99–5422 MOREPRESS RELEASE
EMBARGO: NOT FOR PUBLICATION UNTIL
1300 GMT 17 DECEMBER 1999
PRESS/TPRB/122
13 December 1999
THAILAND’S REFORMS POINT TO STRONG RECOVERY
BUT EFFORTS SHOULD CONTINUE, REVIEW SAYS
Thailand appears to be recovering strongly from the past two years of economic turmoil, but
any temptation to delay reforms should be resisted, says a WTO report. In the first Trade Policy
Review of Thailand since the 1997 financial crash, the WTO says the Thai economy has benefited
from major reforms which have led to greater transparency, stronger governance and better prudential
supervision, both in the private sector and in government.
The report notes that despite the severe recession — real GDP dropped 12% in 1997–98 —the
government has resisted protectionist pressure. “One of the most striking aspects of the Government’s
policy response to the crisis … is its liberalization of several aspects of its trade and foreign
investment regime in order to speed up structural adjustment,” the report says.
The crisis is blamed on weaknesses in the way the financial and other sections of the
corporate sector were governed: poor accounting practices, lack of transparency in management,
inadequate supervision of banks and financial institutions. Because company data was in adequate,
financial risks could not be assessed properly. A seemingly fixed exchange rate régime led operators
to borrow heavily in foreign currencies, precipitating a financial crisis when the exchange ratecollapsed in July 1997. Many of these issues are now being addressed although further work is
needed, the report goes on.
Focusing on Thailand’s trade policy, the WTO report welcomes further streamlining of
import and export procedures, and the continuing trend for tariffs to be reduced even though somehave risen, for example on motor vehicles and clothing, and some high peaks (for example 80%)
remain. It expresses concern about the lack of a single publication containing all regular (“MFN”) and
preferential import duty rates.PRESS/TPRB/122
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MOREThailand has encouraged regional trading partners within the Association of Southeast Asian
Nations (ASEAN), the Asia-Pacific Economic Cooper ation (APEC) forum, Asia-Europe meetings,
South Asia, and the Greater Mekong region to liberalize faster and further in the context of regional
trading arrangements, in the conviction that liberalization will assist economic recovery.
The report notes that the Thai government’s concerns in the WTO include regret that some of
its main exports such as agri-food and textiles and clothing still face quantitative restrictions, few ofwhich have been eliminated. Thailand is active both in the WTO Agriculture Committee, and in
Textiles Monitoring Body.
The Thai government also favours general (“MFN”) tariff reductions in its export markets
over preferential (Generalized System of Preferences — GSP) schemes because some of these
preferences are withdrawn when a country becomes more developed or the product enjoying
preferences gains a sufficient share of the market. The Thai government’s view is that the withdrawalof preferences eventually disrupting Thai exports, the WTO report notes.
Various domestic reforms are also underway, the report says. These include improving
government transparency, tougher measures to deal with corruption and improved integrity of the
customs régime. State-owned enterprises are being privatized and a 1999 competition law aims toensure that these companies do not become private monopolies, although enterprises which are not
privatized are not covered, the report says. The government is also reviewing its import-export and
investment legislation to make trading and investme nt regulations more transparent, predictable and
stable.
The government has also continued to open up the financial sector to foreign investment, as
part of its efforts to deal with the financial crisis, the report goes on. New commitments were made in
the WTO financial services negotiations in December 1997, six months after the crisis erupted.
“These commitments, and in particular the elimination of the 25% limit on foreign equity
participation, should strengthen the financial sector by attracting new foreign capital and expertise andby increasing competition,” the report says.
However it expresses concern about provisions allowing offshore banking (International
Banking Facilities) to operate as a conduit for domestic borrowing, and whose nature may have
magnified the crisis. “A new Financial Institution Law is being drafted to consolidate the supervisionof the financial sector and ensure prompt corrective action, but apparently no amendments to the
International Banking Facilities or associated tax privileges are envisaged,” the report says.
Further liberalization is also taking place in telecommunications and transport, but remains to
be “bound” within the framework of the WTO’s General Agreement on Trade in Services (GATS),
the report notes.
