Decentralized Rural Development Planning : A Case Study of Khok Charoen District, Lopburi Province, Thailand (Part II)


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Decentralized Rural Development Planning : A Case Study of Khok Charoen District, Lopburi Province, Thailand (Part II)

  1. 1. CHAPTER IV NON-AGRICULTURAL SECTORIntroductionLop Buri province is located in the upper part of the central region of Thailand, ‘group 2’,with the region also containing other provinces such as Sra Buri, Lop Buri, Singh Buriand Chainat. It is approximately 150 kilometers north of Bangkok, covering an area of6,641.859 km2. The district under consideration in this study is Khok Charoen, in theNorth of Lop Buri province. The area is connected to Nakhon Sawan province (Tak Fadistrict and Ta Kle district), and Phetchaboon province (Sri Thep District). The non-agricultural sector consists of three major sub-sectors: industry, trade and commerce andtourism. Table 4.1 below shows the economic structure of the Lop Buri province. Hereone can see that non-agriculture sector is a very important part to the provincial economy,with industry and trade and commerce holding 36.88% and 14.11% of the provincial GPPrespectively. Tourism which is another area under consideration in this sector may bepart of ‘Others’ showed in the same table. Similarly, table 4.2 shows the absolute valuesof the income generated, segregated into different sectors; again the percentage share ofeach sector is shown. Table 4.1 General information of Lop Buri province. Population (200 5) 73 7,89 1 people Area 6,64 1.85 9 s q. m. Number of dis tricts 11 dis tricts Gros s Provincial Product (GPP) (200 4) 66 ,5 04 million baht Indus try 36 .8 8% Trade and Commerce 14 .1 1% Ag riculture 12 .5 2% Trans port 3.29 % Cons truction 3.14 % Others 30 .1 6% Average income per pers on (2 54 7) 80 ,6 25 baht Source: Provincial employment statistics (2004)Contrasting the case in provincial level, the non-agricultural sector is not a primary sectorengaged by the people of Khok Charoen district like the agricultural sector.Nevertheless, this sector has a role to play in the economic development of the district asit can still be regarded as additional employment opportunities and income for the localpeople Table 4.2 Breakdown of income generated by sector. S ector Monetary value s (million baht) S hare (% )Indus try 22,22 9 3 6.63Trade and Comme rce 8 ,2 91 1 3.66Government 7 ,5 71 1 2.47Ag riculture 7 ,4 33 1 2.25Education 2 ,9 66 4.89Cons truction 2 ,0 88 3.44Trans port 1 ,9 19 3.16Re al e s tate 1 ,6 85 2.78Electricity and water s upply 1 ,5 67 2.63Bank ing 1 ,4 19 2.34Hotel and res taurant 1 ,2 98 2.14He alth and s oc ial welfare 1 ,2 03 1.98Community, s ocial and pr iv ate s ervice 6 35 1.05Fis hery 2 12 0.35Mining 1 13 0.19Hous e maid 33 0.05Source: Provincial employment statistics ,2004 128
  2. 2. To give a picture on the employment status within Lop Buri province, one can see fromFigure 4.1 that roughly equal shares of the population are employed in agriculture andnon-agriculture, at 46%. Non-agricultural, however, comprises of many economicactivities and the breakdown of this is shown in Figure 4.2.Figure. 4.1 Employment status at provincial level. Source: Provincial Employment Statistics (2005) Others, 1.34% Public sector, 6.50% Agriculture, 45.92% Non-agriculture, 46.24%Source: Provincial Employment Statistics (2005)Figure: 4.2 Breakdown of employment by sub-sector in Lop Buri (in number of worker) Others 21180 Trans port and cargo 6,772 Government, arm y and other public services 10,079 Education 11,595 Hotel and restaurant 20,639 Construction 26,971 Wholes ale, retail, car and motorcycle repair, domes tic product 55,360 Factory production 78,795 Agriculture, hunting, and fores try 196,469 0 50,000 100,000 150,000 200,000 250,000Source: Provincial Employment Statistics (2005)Overview of non-agricultural sector in Khok Charoen districtKhok Charoen is one of the less prominent districts in the Lop Buri province whether interms of area, population, level of development or the income generate to the province. Itis well-evident that this is not the most appropriate area for the development of the non-agricultural sector; this is noticeable in the vision of the district office to develop KhokCharoen as an organic agricultural source. Nevertheless, the non-agricultural sector has arole to play in the development of the district, as well as the improving the well-being ofits people.Table 4.3 shows a comprehensive picture of non-agricultural sector in Khok Charoendistrict. In terms of industry, there is little variety in terms of type of industry and thereare very few industrial developments within the area. Tambon Yang Rak has the highestdensity per 10 km2 with 1.52. The levels of industrial development in Khok Charoen andKhok Samae San as measured by level of density are of similar scale at 1.24 and 1.42 129
  3. 3. respectively. There is only one unit of industry in Nong Makha and none in WangThong; indicating obvious areas that can be improve. Table 4.3 Comprehensive picture of Non-agricultural sector in Khok Charoen district Indicators/Tambon Khok Chareon Yang Rak Khok Samae San Wang Thong Nong Makha Area (sq. km) 72.94 65.71 42.34 25.34 110.81 Population (person) 7296.00 7783.00 3231.00 2638.00 3509.00 Number of cottage industries per 10 sq. km 1.23 1.52 1.42 0.00 0.09 Number of OTOP per 10 sq. km. 1.51 0.15 1.89 0.00 0.27 Number of market per 1000 population 0.27 0.51 0.31 0.38 0.28 Number of service and repairing units per 1000 population 5.21 0.26 1.24 0.00 7.69 Number of wholesale and retail shops per 1000 population 9.87 8.87 10.83 13.27 13.68The number of OTOP projects in Khok Charoen is of fair level. However, these OTOPprojects are clustered in 3 sub-districts in Khok Charoen and Khok Samae San, with thedensity indicator showing 1.51 and 1.89 respectively. Yang Rak and Nong Makha havelittle development in this area and again there is nothing in Wang Thong.Looking at trade and commerce, the indicators shown here are based on number ofmarket, number of service and repair units, as well as number of whole and retail shops;they are shown in terms of density per 1000 population. Here one can see that thepopulation in Yang Rak is most accessible to market places, with the market density of0.51 per 1000 population. On the other hand, although Khok Charoen is one of thelargest sub-districts in terms of population, there exists only 2 market places; hence thedensity being the lowest at 0.27. Nong Makha performs the best in our service andrepairing unit indicator with 7.69 shops per 1000 population. This is closely followed byTambon Khok Charoen with 5.21 units per 1000 population. An area of concern is WangThong where no service providers are located at all. Lastly, the number of retail andwholesale shops are most readily available in Nong Makha where there are 13.68 shopsper 1000 population. Wang Thong also performs very well in this indicator with the shopdensity of 13.27. The sub-district which performs the worst here is Yang Rak. However,this may due to the fact that it has the largest number of population. According to theoverall picture generated from these indicators, one can give an initial conclusion thatKhok Samae San is the most developed in the non-agricultural sector, followed by NongMakha, Yang Rak, Khok Charoen and Wang Thong respectively. It should be mentionedthat this is only a brief screening process to give an idea of the overall situation of thenon-agricultural sector in Khok Charoen district.In terms of tourism, it may not be too much of an exaggeration to say that this is almostunheard of in Khok Charoen district. There is no recorded number of visitors in the areaand there is no obvious existing tourist attraction. 130
  4. 4. 4.1 Industrial Sector4.1.1 General informationThe location of Lop Buri is suitable to the development of industry. Overall, Lop Burihas good level of infrastructure development in terms of road network, communication,irrigation system and power supply. It is also close to Bangkok, being around 155 kmaway. 70 per cent of the area is hilly and mountainous, commonly known for the richavailability of minerals and ores such as copper, limestone and pyrite. The other 30 percent of the lying in plain area are suitable for agricultural activities such as paddy,sugarcane, maize and cassava. According to the data from the Provincial IndustrialOffice, there are in total 583 industries in Lop Buri in 2008. The majority of industrialdevelopment in Lop Buri is in the form of agro-processing, constituting 25 per cent ofprovincial total. Other industries which are prominent in the province include: machineryand equipment (13%), food and drink (11%), non-metal (9%), transport (8%) and metal(7%). The industries which have grown the most over the last few years are agro-processing, machinery and equipment, and metal.4.1.2 Major institutions supporting industries and OTOPsTable 4.4 Summary of supporting institutions of industries and OTOPsNo Major institutions Type of support Organizations to get the support1 BOI Policy and consultancy Registered industries2 Provincial Industry Office Registered industries §Consultancy for funds (linked with different banks) §Promotion for projects3 Chambers and Commerce Office Different types of industries and §Policy support business organizations §Promotion of Industries §Consultancy for business operation §Information for business §Mediator between government and private sector4 VDF OTOPs, SMEs, other cottage industries §Fund5 Community Development Office OTOPs, SMEs, other cottage industries §Policy support §Training §Project promotion (OTOPs) §Fund6 Non-formal Education Office Occupational groups §Training7 Provincial Labour and Welfare Office Labour of different industries §Labour rights §Welfare8 Pollution Control Department Different Industries §Pollution control measures and support 131
