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Thailand's Inequality: Myths & Reality of Isan

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Thailand's Inequality: Myths & Reality of Isan 1 THAILAND’S INEQUALITY: MYTHS & REALITY OF ISAN 2 3 THAILAND’S INEQUALITY: MYTHS & REALITY OF ISAN AUTHORS Rattana Lao omas I. Parks Charn Sangvirojkul Aram Lek-Uthai Atipong Pathanasethpong Pii Arporniem annaporn Takkhin Kroekkiat Tiamsai May 2019 Copyright © 2019 e Asia Foundation 4 5I ACKNOWLEDGEMENTS is report on contemporary life in Isan, ailand’s Northeast Region, was produced with the support of a great many people. e study was co-funded by the United Kingdom and the Asia Foundation. e research team wishes to thank omas Parks, the Foundation’s Country Representative in ailand, for providing vision and encouragement through all stages of the study, including formulation of the methodology, analysis of the ndings, and drawing conclusions for this report. Important contributors during the early stages of the study were Sasiwan Chingchit, Patrick Barron, and Adrian Morel; and throughout the process, the Foundation’s sta in ailand provided crucial administrative and moral support. Most grateful thanks go to the farmers, students, and academics in Isan who participated in the survey, focus groups, and interviews, and generously provid- ed their time and valuable insights. We beneted too from the intellectual support of faculty at Khon Kaen University, Mahasarakam University, and Ubonratchathani University, and especially thank Dr. Rina Patramanon, Dr. Orathai Piayura, Dr. John Draper, Dr. Nattakarn Akarapongpisak, Dr. Titipol Phakdeewanich, and Dr. Preuk Taotawin. Dr. Atipong Pathanasethpong contributed his insight on the health section and oered critical understanding on Isan. Invaluable assistance was provided too by: William Klausner helped us to under- stand what Isan used to be and how it has changed; Sukit Sivanunsakul and Suphannada Lowhachai from the National Economic and Social Development Council and Dr. Jaree Pinthong from the Bank of ailand who gave us guidance in analyzing the study’s data; Christopher Burdett and Yodsapon Kerdviboon at the Isaan Record who helped us to understand current conditions in Isan; an Nuay at Wat a Suay who helped us to understand the relationship between Isan’s modern economy and its traditional lifestyle; researchers at MI Advisory, and particularly Acharanand Lelahuta and Urai Detthanasombat who supported our data analysis; Tim Bewer who provided wonderful photography; and Ann Bishop, our editor, who took great care in revising the manuscript. Finally, most sincere thanks go to the study team: Charn Sangvirojkul, Aram Lek-Uthai, Pii Arporniem, annaporn Takkhin, and Kroekkiat Tiamsai who worked tirelessly and diligently to unpack the complexity of Isan, and whose energy, enthusiasm, and friendship made the completion of this work both possi- ble and enjoyable. e views expressed in this report do not necessarily represent the views of the Asia Foundation or the funders. Rattana Lao, PhD. Senior Program Ocer, Policy and Research e Asia Foundation 6II III7 TABLE OF CONTENTS Acknowledgements I Lists IV Abbreviations & Acronyms VII Preface 1 Introduction 7 Methodology 11 Finding 1: e poverty rate is lower but rural people in Isan 21 are still struggling. Finding 2: Although the incomes of most respondents 27 remain stagnant, they are optimistic about the future. Finding 3: Most people own land, but their land is not very 31 productive. Finding 4: Isan has extremely high levels of household debt. 35 Finding 5: Fewer Isan people are migrating now to other 49 parts of ailand. Finding 6: A high percentage survey respondents (74%) 53 support industrialization in Isan. Finding 7: Most Isan people are satised with educational 59 quality. Finding 8: Universal Health Coverage helps lessen the 71 burden of healthcare costs. Finding 9: Isan people are not unsophisticated peasants. 79 Conclusion 91 References 94 8IV Tables Table 1: Isan provinces categorized by their gross domestic product (GDP) and geographic location Table 2: Average monthly household income (Baht) Table 3: A regional comparison of GRP for ailand’s agricultural and non-agricultural sectors Table 4: Companies in Isan with Board of Investment promotion and their location Figures Figure 1: e poverty rate in ailand by region, 2007–2016 Figure 2: Gross regional product (GRP) in ailand’s regions, 2016 Figure 3: Gross provincial product (GPP) in ailand’s Northeast Region Figure 4: Levels of debt in Isan and the percentage of households aected Figure 5: Changes in average household debt in Isan between 2002 and 2017 Figure 6: Average household debt-to-income ratio in Isan, in comparison with the national average Figure 7: Causes of debt in Isan, 2002 to 2017 Figure 8: e shares of population covered by dierent types of health coverage Figure 9: Share