Thailand: the Path Forward

His Excellency Dr. Surakiart Sathirathai
Minister of Foreign Affairs of Thailand

New York, September 30, 2004

Thank you very much Ambassador Platt for your very kind words of introduction.
Your Excellency Mr. Jose Ramos-Horta, Senior Minister for Foreign Affairs and Cooperation of Timor Leste,
Excellencies,
Distinguished Guests,
Ladies and Gentlemen,

I would like, first of all, to thank the Asia Society, New York City for inviting me to address this distinguished gathering. This year I am doubly honoured by the Asia Society for giving me a chance to speak twice within the span of 10 days in Washington DC on 20th of this month and today in New York. Either you must have liked me so much that you wanted me to do the Asia Society double bill or you must be seeking a vengeance by getting me to work twice as hard! I do hope it is the former!

But in fact, let me confess. The New York invitation did arrive later than the Washington one. So inclined was I to turn down at least one of them because of my tight schedule. But when I saw the name of my friend, Ambassador Holbrooke, as if I was under his spell, I accepted the invitation without a second thought. So I ended up making 6 major speeches in 10 days, all on different themes. Fortunately, today is the last one. If you do enjoy it, I would be happy to take the credit. But if not, blame it on Ambassador Holbrooke!

That having been said, let me also express my sincere appreciation to the Asia Society for having been such an important link for the understanding between the US and Asia. Many of you are not just friends of Asia, but you are so dear to Thailand. I shall look forward to welcoming you to Bangkok next year for the 15th Asia Society Corporate Conference.

In Washington ten days ago, I spoke on the long-standing partnership between Thailand and the United States, from our 1833 Treaty of Amity and Commerce that made Thailand the US’s oldest treaty ally in Asia, to our security and military cooperation during the Cold War, and to our present-day co-operation and where our future relationship and partnership will stand when our children should celebrate the bicentennial of our Treaty relations in 29 years from now. Today, however, I would like to concentrate on how Thailand is charting its way forward in the fast-changing global economy, and the opportunities that our efforts are opening up for our American friends.

Distinguished Guests,
Ladies and Gentlemen,

In January 2001, the present government of Prime Minister Thaksin Shinawatra came into office at a time when Thailand’s confidence had been deeply shaken. The Asian economic crisis of 1997 left us with negative growth rates that some said would take a long time to recover. January next year, this government will be the first elected government ever in Thailand’s history to have run and completed its full 4 years term as provided by the constitution. When we do so in January, Thailand will be left with hardly no trace of the bitter economic suffering left over from the 1997 crisis. Thailand will be left with highly outstanding growth, biggest foreign reserves ever, much stronger grassroots economy, stronger export sector and above all a balanced national budget, something that has never been heard of in our modern economic record.

Last year we scored a 6.7 growth, quantitatively it was almost the biggest in Asia, second only to China. This year, despite the current rise in oil prices, we expect to see growth of 6.0 – 6.5 per cent. The international reserves now stand well above the level of our total external debts. Increased revenues, declining external debt, and the balanced budget have made Thailand one of the fastest growing and most stable economies in Asia.

The achievements of this government, despite interruptions such as the war in Iraq, SARS and avian flu, have come about never by accident but totally by design. The four years’ record has proved that we have moved on the right track in the right direction and at the right pace in our efforts to strengthen our grassroots sector and prevent them from falling the victims of external and unanticipated shortfalls.

Thanks to his successful experiences in running the business where the wish of the customers comes above all else, Prime Minister Thaksin applied the same key business principle into the running of the country. The wish of the electorate must come above all else. He took the outside-in, people-centered approach right from the beginning, from when we formulated the Party’s policy to when we were implementing it and even to when we have completed its implementation.

With the outside-in approach came the “dual-track policy” and its success story. From the financial crisis, we learnt that we could not depend on the export sector alone to achieve sustainable growth. The rural sector must be strong and resilient at the same time. Learning the wish of the electorate and the grassroots economy, we have turned our attention to building the grassroots capacity to survive and thrive under globalization, while at the same time maintaining our economic openness and competitiveness in our trade with the outside world.

Through the dual track policy, we built a strong domestic foundation for the national economy with special emphasis on fostering the grassroots economy. At the same time, we continue to promote the export-led sector and linkages with other countries through trade and investment co-operation.

Many assistance programs were launched to strengthen and empower the grassroots especially with regards to capacity building, increasing the productivity and promoting wider access to capital. These include, among other things, the revolving Village Fund and People’s Bank programs, established to provide micro credit lending to rural communities to generate income from self employment; the One Village One Product scheme or OTOP to enhance local entrepreneurship and productivity; new tax incentives for the SME sector, the housing schemes for the poor; temporary debt suspension for farmers, and a universal healthcare program.