  5. 5. • Board of Investment (BOI)Lop Buri is located in Industrial Zone 3 in the “Policies and Criteria for InvestmentPromotion” established by the Thailand’s Board of Investment. With this, come amaximum number of economic incentives allocated to different geographic zones,including: - Exemption of import duty on machinery - Corporate income tax exemption for 8 years provided that a project with capital investment of 10 million baht or more (excluding cost of land and working capital) obtains ISO 9000 or similar international standard certification within 2 years from its start-up-date, otherwise the corporate income tax exemption will be reduced by 1 year - Exemption of import duty exemption on raw or essential materials used in the manufacturing of export products for 5 years. - Deduction from net profit of 25 percent of the projects infrastructure installation or construction costs in addition to normal depreciation, and such deductions can be made from the net profit of one or several years within 10 years form the date of first revenue derived from the promoted activity -Figure: 4.3 Industrial Development and Planning Zone of ThailandSource: BOI ,2008 • Provincial Industrial OfficeThe direction of regional development in Thailand follows a top-down approach,stemming from the Office of the National Economic and Social Development Board(NESDB), then through national policies laid by ruling government before it comes downto provincial’s strategies. For the period between the years 2009-2012, the overall planfor the provinces in the upper part of the central region ‘group 2’ has put emphasis onrestructuring the process of producing safe food. The Ministry of Industry has also laid 132
  6. 6. policy on ‘1 Province 1 Agro-Industrial Product’ to be promoted in all of the 75provinces from the year 2007. In respond to this, the provincial’s strategy is to developLop Buri as the largest agro-processing industry unit among the 4 associated provinceswithin this region.The Industrial Office has three main responsibilities. First of all, it has a duty to monitor,control, support and act according legislations on industry, mining, royalty, regulation ofminerals, industrial product standard and other related laws. Secondly, it should developand cooperate with development plan to support industrial development at provinciallevel, as well as to cooperate in the implementation and evaluation of the plannedstrategy. Lastly, the PIO needs to cooperate or support the operation of other relevantorganizations. • Provincial Community Development (CD) OfficeConcerning the industrial sector, the CD office is responsible for promotion and supportof community enterprise particularly in the form of OTOP projects. Otherresponsibilities include formulating community development plan, to develop potentialsof the local population through participatory approach with the view of achieving self-sufficiency etc. • Provincial Natural Resources and Environmental OfficeThe Natural Resource and Environment Office has two major functions. First, its role isto implement waste treatment and disposal system and enhancing waste disposal capacityof local administrative authorities for environmental protection. In addition, it has theresponsibility to promote the role of private sector in research and development forenergy conservation, environmental management, recycling of raw materials and cleantechnology. However, this has not been necessary in Khok Charoen district as the poorlevel of industrial development in the area has meant that the problem of pollution isminor. • Provincial Labour and Welfare OfficeThe objectives of the Labour and Welfare Office are laid down as follow: - Promotion for the private sector to play a part in developing labour skills and expertise in order to improve the quality and skills of the labour force, - Implementation of adequate social security measures. - Promotion in the creation of a labour relation system that will provide opportunities for all sides concerned to participate in the resolution of labour problem as well as to develop and protect labours in an efficient and just manner. - Protection of Thai laborers living overseas from being exploited by employment brokers and employers. - To stipulate appropriate measures for dealing with foreign labour, taking into account the private sector’s need for labour as well as the requirements of maintaining order and internal security and the need to develop domestic labour as replacement in key areas. 133
  7. 7. 4.1.3 Current situation in Khok CharoenAccording to the data provided by the Provincial Industrial Office, the total number ofindustries in the province of Lop Buri amounts to around 600 units. The distribution ofthese industries among different districts within Lop Buri can be seen in table 4.4. Hereone can see that Khok Charoen district is the least developed with only 3 existingindustries in the area. This constitutes around 0.51% of provincial total. The sameconclusion can be reached when comparing industries in Khok Charoen to other districtsaccording to the amount of capital invested, number of workers and the productioncapacity (as measured in horsepower). From this, one can see that the combined capitalinvested in Khok Charoen district is valued at 1,170,000 baht out of the total of 8.1billion baht for the whole of Lop Buri province (0.014%). In addition, there are only 3industrial workers registered in Khok Charoen out of the total 12,115 for Lop Buri(0.025%). Lastly, the combined horsepower for industries in Khok Charoen district is 48,compare to 267,200 hp for Lop Buri (0.018%). It must be mentioned that this analysis ispurely based on the data given by the Provincial Industrial Office, whereby one mustremember that this is not necessarily a realistic practical data but rather the data used forthe purpose of registering the industry. Therefore, this may not be an unrealisticrepresentation of the industry situation within Khok Charoen. This is most noticeablewhen looking at the number of workers in which in Khok Charoen there are only 3people.To further elaborate on this, from our primary data collection from different TambonAdministrative Offices (TAOs) as well as an overview of the latest NRD2C in 2007, wehave found that there are in fact a minimum 26 industry units within Khok Charoen.These units are all rice mills. In Thailand, based on the amount of invested capital,industries are divided into three categories: cottage, small and medium, and largeindustries. Industries with invested capital of less than one million baht are classified ascottage industries, from one to one hundred million baht are small and medium industriesand more than one hundred million baht are large industries. Based on these criteria,Khok Charoen district comprises of only one type of industry: cottage industry. Inaddition, from our field visit to the area, we have found that there is at least one extrahome-based industry in Khok Charoen in the form of cassava drying field. The capitalinvested here was 10 million baht and thus it can be classified as a small to mediumindustry. It is also worth mentioning that there exists a large scale sugar factory in SriThep district of Petchaboon province which is very near to Khok Charoen and has a largeinfluence on the local population where the primary occupation is based in agriculture.Table 4.5 Industry situation in Lop Buri province Di strict Num be r of industrie s P e rce nta ge sha re Muang 194 33% Chai Badarn 96 16% Pattana Nikom 82 14% Khok Samrong 63 11% Ban M i 53 9% Tha Wung 36 6% Nong M uang 21 4% Sra Boas t 17 3% Tha Luang 13 2% Lum Sonthi 5 1% Khok Chareon 3 1%Source: Provincial Industrial Office (2008) 134
  8. 8. Table 4.6 Current situation in Khok Charoen district Type Sub-district Capital input (baht) Number of worker Horsepower Rice mill Khok Chareon 420,000 1 16 Rice mill Khok Chareon 400,000 1 16 Rice mill Khok Chareon 350,000 1 16 Total in Khok Chareon 1,170,000 3 48 Total in Lop Buri 8,110,385,130 12115 267200 % share 0.014 0.025 0.018 Source: Provincial Industrial Office (2008)Looking at the distribution of these cottage industries among different sub-districts (asshown in Figure: 4.4), one can see that the areas with the largest development of industryare Yang Rak and Khok Charoen, with the percentage share of 38 and 35 per centrespectively. 24 per cent of these industries exist within Khok Samae San. There is only1 cottage industry in Nong Makha (4%) and no industry exists in Wang Thong. Note thatthe cassava drying field which is classified as a small and medium scale industry is notincluded here; for reference it is located in Tambon Khok Charoen.Figure: 4.4 Percentage distribution of cottage industries by location/tambon 0, 0% 6, 23% 9, 35% Khok Chareon Yang Rak Nong Makha 1, 4% Khok Samae San Wang Thong 10, 38%Since all of the industries mentioned (rice mills) can be classified as agro-processingindustries, it is interesting to relate this to the number of households partakingagricultural activities; this is shown in table 4.4. Since Wang Thong has no industry at all,it has been excluded from this analysis. Nevertheless, a conclusion can be reached herethat Khok Samae San is the most advanced with 58 households to one industry. This isfollowed by Yang Rak, Khok Charoen and Nong Makha respectively.Table 4.7 Number of agricultural household per one agro-processing industry Indicator/ Number of household Number of agro-processing Number of household Sub-district working in agricultural sector agro-processing industrt per one industryKhok Chareon 844 9 94Yang Rak 647 10 65Nong Makha 191 1 191Khok Samae San 345 6 58Wang Thong 391 0 NA 135
