The path to poverty in Thailand

The path to poverty in Thailand

Welfare cardholders queue up to get cash at a Krungthai Bank ATM in Pathum Thani in December last year. (Photo by Sarot Meksophawannakul)
Welfare cardholders queue up to get cash at a Krungthai Bank ATM in Pathum Thani in December last year. (Photo by Sarot Meksophawannakul)

Thailand has had an interesting journey to its current ranking of sixth in the world, and first in Asia, in income inequality, as cited by the World Population Review. The country has historically been a patronage society, where the upper echelons of society are expected to look after those who are underprivileged.

This characteristic of Thai society has been predominant since the Sukhothai Period, about 700 years ago. The 1932 Siamese Revolution transformed the political system from an absolute monarchy to a constitutional monarchy with a king as the head of the state and a prime minister as the head of government. From the revolution until 1975, Thailand had 35 cabinets and 12 prime ministers, all rising to power through coup d'états or military appointments. Until 1975, Thailand did not have a government policy on poverty reduction or mitigation. This is attributed to the fact that Thai society expected the government or the rulers of the country to look after the poor and the underprivileged. This is, in essence, an informal welfare scheme.

In 1975, Thailand had its first popularly elected civilian government and the 13th prime minister, MR Kukrit Pramoj. Kukrit instituted the first anti-poverty scheme, known as ngeun bhan, literally translated as "diversion fund" (from urban to rural areas). To transform this policy into action, the government allocated 2.5 billion baht to set up tambon councils. The councils were intended to employ rural residents on a temporary basis to do public service tasks such as digging waterways, canals, or water catchment reservoirs; repair of public properties, and installing utility poles.

It should be noted that under this policy, being poor is synonymous with being a rural resident. Indeed, it was in the Thai rural areas where the poor were concentrated. Thus, the Kukrit government knew exactly where the poor were located. The problem with this policy was that it was more of a temporary economic reprieve for the poor not sustainable with Kukrit's loss in the next election.

Still in all, the diversion fund, while the brainchild of the Kukrit government, was very popular and well received by the rural residents in all provinces of Thailand. All subsequent governments, whether military installed or popularly elected, adopted some strategy of employing the rural populace to do public works. This was true until the end of 2000.

In January 2001, Thai Rak Thai under the leadership of Thaksin Shinawatra won a landslide victory and came to power in February the same year. The weakness of Thailand's policy for the poor was that it relied solely on the temporary employment of the rural poor. It could not pull the poor out of poverty trap in the long term.

Thaksin set up the "One Million Baht Village Fund" as a revolving loan fund for the villagers to use as a business start-up fund. The concept behind this policy was that the rural residents could not escape the poverty trap because they did not have enough capital to start or invest in a business. This policy gained considerable popularity. However, because of the lack of proper business and entrepreneurial skills, most villagers used the fund for consumption and not investment. The result was that they still failed to escape the quagmire of poverty. Therefore, it was perceived that the One Million Baht Village Fund should not be adopted as a national strategy. This provided a good reason for the military governments that were installed by the coups d'état to either scale down or even completely terminate the fund.

Since 2008, Thailand has not had an anti-poverty policy. The reason was that the global financial crisis adversely effected the economy of Thailand, which had put all its eggs into two baskets -- tourism and export promotion. From that point onward, Thailand focused more on economic growth stimulation to absorb the impact of the economic crisis. The government of Abhisit Vejjajiva formulated a policy known as "Thai Kem Kang" or Strong Thai Scheme. This strategy contained a provision for temporary employment with a budget of nearly seven billion baht. While there is no clear evidence that the economy of Thailand nosedived during this period, the beneficiaries of the programme were mainly those who could contract for development projects from the government.

In 2014 when Gen Prayut Chan-o-cha seized power, the Thai economy was in the doldrums and he inherited the onus of improving the economy and stimulating growth. GDP growth in Thailand is still well below the 7.5% achieved during Mr Abhisit's term. One notable policy launched by the current government is the poverty reduction scheme through state welfare cards. This programme allowed 14 million people to register and define themselves as poor. After some screening criteria, which were often vague and inconsistent, the final number was reduced to 11 million, the largest number of poor people in the history of the country. One achievement of this programme is that it is able to attract those who cannot make ends meet to label themselves as poor, although this is rife with opportunities for abuse. A side benefit to the government is that this may eventually have led to many of the recipients of the benefits becoming supporters of the Palang Pracharath Party (the majority party of the governing coalition) in the last election. It is noteworthy that since this poverty reduction scheme has been in effect, Thailand's poor have increased quite dramatically.

A lesson to be learned from the historical analysis of poverty reduction attempts in Thailand is that it is easier to increase the number of poor than to reduce it. To avoid this undesirable situation, good governance practices in the poverty reduction programmes are needed. Without them, the poor are just a conduit for funnelling money from the government to the rich entrepreneurs. In academic jargon, the percentage of the population under the poverty line correlates more directly and strongly with income equality than with economic growth. So, any poverty reduction scheme should include a plan for a reduction in income disparity.


Peerasit Kamnuansilpa, Dean, College of Local Administration, Khon Kaen University.

Peerasit Kamnuansilpa

Khon Kaen University Dean

Peerasit Kamnuansilpa is Dean, College of Local Administration Khon Kaen University.

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