Thailand has also modified its intellectual property legislation in order to implement the WTO
TRIPS Agreement — as a developing country it has to implement this by 1 January 2000. Among the
measures taken are an amended Patent Act (which allows for parallel imports) and a new Intellectual
Property and International Trade Court. Some problems remain with enforcement, the report adds,
partly because the Thai authorities say they lack cooperation from right holders in conducting raids ortaking cases to the courts.PRESS/TPRB/122
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MORENotes to Editors
Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member
countries’ trade and related policies are examined and evaluated at regular intervals. Significant
developments which may have an impact on the global trading system are also monitored. For each
review, two documents are prepared: a policy stat ement by the government of the member under
review, and a detailed report written independently by the WTO Secretariat. These two documents are
then discussed by the WTO’s full membership in the Trade Policy Review Body (TPRB). These
documents and the proceedings of the TPRB’s meet ings are published shortly afterwards. Since 1995,
when the WTO came into force, services and trade- related aspects of intellectual property rights have
also been covered.
For this review, the WTO’s Secretariat report, together with the policy statement prepared by
Thailand, will be discussed by the Trade Policy Review Body on 15 and 17 December 1999. The
Secretariat report covers the development of all aspects of Thailand’s trade policies, including
domestic laws and regulations, the institutional framework, trade policies by measure and by sector.
Attached to this press release is a summary of the observations in the Secretariat report. The
Secretariat report and the government’s policy statement are available for the press in the newsroom
of the WTO internet site (www.wto.org). These two documents and the minutes of the TPRB’s
discussion and the Chairman’s summing up, will be published in hardback in due course and will be
available from the Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992 and
1999), Australia (1989, 1994 and 1998), Austria (19 92), Bangladesh (1992), Benin (1997), Bolivia
(1993 and 1999), Botswana (1998), Brazil (1992 an d 1996), Burkina Faso (1998), Cameroon (1995),
Canada (1990, 1992, 1994, 1996 and 1998), Chile (1991  and 1997), Colombia (1990 and 1996), Costa
Rica (1995), Côte d’Ivoire (1995), Cyprus (1 997), the Czech Republic (1996), the Dominican
Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991,
1993, 1995 and 1997), Fiji (1997), Finland (1992), Ghana (1992), Guinea (1999), Hong Kong (1990,
1994 and 1998), Hungary (1991 and 1998), Iceland (1994), India (1993 and 1998), Indonesia (1991,
1994 and 1998), Israel (1994 and 1999), Jamaica (1998), Japan (1990, 1992, 1995 and 1998), Kenya
(1993), Korea, Rep. of (1992 and 1996), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997),
Mali (1998), Mauritius (1995), Mexico (1993 a nd 1997), Morocco (1989 and 1996), New Zealand
(1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991 and
1996), Pakistan (1995), Papua New Guinea (1999), Pa raguay (1997), Peru (1994), the Philippines
(1993), Poland (1993), Romania (1992 and 1999) , Senegal (1994), Singapore (1992 and 1996),
Slovak Republic (1995), the Solomon Islands (1998) , South Africa (1993 and 1998), Sri Lanka(1995),
Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991 and 1996), Thailand (1991 and 1995),
Togo (1999), Trinidad and Tobago (1998), Tunisi a (1994), Turkey (1994 and 1998), the United States
(1989, 1992, 1994, 1996 and 1999), Uganda (1995), Uruguay (1992 and 1998), Venezuela (1996),
Zambia (1996) and Zimbabwe (1994).PRESS/TPRB/122
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MORETRADE POLICY REVIEW BODY
THAILAND
Report by the Secretariat — Summary Observations
The principal economic development since Thailand’s previous Trade Policy Review in 1995
has been the financial crisis that erupted in mid-1997. This crisis manifested itself initially in a sharp
depreciation of the Thai currency (the baht). Real GDP dropped 12% over the period 1997–1998 and
unemployment rose sharply. Notwithstanding the severity of the crisis and the consequent recession,
the Thai Government has, by and large, resisted protectionist pressures, opting instead for measures
aimed at reinforcing its already increasingly outward-oriented trade and investment policies so as tofoster economic recovery.
