Thailand s Competitiveness : The New Paradigm Under Globalisation

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Thailand s Competitiveness The New Paradigm
Under Globalisation
Office of the National Economic and Social
Development Board (NESDB)
TDRI Year-end Seminar14-15 December 2002
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Mechanism for Competitiveness Driving
NCC
Visioning
Advisory Team
Resource Allocation Manage-ment
NESDB CMU
Economic RestructuringCommittee
Strategy Setting
Strategy Execution
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Globalisation andThailands Economy
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Globalisation and Thailands Economy
Thailands Trade Proportion of GDP (in value
term), 2002
Billion Baht
Source NESDB, June 2002
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Globalisation and Thailands Economy
Thailands Investment Flows
Billion Baht
Source Bank of Thailand, November 2002
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Conceptual Framework
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Conceptual Framework
Old Paradigm
New Paradigm

• Export-Oriented
• Higher Export Lower Import

Sustainable Economic Value
Export
Domestic
Balance Local and Global
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Conceptual Framework
Globalisation/External Factors
Internal Factors(Competitive-ness Potential)
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Opportunities
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Global Forces Trends Implications to Thailand
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Global Forces Trends

• The End of Single Market
• Increase Social Budget
• Mobility of Labour
• New Product Development

• Incresing Roles of Businesses NGOs
• Efficiency Based Government
• Power of Information Occupants
• Good Governance

Change in Demography
MoreInterdependence
Overcapacity
Knowledge Divide

• Increase Formal and Continuing Education
• More RD and Innovation

• Global Deflation
• Growth with Unemployment

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Population growth will continue to shift toward
developing countries, leaving developed countries
with high aging population proportion
Change in Demography
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Overcapacity
Tragedy of the Common
Over Investment
Mass Market Competitive Paradigm
Scale Driven Economy
Over Capacity
Scale, Standardization, Replication,
Efficiency, Hierarchy
Shortage of Demand
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Ethnic diversity are developing tension in
several parts of the world. One example is an
illicit trafficking network that need
international cooperation among states and
non-state actors.
More Interdependence
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To leap into knowledge economy, society needs a
complete set of information , human capital and
technology
Knowledge Divide
Example Lack of IT infrastructure

• Key Enabler
• Information Technology
• Human Capital

Example Lack of adequate education
Social Wisdom
Knowledge
Data
Information
Example Lack of free flow of information
Lacking one will create knowledge divide problems
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Global Trends Implications to Thailand
Opportunities for PotentialProduct Development
Lower Efficiency of Fiscal Monetary Policies
MoreNon-tariff Barriers
Implication to Thailand
Expansion of BKK and Vicinities
Higher Competition Decreasing Prices

• Labour Problems
• Lack of Knowledge
• and Skilled Labour

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Danger Signs
Profitless Growth Trap
Few Investment for the Future
Stuck in the Competitive Nutcracker
Danger Signs
Lack of Clear Strategy in Geopolitics and
Geo-economics
Low Responsiveness to the Global Changes
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CompetitivenessCapabilities
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Sources of Capability
PC Physical Capital
HC HumanCapital
FC Financial Capital
SC Social Capital
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Thailands Competitiveness Ranking
Source IMD, World Competitiveness Yearbook,
2002 WEF, The Global Competitiveness
Report, 2002
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Physical Capital
Human Capital

• Strengths
• Low Dependency Ratio
• Good Remuneration of mgt. service
  professions
• High Rate of Employment

• Weaknesses
• Low education
• Low skilled labour
• Low labour productivity
• High youth unemployment
• Low HRD index

• Weaknesses
• Low access capabilities to tech.
• Low RD expenditure/ investment
• Low IT skills

• Strengths
• Fertile Natural Resorces

Financial Capital
Social Capital

• Strengths
• Efficiency in tax collection tax rate
• Stabilised capital index
• Low cost of capital
• Attractive investment policy

• Weaknesses
• Credit access
• No freedom to acquire control in domestic
  companies

• Weaknesses
• Low efficiency of medical assistance
• Too open for globalisation

• Strengths
• Low cost of living
• No discrimination
• Identity attractive national culture

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Source IMD, 2002
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Thailand s Competitiveness Strategy
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Strategies
What to do?
Strategic Position
How to do?
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Dual Track Global Local Links
Social Cohesion
International Competitiveness

• Sufficiency
• Community Building
• Cultural Identity
• Family Value

• Efficiency
• Cost effective
• Productivity
• Innovation

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Desired Strategic Position
High Performance Economy (HPE)
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Positioning Thailand
Knowledge-Based Economy
Owner of AdvanceTechnology
Active InternationalPlayer
HPE
Public SectorReform
PrivateSectorReform
Global Niches
Society of Good Living

• Macro Economic Foundation
• Fiscal Monetary Policies
• Trade and Investment Policies
• International Policies

• Generic Factors
• Human Resources
• ST
• Management
• Infrastructure

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What to do?
Knowledge-Based Economy
Active InternationalPlayer

• English/Chinerse will be the 2nd language
  of Thailand
• ICT accessibility and literacy
• Substantial investment in RD (Hardware-
  Software-Peopleware)
• Strong sense of lifelong learning
• Empowering education and creativity

• Aggressively move towards Asian economic
  integration
• Leverage Bi-lateral and Muti-lateral
  Negotiation
• Stimulate and support local business for
  going global

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What to do?
Owner of Advance Technology
Society of Good Living

• Preserve and leverage Bio-deiversity
• Mobilize resources towards advance
  technology development
• Intense collaborative partnership between
  businesses and education and research
  institutions

• Efficient and impartial law enforcement
• Preventive health care focus
• Balance the ways of life
• Efficient urban mgt.
• Empowering local people and institutions
• Lean, efficient, and honest bureaucracy

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What to do?
Global Niches

• Kitchen of the World
• Tourism Capital of Asia
• World Tropical Fashion
• Detroit of Asia
• World Graphic Design Centre

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Potential Global Niches
Tourism
Asia Tourism Capital
Example
High Tech
Foods
Kitchen of the World

• Software

• Fashion

• Auto industry

World Tropical Fashion
Fashion
Level of Sophistication

• Foods

Detroit of Asia
Auto

• Tourism

Low Tech
World Graphic Design Center
Software
Low Touch
High Touch
Level of Customization
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Issues for Discussion
1. Thailands Position - Knowledge-based
Economy - Active International Player -
Owner of Advance Technology - Global Niches
- Society of Good Living 2. Comment on What to
do?