovernmental organizations such as UNCTAD should help provide technical assistance in investment policy formulation to attract foreign investment and to enable developing countries to reap benefits from FDI through the transfer of technology, management skills and contribution to the economic and social development of such countries. Increased emphasis on capacity building based on indigenous and traditional skills, as well as innovative interaction with the new knowledge society of information technology, is a new avenue to promote local and new sources of investment.
On the question of declining ODA for technical assistance to developing and least developed countries, this must be addressed by closer consultation among the parties concerned. In this regard, I have the pleasure to inform the Conference that, from 1st May of this year, the International Institute for Trade and Development in Bangkok, jointly established by the Royal Thai Government and UNCTAD, will start its technical cooperation program to build up capacity for the developing and least developed countries in Asia in addressing the risks and challenges of globalization and promoting trade and investment in the region. I therefore wish to invite interested members to participate in the Institute's work programs and call on our development partners and related intergovernmental organizations to support the operation of the Institute.
The Thai Government is of the view that in addition to traditional models of socio-economic development, new alternative models must also be examined. We agree with the Consensus that the benefits of financing for development must target those who are most in need, namely the people at the grassroots level. We must eradicate poverty, directly and innovatively. Rather than using development funds merely to create basic infrastructure as in the past, Thailand is convinced that creating greater opportunities for the people to seek gainful employment, by expanding their access to capital, technology and new markets to better their lives, will be the new key to sustainable and sound growth.
Towards this end, my Administration has emphasized an "outside-in" approach to tackling the nation's problems. Rather than presuming to know what is best for the people, we have sought their input regarding the main problems they would like the Government to solve and have incorporated this into the Government's policies. Having secured this valuable information, we then did our utmost to encourage public participation at every level in order to ensure that the people were also an integral part of the solution.
The promotion of micro finance or micro credits are among the highlights of our policy strategy, with small and medium-sized enterprises serving as one of the new supports of our economic system.
Equal emphasis has been placed on the revival of the agricultural sector, productivity improvements, and transformation to new market requirements as the backbone of our population.
A debt relief workout program has been implemented to give small scale farmers a breathing space to restructure their productive capacity, thereby enabling them to become financially viable in the medium term.
The introduction of village revolving funds throughout the country provides a source of financing for rural employment and business community projects. The administration of the funds is carried out by a committee composed of the local villagers themselves. This peer group has a free hand in approving and setting the terms of the loans without any interference from the Government.
Meanwhile, the promotion of a champion product, or the so-called "One Village, One Product" initiative, helps foster creativity and competition to improve productivity for the domestic and global market place wherever possible.
Finally, the establishment of a People's Bank for small-scale borrowers has served to provide financing for development at the smallest unit of production. At the outset, many critics had forecast that the borrowers would most likely default on their loans. After 8 months in operation, however, we found that the NPL rate for People's Bank loans amounted to only 0.3 percent of total loans. This is a true testament to the pride that the people have in keeping their word and paying off their loans, if given the opportunity.
Development, of course, is also conditioned by the external environment, namely, global demand conditions, the stability of the financial and exchange rate system, and adequacy of external financing. To ensure that domestic initiatives remain sustainable, Thailand believes that a supportive international enabling environment is needed, particularly open market access for developing countries' exports, sound and coherent policies at the international level to ensure global financial stability and reduced exchange volatility, as well as a level playing field with proper safeguards.
We are all deeply concerned about the problem of uneven development, which has led to a widening gap between developed and developing countries. In these turbulent times, it is hoped that the industrialized nations would offer some kind of support, or "hand-holding" to assist those who are less fortunate. Such support would help bring the less developed countries along and enable them to become better partners of the developed world in the future.
Thailand is mindful of the fact that mutual assistance and cooperation provide the best avenue for greater prosperity. Therefore, we have tried to reach out to our neighboring countries through various economic cooperation frameworks, such as the Greater Mekong Subregion. Our investment today in transportation networks, human resources, and science and technology will increase trade and employment, while building greater capacity for many generations to come.
Thailand is also ready to share with our development partners our experiences in areas of expertise, such as our war on drugs. This has been accomplished partly by promoting crop substitution programs, both in our own country and our neighbors, thus creating an alternative source of income for the local people while helping to eradicate opium production.
At UNCTAD X in Bangkok two years ago, we exchanged views on the causes and cures of financial crises, the imbalances of the international trading system, and other questions on financing for development. We also adopted the Bangkok Plan of Action, which laid down strategies to make economic globalization an engine for economic growth and development for all countries. Next month, Thailand will host the UNCTAD Midterm Review in Bangkok, with a Ministerial Round Table Discussion to assess global economic developments since UNCTAD X. This international meeting, which will take place after three other important international conferences on development, namely, the Brussels LDC III, the Doha WTO Ministerial Conference and this Conference, will provide another important occasion for all of us to make an assessment of the progress of the implementation of the Bangkok Plan of Action and jointly formulate the development strategies and action plan for the next two years until UNCTAD XI. Therefore, I wish to take this opportunity to invite you all to participate in this forthcoming meeting in Bangkok during 29 April to 3 May 2002.
In closing, my delegation wishes to express our sincere appreciation to the Government of Mexico for hosting this very important Conference, which has provided us all with the opportunity to discuss and jointly formulate strategies and action plans for financing for development.
Statements at the Conference