“The Future of Competition is Collaboration” – Interview with Dr. Suvit Maesincee
Interview with Dr. Suvit Maesincee
Dr. Suvit Maesincee, Minister attached to the Prime Minister’s Office and one of the architects of Thailand 4.0, spoke at AMCHAM’S membership luncheon on January 26 and presented the main tenets of the Royal Thai Government’s new strategy to raise Thailand from a volume- based to a value- based economy. Recently, he sat down with AMCHAM’S Communications Director, Deanna Despodova Pajkovski, to answer some follow- up questions and go more indepth into the intricacies of Thailand 4.0 and how it would affect the Kingdom’s business environment .
Q: When you addressed the American business community at AMCHAM’S monthly luncheon in January you talked about ‘ pracharat’ or ‘ State of the People’ as a unifying element of Thailand 4.0. Can you explain the concept of ‘ pracharat’ as it pertains to Thailand 4.0 and how it would contribute to the implementation of the Royal Thai Government’s strategy?
A: The ‘ pracharat’ concept works under several assumptions. The first assumption is that in the last decade we have seen market failure and Government failure; when the Government fails we try to rely on markets and when the markets fail we try to rely on the Government. But in the 21st century, we are facing a systems failure where the division of labor between market and Government doesn’t work anymore. We now need collaboration between the Government and the private sector to deal with challenges. Earlier, the theory of economics talked about competition and the concept of cooperation had a negative connotation. Nowadays, professors teach that the future of competition is collaboration, solving the big challenges together, such as climate change, poverty, and diseases. So in the context of national development it means that we have social as well as economic collaboration among these agents that doesn’t only involve the public and private sector, but also the people sector, or the civil society, by empowering citizens to solve local issues and concerns. This kind of new emerging collaborations as publicprivate partnerships and social enterprises is in line with what we call ‘ pracharat’ in Thai. The Government has created 13 committees or working groups as part of the ‘ pracharat’ concept to work on a variety of issues, ranging from innovation and digitization, the new S- curve, and promoting infrastructure to grass- roots development, modernizing agriculture, education reform, as well as how to enhance the competitiveness of our labor force. These groups will work on a national level, but there is no reason why they couldn’t work on international level as well. For example, we have been approached by JETRO ( Japan External Trade Organization) and they are interested in establishing ‘ pracharat’ between Thailand and Japan because there are a lot of Japanese investors in Thailand and they perceive Thailand as their second home, so they would like to contribute to Thai society. We are also in talks with the Thai European Business Association and I don’t see why we can’t also have a Thai- American ‘ pracharat.’
Q: Thailand 4.0 is a comprehensive strategy that covers all aspects of development. In your presentation at AMCHAM’S luncheon you focused on the economic aspect, or the development of a valuebased economy. What are the other development aspects contained in Thailand 4.0? A: In my presentation I talked about the competitive growth engine, but we also have the inclusive growth engine. We have developed a new regional policy which di-
vides Thailand into six regions and further into 18 clusters of provinces. We have allocated Baht 100 billion to be invested into these clusters of provinces as part of the inclusive growth engine in order to escape the inequality trap. Another aspect we are working on is the environmental one, or the green growth engine. We are trying to balance economic growth, social well- being, environmental wellness and human wisdom. The underlying concept of these efforts is the Sufficiency Economy Philosophy and our efforts are also in line with the Sustainable Development Goals of the United Nations.
The Thailand 4.0 strategy focuses on three things: competitiveness, which is about people, education, technology and innovation; cohesiveness, or empowering people across different regions and trying to achieve economic democratization; and connectivity, which means connecting to CLMV ( Cambodia, Laos, Myanmar, and Vietnam), connecting to ASEAN, and connecting to Asia and the world. Each of these areas have been assigned a Ministry that is accountable for the implementation. The cabinets are already driving the ministerial agenda. Just this morning, we were talking about Government 4.0. The bureaucratic system can be the enabler or the constraint to driving Thailand 4.0, so the primary focus of the policy of Prime Minister Prayuth Chan- o- cha is raising the quality of the bureaucratic system, and finding ways to change the mindset, the skillset, and the ecosystem. Reform starts with reforming the Government.
