Thailand needs to avoid the high-carbon growth path of many developed countries and, instead, take a low-carbon growth path. A green low-carbon growth path is in Thailand's own interest as it can simultaneously tackle local environmental degradation, global climate change, and energy security challenges. It can also position Thailand as a regional leader in green, sustainable growth. Green low-carbon growth in Thailand could focus on the following four pillars: 1) maintaining rapid economic growth while adjusting the country's economic structure toward a less energy, and carbon-intensive economy; 2) achieving greater urbanization while shifting toward green livable low-carbon cities; 3) meeting the huge thirst for energy while transforming the energy sector toward one of high energy efficiency and widespread diffusion of low-carbon technologies; and 4) improving quality of life while shifting toward a resource-efficient and sustainable lifestyle.
Thailand needs to avoid the high-carbon growth path of many developed countries and, instead, take a low-carbon growth path. A green low-carbon growth path is in Thailand’s own interest as it can simultaneously tackle local environmental degradation, global climate change, and energy security challenges. It can also position Thailand as a regional leader in green, sustainable growth.
• Green low-carbon growth in Thailand could focus on the following four pillars:
1. Maintaining rapid economic growth while adjusting the country’s economic structure toward a less energy- and carbon-intensive economy
2. Achieving greater urbanization while shifting toward green livable low-carbon cities
3. Meeting the huge thirst for energy while transforming the energy sector toward one of high energy efficiency and widespread diffusion of low-carbon technologies
4. Improving quality of life while shifting toward a resource-efficient and sustainable lifestyle.
• Changes in the economic structure toward an innovation-driven, high-tech, and service-sector-based economy is a key driver to reduce energy and carbon intensity in Thailand. Despite the government’s efforts, Thailand’s economic structure has shifted over the last decade toward dominance of the energy-intensive industrial sectors-a main reason for the rising energy intensity.
• Building green livable low-carbon cities requires a holistic multisector approach to integrate compact urban form, green buildings and renewable energy supply, sustainable transport, and efficient water and waste management. Bangkok’s carbon dioxide emissions per capita are already high compared to the leading developed cities. Higher density and more mixed-use urban design can substantially reduce energy demand and emissions. Urban public transport is the key to improving green mobility. Green buildings require strengthening enforcement of building codes.
• To greatly improve energy efficiency and achieve the goals of the Energy
Efficiency Development Plan (EEDP), Thailand needs to increase the use of pricing and fiscal measures and performance-based energy-saving targets. The government has actively adopted policies and financing mechanisms to promote energy efficiency, but energy intensity has not changed much over the last decade. The government is committed to reducing energy intensity by 25 percent from 2005 to 2030, among which the transport and industrial sectors offer the largest energy savings. Containing energy growth in the transport sector requires mandatory fuel economy standards, fuel taxes and road pricing, and public transport infrastructure. Industrial-performance-based energy-saving targets can be more effective than the current input-based energy managers program. Finally, the Standard Offer approach can be an innovative and cost-effective way to scale-up the Energy Conservation Promotion Fund.
World Bank. Author:Wang, Xiaodong; Document Date:2011/09/01.Document Type:Working Paper.Report Number:66220
This sector assessment, strategy, and road map (ASR) represents the current assessment and strategic investment priorities of the Government of Thailand and the Asian Development Bank (ADB) in Thailand’s transport sector. It highlights sector performance, needs, constraints, and present government plans and strategies. The ASR will be linked to the ADB country partnership strategy (CPS) for Thailand, 2012–2016. It is also aligned with the vision and strategies of the country’s draft 11th National Economic and Social Development Plan, 2012–2016.1 This ASR may need to be updated in accordance with any changes in government policy during the finalization of the 11th Plan. This ASR focuses on three transport subsectors: (i) roads, (ii) rail, and (iii) urban transport. It is a working paper that reflects ADB’s experiences and was developed through consultations with government agencies and development partners. Key extracts of the ASR will be included in the next CPS for Thailand.
