According to Somkid, Thailand was short-listed for expansion by Seagate, but Malaysia offered better incentives and a more attractive overall package, including a better-qualified workforce. In the end, the California-based company decided to opt for Malaysia, which will benefit from the creation of several hundred new jobs for local engineers and help the country realise its goal of moving its export-oriented industries up the technological scale and value chain.

Seagate is not the first giant US company to pass up Thailand for neighbouring countries. In February, Intel Corporation chose Vietnam for its US$300 million (Bt11.4 billion) semiconductor fabrication plant. This represents the first such investment by the semiconductor industry in Vietnam. This lucrative deal is part of Intel's digital Asean (d-Asean) programme, which seeks to develop a stronger "digital workforce" through its investment package by integrating computer technological know-how into local education in cooperation with the host government.

Thailand is losing the bids to attract these investors one after another because of the insufficient supply of qualified workers and poorly developed or inconsistent government policies. Of course, political uncertainty is another negative against Thailand, but this factor doesn't affect investors' long-term investment decisions as much as the lack of a conducive environment and suitable infrastructure.

Once perceived as one of Southeast Asia's top investment venues, Thailand has lost its lustre. Chakramon Phasukvanich, permanent secretary at the Industry Ministry, conceded that Seagate's shift in investment shows that Thailand had failed to provide adequate support to the company and the industry in terms of human-resources development and investment-promotion privileges. Other Southeast Asian countries meanwhile have been more aggressive in fighting for foreign investment. Thailand meanwhile has never made a serious effort to solve the problem of the country's lack of qualified human resources.

Thailand has for years been squeezed between more technologically advanced competitors and those with lower labour costs. The country has not been very successful in its efforts to move up the technology ladder towards higher value-added production because of a persistent failure to improve workers' skills.

Last month, the Federation of Thai Industries told the Labour Ministry that the electrical and electronics-manufacturing sectors, which together have the potential to grow by 20 per cent over the next few years due to strong export growth, are facing a serious shortage of skilled labour. To be exact, the demand for about 50,000 skilled workers in these sectors in the next two years will remain unfilled unless the labour and education ministries and industrialists get together now to address the problem. Failure to meet the requirement for higher-skilled workers could compromise Thailand's export performance and undermine its global competitiveness - not to mention the country's growth prospects. Thai government officials and planners have acknowledged the problems and this is a positive step. However, what will be crucial is what the next government does to get serious about these problems and address them. Thailand is failing even in supplying skilled workers in sufficient numbers for long-established industries that have clear growth prospects. This bodes ill for its efforts to attract hi-tech companies that require a flexible, innovative and adaptive workforce. Unless the country upgrades its human resources, it may well drop below the international investors' radar screens altogether.