Document of The World Bank FOR OFFICIAL USE ONLY OF THE PRESIDENT OF THE TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF THAILAND

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO $17 MILLION TO THE KINGDOM OF THAILAND FOR A LAND REFORM AREAS PROJECT August 26, 1982 Report No. P-3381-TH This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS Currency Unit - Baht (B) $1.00 B 23 B 1 = $0.04 B 1 million = $43,478 ABBREVIATIONS AND ACRONYMS ALRO - Agricultural Land Reform Office BAAC - Bank for Agriculture and Agricultural Cooperatives LRA - Land Reform Area THAI FISCAL YEAR October 1 - September 30

3 FOR OFFICIAL USE ONLY THAILAND LAND REFORM AREAS PROJECT Loan and Project Summary & Borrower: Amount: Terms: Project Description: Kingdom of Thailand $17 million equivalent 25 years, including 6 years grace, with interest at 11.6% per annum. The project will contribute to the intensification of rainfed agriculture, the expansion of agricultural exports, the alleviation of poverty, and improved land use. It will pursue these aims by strengthening the capability of the Agricultural Land Reform Office (ALRO) to implement a series of land reform and development projects on encroached public lands and by demonstrating the viability of a land reform and infrastructure development model in an initial set of nine land reform areas (LRAs) of 192,000 ha affecting some 35,000 low-income families. Furthermore, it will promote appropriate land use by releasing the LRAs from forest reserve status through degazettement and by promoting soil conservation on sloping land. Finally, it will facilitate the absorption of the LRAs into the provincial administrative framework. The major risk associated with implementation of the project concerns the fact that ALRO, as a relatively young institution, has not yet had extensive experience in implementing land distribution measures and coordinating the activities of other agencies involved in LRAs. The extensive use of technical assistance and the adoption of a subproject approach are meant to minimize this risk. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

4 - ii - Local Foreign Total Estimated Costs: ($ million) -- Institutional development Land reform Infrastructure Project preparation Subtotal Physical contingencies Expected price contingencies Total Project Cost /a Financing Plan: Government The Bank for Agriculture and Agricultural Cooperatives IBRD Total Estimated Bank FY Disbursements: ($ million) Annual Cumulative Rate of Return: 14% Staff Appraisal Report: No TH, dated August 23, 1982 IBRD Map: No /a Including $1.5 million of taxes and duties.

5 REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE KINGDOM OF THAILAND FOR A LAND REFORM AREAS PROJECT 1. I submit the following report and recommendation on a proposed loan to the Kingdom of Thailand for the equivalent of $17 million to help finance a Land Reform Areas Project. The loan will have a term of 25 years, including 6 years of grace, with interest at 11.6% p.a. PART I - THE ECONOMY 2. A Basic Economic Report entitled "Thailand: Toward a Development Strategy of Full Participation" (Report No TH) was issued on September 18, Subsequently Thailand's economic situation deteriorated, and an economic report entitled "Coping with Structural Change in a Dynamic Economy" (Report No TH), which proposed a medium-term strategy to deal with the problems, was discussed with the Royal Thai Government in September 1980 and issued on January 8, A country economic mission visited Thailand in June 1982 and is expected to issue a Country Economic Memorandum in February Country data are given in Annex I. Recent Political Developments 3. Frequent changes at the top levels of government have characterized political developments in Thailand until recently. General Kriangsak Chomanan was Prime Minister from November 1977 to February His third cabinet resigned following increasing public and parliamentary criticism of its economic policies. General Prem Tinsulanonda was elected by the National Assembly as Prime Minister after receiving the support of nearly all major political parties. General Prem's government, formed in March 1980, included leaders from the political parties which supported him. General Prem soon announced his government's policies on a number of issues including economic and social development. These policies place high and immediate priority on accelerating rural development, raising rural incomes and improving health and education. Particular emphasis was given to generating more jobs, and a rural public works program was included as a major element in the strategy. The Government also committed itself to containing inflation, although it recognized the need for a substantial adjustment of energy prices and most public enterprise tariffs. Furthermore, it decided to institute reforms in monetary and fiscal policy and to reduce the trade deficit through improved export performance and development of domestic energy resources. 4. After a period of political consolidation, the Government began to take steps to implement these policies in the fall of In March 1981, however, the social action party and other coalition parties withdrew from the

6 -2- cabinet on an issue of handling fuel oil contracts and a new cabinet was formed comprising members of the United, Chart Thai, and Democrat parties as well as a number of technocrats. Shortly thereafter there was an attempted coup by a group of military officers which, however, failed. During much of the summer of 1981, the political position of the second Prem cabinet appeared to be weak, particularly in the wake of the devaluation of the baht against the dollar in July, which resulted in much public criticism. Since then, however, the Prime Minister's position strengthened, not least because of the relatively favorable economic developments during 1981, especially in the agricultural sector. In December 1981, the Government's parliamentary basis was broadened significantly when the Social Action Party rejoined the cabinet. Currently, it is expected that Prime Minister Prem will remain in government until the general elections to be held in April 1983, and possibly beyond. Past Economic Trends 5. The 1960s and early 1970s were a period of unprecedented economic development in Thailand, with GDP growth averaging 7-8% per year (or 4 to 5% per capita). Real agricultural growth of nearly 5% per year, based largely on an expansion in cultivated area and development of new crops in response to export opportunities, was a major factor contributing to these developments as well as to a sustained growth of exports. An increase in the investment level from about 20% to 27% of GDP contributed to rapid industrial growth. Investments were largely financed by domestic savings, keeping the debt service ratio quite low. The incidence of poverty was reduced substantially, from about 57% in 1962/63 to about 31% by 1975/76. However, poverty still remains a problem, and significant regional disparities exist, with the Central Region, including Bangkok, not only having the highest per capita income, but also being much better served by roads, telecommunications, schools, public health and other services than the other three regions, the North, the Northeast and the South. Considerable variations also remain within regions: farmers who have diversified into the new cash crops have in many cases succeeded in crossing the poverty line, while the incomes of those unable to shift out of subsistence rice culture have stagnated. By the mid-1970s it became apparent that Thailand was facing increasingly difficult problems of development, including the lack of new arable land to continue to absorb the rapidly growing labor force, and an emerging balance of payments constraint as a result of deteriorating terms of trade. In order to deal with such problems the country needed to shift its pattern of growth from one based on the extension of land under cultivation and on import substituting industries to one based on increasingly intensive use of land and on industries producing for domestic and export markets under competitive conditions. 6. Since the mid-1970s Thailand's development problems have been compounded by adverse external factors including oil price increases, a resurgence of inflation and slow growth in developed countries. A relatively high rate of overall growth was maintained (8.6% per annum between 1975 and 1978, 6.0% in 1979 and 5.8% in 1980) but this was accompanied by accelerating inflation, large fiscal and external deficits and growing dependence on

7 foreign borrowing. Consumer prices increased by 8% in 1977 and 1978, by 10% in 1979 and by 20% in The overall Central Government deficit reached 4.4% of GDP in Notwithstanding continued rapid export growth, the current account deficit came close to 5% of GDP in 1977 and 1978, but it amounted to 7.7% of GDP in 1979 and 6.2% of GDP in 1980; consequently there has been a rapid accumulation of Thailand's initially low external debt. 7. Over the years the Government was slow in responding to the changing internal and external conditions, but, beginning in 1979, policy adjustments were undertaken at a gradually accelerating pace. They included sharp increases in prices for most petroleum products and electricity; measures to increase government revenues; amendments to the usury laws, which permitted an increase in interest rates; and the introduction of regulations to increase financial stability and exercise more monetary restraint. In the second half of 1980, the Government began to give serious attention to developing a longer-term comprehensive program for the economy, and continued to implement necessary, but politically contentious, economic decisions. In October 1980 price controls were lifted on 29 of 36 goods. In the same month the Government started on a reform of the tariff structure, reducing import duties on 10 categories of electrical goods by between 10% and 60%. In November, retail prices of sugar, which had fallen out of line with international prices, causing domestic shortages, were increased by 60%. In a number of successive steps, electricity and petroleum prices were increased further, and by mid-1981 they were nearly two-and-a-half times as high as at the start of During the first half of 1981, charges for other public services (water, transport, communications) were increased substantially (most by at least 50%). During this period, the Government also introduced various fiscal measures designed to contain the central government deficit. 8. Despite the effect that these measures inevitably had on the price level and on effective demand, economic performance in most areas appears to have been good during 1981 with GDP increasing at about 7%. Agricultural production and incomes increased rapidly, due to favorable weather and, until mid-1981, agricultural export prices, and the demand and interindustry effects of a buoyant agricultural sector stimulated the other sectors of the economy. In 1982 a slowdown in economic activity is expected, in part as a result of a projected decline in the growth rate of agriculture. The extent * of this slowdown depends significantly on weather conditions during the second half of the year and on the impact of the substantial drop in commodity prices (only partly cushioned by a drop in commodity taxation). On the expenditure side, the weak performance of private investment is notable, especially during the second half of 1981 and the first half of Among the indicators of a weak investment demand is the substantial reduction in the imports of capital goods and of intermediate goods for capital goods production which occurred in the last quarter of 1981 and the first four months of 1982, when compared with the same quarters of the preceding year. Overall the growth prospects of the Thai economy for 1982 have continuously weakened since the second half of Continued high interest rates at home and abroad, substantial reductions in commodity prices and a weaker outlook for export demand, lower than expected construction activity, and an unfavorable and

8 -4- uncertain investment climate are likely to result in a growth rate of 5% or possibly less for Associated with the slowing of international price level increases and recently slower economic expansion at home is a reduced rate of domestic inflation of 13% in 1981, and an expected 7% in The balance of payments situation worsened slightly in 1981 as compared with 1980 as the current account deficit reached 6.9% of GDP in 1981, in the wake of an export shortfall and relatively buoyant import demand in the first half of For 1982, however, the current account deficit is expected to drop to 4.2% of GDP due to a decline in imports during early 1982 and due to continued weak import demand but relatively steady export performance forecast for the remainder of the year. The budgetary position of the Government which had shown signs of improvement between 1980 and 1981, deteriorated substantially in fiscal year 1982, reflecting to a significant extent the reduction in imports (and thus import tariff and business tax revenues) and the drop in export tax revenues as a result of lower tax rates and reduced product prices. Development Prospects and Constraints 10. For the remainder of the decade, many of the positive features which contributed to Thailand's rapid socio-economic development over the past two decades will continue to do so. These factors include a relatively equitable distribution of rural land, responsiveness of Thai farmers to economic incentives and improved technology, provision of infrastructure by the Government, and the dynamism of the private sector in both industry and agriculture. Also, major gains have been made in family planning in recent years, slowing the annual rate of population growth from about 3% during the 1960s to an estimated 2.1% in 1981 (but only affecting labor force growth two decades later). A new favorable factor is that the first phase of the infrastructure to tap the substantial natural gas reserves in the Gulf of Thailand was completed in September 1981, enabling a gradual but significant reduction in Thailand's dependence on foreign oil. 11. The recent developments have, however, demonstrated that the Thai economy is not immune from adverse international developments, such as low international economic growth, high interest rates, and declining terms of trade, resulting in lower domestic growth and a poor investment climate. What is more, fiscal measures have as yet fallen short of reestablishing balance in the Government's accounts. In response to these challenges, the Government has searched intensively for policy alternatives which will correct the fiscal and external imbalances without undue consequences for the growth of incomes and employment, especially for the poor. Its efforts are reflected in the Fifth Five-Year Plan, which covers the period October