Thailand’s economy is heavily dependent on external trade, with exports representing over 60% of gross domestic product (GDP) in 2007 (footnote 1). Although economic growth has declined in recent years, from 4.8% in 2007 to –2.7% in 2009, the current global economic recovery has significantly strengthened export trade volumes. The export-dependent nature of Thailand’s economy, with recent structural changes toward a higher share of value-added manufactured goods and level of global trading, requires a strong supportive and integrated transport and trade facilitation system.
Thailand’s transport sector contributes 1% to the country’s economy. Exports contributed over 60% to Thailand’s GDP in 2007, and the transport sector underpins this notable export performance. The road subsector dominated the transport sector with an estimated 95%8 of the freight and 98% of passengers.
In terms of physical development, the road network also dominates, with an estimated total length of 202,000 kilometers (km). The length of the rail network is 4,043 km. The length of coastline is 2,614 km, and navigable inland waterways represent only about 1,750 km. Thus, the road network is the most developed, with about 98% of roads, including village access roads, being paved.
Passenger transport in Thailand is dominated by personal vehicles (primarily cars and pickup trucks) and motorcycles. National personal vehicle ownership (expressed as in-use vehicles per thousand population) was growing at an average of 8%–10% per year from 1999 to 2007, and this trend is expected to continue.
In Bangkok, cars and pickup trucks are the most prevalent, with 388 vehicles per 1,000 population, compared to 220 motorcycles per 1,000 persons. Motorcycles are dominant in areas outside of Bangkok, with 159 motorcycles and 112 cars or pickup trucks per 1,000 population. With the continuing per capita income growth, it is expected that ownership of four-wheel vehicles will grow faster than motorcycle ownership.
ADB.December 2011.Type:Country Planning Documents.Country: Thailand.Subject: ADB administration and governance; Transport and ICT. ISBN:978-92-9092-415-9 (print), 978-92-9092-416-6 (web).
In response to the on-going flood disaster in Thailand, The Royal Thai Government and ADB seek to take early steps in support of Government efforts to strengthen the strategy for flood management. Consistent with these efforts, the TA is proposed to (i) assist the Government to organize and hold an international knowledge forum to support Government efforts to strengthen its strategy for flood management, in the context of wider water and disaster risk management as appropriate and (ii) support sub-national workshops to discuss water and flood management issues and strategic alternatives for strengthening future flood management.
UNEP.Nairobi/Manila, 1 December 2011. At the inaugural meeting of the Sustainable Rice Platform held at IRRI's Headquarters in the Philippines this week, government representatives from Indonesia, Thailand, Vietnam and Myanmar, many international and Asia-based companies and non-government organizations participated, demonstrating their support and interest in contributing to the initiative.
"There are many different sustainable technologies and practices for rice, the world's most important food crop that feeds half the planet," said James Lomax, from UNEP, which initiated the Sustainable Rice Platform.
"The challenge is to find a mechanism for scaling up these practices and their delivery in many countries," said Mr. Lomax. "The Sustainable Rice Platform provides opportunities for promoting resource use efficiency and sustainable trade flows throughout the value chain of the global rice sector and deliver real results to the lives of rice farmers."
The Sustainable Rice Platform will draw relevant lessons from established commodity initiatives that promote sustainability, such as for sugarcane, cotton, and coffee, and apply them to rice. It will set sustainability targets, develop and promote regional and global standards of best practices for rice production, and support rice farmers to adopt these practices. It will also identify criteria to assess how well the sustainability targets are being met and if farmers are implementing the practices.
"For example, we will harness our know-how to set standards to better manage insect pests in rice to reduce the unsafe and ineffective use of pesticides, which can damage the environment and the health of farmers," said Bas Bouman, who will lead the work at the International Rice Research Institute (IRRI) ; one of the project partners.
"We can also develop and promote the use of specialized field calculators to determine the environmental footprint of water, carbon, greenhouse gas emissions, or chemical use," he added.
Rice presents a unique challenge for any quality control system because it is mostly grown by hundreds of thousands of poor farmers who have only very small farms of less than one hectare each. Moreover, 90 percent of rice is grown in developing countries in Asia where access to knowledge and support is limited.