  9. 9. Figure: 4.5 Distribution of cottage industries (rice mills) 136
  10. 10. 4.1.4 Rural Industry - OTOPKhok Charoen district relies heavily on agricultural sector providing primary occupation.However, local people have indigenous skills and other trained skills by localgovernment agencies which can be utilized in the non-agricultural sector to create moreemployment and income. The target group is mostly females who are willing to take anadditional employment to support their work in the agricultural sector. Because of theavailability of raw materials and skilled labour, the Royal Thai Government (RTG)introduced a program called “One Tambon One Product” (OTOP).OTOP program was adopted from the One Village One Product (OTOP) movement inOita Prefecture, Japan. The scheme has an objective of mobilizing local resources toproduce local products which can be sold both domestically and internationally. TheRTG used this program as a framework for OTOP and has been promoting localindustries through the manufacturing of attractive specialised products based on theabundant native culture, tradition and nature. The target administrative unit is as thename suggested, at Tambon or sub-district level. The specific objectives of OTOP arelaid out as follow: § To construct a comprehensive database system to accommodate necessary information from every Tambon in Thailand § To promote local Thai products from every Tambon, and to facilitate the buy-and- sell procedure. § To bring internet and other information technology to villages. § To encourage and promote tourism in Thailand to Tambon level and consequently raising income of the local community. § To encourage rural people to exchange information, ideas and improve communication level across various Tambons.In 2006, there are in 450 OTOP projects in the province of Lop Buri. The majority ofthese projects are located in Muang district, accounting for 24 per cent. This is followedby Ban Mi, Tha Wung, Chai Badarn, Khok Samrong, Nong Muang with 14, 11, 10, 9 and8 per cent respectively. There are 24 OTOP projects currently in Khok Charoen districtaccounting 5 per cent of total in Lop Buri. In terms of number of OTOP projects, KhokCharoen is ranked at 8 out of 11 districts in Lop Buri; this is illustrated in Figure: 4.6.Figure: 4.6 Distribution of OTOPs among different districts. Source: Provincial CD office (2006) 17, 4% Muang 19, 4% Ban Mi 24, 5% Pattana Nicom 16, 4% 108, 24% Tha Wung 43, 10% Khok Samrong Nong Muang 36, 8% 65, 14% Chai Badarn 39, 9% 33, 7% Sra Boast 50, 11% Khok Chareon Tha Luang Lum Sonthi 137
  11. 11. Comparing the statistics on the number of OTOP projects within Khok Charoen districtbetween the years 2005 and 2006, it is worrying to see the number has only increased byone unit; this is 4.17 per cent increase. It must also be mentioned that, with the exceptionof Pattana Nicom whereby the number of OTOP has actually dropped by 21.21 per cent,Khok Charoen district has seen the small percentage of growth in the amount of OTOPprojects. In this regards, Khok Charoen is rank 8 (2006) as compared to 6 in 2005. Table 4.8 Change in number of OTOP projects in different districts between 2006-07 Number of OTOPS Percentage District 2006 2007 changeMuang 67 108 37.96%Ban Mi 45 65 30.77%Pattana Nicom 40 33 -21.21%Tha Wung 23 50 54.00%Khok Samrong 17 39 56.41%Nong Muang 28 36 22.22%Chai Badarn 35 43 18.60%Sra Boast 13 16 18.75%Khok Chareon 23 24 4.17%Tha Luang 13 19 31.58%Lum Sonthi 11 17 35.29% Total 315 450 30.00%Source: Provincial CD office ,2007The degrading situation of OTOP projects in Khok Charoen can be emphasise whenanalyzing the amount income generated from these projects within the area. Over theperiod of 3 years from 2005-2007, Khok Charoen has experienced a steady decline interms of the income generated from products; reducing from 15,726,039 baht in 2005 to14,249,451 baht in 2007. In fact, Khok Charoen is one of only three districts in Lop Buriwhich have experienced a decline in income generate from OTOPs. Overall, the incomegenerated from Khok Charoen in these products is quite low relative to other districts(rank at 7 out of 11). This is quite worrying considering the quality of the products inKhok Charoen. Looking at table 4.7, it should be raised that Khok Charoen is onlysecond to Ban Mi district in terms of the amount of OTOP with 5 stars success status,with 4 products being qualified. Similarly, in terms of products with 4 stars, KhokCharoen is rank at third place with only less number of quality products than Muang andBan Mi districts. 138
  12. 12. Table 4.9 Comparison of income generated from OTOPs among different districts Amount of income generated from OTOP projects (baht) Percentage change District 2005 2006 2007 2006-2007Muang 88,269,444 110,476,363 142,949,965 22.72%Ban Mi 242,917,542 294,608,560 161,463,200 -82.46%Pattana Nicom 6,969,590 8,632,680 11,190,774 22.86%Tha Wung 25,585,100 55,980,550 86,840,950 35.54%Khok Samrong 18,393,857 21,645,008 28,871,661 25.03%Nong Muang 26,894,845 31,809,323 34,376,500 7.47%Chai Badarn 108,679,900 159,701,800 183,552,130 12.99%Sra Boast 10,803,870 11,719,200 12,185,850 3.83%Lum Sonthi 4,510,211 6,109,764 6,739,000 9.34%Tha Luang 4,552,964 5,594,476 3,535,746 -58.23%Khok Chareon 15,726,039 15,289,373 14,249,451 -7.30% Total 553,303,362 721,567,097 685,955,227 -5.19%Source: Provincial CD office,2007Table 4.10 Comparison of successful OTOPs (4 stars or more) in different districts ofLop Buri Success status Total District 4 Star 5 StarMuang 13 3 16Ban Mi 11 8 19Pattana Nicom 5 - 5Tha Wung 3 - 3Khok Samrong 4 - 4Nong Muang 6 - 6Chai Badarn 4 - 4Sra Boast 2 - 2Lum Sonthi 2 - 2Tha Luang 1 - 1Khok Chareon 6 4 10Total 57 15 72Source: Provincial CD office, 2007 139
  13. 13. Table 4.11 List of OTOPs in Khok Charoen districtSl. No. Tambon Village no. OTOPs product Registered groups 1 Khok Chareon 5 Mudmee clothing product Weaving group of Khok Chareon 2 7 Mudmee clothing product Social welfare housewives group 3 6 Weaving mudmee product Weaving group of Khok Chareon 4 4 Mudmee clothing product Thai cloth weaving network v.4 of Tambon Khok Chareon 5 9 Mudmee clothing product Thai cloth weaving network v.9 of Tambon Khok Chareon 6 4 Mudmee clothing product Thai cloth weaving network v. 4 of Tambon Khok Chareon 7 4 Mudmee clothing product OTOP artists centre 8 6 Mudmee clothing product Indegenous Knowledge Development centre 9 6 Mudmee clothing product Forward Vocational Leadger group 10 6 Processed clothings from mudmee Industry group 11 1 Domestic odour product Charcoal processing group 12 Khok Samae San 1 Mudmee cloth product Thai cloth weaving network v. 1 of Tambon Khok Samae San 13 3 Mudmee cloth product Thai cloth weaving network v. 3 of Tambon Khok Samae San 14 5 Mudmee cloth product Thai cloth weaving network v. 5 of Tambon Khok Samae San 16 6 Mudmee cloth product Thai cloth weaving network v. 6 of Tambon Khok Samae San 17 8 Broom making group Broom making group 18 3 Basketry Basketry group of Bang Muang 19 1 Wooden chair Private cooperative group Suan Pa of Lop Buri 20 Nong Makha 8 Thai dessert Agricultural house wives group of Tambon Nong Makha 21 8 Mudmee clothing product Thai cloth weaving network v. 8 of Tambon Nong Makha 22 8 Mudmee clothing product Thai cloth weaving network v. 8 of Tambon Nong Makha 23 Yang Rak 2 Mudmee clothing pattern Thai cloth weaving network v. 12 of Tambon Yang RakSource: Provincial CD office (2005).* Note there is one extra OTOP product started by an individual in 2006 but data is not known.Analysing the distribution of OTOPs among different sub-districts, one can see that theseprojects are clustered in two Tambons, namely, Khok Charoen and Khok Samae San.Tambon Khok Charoen has the highest number of OTOPs with 11 units, accounting for48 per cent of district total. This is closely followed by Tambon Khok Samae San with 8projects (35%). Nong Makha and Yang Rak have few OTOP projects with 14 and 4 percent respectively. It should also be mentioned that there are no OTOP project in TambonWang Thong.Furthermore, there are only three categories of OTOP projects in Khok Charoen district.It can be pointed out that the overwhelmed majority of these projects are in the form ofcloths and fabric (18 projects, 79%). This is unsurprising as the district is well known forits weaving products. Domestic products such as basketry, broom production also hold asmall percentage of 17 per cent, with 4 projects in this sector. In food sector, only Thong 140
