UNIVERSITY OF VAASA 

 

FACULTY OF PHILOSOPHY 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patchadaporn Poothong 

 

PUBLIC REFORM: 

THAKSIN SHINAWATRA’S APPARATUS FOR POWER CONSOLIDATION 

Thailand‟s Experience 

 

 

 

 

      

 

 

 

 

 

 

 

 

 

      Master‟s Thesis in 

      Public Administration 

 

 

 

 

 

 

 

 

VAASA 2010 



1 

 

 

TABLE OF CONTENTS         

     page 

 

ABSTRACT                 3 

 

1. INTRODUCTION               5 

1.1. Background                5 

1.2. Christopher Pollitt and Geert Bouckaert‟s Model            7 

of Public Management Reform 

1.3. Important Literature              10 

1.4. Thesis‟s Organization             10 

 

2. SOCIO–ECONOMIC FORCES            12 

2.1. Global Economic Forces            13 

2.2. Sociodemographic Change            18 

2.3. Socioeconomic Policies            23 

2.4. Elite Decision–making            29

           

3. POLITICAL SYSTEM              33 

3.1. New Management Ideas            34 

3.2. Pressure from Citizens and Chance Event          46 

3.3. Party Political Ideas              53 

3.4. Elite Decision Making             59 

 

4. ADMINISTRATIVE SYSTEM            61 

4.1. Content of Reform Package            65 

4.2. Implementation Process and Results Achieved          72 

4.3. Elite Decision Making             86 

 

5. CONCLUSION              88 

 

REFERENCES                   94 



2 

 

 

LIST OF TABLES AND FIGURES 

 

Figure1. Christopher Pollitt and Geert Bouckaert‟s model of public          8 

management reform   

Figure 2.Gross Domestic Product Thailand 1990–2000         19 

Figure 3. Allocation of GDP by Sector, Thailand, year 2000        20 

Figure 4. Mobile Phone Subscribers in Thailand, 1997–2004        30 

Figure 5. Thailand‟s GDP from 1996–1999           48 

Figure 6. Thai Rak Thai Party Logo            55 

Figure 7. Royal Decree on Criteria and Procedures for Good Governance        68 

Figure 8. Thailand‟s GDP (2005 PPP Dollars)          89 

 

Table 1.Thailand Demography Profile           18 

Table 2.Percentage of population in different regions from 1970 to 2000       19 

Table 3. Example on the reduced operating time per service given by        74 

Srimuangchum Sub–district Administrative Organization 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



3 

 

 

 

UNIVERSITY OF VAASA 

Faculty of Philosophy 

Author:   Patchadaporn Poothong 

Master’s Thesis: Public Reform: Thaksin Shinawatra‟s Apparatus for 

Power Consolidation 

Degree:   Master of Administrative Science 

Major Subject:  Public Administration 

Year of Graduation:  2010    Number of pages: 100 

 

 

ABSTRACT: 
The purpose of this study is to provide the reader with a detailed analysis of the drives and forces which 

influenced the administrative reforms implemented during Thaksin Shinawatra‟s premiership.  

 

Crippled from the 1997 Asian financial crisis, Thailand felt the necessity to find the right leader who 

could help Thailand rebuild its economy. Thaksin Shinawatra was chosen. To a lot of people, the man‟s 

pioneering socio–economic policies as well as many administrative reform programs were tremendously 

successful and beneficial; therefore Thaksin became very popular, particularly among the poor. Not only 

that his executive power was legally enhanced by the 1997 constitution, but the ideas of New Public 

Management and the concept of good governance were also intensively incorporated to various 

administrative reforms to further strengthen the power of the prime minister. The fact that Thaksin 
became much more powerful was threatening to some because the privileges that once were traditionally 

shared by the senior bureaucrats and high–ranking military officials were shifted largely to the hands of 

the prime minister which he abused for private gain.  

 

To study such drives and forces, the thesis applies Christopher Pollitt and Geert Bouckaert‟s model of 

public management reform to the study. By using the model, the thesis presents why and how various 

features of the New Public Management ideas and the concepts of Good Governance were adopted as 

well as it presents the reform process and results. The model is used to offer an explanation of the 

author‟s argument that New Public Management and the concept of Good Governance were used not only 

to enhance administrative efficiency, but also to redistribute bureaucratic power to the political executive.  

 

 

 

 

 

 

 

 

 

 

 

 

KEYWORDS:  Thaksin Shinawatra, Thailand, New Public Management, public 

management reform, corruption 



4 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



5 

 

 

1. INTRODUCTION 

 

 

1.1. Background 

 

In this past decade there has been increased awareness among Thai people about the 

seriousness of the corruption problem in the government, the public sector and by 

leading public officials. The high–level enthusiasm among Thai population, according 

to W. Vajirameatii (2005), a well–known advocator monk, can be linked to His Majesty 

the King‟s speech given at one of the meetings with the provincial governors serving 

during Thaksin Shinawatra, a former prime minister‟s term. What aroused the people 

was how the King imprecated any governors involved with corruption to death. The 

never–before seriousness in the King‟s speech on this issue stirred up public awareness 

enormously because the King‟s acts and words are highly respected by the majority of 

Thai people. 

 

Such enthusiasm has eventually reflected in the recent political turmoil and series of 

social unrest since 2006. Hundreds of thousands of protesters led by those whose lives 

were financially ruined during Thaksin‟s administration marched on the streets of 

Bangkok, demanding Thaksin Shinawatra, the prime minister of the time to step down, 

prompting the royalist military segment to oust him in a bloodless coup in September of 

that same year. Such resentment of many people stemmed from the increased criticism 

of the corruption of Thaksin‟s administration and Thaksin himself. Thaksin was found 

guilty and actually sentenced to two years imprisonment on the charge of conflict of 

interest while he served as the prime minister and he is now on the run (Suchitra 2008).  

 

What did Thaksin Shinawatra do wrong? He did revive Thailand‟s crippled economy 

and was the first who pioneered several beneficial schemes such as the 30–bath–a–visit 

universal health care and One Village, One Product. He also aggressively brought 

changes to Thailand, to mend the chronic problems of drugs and corruption. A lot of 

measures were implemented and they were considered successful. But, the main flaws 

that were pointed out many times by his opposition that seemed to infuriate the public 



6 

 

 

were that under many schemes, there were many hidden agendas. He seemed to market 

himself and his agendas so well; however, he lacked real commitment and real ethical 

aims that were supposed to uplift the common welfare of the people. He presented 

himself as a person who came from a humble background of a country boy, who 

successfully and honestly became a multibillionaire by his own wisdom, bravery and 

hard work and who wanted to serve the fellow Thai people with his life.  

 

Thaksin‟s popularity came from the fact that he marketed himself to be “a leader of the 

globalized world” who would lead Thailand to progress. In doing so, he included the 

trendy New Public Management and the concept of Good Governance in his public 

reform package. He aimed to completely change everything.  

 

In May 2005, Thaksin gave a speech at the opening ceremony of the 6th Global Forum 

on Reinventing Government in Seoul, Republic of Korea. His theme was “Toward 

Participatory and Transparent Governance”, which he maintained that was the top 

agenda of his government. At the conference he declared that the government was 

launching structural reforms, focusing on downsizing the central agencies and 

delegating more power to the local authorities so that people at grassroots level would 

be directly heard and served. Moreover, his government encouraged public agencies to 

use performance–based and teamwork approaches which meant reduction of red–tape 

and bureaucracy. Information and communication technology would be fully utilized to 

equip the public servants to provide more timely, transparent, and effective service. He 

also mentioned that the government needed to be “reinvented” in order to cope with 

globalization before the country is forced to change. Public services need to be flexible 

and cost–effective so that they can stay in competitive global market. In doing so, he 

further stated that in order to be successful government should “break out of the old 

habits of thinking”. (United Nations 2005.) 

 

Although it might take time as “old habits die hard”, he was confident in his reform 

policy. The need for the “reinvention” of government were not merely for replacing 

century–old bureaucratic–style administration with a more modern, more effective and 

more transparent way of governing. But more so it came from Thaksin‟s understanding 



7 

 

 

of the “unusually powerful positions” of some senior bureaucrats who were upset by 

Thaksin‟s tremendous popularity. This means for Thaksin that the traditional power 

must be overthrown especially through the remaking of the whole political and 

administrative system.  

 

According to Phongpaichit and Baker (2004: 184–185), during the military dictatorship 

period of 1930s–1980s Thailand, the senior bureaucrats had built up their power base 

without having to share the privileges with the elected politicians. But since the period 

of early 1990s when the elected politicians became more dominant, the bureaucrats still 

secured their power and many of them sought to compromise with the elected ministers 

by allowing some profit and power to be shared and by allying themselves to political 

factions. Though something had to be shared, the bureaucratic structure and culture 

were left unchanged, allowing the senior bureaucrats to be largely influential politically. 

 

For Thaksin, power had to be shifted from within the hands of senior bureaucrats and 

the high–ranking military officials to the grips of the new elected ministers, especially 

the prime minister, as much as possible. He essentially aimed at making the bureaucracy 

more responsive to the political demands which were in fact intended to answer his own 

political ends. To do so, Thaksin had put so much of his enthusiasm in administrative 

reform. Since the first year of his first term, he began to politicize the entire 

bureaucratic pyramid including remapping of the bureaucratic structure, intervening in 

bureaucratic decisions and appointments, as well as launching a “war on corruption” 

program that mainly targeted officials not the politicians. At the same time, he launched 

several administrative reform programs that intended to keep up the support from the 

electorate in order to protect himself from counter attacks by traditional powers.  

 

 

1.2. Christopher Pollitt and Geert Bouckaert‟s Model of Public Management Reform 

 

The purpose of this study is to provide the reader with a detailed analysis of the drives 

and forces which influenced the administrative reforms implemented during Thaksin 

Shinawatra‟s premiership. To study such drives and forces, the thesis applies 



8 

 

 

Christopher Pollitt and Geert Bouckaert‟s model of public management reform to the 

study. By using the model shown in figure 1, the thesis presents why and how various 

features of the New Public Management ideas and the concepts of Good Governance 

were adopted as well as it will present the reform process and results. The model is used 

to offer an explanation of the author‟s argument that New Public Management and the 

concept of Good Governance were used not only to enhance administrative efficiency, 

but also to redistribute bureaucratic power to the political executive. 

