We should be manufacturing original brands: Alongkorn
Thailand needs to urgently transform itself from an original equipment manufacturing country to an original design and branding country before the full implementation of the Asean Economic Community in 2015, Alongkorn Pollabutr, former deputy commerce minister, said last week.
The government's populist schemes like rice pledging would leave the Kingdom stuck in a trap, he told an academic forum held |by Thammasat University's PhD programme at the Faculty of Journalism and Mass Communications.
The government had suspended all other subsidisation schemes to relocate money to support the rice-pledging project, which was now facing liquidity problems, he said. The government would take out another loan worth Bt2 trillion just to invest in infrastructure and hardware.
"Thailand needs to move out |of being an original equipment manufacturing (OEM) country. |Our per-capita income is now |only US$5,000, which is much lower than Malaysia's $10,000. We're still talking about the minimum wage as a means of a labour-intensive country," said Alongkorn, a deputy leader of the Democrat Party.
England transformed itself from a heavy industry to a service economy about 50 years ago. Singapore has also positioned itself as a financial and commercial centre and logistics hub of the region.
"The government's leader needs to have a sense of adaptability in transforming the country using its strengths," he said.
After China opened up more than 30 years ago, it has successfully transformed itself from an OEM-based to brand-building or an original brand-making (OBM) economy to cash in on the global expansion and has shown dramatic growth.
Thailand should focus on research and development (R&D) as key mechanism in moving the country forward.
"It's really disappointing that the Science and Technology Ministry is a lower-grade ministry and gets less than 1 per cent of GDP for its R&D budget. Almost 90 per cent of R&D work cannot be commercialised," he said.
Thailand was a "trading nation" with 70 per cent of its GDP going to exports worth about US$200 billion per year. About 40 per cent of the exports, however, were from labour-intensive industries such as automobiles, electrical and IT. Thailand also sells agricultural commodities, such as rice and tapioca, in bulk and they have no added value.
SMEs should become a firm foundation for the development of Thailand's creative economy and exports.
Instead of subsidising the rice-pledging scheme, the government should strategically promote processed rice products, such as facial powder, medical goods and ice cream, to benefit from value creation.
"We should take our geographical strength at the middle of Asean to become a bridge between the East and the West (between the Indian and Atlantic oceans and the Pacific Ocean)," he said.
Thailand has free-trade agreements with 16 countries in Asean and beyond, and what the current government should do was to draw up a marketing strategy and guidelines to be followed by the private sector.
The country should promote itself as a major food supplier to the world, he added.