  14. 14. Muan production in Nong Makha comes from Khok Charoen district. This accounts for 4 per cent of the total. Again the majority of weaving projects are clustered in Khok Charoen. Khok Samae San, however, is the most diverse in terms of different OTOP projects in the area. Figure: 4.7 Distribution of OTOPs by location/Tambon 12 11 N ber of O P groups 10 8 8 TO 6 4 3 um 2 1 0 0 Khok Chareon Khok Samae Nong Makha Yang Rak W ang Thong San Tambon Figure: 4.8 Distribution of OTOPs by function among Tambon12 1010 Domestic8 product, 4, 17% Food, 1, 4% Food6 5 Cloths and fabric Domestic product4 3 22 1 1 1 Cloths and fabric, 18, 79%0 Khok Chareon Yang Rak Nong Makha Khok Samae Wang Thong San 141
  15. 15. Figure: 4.9 Distribution of OTOPs by function among different areas within Khok Charoen district 142
  16. 16. 4.1.5 Comparison among Case StudiesDuring the reconnaissance survey and the sectoral field study, 7 different units ofindustry were interviewed. This consists of 3 OTOP projects, 2 home-based factories, 1small occupational group enterprise and one large sugar factory in a nearby province.The purpose of these case studies is to gain an insight as to how the different industriesare operate and the successfulness of such operations in order to identify the problems aswell as establishing the potentials within this sub-sector. The analysis on sugar canefactory will be based on the influence that this factory has on the population of KhokCharoen. This analysis will consequently be used as a basis for project proposal to beconsidered for implementation by the district.Case Studies of OTOPsThe three OTOP groups used as case studies are all community- based OTOP groups. Acommunity-based OTOP group refers to a group of local people who are partaking in asmall local group enterprise by utilizing their common interests and skills in particulartypes of products. Generally speaking, these groups are form to provide opportunities togain additional income from their primary occupation in agricultural sector which may beturbulent due to a number of factors such as draught, low price of agricultural products.The OTOP groups get support from a number of public organizations such as BAAC,Community Development Office, Royal Thailand Government, and TambonAdministration Office to setup projects. Additional capital has to be raise from groupmembers by selling enterprise’s shares and the income earned is distributed to eachmember according to the number of share purchase.These OTOP groups under consideration are weaving group in Tambon Khok Charoen,weaving group in Tambon Khok Samae San, and Thai dessert (Thong Muan) productionin Tambon Nong Makha. • Thai Hand Weaving Group, Tambon Khok CharoenLike a large proportion of people in the district, people in village number 4 of TambonKhok Charoen are originally from the Northeastern part of Thailand, where theindigenous skills in weaving and traditional mudmee clothing are renowned. The groupwas formed in 1995 and became active during the period of 1996-1998 whereby draughtcaused heavy loss of agricultural products. This led to a revival of weaving skills to beused as a supplementary source of income to the local people.A number of organizations have helped the group by providing financial support as wellas providing ranges of technical and skill trainings. The relevant organizations involvedinclude District office, Community Development office, Thammasart University,Provincial Trade and Commerce Office. In addition, the main player who organized thisactivity is Mr Winai Patchim, a local school teacher. He has contributed tremendoussupport to the group by, for example, providing new patterns, teaching additional 143
  17. 17. weaving skills as well as setting up a community learning centre to teach school childrenon batik painting.The group’s major products are silk based items such as hand woven cloths withindigenous designs and various patterns mudmee products. There are also cotton baseditems available such as cotton mudmee, artificial mudmee, plained color and ‘Pakaoma’.Besides, they also produce other products like note pad holder, glass holder as well as anumber of other domestic products. The hand woven products of the group have received5 stars award recognition and the products are said to be of the highest quality products inLop Buri Province.As to weaving products, the group can make 125 clothing items per month of the size 4by 0.9 meter (3.6 m2). On average 5 hours per day is spent on weaving. Total cost ofproduction is 45,000 Baht which recovers all costs including raw materials, transportationand marketing. Rough estimate on the cost of production is 360 baht per item. The saleprice is 850 Baht per item but price may fluctuate depending on different pattern and rawmaterial. From this, total income can be estimated at 106,250 Baht per month and theaverage income from weaving activities per person is 2,450 Baht per month.The group sells their weaving products to district and external markets such as othernearby provinces and Bangkok. The ratio of quantity they sell in district and in externalmarket is around 10 and 90 per cent respectively. Three years ago, middle man suppliedraw materials and bought products produced by the groups. Now the group purchases theraw materials by themselves and either directly sells their products to the wholesalebuyers or occasionally join government and private-run exhibitions.The main problem of this OTOP group is they are lack of market information,entrepreneurial skills and market linkages. This causes limited access to markets and lowsales volume. Besides, they have low production because they do not have adequatecapital to run their business. In addition, most adult villagers do not participate inweaving activities and they go to find job in Bangkok. This group needs market orientedorganization structure to promote market and network building because they do not haveanyone to take role and responsibilities in marketing channel.In summary, weaving has high potential for generating supplementary source of incometo local population. Stronger marketing networks for hand woven products should beexplored. However, further market networks must be explored and variation of patternsand designs of silk and cotton-based mudmee should be enhanced to capture wideraudiences. If this is successfully implemented, weaving activities can be seen as a long-term occupation for the local people as the skills can be pass on to youth and children tobecome next generation hand weaving entrepreneurs. 144
  18. 18. • Thai hand weaving group, Tambon Khok Samae SanThe weaving group in village number 5 of Tambon Khok Samae San was established in1994 with an initial investment of 430,000 Baht. The majority of the funding wasprovided by the Khok Samae San Tambon Administration Office (TAO) with 400,000baht and the other 30,000 baht was given in the form of weaving equipment by localMember of Parliament, Mr. Chaowat Sudlapa. The CD office also lend support in termsof trainings, providing new patterns and colors, as well as organizing and managing thegroup.Initially, Ms. Kamnun Somsin took responsibility in leading the group and activelypromoting the weaving products to the outside markets. Her influence extended beyondKhok Samae San to other weaving groups in initiating new patterns as well as purchasingthe products from them to be sold to outsiders. There were 30 members in this weavinggroup during Ms. Somsin’s time in leadership. However, there are only 10 members atpresent since she passed away.The products from this weaving group are similar to those produce by the group in KhokCharoen. It has also received 5 stars award for their quality of their product. However,since there are only few members now, the group can only produce around 2 items perday. This means the income generated from this is quite low with an average incomefrom group member being around 2000 per month for each member. This has droppedsignificantly from the period led by Ms. Somsin whereby each member received around4000-4500 baht per month.At present, this weaving group acquire raw materials from middlemen come and the endproducts are also purchased by the same people. Thus there is no other market channel.The feeling we get from the group is that since there is no leadership role, the group lacksorganization and management skills. Consequently they seem to have become more of alabour force for these middlemen rather than group entrepreneur themselves. Figure: 4.10 Marketing channels for weaving products. Source: Interview of weaving groups ,2008 145