9 to September The major (and interrelated) objectives are equity, financial stability, and national security; growth is seen as a derived rather than a primary objective. The Government aims at reconciling these objectives over the five-year period of the Plan, partly through a reduction in lower-priority expenditures, but mainly through medium-term structural adjustments which improve production incentives and increase the efficiency of the economy, and improve its competitiveness, both in the external and domestic markets. The implications of the recent slowdown for longer term growth and for the achievement of the Fifth Plan targets will be assessed in the preparation of the forthcoming Country Economic Memorandum, as will be the requirements for narrowing the fiscal deficit through measures to strengthen the underlying responsivemess of the Thai tax system and to ensure a more efficient utilization of public sector resources. 12. To assist it in realizing the objectives of the Fifth Plan, the Government has sought the assistance of the IMF and the Bank. Agreement was reached with the Fund on a major standby program, which covers a two-year period starting in June 1981, and amounts to SDR million. In addition, the Fund in July 1981 provided Thailand with SDR 186 million under its Compensatory Financing Facility. With regard to the Bank, the Government has sought assistance in further developing and implementing the structural adjustment program, incorporated in the Fifth Plan, through a series of structural adjustment loans. The first such loan was approved by the Executive Directors on March 2, Financing Requirements 13. While the Government is making considerable efforts to improve the efficiency and effectiveness of its spending, the implementation of policies needed for a satisfactory rate of economic and social progress will require continued growth in the absolute level of public expenditures, though they are expected to remain constant relative to GDP. Much greater efforts will be required to mobilize both domestic and external resources than in the past. The Government's domestic revenue, as a percentage of GDP (about 14% for 1978 to 1980), is low compared to other developing countries at similar levels of development. Recently the Government has taken steps to revise the tax structure and to improve collections. Further tax measures are planned, particularly in the area of improved tax administration and structure. In addition, the financial situation of state enterprises, which has already improved in the wake of recent tariff increases, is expected to continue improving as a result of appropriate pricing policies. 14. Despite these fiscal policy measures and the ambitious structural adjustment policies to be implemented in the agriculture, industry and energy sectors, the demand for external resources will increase. Macroeconomic projections indicate that the current account deficit will remain at levels over $2 billion per annum, but will decline as a share of GDP to about 4% in Even the realization of this target will require large amounts of external borrowing, totalling about $25 billion over the period , of which about half is expected to be in the form of public and publicly

10 -6- guaranteed debt. Assuming a significant level of concessional assistance, total debt service payments as a percentage of exports of goods and non-factor services will rise from 11.6% in 1980 to 17.9% in Given the diversification of Thai commodity exports and the continued expansion of agricultural and manufactured exports expected as a result of appropriate structural adjustment policies, these debt service requirements should be sustainable. 15. Official donors, particularly Japan and the development banks, have been expanding their programs to meet a larger part of Thailand's growing resource requirements. The rest has been financed through syndicated loans and bond issues. The Government has established a Foreign Loan Policy Committee to coordinate and approve all foreign borrowing by the public sector. The Bank of Thailand is improving its procedures for recording private borrowing abroad in order to keep track of total foreign debt. External agencies, including the Bank Group, have in recent years increasingly concentrated on project lending to Thailand in some sectors that have high social benefits, but low foreign exchange savings or earnings. To achieve the level of external resource transfer that is now required, it is necessary, in selected projects where the foreign exchange component is low, to finance some local currency expenditures. PART II - BANK GROUP OPERATIONS IN THAILAND 16. Thailand first borrowed from the Bank Group in 1950 for a railway project and, as of March 31, 1982, had received 69 IBRD loans (including two third window loans) and six IDA credits, totalling (net of cancellations) $2,558 million in loans and $125 million in credits. As of that date, $1,337.3 million remained undisbursed on effective loans and credits. No IDA credits have been extended to Thailand since FY79. Annex II contains a summary statement of Bank loans, IDA credits, and IFC investments as well as the status of Bank Group projects under implementation. 17. The sectoral distribution of Bank loans and IDA credits, in dollar terms, has been as follows: 30% for energy; 28% for agriculture and rural development; 17% for transportation; 6% for telecommunications; 5% for urban development; 4% for education; 1% for industry; 2% for population/health/ nutrition; and 6% for structural adjustment lending. Overall implementation of Bank projects in Thailand has improved steadily during the past five years. Thailand's disbursement ratio increased from 14.5% in 1977 to 21.2% in These rates compare well with other countries. In 1980, for example, the ratios for two comparator countries, the Philippines and Malaysia, were 15.4% and 13.0%, respectively. 18. Over the past six years, the Bank has shifted its lending in Thailand from a program dominated by investments in traditional infrastructure projects (accounting for over 80% of the lending through FY75) to a program which places increasing emphasis on assisting the Government's efforts to reach the poorer segments of its population more directly. Since

11 -7- FY76, investments in transportation, power, water supply, telecommunications and industry have accounted for about 60% of Bank Group lending and about half of these, in dollar terms, were for projects specifically designed to benefit the rural population. The proportion of Bank lending to the agricultural/rural development sector has trebled, accounting for about 30% of lending operations since FY76. The design of projects in this sector has also changed, from exclusively large irrigation projects to a more balanced program covering irrigation (including land development and support services to the farmer) and a variety of innovative projects to assist farmers outside the central flood plain (rubber replanting, livestock, agricultural extension, research and credit, and rural development). Projects in the social sectors which, prior to FY76, were limited to three in education, accounting for 6% of the program, have both diversified and grown. In recent years education, population and low-income housing projects have accounted for about 10% of the program. 19. For the future, the Bank's assistance objectives are to support the Government's development efforts, as articulated in its Fifth Five-Year Plan for the period , to address: (a) the long-term issues of poverty alleviation, promotion of employment, and reduction of income disparities; and (b) the medium-term issue of restructuring the Thai economy through the intensification of agriculture, efficient development of the industrial sector, promotion of domestic energy conservation and development, increased public resource mobilization, and improved institutional capacity in the public sector. In addition to these two broad objectives, Bank assistance in Thailand also aims at moving from project-specific to sectoral lending, especially in agriculture, industry, energy, and education, and at strengthening the local Thai capacity for policy analysis and formulation. 20. In implementing this strategy, projects in the areas of agriculture and rural development will seek to generate employment and income growth particularly among the poorer farm households in the rainfed areas of the country and will support the structural adjustment process by aiming at continued growth of agricultural production and exports through intensification. Lending for transport and communications will increasingly aim at expanding the rural road system and thus be in support of agricultural and rural development for the medium and longer term. In the urban development and human resources sectors, Bank lending will be geared to strengthening the long-term capacity of Thailand to transform itself efficiently from a primarily agricultural and rural economy to a relatively more industrial and urban economy, while also supporting the Government's goal to address basic human needs in the more disadvantaged rural and urban areas of the country. Lending in the energy and industry sector will be designated to support structural adjustment and growth through the efficient development and utilization of domestic energy resources and the strengthening of the financial infrastructure. Finally, structural adjustment lending will strengthen the Government's structural adjustment program through studies, development of action programs, and policy actions in the areas of agriculture, industry, energy, fiscal policy, and institutional development.

12 Bank loans and IDA credits to Thailand, disbursed and outstanding, amounted to $1,063.2 million as of March 31, As of December 31, 1980, Bank and IDA debt disbursed and outstanding accounted for 11.7% of total debt (disbursed and outstanding), while the Bank Group's share of total debt service payments amounted to 8.3% in This is not excessive in view of Thailand's modest overall external debt (18% of GDP in 1980) and the declining shares of Bank debt in total debt, and of Bank debt service in total debt service. 22. As of March 31, 1982, IFC had made commitments totalling $110.6 million in nine projects in Thailand. IFC's investments have been primarily in industry and in the development of financial institutions aimed at mobilizing domestic resources and providing financing to smaller enterprises. Prospects for increased IFC operations in Thailand have been enhanced by expanding private sector investment activity, and consultations with the Government have identified several areas where IFC's assistance may be needed. These areas include very large and complex projects such as a proposed soda ash project to serve the ASEAN community, projects in the petroleum and downstream petrochemical sector, and projects in the agricultural sector. A tantalum processing project and a shrimp farming venture are being considered by IFC management. PART III - THE AGRICULTURAL SECTOR Background 23. The Thai agricultural sector currently employs about 50% of the labor force, produces about 30% of Gross Domestic Product, and provides about 60% of total export earnings. The overall growth of the sector has been excellent, averaging about 5.3% p.a. during , largely as a result of movement into higher valued crops and expansion of the area under cultivation. This expansion, sometimes illegally into areas reserved for forest, proceeded at more than 4% p.a. in the 1960s and early 1970s. Now, however, with the exception of a few remaining forest and brush areas suitable for agriculture, the expansion of the area of farm holdings is coming to an end, and there is a need to increase output from the present area under cultivation, largely by increasing the planted area within holdings and raising crop yields. 24. With some 4.5 million farm families occupying about 24 million ha, farm sizes are necessarily small, but the size distribution is not particularly skewed, in general. Ninety percent of the cultivated area is rainfed and only 10% irrigated. In the 1979/80 season, rice was planted on over 60% of the cultivated area, rubber on 10%, maize and cassava together about 15%, and sugarcane 5%. Maize and cassava exports are now higher than the value of rice exports.

13 Despite agriculture's overall good performance during the past two decades, large numbers of the rural population remain poor in absolute terms. It is estimated that about one third of all agricultural households or 8 million people remain in absolute poverty (with incomes below $148 per capita), and many have had little or no improvement in real incomes since Government Objectives and Strategy 26. The main objectives of the Government's agricultural policy are to increase agricultural production; to alleviate rural poverty and redress inter-regional income disparities; to expand agricultural exports rapidly to help the balance of payments; and to utilize more fully the available land suitable for agriculture, protect against deforestation, conserve natural resources, and minimize the deterioration of the environment. Its efforts to pursue the above objectives involve the following major strategies: the creation of an environment in which the private sector will have the needed incentives and confidence to boost production, marketing and exports; demarcation of poverty areas in which line agencies are to focus their programs, particularly for agriculture, rural infrastructure (physical and social) and community development; and the establishment of a land-use policy for better utilization of land suitable for agriculture, including the required legal and regulatory framework to give individual farmers title to their land and a clear demarcation of zones reserved for forestry and conservation. 27. The Bank fully supports the broad outline of the Government's objectives and strategies; its lending program for Thailand's agricultural sector is geared to strengthening the technical and infrastructural bases for improving production, and the expansion of Government's overall capacity for project planning, coordination and implementation. Where possible, projects are oriented toward poverty alleviation by increasing productivity (and thus farmers' incomes). The main activities supported by the Bank in agriculture are irrigation, tree crop development, research, extension, credit, livestock, rural infrastructure, and land development. Land Reform and Development Subsector 28. Issues. In the context of an expanding cultivated area, efforts to intensify agricultural production had been limited to irrigated areas. However, significant extension of the cultivated area is no longer possible, and increasing attention is being directed toward raising productivity in rainfed, areas as well. Two major problems currently hamper this development. First, land classification in Thailand frequently runs counter to the land's actual suitability. This is particularly a problem in lands officially classified for forestry, which now cover up to 26 million ha or half the country's total area. In spite of the classification, about 6 million ha of the areas classified as forest have been encroached by approximately one million families, and some villages have been established for more than 100 years. Furthermore, roughly two-thirds of the forest that