 

 

  

 

 

Figure1. Christopher Pollitt and Geert Bouckaert‟s model of public management 

reform. (Pollitt & Bouckaert 2004: 25) 

 

 

 

 

 

 
 

   

       A. SOCIO–ECONOMIC FORCES 

B. Global 

economic forces 

C. 
Sociodemographic 

change 

D. Socio–economic policies 

 

 

 

 

 

 

 
E. POLITICAL SYSTEM 

F. New management 
ideas 

G. Pressure from 
the citizens 

H. Party political 

ideas 

I. Chance Events 
e.g. scandals, 

disasters 

 

 

J. ELITE DECISION–MAKING 

 
  

K. ADMINISTRATIVE SYSTEM 

L. Content of reform package 

M. Implementation process 

N. Results achieved 



9 

 

 

This model of public management reform was constructed by Pollitt and Bouckaert as 

“a conceptual map, a diagram of forces, and a heuristic device”, when specific theories 

that explain the precise patterns and trends of individual countries or across groups of 

countries, could be developed (Pollitt & Bouckaert 2004: 25). The author chose this 

model to be the main framework for analyzing Thaksin‟s administrative reform since 

the model is suitable to be used with the case study. This is because, like the creators of 

this model, the author highlights the importance of the political executives and the 

senior bureaucrats. Like Pollitt and Bouckaert, the author believes that most changes 

and reforms have mainly been initiated top–down. It is usually the political or 

bureaucratic elites, who play the most influential roles in the government, hold the key 

decisions making for many public management reforms. In box J of the model, situated 

at the heart of the model, what the elites think desirable and feasible are the most vital 

part in the mapping because they usually came from the elites‟ own interpretation of the 

trends and present situation, happening in the country combined with their own political 

and perhaps personal agendas and interests. However, what the reformers desire is not 

always feasible because there are always limitations or forces that resist change. The 

limitations came in various faces; economic, cultural, legal and especially in the face of 

conservatives who hang on and benefitted from the existing system. All of these cannot 

be easily overcome and should not be overlooked. (Pollitt et al. 2004: 26.) 

 

Applying this model of public management reform to the case study, the author places 

Thaksin Shinawatra as the central character. Sitting on the prime minister‟s of 

Thailand‟s seat after the promulgation of the 1997 constitution, he was equipped with 

an executive power which was much more than any previous democratically elected 

prime ministers of Thailand. Apart from being legally more powerful, because of his 

particular background of being a successful business chief executive, Thaksin also 

thought of himself as the chief executive of the government who has assertive power to 

bring out changes in public administration to meet his aspirations. Therefore, most 

aspects of the reforms created during his terms came in a large part from his own 

perception and understanding of the overall situation in Thailand. He understood and 

manipulated what the majority of Thai people needed for the time, and then he 

translated it into various attractive reform programs; all of them contained elements of 



10 

 

 

the trendy NPM and Good Governance. At the same time, he used many parts of the 

reform in an attempt to uproot the traditional power that obstructed his way. 

Compromise with the traditional power was no more beneficial.  

 

Apart from utilizing the Pollitt and Bouckaert‟s model to guide the process of collecting 

data to support the author‟s argument and to be a framework of analysis, the data and 

knowledge used for the analysis in this thesis were obtained from variety of sources 

such as academic articles, books, journals and data from official websites of various 

institutions and organizations. Many of the sources can be found online.  

 

 

1.3. Important Literature  

 

Among many sources, the author gives special attention and importance to two books 

written by Professor Pasuk Phongpaichit, a prominent outspoken economist scholar 

teaching mainly at Chulalongkorn University in Bangkok and an anti–corruption 

campaigner of Asia, with collaboration with Chris Baker, an independent author, 

translator and expert researcher specialized in Asian studies. The first book, Thaksin: 

The Business of Politics in Thailand (2004) is the first and one of the most complete 

biographies of Thaksin Shinawatra that is written in English. It provides a rich detail 

and some investigation of Thaksin‟s personal life and his business and political careers. 

The second book written by Phongpaichit and Baker which is used comprehensively is 

A History of Thailand (2005). It features wide range aspects of Thailand including 

political, economic, social, and cultural themes and how these themes are related and 

interplayed throughout the history from most ancient to contemporary Thailand.  

 

 

1.4. Thesis‟s Organization 

 

The organization of this thesis is divided into three main chapters; socio–economic 

forces (box A), political system (box E), and administrative system (box K), following 

the three main parts of the Pollitt and Bouckaert‟s model of public management reform. 



11 

 

 

Each chapter includes “elite decision–making” (box J) to support the thesis‟s analysis 

on how Thaksin Shinawatra made use of various New Public Management reform 

programs to consolidate political power and to assert political control at the center to 

answer his agenda. The analysis is summarized in the concluding chapter.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



12 

 

 

2. SOCIO–ECONOMIC FORCES  

 

The forces at play contributed to some changes, and some policy inventions during the 

period of Thaksin Shinawatra administration were both associated with the global 

economic forces and some existing sociodemographic pattern in Thailand. In terms of 

global economic forces, Thailand has submerged into the global economy in a lengthy 

period of time. Globalization and capital market were therefore not new for Thailand 

and actually it was warmly welcomed since it has brought a large amount of revenues to 

the country. Several governments set their economic policies to boost the national 

economy through fostering diplomatic relationship with the foreign countries, and at the 

same time, the utilization of international trade was rigorously active, contributing the 

gradual changes in the life patterns; social wise as well as economic wise, of the 

majority Thai. The higher degree of exposure to the foreign goods that sometimes come 

in the same package with the foreign culture slowly moved Thailand to somewhat closer 

to the world of the “developed” world. Chosen to be one of the main manufacturing 

bases in Southeast Asia, money and new opportunities flooded into the country and into 

the pockets of a lot of people. Capitalism flourished. The busy downtown areas 

expanded while natural resources were looked upon as a mere national capital that could 

be traded for the greater development. The quality of life for many people was raised. 

Basic education could be accessed by most parts of the population. The economy was in 

the phase of transition from being based on farming to manufacturing and services. 

Thailand was becoming richer and richer and perhaps in the near future, it would jump 

up from being a “developing” country to a “developed” country.  

 

Too bad this has never happened in reality. Things that seem to be going well all went 

downhill in the event called 1997 Asian financial crisis. It was a total disaster for a lot 

of people. The economy was devastated. Such crisis brought a completely new 

perception about globalization to some people, basically from desirable to disgusting. It 

seemed like a lot of people were hoping for a knight on the white horse to rescue them, 

someone brave to bring change and help Thailand to stand up tall again. Then here he 

came, Thaksin Shinawatra. A business man who survived from the crisis captured the 

moment and promised to help Thailand to not only once more stand up tall, but also he 



13 

 

 

will strengthen the country and make it go beyond everyone‟s expectation. He did 

transform his promises in various welfare policies which a lot of them were applauded 

especially at the grassroots level. Efforts for boosting the economy also were 

emphasized through several means. Society was cleansed with some “social order” 

schemes. By all means, these policies certainly made Thaksin popular and it was 

absolutely what he desired.  

 

 

2.1. Global Economic Forces 

 

Thailand has long been in contact with the outside world as early as the beginning of its 

history. However, since the cold war period during the premiership of Field Marshal 

Plaek Pibulsongkram and especially of Field Marshal Sarit Thanarat; the time in which 

the United States started to increasingly take interest in Thailand as its important anti–

communist ally in Southeast Asia region, Thailand has begun to gradually but 

continuously become subject to global economic forces like no other previous periods 

in its history.  

 

Through rather openly supporting the U.S. led democratic bloc, Thailand significantly 

gained a large sum of return back from this friendship, for example, in a form of 

monetary aid and arms supplies directly from the U.S. and a loan from the World Bank 

(Baker & Phongpaichit 2005: 144). But apart from that, the other byproduct from this 

relationship is that it has brought Thailand to involve in global market more than ever 

before.  

 

The first industry that prominently emerged since the period was tourism. As Thailand 

was chosen as a strategic base of the U.S. troops in the region, the number of Americans 

significantly increased. Some areas of Bangkok and around the other US air bases 

became the place for “rest and recreation” tours of the Americans. Bars, nightclubs, 

brothels and massage parlors were mushrooming to provide services especially to the 

foreigners. The government enthusiastically supported such industry through many 

means, for instance, forming its first organized tourist authority in 1959 and building a 



14 

 

 

new runway to accommodate jets at Don Muang (Bangkok) airport in the early 1960s. 

As a result the industry boomed even more, with more than 600,000 visitors in 1970 

(45,000 visitors in 1967). Service sector grew rapidly. A number of hotels, shops, 

cinemas, school, and clubs were built all over the major tourist sites of the countries. 

Most of them were not only for serving the foreigners but also for the Thai elites. And 

this also quickened urbanization process, taking place in Bangkok and the other major 

cities to a lesser extent. By that time tourism became the fifth largest earner of foreign 

exchange. (Baker et al. 2005: 149.)  

 

Apart from the booming of tourism industry that generated income, the government of 

the time initiated policy that encouraged cash–crop export. To uphold this policy, 

exploitation of natural resources, deforestation, building highways and dams in the 

upland country, and the use of agricultural technology, chemical fertilizer and pesticide 

were rapidly and intensively implemented. A business class of entrepreneurial families 

started to emerge from this point. Not only those who exported the crops, but also the 

local crop traders who commonly lend out the money to the peasants and the officials 

like the head of villages. Many of them used their financial advantage and authority to 

further profit from illegal businesses while most of the peasants remained poor and kept 

losing their land ownership to the rich and so they had to rent the farm to grow crops. 

