Economy: His Majestys Philosophy for Development
H.E. General Prem Tinsulanonda
President of The Privy Council and Statesman
At the Leadership Forum 2001
Imperial Queens Park Hotel, Bangkok
March 15, 2001
Ladies and Gentlemen,
now finds herself at another defining moment of her economic
destiny. Swept over by tidal waves of the financial crisis nearly
four years ago, we, luckily, are up, back on our feet
though still gasping for breath. As we pick up the pieces, some
soul-searching may be in order, and along with it, a search
for a new way.
is, therefore, a great honor for me to be here among such a
distinguished audience at the Leadership Forum 2001. It is even
a greater honor for me to speak on the Sufficiency Economy
as an enlightened way forward, as a feasible approach to achieving
the common objective of a stable, equitable, and durable development
for all the people and communities in our land. As you are aware,
Sufficiency Economy is a philosophy, graciously bestowed on
us by our beloved Monarch, His Majesty the King.
three decades before the crisis, Thailand was one of the few
economies growing at the fastest rates in the world. Income
per head stood at almost 3,000 dollars in 1996, a big leap from
less than 700 dollars in 1980. But the severity of the crisis
went far beyond the bounds of our imagination and experience.
Our people, our communities have suffered greatly especially
those lacking the resources and social protection to fall back
on the unemployed, the poor, small businesses, and marginal
have yet to recover fully from the painful loss and dislocations.
We have yet to regain fully our sense of dignity, selfrespect,
and confidence which have severely diminished in the drawnout
process of adjustment.
the crisis, globalization has often been seized upon by some
as the ready scapegoat for the havoc in its wake. In this new
era, borders have indeed become less significant. Trade, investment
and capital are able to move virtually freely worldwide, creating
a new international environment directed and driven by the more
or less unfettered market forces. This has rapidly led to an
increasingly integrated global economy, conferring benefits
on countries that have proven adept at taking advantage of opportunities,
but globalization, at the same time, carries with it great risks
ready to exact heavy punishment from countries which are caught
unprepared or treat it lightly.
having benefited greatly during the previous three decades of
rapid growth, let down its guard and left itself badly exposed
to those risks. Market forces, whose purpose is the maximization
of profits, could not care less who was to suffer or become
bankrupt. Countries, large and small, can be highly vulnerable
to external shocks, be it volatility in capital flows, contagion
risk, export competitiveness, and exchange rate risk.
severe over-reliance of our private sector on short-term, foreign
currency denominated loans became our undoing. At the end of
1996, it reached the unprecedented height of 70 billion US dollars.
The countrys economic success and the enabling environment
following the countrys liberalization policy and the dismantling
of capital controls attracted the massive capital flows. Such
flows were a double-edged sword. While it fueled the burgeoning
economic growth, it also engendered latent hazards in the mounting
current account deficits. The exit of capital flows proved faster
than its entry, following the herd behavior in the
loss of investor confidence, which led to the severe liquidity
and currency crises.
in my mind, can be a force for good and is above all a stark
reality that cannot be wished away, nor can it be stopped. The
task of integrating ourselves into the new global environment
makes it imperative for us to find a way to make the most of
the opportunities while shielding ourselves from the negative
aspects of globalization.
the seeds of failure had already been sown well before the fateful
month of July 1997. Economic growth, higher incomes, and material
accumulation were being pursued increasingly as ends in themselves.
The volumes, variety and speed of economic and financial activities
and services expanded at a breakneck pace. Impressive sky-high
buildings transformed the landscapes of many cities and towns
in Thailand. Sky-high corporate profits and salaries, and conspicuous
consumption were being confused with economic development itself,
as were prestige projects and prestigious material trappings.
was living far beyond its means, with economic development being
defined and understood too narrowly, which resulted in extremes
and excesses. As I said, these were, for the greater part, financed
by the huge flows of short-term foreign borrowings. Opportunities
were squandered when borrowed capital was channeled into non-productive
sectors. The needed sense of self-reliance and prudence as collective
social values seemed to have been gradually cast aside.
have long held the view that poverty is the root of all problems
facing our nation, and most of my life in public service has
been dedicated to the task of alleviating poverty, in the firm
belief that it would help solving each and every one of those
problems. But this crisis made the yawning gap between the haves
and have-nots widen even further, against a background of searing
costs and disappearing social warmth. Unrelenting quest for
material wealth seemed to have undermined compassion and caring,
which in turn weakened the social fabric, community bond, and
the brighter side, I fully agree with those who say that we
have managed, with many personal sacrifices and despite the
social cost, to achieve a turn-around from the 1997 crisis.
But, clearly, we should draw some lessons from our unhappy experience.
We simply cannot go on with our old ways and old habits as if
nothing had happened.