14 - 10 has been settled appears to be suitable for agriculture, and it is estimated that over 50% of total maize and cassava production, which has been a major factor in Thailand's recent agricultural and national growth, comes from encroached lands. Within these areas, land distribution is more skewed than elsewhere, and the level of infrastructure and public services is substantially below that in neighboring, legally-settled areas. Agricultural productivity is also relatively low. 29. Security of tenure remains a major problem in many areas throughout the country, and 40% of all agricultural land holdings, including the 6 million ha classified for forest, is being occupied with no legal certification. Farmers without any official claim to land face difficulties in obtaining institutional credit and often must depend on relatively expensive informal sources. Inadequate security of tenure also gives farmers little incentive to make long-term improvements to their holdings, such as soil conservation works. This is particularly a problem in the encroached public lands, which are usually transition areas between traditional agricultural lowlands and forested highlands, and which often have sloping portions requiring soil conservation measures. 30. Development Programs. When new land for development was widely available, development programs for public lands were primarily aimed at settling the landless in new areas. More recent programs have placed greater emphasis on intensifying development in populated areas in order to raise incomes of small farmers and curtail further migration. In recognition of the urgent need to address the problems of land use and development, the Government has established a National Land Policy Committee and is reviewing land problems and preparing land-use policies and development programs for implementation under the Fifth National Economic and Social evelopment Plan ( ). 31. The Agricultural Land Reform Office (ALRO). ALRO, in the Ministry of Agriculture and Cooperatives, was created by the Land Reform Act of 1975 to improve land distribution and security of tenure in specified land reform areas (LRAs). ALRO currently has responsibility for land reform and development on I million ha. Its activities are expected to help bring about a more equitable income distribution among the households reached, as well as an increase in both production and incomes by (a) providing security of tenure, which encourages greater investment; and (b) improving infrastructure, which raises productivity and directly affects living standards. ALRO is also introducing soil conservation measures in areas with significant erosion problems. Thus far, 73 LRAs have been established by Royal decree, including 39 LRAs on encroached public lands suitable for agriculture (700,000 ha) and 34 LRAs on private lands (300,000 ha). About 50% of the LRAs on public lands are located in the Northeast Region, 30% in the Central Region and 20% in the North. About 85% of this area is in land classified as forest.

15 ALRO is initially concentrating on developing the public lands under its jurisdiction. Physical and socioeconomic surveys as well as registration of landholdings have been carried out in most of the LRAs, and some rural infrastructure has already been provided in many of them. Three LRAs in which land reform has been completed have been degazetted - that is, reclassified as lying outside the national reserve forest - and farmers have been issued land use certificates, increasing their security of tenure and access to credit. The proposed project will accelerate the public lands effort by financing a land distribution and infrastructure development program covering nine LRAs. As appropriate land compensation arrangements are introduced, ALRO will increase its involvement in LRAs on private lands. 33. ALRO's early efforts at land distribution had limited success since the land was allocated rather mechanically according to a geometric pattern, without regard to previous holdings, topography, soil quality or other relevant agroeconomic factors. Recognizing these shortcomings, ALRO is adopting a more effective approach, which will be incorporated in the proposed project. 34. ALRO has also prepared two projects for external financing, one of which is the project now proposed for Bank financing. The second project involves the development of a private LRA covering nearly 13,000 ha and costing about $40 million; the Japanese Government is considering financing this project. PART IV - THE PROJECT 35. The proposed project was prepared by ALRO with assistance from the FAO/World Bank Cooperative Program, an FAO consultant funded by the UNDP and the Bank. The project was appraised in March/April Because of certain ambiguities in the ALRO Act, the Government was asked to provide a legal opinion, prior to negotiations, confirming ALRO's ability to carry out land reform in forest reserve areas. The legal opinion, provided by the Juridical Council in December 1981, stated that ALRO does not have legal authority to operate in such areas and recommended that they be reclassified (degazetted) before ALRO undertake land reform in them. While it had been ALRO's practice to degazette LRAs only after land reform had been completed, the Government has decided to degazette those areas included in the project on an accelerated basis (see paragraph 55). Once these legal issues had been clarified, negotiations were held in Washington from July 12 to 16, 1982, with the Thai delegation led by H.E. Prok Amranand, Ambassador to the United States, assisted by Mr. Charin Atthayothin, Director-General, ALRO.

16 - 12 Project Objectives 36. The proposed project will contribute to the intensification of rainfed agriculture and the development of encroached public lands. The project will pursue this aim by strengthening ALRO's capability to implement a series of land reform and development projects in these encroached lands, and will demonstrate the land reform and development model for subsequent extension to other areas. Detailed Features of the Project 37. The main features of the project are: (a) strengthening of ALRO's capability to plan and implement land reform and development projects through the provision of consultancy services and the training of staff through relevant courses and foreign study tours; (b) implementation by ALRO, over a five-year period, of a land reform program in nine land reform areas in the North, Northeast and Central Regions currently gazetted as forest land. Project LRAs were selected on the basis of the effectiveness of the respective Provincial Land Reform Offices, the diversity of agricultural conditions represented, and their proximity to each other. They extend over an area of 192,000 ha of encroached forest lands, of which about 173,000 ha are to be covered by the land reform program. The program involves the transfer of land from farmers with holdings over 8 ha to farmers with holdings below the financiallyviable minimum size established for each LRA (generally about 4-5 ha). Until the farmers can be given full title, they will receive land-use certificates from ALRO reflecting the new landholding pattern; (c) development of infrastructure in the project LRAs consisting of: the construction or rehabilitation of 430 km of access roads and service tracks; soil conservation works on about 4,500 ha; small surface water or groundwater irrigation schemes, comprising 75 rock weirs and 500 shallow tubewells irrigating a total of 4,200 ha; water supply facilities, comprising 130 dugwells and 20 tubewells; and construction of 115 primary schoolrooms and 10 health centers; and (d) strengthening of the project preparation system through the implementation of sector and subsector studies, expansion of the project preparation capacity of selected agencies, and preparation of specific projects. A Staff Appraisal Report entitled "Land Reform Areas Project" (No TH, dated August 23, 1982) is being distributed separately. Supplementary data are provided in Annex III.

17 Project Cost and Financing 38. Total project costs (including about $1.5 million of taxes and duties) are estimated at $31.0 million, of which $7.8 million or 25% represents foreign exchange. Physical contingencies of 15% for civil works and 10% for vehicles and equipment have been added to base costs. Price increases for local costs were assumed at 12% in 1983, 10% in 1984, 9% in 1985 and 8% in ; for foreign costs at 7.5% in , and 6% in Expected price increases amount to 37% of base cost plus physical contingencies. 39. The proposed Bank loan of $17.0 million, amounting to 58% of total project cost net of taxes and duties, is equivalent to the total foreign exchange cost of the project plus $9.2 million of the local cost. Local currency financing is considered justified in order to give the Bank a significant share in project financing and achieve the desirable level of resource transfer. The Government will directly finance $7.2 million, or 24% of net project cost, which includes a contribution of $0.6 million to the Government-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) as a guarantee fund for land compensation credit to be supplied by BAAC. BAAC's contribution to net project cost of $5.3 million (18%) will be provided on its normal terms; its current rate of interest is 14%, and it is expected to stay at this level, which is about 2% in real terms, during the project. Credit will be provided for up to 15 years, including grace periods of up to 5 years. 40. In addition to its contribution to the financing of project cost, BAAC will provide credit at its normal terms to project beneficiaries for production inputs and miscellaneous agricultural investments. Shortterm production credit will be made available to beneficiary farmers in a timely manner and will include the cost of maintenance of soil conservation works. The maximum annual requirement of about $4.0 million for short-term credit is expected to be reached in the fifth year of the project. Mlediumterm investment credit will be made available to project beneficiaries to finance equipment, vehicles and tree crops. The total amount of loan funds required for these items over the five-year period of the project is estimated at $0.8 million. Credit arrangements for the project will be stipulated in an agreement between BAAC and ALRO satisfactory to the Government and the Bank, signature of which is a condition of loan effectiveness (Section 5.01(a) of the draft Loan Agreement). Cost Recovery 41. Costs will be recovered to the maximum extent feasible but since the incomes of project beneficiaries will approximate the relative poverty level at full development, some measure of subsidy is deemed acceptable. For components involving cost recovery through the credit mechanism (land compensation, irrigation, tubewells and pumps) the subsidy resulting from the current interest rate will be the same as that received by BAAC's other borrowers. In the case of the soil conservation structures, there are significant benefits which do not accrue to participating farmers, and the

18 Government proposes to use the subsidy as an inducement for adoption of appropriate soil conservation works and practices. No special arrangements will be introduced for cost recovery on rock weir materials, roads, water supply facilities, schools, health centers, or for institutional development. Technical Assistance 42. Consultancy services will be provided for preparation of subproject proposals and assistance to ALRO in the review and implementation of those proposals, mapping, design and supervision of road construction, establishment and operation of road maintenance units, design and implementation of a monitoring and evaluation system, a study of ALRO's organization and procedures, and the carrying out of other relevant studies. This assistance is estimated to require about 600 man-months of professional expertise at a total cost of about $2.5 million. About 75% of the consultants are expected to be local. The average man-month cost (including salary, costs, fees, travel and local allowances) is expected to be $4,150. The average local man-month cost is $3,200 (462 man-months) and the average international man-month cost is $7,500 (138 man-months). Consultants will also be provided to assist in strengthening project preparation. All consultants and technical assistance retained under the project will be employed in accordance with Bank guidelines and with qualifications and experience, terms of reference and conditions of employment satisfactory to the Bank (Section 3.03 of the draft Loan Agreement). Procurement 43. Due to the relatively small unit size, varied timing and geographical dispersal of civil works to be carried out under the project, international competitive bidding would not be appropriate. Roads ($8.6 million total; $300,000 average contract size), drilled water supply wells ($0.1 million total; $35,000 average), schools ($2.5 million total; $80,000 average), health centers ($0.4 million total; $50,000 average) and miscellaneous buildings ($0.5 million total; $90,000 average) will be constructed by contract on the basis of competitive bidding advertised locally in accordance with procedures acceptable to the Government and the Bank. A substantial number of local construction firms, tractor contractors, and drilling contractors are capable of undertaking these types of works, and they have adequate capacity to meet project requirements. To the extent practicable, works will be grouped into contracts of the size indicated above for efficient execution and supervision. Rock weirs and dug wells will be constructed by beneficiaries under the supervision of ALRO. 44. Equipment ($0.6 million total) and vehicles ($0.8 million total; $65,000 average) needed for project implementation are varied in type, of small unit size, and to be procured by various agencies. Contracts will therefore be awarded on the basis of competitive bidding advertised locally in accordance with procedures acceptable to the Government and the Bank. Major manufacturers of equipment and vehicles to be utilized in the project either have plants in Thailand or are represented in Thailand.