Economic environment
Prior to 1997, Thailand’s economic performance had been outstanding, with real GDP growth
averaging almost 9% annually since 1990. This strong expansion was partly the outcome of
market-oriented structural reforms, undertaken by successive governments during the 1980s,
including reductions in barriers both to imports and exports, and the liberalization of the foreign
investment regime. Strong growth of the economy was also greatly helped by Thailand’s high saving
rate, which averaged more than one third of GDP throughout the 1990s. Nonetheless, savings wereinsufficient to finance domestic investment and th e resulting gap was bridged by inflows of foreign
capital averaging 10% of GDP annually, attracted to Thailand by prospects of profitable investments
and by its open foreign investment regime. The correspondingly large and growing current account
deficit, together with the progressive accumulation of public and private external debt, was not a
problem as long as investments in Thailand were allocated efficiently to projects whose returns wereat least sufficient to cover the cost of capital. Unfortunately, by 1997 this was no longer perceived to
be the case, leaving the Thai financial system vulnerable to a sudden loss of confidence, which led the
economy into a severe recession.
This vulnerability was highlighted when commercial banks reported a significant increase in
non-performing loans at the end of 1996; in addition, exports declined in 1997, indicating a possible
fall in external competitiveness. There followed a dramatic flight of capital and heavy losses of
foreign reserves, which culminated in a large depreciation of the Thai baht in July 1997. In turn, the
currency depreciation immediately translated into heavy losses in corporations’ balance sheets
because of their high reliance on foreign debt, and many faced bankruptcy as a consequence. The
outcome of this financial crisis was that real GDP fell by nearly 2% in 1997 and by over 10% in 1998.
Increased unemployment and falling personal incomes resulted in many people falling below thepoverty line. Hence, the financial crisis became a full-blown economic crisis of major proportions
with far-reaching social repercussions.
The origins of this crisis and the resulting d eep recession have been attributed mainly to
generalized weaknesses in the governance of financial institutions and corporations; these weaknessesincluded in particular poor accounting practices and a lack of transparency in management as well as
inadequate supervision of banks and financial institutions. In the absence of adequate company data,
many investments were not based on accurate assessments of financial risks. The financial crisis has
thus highlighted the need for a more transparent, competitive, and rules-based business environment.
Moreover, the maintenance of a fixed nominal ex change rate until mid-1997, combined with the
encouragement of special offshore banking facilities, led banks and companies to borrow heavily
from abroad in foreign currencies, mostly on a short- term and unhedged basis, so as to exploit interestPRESS/TPRB/122
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MORErate differentials, thereby exposing themselves unduly to the risk of a sharp decline in the exchange
rate.
During the months immediately following the crisis, the Thai economy underwent internal
and major external adjustments. A sharp drop in private investment contributed to a fall in domestic
demand and a major contraction in imports. The current account moved from a deficit of 8% of GDP
in 1996 to a surplus of 12% of GDP in 1998. A correspondingly large swing also occurred on thecapital account, which moved from net inflows of nearly US$20 billion to net outflows of nearly
US$10 billion.
In response to the crisis, the Thai authorities established a market-based exchange rate
system, thereby abandoning the peg to a basket of currencies. Initially, they also tightened monetary
and fiscal policies to restore confidence in the economy, but later relaxed both as the recession turned
out to be more severe than anticipated. Aware of the far-reaching social consequences of the crisis,the authorities have targeted low-income groups in recent public expenditure increases. One of the
most striking aspects of the Government’s policy response to the crisis, however, is its liberalization
of several aspects of its trade and foreign investment regime in order to speed up structural
adjustment.
Trade and foreign investment regime
Thailand’s trade and foreign investment policies are aimed at promoting economic
cooperation in international fora and avoiding frictions with trading partners. Accordingly, the Thai
Government has actively participated in the work of the WTO, where it has expressed its regret thatonly a few quantitative restrictions have been eliminated in areas of significant export interest to
Thailand, notably agri-food and textiles; it has called for further efforts to abolish market-access
restrictions. Moreover, Thailand has encouraged regional trading partners within ASEAN, APEC,
Asia-Europe meetings, South Asia, and the Greater Mekong region to liberalize faster and further, in
the conviction that liberalization will assist economic recovery. The Government also favours MFNtariff reductions over GSP schemes because the graduation mechanisms in some GSP schemes can
trigger the reinstatement of higher MFN tariffs, thereby eventually disrupting Thai exports.
