Time for industry to wake up and smell the coffee

Eighty per cent of more than 1,000 respondents representing nine industries expressed grave concern about oil prices and raw-material costs, and half considered the baht's appreciation the greatest risk to their business operations apart from other factors.

Yet when asked what strategies they were using to counter these risks, fewer than 10 per cent opted for foreign investment and slightly more than 30 per cent for long-term sales contracts. It is a shock to learn 25 per cent do not have any strategy for dealing with the risk factors. More alarming is that the 25-per-cent figure covers companies of all sizes, but in terms of small units alone, the proportion is as high as 40 per cent.

It is no surprise that small firms are the first to go under once the economic environment turns upside down. Given that their profit margins are squeezed and the chance of going bust is high, these companies have little energy to worry about increasing productivity even though that would ensure long-term sustainability for their business.

This is a concern for all involved in the productivity issue.

Thailand Productivity Institute executive director Phanit Laosirirat was one person expressing dissatisfaction with the government's dearth of measures.

"The productivity strategy for 2009 has not won a single baht from the annual budget," he told a press conference yesterday.

This could be a reason why Thailand is lagging behind its neighbours. Thanin Pa-em, executive senior adviser for policy and planning at the National Economic and Social Development Board, said out of more than 200 indicators that IMD used to determine competitiveness, Thailand led Malaysia by only 55, while Malaysia led Thailand in the remaining areas.

Twenty years ago, South Korea was on a par with Thailand, but now it is close to the top of the range with several world-class companies. Thanin said without a serious efforts on the part of the public and private sectors, the situation will never change. One good example is Vietnam, which recently won a manufacturing deal from IBM. Even though Thailand leads Vietnam in terms of information technology (IT) and language skills, Vietnam is jumping ahead by arranging evening language sessions for entrepreneurs.

"Without harder work on IT, education and training, we won't attract investment even if we have 10 exhibitions promoting Thailand Investment Year," Thanin said.

He's definitely right, but when will those small and medium-sized enterprises wake up and realise they must do something? And when will the government start looking at long-term factors rather than short-term problems like ministerial posts?