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Published on October 7, 2007

For the past four years, Supachai has been instrumental in boosting public awareness of the role home-grown innovation, which means new products or technologies that could turn a profit if they were properly managed and marketed, plays in national economic development.

Since 2004, NIA has funded or co-funded a total of 215 projects with a combined budget of Bt250 million, averaging just over Bt1 million per project. Based on a relatively high success rate of 50 per cent, about half of these schemes are said to have advanced to the commercialisation stage.

Altogether, these projects have led to a combined estimated investment of Bt6.5 billion.

Among the recent success stories are the widely popular silver-nano anti-bacterial shirt and biodegradable packaging material (made of bagasse) projects, which have so far generated a sales turnover of more than Bt200 million and Bt100 million respectively. Other examples include new models of electric golf-cars, which are lighter but stronger, and body powder made from rice flour.

In addition, NIA has been working with Thailand's Small and Medium Enterprise (SME) Development Bank, Japan Asia Investor Corp and a venture capital firm to set up the Thai Food and Innovation Fund, worth Bt210 million, to promote more collaborative efforts in the food sector, in which Thai entrepreneurs have the potential to be internationally competitive.

However, Supachai cautioned that many Thai chief executives are still innovation-shy, as reflected in a recent survey of the country's top 100 CEOs, in which only 68.2 per cent of those interviewed said they had a high level of confidence in the benefits of innovation.

The same survey also showed that only 36.9 per cent of the country's top 1,000 companies are seriously promoting innovation as a means to boost competitiveness. On inspiration, the majority of those surveyed (56 per cent) said they were driven to be innovative by their own customers, whereas universities and research institutes play a smaller role in driving innovation.

Respondents also noted that they would probably need to spend up to 5 per cent of their annual sales turnover in research-and-development (R&D) activities over a number of years to be able to produce new products or technologies that could turn a profit.

Supachai said such a ratio in R&D spending would be unrealistically high for Thai companies. Even Siam Cement, one of the country's largest industrial conglomerates, could not afford to invest as much as 5 per cent of its sales turnover in R&D.

Siam Cement's R&D budget is understood to be around 1 per cent of sales, while the national average is about 0.25 per cent of GDP.

As a result, in-house R&D activities are not practical for Thai firms due to their relatively small size when compared to the world's major enterprises. To resolve this issue, Supachai has urged more Thai firms to join other partners in collaborative R&D projects, such as the Thai Food and Innovation Fund, which includes venture capitalists who are prepared to take high risks in the initial stages of investment.

While more and more businesses are aware of the importance of innovation, the country still needs to nurture a pro-innovation culture and build sufficient linkages between key components to drive home-grown innovation.

For instance, the state agencies tasked with promoting new SMEs - the SME Bank, the Market for Alternative Investment (MAI) and the Stock Exchange of Thailand (SET) among them - need to work together, as the ultimate goal is to create profitable new enterprises that have strong brands and can compete in domestic as well as overseas markets.

In terms of financing, Supachai suggested that the government should come up with measures to promote the establishment of more venture-capital funds so that entrepreneurs have more funding sources while they attempt to turn their innovative products or technologies into commercially viable enterprises.

If these enterprises proved to be feasible, the MAI and SET should then provide further incentives for them to be listed on the capital markets.

 Nophakhun Limsamarnphun

nap1122@yahoo.com