  19. 19. • Thong Muan production, Tambon Nong MakhaThong Muan production is in village number 8 of Tambon Nong Makha. This is aproject initiated in 1999 by the Food Processing Cooperative; it is called Ruam JaiSamakhee Thongmuan (‘Souls Unity Thongmuan’). At the beginning phrase, the grouphad 20 members. The rationale behind the project is that farmers who live in this villagedepend largely on agricultural production as the main economic activities. After thecropping and harvest season, farmers are free from work and most of them migrate toBangkok in search for employment. Therefore, the head of the group discussed togetherwith the agriculture officers to get additional income for local people after the harvestseason and solution was to use Thong Muan production. This was seen appropriate asraw materials such as cassava, coconuts can be found locally.In the procedure of setting up the group, first of all, Agriculture Extension Officerstrained the group members on the production process: design, taste, and packaging. Allof them contributed 50 Baht each to contribute to purchasing equipments. The moneycollected admittedly was not enough and thus the loan was made from the BAAC in anamount of 50,000 Baht without collateral, but group guarantee.In 2004, the group was separated from Ruom Jai Samakkhee group and they registered asthe Group Enterprise where 11 members were included. Nowadays, the group has 25members. There are 5 to 7 permanent workers and they work in daily rotation. Full-timeworkers can earn 4,000 to 5,000 Baht per month while part-time workers earn 3,000 Bahtper month.The raw materials needed are coconut, sesame (both can be obtained within Tambon),rice powder, cassava powder and sugar are purchased from provincial market. OnlyThong Muan can be considered as an OTOP product but the group also produces anotherThai dessert called ‘Khrong Khraeng’. Overall, the group can produce around 700 to 800small packs of both Thong Muan and Khrong Khraeng combined. One big pack consistsof 6 small packs; the big pack can be sold to retailers at 24 baht per pack. The retailerscan then sell the product at 25 baht per pack. The main market of the groups is within theprovince and neighboring provinces. The products are sold within Tambon KhokCharoen and Nong Makha in Lop Buri province, and also to Srithep district andVangphikoon district in Phetchaboon province, as well as to Nongphai district inNakhonsavan province. The group has a plan to export their products to other countries,but the product quality is not yet accredited officially due to poor productionenvironment.The group has experienced problems in production largely due to inflating price of rawmaterials and transportation cost. According to the head of the group, the cost ofproduction and transportation has doubled in comparison to the initial period. Inaddition, the group has a plan to build a new processing house in order to increaseproduction volume and improve working environment and quality, pending on a loanapproval from TAO and Happiness and Green Society project. Other problems includedifficulties in production process in terms of skills involved in mixing ingredients and 146
  20. 20. rolling Thong Muan; in fact only 5% of the trainees can succeed after training accordingto the head of the group.Lastly, the group has potential as they can expand the volume of production andmarketing channel depending on the market need. Beside this, since Thong Muan is anOTOP product it has potential to be accredited by Food and Medical Agency forexporting.In conclusion, focus is needed on reducing the cost of production. The group also need toimprove on designing and packaging techniques to make the products more marketablee.g. inclusion of nice labeling, food nutrients etc. In addition, to expand its market thegroup needs to improve on the overall working environment and condition includingcleanliness, safety and pollution free in order to get quality control assurance.Figure: 4.11 Marketing channels of Thong Muan production.Source: Interview with group member (2008) 147
  21. 21. Table 4.12 Comparison among OTOPsCriteria for Weaving group Weaving group Thai dessert (Thong Muan)Comparison of Tambon Khok Chareon Tambon Khok Samae San production Tambon NongMakhaOTOPs 1995 1996 2004Invested Capital N/A 430,000 Baht 50,000 BahtSources of Capital The Royal Thailand Government - Tambon administration office BAAC (50000 baht) (capital) (400,000) - Local politician (weaving materials worth 30,000 baht)No. of 25 members (supplementary 30 members à down to 10 -25 membersMembers/Labour income generation) members (supplementary income (5 to 7 permanent workers, the rest used generation) this as supplementary income generation)Outputs of All year round, depends on order. All year round, depends on order. All year roundproduction Max. production: Max. production: 700 to 800 smallIncome 125 items per month Max. production: packets per day Average income: 60 items per month Average income: - 61,250 baht per month for group Average income: - 24000 baht per month per group - 2450 baht per month per - 20000 baht per month per group - 4000-5000 baht per month per member - 2000 baht per month per member member (full-time) (previously members can earn 4000- - 3000 baht per month per member 5000 Baht per month) (part-time)Market network Source: Provincial market Source: provided by middlemen Source: a combination of local and Sales: Sales: provincial market - 10% are sold to district - Middlemen Sales: - 90% are sold to external market - Within district (other provinces and Bangkok) - Phetchaboon province - Nakhonsavan ProvinceSuccess (status) 5 Star (2006) 5 Star (2006) 46 points (2005)Problems Market problem Market problem Production -lack of market information -Lack of market linkage -high input and transportation cost -lack of skills for market No Leadership Role Capital linkages - Group becoming more of a -waiting for loan from TAO Access to finance labour force for middlemen Human Resource -lack of capital rather than entrepreneur -only 5 % of trainees can succeed Human Resources Access to finance in rolling product nicely - low involvement of adults -lack of funding Quality accreditation villagers Reduction in income -Low quality to export to Skills and Technology neighboring country -low of entrepreneurs skill -limited products diversification Organization and Management -lack of market-oriented organization structureFor Potentials •Good quality •Good quality •Expand the volume of production •Skills can be pass to younger •Skills can be pass to younger depend on market need generation generation •Expand market to other districts, •Community learning and OTOP •Purchasing of raw materials provinces and neighboring centre can be develop through other sources countries •Promotion of cultural tourism •Can be accredited by Food and Medical Agency for exporting as assigned by OTOP •Poor production environment (problem with quality certification) 148
  22. 22. Analysis on OTOP projects: Overall, one can see that all OTOP projects requiredexternal source of funding. All groups are experiencing financial problem to someextent. In the cases of weaving groups, this may be due to poor management skills andlack of entrepreneurship. These OTOP projects are mainly used as channels for acquiringadditional income from the primary occupation in agriculture. Only Thong Muanproduction has some members working full-time. Weaving products in Khok Charoenare renowned for their high quality (5 stars) but they cannot generate a significant level ofincome for members. The main problem here is lack of marketing channels. Theweaving group in Khok Samae San, for example, relies on middlemen in both obtainingraw materials and selling their products. On the other hand, although Thong Muanproduction is of lower quality, it can generate greater income due to more proactivemarketing strategies. In the two weaving groups, although the quality of products is ofsimilar levels, the marketing channels in both cases are very different. One may interpretthis as lack of cooperation among different weaving groups. With cooperation, differentgroups can learn from each other experiences as well as being able to achieve greatermarket power through bulk buying of raw materials as for example. The loss leadershiprole of weaving group in Khok Samae San also contributed to a rapid decline of thebusiness operation.Analysis of small occupational group enterprise • Basketry group – Wang ThongThis is a project initiated by Wang Thong TAO in 2006, where all nine villages in theTambon are involved. It can be categorized as a cottage industry, but it is not an OTOPproduct. Currently, there are around 30 members, all of which are females and they usedthis as an opportunity to earn additional income to their primary employment in theagricultural sector. In fact, there are very few full-time workers in the group.The supporting institutions involved include Community Development office and Non-formal Education office. TAO and Community development office provide financialsupport whereas non-formal education office provides classes for making basketry.These classes normally go on for 15 days, after which the participants are capable ofproducing the baskets (although experience is needed to make the products sellable).Basketry products here are handmade in all processes. The raw materials used are hempand either bamboo or simple metal structure; all of which can be purchased from theprovincial markets. Nowadays, metal structures are preferred to bamboos as the basketsmade from them can demand higher monetary value. In one month, around 5-6 basketscan be produced per person, assuming that the partaker works around 7-8 hours per day.Each day, normally around 15-20 people turn up. For one basket, the cost of rawmaterials is 170 baht if metal structure is used and 150 baht if bamboo is used (100 bahtof hemp is used for one basket), but the basket can be sold at 350 baht a piece. 149
