Thailand

1
Thailand in the New Global Landscape
Suvit Maesincee Sasin Institute for Global
Affairs (SIGA)
2

• Thailand
• from the Outside-In Perspective

• Thailand
• from the Inside-Out Perspective

3
We are facing with perpetual crises
During this decade
4
For much of the next decade after the economic
crisis, we can reasonably expect to see

• Weak global growth
• Pressure from overcapacity
• Persistently high unemployment
• Volatility in the financial markets
• Costlier capital
• A great expanded role for governments
• A much larger burden of regulation and taxation
  for all

5
Post crisis Trade-Related Scenario

• The rising tide of economic nationalism temps
  nations to look
• inward-driven more by self interest rather
  than by the outward-
• looking aspirations of collective interest
  that shape a deeper
• commitment to globalization
• A tough business cycle exacerbated by sharply
  rising
• unemployment and a muted recovery, could well
  reinforce the
• tendencies of the localization alternative
• An era of heightened trade friction, increased
  protectionism

6
Global Structural Change
7
Change in Geo-Economics
The New World Economic Structure
World Economic Structure
Global GDP
75
Developed Countries
The Rise of the Rest
The Triad
50
Developing Countries
The Rest of the World
The Rise of Asia
25
1820
70
1913
50
73
2005
China/India
The Rest of Asia
8
Spending power has already been shifting away
from the richest countries towards a growing
middle income bloc

• In 1980, the seven largest economies in the
  world in USD terms
• were all developed economies
• That list now includes all of the BRICs

9
By 2050 China and India will together account for
nearly 50 of global GDP--about the same as the
G7s current share, which is expected to decline
to 25
10
The Asian Century
11
An Emergence of the New Global Middle Class

• By 2030 citizens from China and India had a
  combined shared of 44 percent of the global
  middle class, with the great majority (38
  percent) being Chinese, in fact half of the total
  740 million new entrants into global middle class
  will be Chinese nationals
• The World Bank estimates that the numbers able to
  pursue a middle class lifestyle by 2030 in
  Indonesia could rise by more than 50 million, in
  Malaysia by 20 million, in Thailand by more than
  25 million

Source Bussolo, Maurizio (2007).
World Bank 2007
12
China in the Global Landscape
Shanghai Co-operation Organization
Kazakhstan Kyrgyzstan Tajikistan Uzbekistan
BASICs
G20
Argentina Australia Britain Canada France European
Union Germany Italy Mexico Turkey Saudi
Arabia USA
ASEAN 3
Brasil
Russia
Brunei Cambodia Laos Malaysia Myanmar Philippines
Singapore Thailand Vietnam
China
India
South Africa
Indonesia Japan South Korea
IBSA
13
The New USA
3,284 mil (50 World Population)
12,250 bil US (22 World GDP)
ASEAN 6
2,068 Mil (31 World Population)
9,901 bil US (18 World GDP)
ASEAN 3
ASEAN
585 Mil (9 World Population)
1,275 bil US (2 World GDP)
14
Change in Geo-Politics
Retrospectively, the 20th century was dominated
by the American ideologies
American Ideology
Americanization

• Democracy is better than Dictatorship

American Democracy

• Capitalism is better than Socialism

American Capitalism

• Western culture is better than all the rest

American Culture
15
Challenges facing Americanization
Political Landscape
Non-democratic state e.g., China has had the
greatest success meeting the basic human needs of
its people and pulling them out of poverty
Capitalism is now split into distinctive and
competing forms, with government owning and
directing large parts of the economy in some of
the most critical sectors
Economic Landscape
Modernization did not bring homogenization
culture and identity are powerful enduring
forces between and within societies By hosting
the Olympic Games, China, for example, has
symbolically and emotionally reclaimed its
historic centrality and its international
legitimacy
Cultural Landscape
16
Globalization from Above VS. Globalization from
Below
Multipolarity
Territorialization of Politics
State Actors
Nation-State
Nonpolarity
Non-State Actors
De-territorialization of Politics
Global Civil Society
17
From a World of Enemies to a World of Threats
Risks
Corsairs
Private Armies
Terrorists
Mercenaries
Pirates
Hyper-conflict
Totalitarian regimes slaughter one another to
establish supremacy without acknowledging any law
of war or even any arbitrators
18
In the age of perpetual uncertainty, fear
determines the attitude towards life
Laissez-faire
Precaution
19
Change in Geo-Climatics
Four Southeast Asian countries are likely to face
more severe consequences than the global average
due to limited adaptive capabilities
20
Climate-Related Multilateral Arrangement
Mexico Accord
Emission Trading
Adaptation
Linkage to trade measures
Nationally Appropriate Mitigation Actions (NAMAs)
Copenhagen Accord
Carbon Off-shoring
Carbon Credits
Numerical targets of emission reductions

• Reduction of GHG Emission by both developed
  developing countries
• Low Carbon Development Pathway
• Reduction of emissions through deforestation and
  degradation (REDD)
• Copenhagen Green Climate Fund Technology
  Transfer.