Over the years, His Majesty the King has graciously reminded
us constantly not to lose our bearings, not to be lured by the
glitter of empty labels : being hailed as a tiger economy
or a newly-industrialized country, as it turned
out, had little meaning or substance. As the whole nation was
laboring under hardships brought on by the crisis, his subjects
derived consolation and encouragement from His Majestys
observations on how to conduct oneself in the face of such adversity.
Our Monarch gave us a number of principles contained in His
philosophy on Sufficiency Economy
do not pretend to have a full grasp of the principles involved
in all their profundity and intended intricacies, but I do know
that it is surely in our best interest to make the effort, however
modest, to understand and draw inspiration from the wisdom of
Economy has as its thrust the middle path as the overriding
principle for appropriate conduct by the populace at all levels.
The middle path, when practiced at the level of the individuals,
families and communities, as well as collectively in the choice
of a balanced national development strategy, will provide a
firm foundation for all in standing up to the trials and challenges
of todays world. It means moderation in all human endeavors,
reining in expectations to within the bounds of self-support
and self-reliance, having enough to live on. It lessens human
proneness to the extremes and excesses, both in our insatiable
appetite for wealth and wasteful consumption, which marked the
period leading up to the crisis.
Economy does not advocate isolationism but presupposes the inevitable
process of increasing global interdependence. What it does envisage
and promote is the way towards a smoother, and more successful,
integration of the Thai economy into the sweeping and stormy
process of globalization. Moderation could be the means by which
the sail of interdependence can be trimmed and adjusted so as
to prevent the boat from being capsized by over-dependence.
We all have seen how over-dependence made us extremely vulnerable
to the whims of international capital, which, on its part was
not immune to the influence of herd behavior.
is and integral component of Sufficiency Economy. Our successive
Chakri Kings have over the centuries placed great importance
on learning from the outside world in ensuring the survival
and the modernization of our country. Today the acquisition
of knowledge, not just in the sciences and the technologies
but also of other nations experiences in development and
reforms, continues to play a central role in capacity building
and in charting the course of our own national development.
Here, his Majesty urges prudence in the application of knowledge,
in particular, great care is needed in the utilization
of untested theories and methodologies for planning and implementation.
The question, which I have often asked myself in this connection,
albeit with the benefit of hindsight, is whether we have been
a little too unquestioning and a little too fast in embracing
forces of the market from outside? Could we have been more discriminate
and selective in our approach?
Economy seeks to strengthen the symbiosis and harmony between
man and his natural environment. The crisis has brought into
sharp focus His Majestys lifelong work in agriculture
and conservation, built up over the years with a great number
of the Royally initiated projects. Agriculture, the mainstay
of the majority of the Thai population who are still toiling
in poverty, can serve as a buffer against external shocks, testifying
to the value of getting back to basics. For too
long, the growth-oriented strategy has led to the rapid depletion
of environmental assets priced cheaply at below their replacement
cost. Conservation is but an integral part of sustainable development.
His Majesty has truly been teaching us by example, be they His
projects to restore watershed areas through reforestation, or
to reverse desertification or to harness the sometimes-destructive
forces of nature such as flooding, benefiting at the same time
from power generation and irrigation.
above all else as a constant in any overall equation is the
need to strengthen the moral fiber of the nation, so that
everyone, particularly public officials, theorists and businessmen,
adheres first and foremost to the principles of honesty and
integrity. It is true that at times people were badly
demoralized on being turned into paupers overnight. Each, out
of necessity, went his own way, caring little, if at all, for
his fellow men. Moral fiber gradually reinforced, contributed
to the collective national resilience, and seemed to be the
single most important factor that kept us afloat and pulled
us through the crisis.
Ladies and Gentlemen,
Majestys Sufficiency Economy was timely in
pointing the way forward. It gave heart to His people when they
were in dire need, and was so well received that it now provides
the foundation for the formulation, now in progress, of the
Ninth National Economic and Social Development Plan (2002-2006).
the national context, the international community at the Tenth
United Nations Conference on Trade and Development (UNCTAD)
has acclaimed Sufficiency Economy in February 2000,
which expressly recognized His Majesty as the Developer
King. There is perhaps no better way to conclude my presentation
than to repeat the tribute paid to His Majesty in the Statement
of the Conference, and I quote This remarkable resilience
reflects the strength of the Thai nation. And that strength
has been nurtured and developed by His Majesty King Bhumibol
Adulyadej, the King of Thailand, who is the soul of his nation.
Through his caring leadership, His Majesty has earned the abiding
love and profound respect of his people, and through his thinking
he has laid the foundation for and inspired his countrys
development strategy. His Majestys philosophy of a sufficiency
economy now lies at the heart of Thailands development
The experience of Thailand offers fundamental
lessons to all of us and the Thai nation is living testimony
to the efficacy of the Kings actions and boundless compassion.