After the Thai government was forced to float the currency on 2 July 1997, the baht dropped to around 40 per cent of its former value against the US dollar (Phongpaichit & Baker, 2004). Thailand received financial assistance and social advice from three international organisations, the International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB). Each organisation was responsible for different programs,
IMF was responsible for macroeconomic policy and bank restructuring, the World Bank for preparing the resolution framework for finance companies and corporate debt restructuring, and ADB for the capital market reform and the social sector (ADB Special Evaluation, December, 1999, p. 1)
On 20 August 1997, Thailand adopted a US$17.2 billion IMF-led assistance package, just seven weeks after the devaluation, (UNESCO, 2001). The ADB had lent Thailand US$500 million which the World Bank described as “the largest social program loan ever provided” by the ADB (World Bank Thailand 1999, p.17 cited in Phongpaichit and Baker, 2000, p.76). However, the assistance came with conditions. The ADB in particular, pushed for an autonomous-university policy. The economic crisis resulted in government budget cuts for all ministries, an overhauled financial sector, and increased value-added taxes from 7 per cent to 10 per cent. Accordingly, the budget allocated for higher education was decreased year by year, from 17.2 per cent of total government expenditure in the early 1990’s to 16.4 per cent in the late 1990’s and to 14.4 per cent in 2002 (Sangnapaboworn, 2003).
The economic crisis led to the closure of 56 of Thailand’s top 58 financial institutions (Friedman, 2000). In addition, a large number of businesses also collapsed which directly affected employment levels, causing 300,000 workers to be laid off by 4,000 enterprises in 1998 (Siltragul, 2003). While Thai employees were struggling with the local employment crisis, foreign investors took over many businesses in Thailand, especially banking and financial industries. The Singaporean bank, DBS found gaps in ‘international capabilities’ when they took over Thai Danu bank and did not recruit Thai employees to manage units outside Thailand due to the lack of extensive overseas experience and communication skills. DBS claimed that there was ‘only a handful of staff with extensive overseas experience’ (De Meyer, Mar, Richter & Williamson, 2005, p.11).
The impact of globalisation on national economic development had forced the Thai government to restructure itself for a better global economic position. To some extent, the crisis revealed the country’s weakness of labour and professional skills. Producing knowledgeable and skilled workers, including English language skills, was the country’s focus since the Eighth National Economic and Social Development Plan (1997-2001). The emphasis on the importance of the quality of educational standards and human resources stated clearly the country’s needs for internationalising the higher education system. However, it was not only the economy, but also the 1997 constitution, Thailand’s first great constitutional reform and the National Education Act 1999, that drove educational reform at all levels.
During the country’s economic crisis of 1997-1998, the policy on ‘internationalisation of higher education’ developed dramatically. Overseas fees and living expenses were more than doubled in price due to the dramatic devaluation of the baht in 1997.The crisis created an ‘international education boom’ in Thailand as more Thai students chose the less expensive option to access an international education at home (Fry, 2002). In the meantime, Western offshore degree programs expanded through cooperation and collaborations with Thailand’s international degree programs. Both circumstances have created pressures in the international education market in Thailand. International degree programs, both those managed by Thais in collaboration with Western institutions and others managed by Western institutions with minimal Thai participation, were encouraged by the Thai government’s internationalisation strategy designed to achieve internationally recognised standard in higher education.
Traditionally, Thailand sent students abroad, particularly to developed countries, to obtain knowledge and skills in subject areas such as science, technology and engineering so as to advance the country’s development and to significantly build a relationship with developed nations. Now, Thailand is also becoming an exporter/provider of an international education while still maintaining international cooperation. Many higher education institutions (both colleges and universities) are offering international degree programs (mainly in business and technology) to both local Thai students and non-Thai students.
After the financial crisis of July 1997, Thailand identified a skilled labour shortage as well as the need to develop English language programs as two priorities for national development. Friedman (2000) believes that the ‘quality’ of the state did have a major role in the Asian economic crisis and was important for the survival of the nation in the era of globalisation. In 1998, Prime Minister Chuan Leekpai told Friedman that,
One of the lessons this crisis has taught us is that many of our structures and institutions were not ready for this new era. Now we have to adapt ourselves to meet international standards. The whole of society expects it. They are looking for better government and transparent government. (p. 158)
The economic downturn forced the Thai government to rethink the country’s past strategies, especially in terms of ‘international competitiveness’ (Fry, 2002). Although Thailand invested a high percentage of annual government budget in education, it still ‘lags behind internationally on many major indicators of educational quality and human resource development’ (Atagi, 2002 cited in Fry, 2002). A powerful message from Krugman (1994 cited in Fry, 2002) influenced Thai policy makers to realize Thailand could not depend on its cheap labour the way that countries such as Bangladesh, Cambodia, Vietnam and China could. Apart from producing an educated and skilled workforce, the government needed to rework new strategies to face globalisation.
Significantly, the crisis also highlighted the importance of ‘quality’ of human resources in a new environment of workforces managed by foreign investors who had taken over businesses during the aftermath of the crisis. Consequently, the Thai government became ever more conscious of education as a key for resolving the country’s skills shortages in private industry. The National Education Act 1999 and the Constitution of the Kingdom 1997 (known as the People Participation version) called for educational reforms and made significant changes to all levels of the education system of the country. In particular, it required a formal establishment of educational standards and a quality assurance system for the whole sector.
Thailand’s national policy emphasized the human capacity and human resource development to cope with rapid changes associated with globalisation in order to strengthen national competitiveness in a global economy. Internationalisation of higher education was used as a key competitive strategy to modernize and to achieve internationally recognized standards for education.
Since the crisis, Thailand has focussed on the development of its human potential and creativity and enhancing the capability of communities, societies and the nation as a whole. Accordingly, the Eighth Economic and Social Development Plan (1997-2001) focused on ‘human development’ instead of ‘economic development’ (Siltragool, 2003). The logic behind this shift is the belief that ‘the knowledge and skills possessed by workers contribute to economic growth’ and that quality knowledge workers can largely be built through formal education and on-the-job training (Slaughter & Leslie, 1997, p.10). Accordingly, education is increasingly becoming more instrumental in relation to human development in line with the economic development of the nation. The shift towards ‘human development’ since the 8th Plan is quite evident and it has been carried through the current 10th Plan which is being implemented at the moment. It reflects and gives an emphasis to ‘human capability’.