  23. 23. Although this may sound like a good price, lack of marketing channel has meant thatgroup’s income is small. In fact, total production per year is around 200 items per year;this is on average 17 pieces per month. From this, we can estimate the monthly incometo be at 5,950 baht per month (350 × 17) and thus total monthly profit is estimated at3,060 baht per month (5,950 – (17 × 170)). This level of profit earn is noticeably low andit is then distributed among group members depending on the amount of time they spendworking. On average, a regular worker will earn only around 300 baht per month. Asmentioned, there is a problem with marketing channel, with all the products being sold tomiddlemen (normally from Tambon Khok Charoen) or to rare visitors in the area.The conclusion can be reached that there are some potentials in Wang Thong for basketryproduction. The price of each handicraft is quite high, indicating the quality of theproduct. Therefore, it may be possible to develop this as an OTOP project; the first onein the sub-district! From interviews, we have found that the level of production can beincreased since people are generally interested to join the group if there are greatereconomic incentives; the problem is there is no market to sell these products to. This is akey problem that must be tackled for further development.Figure: 4.12 Marketing channels for handicraft basketry. Source: Interview with group membersAnalysis on case studies of home-based industriesIn this section, a small rice mill and cassava drying field are used as case studies toanalyse the problems and potentials of home-based industries in Khok Charoen district.Both of these units can be regarded as agro-processing industries. Rice mill cancategorised as cottage industry with the initial investment of less than 1 million baht.Dried cassava production, on the other hand, can be seen as a small to medium scaleindustry as the capital invested here is quite high at 10 million baht. The number oflabour needed is fairly small in both cases and the raw materials used in them are readilyavailable within local area. In the case of cassava drying field, the extra productioncapacity can accommodate more raw materials from nearby provinces. There is alsoconstant demand for these products but the profitability is based on the market price asthere is a lot of supply for these homogenous goods. Minor environmental problemsoccur in these industries in terms of smell, noise and dust. Overall, there is generally noproblem in these small home-based industries, thus it is reasonable to say that there isgood potential for further development in Khok Charoen district. Source of funding may 150
  24. 24. however be crucial here as the area is fairly backward in terms of level of income; notmany people will have the kind of money to set up these industries. Figure: 4.13 Marketing channels of dried cassava. Source: Interview with owner, 2008Figure: 4.14 Marketing channels of products from rice mill.Source: Interview with owner ,2008 151
  25. 25. Influence of nearby large scale industry on the population in Khok Charoen • Thai Rung Reung sugar factoryThis factory is one of the seven sugar factories owned by the Thai Rung Reung group.The company was originally established in 1958 but this particular factory started in1996. Although this factory is not based in Lop Buri province, the district of Sri Thepwhere this factory is located is actually nearer to Khok Charoen district (17 km) thanthose in Lop Buri itself.From the criteria mentioned in the introduction, this factory can be regarded as a largescale factory i.e. more than 100 million baht was invested here. The exact detail on thecapital invested is confidential. Total factory area is 1800 rais; this consists officebuilding, machinery building, technicians building and cargo building. There is also anexperimental field of 100 rais which is used for testing different breeds of sugar cane, soiland chemical.The factory has 27000 rais of ‘support’ area within 50 km radius of the factory. Thesupport area means that the farmers in the area are contractually obliged to sell theirproducts to the factory every year. The going rate is that for 10 rais of farmland, thefarmers will have to provide 100 tons of sugar cane to the factory per year. 3000 farmersare part of this program; it is not known how many of these farmers are from KhokCharoen. The factory gives assistance to the farmers in the support area, in terms offinancial credit/loan. If it is to a new farmer (i.e. no machines, experience etc.), thefarmer needs around 5500-6000 baht/rai, here the factory will help around 4000 baht/rai.If it is for existing farmer, the factory will help around 2000 baht/rai. The condition isthat the money has to be paid back by the end of the next harvesting period. The goinginterest rate for loan is 7 per cent per annumDuring the harvest period, the factory purchases around 25000 tons of sugar cane per day.This is 1300 trucks per day, each truck bringing 22-25 tons. Broadly speaking, around 10types of sugar cane breed are brought to the factory. However, 95 per cent of sugar caneis of K84-200 breed. This is a genetically-modified breed (invented Agriculture ResearchCentre) and its main advantages are high weight, sweet and most importantly it is droughtresistant. This is an important factor as 97-98 per cent of the surrounding area has noirrigation system. The government sets the price of sugar cane, based on the sweetnesslevel indicator, ‘commercial cane sugar’ aka CCS. The going price is 600 baht for 10CCS, which roughly constitutes a ton of sugar cane. The sweeter the sugar cane (i.e. thehigher the CCS level), the higher is the price. One extra CCS level gives an extra 36 bahtto the farmer (or around 10% of the government’s set price). In general, the CCS level ofsugar cane prior to mid-January is around 10.5. As the crops are more matured, the CCSlevel will consequently rise. The majority of sugar cane the factory received has the CCSlevel of around 12.5. The highest CCS level the factory has seen is 16 (very rare). TheCCS level of each sugar cane stock received at the factory is determined by staffs fromthe Ministry of Industry. 152
  26. 26. The majority of the workers are from local and nearby surrounding areas, especially thefull-time workers. A quarter of part-time workers are migrated from the Northeasternareas in Thailand. There are 350 full-time workers and 650 part-time workers. The part-time workers are only employed during the harvest period between December to April.The full-time workers receive a salary on a monthly basis. There are 3 salary bracketswithin the setup. § The technician assistants receive less than 10000 baht/month. § The technician and foremen get between 10000-30000 baht/month. § The management staffs receive more than 30000 baht/monthThe temporary workers get 157 baht/day for 8 hours of work (the average in KhokCharoen is less than 150 baht per day). However, they can also get an OT (overtime)pay, working an additional 4 hours for 117.75 baht. This is a 4 hours work for the wageof 6 hours at normal rate. ProcessesAnalysis: this factory has a large influence on Khok Charoen even though it does notlocate within the Lop Buri province. The reason for this is that the factory is actuallynearer to the district than some other sugar factories within Lop Buri. This is particularlyimportant as sugar cane is one of the main agricultural products that come from KhokCharoen. The factory has great power over the sugar cane farmers in that the farmers arecontractually obliged to sell their products as well as being tied to the loan given to thefactory. Some people from Khok Charoen are also employed by the factory, either on afull-time or part-time basis. It is unlikely that industries of such scale can be set up inKhok Charoen as it requires large capital of investment, significant improvement in thelevel of infrastructure, availability of raw materials as well as the fact that it may not beeconomically feasible to compete with existing industries. For example, as mentioned,during harvest season the factory uses 25000 tons of sugar cane per day in theirproduction. The total volume in Khok Charoen in the year 2005 is only 375733 tons.4.1.6 Summary on problems and potentials of the industrial sector in Khok CharoenThe main strength of Khok Charoen lies in the rural industry, or more specifically in theform of weaving production. The majority of the population is migrated fromNortheastern area of Thailand, in which they bring with them indigenous knowledge andartist expertise in weaving production. Currently, there are at least 400 peopleparticipating in weaving activities showing there are enough skilled workers to expandthe capacity of production. The quality of weaving products here is of very high qualityand many of these products have been given OTOP status. In addition, 10 weavingproducts have been given 4 or 5 stars (max. 5) for their quality; this is significant as thereare only 72 products in Lop Buri which have been given this status. It should also bementioned that Lop Buri lies in zone 3 in the criteria established by the Thai Board ofInvestment (BOI). With this, comes a maximum benefits in terms of import duty and tax 153