The poor peasant became more and more marginalized. Moreover, since agriculture still 

depends much on the weather conditions, increasing population growth which caused 

pressure on farming land and since the cost arrived from the increasing needs for 

chemical products and agro–technology was much more, millions of them had no 

choice but to migrate to make money in the city especially as wage labor. (Baker et al. 

2005: 151–162.)  

 

Furthermore, to answer the growing demand of urban economy, the government 

attempted to replace import goods by domestic manufactured products. Foreign 

investment surged as Thailand oriented towards the liberal market economy. A number 

of former local importer families and their foreign partners turned themselves to invest 

locally instead. Many of them became immensely rich through diversifying their 

businesses to various sectors. (Baker et al. 2005: 153.) 



15 

 

 

At the early stage, the main investor was the US. However, after the US military 

withdrew its troops from the bases in Thailand, many US firms left the country as well. 

Nevertheless, the American investors were not replaced by the local entrepreneurs but 

rather by the Japanese ones, focusing on manufacturing goods, for domestic market and 

international market. The products have been gradually moving away from agricultural–

related to higher–profit products like electronics and auto–parts. (Baker et al. 2005: 

201–203.)  

 

This industrial boom created demand for higher–skilled labor, therefore the government 

responded by increasing the budget for education. More secondary educational levels 

were added to more schools in the rural areas. Scheme like free lunch, free tuition and 

free uniform were put in place to reduce costs. These certainly boosted national literacy 

rate which successfully supply the skilled labor to the needed industries. (Baker et al. 

2005: 220.)  

 

Since mid 1980s, Thailand‟s total size of the economy (Gross Domestic Product; GDP) 

began to grow very fast. In 1990 the GDP PPP (GDP converted to international dollars 

using Purchasing Power Parity (PPP) rates) was around 224,000 million. But by 1996, it 

reached around 360,000 millions (UNESCAP 2008). The fast growing economy came 

with the increased availability of jobs and opportunities in many sectors. The processes 

of urbanization and industrialization of Bangkok and other industrial areas were even 

more rapid with over 10 million people concentrating in the Bangkok area alone (Baker 

et al. 2005: 201). With higher amount of income earned, the number of urban middle 

class rose. More students attended university level education. Lifestyles of this white 

collar and better educated group gradually changed over time, leaning to a new standard 

modeled after the west. A lot of people rather chose to work for private companies 

especially for foreign owners than for government (vice versa in the past) since the 

difference in salary rate was quite big. More and more people perceived that imported 

goods from America, Europe or Japan to be better than the Thai products. Moreover, 

they also more openly embraced western values such as gender and class equality, 

materialism, and democracy (against military dictatorship).  

 



16 

 

 

Since the late 1980s, the urban middle class consisting largely of the members of press 

and academics gained more influential roles in the public sphere. Against the 

background of rapid urban development, the point that this group tried to project was 

how urban–biased development and capitalism opened opportunities for corrupt 

politicians and their associates to exploit the environment and livelihood of people. One 

example of a reaction from public intellectuals like Prawase Wasi, Saneh Chamarik and 

His Majesty the King to this, has been to follow the self–reliance approach, believing 

that a community would be better off if it becomes self–reliant and independent of 

market capitalism through the intensive use of local wisdom in terms of ethics and 

practices. A shift should be made away from an economic growth orientation to people–

centered development by enhancing community participation at all levels in order to 

reducing economic gaps between city and village. This vision has been supported 

widely and it was to be built into the national policies; however, it could not be simply 

implemented since Thai government has been over–centralized. (Baker et al. 2005: 

250–253.)  

 

By 1995, like many people feared, the impact of the 1990s, double–digit growth period, 

created the apparent problems which became a major financial crisis by 1997. Because 

in the late 1980s and early 1990s,  Thailand economy was made more accessible, for 

example by making the baht convertible, removing interest control, making stock 

market more accessible, and installing offshore banking system, in believing that it 

would attract new international entrepreneurs to invest in the country which would 

contribute to the economic growth. As a result of this financial liberalization, Thailand 

could draw a large sum of private capital especially from foreign direct investment. 

Unfortunately, a lot of capital inflow was invested unproductively on projects relying 

largely on future growth and speculative markets especially for property and services.  

Furthermore, because of overly rapid development, the strain on infrastructure was 

quickly increased and as the real wages rose, the profits from export manufacturing 

were already declining. (Baker et al. 2005: 253–255.) 



17 

 

 

0

50000

100000

150000

200000

250000

300000

350000

400000

1990 1992 1994 1996 1998 2000

M
ill

io
n

s 
o

f 
D

o
lla

rs

year
 

 

 

Figure 2.Gross Domestic Product Thailand 1990–2000 (UNESCAP 2008) 

 

 

Therefore by late 1996, foreign investment began to flee from Thailand and at the same 

time the baht was increasingly attacked by international speculators. To handle the 

situation, the Thai government used the entire foreign reserves to protect the currency 

which did not ease the crisis. In 1997, the GDP plummeted down by 5,000 million 

dollar in one year to about 355,000 millions dollars (presented in figure 2). The baht 

was floated as well as the financial system was further liberalized by the government to 

make its economy more accessible to the foreign investors according to the advice from 

the IMF. Again, the measures could not relieve the crisis. A lot of firms which had 

taken a large amount of foreign loans went bankrupt. Several of them were transferred 

to foreign ownership. Banks that had intermediated the loans also collapsed. A number 

of prominent conglomerates which failed to modernize their management were crippled. 

Consumers stopped spending. Over two million people lost their jobs. (Baker et al. 

2005: 253–255.) 

 



18 

 

 

In sum, the 1997 financial crisis actually further amplified Thailand‟s level of economic 

dependency on exports and foreign capital which meant that the country no other choice 

but to go with the forces of global capitalist economic.  

2.2. Sociodemographic Change 

 

The impact of the booming of the industrialization and urbanization on the pattern of 

life for millions of Thai population has been tremendous. This demographic transition 

was certainly the consequence of urban economic growth initiated in Thailand since the 

American influenced period which can be obviously remarked during the turn of the 

millennium.   

 

 

Table 1.Thailand Demography Profile (Population Division of the Department of 

Economic and Social Affairs of the United Nations Secretariat 2010) 

 

 

Indicator 1985–1900 1990–1995 1995–2000 

Population change per year (thousands) 826 693 441 

Births per year, both sexes combined (thousands) 1137 1100 1009 

Population growth rate (%) 2.12 1.19 0.72 

Crude birth rate (births per 1,000 population) 24.6 18.8 16.5 

Crude death rate (deaths per 1,000 population) 5.9 6.8 7.8 

Total fertility (children per woman) 2.30 2.05 1.86 

Infant mortality rate (infant deaths per 1,000 live births) 26.0 19.0 13.6 

Life expectancy at birth, both sexes combined (years) 69.4 68.6 68.1 

 

 

Rapid urbanization came together with the advancement of medical technologies from 

the west. This has improved the overall living standard relating to the Thai population‟s 

health. As shown in table 1, with the increasing availability of health care service and 

modern medicine, infant mortality rate was radically reduced during the period of 1980 

to 2000. Moreover, for the same reason, the death rates and the life expectancy 

remained rather constant and the population increased during that period from 47 



19 

 

 

million to 62 million (Population Division of the Department of Economic and Social 

Affairs of the United Nations Secretariat 2010).  

 

Furthermore, there was a wider–spread of knowledge of various birth controls 

techniques, particularly among the urban middle class. A lot of people choose to delay 

childbearing to pursue higher education and careers (Baker et al. 2005: 201). As a result 

the population growth rate dropped continuously in the last half of the 20
th

 century. In 

the 1950s, the population growth was almost 3 per cent. By 2000, in only 50 years, the 

rate has gone down to 0.72 per cent, marking Thailand, as one of a few countries in 

Southeast Asia that has a slow population growth rate (Population Division of the 

Department of Economic and Social Affairs of the United Nations Secretariat, 2010).  

 

 

Table 2. Percentage of population in different regions from 1970 to 2000 (National 

Statistical Office 2000)  

 

 

 

 

This overall continuous low population growth rate might lead Thailand to face the 

problem of labor shortage in the future. Despite the slow growth, the concentration of 

population has been shifting to the urban areas. As presented in table 2, it is noticeable 

that there is a constant decrease in the percentage of population in northern and 

northeastern regions. Both are areas that are least urbanized. While in Bangkok and 

other provinces in the central region, the percentage of population is raising due to the 

higher rate of urbanization which expanded to the outskirt areas around Bangkok. By 

Region 

Year 

Bangkok Central 

Region 

Northern 

Region 

Northeastern 

Region 

Southern 

Region 

1970 8.9% 21.9% 21.8% 35% 12.4% 

1980 10.5% 21.7% 20.2% 35% 12.6% 

1990 10.8% 22.1% 19.4% 34.9% 12.8% 

2000 10.4% 23.3% 18.8% 34.2% 13.3% 



20 

 

 

2000, Bangkok alone had a total population of over 6.3 million, almost 4 million higher 

than the second largest city, Nakhon Ratchasima (National Statistical Office 2000).  

 

The mushrooming of the suburban areas around Bangkok is a result of the growing 

population in the inner–city areas, causing the land and accommodation prices in the 

areas to sky rocket.  A lot of the middle class people who work in downtown Bangkok 

have moved out to buy private houses outside Bangkok where it is not too far to 

commute in and out of the city daily.  

 

As people move away from their original family settlement and because of the delay of 

child–bearing and higher cost of living, the family size especially among those who live 

in the cities and suburban areas gets smaller. The family structure which used to be 

extended, consisting of three generations in one household, has shrunk. Now the nuclear 

type of family, consisting of parents and children is most common. A statistic from 

Thailand‟s National Statistical Office (2000) shows that the average size of Thai 

population‟s household was 3.9 persons in 2000 which had shrunk from 5.6 persons in 

1960.  

