Decentralization

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Thailand’s new Constitution promulgated in 1997 and the Decentralization

Act, which followed it, specify an ambitious program of decentralization

of government expenditures. The share of total government expenditures

outlaid by local government authorities is scheduled to increase from around

8 per cent in 2000 to 35 per cent in 2006. The program involves both transfers

of revenue from the central government to the local level and the transfer

of some taxing powers to the local level as well. Because some forms of

expenditure cannot be decentralized, obvious examples of which include

defense and foreign affairs, the level of decentralization in the remaining

areas, including education, health and social security, will necessarily be

well in excess of the overall target of 35 per cent.

The declared purpose of the decentralization is to increase the extent to

which local communities have control over the way revenues are appropriated

and thus to increase the degree of local accountability for public expenditures.

Despite this laudable goal, preliminary indications suggest that the program

may be too ambitious in the degree of decentralization that is planned. If

so, this will have serious implications for the capacity of the government to

deliver sustained social safety net programs in the future, as well as other

forms of expenditure that are important for the poor.

The nature of Thailand’s decentralization process is made clearer by

comparison with Indonesia, which is also embarked on an ambitious

decentralization program. In Indonesia, a high proportion of government

expenditure is to be reallocated to the provincial (kabupaten) level. This

means decentralization to about 350 local level government authorities,

with an average population size of over half a million. Considering that

Thailand’s population is one quarter of Indonesia’s, a similar degree of

decentralization would mean devolving a large proportion of expenditures

to around 80 local administrative units, corresponding roughly to the

number of provinces (changwat).

But Thailand’s 76 provincial governments are not democratically elected

(provincial governors are appointed from Bangkok) and the decentralization

program has not been aimed at increasing expenditure signifi cantly at

this level, but rather at the tambon level, meaning the 7000 or so Tambon

Administrative Councils. In rural areas, the average population size of

these authorities is about 5000. They are seemingly too small; the average

tambon cannot support a high school or the professional administrative

staff needed to account properly for the way a large increase in funds is

actually being spent.

Wastage of public expenditures will result if the Tambon Administrative

Councils are unable to manage large increases in expenditures well. Local

level corruption will also increase in many areas if effective programs of

monitoring cannot be implemented in time. The basic problem, of low

levels of participation in secondary education among Thailand’s rural

population, will not be addressed by the decentralization program, unless

local Tambon Administrative Councils are able to group themselves into

larger units. This will probably happen if the program proceeds, but it will

take time, and meanwhile serious disruption could result. As the central

government transfers revenue to the local level it necessarily transfers

functions as well. The education, health and other services now provided

by the central government and which are crucial for poor people may not be

forthcoming from the tambon level if the Tambon Administrative Councils

are inadequately prepared.

Thailand’s current Prime Minister, Dr Thaksin Shinawatra, has a

background in corporate business. He is a centralizer, not a decentralizer.

The decentralization program is mandated by the constitutional changes of

1997 but they are not necessarily to the liking of the current government.

Not surprisingly, in view of the above discussion, recent statements by the

Prime Minister and others have suggested the intention to focus resources

at the provincial level and not simply at the tambon level. For the reasons

set out above, this makes ample sense in terms of effi cient management.

Constitutional problems may arise, but if so, the parliamentary majority

of the present government is large enough to push through any desired

constitutional changes. There would be a political cost, however, with

elections due in 2005.