Regions and Countries

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p. 6 of 23 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Thailand : I. Country Performance Assessment

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E. Implementation Assessment

1. The Portfolio

25. The ADB’s very first loan was to Thailand (Loan No. 0001: First Industrial Finance Corporation of Thailand Project - $5 million, approved in 1968). As of 30 April 2000, the ADB had approved a total of 81 loans for the public sector in Thailand amounting to $5.31 billion. Of the public sector loans, 67 loans have been closed, leaving 14 loans with a total net loan amount of $1.98 billion under administration. Besides the loan program, ADB had approved a total of 127 TA grants to the country, amounting to $46.5 million (including 20 ongoing TAs totaling $15.2 million). In addition, the ADB has approved loans and equity investments for seven private sector projects amounting to $73.3 million.

26. Disbursement ratios for the past decade have been considerably above the ADB average. In the early 1990s, the disbursement ratio for loans to Thailand was around 20 percent. Subsequently, after declining to 12 percent in 1996, the disbursement ratio for Thailand rose sharply to 38.3 percent in 1997, 38.4 percent in 1998, and 39.4 percent in 1999. Though the disbursement ratios for Thailand in 1997-1999 were much higher than the ADB average, they were mostly attributable to three large, fast-disbursing program loans that were provided in the form of emergency assistance. It also reflects the maturity of the Thai portfolio, since disbursements pick up towards the later stages of a project.

27. Of the 42 projects in the Thailand portfolio which have been post-evaluated, 38 (91 percent) are regarded as having been generally successful. The remaining four projects (9 percent) in the Agriculture and Natural Resources and Social Infrastructure sectors are regarded as partly successful. No projects were evaluated as unsuccessful. This compares very favorably with the ADB average as well as with that of other Group C countries. In the end, however, portfolio performance must also be evaluated on the basis of the portfolio’s impact on development. In the past, the ADB’s portfolio in Thailand was dominated by physical infrastructure projects such as energy, roads and communications. These are also the sectors where Thailand’s progress during the past three decades has been excellent, supporting a very high rate of growth until the recent crisis. The Government concurred with this portfolio assessment.

28. Post-evaluation experience demonstrates that the most important factor responsible for the success of ADB-financed projects in Thailand is the institutional capability (in terms of well-designed organizational structure, staff strength and efficient operational systems and procedures) and extensive experience of the executing agencies. This is certainly the case in the electric power, water supply, development finance institutions, roads and irrigation subsectors, where the ADB dealt with the same executing agencies over a long period through successive loans. The executing agencies (Electricity Generating Authority of Thailand, Metropolitan Electricity Authority, Industrial Finance Corporation of Thailand, Department of Highways, and Royal Irrigation Department) have been strengthened and gained experience through association with the implementation of a series of projects financed by multilateral and bilateral aid agencies, enabling them to improve project design, project supervision and operation of project facilities. Hence, greater attention needs to be paid to analyze institutional aspects at the time of project preparation and appraisal and technical assistance for strengthening the capability of the executing agencies should be incorporated in this project design.

29. The experience of post-evaluated projects in Thailand also indicates that project success is greatly influenced by the policy environment in which a project operates. It is, therefore, important that relevant sectoral and macroeconomic policies need to be carefully reviewed at appraisal and policy dialogue should be conducted with the Government to ensure that a conducive policy environment is created for sustaining project performance.

30. Despite their generally successful performance, many post-evaluated projects in Thailand experienced implementation delays due to land acquisition and right-of-way problems, procurement difficulties and lack of efficient coordination among agencies concerned. In addition, certain projects for aquaculture, water supply and energy development were found to have some adverse environmental impacts. Processing of future projects in Thailand should reflect these problems and measures to address them should be taken into account during project preparation and implementation. The two important lessons based on the experience of two post-evaluated projects in the education sector include: (i) the need for interaction between vocation schools and employers to ensure that curricula are relevant to job requirements, and (ii) the need for technical guidance and training and more effective ADB supervision in implementing benefit monitoring and evaluation system if its value as a management tool for monitoring internal and external efficiency aspects is to adequately recognized. The most important post-evaluated lesson from rural development projects is that project design and implementation schedules for complex rural development projects should be realistically determined taking into account the past experience and institutional capability of the executing agencies as well as the remoteness of the areas. Two of the major lessons from post-evaluated road projects are (i) their economic impact would be enhanced if they are implemented in the context of wider regional or agricultural development schemes, and (ii) projects based on sector lending approach could achieve a greater impact on policy and institutional reforms if they are designed to address a limited number of key issues in depth rather than deal with all issues in a broad manner.

2. Issues in Project Implementation

31. The ADB is a lead agency in several key sectors in Thailand including the agriculture/rural development, social and financial sectors. As such, the ADB has assumed a high level of responsibility in shaping policy development and planning in these sectors. Recognizing the fact that the ADB's operations in Thailand are becoming increasingly complex, with increased attention given to high-level policy dialogue in relation to major structural changes on both the macroeconomic and sectoral fronts, ADB approved the establishment of a resident mission (ThRM) in Thailand in March 2000, to be operational by November 2000. The ThRM will raise the overall effectiveness of ADB operations and development impact in the country by facilitating improved policy dialogue with the Government on development issues, providing in-country project administration support for the ongoing loan and TA portfolio, supporting institutional strengthening and capacity building in concerned Executing Agencies, facilitating subregional economic cooperation activities, and assisting in closer coordination and mobilization of cofinancing among funding agencies.

32. With a progressive shift of the portfolio towards new sectors, portfolio implementation will need to be more closely monitored by ADB and the Government. While implementation is on the whole quite successful, delays have been encountered in disbursements under selected projects and in the accomplishment of policy reforms under program loans. It is necessary therefore to strengthen the loan and TA monitoring framework. Towards this end, the Government established the Public Debt Management Office (PDMO), Ministry of Finance, on 20 September 1999, for efficient portfolio implementation and sound public debt management. Its mandate is to be the single office in the Thai Government with full responsibility for monitoring and managing Thailand’s public debt. It will also monitor and analyze the fiscal risks associated with the Government’s contingent liabilities (e.g., sovereign guarantees on state enterprise borrowings). The PDMO, in close collaboration with the Bank of Thailand, will assist policy makers in developing a comprehensive, medium-term financial and debt management strategy. It will also assist in the creation of short-, medium- and long-term borrowing plans that are consistent with National Economic and Social Development Board's (NESDB) Development Plan and the Government’s fiscal and monetary stance. To achieve these objectives, the PDMO will undertake several functions including: debt service forecasting; active debt management; cash management; risk management (to hedge against currency, interest rate, funding and refinancing, credit and operational risk, among others); monitoring project finance related transactions; and tracking and preparing to deal with contingent liabilities of Government. The PDMO is in the process of developing an appropriate information system and skills base to support integrated public debt management. This will require establishing a number of debt, cash, risk management and other systems, each linked together—both mechanically and through appropriate operational procedures and guidelines within government. These new systems will be supplemented by continuous training and guidance from local and international experts at strategic intervals during this exercise.

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