 

 

 

 

 

 

Figure 3. Allocation of GDP by Sector, Thailand, year 2000 (UNESCAP 2008) 

 

Agriculture

9 %

Industry

42 %

Services

49 %



21 

 

 

While the urban areas kept expanding, the rural areas declined in importance. The 

reason is because the emphasis on economy shifted away from the main sector; 

agriculture, which most population outside the cities was engaging in. This shift can be 

seen from the allocation of Thailand, GDP by sector of the year 2000 (see Figure 3) 

which shows that agriculture only made up to 11 per cent of the total GDP. The sector 

came last when compared with industry and services. Both of these sectors concentrate 

largely in the urban areas.  

 

In fact, the real factor that caused the decline of the agricultural sector in Thailand was 

the world–wide agricultural prices fall since 1970s. Because of that, Thai government 

started to support the other industries while the big conglomerates that formerly 

invested in agriculture diversified themselves to higher–valued products (Baker et al. 

2005: 212).  Whereas the amount of income has shrunk for the paddy farmers, living 

expenses, on the contrary, is increasing. The farmers have to find the best way out for 

their own survival.  

 

Poverty drives people to seek new and “better” life. The urban boom has drawn a lot of 

rural labor force to the city, leaving the farming areas with much less population while 

expanding the slum areas in the significant cities. In general, people from the rural areas 

come to engage in blue collar types of jobs such as factory workers, construction 

workers, taxi and bus drivers, servants, waiters, and sales persons of their own small 

stalls or in department stores usually because they are poorly educated. Moreover, 

countless people from the rural areas also get into illegal industries such as prostitution 

and drugs (either voluntarily or forced). And numerous people were drawn to the cities 

because of the excitement of urban life. 

 

A number of those who left home for work in the cities left their aged parents, wives, 

and children behind. Some portions of money earned are usually sent home for the 

living of the rest of their family members. The money is then probably invested into 

farming or local business like small shops, restaurants, and beauty parlors, generating 

more income to the families and communities which gradually further the process of 



22 

 

 

urbanization in the areas.  However, some people have gone away and never looked 

back, abandoning their parents and children starving and hopelessly poor. 

 

Although, a lot of people choose to find work in the cities, several rice farmers remain 

home. However, they have become much more commercialized in order to earn enough 

for living. Not only had they to invest more on tractors, automated harvesters and 

chemicals, but they also had to change from growing rice to higher–valued crops such 

as fruits and vegetables to feed the growing demands of the urban population and for 

export. While many others, in 1900s, turned their paddy fields into sea–water ponds for 

shrimp farming which certainly can bring at least doubled amount of income to the 

farmers; however, there are always some risks of diseases which would kill entire 

shrimps in the farm as well as the risk of serious land degradation. A few turned to the 

Buddhist principles of sufficiency and self–reliance by diverting from the rice mono 

culture to devising a small mixed farm. There have been a few success stories but it is 

very difficult to implement without selling some crops to the market at all. (Baker et al. 

2005: 213–214.) 

 

Although farmers can gain better access to higher agro–technologies, some of them, 

especially those who have difficulty in diversifying to the higher–valued cash–crops 

because of the areas farmed are less fertile, remain deeply or even have become deeper 

in debt. (Baker et al. 2005: 213.) 

 

With the high rate of natural resources exploitation begun since the American 

“development” era, the amount of natural resources of Thailand shrank significantly. 

Forest areas were transformed for industrial and urbanization purposes. And the 

reduction of numbers of trees in the forests meant that the rain falling would be less 

predictable for the farmers and higher risk of flooding in the low land areas. Dams were 

built to solve such problems and for securing water and power supply for the urban 

consumption. But building dams also meant that more areas of forests have to be 

destroyed as well as the some existing settlement areas were also included in the 

flooding areas, causing resentment among the local people since 1980s. (Baker et al. 

2005: 215.) 



23 

 

 

With the cooperation with NGOs, middle class sympathizers, and international 

environmental movement groups, the rural farmers made several attempts especially 

through media to put pressure on the government to provide compensation for old dam 

projects and abandon new ones as well as petition for other issues like agrarian debt, 

falling crop prices and access to forests. Among many groups, thousands of rural 

protesters reorganized themselves into Assembly of the Poor, marching to Bangkok and 

blocking roads in the capital in several occasions to push further several demands. 

Many attempts have been successful, proving to be more assertive than ever before. The 

rural farmers can no longer be perceived as a group of passive uneducated people 

anymore.   

 

 

2.3. Socioeconomic Policies 

 

Over the past two decades before the rise of the Thaksin Shinawatra government, the 

pattern of life for over sixty millions of Thai population was gradually shifting closer to 

resemble the lives of the people of the more “developed” countries especially of the 

West. Quality of life was improved. Democracy was praised. The continuous GDP 

growth seemed promising. Globalization earned a huge credit for contributing Thailand 

with all these good things.  But when Thailand was hit hard by the 1997 Asian financial 

crisis, not only its economy was crippled, but the crisis also impacted badly to the social 

fabric of the society. The global economic forces were indeed powerful and a lot of 

people were shaken to their mental core, contributing to the loss of trust in 

globalization. The blame was also pretty much thrown upon the government. Three 

years after the nightmarish crisis, although the situation began to ease, the shock from 

the event still made a lot of Thai people desperate for something new, a new leader with 

new approaches and policies. Thaksin Shinawatra was the one who correctly interpreted 

the situation and once he became the Prime Minister, he also translated such 

interpretation into a number of policies. Most of them were made to please the voters.  

 

Economic policy and programs of Thaksin‟s government, also known as 

“Thaksinomics” concentrated obviously on accelerating economy aiming at achieving 



24 

 

 

rapid recovery from the 1997 Asian economic crisis. According to Thaksin, Thailand 

needed to shift away from the “East Asian Model” that was overly dependent upon 

exports produced by foreign technology brought in by foreign investors with low value–

added content and relying mainly on cheap labor. As a result Thailand‟s economy was 

vulnerable to the fluctuations in the global economy (Phongpaichit & Baker 2004: 104). 

In the long run, this resulted in low domestic income and demands. From this belief, 

Thaksin initiated a number of schemes that aimed to help stimulate internal demand and 

promoted domestic entrepreneurship since he believed that it would allow Thailand to 

sustain development and attain better quality of life in the long term.  

 

Most of the schemes were usually seen as designed to appeal to the rural majority. First, 

in order to stimulate the domestic demand, Thai people especially the rural mass must 

be further integrated into the market economy. This would, as Thaksin believed, solve 

the problem of poverty as well as increase the GDP. One basic way to bring the people 

further into the market system was to provide them with capital (Phongpaichit et al. 

2004: 115–116). In 2003, the “war on poverty” was launched. Under it, policies such as 

the policy of farm debt restructuring including a three year suspension of some debts 

owed by poor farmers to state banks and the policy of village funds financed by grants 

of one million baht (about $24,000) to roughly 70,000 villages to provide locally 

administered micro–loans were launched (Phongpaichit et al. 2004: 117). 

 

Furthermore, Thaksin government also encouraged the Thais to be more 

entrepreneurial. Special attention was paid to small–sized and medium–sized enterprises 

(SMEs) by state–owned lending agencies. To restructure the economy away from deep 

dependence on imports and towards more reliance on local resources as well as 

promotion on exports of products, especially agricultural and crafty works, the 

government promoted products specialization by village groups, called the "one tambon 

(group of five or six villages), one product" scheme inspired by a similar Japanese 

program (Phongpaichit et al. 2004: 113–115). Moreover, there was the establishment of 

the People's Bank, administered through the Government Savings Bank (GSB), 

allowing GBS account–holders to apply for small loans (up to about 30,000 baht or 

$370) mainly for small retailing or commercial ventures. And lastly, there was the 



25 

 

 

transfer of non–performing loans (NPLs) to the Thai Asset Management Corporation 

(TAMC) established 2001, required of state–owned operations and voluntary for private 

ones, to promote more efficient debt restructuring (Phongpaichit et al. 2004: 121–122). 

 

At the same time, Thaksin did not abandon the importance of international trade since 

the trade has been a significant source for new investments and for generating GDP 

growth. Tourism, Thailand‟s well–known industry was highly encouraged. The baht 

currency was depressed to help export. Moreover, since the beginning of his term, 

Thaksin and the other members of the government frequently traveled abroad to create 

trust and trade partnership with various countries, promoting that Thailand‟s domestic 

policies would be as well beneficial for foreign investor (Government Public Relations 

Department 2006).  For example, the stronger local SMEs would provide support for the 

industries of the foreign investors. The deepening capitalism that the consumer demand 

generated domestically would be advantageous for investors who aimed for Thailand‟s 

market. The Thai workers would be healthier because of the cheap health care program, 

therefore, the investors would lower the costs related to the labor‟s healthcare 

(Phongpaichit et al. 2004: 121–123). 

 

These policies that seek to promote grassroots economy and enhance national 

competitiveness are called “the dual–track policies”. The essence of the policies aimed 

to strengthen the domestic economy, while enhancing Thailand‟s international 

competitiveness for balanced development. Thaksin pointed out that Thailand has two 

different societies. One is the rural society, consisting of poor farmers, and the other is 

the urban society, comprising educated people. It is in the aspiration of many people in 

the rural areas to go find a better living and a better life opportunity in the cities. A 

number of them send their children to gain education in the cities with their saving 

money. As a result, many of the talented people in the countryside chose to live and 

work in cities instead of going back home. (Government Public Relation Department 

2006.)  

 

Since Thailand is a country of two societies, Thaksin went on that the country needed to 

adopt the dual–track policy, a social and economic citizen–centered approach, to 



26 

 

 

develop both societies. This means that efforts must be made for farmers to get better 

prices for their agricultural goods. At the same time, the export–led economy must also 

be strengthened together with the domestic–led economy. Following this policy, the 

economic gap between two societies would be gradually narrowed down (Government 

Public Relation Department 2006).  