The OTOP or the one village, one product scheme, for example was so successful that in the first year of its introduction its total sale was about 200 million US dollars. Two years later it went up more than 3 folds to 700 million. The scheme generates income, jobs and productivity. The scheme has brought the revival of many indigenous skills. These skills could have been lost through neglect and time. But now they have become villages’ valuable source of income. The government role was to assist with the marketing, design and packaging skills which were lacking among our grassroots. Finding their markets domestically and internationally through the invent of , the Thai villagers have learned the benefit of being on line with tangible benefits to their everyday life.

The use of and ICT in improving people’s everyday life has been so successful that Thailand has been often quoted as a good example of a developing country that uses ICT to improve quality of life of its population.

The introduction of the village and the school was part of Thailand’s overall scheme to transform the country into a knowledge-based economy. Education reform and building a new generation of our human resources are high on the government priority list. Reforms of government machinery and bureaucratic system are taking place. With economic prosperity, the quality of life and the social fabric must be improved. That is why the Government has declared war against illicit drugs, corruption and poverty.

More than two years of our total war against illicit drugs have reduced the availability of narcotic drugs in Thailand in an unprecedented and substantially large scale. Laws were amended to treat drug addicts as patients not criminals. Hundred of thousands of them have turned themselves in for medical treatment. Only two weeks ago, President Bush announced in his Annual Determination of Major Illicit Drug Producing and Drug-Transit Countries to remove Thailand from the list of major drug-transit or major drug-producing countries. It is such a rare occasion for any country to be removed from that list. We are gratified that our efforts have been recognized. Nonetheless, we know that the battle may have been won but the real war is not yet over. We will keep on fighting.

Today Bangkok time, Prime Minister Thaksin has just announced the Government’s comprehensive set of measures to fight corruption after having declared war against all forms of human trafficking in early August. It is tactical that the launch of this war against corruption must come at this stage because in our suppression of narcotic drugs and related crimes and to ensure its victory, the government would need total collaboration from every single official in the land. Only once the battle on drugs and related crimes has been adequately won could we launch the national campaign to suppress corruption.

On poverty, we are fully aware that its eradication is time-consuming. But with the growth rate, the balanced development between the grassroots economy and the export sector, the healthy budgetary status, and all the positive indicators available to us, we are sure to be able to eradicate poverty as defined by the UN from Thailand by the year 2009.

Prime Minister Thaksin has wanted his first term of government to be the four years of restoring the nation from all the damages economically, socially and for that matter politically caused by decades of political instability, bureaucratic inefficiency, social and economic ills, and the 1997 financial crisis. We think we have done that.

When, and please note that it is “when” not “if”, we return after winning the next election in January or early February, the next term of government will be four years of building new economic conditions for the country, preparing Thailand to leapfrog on the development scale of nations. Apart from the new Bangkok international airport which is due to open towards the end of next year, and the newly opened subway line, the Government is planning to spend several billion US dollars on the Bangkok comprehensive transit network to be completed within the next 5 years.

Distinguished Guests,
Ladies and Gentlemen,

We did not launch our dual track policy only on domestic policy. Our foreign policy also runs on dual track, parallel and fully complementary to our domestic policy.

Fully cognizant of the impacts both positive and negative globalization have borne on Thailand and the rest of the world, we have chosen to run a foreign policy that fully supports domestic economic and social policy on the one hand, and projects Thailand with a new perception in international arena, on the other.

Thailand’s forward engagement foreign policy is graduating Thailand from a recipient country into a donor country status. This forward engagement foreign policy advocates the principle of self-help and partnership. It aims at turning international diversity and differences into a force for strength and harmony. It believes in creating regional partnership for global multilateralism.

When we turned to our adjacent neighbors, Myanmar, Laos, and Cambodia, we were dismayed at the gap of economic and development disparity that exists between them and Thailand. Of all the combined GDP, the GDP of these three countries accounts for only 9 per cent, while Thailand alone making up 91 per cent.

Realizing this predicament, we immediately apply the good neighborly principles of “prosper thy neighbors” and “charity begins at home”.

As we begin to be successful with our development growth, our neighbors must not be left neglected. A fast-track economic cooperation strategy, by the name of ACMECS, was initiated by Thailand. It offers development assistance to all of these neighbors, including Viet Nam which joined the cooperation in May, on the basis of self-help and partnership. Development programs in the areas of trade and investment, agriculture and industry, transport linkages, tourism and human resource development were launched. Several developed partners such as France, Germany, Japan and New Zealand as well as the Asian Development Bank or the ADB have expressed keen interests to work in partnership with Thailand in the ACMECS projects.

