Innovation is a major driver of growth and competition, but also a key disrupter. With the Thai government’s newest economic model ‘Thailand 4.0’ designed to use innovation to drive the country’s next phase of development, companies must effectively manage the disruption created.
The 20-year strategic plan focuses on addressing the country’s productivity issues and reduce income and development disparities. Representing a combination of promoting industrial transformation and establishing an economic corridor in eastern Thailand, the new policies will alter the Thai economy, creating an economic model based on creativity, new technology, innovation and superior services to improve quality of life.
Asia continues to be the major driving force for global economic growth, and Thailand’s development provides tremendous opportunities. Building upon the Thailand 1.0 (Agriculture Focus), Thailand 2.0 (Light Industries Focus), Thailand 3.0 (Heavy Industries Focus), the Thailand 4.0 focuses on ten newly targeted industries that will serve as the country’s new and more sustainable growth engines. These industries are broken into:
The first S-curve of:
- Agriculture and Biotechnology
- Smart Electronics
- Affluent Medical and Wellness Tourism
- Next-Generation Automotive
- Food for the future
And the New S-curve industries of:
- Digital Economy
- Medical Hub
- Automation and Robotics
- Aviation and Logistic
As well as both the public and private sectors joining together to enhance its technological capabilities and language competencies, it’s also strengthening Thailand to become the preferred investment country in the region. To attract global investors, the Thai government has granted tax incentives in many of the new S-curve industries and investor-friendly regulations in the Eastern Economic Corridor (EEC) area. This has seen encouraging growth.
Foreign Investments / Application in 10 S-Curve table below summarises the uplift in investment.
(Credit: Thailand Investment Review)
This all positive, however, Thailand’s new innovation-driven industry, as mentioned, is disrupting many sectors and organisations. The four critical disruptions are:
- A massive rise in data volumes, computational power and connectivity, especially new low-power wide-area networks.
- The emergence of analytics and business-intelligence capabilities.
- New forms of human-machine interaction, such as touch interfaces and augmented-reality systems.
- Improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing.
To manage these disruptions and survive, companies must continue to focus on their digital transformation journeys. A long term commitment to a culture of innovation must be established, with transformation at the core of their business plans. To do this, companies must implement the following:
- Promote research and development and innovations by building teams and ideas for innovation. For example, the Industry Ministry recently established the Industrial Design Centre to provide a design consultancy to manufacturers.
- Significant adjustment in the educational system, so people are trained with the right skills they need to be future-ready.
- Establish a work culture built on reskilling and upskilling employees to ensure resilience under a long-term plan.
- With automation and rapidly changing required skills affecting the labour market, companies need to look at flexible work models, search overseas, and allow part-time work to find talent with the right skills. For example, as electric vehicles are likely to be a “disrupter” of the current automobile and auto-parts sector, the government is focused on promoting the aerospace and medical equipment industries and encouraging parts-makers to shift into these more promising industries.
- Have the ability to tap into the pool of talent and capitalise on data analytics
- Be open, collaborative, creative and sharing, with continued improvement.
It’s excellent that Thailand is actively working on its transition into an increasingly digitalised world. Still, as it moves further into Thailand 4.0, the country will need to upgrade its economy and elicit further foreign direct investment. However, this will only happen if organisations effectively manage technological and digital disruption to support Thailand with its new economic model successfully.
About David Ng
David is the Business Development Director and Head of Thailand for Lim-Loges & Masters. He supports clients with their growth agenda in Thailand’s expanding and competitive market, including Vietnam, Myanmar and Cambodia, and across Indochina. With over 24 years’ experience in developing new business prospects in the industrial sector for leading global organisations, his particular strength lies in his ability to simplify work processes, strengthen relationships, create development opportunities and implement proven innovation.
Business Development Director
& Head of Thailand
Lim-Loges & Masters
m: +66 659 453 307 (Thailand)
Line: + 65 91832963 / Whatsapp: +65 91832963