Finance
REDD
Carbon Leakage
Sectoral Approach for Heavy Emitters - e.g.
Steel, Cement, Electricity , Paper pulp
(possibly including agriculture sector)
Technology
A handful of mutually agreed concepts are noted
in the Copenhagen Accord, yet loads of
contentious issues with diverting views on
details remain
21
Global Forces Trends Towards Low Carbon Society
Citizens
Government
Business

• Improvement of energy
• efficiency to reduce costs
• Voluntary emission reduction
• for green image
• Low Carbon, Technology-
• driven

• Green Growth as a new economic growth engine
• Stricter rules on less green imports
  provision of adaptation support to maintain
  competitive edge of domestic industries.

• Environmentally Awareness / Go Green
• Health Concern

Change in Consumers Preferences - Eco-buying
Manufacturing ? Services
Carbon Leakage/Off-shoring to Developing
Countries??
Examples

• Korea ? To become the World 7th Green Power by
  2010 and 5th by 2050
• Japan ? Carbon Minimization in All Sectors
• ?Toward a Simpler Life Style that Realize Richer
  Quality of Life
• ?Coexistence with Nature
• US, UK, China, India etc.

22
CC is affecting or will affect a wide range of
industry sectors, some more than others
23
Are Thais Companies still fitting in ?
Thais Companies ???
Green
Green
Green
Green
Global Supply Chain
24
Change in Geo-Demographics
Towards the Century of Geo-Demographical
Imbalance
Developed Countries
Developing Countries
Aging Society
Dynamic Young Society
25
A First World of the aging industrialized nations
North America, Europe, and Asias Pacific Rim
(Including Japan, Singapore, South Korea, and
Taiwan, as well as China (after 2030)
Developed Countries
Developing Countries
Aging Society
Dynamic Young Society
26
A Second World of fast growing economically
dynamic countries with a healthy mix of young and
old inhabitants
Developed Countries
Brazil, Iran, Mexico, Thailand, Turkey, and
Vietnam, as well as China (until 2030)
Developing Countries
Aging Society
Dynamic Young Society
27
Demographic Challenges Issues Facing Thailand
Potential supportive ratio
Shortage of Labor
7
Economic
6
5
Lower potential supportive ratio
Socioeconomic
4
3
2
1
124
Sociological
0
2000
2020
2050
Source Kua Wongboonsin
28
A Third World of fast growing, young, and
increasingly urbanized countries with poorer
economies and often weak governments
Developed Countries
The rest of the world
Developing Countries
Aging Society
Dynamic Young Society
29
Three Great Waves of Outsourcing
The First Wave
The Third Wave
The Second Wave
Manufacturing
Services
Foods Agriculture Resource War --The world
will demand 70 percent more food by 2050,
outstripping population growth
30
Global Structural Changes
Change in Geo-Climatics
Change in Geo-Economics
Change in Geo-Politics
Change in Geo-Demographics
31
A) Asian Century
D) The Impact from Climate Change
D1) Food Fuel Security0
D2) Carbon Footprint
D3) NTBs
D4) Green Products
D5) Waste Management
D6) Higher cost of imported products
A1) Internal Consumption
A2) Regional Logistics
A3) Increase Pan-Regional Integration
A4) Similar Culture/Easy Market Access
A5) Internationalization
A6) Strong Competitors in world market
A7) Strong Trade Bloc
E) The Third Wave of Outsourcing
B) Geo-Demographic Imbalance
E1) Global Land Grab
E2) Technology Transfer
B1) Halal Food / Kosher / Hispanic
B2) Long Stay
B3) Senior Tourism
B4) Brain Drain
B5) Service Trade (Medical,Education)
B6) Imported Labour
F) The World at Risk
F1) Security/ Terrorist
F2) Higher cost of imported products
F3) Insurance Service Security Service Opportunity
C) The New Global Middle Class
G) The Age of Philanthro-Capitalism
C1) Increase in Commodities Prices
C2) Demand for High Protein Content Food
C3) Demand for Health Food/Health Products
C4) Tourism Industry Opportunity
C5) Service Trade (Healthcare/Education)
G1) CSR
G2) Higher cost of imported products
G3) Service Trade (certify body)
32
Opportunities Threats Matrix



C1
D1
F1
G3
A6
B1
E1
A1
C2
D2
F2
G2
A7
B2
E2
A2
H
C4
D3
F3
G3
B3
A4
C5
D4
B4
A5
D5
B5
Probabilities
D6
M
C3
A3
L
H
M
L
Impact
Source Dept. Export Promotion, MOC
33
Can Thailand accommodate global risks and
opportunities?
34

