The Human Factor in Thailand 4.0
There have been many instances in Thailand’s history when a reformist government has come up with new plans to solve old problems. Some have been devised by local experts, others by invited external specialists, others by a combination of both. But oftentimes these plans have been devised, at considerable effort, time and cost, much heralded, backed up by presentations, and eventually been quietly shelved and forgotten, only to be replaced by new inspirations.
There is hopefully something different about Thailand 4.0, because the need for fundamental change has never been so evident. Competitive world and regional neighbors are so clearly far ahead of Thailand and moving further forward, and there is a government in place with the ability to command and institute action, with a mandate designed to extend well beyond its own intended timeframe in power. We live in rapidly changing times, and urgent and far- reaching action is needed.
THAILAND 1.0: A TREASURY OF HIDDEN POTENTIAL
The period defined as Thailand 1.0 constitutes the era of primary production, dominated by the agricultural sector. This is an era measured in thousands of years with only limited change over time. Much of Thailand has not moved very far beyond this era, even today, with many agricultural techniques failing to keep pace with modern methods. Agriculture and agro- industries can be highly sophisticated in advanced countries, resulting in superior, market- oriented products, and high productivity. Human resources are well- trained and educated, able to generate and personally earn competitive incomes. But it is evident that Thailand has yet to attain this level of performance, with the current level being characterized by low average per capita incomes, an ageing workforce, and reliance on subsidies and unrealistic support schemes. As a result, there are poor returns on capital both for operatives and for their financiers. Given the right stimulus, along with a strong focus on human resource training and inte- gration with market demand, Thailand 1.0 can be quickly elevated to Thailand 4.0. Thailand itself is one of the stronger potential leaders of the ASEAN community for agro- industry.
Along with basic agriculture, an important element of Thailand 1.0, already geared for take- off, are the cottage industries. These form the backbone of the OTOP ( One Tambon One Product) scheme. Once ridiculed by critics as a “basket case for basket makers,” the OTOP concept is now an impressive example of combining basic technologies with local initiatives, producing an amazing array of locally- developed and sourced products. Not only do the products have value in themselves, but also serve as a grass- roots training ground for technology and business skills. As with all types of business, some initiatives fail, but many others are achieving resounding success.
THAILAND 2.0: FOUNDATION STONE FOR ONWARD GROWTH
It was in the 1960s that Thailand’s industrialization really took off into sustained growth. Prior to that era, industrialization was mainly left to state enterprises and some royally- inspired pioneering ventures such as the Siam Cement Group. This was the era of the creation of the Board of Investment, which promoted import substitution industries, low- cost labor- intensive production, and extraction of natural resources. Labor needed to be brought in from the rural sector, given basic training, and set to work to supply export destinations. Education was limited, universities were few and elitist, and those students who could afford the best education, or received scholarships, studied aboard and returned home, often for civil service jobs or positions in newly- established multinational corporations. But fortunately not many Thai students remained abroad or emigrated, so whatever trained human resources were available stayed at home. Sons of a growing group of traders and entrepreneurs went overseas to gain knowledge which they subsequently put into practice in growing family firms, often joint ventures with foreign investors. This era of Thailand 2.0 lasted only for a few decades, as the onset of technical competitiveness pushed older work styles towards “rust belt” subsistence, and heralded the next stage of development.
THAILAND 3.0: WHERE WE ARE NOW
Globalization is enthusiastically embraced by some, but feared and resisted by others. Rather than substituting local products for imported ones, Thailand has had to consider what could best be done locally, for local consumption, what can be done locally for export, and what can best be imported from somewhere else where such products could be produced better, or more cheaply, or often both. Industrial establishments became more sophisticated, with larger workforces, higher emphasis on machines rather than manpower, and often foreign investment in control. While Thailand has resisted some of the consequences of these trends, including reluctance to accept foreign equity control and employment of foreign workers, internationalization trends have become inevitable. However, where business conditions are highly competitive or less capable of technological advance, local ownership can remain competitive and survive.
Meanwhile the education sector has boomed, whether in numbers of institutions, size of enrolments, variety of courses, and in some cases, even quality of instruction. With a plateauing in the demographic profile, it has been possible to absorb higher proportions of age groups within existing facilities. At the tertiary level, there has been a burgeoning of supply. But the massive increase in number of institutions can be misleading. Technical colleges and teacher training colleges have themselves graduated, turning themselves into degree- awarding universities instead of diploma- awarding training colleges, without commensurate upgrading of intellectual resources or product output quality. Whether in terms of education and training, or the efficiency, productivity or competiveness of enterprises, Thailand clearly needs to move in new directions. So here comes Thailand 4.0 to the rescue.
