Background and Significance | Policy Framework
Dual-Track Policy *
… “The dual-track approach represents a new policy paradigm of simultaneously pursuing the development of a strong domestic foundation for the economy as well as promoting linkages through international trade, investment and financial cooperation. The two tracks combined will lay a solid base for sustainable growth and stability for the country.” …
His Excellency Dr. Thaksin Shinawatra
Prime Minister of Thailand
At the Tenth APEC Finance Ministers’ Meeting
4 September 2003
Background and Significance of the Policy
The dual-track policy can be regarded as an economic development policy framework of the current government led by Dr. Thaksin Shinawatra. This new policy approach aims to create a more balanced society as much as to reduce Thailand’s exposure to external volatility.
The rationale behind this policy can be explained when looking at the changing environment of the global economy. In the past, the world’s economic prosperity was very much dependent on three major economic blocs, namely the Unites States, Western Europe and Japan. The economic growth of developing countries, Thailand including, were unlikely to achieve without external demand and strong economic performance of the big three.
However, the situation started to change as some empirical evidence suggested. The rise of Chinese economy during the last fifteen years started to water down the eminence of the big three economies. Moreover, as well as China, other East Asian countries started to adopt the new approach to achieve economic recovery after the 1997 financial crisis, which focused on stimulating domestic demand in parallel with promoting exports.
Therefore, Thailand is not the only Asian country to adopt this policy approach but it is also joined by other Asian countries such as China, South Korea and Malaysia as it became the theme of the 10th APEC Finance Ministers Meeting – “Local/ Regional Links, Global Reach: A New APEC Financial Cooperation”.
For more background knowledge of the Dual-Track Policy, please look at the paper “Thailand’s Positioning In a New Global Economic Paradigm” by Dr. Olarn Chaipravat
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Policy Framework
The dual-track approach represents a new policy paradigm of simultaneously pursuing the development of a strong domestic foundation for the economy as well as promoting linkages through international trade, investment and financial cooperation. The two tracks combined will lay a solid base for sustainable growth and stability for the country.
On the domestic side, the government has attempted to strengthen all of the different layers of the economy, namely the grass-roots economy, the small and medium-sized enterprises and the large-scale domestic industries.
To promote the economic prosperity at the grass-roots level, the government has established a revolving Village Fund and a People’s Bank Program in order to provide micro-credit lending for people at the grass-root level. The other successful measure that has been launched is the “One Tambon One Product (OTOP) scheme with an objective to enhance local entrepreneurship and productivity.
For small-and-medium-sized enterprises, the government introduced new tax schemes for SMEs as an incentive for their investment. The SME Development Bank was also established to provide financial and advisory services to SMEs.
The large-scale industries will be strengthened through the Thai Asset management Corporation (TAMC), which has facilitated the debt and corporate restructuring for large corporation.
One the external side, the government set a goal to create linkages and strategically enhance the country’s competitiveness in the global arena. This included the FTA negotiations with several trade counterparts.
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