 

To implement this policy on the part involving stimulating international trade, Thaksin 

government mainly promoted regionalism and cooperation with the rising economy of 

China. He believed that the strong economic integration between Southeast Asian 

countries as a single market would not only attract large–scale foreign investment, but 

also would be beneficial since the neighboring countries and regions would become 

Thailand‟s sources for market, materials and labors. In this, Thaksin strongly supported 

the development of a free trade agreement and agreements which deepened relations 

with the other Southeast Asian countries as well as with the South Asian and the East 

Asian countries. (Phongpaichit et al. 2004: 123–124.) 

 

Although much of Thaksin‟s policies were economic oriented, there were some 

significant social policies included. One of the most pioneering welfare schemes must 

have been the 30–baht per visit healthcare scheme, a national universal coverage 

healthcare scheme.  

 

This scheme was implemented as part of the electoral populist agendas he promised, 

aiming at reducing the economic burden of the people especially the low–income group. 

All individuals who did not currently enroll in a health scheme and whose names were 

documented in house registrations received a “Gold Card”, which has to be presented 

together with the patient's national identification card every time he or she accesses 

health services. A 30 baht payment must be paid for all consultations. Children under 12 

years of age, seniors over 60 years of age, volunteer health workers, and the very poor 

are exempt from this user fee. From the introduction of this program insurance coverage 

increased from 71 per cent of the national population in 2001 to 94.3 percent by 2004. 

(Coronini–Cronberg, Laohasiriwong & Gericke 2007.)  

 



27 

 

 

Another policy that Thaksin launched as a part of the promised electoral agenda was the 

“war on drugs”. The formal name for this policy was the “Concerted Effort of the 

Nation to Overcome Drugs”. The effort came from the belief that a large number of 

populations, roughly five per cent were using methamphetamines, also commonly 

known for Thais as “crazy pills”. It has been an alarming social problem for many Thais 

because although the drug was made illegal, there had been a growing number of the 

younger addicts since the drug could be accessed quite easily with an affordable price as 

well as the lax law enforcement. (Dabhoiwala 2003.)  

 

The campaign was initiated in February 2003, with an ambitious target to eliminate 

drug problem within three months. Firstly the campaign emphasized education and 

awareness of the danger of methamphetamines, and the treating of drug users as patients 

rather than criminals, made negotiations with the neighboring countries housing 

methamphetamine factories (Cambodia, Laos, and especially Burma), and intensified 

border patrol to monitor drug trafficking. Furthermore, Thaksin believed that the 

powerful government officials were providing backup for the traders or many of them 

were the traders themselves so drug has become one of the biggest chronic problems for 

Thailand. (Phongpaichit et al. 2004: 160.) 

 

The methods to eliminate the drug dealers used in the campaign were ruthless and 

controversial. Thaksin personally said that “Traders will get no return except risk to 

their own lives, risks of being arrested, and of being finished off because all their assets 

are seized.” (quoted in Phongpaichit et al. 2004: 160–161.) A combination of incentives 

and warnings were used to have police eliminate as many suspected drug dealers, by 

whatever means possible. The incentives were mainly financial, increasing bonuses to 

officers for drug confiscated according to the size of the taking. Warnings to 

government officers included threats to transfer, demote, or sack those failing to meet 

the target of arrests (Dabhoiwala 2003). 329,000 names of those involved with drug 

trading were listed in a blacklist. These drug traders were called upon to turn themselves 

in and promise to quit or face justice. By the end of the three–month campaign, 2,637 of 

those allegedly involved with drugs were killed, only 68 were shot by police on the 

ground of self–defense (Phongpaichit et al. 2004: 161–162). 



28 

 

 

Moreover, Thaksin also answered the present public awareness about the degrading of 

Thai culture and social order. The most well–known one was “social order” campaign 

executed by the Ministry of Interior in early 2001. The campaign targeted to control 

lives of the urban youth, keeping them away from drugs, sex, and other bad influences 

as well as to improve the country‟s image. In 2002 three “entertainment zones” were 

created in which drinking and dancing were allowed until 2 a.m. Outside these zones, 

dancing was illegal in all venues and closing times were 1 a.m. Vigorous ID checks 

were enforced at all entertainment venues and random spot checks by police on roads 

were common. Anyone under 20 years old could not enter the zone and everyone must 

present a valid ID. For non–Thais constituted, an original passport or a driver's license 

must be presented. Surprise police check up (sometimes accompanied by local TV 

crews) at the venues was a common practice. Occasionally the clubbers were forced to 

urinate in a cup to test for drug use. A number of popular clubs in Bangkok were 

negatively affected from this campaign. A lot of them had to close down. (Gampell 

2006.) 

 

Stricter regulation on the Thai youngsters‟ lives went further. A plan was announced by 

the Ministry of Interior to test the suspected drug users in schools. School officials 

would interview students to determine whether they should be tested. Information 

would be passed on to police. Furthermore, a 10 p.m. curfew on the young people under 

18 was put in place, forbidding them to get out of their residents without adult 

supervisory. And after hearing complaints that many children under 18 were staying out 

late playing Internet games, the youngsters were also banned from visiting Internet 

cafes after 10 pm as well. In addition, to prevent the teenagers from the undesirable 

sexual practices, various measures were created. For example, on Valentine‟s Day, 

police officials patrolled popular teenage hangouts in Bangkok to help the youngsters 

“keep their virginity”. Also private dormitories in all provinces were ordered to 

segregate the underage students to live in single dorms to remove the temptation of 

having sex. (The Irrawaddy 2002). 

 

In October 2002, a new ministry, the Ministry of Culture was established, aiming 

basically to promote Thai values such as belief in society, kinship, respect for elders, 



29 

 

 

deference, and empathy over the spread of consumerism and individualism. Thai 

language, Thai manners, Thai food and Thai dress as well as other forms of Thai art 

were highlighted and highly encouraged. Going along with the social order campaign, 

the Culture Ministry went further to condemn “inappropriate” entertainment materials.  

Broadcasted songs mostly with sexual content were banned. Overly exposed sex scenes 

and scenes showing the presence of alcohol and cigarettes were cut off. In addition, the 

production of underground pornographic VCDs was strictly banned by the Ministry. 

(Phongpaichit et al. 2004: 168–169.) 

 

 

2.4. Elite Decision–making  

 

Various important policies and schemes launched during Thaksin administration were, 

apparently, tools to achieve what is desirable for the elites. In this case, what the elites 

desired perhaps was to secure the support from the voters at all levels as much as 

possible. This is not a new thing for politicians to do; however, in Thailand, it was done 

with a rather new approach, a more intensive one.  

 

A number of the policies described in section D were predominantly populist, meaning 

that they were created to fit the understanding of the majority of people and what people 

desire. After the 1997 Asian financial crisis, a lot of Thai people, rich or poor, all felt 

the threats of what globalization could bring to their homeland. For a lot of people, 

globalization brought in the distortion of the Thai ways of life, their precious cultural 

heritage, morals and good values and of course it almost destroyed Thailand‟s economy. 

Understanding what people called for, the Thaksin government offered a new way out 

for a lot of people. The economy was to be rebuilt “sustainably”. A sustainable GDP 

growth must be coupled with the improvement of the overall livelihood of all Thai 

population. New approaches were introduced to achieve such goals.  

 

Many of the schemes and policies affected the whole population. Nevertheless, the 

portion that benefitted the most were the rural grassroots and the low–income 

population. Dual–track policy that aimed to develop the rural economy along side with 



30 

 

 

the urban one was adopted in an attempt to close the wide gap between the two 

societies. A larger amount of government budget channeled to help the money 

circulation in the rural areas. The local SMEs that utilized the local wisdom were 

publicly encouraged. Money were given away to help stimulate the economy. People 

were spending more whilst their burdens for health problems were removed because of 

the 30–bath per visit healthcare scheme. Capitalism flourished again as according to one 

important indicator, the number of mobile phone subscribers.  

 

 

0

5

10

15

20

25

30

M
o

b
ile

 P
h

o
n

e
 S

u
b

cr
ib

e
r

(m
il

lio
n

)

year

 

 

 

Figure 4. Mobile Phone Subscribers in Thailand, 1997–2004 (International 

Telecommunication Union 2010)  

 

 

Figure 4 shows that the number of the mobile phone subscribers grew very quickly from 

only around two million subscribers in 1997 and began to rise gradually after the 

financial crisis started to ease. However, interestingly, the number of subscribers 

increased more rapidly during Thaksin‟s administration. By 2004, more than 27 million 

people out of the total of 62.5 million had access to mobile phone (UNESCAP 2008). 

The sharp increase was partly due to the constant fall of the mobile phone prices 



31 

 

 

resulting from the high competition for the mobile phone domestic market as well as 

Thailand‟s economy was recovering.  The telecom company that gained the largest 

profit margin was the AIS (Advance Info Service), one of the main companies of the 

Shinawatra – Damaphong‟s (Damaphong was Thaksin‟s ex–wife family name). 

According to the Assets Examination Committee (AEC) which was specially set up by 

the military junta to investigate Thaksin‟s corruption case after he was ousted, Thaksin 

and Pojaman (Thaksin‟s ex–wife) still illegally owned Shin Corp throughout the time 

Thaksin was serving as prime minister from February 2001 until the sale of the 

company in January 2006. Thaksin as a prime minister was not allowed to hold any 

share of any company. He and his now ex–wife allegedly used their children 

Panthongtae and Pinthongta, Pojaman's brother Banaphot Damapong, and Thaksin's 

sister Yingluck, as well as Ample Rich Investment Ltd and Win Mark Ltd as nominees 

to conceal their real ownership of 1,419 million shares, or about 49 per cent, in Shin 

Corp (The Nation 2008). 

 

In 2003, AIS had 13.2 million subscribers considered having around two–third share of 

the total revenues since a lot of customers favored the AIS‟s superior quality of its 

network and the AIS invested a large amount of money on marketing when comparing 

to its competitors though it charged slightly more. Additionally, in 2001, all AIS 

competitors could not fulfill the Telecommunication Business Act that limited the 

foreign holding in any telecom venture to 25 per cent. Only Shin‟s AIS could conform 

to this rule (Phongpaichit et al. 2004: 203–207). Not only that, but according to the 

AEC, Thaksin government allowed state agencies to convert the telecom concessions 

which removed tax to benefit Thaksin‟s Shin Corp. Telecom Organization of Thailand 

(TOT) and Communication Authority of Thailand (CAT), who awarded the concessions 

to the subsidiaries of Shin Corp, lost 41.95 billion baht and 25.99 billion baht 

respectively from the conversion of the concessions (The Nation 2008). 