• Thailand
• from the Outside-In Perspective

• Thailand
• from the Inside-Out Perspective

35
Revisit the Asian Financial Crisis 1997
Credit Crunch
Real Sector
Bankruptcy
Collapse of Financial Institutions
Public Sector
Financial Sector
Political Instability
People Sector
Social Unrest
Attacked by Hedging Funds
Unemployment
36
Closing Strategic Gaps--1997
High Performance Economy
Gap II
Economic Restructuring
A Nation in Crisis
Gap I
Economic Recovery
37
The Current Compounding Crisis
Pandemic
Social Fragmentation
Climate Change
People Sector
Global Economic Crisis
Private Sector
Public Sector
Economic Vulnerability
38
Closing Strategic Gaps 2010
High Performance Economy
Gap II
Competitiveness
A Nation in Crisis
Gap I
Cohesiveness
39
Current Political Battlefield
Political Conflict
Social Conflict
Economic Conflict
40
Cohesiveness
A huge gap between ultimate perceived reality
Perceived Reality
Distortion
Ultimate Reality
Bias
41
Cohesiveness
Dangerous Zone

• No mutual trust
• No mutual respect
• No shared value
• No collaboration

Reconsider Vs. Ignore
Dangerous Zone
Bias
Framed Vs. Ignore

• Hyper-conflict
• Instability
• Insecurity

Unbias
Distorted
Undistorted
42
Cohesiveness
Future Scenario
Last Decades
War against Communism
Pre- May 19, 2010
War against Poverty
This Decade
Post-May 19, 2010 Scenario
War against Terrorism
43
Competitiveness
Thailands Overall Competitive Position

• Singapore

First Sphere
Mature/Stable Market Economy

• Dubai

• Thailand

• South Korea

Second Sphere
Stagnant/Chaotic Economy

• Vietnam

Third Sphere
Political Disorder
Mature/Stable Liberal Democracy
Source Tanaka Akihiko
44
Competitiveness
Overall Thai Industrys Competitive Position
Competitive Nutcracker
Apparel
Italy (2)
Leaders
Hong Kong (3)
Design/ Differentiation based competition
Thailand (11)
China (1)
Followers
Low cost-based competition
Low Cost
Differentiation
Competitive Advantage
45
The Current Compounding Crisis
46
Developmental Imbalance
Current Development Position
()
Ideal Position
Initial Position
Social Development
()
(-)
Actual Position
(-)
Economic Development
47
Economic Success
From the year 1946 to 2009

• Population increased 3.7 times
• (From 17mil to 63mil)

• GDP increased 32 times
• (From 0.133bil to 4.2bil)

• Income/capita increased 10 times
• (From 6,600 Bahts to 64,500 Bahts)

• People under poverty line
• (From 24mil in 1986 to 5 mil in 2007)

48
Social Failure
Vulnerable Social Capital

• One in every ten children are born from the
  adolescent parent
• High divorcing rate of 1 in every 4 new spouses
• One fourth of the elementary school students
  does not live with their parents
• 39 are families which are violent to their
  children
• 62 are families with alcoholic parents
• 46 are families with smoking parents

49
Income Inequality
64
.
5
Namibia
47
.
2
Bolivia
4
44
.
7
South Africa
.
7
38
.
4
Malaysia
3
.
4
37
.
8
Sri Lanka
5
.
3
34
.
9
Hong Kong
.
7
33
.
4
Thailand
.
8
33
.
1
China
.
9
32
.
8
Singapore
3
.
2
29
.
9
Vietnam
.
9
29
.
9
USA
3
.
9
28
.
5
India
3
.
6
28
.
5
Indonesia
Canada
.
6
24
.
8
3
.
9
23
.
4
Norway
Finland
4
22
.
6
2
.
9
22
.
5
Korea
Sweden
3
.
6
22
.
2
Japan
4
.
8
21
.
7
0
10
20
30
40
50
60
70
80
90
100
Share of Income ()
Poorest 10 Percentile
Richest 10 Percentile
50
(No Transcript)
51
Turning from Constructive to Destructive Social
Structure
52
Building a Clean Clear Society
Good
Governance
Bad
Tight
Loose
Anti-corruption Measures
53
Building a Free Fair Society
Yes
Fair Practice
No
Yes
No
Degree of Freedom
54
Building a Care Share Society
Yes
Clean Clear Society
No
Yes
No
Free Fair Society
55
Unacceptable Inequality
Felt Inequality
Level of Inequality
Forced Inequality
Acceptable Inequality Level
Natural Inequality
56
Sufficiency Economy
Over
Perceived
Sufficient
Under
Over
Under
Sufficient
Actual
57
Norms Value

• Materialism
• Consumerism
• Hedonism

Economic

• Parochialism
• Nepotism
• Cronyism

Social
Political

• Authoritarianism
• Profitism
• Populism

58
Instrumental Reform

• Law Regulation Reform

• Tax Reform

• Land Reform

. . . . .

