ADB-Thailand Partnership

Owing to rapid growth of its gross domestic product, Thailand — currently the second-largest economy in Southeast Asia — has been able to significantly reduce poverty levels and increase the overall standard living in the country. Severe flooding in 2011 and persistent political unrest in the capital, however, have slowed down growth. And although poverty levels are down, there remain pockets of destitution. The northeastern region, for example, is home to 40 percent of Thailand’s poorest people. Agriculture is the main driver of the remote and rural region’s economy. Environmental degradation and an aging population are also major concerns. The Asian Development Bank closely aligns its 2013-2016 country partnership strategy with Thailand’s medium and long-term development goals and priorities. Compared with previous strategies, however, the current CPS emphasizes the “finance ++” approach, which combines finance with leverage and knowledge. ADB believes this approach would increase flexibility in its support for Thailand, which currently receives a mix of public and private sector loans. Through this more flexible approach, ADB aims to promote productivity and competitiveness, regional equity and inclusive growth, environmentally sustainable development, and regional cooperation and integration in Thailand. Funding levels As a middle-income country, Thailand receives support mainly from ADB’s ordinary capital resources envelope, which provides loans at near-market interest rates. Between 2006 and 2012, the bank has approved 27 funding instruments and disbursed $327.7 million in sovereign loans and other special funds. ADB has also committed to provide $665 million worth nonsovereign support in the form of loans, equity investments, guarantees and trade finance. From 2013 to 2016, ADB has allocated $404 million in indicative OCR financing to Thailand and an additional $8.7 million in technical assistance. Funding strategies Under the current partnership strategy, ADB support will be anchored on three pillars: ▪ Knowledge advancement and innovation. ▪ Support for private sector development. ▪ Facilitation of regional cooperation and integration. In terms of sectors, technical assistance will prioritize the following: ADB will also provide technical assistance to the energy sector, but funding will come mainly from private sector operations. Some of the recently approved ADB projects in Thailand include: Piloting Public-Private Partnerships in the Social Sectors — aims to increase private sector engagement in health sector investment and delivery of efficient and quality health services. Strengthening Integrated Water and Flood Management Implementation — technical assistance supporting the development of planning and implementation procedures and guidelines for water project assessment, monitoring and evaluation. Central Thailand Solar Power Project — a public-private partnership to buy renewable energy from power plants for up to 10 megawatts per purchase power agreement to provide clean electricity to the grid. Intercity Motorway Project — policy and advisory technical assistance to attract private sector participation in motorway financing and development, with the goal of creating a suitably designed financing modality for the Bang Yai-Nakhon Pathom-Kanchanaburi intercity motorway project. Devex analysis Thailand aspires to avoid the “middle-income trap” and move up to high-income status. But the country is mired in various developmental challenges — from difficulties in moving to high value-added manufacturing and services to addressing environmental degradation and climate change to promoting regional connectivity — that impede growth. Political tensions in Bangkok and neighboring areas exacerbate these challenges. In addition to driving tourists away from the capital, sporadic protests are undermining Thailand’s economic growth and challenging its business-friendly environment. If left unresolved, these tensions may have detrimental effects to the country’s economic performance. Supporting Thailand amid its myriad challenges is therefore a key challenge for ADB. For this funding period, ADB will provide more knowledge-based support to boost Thailand’s competitiveness in the regional and global environment. ADB will collaborate with the public and private sectors to advance their operations in the country. In addition, the bank will work closely with the government to support regional cooperation programs in the Greater Mekong Subregion and the Association of Southeast Asian Nations. ADB will continue to provide sustained levels of funding to the country until 2016. The mode of financing will be more flexible to leverage public and private sector financing and to respond rapidly in times of crisis or disasters. Contact: Thailand Resident Mission Tel: (66-2) 263-5300 Fax: (66-2) 263-5301 Email: adbtrm@adb.org Join the Devex community and gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.