National government agricultural departments will explore and test management practices to make them nationally relevant and to promote them to rice farmers. Non-government organizations and companies will assist to develop the sustainability criteria to help safeguard or improve environmental health.
Rice farmers, production, processing, or trade organizations and businesses, will use the Sustainable Rice Platform to secure a sustainable rice system and crucially explore incentive mechanisms for farmers to grow rice more sustainably.
"Rice is an extremely important food crop, both for Kellogg Company and the world. We are therefore delighted to support UNEP in the mass adoption of better and more sustainable rice-growing practices to improve the world's food supply and the lives of the farmers and the communities who produce it," Chief Sustainability Officer at Kellogg Company, Diane B. Holdorf.
"In addition to financial support," she added. "We intend to fast track sustainable techniques into our contract growing programs as soon as 2012. We'll share the results with the Sustainable Rice Platform and use them to inform our global rice policies and direction."
Fast facts
The Sustainable Rice Platform will set management standards for rice production that will ensure it is grown in an environmentally-sustainable and socially-responsible way;
Poverty will reduce as farmers stand to gain by higher incomes through reduced input costs, higher production, and/or getting a premium on their rice;
Consumers and processors purchasing rice grown on the Sustainable Rice Platform will be assured it is good for the environment and farmer welfare.
Asian Development Bank.In response to the on-going flood disaster in Thailand, The Royal Thai Government and ADB seek to take early steps in support of Government efforts to strengthen the strategy for flood management. Consistent with these efforts, the TA is proposed to (i) assist the Government to organize and hold an international knowledge forum to support Government efforts to strengthen its strategy for flood management, in the context of wider water and disaster risk management as appropriate and (ii) support sub-national workshops to discuss water and flood management issues and strategic alternatives for strengthening future flood management.The TA will be implemented over 6 months starting in December 2011 and ending in May 2012.
World Bank.November 2011. Growth in developing East Asia in the first half of 2011 remained strong, but continued to moderate, mainly due to weakening external demand. Global growth was also affected by supply shocks from geopolitical disturbances in the Middle East, supply chain disruptions following the earthquake and tsunami in Japan, and a slower-than-expected recovery of private demand in crisis-affected countries. More recently, uncertainties over fiscal sustainability in the U.S. and sovereign debt in the Eurozone fed financial volatility and affected investor and consumer sentiment.
Domestic demand in East Asian economies has also been softening, driven by the normalization of fiscal and monetary policy, although it remained robust and the largest contributor to growth. We project that real GDP in developing East Asia will increase by 8.2 percent in 2011 (4.7 percent excluding China), while growth will slow to 7.8 percent in 2012. Risks are on the downside, however. Based on the still robust current growth projections, the proportion of people living on less than US$2 a day indeveloping East Asia is expected to decrease to about 24 percent in 2011, down two percentage points from 2010, and an estimated 38 million people are projected to move out of poverty. However, poverty reduction efforts would be hampered in the event of another sudden increase in food prices against a backdrop of slowing income growth.
The growth slowdown was particularly pronounced in industrial production. Exports of major regional industrial supply chains, especially electronics, have started to decline. Demand for commodities and raw materials remained strong, helping resource-rich economies maintain high levels of export and GDP growth. East Asia, and China in particular, is gaining importance as a source of global demand, while rising consumer goods imports in China are benefiting the region’s manufacturing exporters.
In the short- to medium-term, East Asia’s growth prospects are constrained by global uncertainty and by the impact of natural disasters. The slow progress towards resolution of debt problems in the Eurozone intensified investors’ concerns over global growth and stability. As capital flowed out of emerging markets into relatively safer havens, portfolio investments reversed and stock markets lost value in East Asia. Markets remain jittery, even after the Eurozone countries agreed on a solution for the sovereign debt and banking problems. Fiscal and financial consolidation in the Eurozone is likely to reduce growth in Europe, and could lead to renewed financial outflows from East Asia as banks shore up their capital coverage. Credit outstanding from European banks to developing East Asia amounts to US$427 billion, or six percent of GDP. But high reserves and current account surpluses protect most East Asian countries against the impact of possible renewed financial stress.