  27. 27. exemption and thus an industrial unit set up in Khok Charoen will gain an economicadvantage over those set up in other geo-economical zones. Current national andprovincial strategic aim has also emphasized on the development of agro-processingindustry. This can be interpreted as strength of Khok Charoen as the majority of thepopulation is already employed in the agricultural sector and the district has seen highyield in products such as paddy, sugar cane, and cassava. The agricultural input can thusbe used as input materials to facilitate agro-processing industries.However, there are many weaknesses in the industrial sector. Despite the quality ofweaving products in Khok Charoen, there are limited market channels and opportunitiesto sell the products, hence the low recognition of Khok Charoen brand of weavingproducts. From the study, it was clear that members of these weaving groups lackentrepreneurship skills and consequently they rely on middlemen coming to purchasetheir products. To make problem worse, some groups even rely on the same middlemento provide them with raw materials necessary for production. Thus despite the quality oftheir products, their income from this has actually been decreasing. To illustrate this, theincome generated from OTOP products in Khok Charoen district has decreased byaround 7% between the years 2006-2007. This weakness can also be used to describe thesituation of other groups such as handicraft. Through interview of staffs from district andTambon office, we have also found that there is limited collaboration among variousoccupational groups performing similar activities. Thus there is no process for the groupsto learn from the mistakes that other have already experienced in their businessoperations. In addition, it should be raised that there is an inadequate level ofinfrastructure to set up a large scale industrial unit in Khok Charoen. From field visit to alarge sugar factory in nearby province (Sri Thep, Petchabun), we have found such scaleof industry requires a lot of water and electricity in their production and maintenanceprocess. It is also dependant on a large road network for transportation of their products;this is however not sufficient in Khok Charoen.Table 4.13 List of main problems in the industrial sector Problems Causes 1. Shortage of § Lack of collateral for loan due to no land title. capital for § Lack of skills in managing financial resources. Low level of investment. entrepreneurship among the population. § Supporting funds are not sufficient for distributions to all groups. 2. Lack of § Exploitation by local middlemen whether in terms of supply of market channels raw materials or purchase of end products. § Limited market network and information. § Since many groups are small in terms of number of members (= less production), they do not enjoy economy of scale and has little market power. 3. Decreasing § Lack of market channels level of income § Increasing price of raw materials and transportation cost. generated § Low recognition of Khok Charoen brand of weaving products. 154
  28. 28. OTOPs4. Limited § Although the majority of the people in Khok Charoen arecollaboration migrated from the Northern-eastern part of Thailand, they areamong various originated from different provinces. Thus interaction betweenweaving groups various groups is limited. § Loss of strong community/group leaders. § No organized location for interaction to take place.5. Low § Lack of market channels.recognition of § For weaving products, there is a strong competition from nearbyKhok Charoen district such as Ban Mi where the capacity of production is muchbrand of higher. There is also fierce competition from other provinces inweaving the North-eastern region of Thailand.products. Table 4.14 List of potentials of industrial sector in Khok Charoen Factors Descriptions1. Policy § Industrial zone; maximum benefits. § National and regional promotion on agro-processing industry. § Adequate vocational training programs.2. Access to raw § The primary occupation in the area is in agriculture. Thematerials main products include sugarcane, cassava, paddy, corn. There are also many beef cattle in the area, thus consideration on local slaughter house may reap considerable financial reward. § Information from the Provincial Industrial Office has also shown that some minerals such as pyrite are available in the area; this can be seen as another potential for industrial development.3. Location § The location of Khok Charoen is on the fringe of Lop Buri in the North. Thus Khok Charoen has access to nearby provinces such as Nakhon Sawan and Petchaboon, as a source of raw materials and as market outlets. Lop Buri, itself, is not so far away from Bangkok (only 155 km). § There is not much competition in the area at all levels of industry.4. Skills and § Total working population in the area amounts to aroundlabour 11,000 people. Since the majority of the population engaged in the agricultural sector, which is seasonal, they will be able available to accept another form of employment opportunities. § The average income per day in non-agricultural activity is surveyed to be around 150 baht or less, in general for the whole district. § At least 590 people are recorded as having taken a form of vocational training. § The population possesses indigenous knowledge and skills in weaving production. They also possess unique design and pattern of fabric. 155
  29. 29. § Quality weaving products are renowned in Khok Charoen. Many OTOP products here are given 4 and 5 stars award for their quality. 5. Adequate § Accessible road networks. infrastructure for § Access to electricity. small and § Adequate water supply. medium scale industry4.2 Trade and Commerce4.2.1 General Information and Current Situation on Trade and CommerceThere are 102 enterprises and partnerships with the registered investment of 154,240,000baht in the province of Lop Buri. It classified into 28 enterprises with registeredinvestment of 30,900,000 baht, and 74 partnerships with the registered investment of123,340,000 baht. The province has 18 permanent markets, 6 located in Mueang LopBuri, 2 in Ban Mi, 2 in Chai Badan, 2 in Khok Samrong, 2 in Nong Muang, and ThaLuang, Ta Wung, Phattana Nikhom and Sa Bot each has one.There is no any permanent market in Khok Charoen district, the only weekly and mobilemarkets operating in the district. In the district, there are 9 places of weekly marketlocated in different Tambon and operating different date and time. These markets sellcloths, grocery, house ware, electricity ware, meat, vegetable and fruit. The district hasmobile market system, traders upload there goods to pick up truck and travel aroundvillage by village. The mobile market sell cooked food and fruit, they travel mostlyduring the meal time especially lunch time. Retail shops in Khok Charoen district consistof private shop and community shops, these shops sell grocery and soft drink. Totally,there are 373 private shops in Khok Charoen. Those shops are requested to pay tax todistrict tax office. There are two types of tax named sign tax and housing taxAlthough, in the district has no permanent market. However, local traders have marketlinkage with Srithep market, Phetchaboon province far away from the Khok Charoenmore than 15 km, Nong Muang market, Lop Buri province far from his home more than30 km, and many markets in Lop Buri district the capital city of Lop Buri province.There are two types of market in Khok Charoen district, namely weekly market andmobile market. These markets are the main source of providing goods and service. Thereare many kinds of commodities sold in the market including food, clothes, fruits,vegetables, animal meat, grocery, electricity ware etc. The markets serve the people intheir own Tambon and also other surrounding Tambon. Some kinds of the commoditiesare taken from outside Tambon, namely from Bangkok, and also neighboring province.Khok Charoen district has no any industry to produce goods for local consumption andexport to outside, the only non-agriculture products from the district flow out is only 156
  30. 30. weaving and handicraft products. The common products in the district sold out areagricultural product such as sugarcane, cassava and vegetables. Livestock is one mainsource of outflow such as cattle which is very common in the district.4.2.2 Markets and Shops in the Districta. MarketWeekly MarketsWeekly markets operate in different place and time found in the district. Total number ofweekly market in Khok Charoen is 10 places. These markets existed in all Tambon,serving people living around four to five villages providing some basic goods for dailyhome consumption. Some places operate more than one time a week for example inTambon YangRak at village number 4 and 9 operate two times a week and Tambon NongMakha at village number 8 operates 3 times a week (Table 4.15).Table 4.15 Distribution time and place of weekly market in Khok Charoen district. Location No. Tambon Schedule (time operated) (Moo) Moo 2 Sunday evening (3-8pm) [one time/week] 1 Khok Charoen Monday evening (3-8pm), Thursday evening Moo 4,5 (3NA8pm) [two times/week] Moo 2 Sunday evening (3-8pm) [one time/week] Wednesday and Saturday Morning (6-9am) [two Moo 4 times/week] 2 YangRak Tuesday and Thursday evening (3-8am) [two Moo9 times/week] Moo 10 Saturday evening (3-8pm) [one time/week] 3 KhokSamaesan Moo 4 Tuesday evening (3-8pm) [one time/week] 4 WangThong Moo1,2 Friday evening (3-8pm) [one time/week] Sunday morning (6-9am), Tuesday and Thursday 5 NongMakha Moo 8 evening (3-8pm) [three time/week]Source: Interview with TAOs 157
