Interview: Kobchai Sungsitthisawad, Director-General, Department of Industrial Promotion
How can Thailand establish a competitive environment for the development of S-Curve industries?
KOBCHAI SUNGSITTHISAWAD: Knowing that the industrial sector contributes to 40% of our GDP, the government established the Thailand 4.0 policy to move into a higher-value market, with the Ministry of Industry leading development and the Department of Industrial Promotion executing it. If the industrial segment can drive this policy, it will improve productivity and the overall economy.
To be competitive in a sustainable way, we must include SMEs and industrial segments through digitisation and IT, automation, robotics and innovation under an industrial cluster strategy. We try not to focus only on new or old S-Curve industries but on all growth industries. SMEs also have a role in pushing our agriculture and manufacturing businesses further. Thailand has 3m SMEs, of which 2.6m are in agriculture, services and trading, and 400,000 are in manufacturing. We had to include IT so that the upstream segment of agriculture could serve the needs of the market. Therefore, we had to improve their marketing by signing a partnership with an e-commerce firm, and their warehouse and stock management through the use of quick response codes in order to improve their supply chain management. In regard to the manufacturing segment, we are trying to improve them by using the enterprise resource planning system. Downstream, we are establishing a business-matching platform, with the involvement of banks and e-commerce giants such as Alibaba.
Given the proliferation of high-tech Chinese products in the Thai market, how could Thailand’s industrial output compete more effectively?
KOBCHAI: I’m not worried about this issue; Thailand has its own research and development (R&D) and Thai consumers prefer Thai due to their higher quality.
In order to guarantee the quality of all imported products, imports are subject to quality assurance, and the Thai Industrial Standards Institute (TISI) ensures that imported products meet the highest standards before entering Thailand. Of course, we face competition but we are not concerned about our quality.
If our products end up having the same quality as other products, then we would be worried, and would do our best to be more cost efficient while improving our products and reducing the cost per unit.
Where do you see the possibility for foreign corporations to play a greater role in moving the Thai industrial sector up the value chain?
KOBCHAI: Thailand extends privileges to foreign corporations operating in the Eastern Economic Corridor (EEC) via the Thailand Board of Investment, and involves reducing their income tax for a period of up to 13 years. With that in place, I believe foreign corporations have a bright future in Thailand.
On December 19, 2017 the government of Thailand released a decree to engage foreign investors in the development of our country. We invite them to be coaches to Thai SMEs and foreign corporations will play a bigger role in our digital and educational growth.
There are two sorts of coaches: local champions and foreign ones. Foreign firms have and will continue to be important in establishing the framework when advancing robotics in our country and industries.
For instance, visualising methods will be installed to monitor the efficiency of machines with the support of Japan’s Asahi Tekko, and visualised craftsmanship that synchronises humans and machines will be integrated with the support of the Toyo Corporation. We will implement these improvements in around 1000 factories in 2018, with the ultimate aim of bringing our SMEs into the higher value chain.
Working in close collaboration with our research centres, these foreign R&D hubs are bringing value into our industries. The S-Curve concept allows industries to share their knowledge, technology, orders and marketing in order to improve supply chains nationwide.
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