ACMECS will not be just a capacity building endeavor for our neighbors, but will also be an important building block for ASEAN which is working to achieve a single ASEAN community by the year 2020: composed of economic, security and socio-cultural pillars.

Just like in Europe and elsewhere, the creation of such community will never be achieved without overcoming the hurdles of economic disparity between would-be members of the community. We are confident that Thailand’s initiative with our neighbors will be an invaluable contribution to the realization of the ASEAN Community.

Consistent with our belief in consolidating our region through partnership, Thailand supports any inter-subregional linkages in Asia. We believe that the East Asian Community that will connect the 10 members of ASEAN with China, Japan and the Republic of Korea will bring tremendous benefit to Asia and the world. We believe that BIMSTEC which is the cooperation that links some countries in Southeast Asia, including Thailand, with several countries of South Asia, including India, will enable countries from the two subregions to share and exchange best practices and experiences they both need to accelerate their development. After its first Summit hosted by Thailand earlier this year, the BIMSTEC members are now negotiating for a free trade arrangement.

What does Thailand hope to see with all these subregional and inter-subregional cooperation arrangements? Simply put, we want to see a stronger Asia based on these building blocks that can help the peoples of Asia and be beneficial to the rest of the world.

That is why it has been our well-published policy during the election campaign in 2000 and the policy of the government when we won that election to turn the continent of Asia, a continent that has been torn by diversity in culture, diversity in beliefs, diversity in the level of economic development, and even diversity in races and ideology, into a continent of harmony and strength. Prime Minister Thaksin believes that with more than half of the world population and in possession of more than half of the world foreign reserves, the people of Asia deserve more than a continent of divisiveness, poverty, deprivation and degradation.

Central in our foreign policy is, therefore, the establishment of the Asia Cooperation Dialogue, or the ACD. Initiated by Prime Minister Thaksin of Thailand in June 2002, the ACD is the first ever Asia-wide cooperation. It was created out of Thailand’s conviction in drawing strength from differences and diversity. The diversity that has kept Asia apart must become the diversity that binds Asia together. Now comprising 25 Asian members, and still growing, spanning the breadth and length of the Asia continent, the ACD is an open , evolving, non-institutionalized and inclusive cooperation. The ACD Ministerial breakfast meeting in New York on Monday just decided to admit Bhutan as its 26th member at the next annual ACD Foreign Ministers’ Meeting in Pakistan next year.

The ACD is the missing link of Asia and aims at tapping into the inherent strength of Asian countries in order to yield mutual prosperity and sustainable development to the peoples of Asia. The ACD members choose to participate in any or all of the 18 areas of functional cooperation on a voluntary basis. But when you add up all participants in all 18 areas of cooperation, the picture of a pan-Asia network of cooperation is more than evident.

One of the major ACD projects is the financial cooperation for which Thailand is a prime mover to create the Asian Bond Fund and Asian Bond market. This new financial architecture of Asia will enable Asia to make use of their own foreign reserves to build our own wealth in Asia.

All these partnership and cooperation, from ACMECS to ASEAN, to BIMSTEC, to ACD will serve as building blocks to support the UN multilateral system both at present and when it has been reformed.

Finally, let me touch briefly upon another important policy of Thailand. Thailand is making all efforts to achieve a free trade arrangement that is WTO compatible with several of our major trade partners. We have concluded or initiated FTA with countries like Australia, Bahrain, China, India, Japan, New Zealand, and Peru as well as with the European Free Trade Association (EFTA). But most importantly, we have embarked upon an FTA negotiation with the United States. We do hope that eventually, the Thai-US FTA negotiation would result satisfactorily for the mutual benefit of both sides.

Distinguished Guests,
Ladies and Gentlemen,

Both Thailand and Asia are entering the new era, which we could call the Asian century. I hope, within the past twenty minutes or so, I have walked you through the path forward for the future of Thailand clear enough to enable you to see what lies ahead of our country and what prospects Thailand and Asia have to offer. But this path towards the future will lead us to a more meaningful destination only if it is walked with such an old and trusted friend and partner like the United States. When the Asia Society comes to Thailand in May next year, you will be able to see for yourselves what changes have occurred in our country. The last 4 years we have restored confidence back to Thailand. But the next 4 years will see Thailand
leapfrog beyond any anticipation. And we want our US friends to be with us all the way.

That concludes the prepared portion of my remarks. I would be happy to entertain any questions you may have. Thank you very much.