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Published on July 13, 2007

The sudden closure on Wednesday of Thai Silp Southeast Asia Import Export, a sport-clothing manufacturer, which left almost 5,000 of its employees jobless and which many people, including its owners, attributed to excessive strengthening of the baht is a symptom of a deeper malaise. Exactly how the government managed to persuade the company's ownership to reopen the business yesterday remains a mystery, but the decision may be linked to the injection of Bt40 million in financial support from the Thai Textile Institute.

How much longer Thai Silp Southeast Asia Import Export will remain in business is anybody's guess. After all, the company's future depends more on its performance in terms of quality, productivity and competitiveness than on a financial bailout. Many Thai exporters have in recent months made a habit of blaming the strong baht for everything that has gone wrong with their businesses partly to try to hide their persistent failure to improve their ability to compete internationally.

Apparently Thai Silp Southeast Asia Import Export, an original-equipment manufacturer for top international brands, shut down without notice and with the intention to avoid its legal duty to provide laid off workers with severance packages, which would have been socially irresponsible and illegal. However, its use of the appreciating value of the baht as an excuse for its decision to take the easy way out is about as convincing as saying that Thailand has been doing well in terms of increasing its international competitiveness.

The upward trend of the baht against the US dollar and other major currencies has been evident for several months. The effects of a stronger baht are well known, such as earnings made in US dollars resulting in less money when converted to baht and thus shaving off profit margins or even resulting in losses. Many business operators, however, have managed to successfully stay afloat and even thrive by cutting production costs and improving productivity levels to stay

competitive.

That is not to say that the rising baht is not a serious problem, one that Thailand has to grapple with to arrive at exchange rates that best reflect the country's economic fundamentals.

It is a well established fact among government economic planners, members of the local business community and foreign investors that Thailand has for many years been squeezed between more technologically advanced competitors and those with lower labour costs. For too long, the country has consistently failed to move up the technology ladder towards higher value-added production because of the low quality of its human resources.

Poor human resources, particularly a lack of improvement in workers' skills, have provided the clearest indicator of the failure of our educational system to produce enough specialised professionals, as well as skilled workers, to form a productive workforce that is highly efficient and adaptable to enable the country to compete successfully in the global economy.

As a result, Thailand is losing out in the effort to attract foreign investors because of its utter failure to produce a sufficient supply of qualified workers, which is made worse by incoherent and poorly developed government policies.

In the meantime, Thailand has yet to make a serious effort to solve the nagging problem of the country's lack of qualified workers.

If we ask ourselves why that is so, and if we were honest enough to be able to accept the painful truth, we would realise that we don't even know how to start a rational public debate, backed by scientific evidence, that might lead to a lasting solution to our problems. The government and the business community, which are supposed to work closely together to map out strategies and do whatever it takes to achieve a high level of competitiveness, are not functioning as equal partners the way they should.

Too many members of the business community act like cry babies always demanding that the government solve their problems for them, while the government, which knows little about businesses, is too aloof to consult with business people. Unless Thailand cleans up its act soon and lifts itself up from this trap of non-competitiveness, we could be left on the wayside by other countries.