The effects of flooding in several countries are likely to take a toll on growth this year. Because of widespread flooding, Thailand’s GDP growth for 2011 was revised down to 2.4 percent, although the final tally of the damage done is yet to be made. Losses in production are being felt in the entire region, as the impact of the disaster is spreading through the industrial supply chains. While reconstruction after the flood in 2012 is likely to contribute to growth, the resilience of East Asia’s production networks is being tested once more. Earlier in the year, after the March 11 earthquake and tsunami in Japan, East Asian countries suffered production losses from disrupted supply chains in electronics and automotive industries. However, these returned to their pre-disaster growth rates and production levels shortly after Japanese industry recovered in June. This time, recovery of production to pre-disaster levels in the region will also depend on the strength of global demand for electronics and cars.
With growing recognition that the current global economic slowdown could continue into the long-term, policymakers in East Asia are rethinking their policy options. With a few exceptions, notably Vietnam and Mongolia, the emphasis navigating turbulence, sustaining growth has shifted from fighting inflation and dealing with excess capital inflows to sustaining growth, now the dominant concern.
In the short-term, striking a balance between stimulating growth and fighting the effects of global uncertainty is the primary challenge. Policymakers are likely to hold off further policy tightening and stand ready to act should furthernegative shocks to growth occur or in the extreme case of a disorderly resolution of the Eurozone debt problem.
Monetary policy normalization has already been on hold in most countries in recent months and some central banks have started to cut official interest rates. In countries where the recent financial turbulence resulted in significant pressures on exchange rates, policymakers have also intervened in the currency markets. In this scenario it will also be important to take precautionary steps against financial risks arising from sudden downward movements in asset prices. Fiscal positions, while not as strong as before the 2008 crisis, leave sufficient space for fiscal stimulus in most middle-income countries should this become necessary.
Stimulus alone will not be enough to address the likely prolonged weakness in the global economy. Slow global growth presents an opportunity for East Asian governments to refocus on reforms that will enhance growth in the mediumand long-term. Increasing productivity and moving toward higher value-added production can be achieved through higher investment, including in productive infrastructure, education, and in building social security systems in most countries. Where levels of investments are already high, increasing the quality and efficiency of these investments should be the first priority alongside rebalancing growth towards domestic consumption. Improvements in public investment programs and regulatory frameworks will improve the quality of investments and increase investment rates. Further investment in disaster management and prevention is also becoming increasingly important for the region. Any fiscal stimulus should promote these structural reforms that support rebalancing and domestic sources of growth.
Once volatility in global financial markets recedes, capital flows are likely to return to East Asia. When that happens, a concerted effort in the region to use exchange rate flexibility to gain more independence in monetary policy, as well as to shift demand towards domestic sources, could become an option yet again. Efforts to deepen regional integration through existing regional initiatives can boost regional trade and demand and help establish the East Asia and Pacific region’s new role in leading the global economy.
KEY FINDINGS
Real GDP in developing East Asia is projected to increase by 8.2 percent in 2011 (4.7 percent excluding China), while growth will slow to 7.8 percent in 2012.
In 2011, an estimated 38 million people will move out of poverty, and the proportion of people living on less than US$2 a day is expected to decrease to about 24 percent, down two percentage points from 2010.
Growth in developing East Asia in the second half of 2011 continued to moderate, mainly due to weakening external demand. Domestic demand in East Asian economies remained the largest contributor to growth, although it is easing driven by the normalization of fiscal and monetary policy.
The growth slowdown in East Asia was particularly pronounced in industrial production. Exports of major regional industrial supply chains, especially electronics, have started to decline.
Demand for commodities and raw materials remained strong, helping resource-rich economies maintain high levels of export and GDP growth.
China is gaining importance as a source of global demand as imports held up better than exports. A shift to more consumer goods imports in China is benefiting the region’s manufacturing exporters.
