'Boiled Frog State': Experts Warn Thailand's Structural Flaws Threaten National Future
Leading economists and legal minds identify low-productivity bureaucracy, weak rule of law, and an economy favouring 'grey business' as crippling flaws, demanding radical, immediate reform to avoid catastrophe
- Experts warn Thailand is becoming a "boiled frog state," risking irreversible decline due to fundamental structural weaknesses that require immediate reform.
- The three core flaws identified are an obsolete and inefficient civil service, a weak rule of law with inadequate constraints on government power, and a biased economic structure.
- The country's economic system is actively harming small and medium-sized enterprises (SMEs) while favoring large corporations and the illicit "grey" economy.
- Proposed reforms include tackling corruption, limiting the state's role in business, overhauling outdated laws, and decentralizing government power.
Thailand is at a crucial juncture, risking irreversible decline due to fundamental, internal structural weaknesses, according to a panel of top experts.
Speaking at the annual conference of the National Economic and Social Development Council (NESDC) on Friday, the specialists warned that without immediate and decisive national reform, the country’s issues will soon become too severe to resolve.
The core diagnosis points to three crippling flaws: an obsolete and inefficient civil service, a weak framework of rule of law, and an economic structure that actively damages small businesses.
The Dead Weight of the Bureaucracy
Dr Veerathai Santipraphob, chairman of the Thailand Development Research Institute (TDRI) and former Bank of Thailand Governor, asserted that the Thai bureaucracy is the biggest drag on development.
He noted that while civil servants are often talented, the system itself is structurally deficient.
"The government's productivity is lower than every other economic sector, making it a direct cost to citizens and businesses," Dr Veerathai stated.
He highlighted the bureaucracy's risk-averse culture—driven by fear of prosecution and political patronage—which leads to delays and decision paralysis.
Furthermore, the civil service is failing to adapt to global changes, exemplified by the inability to enact legislation for Carbon Capture and Storage (CCS), a failure that will soon compromise the competitiveness of key Thai industries.
Compounding this is the persistent failure to tackle inequality.
Despite vast public spending, state mechanisms like the education system are not raising quality, and the country's fiscal resilience is visibly declining.
Proposed Reforms: Limiting State Power
Dr Veerathai offered a stark path forward for the government, even with a limited timeframe:
Tackle Corruption: This is the non-negotiable first step to restore public trust and enable all other reforms.
Limit the State’s Role: The government should retreat from operational roles best handled by the private sector, acting instead as a regulator and policymaker.
Wholesale Legal Review: Immediately repeal masses of outdated laws and establish an independent body to assess the efficacy of regulations, stopping agencies from marking their own homework.
Decentralise and Empower: Transfer greater authority to local administrations to reduce the central government’s "top-heavy" structure and foster local accountability.
Fiscal Prudence: Reduce the size of the civil service and ensure state enterprises generate income rather than draining public funds.
"Thailand risks becoming a 'boiled frog state'—slowly facing increasingly severe problems until it is too late to fix," Dr Veerathai cautioned, urging action before a full-blown crisis forces change.
The Invisible Foundation: Rule of Law
Prof Dr Kittipong Kittayarak, chairman of the Thailand Institute of Justice, stressed that the Rule of Law is the critical, yet invisible, structural foundation holding the country back.
He noted that the concept, which ensures the law is just and applied equally, is often seen by the public as solely an issue for lawyers.
The failure to reform the Rule of Law stems from a lack of political will to restrict state power.
This is reflected in the World Justice Project (WJP) Rule of Law Index, which ranks Thailand a poor 101st globally for constraints on government power.
Dr Kittipong advocated for making the Rule of Law a National Agenda Item to force multisectoral cooperation.
He also suggested using the WJP framework and the objective of OECD membership as external motivators to apply internal pressure for change.
The Economy's 'Pro-Grey' Bias
Focusing on the economic fallout, Dr Piti Tantakasem, CEO of TMBThanachart Bank, warned that the structure has shifted from being 'Pro-Business' to favouring large corporations and, dangerously, 'grey businesses' (the illicit underground economy).
"Formal SMEs are dying," Dr Piti lamented, noting that the sector, which is the backbone of employment, is being crushed by large capital, cheap Chinese imports, and illegal businesses willing to pay bribes.
He cited an alarming survival rate of only 10% for SMEs over a three-year period.
Dr Piti called for a "Reinvent Thailand" blueprint—a stable, national architectural design that politicians must implement as "contractors," rather than changing the blueprint with every new administration.
Key economic proposals include:
Debt & Finance: Addressing unsustainable household debt by using credit scoring to grant fair-priced credit to financially disciplined citizens.
Business Structure: Creating an advantage for local SMEs through public procurement standards, similar to past Local Content policies.
Welfare Funding: Considering a VAT increase to 10% (generating an estimated 400 billion baht) to finance a new, comprehensive welfare system and bring the informal economy into the formal system.
