The recommendation came yesterday after a two-year study by the Fiscal Policy Research Institute, in which Patthadej had participated. The study showed that local communities had the potential to develop home-grown cottage industries like hand-made ceramics, but there was a "missing link", as the government had failed to provide the necessary technical support or venture capital that would enable the local products to enter international markets.

Patthadej said government policy so far was aimed at promoting cottage industries from the top down, which left out local people. For instance, the government provides tax incentives to promote foreign investment but has not responded to local needs.

"We need something like a venture-capital institute to enable locals expand production, build up their technology and find markets," he said.

The study shows that communities in the west of Thailand have the potential to develop a ceramics industry, but not the value chain to upgrade production to higher volumes.

The East, particularly Chanthaburi province, could develop into a centre for food and rubber-related products.

The Fiscal Policy Office's Fiscal Policy Research Institute (FPRI) is working on a data map to help small and medium-sized entrepreneurs develop their supply and value chains for the next phase of development.

"The government should help provide supporting technology and venture capital to create a momentum for these industries to progress further," he said. Patthadej said this model had already proved successful in other countries, such as Germany.

The FPRI will present the study's findings during an international seminar next Friday at the Four Seasons Hotel. Professor Michael Enright, an expert on the cluster approach, will also speak on "Thailand's Regional Competitiveness".

Jeerawat Na Thalang

The Nation