Lower growth in Europe in the course of fiscal austerity and the banks’ needs to increase capital coverage would affect East Asia. Less credit from European banks can also affect capital flows to East Asia.
High reserves and current account surpluses protect most countries in the region against the impact of possible renewed financial stress.
Due to widespread flooding, Thailand’s GDP growth was revised downwards to 2.4 percent, although damage assessments are not complete. Reconstruction after the flood is likely to contribute to growth in 2012.
Impacts of the disaster are spreading through industrial supply chains. Recovery of production to pre-disaster levels in the region will also depend on the strength of global demand for electronics and cars.
In the short-term, striking a balance between stimulating growth and fighting the effects of global uncertainty is the primary challenge for policy makers.
Fiscal positions in most countries, while not as strong as before the 2008 crisis, leave sufficient space for fiscal stimulus if necessary
Slow global growth presents an opportunity for governments to refocus on reforms that will enhance growth in the medium- and long-term.
Higher investment, including in productive infrastructure, education, and in building social security systems, can help countries increase productivity and move toward higher value-added production.
Where levels of investments are already high, increasing the quality and efficiency of these investments should be the first priority alongside rebalancing growth towards domestic consumption.
Given the outlook for protracted low global growth, any possible stimulus should be fiscally sustainable, well-targeted, and directed at promoting the structural transformation needed to sustain stronger, domestically driven growth.
Further investment in disaster management and prevention is also becoming more important for the region.
WTO.Thailand WT/TPR/S/255. The sixth review of the trade policies and practices of Thailand takes place on 28 and 30 November 2011. The basis for the review is a report by the WTO Secretariat and a report by the Government of Thailand.
1. For over 30 years Thailand has pursued a policy of export-led development that has successfully turned the county into a major exporter of industrial goods and led to rapid economic growth, particularly in the 1990s. Growth slowed in the 2000s - due partly to lower investment growth and infrastructure bottlenecks - but still remained strong at an average of 5.7% between 2003 and 2006. Although the 2008 global financial crises led to a fall in GDP in 2009, growth picked up again in 2010 when it reached 7.8%. Between 2007 and 2010 GDP per capita rose from US$3,740 to US$4,737, and Thailand has been able to reduce poverty and meet its Millennium Development Goals, although significant income and regional disparities remain.
2. Thailand has an open economy, with the value of exports and imports equivalent to about 135% of GDP in 2010. It was the world's 19 largest exporter and the 17 largest importer of goods in 2010. As regards world trade in commercial services, it ranked 16 as exporter and 14 as importer. This outward-orientation makes Thailand vulnerable to external shocks but has also contributed to the resilience of the economy in adapting to challenges. Underpinning this resilience has been sound macroeconomic, including fiscal, policies with current account surpluses and high levels of international reserves.
3. The value of trade in goods increase by 27% in 2007-10 as exports increased to US$195.3 billion and imports to US$182.4 billion. Most exports are of manufactured and processed goods and most imports of raw materials and machines. The pattern of export trade has changed as exports to developed countries have increased at a slower pace than exports to other Asian countries, and China has replaced the United States as the main destination for Thailand's exports.
4. Thailand also has a positive balance of trade in services, of US$6.5 billion, with a large surplus in tourism and related services offsetting net-payments for other areas.
5. The main macroeconomic concern for Thailand has been the decline in foreign direct investment, which was partly caused by the political unrest that affected much of the period under review. Other reasons for the decline include the restrictions on foreign ownership, particularly on services and agriculture, as well as complex and timeconsuming systems for paying the different taxes.
6. The political instability has also delayed reforms in several areas, including intellectual property, privatization, and several services subsectors. These delays have also contributed to the lower levels of FDI.
7. As a member of the ASEAN group, Thailand is committed to deepening economic integration among members, including removing obstacles to trade and improving trade facilitation.
8. Thailand, both unilaterally and through ASEAN, has continued to pursue a policy of negotiating free-trade agreements of varying scope with the focus on the Asia-Pacific area. In the absence of comprehensive multilateral agreement on trade liberalization, the focus on free-trade agreements is understandable but the complex web of agreements with different rules of origin means it can be hard for traders to benefit from them.
