Regulatory
Reform and Competitiveness in Thailand
By:
Sakda Thanitcul
--
Public Warehouse Organization
--The Tourism Authority of Thailand
--The Botanical Garden Organization
--Office of the Rubber Replanting Aid fund
--The Marketing Organization for Farmers
--The 200 logical Park Organization
--Thailand Institute of Scientific & Technological Research
(2) Privatization
and deregulation Compared
The
failure of public ownership as a mode of regulation explains the current
popularity of an alternative mode, whereby public utilities and other
industries deemed to affect the public interest remain in private hands
but are subject to rules developed and enforced by specialized agencies
or commissions(20). Such bodies are usually established
by statute as independent authorities, in the sense that they are allowed
to operate outside the line of hierarchical control or oversight by the
departments of central government. This mode of regulation represents
a new frontier of public policy any public management in Europe(21).
By
contrast, however, in America, the tradition of regulation by means of
independent bodies combining legislative, judicial and executive functions
(rule-making, adjudication and enforment in the terminology of American
administrative law) goes back to the Interstate Commerce Act of 1887 at
the federal level, and even earlier in states such as New York, Massachusetts
and Wisconsin.(22) The rejection by American political
leaders of nationalization as a politically and economically viable option
reflected the generally held belief that the market functions perfectly
well under normal circumstances, and that interference should be limited
to clear cases of market failure(23).The expert commission
represents the Institutional embodiment of this belief.
In the 1970s, the legal, political and economic criticisms of American-style
regulation found expression under the label "regulatory failure",
just as the market fails in certain circumstances to serve the public
interest.
It is useful to compare
two types of regulatory failure(24).
European-style
nationalization
(State enterprises) |
American-style
regulation
(independent regulators) |
capture
of public managers by politicians
and trade unions |
capture
of regulators by regulated firms |
over
manning |
overcapitalization
(the so-called Averch-
Johnson effect) |
public
monopolies |
anti-competitive
regulation |
Ambiguous
and inconsistent goals given to public managers |
vague
objectives ('regulate in the public interest') |
poor
coordination among different public Enterprises |
poor
co-ordination among different public Regulators |
no effective
control over public Enterprises by parliament, the courts or the
Sponsoring minister |
insufficient
political accountability of independent regulatory agencies |
However,
the very successful stories of deregulation in the United States, the
deregulation of telecommunications and the deregulation of the airline
industry in the early
1980s, were followed two with great interest in Europe. One Eyropean comentator
made the following conclusions derived from the comparison between the
deregulation of telecommunications in the United States and the privatization
of the same industry in Britain, the pioneer of privatization in Europe.
"First,
the great paradox of nationalization is that public ownership has weakened,
instead of strengthening, the regulatory capacity of the state. By confusing
the roles of manager and regulator, and effectively subordinating the
latter to the former, public ownership has impeded the development of
specialized regulatory institutions. Moreover, the persistence of old
habits of thought and patterns of behavior-especially the habit of ministerial
interference and secrecy-inherited from the age of nationalization, has
had a negative effect on the design of new institutions. On the other
hand, a mode of regulation emphasizing independence and expertise not
only produces more incisive regulatory policies but, as our examples show,
can also push through deregulation when economic and technological changes
make public oversigh no longer necessary. Despite its conflictual beginnings
and the criticism to which it has been subjected for more than a century,
the American model of statutory regulation by independent agencies has
proved to be remarkably resistant, and in fact has been widely imitated
internationally(25)".
(3) The American
Model : The McKinsey Report and The Emerging Deregulation
The
author argues that the Thai Master Plan on State Enterprises Reform has
been modeled after the European regulatory reform. The European regulatory
reform starling in the 1980s, was influenced by the success stories of
the American deregulation, especially the telecommunications and airline
industries. Besides the state enterprise reform, deregulation American-style
is emerging in Thailand. The McKinsey report on Thai productivity shows
the clear trend of this emerging pillar.
The
2001 McKinsey report argues on three key points:(26)
--To increase international competitiveness and return to a path of Sustainable
economic growth, Thailand needs to strengthen productivity throughout
its economy Only broad-based gains in productivity can allow Thailand
to remain competitive in the face of globalization.
--McKinsey's research has shown that sectoral regulatory reform can dramatically
increase Thailandes productivity. The good news is that addressing regulatory
barriers is less costly and can even have nearer-term impact than some
alternative remedies such as fiscal stimulus spending or investments in
education and infrastructure.
--To carry out the far-reaching regulatory changes needed, Thailand should
develop the institutional capability to guide and direct reform. The current
administration's strong public mandate creates a unique window of opportunity
for taking the necessary actions to boost productivity, but a dedicated
agency is needed to ensure that reforms are executed and sustained.
The
report identified sector-specific regulations bound to be major productivity
barrier in Thailand as below (ranking from the sector of highest level
of regulation to the lowest one)(27)
1.Telecommunications
--Unclear policy objectives leading to regulatory inconsistencies
--regulated entry
--current concession structures leading to distortions in industry behavior
--government ownership
2. Retail Banking
-- "soft regulation" and bureaucracy of regulator
--historical constraints on foreign competition
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(20)
Majone, supra note 8 at 15
(21)
Id.
(22)
Id.
(23)
Id.
(24)
Id.at 18.
(25)
Id., at 23.
(26)
The Mckinsey Report, supra note 6, at 5.
(27)
Id., at 21. |