The Hu­man Fac­tor in Thai­land 4.0

Thai-American Business (T-AB) Magazine - - Content - Writ­ten by: Christo­pher F. Bru­ton

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.

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