9. Thailand's adoption of the ASEAN Harmonized Tariff Nomenclature has had the effect of increasing the number of tariff lines in its tariff book, but the actual rates on different products have not changed much since the last Review of Thailand and, on average, tariffs are applied at less than half their bound levels. Also unchanged is the complicated tariff structure with different WT/TPR/S/255 Trade Policy Review Page ad valorem, specific duty, and alternate duty rates. Over a quarter of tariff lines are unbound (including, according to the authorities, some agricultural products).
10. Thailand continues to use complicated systems for excise duties, personal income tax, and corporate income tax, with a broad range of tax incentives for investments in different parts of the country. The complex tax structure contributes to Thailand's low rating for ease of paying taxes. Although a considerable effort is being made to simplify the tax assessment and payment systems, it would also help to simplify the taxes themselves, particularly excise duties and tariffs.
11. One area where progress has made compliance easier has been in customs procedures. Since 2008, they have been fully paperless and, in the near future, they are expected to move to a single-window service. However, Thailand has not completed the legal amendments necessary to comply with the Revised Kyoto Convention on customs procedures, and the perception of corruption in the Customs Department persists.
12. The law on anti-dumping and countervailing measures has not changed over the past six years. Between 1 January 2007 and 31 May 2011, 6 new investigations were initiated; 19 cases were reviewed and antidumping duties were continued; and in 5 cases anti-dumping duties were terminated. A new law on safeguards introduced in 2007 covers initiation of investigations, the option of applying provisional safeguard action, investigations, and the application of definitive safeguards. As of end-April 2011, provisional safeguards have been applied in one case.
13. Non-automatic import licensing is required for a variety of products and justified for a number of reasons, such as price monitoring, for public health, and protection of domestic producers.
14. A limited number of products, mostly unprocessed wood, are subject to export taxes, with applied rates of tax lower than the statutory maximums. Other export licensing requirements and controls are normally associated with meeting international obligations or for environmental, public health, and intellectual property protection reasons. Exports of some types of oil cakes are not generally allowed, in order to prevent domestic shortages.
15. Thailand has eliminated export subsidies under several programmes but maintains a number of schemes to promote and facilitate exports. These export supports include: bonded warehouses, duty drawbacks, and tax refunds for import duties and VAT. Thailand continues to promote foreign direct investment through tax advantages for investments in less developed areas of the country and through the I-EA-T free zones. The authorities pointed out that there are no export-related requirements or privileges attached to such investments.
16. The widespread use of price controls continues, with a large number of products subject to varying degrees of control. These include a requirement for approval before prices can be changed, through prior notification of price changes, to price labelling. Although such measures may control prices for consumers in the short-term, they also distort market signals and delay restructuring.
17. In line with official policy to increase the contribution to the economy from creative industries, the Department of Intellectual Property in the Ministry of Commerce has been encouraging the creation of intellectual property, including through registration, enforcement, and trading. Thailand has made some use of compulsory licensing for medical drugs with seven licences issued in 2006-08. Some royalties are paid, and the generic drugs are meant for those that cannot afford the patented version. While the Thai government argues that it has acted in good faith, going beyond its obligations, some countries remain concerned about the way compulsory licences are used. Some countries are also concerned about piracy in Thailand although they also recognize the efforts being taken to reduce it.
18. Agriculture remains the main source of employment, and Thailand is a major producer and/or exporter of several agricultural products, particularly rice and rubber. Agricultural policies vary from one product to another. In the case of rice,production used to be supported through a mortgage system, which provided farmers with loans with the rice crop as collateral and loans were repaid either in cash or the crop. This was changed to a deficiency payment system that provides full compensation for farmers whenever prices fall below a target price and back to a mortgage scheme in late 2011 with a significant increase in prices raising concerns about its impact on international prices which have been exacerbated by recent flooding. Sugar is also supported through prices set by the Cane and Sugar Board. However, world sugar prices have been higher than the set prices leading to concerns about domestic shortages.