 

Furthermore, there were a number of other businesses owned or shared by Shinawatra – 

Damaphong family under Shin Corporation. Shin Corp started mobile phone business 

diversified into many areas, all were in service sector which most also depended to 

some extent on government regulations and licenses. The example of the new ventures 



32 

 

 

were satellite, property development, personal loans and credit card, low–budget airline 

services, TV, private hospitals, banking, photography and advertising (Phongpaichit et 

al. 2004: 210–222). For instance, 41 billion baht low–interest government loan were 

granted to Myanmar in 2004. The AEC ruled that Thaksin had endorsed with the 

intention of securing its purchase of satellite services from Shin Satellite which at the 

time was controlled by Thaksin's family. In terms of property development that Thaksin 

involved since after the Asian Financial crisis, the AEC ruled that Thaksin violated the 

law by using his high office to endorse a deal with the Financial Institutions 

Development Fund, a state institution in order that his ex–wife could purchase a huge 

plot of land in the Rachadaphisek, the downtown area of Bangkok (The Nation 2008). 

Another example, AirAsia, a low–cost airline from Malaysia which Shin Corp had a 50 

per cent share announced its air route to Thailand, a couple weeks after the regulation 

setting a floor on air ticket pricing was removed for “promoting tourism”. Later the Thai 

Air Asia received a package of investment privileges, including eight years exemption 

from taxes as well as government assistance on pilot training and maintenance by the air 

force (Phongpaichit et al. 2004: 218). In 2003, Shin Corporation‟s net profit was 9.7 

billion baht, of which the Shinawatra and Damaphong families‟ shares were 47 per cent 

altogether (Phongpaichit et al. 2004: 223). 

 

Shin Corp apparently made a tremendous amount of money during Thaksin‟s 

administration not only because of its brilliant business strategies but also because it 

received some assistance from the socio–economic policies described earlier, of the 

Thaksin government. It seems that the entering into politics of Thaksin was a mere 

logical extension of his businesses since these businesses rely heavily on state 

concessions. Political lobbying for business benefit would be much easier and the 

policies would be made to best suit the business requirements and desires. A number of 

populist policies were also crafted to satisfy a large amount of voters. Capitalism 

flourished. People had more money to spend on the extravagant goods. Therefore, the 

businessmen politicians were happy because it means that their pockets would become 

much bigger, too.  

 

 



33 

 

 

3. POLITICAL SYSTEM  

 

The development of public administration in Thailand is commonly dated back since 

the dawn of Sukhothai Kingdom period, the Kingdom of Ayutthaya, the Thonburi, the 

early Rattanakosin, the period of bureaucratic reform under the reign of King 

Chulalongkorn, and the era after the establishment of constitutional monarchy in 1932. 

Before the mid nineteenth century that marks the period before the bureaucratic reform 

undertaken by King Chulalongkorn, the fifth king of the current Chakri dynasty, Thai 

public administration and politics was organized similar to European feudalism. The 

governing and social system was highly based upon the concept of hierarchy where the 

king stood on top of the pyramid and the slaves were at the bottom. The coercive power 

of the king was presumed to be absolute; however it was not the case in reality. Instead 

the power had to be separated to different nobility and local kings due to the difficulty 

in administration derived from the distance.  

 

But since the beginning of the nineteenth century when the European colonialism 

became a major threat for different Kingdoms in Southeast Asia, Siam or nowadays 

Thailand especially since the era of King Chulalongkorn eventually took on the then 

modern concept of modern nation as well as the centralized state bureaucracy to 

strengthen itself aiming to avoid being colonized by the west. Siam was left to its 

independence. Slavery was abolished and the class of commoners was replaced by the 

idea of citizenry. The public administration was to mirror the western style bureaucratic 

model in which government was separated into different ministries. However at the 

same time, the whole public administration was still controlled by the noble elites, 

members of royal clan and the king himself as the highest posts were reserved for these 

classes only. The system of absolute monarchy remained unchanged.  

 

However, since the successors of King Chalalongkorn were not as popular, competent 

and powerful caused a growing resentment among the public officials, especially those 

from military, who shared a commoner background and also who were inspired by the 

revolutions in Europe. As a result, the system of absolute monarchy was overthrown in 

a 1932 military coup d'état and was replaced by a system of constitutional monarchy. 



34 

 

 

The regime shifted away from the king to military elites. Military groups dominated the 

political scene, marked by authoritarian rule and strong nationalistic ideology. The 

administration that still followed the bureaucratic model was managed largely by 

officers with high military rank. The post of prime minister usually came by 

appointment or seized by a coup.  

 

Nevertheless, military influence has slowly waned since the student–led demonstrations 

in 1973. The middle–class educated demonstrators demanded a government that comes 

by democratic election. The parliamentary influence was expanding slowly since a 

number of the parliamentarians still had the background of being military bureaucrats or 

having personal or business connections with the bureaucrats.  

 

Despite the regime change, the administration of public sector and its structure has 

remained to a large extent similar to what was initiated since the reign of King 

Chulalongkorn. Bureaucracy still played an important role to this present day in being 

the template for public administration. However, it is noticeable that there are gradual 

changes in the Thai bureaucratic system which is moving away from the classical 

bureaucratic model towards what is commonly called “new public management” 

(NPM). The changes can be observed in the several modifications of legislative Acts 

through more than half a century. 

 

 

3.1. New Management Ideas 

 

After 1932, the governmental structure was reorganized in response to the changing 

environment although it was still divided into central, regional, and local administration 

like in the prior period. During the Field Marshal P. Pibulsonggram administration, the 

division of responsibilities between bureaucrats and political office holders was made 

clearly separated.  This was done by assigning the Secretariat of the Prime Minister to 

handle political affairs, while the Office of the Permanent Secretary would take care of 

the affairs of permanent officials. (Government Public Relation Department 2009.) 

 



35 

 

 

Later, the reform of the administrative system still continued but without drastic 

changes in terms of reorganization. In the administration of Field Marshal Sarit 

Thanarat, several advisory boards were appointed to help the government in decision–

making. In the 1980s, the administration led by General Prem Tinsulanonda raised the 

idea of limiting the growth in the number of government officials by no more than two 

per cent a year. The Chatichai Choonhavan administration emphasized faster services 

for the people. Privatization of state activities was a focus of attention during the Anand 

Panyarachun administration. The first Chuan Leekpai administration set standards for 

downsizing and spending control in the public sector. Emphasis was placed on the 

promotion of public services among government agencies during the Banharn Silpa–

archa administration. The bureaucratic reform master plan and the action plan were 

formulated in the Chavalit Yongchaiyudh administration. During the second Chuan 

Leekpai administration, there was the introduction of a new form of administration in 

the public sector. (Government Public Relation Department 2009.) 

 

However, the changes towards the NPM were most obviously seen in the period of 

Thaksin‟s premiership during 2001–2006. According to the ex–prime minister‟s policy 

statement given to the Parliament on February 2001, his government decided to speed 

up the reform process with the intention of improving efficiency and reorganizing the 

governmental structure to be more suitable for the situation of the moment and to 

improve the public sector‟s performances to better serve national economic and social 

development. Thaksin assigned Deputy Prime Minister Wissanu Krea–ngam to oversee 

bureaucratic reform and state mechanisms. (Governement Public Relation Department 

2009.) But what actually is this NPM? And where is it from?  

 

The NPM approach is not the product of local wisdom. Since 1980s, New Public 

management has emerged as a new paradigm in describing a public management 

reform. It became a popular approach that most governments had to at least look to. Its 

practices and techniques have been widely used in most developed countries while 

some developing and transitional countries with transitional economies were also 

gradually following the trend (Larbi 1999). In another word, as the countries were 



36 

 

 

submerging themselves deeper and deeper into the globalized capitalist world, the 

higher the tendency that such countries followed this NPM movement. 

 

Seriye Sezen (2010) argued that since the end of the Second World War, the state‟s 

functions and its functioning have been reshaped tremendously by globalization. Many 

states either have voluntarily chosen or have been forced to engage in the global market 

capitalism. This has increased the level of interdependence and interconnectedness in 

terms of financial, political, environmental, technological and cultural aspects between 

different states all over the world and transcended national boundaries. Furthermore, it 

has also contributed to changes ranging from state‟s institutional organization and its 

functioning, the judicial rules, personnel regime and lastly conceptualization of public 

services. This transformation could be described as a shift from the public 

administration to new public management.  

 

According to Dunleavy (1991) this model initially originated from the critique of the 

traditional organization of the public administration which is commonly linked with the 

ideal–type rational/ legal bureaucracy (Yamamoto 2003: 4, Pollitt et al. 2004: 62). The 

model of bureaucracy, a term coined by Max Weber can be characterized by its fixed 

spheres of competence, a clear distinction between the public and private roles of the 

officials, specialization and expertise as the basis for action, a defied hierarchy of 

offices, full time, career appointments for officials, and management by the application 

of a developing set of rules (Pollitt et al. 2004: 62).  However, the most important 

component of all characteristics of the model relies upon its highly centralized single, 

hierarchical top–down chain of command. As a result, this model highly endorses the 

structural stability of the organization. It is a system of control in which a policy is set at 

the top then it is implemented through a number of offices down the monocratic 

hierarchy in which all subordinators must report to their superior  (Pfiffner 2009).  

 

Right before the beginning of the twenty–first century, this traditional bureaucratic 

model has increasingly been challenged. It was regularly exposed to various criticism. 

