In 2017 Thailand reinvents itself as version 4.0
Thailand’s junta government is working hard to promote “Thailand 4.0” as a new market image and economic model aimed at pulling Thailand out of the middle-income trap and developing it as a high-income country. Middle-income countries like Thailand are squeezed between their low-wage competitors like Myanmar and Cambodia that dominate the mature industries on one side. And the rich-country innovators like Singapore and South Korea that dominate industries of rapid technological change on the other side.
Thailand has gone through an emotional rollercoaster from its first version as farming industry to the desired participation in the club of high-income and high technology countries – somewhere between Japan and Bangladesh:
- Thailand 1.0: Simple agricultural society
- Thailand 2.0: Focused on light industry with low wages (as result of the industrialization)
- Thailand 3.0: Heavy and more complex industries and exports (as result of the globalization)
- Thailand 4.0: Value based economy with an emphasis on research and development, science and technology, creative thinking, and innovation.
In 2017 ff., small and medium enterprises shall become smart and new company set-ups will develop to be high-potential startups. Traditional services with low yields will be transformed into “high-value services”. Low-skilled workers shall be supported and trained to become highly educated and skilled. To transform itself into Thailand 4.0, the country aims to tap its advantages in terms of biodiversities and cultural pluralism to enhance competitiveness through innovations and creativities in these industries
- food and farm products
- public health and medical technology
- electronically controlled robots and machinery, digital technology and connectivities
- high-value creative industries
It is the declared aim of the government (i) to change production of commodities into innovative products,
(ii) to transform industry-driven activities into those driven by technology, creativity and innovation and (iii) to shift the focus on making products, to providing services.
Enhanced BOI investment promotion strategy
BOI’s investment promotion strategy to prepare the country for Thailand 4.0 will encompass the following 5 key dimensions:
- Investment in human resources, e.g., attracting talents from abroad,
- Investment in enterprises, ranging from community enterprises to those that are innovation-driven, e.g., startups, SMEs in agriculture, etc.;
- Investment in the S-curve industries: (i) next-generation automotive; (ii) affluent, medical & wellness tourism; (iii) smart electronics; (iv) agriculture & biotechnology; and (v) food for the future.
- Investment in the core technologies; (i) robotics; (ii) digital; (iii) aviation & logistics; (iv) medical hub and (v) biofuels & bio-chemicals.
- Investment in infrastructure, such as high-speed trains, mass rapid transits, special economic zones, Eastern Economic Corridor (EEC), digital infrastructure
BOI Plus and other new legislation
New laws have been enacted to support future investment promotion, and to correspond with the national agenda:
- New Investment Promotion Act (BOI);
- National Competitiveness Enhancement Act for Targeted Industries (BOI Plus);
- Eastern Special Economic Zone Act; and
- Special Economic Zone Act.
BOI and BOI Plus, in particular, are the new tools which help promote merit-based investments and highly-impacted projects in line with BOI’s 7-year strategy (2015-2021).
Ease of doing business and SMEs development
The Thai Government has undertaken a number of measures for ease of doing business, for instance, tax-related measures, and combat against corruption. This year, in the Ease of Doing Business ranking conducted by the World Bank, Thailand ranks 46th, up by three notches.
SMEs and startups are the driving forces of Thai economic system. SMEs’ accessibility to funds, markets, and opportunities, as well as e-commerce system has been promoted.
However, the whole scheme depends on the assumption that Thais 4.0, people with more knowledge, social responsibility and capabilities to use modern technology, will be the driver of Thailand 4.0.
2017: Next steps
The government focuses in 2017 on four areas:
- the digital economy, above all the national broadband network and submarine cable project,
- infrastructure development, especially the double-track rail network and the Eastern Economic Corridor (EEC)
- agricultural reform (smart farmer project), and
- local economic development via 18 provincial clusters.
Source: DPM Somkid on “2017: Thailand’s Turning Point” conference, Bangkok 11/01/17
PUGNATORIUS Ltd. guides foreign investors through the hurdles of Thailand 4.0.