On the domestic front, a long-term priority is to ensure greater government transparency and
accountability. A 1997 Constitutional amendment introduces the right of the Prime Minister to requesta referendum, provides for a National Counter-Corruption Commission and establishes an
independent advisory body in charge of consumer protection. In addition, the customs authorities have
set up a special task force to create transparency, resolve complaints, and thereby improve the
integrity of the customs regime.
Economic infrastructure should also benefit from the planned privatization of state-owned
enterprises; a 1999 competition law is aimed at ensuring that such enterprises do not become privatemonopolies in the privatization process. However, the law does not extend to those enterprises that
will remain state-owned. Recurrent legislative delays reflect the difficulties faced by the Government
in passing necessary legislation through Parliament. These difficulties include opposition to the sale
of domestic enterprises to foreign interests.
As a consequence of legislative delays, after seven years of parliamentary deliberations, a
new legislative framework for foreign investment has yet to obtain approval. Meanwhile, conditions
for foreign investment continue to be determined  according to the latest ministerial announcement.
The authorities have also relied on such announcements to implement border tax changes, regulate
trade defence, change the conditions for export assistance, implement changes in direct and indirectinternal taxes, and amend government procurement rules. Although use of ministerial announcements
has the advantage of flexibility, it reduces the stability, predictability, and perhaps the overall
coherence of the trading and investment regime . Accordingly, the Government is reviewingPRESS/TPRB/122
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MOREimport-export and investment legislation to ensure that it reflects the actual openness of Thailand’s
trading system and provides a clear and stable framework for business decisions.
Policies and measures affecting trade and foreign investment
Border measures
The Government has continued to streamline actual import and export measures in order to
facilitate international trade. Thus, for example, the authorities are in the process of amending the
legislation on customs valuation, which should reduce the incidence of arbitrary “uplifts”.
Furthermore, despite complex licensing legislation, which remains un-notified to the WTO, Thailand
maintains few import licences, quotas, or other quantitative restrictions on imports. Few trade defence
measures are in place, although a new Anti-Dumping and Countervailing Duty Act in 1999 replacedthe previous much debated regulations notified to the WTO. As a result, border measures consist
essentially of tariffs. In this context, the publication of a single and comprehensive tariff containing
MFN and preferential duties would, as already noted in Thailand’s 1995 Review, greatly enhance the
transparency of the import regime.
The trend in tariffs is downwards although rates have fluctuated since 1995. In September
1999 applied MFN tariffs averaged 18%, compared with 23% in 1995. But tariff peaks can be as high
as 60%, down from 100% in 1995; they protect domestic producers of agri-food products, clothing
and motor vehicles. The simple average of bound tariff lines will be 26% for industrial products and
34% for agri-food products, once the Uruguay Round of tariff reductions is fully implemented.However, 31% of national tariff lines covering industrial tariffs are unbound. Under the 1997
Information Technology Agreement, Thailand is  committed to eliminating MFN duties on products
accounting for approximately one quarter of total trade. Reductions were due to start in 1999.
Tariff increases during the period under review have in several cases caused applied MFN
tariff rates to exceed WTO bound rates, but the authorities note that in such cases MFN bound rates
apply to WTO Members, on condition that a certificate of origin is provided at Customs. Such
certificates are likely to complicate trading procedures as does the fact that tariff rates tend to be
higher for non-members than for Members of the WTO.
Thailand is actively implementing tariff reductions under the ASEAN Free-Trade Agreement
(AFTA). By the year 2000, Thailand’s AFTA tariff will slightly exceed 7%, less than half of the
applied MFN rate. This divergence between MFN and AFTA tariff rates may have contributed to
trade diversion, particularly in an environment of falling imports and GDP. The share of imports from
ASEAN members in total imports has increased since the last Review of Thailand in 1995.
The financial crisis created the concern that bank failures would deprive producers of access
to export finance. The authorities therefore have greatly expanded the number and funding of export
financing schemes, some of which involve preferential terms. For example, the value of exports
financed under the Packing Credit Facility amounted to 10% of total exports in 1998. The authorities
have also taken advantage of transitional provisions contained in the WTO Agreement on Subsidies
and Countervailing Measures to introduce additional tax incentives in favour of exports. Generally,however, Thailand competes on world agri-food and other markets without any significant export
subsidies.
