Thailand Drafts Roadmap For "Digital Economy"
Investvine, A Company of Inside Investor, Ltd.
Sep 16, 2016

Other countries have their “visions” for the economic future, Thailand uses a borrowed term from the IT sector: The country wants to become “Thailand 4.0,” which means it seeks to transform its economy into a service-based, value-creating digital one.

This is, of course, easier said than done. In the computer world, to change or upgrade an operating system, it normally needs to be rebooted, and everything organises itself from scratch again.,

In the case of Thailand, things are even more complex. Basically, as Investvine learned from the country’s Deputy Minister of Economy Suvit Maesincee, Thailand aims at introducing the new model to “escape the middle-income trap” and develop towards a high-income nation to “avid a lost decade.”

To facilitate these objectives, the government officially approved the “Thailand 4.0” initiative to move the country’s economy into the digital era with an initial budget of 3.7 billion baht, or more than $100 million, acknowledging that Thailand’s industrial growth has so far passed three stages of economic evolution: Thailand 1.0 (an agriculture-based economy), Thailand 2.0 (a light industry-based economy based on assembly manufacturing) and Thailand 3.0 (a heavy industry-based economy).

What should follow is “Digital Thailand” or “Thailand 4.0,” pushing Thailand’s economy to the next level by facilitating important sectors of the digital economy such as e-commerce, IT services, creative technology, smart systems and innovation.

“At the current stage, Thailand is in fact facing three traps,” Suvit explains.

“These are, besides the middle income trap, the inequality trap and the imbalance trap, and all are responsible for the many problems we are currently facing, including in politics, as well as corruption,” he adds, noting that “therefore, what we need to do is to change the engine – to enable us to walk away from a producing towards a higher-value economy with a better distribution of wealth and a more balanced society.”

As a start, various projects are planned under the initiative, including the delivery of affordable broadband Internet access to villages nationwide, and the deployment of IT to improve public services offered by state agencies. The latter includes an attempt to consolidate government services into a single portal that comprises all state agencies.

Further on, initiatives in the most important sectors of the Thai economy are planned, including the introduction of “smart farming” with the help of biotechnology and agritech, creative technologies in industry and manufacturing using robotics and mechatronics, better skills training to groom knowledge workers instead of blue collar labourers, support of smart enterprises and startups in fintech, e-commerce, cyber security, environmental technology and other enhanced services, as well as the development of a broader service industry with high-value services, for example in the lifestyle and healthcare sectors.

“In fact, our service industry at the moment relies to 70 per cent on tourism. We clearly need to diversify it,” Subvit says, suggesting that the wellness and health care sector could be expanded by biomedical and other new services.

One big obstacle on the way to Thailand 4.0, though, is the problem of a skills gap, Suvit openly admits.

“There is actually a huge knowledge gap between Thailand and the rest of the developed world,” he concedes, adding that “our education system is very ineffective and reforms are seriously needed in order to produce more high-skilled talent.”

In this context, an editorial in “The Nation” published on September 8 names poor English proficiency in Thailand as compared to most of its neighbours as one of the biggest problems that need to be overcome to end the country’s economic standstill. The paper cites two main reason for the issue:

“First, we are too nationalistic. This can be seen especially among civil servants, who hide what is generally a very poor command of English behind exaggerated displays of patriotism. Some still insist that foreigners in Thailand should speak Thai. That authoritarian attitude has caused others to hide their deficiencies. They ignore the fact that few people beyond our borders can speak Thai.

Second, many Thais simply do not understand that English is a universal language that gives its speakers an information advantage over those who have to rely exclusively on Thai media. Global news in Thai, especially on economics, is usually reported two days late, which causes errors in decision-making by those who depend on it.”

The writer recommends that Thais “simply have to cultivate a more global mindset,” echoing Suvit’s conclusion that better education leads a more balanced society and eventually a better life fr its members.

“Thailand’s transition over the next five years needs to address three issues: Conflict, corruption and inequality,” Suvit says, adding that “Thai people need to change from being self-centric to become socially responsible.”

Thailand’s educational system, which is arguably stuck in the last century, in the “Thailand 4.0” concept should transform from a passive, standardised and duty-driven system to an idea- and practice-based, active and achievement-oriented system to improve human capital development in the country and create a “talent market” and eventually, and ideally, a society that is driven by “active citizens, engaged contributors and social innovators,” making it more inclusive and more innovative in the process.

The concept has been named Pracha Rath, which means “State of the People” and describes an ideal goal for Thailand where economic and social collaboration between people and businesses – from the grassroots up to big companies – lead to a balanced and harmonic society with empowered people.

The road towards this goal will be, not unexpectedly, rocky.

Initial reactions to the Pracha Rath concept have been diverse. While some saw it as a god way to bring the government, the private sector and communities into collaboration, others simply called it a “daydream.”

Moreover, the Bangkok Post in August cited a survey that most businesses in Thailand know little about the “Thailand 4.0” concept.

The survey by a unit of the University of the Thai Chamber of Commerce showed that slightly more than half of 600 surveyed businesses mainly in the manufacturing and service sectors know little about Thailand 4.0. In detail, 55 per cent admitted they had little knowledge about it and only one percent responded that they knew it comprehensively. In between, 27 per cent of the respondents said they somewhat knew what it meant and 17 per cent said they knew it “pretty well.”

Broken down, 57 per cent of the medium-sized ones said they “do not know much” about Thailand 4.0. Among the big-scale industries in the survey, 75 per cent said they understood it “moderately.”

Company Investvine, A Company of Inside Investor, Ltd.
Contact Imran Saddique