19 In order to provide a measure of flexibility in the case of small civil works, items of equipment or quantities of materials, prudent shopping, involving a minimum of three quotations where possible, may be applied for items costing less than $20,000 each and $700,000 in the aggregate. When bids are estimated to exceed $300,000 for civil works or $100,000 for vehicles and equipment, the Bank's prior approval will be required before invitations to bid are issued and before contracts are awarded. Disbursement 46. Disbursements from the Bank loan will be made at the rate of 100% of the foreign exchange costs of directly imported goods; 100% (ex-factory) of the costs of locally manufactured goods; or 65% of other goods procured locally. The rate of disbursement will be 85% of expenditure for civil works and 100% for consultants, training, and data processing services. It is expected that disbursement will be completed by December 31, Project Organization and Management 47. Institutional Strengthening. ALRO has about 1,700 staff centrally located in Bangkok that undertake surveys, prepare recommendations on the proclamation of land reform areas (LRAs), formulate plans for land reform and improvement of infrastructure, and implement these development plans. Headquarters staff, together with about 600 staff of the Provincial Land Reform Offices operated by ALRO in 32 provinces, undertake the land reform programs and execute some of the infrastructure works. Other works are constructed by contractors supervised by ALRO, while the remainder (e.g., schools, health centers) are established and operated by other Government agencies in cooperation with ALRO The proposed project will strengthen ALRO's capacity to implement the land reform and infrastructure development program to be carried out under the project, while also enhancing ALRO's ability to undertake a series of similar programs in the future. A primary means of accomplishing this aim will be the introduction of a subproject approach to program implementation, with each of the nine LRAs treated as a separate subproject. This will facilitate the use of consultants, keep ALRO's workload manageable, and permit review of parts of the program as appropriate. Subproject proposals for each LRA will be prepared by teams of consultants with expertise in land reform, agriculture, rural engineering, and economics. Each subproject will be expected to meet specified technical and economic viability criteria, including a satisfactory rate of return, to be agreed between ALRO and the Bank. After review and, where appropriate, modification by ALRO, the Bank will be sent subproject proposals for its review and approval (Section 3.10 of the draft Loan Agreement). ALRO will also retain appropriate specialists to assist in reviewing and implementing the subproject proposals. Informal training for project staff will be provided by the specialists, and selected staff will be assigned full time to participate in the preparation of subproject proposals by the consultant teams. Formal training will be provided through courses in subjects

20 relevant to the project and through foreign study tours. As a condition of loan effectiveness, ALRO will retain an agriculturalist/soil conservationist, a rural works engineer and a rural development economist (Section 5.01(c) of the draft Loan Agreement). ALRO will retain consultants to design a monitoring and evaluation system by January 31, 1983, and by May 31, 1983 will provide a copy of the consultants' report on the proposed system for review by the Bank (Sections 3.03(a) and 3.04(a) of the draft Loan Agreement). To ensure that ALRO's organization and procedures are appropriate to its expanding responsibilities, ALRO will retain consultants by December 31, 1983 to undertake a study of the agency's existing structure and procedures and to recommend appropriate modifications. ALRO will provide a copy of the study, together with its proposals, for review by the Bank by December 31, The Government will take into consideration the Bank's comments in implementing the proposals (Sections 3.03(b) and 3.04(b) of the draft Loan Agreement). 49. Land Reform and Infrastructure Development Program. Overall responsibility for implementing the program will rest with ALRO, which will be directly responsible for all land reform activities and the execution of civil works when the timing of such investments in relation to land distribution activities are particularly crucial or when there is insufficient assurance of adequate performance by another agency. The Land Development Department and the Department of Agricultural Extension will be responsible for soil conservation activities, the Ministry of Education for the establishment of schools and the Ministry of Public Health for the establishment of health centers. These other agencies will carry out project activities under written agreements with ALRO, such agreements to be satisfactory to the Government and the Bank, and copies of the signed agreements will be provided to the Bank prior to disbursement for the relevant component (Section 3.02(b) and paragraph 4(b) of Schedule 1 of the draft Loan Agreement). 50. Program implementation will be coordinated by means of committees to be set up at four different levels of Government, with representatives of the implementing agencies and BAAC included in each committee. In the Government's view, this will allow the formulation of policy and coordination of project activities at the various levels, besides providing lines of communication from the ministerial to the field level. The project committees will be established by January 31, 1983 (Section 3.06 of the draft Loan Agreement). 51. ALRO will implement the project through its existing Divisions, with the Director of the Operations Division serving as Project Manager. In the project LRAs, field offices will be established for implementation of project activities. ALRO's Foreign Loan Project Office will have general responsibility for planning, training, budgeting, procurement, disbursement, coordination, and monitoring. ALRO will assign 56 full-time staff to the project - 36 in the field offices, 9 in the Operations Division, and 11 in the Foreign Loan Project Office. In addition, teams from ALRO's various Divisions will provide an average input of 40 man-years annually for project activities.

21 To the maximum extent possible, a Division will assign the same staff to work part-time on a particular LRA until the Division's activities in the LRA is completed (Section 3.01(c) and Schedule 6 of the draft Loan Agreement). 52. In each LRA, the program, in general, will be based on a variety of preparatory investigations including: a study of the existing political, social, economic and landholding structures in order to formulate the land distribution strategy; a census of all persons residing in the LRA and a survey of all claimed landholdings; mapping of land use and capability; and a socioeconomic survey to determine the minimum financially-viable holding for the area. In all the initial surveys, perceived needs of the residents and their priorities will be recorded. Meetings will then be held with village leaders, groups of farmers and farm families on an individual basis to explain the proposal for land distribution and infrastructure development, and to obtain reactions. Proposals will be modified as feasible to accommodate suggestions arising during this process. The land distribution program as agreed with the farmers will then be implemented, and boundaries permanently marked. Land-use certificates corresponding to the new landholding pattern will be provided, and infrastructure development will follow. ALRO is currently preparing implementation guidelines setting forth its organizational arrangements and procedures for execution of the project, including the parameters and procedures for land distribution and titling. Bank approval of these guidelines is a condition of loan effectiveness (Sections 3.02(a) and 5.01(b) of the draft Loan Agreement). 53. Under the project, a phased program of development will be followed in each of the selected LRAs, commencing with one LRA in the first project year, two in each of the second and third years, and four in the fourth year. The approach to be adopted and the activities to be implemented are based on ALRO's own experience and the recommendations of a consultants' study which draws on the experience of the various Thai agencies which have carried out settlement programs. Land distribution will be implemented in blocks of about 4,800 ha in order to complete operations in each block during a single dry season. For project LRAs, the cadastral and socioeconomic surveys have already been undertaken, and cadastral and topograhic maps prepared. Land claimants have also been registered. Furthermore, small land distribution schemes in areas of the order of 1,000 ha have been initiated by ALRO in six of the nine project LRAs. Therefore, after some additional survey work to investigate the power structures and formulate strategies, full-scale land distribution is ready to begin in the project LRAs. 54. In order to minimize the dislocation caused by land transfers but still to achieve a reasonably equitable distribution, a range of holding sizes will be allowed. The maximum size will be 8 ha, the area cited in most land reform legislation in Thailand. The minimum will vary among LRAs but will generally be 4-5 ha. Consequently, only farmers with holdings above the maximum will be subject to loss of land (with compensation), while all other landholders will either remain unchanged or gain land. Farmers losing land will be allowed to choose which part of their original holding they

22 wish to retain, and new holdings will be designed with a minimum change of existing boundaries. Compensation will be set at about 65% of current market value, which surveys indicate is acceptable to landholders. Since many of the farmers with excess land will sell the excess prior to intervention by ALRO, it is estimated that 9,500 ha of the 38,000 ha of excess land indicated by surveys in project LRAs will remain available for distribution under ALRO supervision. Land available for redistribution will be allocated first to farmers with holdings below the minimum viable size, and any remaining land will be allocated in minimum-sized holdings to laborers and families from outside the LRAs. Farmers receiving land will obtain credit from BAAC to cover the compensation amount. 55. Although the areas included in the project are still officially gazetted as forest reserve, their designation as LRAs is a step toward full recognition of their general suitability for agriculture rather than forestry. The status of the LRAs will now be further stabilized by: degazettement; development of basic infrastructure in the LRAs to the level of surrounding areas, which would facilitate integration into the economy; and assimilation of the LRAs into the local administrative structure. The Government has agreed that each LRA will be degazetted according to a schedule which will allow project activities to begin in a timely manner and will be integrated into the local administrative framework by the end of its development period (Section 3.12 of the draft Loan Agreement). Degazettement of the LRA to be developed in the first year of the project is a condition of loan effectiveness (Section 5.01(d) of the draft Loan Agreement). 56. Implementation and maintenance of project infrastructure works will be handled as follows: (a) Designs for the roads and tracks to be constructed initially have been completed by ALRO and will be reviewed by consultants. Works will be carried out by contractors under ALRO supervision with the assistance of consultants. ALRO will establish six small maintenance units to carry out minor repairs, and remedial maintenance will be carried out by contract. ALRO will utilize road and track design standards agreed with the Bank and will provide adequate maintenance for roads and tracks in the project LRAs during the project period, after which they will be transferred to provincial authorities. (b) Soil conservation works will be carried out on about 4,500 ha of sloping land susceptible to erosion. Under the supervision of the Land Development Department, diversion ditches and broad-based banks will be constructed by contractors. The Department of Agricultural Extension will advise farmers on the maintenance of conservation works and on agronomic conservation practices. Maintenance of the diversion ditches will be carried out by the Land Development Department by contract during the project period and by benefitting groups of farmers thereafter; banks will be maintained by farmers through incorporation into their plowing contracts, financed with credit from BAAC.

23 (c) Irrigation tubewells will be constructed by contractors and financed by credit from BAAC. Rock weirs will be constructed by the benefitting farmers under the supervision of ALRO, which will also provide the necessary materials. The weirs will be maintained by the benefitting farmers under the supervision of ALRO. (d) Dugwells for water supply will be constructed by ALRO using force account while tubewells for water supply will be constructed by contract under ALRO supervision. Users will maintain all wells under ALRO's guidance. (e) Schools will be established, operated and maintained by the Office of the National Primary Education Commission in the Ministry of Education. (f) Health centers will be constructed, operated and maintained by the Department of Health in the Ministry of Public Health. Sites will be selected according to the criteria used in establishing rural health facilities under the Bank's Population Project (Credit 767-TH). 57. Project Preparation. The capability of government agencies to formulate and prepare agriculture and rural development projects requires strengthening. The project will provide assistance for the implementation of sector and subsector studies, the expansion of the project preparation capacity of selected agencies, and the preparation of specific projects. Proposals will be submitted to the Bank for its approval prior to implementation. Accounts and Auditing 58. ALRO, the Land Development Department, the Department of Agricultural Extension, the Ministry of Education and the Ministry of Public Health will establish separate accounts covering all financial transactions related to project activities and will prepare annual statements of receipts and expenditures based on these accounts. The existing internal control systems are adequate for the project. Auditors satisfactory to the Bank will audit the project accounts and financial statements. The audit reports and audited financial statements will be sent to the Bank within nine months of the close of each fiscal year. Benefits and Risks 59. The project will strengthen ALRO to enable it to implement this and succeeding projects and thus has the potential to affect eventually roughly 4 million ha of encroached public lands suitable for agriculture and some 0.8 million low-income families. The proposed project covers nine LRAs, 192,000 ha and 35,000 families. Squatters in the LRAs will be affected in varying degrees, but generally the improvement of infrastructure and provision of

24 security of tenure will increase agricultural productivity and incomes, and land distribution will provide a relative increase in the assets and incomes of the poorest farmers. Project beneficiaries typically have incomes just under the absolute poverty level ($148 per capita) which will rise to about the relative poverty level ($260 per capita) at full development. The land reform and development model to be applied in the project, when suitably modified on the basis of experience, would be incorporated into succeeding projects on encroached public lands suitable for agriculture. Other benefits include improved quality of life through the provision of social infrastructure, and improved land use stemming from the degazettement of forest reserves and the introduction of the soil conservation works. 60. Due to the interrelated nature of the project's components, a single economic rate of return was calculated. The project's quantifiable benefits are associated with the proposed construction or improvement of 430 km of access roads and service tracks, which will have an impact on agricultural production and passenger transport costs. Calculation of the economic rate of return included all project costs excluding those for land compensation (which are transfer payments), social infrastructure (since benefits were assumed to equal costs), and project preparation (the costs of which are related to other projects). Based on 74% of total project costs, the economic rate of return for the project is estimated to be about 14%. A decline in benefits of 13% or a cost increase of 15% will reduce the economic rate of return to 10%. 61. There is a risk that ALRO, as a young and relatively inexperienced organization, might have some difficulty in implementing a project of this size and complexity, particularly in view of the sensitive nature of many of the policy issues involved. To minimize technical risks, the project was designed to utilize a subproject approach and includes considerable consultant input to permit project execution and simultaneously to train ALRO's staff so that they may assume responsibility for future projects. The Government is dealing with the difficult policy issues of land use and land tenure through the establishment of its National Land Policy Committee. Dialogue on these issues is being pursued under the Bank's Structural Adjustment Loan.