19. Although Thailand is a net importer of energy, including oil and natural gas, it is also an exporter of refined petroleum products as it imports crude for refining and export. The State continues to be heavily involved in prospecting and the production of hydrocarbons through the PTT Public Company Limited, which is 51% state-owned. The State also controls prices of fuels using the Oil Fund to tax some fuels and subsidize others, particularly petrol/ethanol mixes and biodiesel. Ethanol is produced from sugar cane and tapioca and biodiesel from palm oil.
20. The basic structure of the electricity subsector has not changed since the last Review. The state enterprise (the Electricity Generating Authority of Thailand) produces just under half of all electricity generated in Thailand; and the two distribution companies are also state-controlled. However, regulation of the sector has been reformed with the establishment of the independent Electricity Regulatory Commission for electricity generation, transmission, distribution, and retail, and for gas transport and supply as well as for LPG terminals. The Commission is also responsible for setting electricity tariffs, subject to the approval of the National Energy Policy Council.
21. Overall, the liberalization of Thailand's services sector, which makes up a large part of the Thai economy, is ongoing. Restrictions remain on market entry and foreign equity participation in several subsectors, and the regulatory framework is complex. Although ownership restrictions have been relaxed in some cases, these decisions appear to have been on a taken on a discretionary basis. Rationalizing the regulatory regime and increasing competition could help to enhance innovation and productivity, and hence further increase the economy's competitiveness.
22. In the banking subsector, increased foreign participation has contributed to improving competitiveness and growth but some foreign ownership restrictions remain in place. The State continues to play an important role in the financial sector through equity holdings in commercial banks and through the specialized financial institution, which provide finance to low-income households and specific economic sectors, including agriculture, housing, and export promotion.
23. Under Phase I of the Financial Services Master Plan, a new law that entered into force in 2008 consolidated and enhanced existing legislation and improved supervision of the sector by the Bank of Thailand, while the latter's autonomy was increased by an amendment to the Bank of Thailand Act. Phase II of the Master Plan started in 2010 and is to address operating costs, improving competition, improving access to financial services, and strengthening financial infrastructure. Although much progress has been made in increasing competition and improving oversight and security, some concerns remain, particularly about regulation of the specialized financial institutions, which have a separate regulatory regime, along with the wide spread between commercial banks' deposit and lending rates.
24. New legislation has been introduced for insurance services and capital markets with the objective of improving oversight and increasing competition. Although the law on foreign participation in insurance companies has been relaxed, restrictions remain in place. The telecommunication sector has continued to grow but at a slower pace than in previous review periods. Competition has also increased, although the degree varies from one sector to another, and the two state-owned enterprises continue to play a major role. Furthermore, the 3G licensing process has been delayed due to legal proceedings, with the result that private sector operators do not yet have licences. Although foreign participation in telecommunication is increasing, restrictions remain on service providers that own their own networks. Under legislation passed in late 2010, which a new single regulator will be established to oversee the broadcasting and telecommunication industry.
26. The Government actively promotes the transport industries through fiscal and financial incentives, and encourages private sector participation in infrastructure development. However, the regulatory framework for the provision and management of infrastructure services is complex, and restrictions on foreign investment apply in all transport subsectors. In air transport, Thailand implements a "gradual open skies policy" and maintains 99 bilateral air services agreements as well as several ASEAN agreements through which traffic rights have been liberalized. A public company, in which the Government holds a 70% stake, operates the six main international airports, which are responsible for most of Thailand's air traffic.
27. Domestic shipping is reserved to Thai vessels. Although there are generally no restrictions on access to cargoes to and from Thailand, the domestic shipping industry continues to receive protection through a cargo reservation policy. Goods imported directly or indirectly by government agencies or public enterprises must be transported by Thaiflagged vessels on designated shipping routes where such vessels are available. A state enterprise manages Thailand's five main public ports. Private companies may be authorized to operate port services.
28. Tourism continues to have a crucial role in the Thai economy. It is a major source of foreign exchange, investment, job creation, and government revenue. Provision of tourist guide services is reserved for Thai nationals.