Substantial progress has been made to expedite the customs clearance process for exports, as
part of an overall strategy to achieve an export-l ed recovery. In order to conform with quantitative
restrictions maintained by trading partners, export quotas are in place on textiles and clothing products
destined for Canada, the European Union, Norway and the United States; and on cars exported to
Chinese Taipei.PRESS/TPRB/122
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MOREInternal measures
Numerous tariff and other tax concessions are intended to neutralize the effect of relatively
high tariffs on exports, investment, and production. Several of these measures are administered by the
Board of Investment (BOI), which grants not just tax but also non-tax incentives, such as the right toown land or to invest in activities otherwise closed to foreigners. Changes in incentives may be
introduced by ministerial notification and do not need to be approved by Parliament, provided they
fall under the purview of the Investment Promotion Act. A number of incentives have been notified to
the WTO as subsidies or as trade-related investment measures; the authorities intend to abolish the
latter by 1 January 2000. Overall, investment incentives may have resulted in an inefficient allocation
of capital, as witnessed by the large number of unprofitable investments, which contributed to the
recent crisis.
Thailand has modified its intellectual property legislation in order to implement the WTO
Agreement on TRIPS. In particular, the Patent Act, as amended, introduces the principle of national
treatment and eliminates the requirement that products under a patent must be manufactured locally.
Parallel imports are considered necessary to maintain competitive prices of products protected byintellectual property rights. In 1997, the Intellectual Property and International Trade Court began to
handle all civil and criminal cases involving intellectual property. Despite the several steps taken to
improve enforcement, the authorities consider that, in  practice, this remains extremely difficult, partly
because of insufficient cooperation from right holders in conducting raids or taking cases to the
courts.
The Thai Industrial Standards Institute has participated actively in the work of the
WTO Committee on Technical Barriers to Trade; it considers that harmonization of international
standards, transparency, avoidance of unnecessary obstacles to trade, and non-discrimination would
be beneficial to Thailand as well as to other developing countries. All new Thai standards andregulations are now systematically based on international norms, and conformity assessment
procedures have been greatly simplified in cases where mutual recognition agreements have been
established. Meanwhile, however, rather stringent food and drug regulations, in effect, create a system
of exclusive importers, as only one applicant holds the information required for registration and
licensing, thereby preventing parallel imports of such products.
The authorities report that Thailand’s regulations on government procurement have recently
been amended with the objective of enhancing openness, transparency, and fair competition. The
authorities have indicated that procuring agencies allow foreign bidders to compete for contracts
unless at least three domestic products meeting national standards are available. Most domestic
products are given a price preference margin in procurement. Government contracts for consultancy
and engineering services must be awarded to domestic companies as the leading firm. Allpublic-sector imports above US$7 million must have a related countertrade transaction.
Sectoral trade policies
Thailand has continued to participate actively in the work of the WTO Committee on
Agriculture, urging Members to proceed with tariff reductions and eliminate market-access
restrictions. The authorities report no significant export subsidies and Thailand has also shown
restraint in the use of domestic subsidies likely to affect trade, particularly since the recent
depreciation of the baht. Production and trade of se veral key agri-food products are organized through
marketing boards and other government-supervised organizations.
High tariffs protect the domestic meat and dairy, fruit and vegetable, sugar, beverage and
tobacco manufacturing industries. Thailand does not apply quantitative restrictions on agri-foodPRESS/TPRB/122
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MOREimports; many of the tariff quotas established under the Uruguay Round are not used in practice to
restrict imports; instead, lower or zero duties are frequently applied when imports of the products
concerned are needed for the domestic processing industry. For the few products whose importation is
impeded by high tariffs, partners to the AFTA will have unlimited access to Thailand’s market as of
2000 at rates not exceeding 20%, thereby generating substantial pressure on certain domestic agri-
food sectors.
Thailand has continued to liberalize the energy market and has undertaken in various
international fora to enhance efficiency through greater competition, including by majority
foreign-owned companies. A transparent regulatory  framework has been announced for the year 2000
in the petroleum, electricity, and gas sectors, followed by corporatization and eventual privatization of
selected state-owned enterprises. In the WTO, Thailand has not bound tariffs on most petroleum
products, and has not included any energy-related sectors in its GATS Schedule of Commitments.