25 PART V - LEGAL INSTRUMENTS AND AUTHORITY & 62. The draft Loan Agreement between the Kingdom of Thailand and the Bank and the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement of the Bank, are being distributed to the Executive Directors separately. In addition to the features of the Loan Agreement which are referred to in the text and listed in Section III of Annex III, additional conditions of effectiveness are (a) signature of an agreement between ALRO and BAAC, (b) employment of an agriculturalist/ soil conservationist, a rural works engineer, and a rural development economist, (c) agreement by ALRO and the Bank on implementation guidelines setting forth ALRO's organizational arrangements and procedures for execution of the project and (d) degazettement of the LRA to be developed in the first project year (Section 5.01 of the draft Loan Agreement). 63. I am satisfied that the proposed loan complies with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 64. I recommend that the Executive Directors approve the proposed loan. Attachments A. W. Clausen President August 26, 1982 Washington, D.C.

26 -22- ANNEX I Page 1 of 5 T8AILAND - SOCIAL INDICATORS DATA SHEET THAILAND URZEENCE ROUPS (WEIGHTED AVWSGS ARZA (THOUSAND SQ. KM.) IST M- RZCZNT ZSTIMATE TOTAL MOST RECENT MIDDLE INCOMM MIDDLE INCOME AGRICULTURAL /b 1970 /b ZSTIMATZ /b ASIA A PACIFIC LATIN ANEICA A CARIBBZAN GNP PER CAPITA (USS) ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) URBAN POPULATION (PERCENT OF TOTAL) POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 68.0 STATIONARY POPULATION (MILLIONS) YEAR STATIONARY POPULATION IS REACHED 2070 POPULATION DENSITY PER SQ. KM PER SQ. KM. AGRICULTURAL LAND POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS YRS YRS. AND ABOVE POPULATION GROWTH RATE (PERCENT) TOTAL URBAN CRUDE BIRTH RATE (PER THOUSAND) CRUDE DEATH RATE (PER THOUSAND) GROSS REPRODUCTION RATE FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) /c USERS (PERCENT OF HARRIED WOMEN) FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA ( ) PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) /d PROTEINS (GRAMS PER DAY) r OF WHICH ANIMAL AND PULSE Td CHILD (AGES 1-4) MORTALITY RATE HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) INFANT KORTALITY RATE (PER THOUSAND) ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL /e URBAN ;T RURAL T ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL /f URBAN d RURAL f POPULATION PER PHYSICIAN /e POPULATION PER NURSING PERSON / e POPULATION PER HOSPITAL BED TOTAL /e URBAN Te RURAL ADMISSIONS PER HOSPITAL BED /e HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.5/L /e URBAN 5. 37;i T* RURAL Th AVERAGE NUMBER OF PERSONS PER ROOM TOTAL /e URBAN /. RURAL /e. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL URBAN RURLAL

27 ANNEX I Page 2 of 5 TRAILAND - SOCIAL INDICATORS DATA SHEET THAILAND REFERENCE GROUPS (WEIGHTED AVE;ES - MOST RECENT ESTIMATE)- MOST RECENT MIDDLE INCOME MIDDLE INCOME 1960 /b 1970 lb ESTIMATE /b ASIA & PACIFIC LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL /d MALE FEMALE ? SECONDARY: TOTAL MALE FEMALE VOCATIONAL ENROL. (X OF SECONDARY) /e PUPIL-TEACHER RATIO PRIMARY /d SECONDARY ;i ADULT LITERACY RATE (PERCENT) /e CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION /f RADIO RECEIVERS PER THOUSAND POPULATION TV RECEIVERS PER THOUSAND POPULATION NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION CINEMA ANNUAL ATTENDANCE PER CAPITA.. 1.8/h LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) FEMALE (PERCENT) AGRICULTURE (PERCENT) INDUSTRY (PERCENT) PARTICIPATION RATE (PERCENT) TOTAL MALE FEMALE ECONOMIC DEPENDENCY RATIO INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGhEST 5 PERCENT OF HOUSEHOLDS 21.8/ 23.8/i 14.0/ HIGHEST 20 PERCENT OF HOUSEHOLDS 50.9/g i 42.2/d LOWEST 20 PERCENT OF HOUSEHOLDS 6.27L / I LOWEST 40 PERCENT OF HOUSEHOLDS 14.97/ 15.97i POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN RURAL ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN RURAL ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN RURAL Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1978 and /c Government program only; /d 1977; /e 1976; /f 1975; /g 1962; /h 1973; /i 1968; /L Preliminary data for ; due to lack of data on national ba'-is, the methodology for aggregating the available regional data overstates incomes of low income groups and understates incomes of higher income groups. Thus, this data is not suitable for any analytical comparisons. May, 1982

28 -24 - ANNEX Page 3 of.5 ee.ialthough the dtte arm dretelf Io eet.foekoeolpj.did gme Mat tethe1titetit tad reliable, it should AIle be nttgdbthee ttheprtoy see he teten._ MetetUlly comirablo beteetofth leac of ste.0 orttle defnit e GM emg:pt ttf by ditett taettt!oleteatedaa h dt re oe andte, uteful to deetrihe edt.o thitt,.itoeeted t te Ohrteitcrtto iediffaem. heteet teaum e he reeea groupo are (1) the tat tototry stru of te eubjeot tounttry ted (2) a0 o-utri arw M tith etinuht htuhor aver&" tetse thm the cotmepy vpe.1the iijo onr ecp o 1t I etce tootae Cil sto there iddle titem North WfIGS tad Ks idd Moet" isehe ho teneem or otroeer toot-ealtenti MiffteCo.au)" in the eferee. iteut dat the teersiet tos t Se iett, vatltted ofthet tte e emit irdtootet ab sbm te,p 06 wen tejorttp he otuettle of tn t Brett ce date for that ttg tr oftc tgm eeearee ef feetrite ReMB the tditaottrt dopoedo totettttitp tdt 00eiotfo tohe ti. a,!, n the b -aunry ted aroe.t.ol,i &drat, otwtronto. CI I d 1 Gnocean tqi.k."t!oohignr.u.0l e -tta.ure.,e1tri oplttt(tti Tol Tetal ourfaca tree oorteioo lend tree ted nle1nd -tetoro 1979 data. uh,ennold itdbterroeti eheof hofotp W e ta.rieiturci - tott-t of tjriultu... tio SC te.d tofoo...ily or p-rteountly oieiebl to puli oed prie,tt tetetel ted pggattittd heptl tert If.ii-P..Ptetoreo, otrit ted kitchen at-d-c on to It. fellow; 1979 data. t 'Gioete G.toe tepit ore tttbi hmetp_t G Waeempt atd hy St I.t." en. thy.1.clt. Mt.tIi.hiofott p-oidiot prnciopally -ate- GOP Pn CAPITA (USt)) O e oieetmo tt,tn taopit tl did, caren. nottoluded. Mutal heptgie. hocer include hotlth oclted by ot on,ertiontto. odtc AtleS (l97t-t hoot.); 10960, Snd eeditl tooett omtnlyeuftbye ysit htb en 190dae.todcl ottt,ot,*itf,o.)hihofrt-titeco - COURY CONSUMPTION Pt! CAPITA -Acot-l and ligito, neturl ptrolocm coneumf,lo of oonrlt eaty(colti1dprpet tee cd bydr-, nucear en goonhemel 010-1bcfooitl Sold 90 tonplaoot eoie endturol iorl hoptttl. l1te or -t,rtot bdtytulo a tesiteieud dtriutty)tkltom tto)q.tlntper ceylte; , end 1979 pocelco lonor. rupiot1 hc.i.lde nly oni.det ose POPULATIOp ADub VITAL-STATISTICSh IH"l Md-Tt.. rof ei i_' da ". tot_lpculettt, tid-t-e (tbch-de) -A. of July 1; 1960, 1970,. td 1990 ff NG0 dlate to Ad otsloeitf toeood (ooc t tnecd tu.ubn idrr -T.font dflntton of utenre Soy ffect roeert.bili'tpyof,'dtendhir icml.abrot or lc`'.`i -detr toy or my. no etnlddt Populteion PrObe Iseccttioe; tosaeeo l9b , end 1900 date, th othlgfreeltne nutr o soeone, A btroom upoo - tudelr uthee- ted Iturel encludedo.p.1 tlott to coot Current populutico projonton en booed Co 1960 harc nroe o rcodoog-j. in, pi te, tdtrponuto onenl total PPeItutttn by e. end lee end thei. iltyatfruiyrto doellinyto- proottnl.oritt, Ce-odruralo otolde otetrea - te Prejontoprmeefriroi itloerto oftresoet00mr7otptdpre tntlife enpneenp tbit incrotint oit nu"ntlyertot cattl inoomsn.e itlnrioitr (neoen fdnlte oe.uhc n u lecl ens ea.lfetpoec teblon 'or". per. Tepr-_conl7ldolct iheooict 0Inn uattd oti te tectie mitt. Gc ortlt reeee eottelcl ttttdcin. in.- l of. tte, ubn n rurb-ttiitgmteputtc fetlt tedn n noolclttpet foolly.y,, t...nnictparporfettt-tnco.. Gtho uty tto c tndtoo P h.te nin oeaiotce of- partein ROICA MteIonteOoel.. dtic Ytio Lon t= JtineyPoputio Y Pie..e IIt B.frooheaIt Print, ocolttlur. n dl.iend Smel -pgrat tosy It- mal ted..o.e. dhibi II YaW(i-ue to-p,-j. tho d th ::.., Sc tiblt the, et _tncturototyrlen folet a h ror eo opoonet froet miow oteu _" th hie othoe nyenrhtie el eln oplepaho-t uuett;nral Olocide edal th olcten'ye of otn fot neoly epece e ttot otdelnnt,te te tetotcypoultio ehanrno 000te nontio oaehteleo tithunneea t ifrn euceio ooh eroite.ttadutcea1t ftiiyeaate eron o PnAlioOOt-tV.. occluded.iarut t,sc theer- popuetio per Iqoedte1. 'Alt;tot 110 wheot..e).o tet_lonl ecnliet pets of ceonten) Per toen P.na tat,to.. flot Plie;16,17 n 99dTh. S duidosgnhocel t dtteif. otether lre drm echid. noted teoe-i Per eq. IS opcd0 hv o aictriln nl Y.eaiuirlln r0 d_-imteo eeo ntitto Yen onl; 160,197 en ItO dto.puoi-tenhr SIh-et rtte-tedton. nd - To P re onudontoonroi., t 60 -Ie) td rtird eeed SI l otnngenfldvonppo o... ropein 10th0.1.. year poplatonrar -r200,- t990 o0 al0-0 endc of970-l0.t t letien fa 904,104.ad 90t.PeoorC (nor ihoueend' nnpuition -Patogr ee cd t mt pnpuetin; , and 1900 d.ti tary trhicloo Cru, SIt tblernoeed fa ooldap thog.b pe hute oft-yratic tuc... laon thoucent ronultdion) - Vll atyionof SatVeIfn e popalonio; , 1Sod and7ot data-brydtorio it Yeoa pulcpr htad fppleit nceo her noral rtpotnctlt purle if Choldr.nle0u14 yreeeno) ef-,kptotflt for-. nef ;dt roenu forreoo pedro my Toal bs ceud teb..1in.4 tulln eolatlyf no-0 re n10,17, ead Ycn~oodn pot.pmtuotire litoe abloe ofbithnntrl ont,toerotpitaofneicolfell penin potam Ccoalpuli rt hooad opioioofncudsalionodtvte inor PamlIcplennie - lote leooent o etld - otn. at - Seuneoo are in- ocnnltadi yaoehnrtesernoftvci e o en oig arid oe n in o, 95-om eg group., Sueto o n(yoceeltngreonounrsotocta etrdie P.Pul.tt.. G _th 1. Id 19 - dnto tpblteic plmti i ncotit onca noeti t onedde Inte oftoodptnuttlc nr Capita An0-10)-ltoo o oiaeea ieaaeula odnortcpl o er-eodo th n.0 of.u Aireh of. (uban elh eo--dib Anend 1 b,h.p t hnenoret..ot. doffeiad-y. ho. p..i..' ne ae o lh el Agrt nalocu prroeolhc; eorao prduttio 0c nedco tsot 10101,190, onr ct196 0heto dle,toal AO OC Lbo Prc (OhocoendoIgh P... Po -Lin un,tgon c9tlo_ito (nortont of.. Peourcmte)u. - Ca f 1ccaiel Saniv portt Lrd fo ro fny...nolydhtooldo otoit.oodn t. ocr cnt d. tnd chngc It etc..te id od,lo.(r-rcobeer bupioocueeia thmal labor forc All typnnf of lctelleh. forte qunile cot n od rcoot, n 100 iclonhnin tqlo-t9iunuoioroo)-lbodoroinlma.fcdty hnin. mnceoorooenlmned by tao boot~~~- no phsoole St. n..d.t nor ll.a 0001 fphn!9 ecetg f ca lbrtoc;160,90 n 96 e Icty rod helt tona toin pvrtnotl t...orcue body noleblp. etif,ctr f. rtn-ra Labor torte onng yn toorum..eonng act tah h atluto uohldlcl 191-AS,rl op.'lton 197 cod 197dSoS90 ndaloig10phco f.uo.ten..oilut,.at!edou 197:n data.a IS.tGO o otocg ouolll"" fre P "I000onono rli r (treno ccu:ut a)-polontcr o ocpl 9Otl0te O fue ltorcnont-f. toce,moan Itao ariipts.o cony...p.y tof fon poda. Cot op1 Gffoo dof.uinod e atofe, -;t.r-t Racalnyeeeocpto etotl,, Y M and f b... bor fos a... qurmnf fo Ilcanytotttiehdby-I iro%dufc InS.prounof loal,.. mlt n rol ocllo f l oosepcc.ay elitonanto. of cocel of 60 cram p pot dayend 20 gram of oninal Iote end and 1980 aco. thee. err boaed to ILOc panoicipatms. h...ds.t Po eonpoei u1l toanblenhuot-poci oc.ppr1y of food dn-f... T rio ro n.leec pli o c. ptdyd16-o 1970 adev1977 dole V.C..4..SITnIWalt FOOD o domteionned lft cablto 190 and 1980deco. ci blft ocetholde tohop t PrLod- ProdtiTY.t IGI_ OttOdO-PI ; LIflpe cny ocfic Iree dil- Anrg i obco tec.o tfdcddnn TefloIn dula o am c Pt epyrcn Prp maacrd -mc 00. p00cm V f ebirt;190i of ogo 19 pt thnootd lccnhircho;1960. end : lnan 1990) utoiy S deco, aoirnchten)- I acl 170 and och 960 f doc. c uc cdcoc ou ocmo any.o:1 theolco d ahctid AalooPonlyItonLve pococy eltrccdnt.ctineltuin lotom lenol 0 chal 00 cconr ntcona lvol hob cri ohich adrua.101n0 Acrat o Sf ccelo)-tnl,con uo (oco adttl- u- ocrclnly dqaod Src leanca c-tdcqonot o hoifdoi cci c00 n ua)nc ffeo_labiocccroocooato dff-rdablroeoonohul,occetefocad fepd checlth hoceilfbe i c- mthryo ct th p, hcrhld ad frcral Pndrunnc of l bcclti... lcudied cc)ab are-i "btlco AceaotcraOct!ld... n.co cocu Ict - ' toel t)thaf,and1ruralf- _otyatlo con PhtucifIa,-boy b0 PopltOcd1-o.ulr -hcu Luccccroa- c ob n SOa Ide 19e dlc tom.t Supplyo ft fconod rti Proc - PoclucYo dt - forucoot alatouep. t lldb UD rli.ft otdid n cy... r of pr cclpltg 196up97 1d9962dt.