In the rhetoric associated with public management reform, bureaucracy was given to be 

part of the old timer and it is often time frowned upon. It is placed in contrast to 



37 

 

 

something “new” or a reformed version of public sector organization (Pollitt et al. 2004: 

61). This notion of “newness” against the “oldness” associated with ideas, thoughts, 

concepts, paradigms, and theories is sometimes criticized that there is actually little that 

is really new as Frederickson (1980: 5) explained metaphorically in his book, New 

Public Administration that “The newness is in the way the fabric is woven, not 

necessarily in the threads that are used.”  The new models or theories might be branded 

with striking distinctions with different ways to organize the ideas, but it must be based 

on, originated from or hybridized with some elements of the existing knowledge at 

some points.  

 

The critique of the classic weberian bureaucracy targeted its nature that aims to produce 

organizational stability. However, stability also produces undesirable byproducts. The 

problem stems from the fact that the bureaucratic model functions both as a structure of 

an organization and as the means by which persons and work are managed within the 

organizational structure. As observed by organizational theorists, indeed over time such 

stability tends to become ultra–stability as it is likely to have lasting effects on the 

mindset of people subjected to such hierarchical structures and managerial control 

within and outside the organization. It seems to have the power beyond legislative or 

executive power. As a result, it is highly resistant to changes.  

 

And within the framework of this model, when problems concerning management or 

productivity occur, it sticks to the belief in hierarchy. Merely reorganization or 

restructuring is applied to solve the problems (Frederickson 1980: 17–25). Gradually 

the model that focuses on the one best way for management or structuring an 

organization has tendency to lose its articulated values that its inventors meant to 

achieve at the first place. What believed to work in the industrial era is losing its appeal. 

These values are efficiency, economy and productivity (Frederickson 1980: 21). An 

efficient and economical public organization should seek to maximize its productivity, 

meaning being able to provide the quantity and quality of services in accordance with 

the public demands, with the least possible money. As argued by Federickson, these 

values are certainly fundamental for all public administration theories and models. 



38 

 

 

The bureaucratic model therefore has been continuingly attacked usually on the ground 

that it can no longer satisfy fundamental values. Its inflexibility of structure, the 

expensiveness, and the inefficiency of the multi–layered top–down hierarchical 

structure which hindered decision making process, delaying the service delivery were 

stressed. The system is looked down to as it can no longer serve the needs of both 

workers and service recipients since it cannot effectively function in the present era of 

what Nye and Donahue (2001) called “thick” globalism. The period of thick globalism 

can be characterized by the rapid growing of number of domestic and international, 

governmental and non–governmental organizations which become interdependent and 

interconnected with each other, forming a dense network (Yoder & Cooper 2005: 297). 

It is also often called information age in which the communication is instant and 

tremendous in amount. Economic value is now based on information and its 

manipulation rather than industrial production (Yamamoto 2003). It is not difficult to 

imagine how much time–consuming and how frustrated a public servant must be in 

needing to cope with a pile of elaborate records that he needs to read, comprehend and 

respond to both up and down the hierarchical chain of command while at the same time 

being obligated to serve a number of demanding citizens. 

 

Thus to get rid of the problems and improve efficiency in public sector under the rapid 

changing and the information–rich environment, public management reforms should be 

adopted in order to change the structure and process of the public sector organization 

(Politt et al. 2004: 9). According to Phayat (2007), continuously developing new 

products and services are the most important task of the organization leaders in order to 

achieve sustainable success for the organization. By following closely the changing 

trends, all organizations must be well–prepared for a constructive change. Being more 

adaptive and more flexible in terms of their missions, business goals and business 

strategies is crucial. Moreover, the human resource management must also be improved 

and the organizational structure must be modernized.  

 

As a result, waves of criticism stemmed from academy that stirred up a pressing need 

for replacement of the outdated model by more flexible, fast moving, performance–



39 

 

 

oriented forms of modern organization. The notable reform model that has become a 

global trend since the late 1980s is NPM. 

 

New Public Management is a combination of different elements for public 

administration reform. It cannot be portrayed as a homogeneous reform program. But 

rather it is a kind of „shopping basket of different elements of reform that a government 

might pick up one or more among many elements as they see fit to reform its 

administration (Skålén 2007).  In another word, NPM has become a new template for 

administrative system for public sectors on a global scale. It serves as an alternative for 

the traditional public administration or as a tool for fixing administrative flaws.  

 

The practices and techniques of this model are created to mimic those of private sectors 

based upon the belief in the preeminence of markets and competition over bureaucratic 

hierarchy. The roles of the public sectors should necessarily be reduced to play the role 

of the “facilitator” whose task is to assist the flowing of free–market economy. 

According to Frederickson (2005: 177) these belief originated from the theory of public 

choice perspective in public policy and administration. It praises the superiority in 

management of the business sector over the governments derives from the fact that the 

businesses must compete in the market place. To engage in an open market and 

competition, it is assumed that governments thus could buy the best products at the 

lowest price therefore they could sell the products and serve the citizens in the lowest 

price as well. To be able to be successful in highly competitive globalized market–

driven economy and to be able to promptly supply services for the growing demands, 

the government is urged to absorb, adopt and adapt the values and practices of business 

management. In another word, the public sector needs to follow „the best practice‟ 

model of the private sector management, turning citizens to clients or customers of the 

state services.  

 

Furthermore, the new public management favors decentralized administration, 

downsizing bureaucracy, delegation of discretion, contracting–out and privatization for 

goods and services, and the use of the market mechanisms of competition and 

improving customer service to enhance performance. It focuses more on the 



40 

 

 

measurement of the outcomes instead of relying on inputs. The tight control of top–

down hierarchical structure through rules and regulations are replaced by the 

performance measures. To cut red tape and enhance the flexibility in organization, it 

seeks to reduce regulations and restructure the organization. To avoid the overlapping of 

tasks and improve coordination within and outside the organization, some departments 

maybe dissolved, included to the others, or decoupled.  

 

In addition, there might be agentification in which smaller and more flexible agencies 

with a specific smaller objective are set up. These agencies are not regarded either as a 

state enterprise or an official state department. Bureaucrats, who are encouraged to 

adopt the concept of managerialism, are provided with more freedom to use their own 

expertise, professionalism, creativity and common sense in carrying on tasks and 

solving problems without having to report to their superiors through paper work at 

every stage (Pfiffner 2009, Frederickson 2005: 167–168). To sum up, Donald Kettl 

summarizes the six “core characteristics” of the New public management approach as: 

productivity, marketization, service orientation, decentralization, a policy orientation, 

and accountability for results (Pfiffner 2009). 

 

Through adopting the model of NPM as a reform program, the concept of good 

governance often comes along in the same package. Since the early 1990s the western 

based intergovernmental organizations and international institutions such as World 

Bank (WB), United Nations Development Programme (UNDP), International Monetary 

Fund (IMF),  and other development partners has begun to urge a number of developing 

countries that receive their economic assistance to reform their public sectors along the 

principles of NPM. Within the era of globalization, it is unavoidable for a number of 

countries to be included and subjected in a unified system. Several countries that are 

facing the issue of internal corruption, their governments are regarded by the 

international organizations as ineffective, weak and needed to be helped since according 

to Seligson there is a growing belief that corruption would retard economic 

development and it also undermines the consolidation of democratic governance. 

(Yoder et al. 2005: 300.) 

 



41 

 

 

Aktan and Hayrettin (2009) provided a summary on how the concept of “good 

governance” is defined by different donor institutions. Here, two institutions, the World 

Bank (WB) and the International Monetary Fund (IMF) are selected as examples.  

 

For the World Bank, the concept of good governance can be defined as the practices and 

institutions by which authority in a country is exercised for the common good. This can 

be seen from the ways in which how the governments are selected and whether they are 

accountable to the public or not. Moreover, the governments have to be able to create 

appropriate and beneficial policies as well as able to implement such policies with the 

available resources effectively. In addition, to achieve the “common good”, WB sees 

the importance of decentralization of the government, one main element that links the 

concept of „good governance‟ with the model of NPM. The roles of central government 

and administration must be reduced especially in terms of interfering excessively in 

economy. The economy of the state should be left alone in the market economy that 

subject to growing inter–governmental competition while local and cultural autonomy is 

preserved. And at the same time the mechanisms of checks and balances must be 

available in all political processes to ensure transparency and efficiency of governments. 

(Aktan et al. 2009.) 

 

For the IMF whose prime concern is with the macroeconomic stability of the monetary 

system of the world economy and systematic economic growth in member countries, it 

seeks to provide policy advice and technical assistance that involves the concept of 

good governance especially in the sphere of economics. These policy advice and 

technical assistance aim to promote and increase the transparent and stable economic 

environment and regulatory systems favorable for the private sector activities. 

Furthermore they aim to equip the member governments with a better ability to manage 

the public resources through reform programs coherent with the NPM approach. These 

reform programs embrace both monetary public sector institutions such as the treasury, 

central bank, public enterprises, civil service, and the official statistic function as well as 

the financial administrative method for example the expenditure control, budget 

management, and the revenue collection. (Aktan et al. 2009.)  

 



42 

 

 

There may be some differences about how different organizations define the term. 

However, in general the concept of good governance includes “Transparency and 

accountability in government, economic liberalization and privatization, civil society 

participation and respect of human rights, democracy and the rule of law” (Yoder et al. 

2005: 299). The linkage between the concept and NPM are clearly visible. This is 

because the definition widely given usually includes some basic principles of New 

Public Management. Good governance is usually one main ingredient that the NPM 

cannot miss. However, it should be noted that it is almost impossible for a state to have 

wholly good governance. As the UN‟s Economic and Social Commission for Asia and 

the pacific (ESCAP) notes 

 

“…it should be clear that good governance is an ideal which is difficult to achieve 

in its totality. Very few countries and societies have come close to achieving good 

governance in its totality.” (UNESCAP 2009.) 

 

Therefore, the concept serves only as a guideline that has spread all over the world, 

including Thailand. 

 

Moreover, there is also a strong conviction that corruption, intimidation and the use of 

force have carried an increasing number of influential public figures under patronage of 

wealthy transnational terrorist organizations. As a result public administration and the 

society of the countries have been seriously damaged. Therefore, in this new globalized 

environment the prosecution and punishment of wrongdoing would not be sufficient. 

