Thailand’ S Competitiveness

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Thailand’ S Competitiveness

  1. 1. Thailand’ s Competitiveness : The New Paradigm Under Globalisation Office of the National Economic and Social Development Board (NESDB) TDRI Year-end Seminar 14-15 December 2002
  2. 2. Mechanism for Competitiveness Driving NCC Advisory Team Economic Restructuring Committee Strategy Setting Strategy Execution Resource Allocation Manage- ment NESDB : CMU Visioning MOF MOL MOAC MOC MOI MOE ... National Committees
  3. 3. Globalisation and Thailand’s Economy
  4. 4. Globalisation and Thailand’s Economy Thailand’s Trade Proportion of GDP (in value term), 2002 Source : NESDB, June 2002 Billion Baht
  5. 5. Source : Bank of Thailand, November 2002 Thailand’s Investment Flows Globalisation and Thailand’s Economy Billion Baht
  6. 6. Conceptual Framework
  7. 7. Conceptual Framework Old Paradigm New Paradigm <ul><li>Export-Oriented </li></ul><ul><li>Higher Export Lower Import </li></ul>Export Sustainable Economic Value Domestic Balance Local and Global
  8. 8. Globalisation/ External Factors Conceptual Framework Internal Factors (Competitive- ness Potential) 8 Value Creation = Opportunities Strategies Capabilities X X
  9. 9. Opportunities Value Creation = Opportunities Strategies Capabilities X X
  10. 10. Global Forces & Trends : Implications to Thailand 10
  11. 11. Change in Demography Overcapacity More Interdependence Knowledge Divide Global Forces & Trends <ul><li>The End of Single Market </li></ul><ul><li>Increase Social Budget </li></ul><ul><li>Mobility of Labour </li></ul><ul><li>New Product Development </li></ul><ul><li>Global Deflation </li></ul><ul><li>Growth with Unemployment </li></ul><ul><li>Incresing Roles of Businesses & NGOs </li></ul><ul><li>Efficiency Based Government </li></ul><ul><li>Power of Information Occupants </li></ul><ul><li>Good Governance </li></ul><ul><li>Increase Formal and Continuing Education </li></ul><ul><li>More R&D and Innovation </li></ul>11
  12. 12. Population growth will continue to shift toward developing countries, leaving developed countries with high aging population proportion Change in Demography 12
  13. 13. Over Capacity Mass Market Competitive Paradigm Scale Driven Economy Tragedy of the Common Over Investment Shortage of Demand Scale, Standardization, Replication, Efficiency, Hierarchy Overcapacity
  14. 14. 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 14
  15. 15. To leap into knowledge economy, society needs a complete set of information , human capital and technology <ul><li>Key Enabler </li></ul><ul><li>Information Technology </li></ul><ul><li>Human Capital </li></ul>Data Information Knowledge Social Wisdom Lacking one will create knowledge divide problems Example: Lack of IT infrastructure Example: Lack of adequate education Example: Lack of free flow of information Knowledge Divide
  16. 16. Lower Efficiency of Fiscal & Monetary Policies Expansion of BKK and Vicinities Higher Competition Decreasing Prices Global Trends : Implications to Thailand <ul><li>Labour Problems </li></ul><ul><li>Lack of Knowledge </li></ul><ul><li>and Skilled Labour </li></ul>More Non-tariff Barriers Implication to Thailand Opportunities for Potential Product Development 16
  17. 17. Danger Signs Lack of Clear Strategy in Geopolitics and Geo-economics Stuck in the Competitive Nutcracker Profitless Growth Trap Low Responsiveness to the Global Changes Few Investment for the Future Danger Signs
  18. 18. Competitiveness Capabilities 18
  19. 19. Sources of Capability PC Physical Capital HC Human Capital FC Financial Capital SC Social Capital Value Creation = Opportunitie s Strategies Capabilities X X
  20. 20. Thailand’s Competitiveness Ranking Source: IMD, World Competitiveness Yearbook , 2002 WEF, The Global Competitiveness Report, 2002