After two decades of double-digit growth, Thai manufacturing was severely affected by the
financial crisis that broke in mid-1997, after which the authorities substantially increased border taxes
on several consumer products. In particular, tariffs on motor vehicles were raised from around 40% to
80%. Production capacity has increased in the automotive sector as new joint ventures with foreignmultinationals have started supplying domestic and export markets. Investment incentives in the
automotive sector, some of which are due to be amended by 1 January 2000, include local-content
provisions, themselves attached to end-use provisions, import and excise duty concessions, and
corporate tax exemptions.
The textile and clothing industry provides an example of the recent tariff instability in the
manufacturing sector, causing unpredictability for importers. After a continuous process of tariff
reduction from 1994 to 1996, whereby tariffs on clothing were reduced from 100% to 45%, and then
to 10% for some products (in early 1997), tariffs were raised to 60%, ostensibly on fiscal grounds, but
also to assist crisis-stricken industries: Thailand does not protect its textile and clothing industry withimport quotas; however, its exports are substantially restricted by quantitative restrictions and
safeguards in export markets.
In the course of implementing measures to overcome the crisis, the Thai Government has
continued to open its financial services sector to foreign investment. Thailand has made newcommitments with respect to insura nce, banking, and other financial services, first in its Schedule
annexed to the Second Protocol to the GATS (the  so-called Interim Agreement) on Financial Services
agreed in July 1995, and then, as a result of the WTO financial services negotiations concluded in
December 1997, six months after the crisis erupted. These commitments, and in particular the
elimination of the 25% limit on foreign equity participation, should strengthen the financial sector by
attracting new foreign capital and expertise and by increasing competition. One possible area of
concern involves the provisions allowing offshore banking (International Banking Facilities) tooperate as a conduit for domestic borrowing, and whose nature may have magnified the crisis. A new
Financial Institution Law is being drafted to consolidate the supervision of the financial sector and
ensure prompt corrective action, but apparently no amendments to the International Banking Facilities
or associated tax privileges are envisaged.
Under a series of concession contracts with the existing public duopoly, private companies
have progressively entered a variety of telecommunications markets, creating a thriving market in
certain telecommunications services, such as mobile phones and Internet services. The authorities,
aware that these markets are unlikely to be truly competitive in the absence of cost-based pricing,
transparent and fair interconnection arrangements, and independent regulation, have undertaken tointroduce commitments regarding commercial presence in voice telephony and other
telecommunications services, by 2006, on the basis of new legislation.PRESS/TPRB/122
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ENDThere have also been developments towards greater international competition in the transport
sector. The main airline is being partially privatized, and amendments were introduced in Parliamentto allow larger shares of foreign ownership in domestic airlines and introduce competition in
reservation systems. In 1997, foreigners were allowed to hold a de facto majority in a company
owning maritime vessels under the Thai flag.
Thailand included a large number of business services in its GATS Schedule of Specific
Commitments; the current regulatory framework allows foreign presence essentially through
joint ventures with minority foreign control. In particular, member firms of the “Big Five”
multinational accountancy networks supply a large share of domestic audit services under these
joint ventures. Recent analyses of Thailand’s crisis have highlighted the lack of transparency and
accountability in corporate management and auditing practices, leading the authorities to revise all
Thai accounting standards, and require companies to apply international accounting standards, as well
as establish an audit committee to oversee companies’ financial reporting process and disclosure.Market access restrictions, including nationality and equity requirements, undoubtedly contributed to
the severity of the crisis.
Outlook
The main macroeconomic indicators suggest that Thailand is recovering strongly from the
economic turmoil of the past two years. Major re forms, resulting in greater transparency, and
strengthened governance and prudential supervision, have underpinned the recovery by improving
consumer and investor confidence, both domestically and abroad. Trading partners too have played a
key role in the recovery, aided by Thailand’s welcoming and liberal business environment, providinggreater efficiency through import competition and direct investment inflows. They have also kept
their markets open to Thailand’s exports.
There are still a number of downside risks, however. For example, the continuing need for
corporate debt restructuring, reflected in the high  level of non-performing loans, could hamper the
recovery of private investment. More broadly, the danger remains that as the recovery gains pace, the
Government might succumb to pressures to put off fundamental reforms, which although currently
well under way, are still incomplete and yet essential for the achievement of a stable basis for
sustainable and equitable growth of the Thai economy.