In this context, we are focusing on two things: administrative reform and regulatory reform. At the same time, we are focusing on relaxing regulatory constraints on business and improving the ease of doing business by eradicating outdated regulations. Q: You mentioned several times that people are an essential element in implementing Thailand 4.0. What is the Royal Thai Government’s plan on elevating the capacity of the current and future Thai workforce to make Thailand 4.0 a reality? A: What we are trying to do is relax the constraints on importing knowledge, such as, for example, the regulation that foreign academic institutions need to have a majority Thai ownership. I now supervise the Board of Investment ( BOI) and I have talked to the Minister of Education and we completely agree that we need to abolish this regulation. We need talents in science and technology, so why not make the free flow of talent possible? In the short term, you need to buy education, so we need to relax the constraints to bring in the best and brightest. The return on investment in people is very high. So we are trying to bring in investment not only in the business sector but also in academic institutions. In the long- term, we should aim to stand on our feet and increase our universities’ competitiveness while still being part of the global collaborative network. In the next five years we should try to bring the best people from the best global research institutions and universities to work hand- in- hand with their Thai counterparts to make progress in new fields such as biotech, biomed, etc. I believe this is the right model for Thailand. We are a small and open economy and we should have a strong network to ensure that we have a free flow of goods and services, capital and talent, and knowledge.
Regarding primary and secondary education, I believe the biggest problem is inequality, so the first thing we need to focus on is this structural problem and close the gap in educational opportunity.
Q: Are there any plans to reform and invest more in vocational level education?
A: When it comes to vocational education, we have to overcome two barriers: the first is the attitude towards vocational education which is still perceived as inferior to a university degree even though the demand for semi- skilled labor is very high. Then, we have to ensure a tripartite cooperation between the schools, the industry, and the Government and that people trained through the vocational institutions are guaranteed a job. We have to create an enabling environment to make this option attractive to people.
Another issue we have to work on is how to retrain semi- skilled labor to respond to the ongoing trend of automation in order to avoid social issues five or 10 years down the road.
Q: What can the American business community in Thailand do to support the implementation of Thailand 4.0?
A: When I think about Thai- U. S. cooperation, the first thing that comes to mind is knowledge transfer. Thailand 4.0 is in line with what American companies are already doing so we need to look into how we can make this linkage stronger.
Most American companies are multinational and America as a whole is focused globally, not regionally. Japan, for example, is more regional- centric. They approach different regions with different strategies, so their priorities in Thailand are different from Indonesia. I think America should approach the world in a similar manner, and not with a one- size- fits- all model. Also, it would be useful to conduct extensive research before entering a market or expanding, or doing CSR, or talking to the Government, like JETRO does. When I talk to JETRO I always have a feeling they have done their homework, they are aware of what the government needs and they offer matching assistance that creates a win- win. So organizations like JETRO and JICA are needed to provide meaningful assistance. Also worth noting is that this cooperation is not transactional; it is relational.
Q: You very precisely identified that the future of global economic exchange is not in the sphere of heavy industry, but technology and knowledge transfer. Is the Government planning any changes to the investment promotion requirements to attract tech startups and R& D- focused SMES?
A: Under my leadership, the work of the BOI will be re- directed from volumebased to value- based. Also, BOI’S approach will no longer be sectoral, but will focus on three domains, the first one being talent. One of the constraints of the BOI incentives was that it was only offering corporate income tax incentives, but that is not enough. In order to attract startups, which are frequently only one or two people, we will offer reduction in the personal income tax as well. Another incentive we are working on is offering the possibility to get a work visa and work permit at the same time. It is currently quite burdensome for foreign talent to obtain the necessary documentation to work in Thailand as the work visa is issued by the Ministry of Foreign Affairs and the work permit is issued by the Ministry of Labor. This doesn’t make any sense. I have asked the Ministry of Labor to delegate the issuance of the work permit to the Ministry of Foreign Affairs so any Embassy can issue the visa and work permit at the same time. Also, in the next three months all reporting to the Immigration Office will be done online instead of in person.
Another reform we are considering in the direction of increasing the ease of doing business is to make it possible for only one person to establish a company without the need for nominees in order to attract startups. Last but not least, we are looking into changing the regulations for Government procurement bids to make them available internationally, not only locally. It is possible to have transparency and quality at the same time.
We are also upgrading the BOI promotion scheme into BOI Plus. For example, for certain targeted sectors the tax breaks have been extended from eight to 13 years. We have also established a Competitiveness Fund worth Baht 10 billion to attract and support high- value companies that wish to invest in Thailand. Then there is a special, customized package for the Eastern Economic Corridor ( EEC).
A lot of the reforms we are trying to implement are based on common sense with an additional consideration of how we can differentiate ourselves from neighboring countries.