29 -25 - ANNEX I Page 4 of 5 Population 46,500 (mid-1980, thousands) GNP per Capita US$670 (1980) THAILAND - ECONOMIC INDICATORS Amount (million USS at Average annual increase (X) Share of GDP at market prices (2) current prices) (at constant prices) (at current prices) Indicator 1980 /a n /b /b /a NATIONAL ACCOUNTS Gross domestic product 32, Agriculture 8, Industry 7, Services 13, Consumption 25, Gross investment 9, Exports of GNFS 8, Imports of GNFS 10, Gross nattonal savings 6, Composition of merchandise trade (2) (at current prices) /a 1985/b 1990/b EXTFRNAL TRADE Merchandise exports 6, loo.n Primary 3, Manufactures 2, Merchandise imports 8, Food Petroleum 2, Machinery & equipment 2, Others 1, /a PRICES GDP deflator Exchange rate Export price index Import price index Terms of trade index As % of GDP /a PUBLIC FINANCE /c Current revenues Current expenditures Surplus (+) or deficit (-) Capital expenditure Foreign financing n /b /b OTHER INDICATORS GNP growth rate (2) GNP per capita growth rate (X) ICOR Marginal savings rate Import elasticity n.77 /a Preliminary. /b Projected. /c Central government only. December 14, 1981

30 Populaton I (aid-1980, tboueead). 087 per Capital us. 70 (1980) ANU I Page 5 of 5 THAILAND - MIA2C3 OP PAIVMT8 XTNAL CAITAL AltD 08?T (amillion 04 at earnste pyicte) Actual... te Indtcator 97 9 I j t98l 16 Pal to, 199 BALANCE OV PAISaTr xportt of Ood6 and nonfactor service. 1,108 2,796 3,490. 4,029 4,976 6,494 8,211 9,061 10,562 12,783 15,236 18,251 21,794 25, Of whichl merchandise f.o.b ,178 2,959 3,456 4,041 5,233 6,657 7,333 8,573 10,397 12,491 14,963 17,832 21,221 42,574 Import. of 0oods and nonfactor servicee -1,430-3,487-3,892-5,066-5,905-8,170-10,228-11,022-12,319-14,384-16,033-19,706-23,115-27,186-52,347 Of uhieh, Morch;ndi.. f.o.b. -1,148-2,639-3,166-4,244-4,909-6,822-8,907-9,704-10,928-12,809-15,048-17,679-20,808-24,557-47,913 Net fa tor Incoe from abroad 23 * ,152-1,435-1,773-2,183-2,646-5,122 Net transfers Current account balance ,094-1,149-2,092-2,367-2,359-2,343-2,380-2,630-2,795-3,037-3,443-5,358 Private diract investeant * MLT loans (net) ,093 1,732 1,916 2,273 2,515 3,005 3,238 3,412 4,919 Official ,016 1,081 1,169 1,598 Private /a ,633 1, ,560 1,989 2,157 2,243 3,321 Other capital /b , Change in rserves International reserves 906 2,007 2,113 2,208 2,558 3,102 3,026 3,526 3,926 4,326 4,726 5,176 5,626 6,076 8,076 Reserve as months imports EXTERNAL CAPITAL AND DEBT Gross Disbursmeents Concessional loans DAC H IDA Other Nonconcessional loans ,160 1,792 2,395 1,930 2,000 2,691 3,269 3,986 4,563 5,229 8,373 Official export credits IBRD Other m ltilateral Private publicly guaranteed Private noeguaranteed , ,581 2,008 2,640 3,118 3,596 6,329 Total gross disbursements ,313 2,025 2,617 2,241 2,410 3,168 3,735 4,474 5,081 5,787 9,333 External Debt (fixed-term) Public debt outstanding 6 disbursed ,094 1,816 2,819 4,063 4,926 6,072 7,216 8,288 9,250 10,425 11,599 n.a. Official ,270 1,638 2,098 2,737 3,545 4,464 5,419 6,435 7,515 8,685 14,440 Private ,064 1,694 2,189 2,527 2,752 2,869 2,815 2,910 2,914 n.a, Private nonguaranteed debt outstanding end disbursed ,243 1,922 2,845 3,615 4,743 6,187 8,229 10,292 12,530 n.a. Total debt outstanding and disbursed 710 1,352 1,613 1,974 2,755 4,062 5,985 7,771 9,687 11,959 14,475 17,479 20,717 24,129 41,571 *Undisbureed debt ,401 1,902 2,358 3,204 3,066 3,386 3,734 4,087 4,514 5,001 5,459 7,710 Debt Service Total sarvice payments ,250 1,149 1,325 1,913 2,480 3,013 3,733 4,647 8,614 Intereat ,019 1,260 1,544 1,890 2,272 4,200 Payments as 2 exports of goods and nonfactor services Average interest rate on new loano (2) /c 6.R OfTicial Private R Av rag nnturity of new loans (Years) Ic , Official Private Bank Group Expgare (% IBRD DODtotal DOD I8RD disbursements/total gross disbursements I8RD debt service/total debt aervice IDA DOD/total DOD IDA disbureseents/total gross disbureemnts IDA debt service/total debt servics As S of debt outstanding at and of 1979 Maturity structure of debt outstanding Principal due within 5 years 28.4 Principal due within 10 years 61.3 Interest structure of debt outstanding Interest due within first year 4.6 /a Due to change in classification, projected data for "private MLT loans' include some of the category -other capital". 7ii 'Other capital" includes net use of IMF funds and net flow of short-term capital. 7i Ristorical data does not include nonguaranteed private debt. 7i Preliminary.