• Budgeting Reform

59
Closing Strategic Gaps 2010
High Performance Economy
Gap II
Competitiveness
A Nation in Crisis
Gap I
Cohesiveness
60
Whats Next ?
Thailands Trade Policy

• 1960s Import Substitution
• 1970s Export Promotion
• 1980s Foreign Direct Investment
• 1990s Trade Liberalization
• 2001-2007 Dual Track Development
• 2007- ??

61
Thailands Strategic Intent
Market-led Economy
Remove the systemic impediment that currently
render Thai enterprises uncompetitive and make
Thailand an unattractive place for place for
multi-national corporations to do business
Move forward to overcome the shortfall in both
managerial and technical knowledge by drawing
heavily on the outside world. There is no way
back. Thailand must move forward to be
knowledge-based.
Knowledge based Society
Entrepreneurial Spirit
For Thailand to be adaptable in its AEC strategy,
and to re-energize the growth engine in the
economy, entrepreneurialism will be crucial.
Regional Integrated
Thailand s greatest opportunities, and greatest
competitors, lie within 2000 km. of Bangkok.
Thailand needs to become a tightly integrated
insider in this region
Thailand has long history of self reliance, but
will fail to realize its potential if it
continues to pursue this approach. The countrys
real opportunities going forward are to become
the best globally connected country in this region
Globally Connected
62
Thailands Trade Investment Architecture
Trade Investment Policy
Agriculture
Market Access
Manufacturing
Capacity Building
Market Penetration
Services Tourism
Global Dynamics
Market Facilitation
Enabling Infrastructure
63
ASEAN Economic Community
Production
Service
Resource
Singapore
Thailand/ Malaysia/ Indonesia/ Philippines/Vietnam

• Rubber
• Automotives
• Tourism and Aviation
• Fashion
• Food
• Education
• Logistics/Transportation
• Agriculture and Fisheries
• Wood
• ICT and Healthcare
• Electronics
• Financial Services
• Energy
• Construction

Brunei Cambodia Laos Myanmar
64
AEC-Thailand Trade Structure
65
Using AEC as a stepping stone to enhance Thailand
competitiveness in the global markets

• The US/Canada
• Western Europe
• Japan/South Korea

• China/India
• Russia
• Argentina/ Brazil/ Chile
• Mexico
• South Africa

Advanced Countries
Matured Countries
Emerging Countries

• African Countries
• Middle East

AEC
Thailand
66
Regional Hub
Cultural Tourism
Jewelry THA,MYN,CAM Land Transportation
THA,MYN, LAOS,CAM,VIET,MAL,SING Food
Restaurant THA
Textile
Automotives
Rubber/ Leisure Tourism
Aviation/ Education/ Healthcare
67
Global Reaches, Local Links
Cluster of Province
Province
Village
Global
Regional
Social Cohesion
International Competitiveness

• Efficiency
• Cost effective
• Productivity
• Innovation

• Sufficiency
• Community Building
• Cultural Identity
• Family Value

68
Rebuilding Thailand
Economic Wealth
Environmental Wellness
Social Well-Being
Human Wisdom
69
The New Nation Architecture

• Entrepreneurial Society
• Innovation Driven
• Pro-competitive Eco-structure
• Local Linked, Global Connected

Value Creation Economy
Green Society
Welfare State

• Low Carbon Economy
• Climate Resilient Society
• Green Growth Industry

• Social Assistance
• Social Safety Net
• Social Insurance

Democratic Culture

• Open Society
• Rule of Law
• Plurality
• Civility

70
Challenges facing our nation
Yes
Willingness to Change
No
Yes
No
Ability to Change
71
Ability to Change
72
Leadership in the New Global Landscape

• Assertive
• Competition
• Authoritarian
• Focuses on commanding
• the behavior of others

Hard Power

• Collaborative
• Participative
• Integrative
• Aims to co-opting the behavior
• of followers

Soft Power
73
Mandate for Change
Willingness to Change
Mandate For Change
Leadership
Ability to Change
74
Every morning in Africa, a gazelle wakes up.It
knows it must run faster than the fastest lion or
it will be killed. Every morning a lion wakes
up.It knows it must outrun the slowest gazelle
or it will starve to death. It does not matter
whether you are a lion or a gazelle. When the
sun comes up, you better start running.
African Proverb
75
If You want to go quickly, go alone if you
want to go far, go together.
African Proverb
76
It is not the strongest of the species that
survive, nor the most intelligent, but the
one most responsive to change.
Charles Darwin