of OOP health expenditure to total health expenditure Figure 10: Incidence of households with catastrophic health expenditure resulting in health impoverishment (per 100 households) Figure 11: Isan voting patterns from 2001 to 2019 V9 Graphics Graphic 1: DEMOGRAPHICS IN ISAN Graphic 2: VIEWS ABOUT THAILAND’S DIRECTION Graphic 3: CHANGE IN HOUSEHOLD INCOME Graphic 4: LAND OWNERSHIP IN ISAN Graphic 5: DEBT IN ISAN Graphic 6: ECONOMIC SITUATION LOCALLY Graphic 7: DIFFICULTIES IN ISAN Graphic 8: MIGRATION Graphic 9: VIEWS ON INDUSTRIALIZATION Graphic 10: LOCAL EDUCATION Graphic 11: SMALL SCHOOLS CONSOLIDATION POLICY Graphic 12: PUBLIC WELFARE SCHEMES AND SERVICES Graphic 13: EXPECTATIONS OF GOVERNMENT Graphic 14: DECIDING HOW TO VOTE IN AN ELECTION Graphic 15: POLITICAL PARTICIPATION 10VI VII11 ABBREVIATIONS & ACRONYMS BACC – Bank for Agriculture and Agricultural Cooperatives BOI – Board of Investment GDP – Gross Domestic Product GPP – Gross Provincial Product GRP – Gross Regional Product NESDB – National Economic and Social Development Board NESDC – National Economic and Social Development Council OPP – Out-of-Pocket OTOP – One Tambon, One Product UHC – 30-baht Universal Healthcare Coverage scheme UNESCAP – United Nations Economic and Social Commission for Asia and the Pacic Village Fund – One Million Baht Village Fund 12 1 PREFACE Inequality is one of ailand’s greatest domestic challenges. In part, this chal- lenge is a product of ailand’s success. By 2011, aer decades of rapid growth that began in the 1960s, ailand had reached upper middle-income status. Today, the Kingdom is facing challenges that typically aict higher income coun- tries—rising costs of production that discourage investors, an aging workforce, and outdated infrastructure. But in many ways, rising inequality is the most seri- ous challenge. ere is considerable debate about inequality in ailand, and this includes disagreements over its severity. In 2018, the Bangkok Post labeled ailand the most unequal country in the world, based on data from the Credit Suisse Global Wealth Databook. However, it is important to note that this nding was based on wealth inequality (as opposed to income inequality), and that the data were more than a decade old.1 Many experts point to ailand’s declining economic growth as the central challenge, and argue that public investments and policies should focus on ailand’s more productive sectors and regions to help the Kingdom emerge from its looming “middle-income trap”. Although some claim that government policies have caused inequality to rise, there is clear evidence that the ai Government has made signicant eorts to address the problem. Over the past 15 years, successive ai administrations have acknowledged the problem of inequality, and instituted wide-ranging poli- cies and programs to improve the lives of those who are being le behind. By some accounts, ailand has been a moderate success with regard to reducing inequality. According to the United Nations Economic and Social Commission for Asia and the Pacic (UN ESCAP), between 1990 and 2014, ailand’s Gini Coecient shows that income inequality actually declined by 38%.2 World Bank data show that ailand’s 2017 Gini Coecient of 36.5 puts it in the middle of the group of Association of Southeast Asian Nations.3 Despite this mixed picture on overall inequality trends, the country faces a major challenge in regional disparities. ere has always been a wide gap between the thriving Central Region and regions on the periphery, and this remains true today. Many economists argue that the imbalances between regions are a natural outgrowth of economic development because new industries and other invest- ment usually cluster in regions with well-connected roads, seaports, and airports; reliable electricity and telecommunications; and higher skilled labor. In some ways, regional disparities benetted ailand’s economic development. From 1 Bangkok Post. 2018. “Report: ailand most unequal country in 2018”. 2 UNESCAP. 2018. Inequality in Asia and the Pacic in the era of the 2030 Agenda for Sustainable Development. 3 World Bank. 2017. “Gini Index: ailand.” 2 the 1960s to the 1990s, the export-oriented manufacturing economy in central ailand attracted low-cost migrant labor from the lagging peripheral regions, giving ai exports a major competitive advantage. However, regional disparities are no longer benetting ai manufacturing, as they once did. Due to rising wages, ailand’s manufacturing sector is much less competitive today, and instead lower-wage countries such as Cambodia, Bangladesh, Indonesia, Myanmar, the Philippines, and Vietnam are now attract- ing the low value-add manufacturing that once fueled ailand’s rapid economic growth. To counter this, the ai Government has prioritized moving up the value chain in both the manufacturing and services sectors,
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