31 ANNEX II Page 1 of 12 THE STATUS OF BANK GROUP OPERATIONS IN THAILAND A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1982) Loan or Amount ($ million) Credit Less Cancellations Number Year Borrower Purpose Bank IDA Undisbursed Thirty three loans and three credits fully disbursed Kingdom of Thailand Irrigation T 1976 Kingdom of Thailand Rural Dev. 21.O0(TW) T 1976 Kingdom of Thailand Livestock 5.00(TW) Kingdom of Thailand Rubber Kingdom of Thailand Education Industrial Finance Corporation of Thailand Industry Kingdom of Thailand Agriculture Kingdom of Thailand Irrigation Electricity Generating Authority of Thailand Power Kingdom of Thailand Population -.10/a Kingdom of Thailand Highways Provincial Electricity Authority Rural Elect Kingdom of Thailand Housing Telephone Organization of Thailand Telecom Kingdom of Thailand Irrigation Kingdom of Thailand Urban Trans State Railway of Thailand Railways Electricity Generating Authority of Thailand Power Kingdom of Thailand Education Kingdom of Thailand Agriculture Kingdom of Thailand Ag. Extension Electricity Generating Authority of Thailand Power Petroleum Authority of Natural Gas Thailand Pipeline /b Kingdom of Thailand Irrigation Kingdom of Thailand Ag. Credit

32 -28- ANNEX II Page 2 of 12 Loan or Amount ($ million) Credit Less Cancellations Number Year Borrower Purpose Bank IDA Undisbursed Electricity Generating Authority of Thailand Power Provincial Waterworks Authority Water Supply Kingdom of Thailand Housing Provincial Electricity Rural Elec- Authority trification Kingdom of Thailand Inland Waterways Kingdom of Thailand Ports Kingdom of Thailand Ag. Research Kingdom of Thailand Potash Engineering Industrial Finance Corp. of Thailand Industry Electricity Generating Authority of Thailand Power Kingdom of Thailand Irrigation Kingdom of Thailand Provincial Roads Kingdom of Thailand /c Tree crops Kingdom of Thailand T7 Structural adjustment Total 2, , of which has been repaid Total now outstanding 2, Amount sold /d of which has been repaid Total now held by Bank and IDA 1, Total undisbursed 1, /a Of which $3.1 million is Norwegian grant participation. 7T Includes refinancing of Loan S-10-TH ($4.9 million). 7-c Not yet effective. 7T Of which $43.3 million sold to the Bank of Thailand.

33 -29 - ANNEX II Page 3 of 12 B. STATEMENT OF IFC INVE$TMENTS (As of March 31, 1982) Amounts ($ million) Year Company Type of Business Loan Equity Total 1959 Concrete Products and Cement and Construction Aggregate Co., Ltd. Materials / Industrial Development Finance Corporation Finance Company of Thailand (IFCT) 1969/ Siam Cement Group Cement and 1975/ Construction 1978/1979 Materials Mutual Fund Company Money and Capital Limited Market United Sugar Terminal Food and Food Limited Processing Siam Commercial Bank Small and Medium Scale Industries / Bangkok Glass Industry 1980 Company, Limited Glass Containers / Siam City Cement Cement and Construc Co. Ltd. tion Materials Thai Orient Leasing Co. Ltd. Capital Market Total gross commitments Less cancellations, terminations, repayments and sales Net held by the Corporation Total undisbursed

34 ANNEX II Page 4 of 12 C. STATUS OF PROJECTS IN EXECUTION /1 (As of March 31, 1982) Credit No. 929 Northern Agricultural Development Project; $25 Million Credit of June 28, 1979; Effective Date: October 12, 1979; Closing Date: December 31, 1985 In general, reasonable progress has been achieved to date, but the completion of major work programs planned for this year will be important to the project's success. Actions are being taken to resolve difficulties relating particularly to management, staffing, contracting and budgeting. IDA staff are giving close attention to these problems in an effort to help resolve them. Loan No Phitsanulok Irrigation Project; $95 Million Loan of July 25, 1975; Effective Date: October 31, 1975; Closing Date: June 30, 1985 Project completion is now expected by mid-1985, two years behind schedule, due to slow progress in on-farm works. Construction work on the diversion dam is complete and works on the distribution systems are proceeding well. All studies financed under the project are proceeding satisfactorily. Loan No Second Chao Phya Irrigation Improvement Project; $55 Million Loan of September 23, 1977; Effective Date: December 23, 1977; Closing Date: June 30, 1983 Equipment procurement is almost complete. Rehabilitation and onfarm development works for Part A of the project on about 13,000 ha were completed in 1981 bringing the total area developed to 48,000 ha, compared to 51,000 in the appraisal schedule. Under Part B, rehabilitation works are progressing satisfactorily. Under Part C, 65 km of service roads are being constructed. All physical works are expected to be completed in 1982 in accordance with the appraisal schedule. Under Part D, a feasibility study for about 175,000 ha in the Stage II area of Maeklong was completed in March 1980 and a study for a possible Third Stage Chao Phya Irrigation Improvement Project was completed in December /1 These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project implementation.

35 ANNEX II Page 5 of 12 Loan No Second Northeast Thailand Irrigation Improvement Project: $17.5 Million of December 4, 1978; Effective Date: April 25, 1979; Closing Date: September 30, 1985 Project implementation is about one year behind schedule due to initial delays in procurement of equipment and supplies. Procurement of equipment is now proceeding smoothly. Construction of main and secondary canals is progressing satisfactorily but on-farm works are well behind schedule. Two new diversion dams have been built in the Lam Takhong project area, and work on canal rehabilitation is progressing satisfactorily. Loan No Eleventh Irrigation Project; $80 Million Loan of January 17, 1980; Effective Date: April 2, 1980; Closing Date: June 30, 1986 The project is about one year behind schedule due to delays in the appointment of consultants. Satisfactory progress is now being made in procuring equipment and vehicles. Canal rehabilitation work is progressing satisfactorily, but on-farm works are behind schedule due to delays in design work. Loan No TH Twelfth Irrigation Project; $57 Million Loan of August 13, 1981; Effective Date: November 11, 1981; Closing Date: June 30, 1987 Consultants were appointed in September Surveys and mapping have been completed for 10,000 ha, and 8 km of main and lateral canals have been constructed. A contract for construction of about 60 km of main and lateral canals is due to be awarded in Good progress is being made in developing a Plan of Action for strengthening the Royal Irrigation Department. Loan No. 1198T Northeast Thailand Rural Development Project; $21 Million Loan of Februar} 27, 1976; Effective Date: June 28, 1976; Closing Date: September 30, 1982 Construction of almost 600 km of village access roads is complete and is under way on the remaining 700 km. The road maintenance program is being carried out at an acceptable rate with good quality work using equipment procured under the project. The village water supply component has provided 2,600 freshwater wells. The agricultural extension component was completed in 1978 and subsumed into the National Extension Project (Loan 1393). The upland crops component is being satisfactorily completed and research work is being continued by the National Agricultural Research Project (Loan 1922). The village electrification component has been completed with electrification of about 475 villages. The land settlement component is essentially complete; cash incomes of pilot cooperating farmers were roughly doubled in the project period, and settlement cooperative placed on a sound footing.

36 ANNEX II Page 6 of 12 Loan No. 1199T Livestock Development Project; $5.0 Million Loan of February 27, 1976; Effective Date: May 25, 1976; Closing Date: June 30, 1982 The project continues to make fairly good progress particularly with legume seed production, artificial insemination and private pasture development. However, disbursement remains behind schedule and the original loan closing date of June 30, 1981 was extended by 12 months to June 30, The Department of Livestock Development is developing plans for transferring project activities into the work programs of the regular divisions of the Department, and these transfers should be completed before June 30, 1982 as part of a departmental reorganization plan. Loan No Rubber Replanting Project; $50 Million Loan of September 13, 1976; Effective Date: January 14, 1977; Closing Date: June 30, 1982 The project is one year behind schedule due to procurement difficulties and initial delay in loan signing as well as in agreeing on the formula of fertilizers to be procured through ICB. The replanting rate over the project period has been slower than that envisioned at appraisal, but for 1981 about 65,000 ha were replanted - 30% above the target of 50,000 ha. Management and the general level of staff efficiency at the Office of the Rubber Replanting Aid Fund is satisfactory. Bank disbursements for the project are expected to be completed before June 30, Loan No National Agricultural Extension Project; $28 Million Loan of May 17, 1977; Effective Date: September 1, 1977; Closing Date: December 31, 1982 Delays in staff recruitment experienced in the early days of the project have now been overcome and the "T and V" system is operating reasonably satisfactorily. Vehicles, including motorbikes for village-level extension workers, remain in short supply. Shortages of audio-visual aids and counterpart funds for day-to-day operations are also adversely affecting progress. Subject matter specialist training is being given priority attention. Civil works construction is nearing completion and disbursement has improved considerably in recent months. Loan No Second National Agricultural Extension Project; $40 Million Loan of September 18, 1979; Effective Date: December 18, 1979; Closing Date: December 31, 1985 Project implementation is off to a reasonable start in seven provinces and disbursements are ahead of appraisal estimates. Subject matter specialist training is being given priority attention, as also is the relevance of the information being disseminated to farmers through the "T and V" system.

37 ANNEX II Page 7 of 12 Loan No Agricultural Credit Project; $19 Million Loan of April 30, 1980; Effective Date: August 29, 1980; Closing Date: December 31, 1984 Overall Bank disbursements for the project are ahead of schedule. The Bank for Agriculture and Agricultural Cooperatives' (BAAC) ongoing term lending in the North and Northeast, to be financed under the project, is progressing well. Implementation of works under the specified lending component, however, has been slow. The most critical factor affecting the financial viability of BAAC is the interest rate levels for agriculture. Satisfactory progress has been made by the Cooperative Promotion Department and the Cooperative Auditing Department in their training activities and in the construction of regional and provincial staff housing. Loan No National Agricultural Research Project; $30 Million Loan of December 19, 1980; Effective Date March 20, 1981; Closing Date: June 30, 1989 The loan became effective in March 1981, but a budget deficiency in the first six months, which coincided with the last six months of the Government fiscal year, seriously affected project implementation, which was negligible, although much useful preliminary planning was accomplished. The recent approval of a project budget for FY82 and the pending approval by Cabinet of the reorganization plan for the Department of Agriculture should enable implementation to proceed satisfactorily in the latter part of FY82 after allowing for a delay of about nine months from the appraisal report schedule. Loan No Second Tree Crops Project; $142 million Loan of January 29, 1982; Closing Date: March 31, 1987 The loan has not yet been declared effective. Loan No Fourth Education Project; $31 Million Loan of September 13, 1976; Effective Date: February 9, 1977; Closing Date: June 30, 1982 Progress in project implementation is satisfactory and is expected to be completed by the original Closing Date. All civil work contracts have been awarded and nearly completed. Equipment and furniture is under procurement. Nearly all fellowships have been awarded. Staff training programs are on schedule but need to be improved, as does supervision by the Ministry of Education of its nonformal education programs. Credit No. 913 Fifth Education Project; $35 Million Credit of June 28, 1979; Effective Date: October 12, 1979; Closing Date: June 30, 1985 The project is being implemented in three phases. Acquisitions of sites and design work has been completed. Construction of workshops included in phase one has been completed, and equipment contracts have been

38 ANNEX II Page 8 of 12 awarded. Phases two and three will be completed mid-1982 and mid-1983, respectively. Project staff has been appointed or designated. Curricula are being developed. Technical assistance agencies have been contracted and staff training programs are being conducted as scheduled. The studies under the project are progressing satisfactorily. Credit No. 767 Population Project; $33.1 Million Credit of February 27, 1978; Effective Date: July 6, 1978; Closing Date: December 31, 1983 Under new management, the project is moving ahead smoothly and rapidly, and disbursements have improved considerably over the past year. Project implementation is now running, on the average, about 12 months behind the appraisal schedule. Six of the ten national level training facilities have been completed. Of the 430 rural health facilities, 374 have been completed, 33 are under construction and 23 had to be deleted. The final round of procurement of equipment and furniture is currently underway. Most training, information/education/communication, and population-related research and evaluation activities have been completed on schedule. The Innovative Village Nutrition Activity has been successfully launched and Government is about to approve the use of most of the remaining funds for Innovative Activities for testing new ideas in continuing education and the role of mass communication in health education are about to be approved by the Government. Loan No Bangkok Sites and Services Project; $8.6 Million Loan of June 15, 1978; Effective Date: September 22, 1978; Closing Date: December 31, 1983 Project implementation is about eighteen months behind schedule because of difficulties encountered with the largest contract. The National Housing Authority (NHA) has terminated the existing contract and steps are underway to hire a new contractor to complete the work. Good progress, however, has been made on the various policy concepts on which the project is based, and NHA's financial management has been strengthened through technical assistance. Loan No Bangkok Traffic Management Project; $16 Million Loan of January 25, 1979; Effective Date: April 25, 1979; Closing Date: September 30, 1982 There has been a significant improvement in all aspects of the project. While no action seems probable on area road pricing, progress has been made in implementation of the bus lane system, parking restrictions/charges, experimentation of staggered work hour system and noise abatement. Construction is now underway on several traffic improvement schemes. Since November 1981, contracts worth $6.3 million have been awarded; further contracts for $10.3 million equivalent are to be awarded in the next 3-6 months.

