Making growth more inclusive in Thailand

Sustainable finance for inclusive growth in Thailand

“…It also discusses how to better fund long-term infrastructure projects, including through greater private sector participation. Building on the analysis presented in Fleischer et al (2018), it then reviews how to improve the financial sustainability of the pension and healthcare system.…”

“…Indeed, OECD experience indicates that when institutional efficiency and macroeconomic stability are not in doubt, the corporate tax rate has a limited impact on overall attractiveness as an investment destination (Matthews, 2011). Thailand has also adjusted personal income tax settings, but high labour force informality -estimated at 56% (Fleischer et al, 2018) -combined with a generous tax-free threshold mean that only one-fifth of the working-age population (15-64) pay any income tax. In 2013, the top rate was cut from 37% to 35%, and in 2017, thresholds and deductibles were raised substantially.…”

“…At the same time, OECD experience shows that well-designed health and pension policies can deliver cost containment and efficiency gains (OECD, 2015a). The effectiveness and coverage of Thailand's healthcare and pension systems are assessed in Fleischer et al (2018).…”

“…Among comparator countries, only Indonesia spends less ( Figure 13A). However, as the UCS covers around three-quarters of the population and is entirely government funded (Fleischer et al, 2018), the share of public expenditure has increased more dramatically, from 56% in 2001 to 78% in 2014, above all comparator countries and the OECD average ( Figure 13B). Government outlays on health thus rose from 1.9% to 3.2% of GDP over the same period.…”

“…While this is below most OECD countries, it exceeds the costs of comparable economies within the region. Given Thailand's sound fiscal position, it can and should avoid near-term regressive and often ineffective blanket cuts to the health budget and, instead, implement targeted supply-side measures to yield efficiency gains (Fleischer et al, 2018) and financing reforms that improve affordability. Efforts to reform the financing of Thailand's healthcare system by introducing greater private contributions, for those able to afford them, can also improve sustainability.…”