THAILAND 4.0: WHERE WE ( HOPE) WE ARE HEADING The grand design of Thailand 4.0 represents a combination of policy reorientation and trade- induced and investment- led transformation. The policies are supposed to promote ‘ smart enterprises’ with greater emphasis on local initiatives, working with Mekong Region countries and with ASEAN as a whole. Trade- induced transformation is to concentrate on demand rather than supply, value creation rather than mere value added, services above goods, and facilitation rather than regulation. Investment is to emphasize people and technology, both developed and transferred, with integrated infrastructure. Thailand 4.0 is to be an industrial base consisting of a new generation of industries: automotive, electronics, biotechnology, robotics, aerospace, biofuels and chemicals, and new age medical services, operating as a regional hub. To facilitate all this dynamic change, the public sector is to be restructured, the private sector re- energized and, above all, the “people sector” is to be “empowered”. Among reforms that are promised as part of the grand design are education reform and administrative reform. To suggest that all this has been strategized, in one form or another, several times before, and that it is merely “new wine in old bottles”, or else “old wine is new bottles” would be unduly cynical and skeptical. In Thailand’s present predicament, something needs to be done. It is better to do something rather than nothing. One cannot just carry on in the same old way. Technologies are changing all over the place: building, transport, communications, fuels, materials, manufacturing methods. But the ‘ soft skills’ of administration, education and most of all, political empowerment, have been left behind. Now is the time to catch up. Thailand 4.0 is yet another way of trying to do this. But where does Thailand stand in its capacity to undertake this ambitious program? Interim Constitution Section 44 says “just do it!” but how, and with what tools? THAILAND: EDUCATION, HUMAN CAPITAL, COMPETITIVENESS To do the job, you need the tools, and Thailand 4.0 tools require capable people achieving results throughout the economic spectrum. Recent alarm was expressed about Thailand’s education, arising from
publication of the OECD Program for International Student Assessment ( PISA), conducted in 2016. Thailand was ranked among 72 other countries, including Singapore, Vietnam, Malaysia and Indonesia. The test evaluated 15- year- olds in each country for abilities in mathematics, reading and science. Singapore performed spectacularly, best in the world, and Vietnam came 8th in rank. Malaysia was 45th, Thailand 54th and Indonesia 62nd. The score of Vietnam aroused particular comment, because the country is much less developed than regional leaders. Despite repeated attempts at educational reform, Thailand’s PISA results are discouraging ( see Table 1 for details).
On a broader front, the World Economic Forum Human Capital Index ranks 130 countries, including subdivision by age groups. The Index includes nine ASEAN countries, with Singapore placed at 13, Thailand at 48, and Vietnam at 68. While outpaced by Singapore, Thailand ranks favorably in ASEAN and, somewhat consolingly, is well ahead of Vietnam. ( see Table 2 for details).
What ultimately counts in the world is competitiveness. According to the World Economic Forum assessments in overall terms, Thailand fares fairly well. Admittedly, Singapore is out there in second place after Switzerland, but Thailand holds its own at 34th place, within the top quarter of countries worldwide, well ahead of other ASEAN countries, except Malaysia. Admittedly the education scores for Thailand are discouraging, at 86th for primary and 62nd for tertiary education, but they are better than Vietnam, whatever the PISA results may suggest. For Thailand, poor education is compensated by other factors. ( see Table 3 for details). So what is our conclusion? Basically, Thailand has a big challenge to bring Thailand 4.0 to successful achievement. We have heard a lot of rhetoric in the past, and the results have been at best modest. But human resource availability and quality need not hold Thailand back. Many Thais have achieved success in spite of, rather than due to their passage through Thailand’s imperfect educational system. However, first things first: of all the reforms that are needed, education must come on top of the list. Singapore has shown the way, and there is no reason why Thailand cannot achieve the same over time. However, plans must move from drawing- board to practical reality, and not fall by the wayside as in the past.
Christopher Bruton is Executive Director of Dataconsult. He can be contacted at chris@ dataconsult. co. th.