39 ANNEX II Page 9 of 12 Loan No National Sites and Services Project; $29 Million Loan of August 8, 1980; Effective Date: January 7, 1981; Closing Date: December 31, 1984 This project expands the National Housing Authority (NHA) programs initiated in Bangkok under the Bangkok Sites and Services and Slum Improvement Project (Loan 1556-TH) and extends the sites and services program to five regional cities. Design and procurement are proceeding satisfactorily. Construction has commenced in Bangkok and the regional cities. Loan No Provincial Water Supply Project; $40 Million Loan of November 25, 1980; Effective Date: January 4, 1982; Closing Date: April 3, 1986 Engineering consultants were appointed in January 1982, about one year later than originally expected due to the Borrower's inexperience in hiring outside consultants. A UNDP-financed adviser has been appointed to assist the borrower in these and related matters. Loan No Pattani Hydroelectric Project; $50 Million Loan of September 23, 1977; Effective Date: December 20, 1977; Closing Date: December 31, 1982 The project has been completed on schedule. The three units of turbine generators are operating satisfactorily. Good progress is being made under the transmission line and substation components associated with the project. Loan No Accelerated Rural Electrification Project; $25 Million Loan of March 9, 1978; Effective Date: June 7, 1978; Closing Date: June 30, Work has been started on 3,480 villages, out of which 2,100 villages have already been electrified. The load promotion program started in April Disbursements have accelerated and are very close to initial appraisal estimates. Loan No Bang Pakong Thermal Power Project; $80 Million Loan of August 9, 1979; Effective Date: May 23, Closing Date: June 30, 1984 The project is about two months behind schedule because of poor soil conditions encountered during foundation piling. Field works are now proceeding satisfactorily, and project execution is expected to catch up with the original schedule. The first unit is targeted for commissioning in July 1983, as scheduled.

40 ANNEX II Page 10 of 12 Loan No Khao Laem Hydroelectric Project; $80 Million Loan of June 17, 1980; Effective Date: September 17, 1980; Closing Date: February 28, 1985 The project is about one year behind schedule because of unexpectedly poor rock foundation, but works are now underway satisfactorily. Disbursements are close to appraisal estimates. Construction of the resettlement program started at all five sites. Loan No Second Accelerated Rural Electrification Project; $75 Million Loan of November 14, 1980; Effective Date: August 20, 1981; Closing Date: June 30, 1986 Construction started in 262 villages for the first nine provinces. Seventeen villages have been electrified. Procurement is proceeding satisfactorily. Loan No TH Power Subsector Project; $100 Million Loan of July 8, 1981; Effective Date: October 26, 1981; Closing Date: June 30, 1985 Bids for the diversion tunnel will be issued in July 1982, and main civil works in May 1983 for the Chiew Larn Hydroelectric component of the project. Loan No Second Natural Gas Pipeline Project; $107 Million Loan of February 15, 1980; Effective Date: May 27, 1981; Closing Date: December 31, 1983 Good progress was made with the overall physical works and major project components, including the offshore pipeline and onshore main line which have been completed on schedule. The pipeline started operations in September 1981, and all physical works should be completed by mid The project is being completed on schedule and below the original cost estimate. Loan No Mae Moh Lignite Project; $72 Million Loan of June 17, 1980; Effective Date: September 17, 1980; Closing Date: December 31, 1984 Procurement of equipment is proceeding satisfactorily. However, the borrower, in its last progress report dated January 1982, indicated little progress in civil works. Loan No Third IFCT Project; $25 Million Loan of December 8, 1976; Effective Date: March 14, 1977; Closing Date: June 30, 1982 The loan is almost fully disbursed. Only $29,000 remain against an outstanding letter of credit.

41 ANNEX II Page 11 of 12 Loan No Fourth IFCT Project; $30.0 Million Loan of April 15, 1981; Effective Date: June 18, 1981; Closing Date: December 31, 1984 The project is proceeding well. By the end of March 31, 1982, an amount of $23.2 million has been committed and $19.8 million disbursed, considerably faster than originally estimated. Loan No TH Potash Engineering Project; $8.9 Million Loan of March 4, 1981; Effective Date: December 29, 1981: Closing Date: March 31, 1983 well. The loan became effective on December 29, 1981 and is proceeding Loan No Sixth Highway (Provincial Roads) Project: $110 Million Loan of March 23, 1978; Effective Date: June 22, 1978; Closing Date: December 31, 1982 All construction contracts have been awarded and work is over 80% completed. However, for three of the roads the bidding and awards were delayed about 10 months to synchronize with bidding and award of contracts in March 1979 on a link road financed wholly by the Government. Completion of the project may thus be delayed about twelve months. The maintenance equipment has been procured and with recently increased budgetary allocations, progress with the road maintenance program is improving. The studies are nearing completion. Detailed engineering of roads for construction under the Provincial Roads Project (Loan 2035-TH) has been completed and is underway on roads for future projects. Loan No TH Provincial Roads Project; $35 Million Loan of August 13, 1981; Effective Date: December 1, 1981; Closing Date December 31, 1985 Contracts have been awarded on 19 roads, and are expected to be awarded shortly on the remaining four. Proposals have been obtained for a Transport Study. Loan No Fifth Railway Project; $16.7 Million Loan of April 23, 1979; Effective Date: August 22, 1979; Closing Date: June 30, 1982 Mainly due to slow progress in procurement of equipment and material, project execution is behind schedule. Contracts are placed or being placed for all originally agreed Bank financed items, and most of the contracted equipment and material has been delivered. An amount of about

42 ANNEX II Page 12 of 12 US$2.9 million remains unallocated. Disbursements are about two years behind schedule and an extension of the Closing Date to June 30, 1983 is being considered. Operational efficiency is in general good; however, availability of passenger and freight cars was below appraisal target. The financial position of SRT remains unsatisfactory despite the 35% and 73% tariff increases for passengers and freight respectively in June 1981, mainly because of a subsequent severe decline in freight traffic. Loan No Inland Waterways and Coastal Ports Project; $53 Million Loan of August 27, 1980; Effective Date: December 10, 1980; Closing Date: June 30, 1984 The construction contract for improvements to the Chao Phraya River has been awarded and the contractor is in the process of mobilizing. Consultants have been appointed for design and construction supervision of the various project components and work is underway. Acquisition of land for port sites is still incomplete. Loan No BPnZkok and Sattahip Ports Project; $47 Million Loan of December 19, 1980; Effective Date: August 12, 1981 Closing Date: December 31, 1984 Implementation of project components concerned with the Port of Bangkok are progressing satisfactorily with construction work underway and selection of consultants to provide technical assistance to the Port Authority of Thailand in process. Work at the Port of Sattahip is temporarily in abeyance pending completion of the Master Plan Report now being prepared by consultants financed through bilateral aid (Australia). The appointment of consultants for the design of the Bang Su Container Freight Terminal has been long delayed. With Bank concurrence, consultants were selected and contract negotiations completed by the State Railway of Thailand but approval from higher authority is not yet forthcoming, causing serious delays in the implementation of this project component. Loan No Third Telecommunications Project; $90 Million Loan of October 4, 1978; Effective Date: January 3, 1979; Closing Date: September 30, 1983 Due to a delay in the borrower's decision on standardization of switching equipment and subsequent delays in issue of bid invitation and in evaluation of bids, the project is currently about 18 months behind schedule. Recent progress has been satisfactory, with TOT awarding contracts for most of the Bank financed items. The financial condition of the borrower continues to be satisfactory. Loan No Structural Adjustment Lending; $150 million Loan of March 15, 1982; Closing Date: March 31, 1983 The Loan has not yet been declared effective.

43 ANNEX III Page 1 THAILAND LAND REFORM AREA PROJECT Supplementary Project Data Sheet Section I: Timetable of Key Events (a) Time required to prepare the project: 2 years, 6 months (b) The agencies which prepared the project: ALRO, FAO/CP, UNDP, Bank (c) Date of first presentation to the Bank: November 1976 Date of first Bank mission to consider the project: September 1978 (d) Date of departure of appraisal mission: March 1981 (e) Date of completion of negotiations: July 16, 1982 (f) Planned date of effectiveness: December 31, 1982 Section II: Special Bank Implementation Actions Bank staff have commented on draft ALRO Guidelines and draft implementation agreements between ALRO and each of the other implementing agencies. Prior to commencement of the project the Bank will need to review these again so that they may be finalized. Bank staff will visit Thailand in late 1982 to facilitate this review. Section III: Special Conditions (a) The Borrower has agreed that: (i) credit arrangements for the project will be stipulated in an agreement between BAAC and ALRO under terms and conditions satisfactory to the Government and the Bank, and the Land Development Department, Department of Agricultural Extension, and the Ministries of Education and Public Health will implement their parts of the project under agreements with ALRO satisfactory to the Government and the Bank (paras. 40 and 49);

44 -40 - ANNEX III Page 2 (ii) subproject proposals will be furnished to the Bank for approval; project committees will be established by January 31, 1983; and ALRO will assign staff to the project according to an agreed schedule, maintaining the continuity of parttime staff to the maximum extent feasible (paras. 48, 50, and 51) (iii) the consultants for design of the monitoring and evaluation system will be retained by January 31, 1983, and their report will be sent by May 31, 1983, for the Bank's review; the consultants for the organizational study will be retained by December 31, 1983, and ALRO will provide the Bank with a copy of the study and its proposals thereon by December 31, 1984, and would consider Bank comments in implementing the study recommendations (para. 48); and (iv) all LRAs will be degazetted by Government according to an agreed schedule and would be integrated into the local administrative framework at the end of the development period for each LRA (para. 51). (b) Additional conditions of effectiveness of the lyan are: (i) signature of an agreement between ALRO and BAAC (para. 40); (ii) employment of an agriculturalist/soil conservationist, a rural works engineer and a rural development economist to advise ALRO (para. 48). (iii) agreement by ALRO and the Bank on implementation guidelines setting forth ALRO's organizational arrangements and procedures for execution of the project (para. 52); and (iv) degazettement of the LRA to be developed in the first project year (para. 51).

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