  31. 31. Mobile MarketsThis is a dynamic kind of market for rural villagers; it provides a very convenienceservice to rural people with food, fruit and other different kind of commodities for basicneeds. In Khok Charoen district, mobile market performed as direct sale, traders bringthose kinds of goods to serve people at their home. The advantage of mobile market is tofacilitate the rural people to access to the necessary goods and commodity especially foodand fruit. This type of market reduces the cost of transportation of the villagers andvillagers also can save their time on traveling to other shops or markets. However, due tothe increasing of fuel price, the cost of transportation of traders has increased and itreducing the profit of traders. Hence, traders have to increase the price of goods whichleads villagers need to pay more and more on price of those basic goods. One of thevillagers complained that every item has increase the price at least 10% compares to lastcouple years.b. ShopsCommunity ShopsThe community shop is an activity of cooperative base shop, establish by the savinggroup with the help of district community development office. Villagers participatethrough their contribution as saving capital formation and involved in management to runthe shop. The shop has a good economic implication on the rural people in term of theirsaving and good service in order to get benefit through saving mobilization on non-farmactivity. The shop function as local needs support for local people who have less capacityto travel to buy things for their family at far away market. The community shop alsohelps local people who to buy goods in credit in the case that members have not enoughcash in hand, then he or she can pay back later. The shop sells beverage, food, houseware, and grocery and some shops sell some items of motorcycle and car spare part, oiland fuel.Case study: Community shop of Ban Mai Si Ou Bon, Tambon Nong Makha, KhokCharoen district- Year establish: 1991- Location: Ban Mai Si Ou Bon, NongMakha- Main goods: groceries, beverage, some spare part of motorcycle, oil 158
  32. 32. and fuel- Member: 25 (1991), 95 (2008)- Committee member: 7 people, village head man as the chair person- Working time: 6 am to 9pm- Contract seller: one person- Seller salary: 32% of annual net profit- Source of fund: SML and share (total 950,000 baht)- Share price: 10 baht/share- Dividend/member: 1 baht/share (10 baht gain 1 baht)- Duration: One year a time of dividend provided- Infrastructure: District Community Development Office provided- Goods purchasing: Through middlemen (Whole seller bring for the shop) and, staff went out to buy from whole seller shops in Khok Charoen town- Management: Executive Committee of the shopPrivate ShopsKhok Charoen district has several types of shop regarding to the tax office, shops wereclassified into many types according to their functions. The largest number is convenientor grocery shops then flow by car and motorbike repair shops and gasoline pump. Theseshops are owned by private, functioned as household business to provide service forvillagers and people living around. According to the data from Tambon tax revenue list,in each Tambon has different types and number of shops. The highest number of groceryshop is in Tambon Khok Charoen, and then follows by Tambon Nong Makha, the leastnumber of grocery shop is in Tambon Wang Thong (Table 4.17). Number of groceryshop shows the rate of household business activity in that particular Tambon.According to Table 4.16, Tambon Khok Charoen has the largest number of shops whichaccount for 29.49 per cent, when we take to population ratio (total population divided bytotal shops) Khok Charoen has the least ratio. Tambon Wang Thong has the leastpercentage of shop but the second least ratio. It means Wang Thong has less populationeven the number of shop is less, but people can also have more chance to access to theshops. However, the variety of shop (goods and service) is not good as Khok Charoenand other Tambon. We cannot assume the shop type due to the data on shop given is notclassified in to different type of shops dealing with different goods and services.Table 4.16 Distribution of total shop by Tambon No. Tambon Population Total number of shops Percentage of shop in each Tambon 1 Khok Charoen 7,296 110 30 2 YangRak 7,783 71 22 3 KhokSamaesan 3,231 39 12 4 WangThong 2,638 35 11 5 NongMakha 3,509 75 23 Total 24,457 330 100.00Source: TAO office, 2007 159
  33. 33. Table 4.17 Distribution of Shops by Tambon Shops No Tambon Car and Total Grocery Gasoline Agriculture Construction motorbike Pharmacy Others* shops pump inputs material repair 1 Khok Charoen 72 4 12 5 4 4 9 110 2 YangRak 69 2 NA NA NA NA NA 71 3 KhokSamaesan 35 4 NA NA NA NA NA 39 4 WangThong 35 NA NA NA NA NA NA 35 5 NongMakha 48 3 10 1 1 NA 12 75 Total 259 13 22 6 5 4 21 330 *Hair salon, knitting shop, restaurant and game shop Source: TAO office, 2007 Table 4.18 Ratio of Population under the Service of Shops in Tambon Khok YangRak Khok Samaesan WangThong NongMakha TotalTypes of shops Charoen Shops Ratio Shops Ratio Shops Ratio Shops Ratio Shops Ratio Shops RatioGrocery shops 72 101 69 113 35 92 35 75 48 73 259 94Gasoline pump 4 1,824 2 3,892 4 808 NA NA 3 1,170 13 1,881Car and motorbike 12 608 NA NA NA NA NA NA 10 351 22 1,112repairPharmacy 5 1,459 NA NA NA NA NA NA 1 3,509 6 4,076Agriculture inputs 4 1,824 NA NA NA NA NA NA 1 3,509 5 4,891Construction 4 1,824 NA NA NA NA NA NA NA NA 4 6,114materialOthers* 9 811 NA NA NA NA NA NA 12 292 21 1,165Total 110 66 71 110 39 83 35 75 75 47 330 74 Source: TAO office, 2007 160
  34. 34. Figure: 4.15 Density of Population to Private Shops Map 161
  35. 35. Figure: 4.16 Distribution of Weekly Market Map Tambon Nong Makha 3 3 2 1 1 0 Places Frequency conducted Tambon Khok Charoen Tambon Wang Thong 3 3 3 2 2 2 1 1 Tambon Yang Rak 1 1 0 0 Places Frequency 8 6 Places Frequency conducted 6 4 conducted 4 Tambon Khok Samae San 3 2 2 1 1 0 1 Places Frequency 0 conducted Places Frequency conducted 162
  36. 36. Figure: 4.17 Market Linkage 163
  37. 37. Market Linkage and Network AnalysisThe Figure 4.15, 4.16 and 4.17 provide as very clear explanation on shops and marketsdensity in Khok Charoen district. In the district has no any permanent market, whiledistrict nearby named Srithep has a big permanent market; traders in Khok Charoen haveto travel to buy goods from Srithep to sell in the district. There are 10 weekly markets inthe district; the weekly markets as well as shops are not well distributed fairly in thedistrict. Thus, some Tambon are less number of shops and weekly market to serve theirpopulation, while others have much more market and shops density comparing to thepopulation size. Hence, it means that not very people in every Tambon can access and gettheir need from their local market. They have to spend some time to travel for goodspurchasing for their daily need. Regarding to this situation, the population who live at theplace has less service, they are disadvantage in term of access to variety of service as wellas price of common basic goods comparing to the neighboring area. We also can see thatthe largest numbers of shops and other services are agglomerated in Tambon KhokCharoen. Hence, maybe in Tambon Khok Charoen is the most advantage Tambon in thedistrict.Neighboring districts are the sources of daily goods that traders from Kho Charoendistrict usually go to buy goods to sell in Khok Charoen. Regarding to the map there arefour neighboring districts which has road connection with Khok Charoen named Srithepdistrict far from Khok Charoen around 25 km, Nong Muang 30 km, Sabot 20 km andChai Badan 45 km. In the case that traders want to buy in big volume they have to go toLop Buri city where far away from Khok Charoen around 80 km.Since, the road access is very important for trade and commerce. According to the map,transport node is quite in good situation. Thus, better the road connection provides morechoice for local traders dealing trading with neighboring markets, and also brings outlocal products to outside markets.4.2.3 Marketing Channel of ProductsMarketing channel were classified in two parts namely inflow channel and outflowchannel. The inflow channel to present the goods those are being brought from outside tothe Khok Charoen district which classified into four main components related to non-agriculture sectors namely cloths, grocery, house ware and electricity ware. The outflowchannel present the goods and products which the district and produce and send out tosell in other market outside the district. The goods and products which are beingproduced in the district and sending to market outside are weaving product, basketryproduct, Thong Muan (Thai sweet role) and agro-processing product such cassava andsugarcane. The flow of these goods and products were drawn base on the interview withTambon administrative offices, shop owners and traders in the various weekly markets.The whole seller, cloth shop owners and cloth traders buy clothes from Bangkok (BoBemarket). First channel, some of them group together around 5 to 6 people, then hire a 164