Instead to cope with the pressing problem, preventive measures should be more suitable 

in fostering a sound public administration and in controlling the spread of corruption. 

To do so, the concept of what is good or bad must be collectively and harmoniously 

shared. (Yoder et al. 2005: 300–301.) 

 

For these reasons, several international organizations seek to self–grant the mandate to 

form the preventive and reforming measures for their donor recipient countries. The 

developmental goals are usually set by the organizations for the recipient countries to 

implement. And in order to realize developmental goal set particularly on western 

standard, the reforming program frequently imposes western standard of ethical 



43 

 

 

conducts which is often called the concept of “good governance”. The term emerged in 

1980s. It is the product of western society since the concept derived from European 

structural models such as French administrative law, the English common law, the 

German principle of proportionality, and the Scandinavian ombudsmen institution. 

(Aktan et al. 2009.) 

 

In the case of Thailand, enhancing the efficiency of the state administration was one of 

the main reasons for the justification for the adoption of the NPM and the concepts of 

good governance. On the basis of influential market–based ideas Mutebi and Sivaraks 

(2007) argued that the Thai public bureaucracy that applied the traditional 

administrative practices and structures that emphasizes exceedingly inputs and control 

was commonly considered having many disadvantages. These two particular points are 

believed to be the causes of the poor performances of government agencies especially in 

terms of efficiency and responsiveness to the needs of the general public which has been 

continuously growing. By 1980s through mid 1990s, the period of fast economic growth 

of Thailand resulted from the full–engagement in the globalized economy; the old 

system was widely criticized in terms of over centralization, having too many 

unnecessary regulation, underpayment of the civil servants, corruption among civil 

servants, and insufficiency of participatory mechanisms for both public and its officials.  

 

Deriving from the idea that Thai bureaucracy with its traditional public administrative 

system has several major shortcomings, therefore the system needed to be replaced by a 

new arrangement and new practices. The efforts to reform the public administrative 

management have been made by several governments since the beginning of the 1990s 

through the financial crisis period of 1997 and to the present time. The reform package 

usually concluded decentralization, restructuring of the size and the structure of the 

government organizations, improving the morale of civil servants through civil service 

trainings, reducing the operative cost in public sectors especially through privatization, 

focusing more on performance– oriented practices, enhancing flexibility and 

effectiveness of the civil service system and improving transparency in state 

bureaucracy (Mutebi et al. 2007). These elements are obviously the parts of main 

ingredients of the New Public Management model. Nevertheless, it should be noted that 



44 

 

 

the reforms that led to the hybridization between the NPM and the old system can only 

affect the administrative system on the superficial level; therefore, the fundamental 

problems especially corruption still stay persistent.  

 

Thaksin also had similar negative perception towards the traditional Thai bureaucracy. 

To him Thai bureaucracy is too powerful, passive, and too ignorant of business world, 

therefore, it cannot help Thailand to develop or progress whereas the bureaucrats are 

obsolete thus unable to keep up with the changes in the era of globalization and high 

competition (Phongpaichit et al. 2004: 172). The NPM model which in many respects 

has several elements similar to the practices and values used in the business sectors, 

became a global movement since it has been promoted especially by international 

consultants from the World Bank and the United Nations as the solution to improve 

public bureaucracy and the employment of such model by many states also reinforced 

Thaksin‟s belief in the use of business practices in the public administration 

(Bowornwathana 2004: 137). Moreover, most importantly under the NPM label, the 

power of Thaksin as the prime minister could be enhanced especially through the 

restructuring of the public agencies and redressing scope of responsibilities to favor the 

particular interests. 

 

Upon these exacting reasons, his government continued the reform program of the 

previous government; however, much more extensive and intensive in scale. The 

management idea that significantly became the drive for administrative reform during 

Thaksin administration mainly came from Thaksin‟s strong belief in the supremacy of 

the management of the private sectors over the traditional bureaucratic administration.  

 

For example, he has shown his admiration to many foreign management experts who 

have written widely read books relating to especially private sectors management.  He 

has many times recommended to the public to read the books from the list of 

management books given by him. The points that these books stress is usually 

concerned with are profit making and the maximization of efficiency in the private 

organizations. The examples of these books are Why CEOs Fail, Why Smart Executives 

Fail, As the Future Catches You, What the Best CEOs Know: 7 Exceptional Leaders 



45 

 

 

and Their Lessons for Transforming any Business, The New Law of Demand and 

Supply, and The Mystery of Capital. In addition, several management professors and 

successful businessmen such as Deepak C. Jain, the Dean of Kellogg School of 

Business Administration at Northwestern University, Michael Porter from the Harvard 

Business School, the Deputy Prime Minister Somkidd Jatusripitak, a former lecturer 

from the business school at the National Institute of Development Administration 

(NIDA), Bangkok, and CEO of Shin Corporation (the telecommunications 

conglomerate founded by Thaksin) were invited to give lectures to senior government 

officials such as provincial governors and ambassadors. (Bowornwathana 2004: 143.) 

 

But most importantly, the admiration for the business practices of Thaksin perhaps 

comes mostly from his own life experience. Thaksin was born as a member of one of 

the most successful entrepreneurial Chinese–origin families in a province in the 

northern part of Thailand. As a young man although he was educated in the field of 

policing, he never stopped having an aspiration to become a successful entrepreneur. 

After quitting the official post, he started from small business. But his immense 

business success actually started in the late 1980s since he continued to win several 

telecom concessions from the government. And since his conglomerate managed to 

survive the 1997 Asian financial crisis quite well, he became one of the most successful 

and wealthiest businessmen in Thailand (Phongpaichit et al. 2004: 25–41). From more 

than 30 years of experience in managing and directing his businesses, Thaksin was 

strongly confident in his own ability as a good leader figure. Thus when he entered 

politics, he believed that to manage a country is merely similar to managing a company. 

This perspective of Thaksin is clearly evident even in his first “political testament” 

stated in 1999. 

 

“Thailand can be compared to a large–scale company that has to seek profits in 

order to provide for its large number of employees by producing goods to sell in 

competition with other countries….The proper role of MP is to manage the 

nation’s biggest organization, Thailand Company. Politics are just the outer 

surface. Management is the substance for moving Thailand ahead as an 

organization.” (quoted in Phongpaichit et al. 2004: 102.) 

 



46 

 

 

From this statement, it is obvious that his belief is largely market–oriented. For him as 

he perceived it, a country equals simply a company, and that he who is elected to 

become the country‟s leader should hold the post that equals to a company‟s Chief 

Executive Officer (CEO) who should be able to freely exercise the absolute power 

through the use of his entrepreneurial skills in the process strategic decision making 

relating to management in the “Thailand company”. The CEO prime minister similar to 

a super CEO of a private company should be situated as well on top of the single 

pyramid of hierarchy within his organization. The heads of various units should also act 

as CEOs who to a certain extent have authority to make decisions in their units; 

however such decisions must be coherent with the decisions made by the super CEO 

prime minister (Bowornwathana 2004: 142). The national resources as well as human 

resources of the country should be conceived as commodities that could be traded in the 

global market. In this view, national economy is treated like a business. And for a 

business to stay successful in the era of globalized cutthroat economy, it has to stay 

competitive and continue making profits. The government should have its roles in 

protecting, assisting and promoting the interests of domestic firms and sectors 

(Phongpaichit et al. 2004: 102).  

 

 

3.2. Pressure from Citizens and Chance Event 

 

The event of the 1997 East Asian financial crisis described earlier briefly in the second 

chapter sent tremendous shockwaves of impacts on Thailand‟s economy and society. It 

should be considered as the most important chance event since it created pressure from 

the Thai citizens which led to the rise of Thai Rak Thai and Thaksin Shinawatra. 

 

The government of the time which was led by General Chavalit Yongchaiyudh, the 22
nd

 

prime minister‟s of Thailand had no choice but to devaluate the baht. This devaluation 

of the currency led to the modification of the exchange rate policy. The situation was 

worsened after the change was done and it eventually dwindled down into the collapse 

of the economy of the country. The shock was great since the crisis hit the country by 

surprise for many people. Since the 1980s Thailand has engaged more and more in 



47 

 

 

globalization. Since then it began its rapid process of industrialization and financial 

liberalization to enhance its competitiveness in the global market. According to Baker 

and Phongpaichit, (2005: 253–255) by the early 1990s, the country could achieve 

doubled–digit economic growth because the increase in export volume in manufacturing 

and service sectors as well as the flood of foreign direct investment and private capital 

inflows resulted from the removal of interest control, the more accessibility of the stock 

market, and the installation of offshore banking system.  

 

With the availability of cheaper interest rates for offshore loans and a perceived fixed 

exchange rate, the Thai private sector continued to borrow the short–term loans and a 

lot of the borrowed money was invested excessively into speculative markets, especially 

for property which is a risky and non–tradable sector. And at the same time, the profits 

made in the export manufacturing sector was also decreasing because the availability of 

infrastructure to support such swift economic growth was not sufficient and because the 

rising wages of the labors whose education and skills had not adequately improved 

corresponding to the higher requirement of the upper–level of industrialization that the 

high growth had brought. Thus Thailand gradually lost its competitiveness among the 

countries that offered manufacturing base for low–value added products.  

 

Without any effective management measure by the government, the over–borrowing to 

invest in the non–productive sectors and decrease of profit ultimately led to the slow–

down of export growth because the manufacturing sector could not sustain its 

competitiveness. The balance of payment deficit soared and the foreign capital began to 

leak away. The baht was increasingly subject to speculative attacks from 1996, and this 

intensified in mid–1997.  

 

Initially, the Bank of Thailand (BOT) spent large amounts of foreign reserves to defend 

the currency. However, it reserve could not match the enormous funds of the foreign 

speculators. Thus, Thailand had no choice but to apply for a US$17.2 billion loan from 

the International Monetary Fund (IMF). The IMF demanded Thailand to float the baht 

on July 2, 1997 as well as required Thailand to raise tax and interest rates, close weak 

financial in