Greater focus on R&D seen as key to strengths

Panellists at the "Reassuring Thailand's Strengths & Competitiveness" seminar agreed that while the country's strengths in agriculture, services and manufacturing should be sufficient to fulfil the dream of the Kingdom becoming one of the top 15 nations in the world in terms of competitiveness, much still needed to be done.

Tevin Vongvanich, chief finance officer of PTT, said Thailand was capable of enhancing its competitiveness through innovation, provided the R&D budget were to be increased by both the public and private sectors.

Against the goal of upping the R&D budget to 0.5 per cent of gross domestic product, actual spending is now only 0.2 per cent - against more than 1 per cent in many other countries. The situation would be helped if the protection of intellectual property were to be improved, he said.

"Then, there must be integration of R&D with an improvement in education. This would lead to proper human-resources development, in line with the national strategy - no matter whether we want to focus more on the manufacturing or service sectors," he said.

Issara Vongkusolkij, founder of Mitr Phol Sugar, said the private sector may need to take the lead in terms of R&D, and the government could help via support from state units. He said tax incentives, whereby private companies can deduct up to two times their R&D expenses from taxable income, could be raised, and that more government resources should be made available to ensure more rapid screening and hence faster development.

Arkhom Termpittayapaisith, deputy secretary-general of the National Economic and Social Development Board, said science, technology and innovation could be enhanced through extracurricular courses, as Thailand has sufficient facilities to do so.

For example, the Thailand Creative and Design Centre is ready to share knowledge in design, and this could be integrated with R&D from private and public institutions.

"If we want a quick win [in terms of ranking], we can do more in extracurricular education. Conventional education would take a longer time to yield successful results," he told the audience.

Veerathai Santiprabhob, chief strategy officer at the Stock Exchange of Thailand, said the Kingdom would have a higher global competitiveness ranking if there were certain changes in the public and private sectors.

For the public sector, he highlighted the need to reduce the number of sticks and sweeten the carrots. All hindrances must be cleared, such as doubts over the use of double standards and the perception of public servants.

Rules and regulations could be eased, he said, while promotion should be enhanced, with higher efficiency being the priority. Without a change in culture, the public sector will not catch up with the private sector, thus slowing down advancement.

Meanwhile, he said, the private sector needs to understand that while it is moving up, the world does not stand still. Thai businesses still rely heavily on bank borrowings, while the capital market is not yet developed sufficiently to support their expansion. Non-organised segments like venture capital and mergers and acquisitions must take on a bigger role, in order to increase the access to funding and talent.

"Thailand needs a new platform to promote dynamic competitiveness," he added.

Arkhom also said the country needed to focus on the question of efficiency in both the public and private sectors, as this factor could either lift or put pressure on the overall competitiveness ranking.

In the public sector, there is a greater need for policy clarity and continuity as well as smooth policy implementation. Regulations must be eased to improve the conduct of business.

Meanwhile, the private sector must focus on productivity, and this could be enhanced by R&D, he added.

Panellists, while stressing several weaknesses that must be resolved, said they believed Thailand could grow further in the international arena.

While Dusit Nontanakorn, chairman of the Thai Chamber of Commerce, and Issara expressed confidence in the food industry, Arkhom saw huge potential for Thailand to improve its overall ranking through a greater focus on logistics and the service sector, which now contributes 50 per cent of GDP. This compares to 10 per cent for the agricultural sector and 40 per cent for the manufacturing sector.

Still, they said, infrastructure - physical and non-physical - must be developed to support this.

Tevin said the Kingdom could also achieve higher growth in the manufacturing sector, although this would come with more concern over environmental impacts, and from the service sector.

But as it was crucial for infrastructure to be developed, he urged that the right strategies be introduced and that there also be clear policy implementation.

To Veerathai, the IMD's annual "World Competitiveness Report" focuses largely on static indicators. For example, Thailand's fiscal position is ranked higher than that in 57 other countries, but this could partly due to slow budget disbursement. The ranking on labour is also high, though there are reported shortages in several areas.

He said that if these facts were factored in, Thailand's overall ranking could have been lower than the current 26th.

"We look at the aggregate numbers, like the number of students per teacher. But we don't look at the distribution of teachers," he added.

 Arkhom asserted that while moving forward in its development, Thailand needed to balance economic advancement with social and environmental concerns.

 The overall ranking could be improved slightly with such a balance, but "we should be pleased if the growth is evenly distributed", he said.