  21. 21. Physical Capital Human Capital Financial Capital Social Capital <ul><li>Strengths </li></ul><ul><li>Fertile Natural Resorces </li></ul><ul><li>Weaknesses </li></ul><ul><li>Low access capabilities to tech. </li></ul><ul><li>Low R&D expenditure/ investment </li></ul><ul><li>Low IT skills </li></ul><ul><li>Strengths </li></ul><ul><li>Low Dependency Ratio </li></ul><ul><li>Good Remuneration of mgt. & service professions </li></ul><ul><li>High Rate of Employment </li></ul><ul><li>Weaknesses </li></ul><ul><li>Low education </li></ul><ul><li>Low skilled labour </li></ul><ul><li>Low labour productivity </li></ul><ul><li>High youth unemployment </li></ul><ul><li>Low HRD index </li></ul><ul><li>Strengths </li></ul><ul><li>Efficiency in tax collection +tax rate </li></ul><ul><li>Stabilised capital index </li></ul><ul><li>Low cost of capital </li></ul><ul><li>Attractive investment policy </li></ul><ul><li>Weaknesses </li></ul><ul><li>Credit access </li></ul><ul><li>No freedom to acquire control in domestic companies </li></ul><ul><li>Strengths </li></ul><ul><li>Low cost of living </li></ul><ul><li>No discrimination </li></ul><ul><li>Identity + attractive national culture </li></ul><ul><li>Weaknesses </li></ul><ul><li>Low efficiency of medical assistance </li></ul><ul><li>Too open for globalisation </li></ul>Source: IMD, 2002 21
  22. 22. Thailand’ s Competitiveness Strategy
  23. 23. Strategic Position What to do? How to do? Strategies Value Creation = Opportunitie s Strategies Capabilities X X
  24. 24. Dual Track : Global Local Links Social Cohesion International Competitiveness <ul><li>Efficiency </li></ul><ul><li>Cost effective </li></ul><ul><li>Productivity </li></ul><ul><li>Innovation </li></ul><ul><li>Sufficiency </li></ul><ul><li>Community Building </li></ul><ul><li>Cultural Identity </li></ul><ul><li>Family Value </li></ul>Community- Urban Trade Community- Global Trade Between- Community Trade Within-Community Self-Sufficiency Surplus Specialization
  25. 25. H igh Performance Economy (HPE) Desired Strategic Position
  26. 26. Positioning Thailand <ul><li>Macro Economic Foundation </li></ul><ul><li>Fiscal & Monetary Policies </li></ul><ul><li>Trade and Investment Policies </li></ul><ul><li>International Policies </li></ul><ul><li>Generic Factors </li></ul><ul><ul><li>Human Resources </li></ul></ul><ul><ul><li>S&T </li></ul></ul><ul><ul><li>Management </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul>Knowledge-Based Economy Active International Player Owner of Advance Technology Global Niches Society of Good Living HPE Public Sector Reform PrivateSector Reform 26
  27. 27. <ul><li>English/Chinerse will be the 2nd language of Thailand </li></ul><ul><li>ICT accessibility and literacy </li></ul><ul><li>Substantial investm ent in R&D (Hardware- Software-Peopleware) </li></ul><ul><li>Strong sense of lifelong learning </li></ul><ul><li>Empowering education and creativity </li></ul>What to do? Knowledge-Based Economy <ul><li>Aggressively move towards Asian economic integration </li></ul><ul><li>Leverage Bi-lateral and Muti-lateral Negotiation </li></ul><ul><li>Stimulate and support local business for going global </li></ul>Active International Player 27
  28. 28. <ul><li>Preserve and leverage Bio-deiversity </li></ul><ul><li>Mobilize resources towards advance technology development </li></ul><ul><li>Intense collaborative partnership between businesses and education and research institutions </li></ul>Owner of Advance Technology What to do? <ul><li>Efficient and impartial law enforcement </li></ul><ul><li>Preventive health care focus </li></ul><ul><li>Balance the ways of life </li></ul><ul><li>Efficient urban mgt. </li></ul><ul><li>Empowering local people and institutions </li></ul><ul><li>Lean, efficient, and honest bureaucracy </li></ul>Society of Good Living 28
  29. 29. What to do? <ul><li>Kitchen of the World </li></ul><ul><li>Tourism Capital of Asia </li></ul><ul><li>World Tropical Fashion </li></ul><ul><li>Detroit of Asia </li></ul><ul><li>World Graphic Design Centre </li></ul>Global Niches 29
  30. 30. Level of Customization Level of Sophistication High Tech Low Tech Low Touch High Touch <ul><li>Software </li></ul><ul><li>Foods </li></ul><ul><li>Tourism </li></ul><ul><li>Auto industry </li></ul><ul><li>Fashion </li></ul>Example Tourism Foods Fashion Auto Software Asia Tourism Capital Kitchen of the World World Tropical Fashion Detroit of Asia World Graphic Design Center Potential Global Niches 30
  31. 31. Issues for Discussion <ul><li>1. Thailand’s Position </li></ul><ul><ul><li>- Knowledge-based Economy </li></ul></ul><ul><ul><li>- Active International Player </li></ul></ul><ul><ul><li>- Owner of Advance Technology </li></ul></ul><ul><ul><li>- Global Niches </li></ul></ul><ul><ul><li>- Society of Good Living </li></ul></ul><ul><li>2. Comment on “What to do?” </li></ul>

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