Unequal wealth distribution is one of the most pressing problems facing Thailand with the richest one percent owning more than half of the total household wealth while entrenched corruption is threatening the country’s long-term growth, Governor of the Bank of Thailand Veerathai Santiprabhob said today.
He also said low financial literacy and high household debt level hamper the ability of individuals to pursue new opportunities and secure long-term financial security.
“Essentially, widening wealth and income inequality is a major contributor to the fragility of the Thai society and is frequently used as an excuse to draw public support for a number of costly and unsustainable populist policies,” Veerathai said in opening remarks at a forum on sustainable banking organized by the central bank.
He also pointed out that Thailand as an ageing society is facing a declining labour force. “And yet a number of public policies have focused on creating short-term stimulus rather than on encouraging the necessary adjustments to address long-term productivity issue,” he said, adding that the educational standards have not been able to prop up the low productivity level and lag behind in many important areas.
Another challenge facing Thailand is the environmental and ecological issues. He said continuing irresponsible actions—from massive burning of fossil fuels to excessive use of plastic containers—contributed to the overall deterioration of the global environment. “And, as we have observed, climate change has resulted in increasing frequency as well as severity of natural disasters. The painful experience of the great floods of 2011 should be a case in point, as these floods were the result of rampant deforestation, new developments blocking natural water ways, and clogged drainage system from careless waste disposal.” he said.
But it is entrenched corruption that Veerathai believes is a major obstacle to achieving long-term focus. “Paying bribes and granting favors are harmful practices that incur unnecessary costs and create distortions in resource allocation,” he said.
He pointed out that despite years of anti-corruption campaigns, Thailand’s level of corruption has been largely unchanged and blamed practices in the financial sector as part of the culprits of corruption.
Veerathai said these challenges are a result of actions taken without regard for moderation, responsibility and long-term consequences “and they should serve as a wake-up call for all of us.”
“For without a proper remedy, we would be transferring unfair burden to future generations, thus impairing long-term sustainability and prosperity,” he said and called on all sectors to make collective efforts to address these challenges.
Veerathai urged the financial sector in particularly to take the lead in making changes toward sustainability that can be achieved if the focus is on long-term goals. He said the objective of the sustainable banking forum is to raise awareness of the various issues of sustainability and identify gaps within the financial sector.
“It is now up to all of us—financial institutions, policymakers, and leaders—to embrace sustainability and incorporate its guiding principles in our daily lives and business practices,” said.