Govt to revive Otop and Village Fund schemes

Economy August 28, 2015 01:00

By Erich Parpart

The Nation

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The government will revive the One Tambon One Product (Otop) scheme to kick-start the grassroots economy while boosting multiple business and industrial clusters with new incentives, according to deputy premier Somkid Jatusripitak.



Somkid, head of the new economic team, met yesterday with leaders of the private sector for the first time to explain his policies and measures. Besides the Otop scheme, the Village Fund scheme would also be revived with fresh cash.

Both schemes were popular in the early 2000s during the tenure of former premier Thaksin Shinawatra when Somkid was deputy premier and finance minister.

Originally, Otop was designed to promote indigenous entrepreneurship for locally made and marketed products of each Thai tambon or sub-district. It was inspired by Japan’s successful One Village One Product program.

Somkid said yesterday that the government would also promote at least six to seven business and industrial clusters, such as processed food and value-added agriculture products, automobiles and parts, electronics, and petrochemical products that are environmentally friendly, along with the use of Internet technology as part of the digital economy policy.

Somkid told business leaders at a seminar held by the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB) that the economic situation is not yet a "crisis" but there has been a lack of private confidence plus a slowdown in the global export demand.

"Since Thailand is an export-led economy, we have to re-balance by shifting our focus to domestic activities and SMEs (small and medium enterprises) to strengthen our economy.

"Otop and domestic tourism drives will come back under the guidance of this economic team. I am in charge of all seven economic and related ministries and Board of Investment so we will all work together to provide more incentives for Thai and foreign companies to invest in the six or seven business and industrial clusters," he said.

One of the clusters is the so-called "Rubber City" – a special economic area that utilises local resources, namely, natural rubber, and expertise to be provided by established companies in the industry.

The government will also boost incentives for leading domestic and foreign educational institutions to play a key role in providing human resources, especially skilled workers.

"All details on incentives and BOI’s privileges for business clusters should be done within a month for Cabinet approval," he said.

Somkid’s policies are welcomed by Boontuck Wungcharoen, chairman of the JSCCIB and Thai Bankers’ Association, as well as Supant Mongkolsuthree, chairman of the Federation of Thai Industries.

Supant said helping low-income earners and promoting SMEs would be effective in lifting the economy up, especially in terms of boosting domestic consumption.

For decades, the Thai economy depends heavily on the export sector to drive growth as it accounts for as much as 70 per cent of GDP.

However, exports in the first seven months contracted by nearly 5 per cent year-on-year due to the sluggish global demand.

Boontuck said it would take about three to six months for the new policies to bear fruit. But he said Somkid should listen to the private sector’s viewpoint before introducing or amending any rules and regulations to implement the policies.

Stanley Kang, chairman of the Joint Foreign Chambers of Commerce in Thailand, also expressed support for the new policies, especially extra incentives for foreign businesses in the education sector, as that would encourage the transfer of know-how and expertise, plus decentralising and giving more importance to local small businesses.

Still, he said implementation was more important, plus injecting money into the grassroots had to be done. Upgrading and modernising infrastructure in Map Ta Phut and Laem Chabang was also important.