The Pace of Thailand through the Year 2020 The Pace of Thailand

through the Year 2020

A presentation by

Chakramon Phasukavanich 20 May 2003

NESDB National Economic and Social Development Board

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Complexity of the World Global Economic Development

Navigating whitewater

Thailand’s Vision 2020 Where are we now?

Thailand’s dreams

Competitiveness agenda

Development platform

..Mirror our direction with complexity ..Mirror our direction with complexity of the world...of the world...

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Stages of Economic DevelopmentStages of Economic Development

1950 1960 1970 1980 1990 2000 2010 2020

ComparativeAdvantage

CompetitiveAdvantage

- Resources- Low-cost

- Innovation- Productivity

Growth

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Productivity depends on the value and efficiency of products and services.

Not what industries we compete, but how we compete.

Devaluation and lower costs reveals a lack of fundamental competitiveness

Sources of Prosperity…Sources of Prosperity…

Wealth of Wealth of NationNation

ProductivityProductivity

InnovativeCapacity

“Competitiveness”

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Competitiveness = ???Competitiveness = ???

• Is NOT about competition policy

• Is NOT about restructuring

• Is NOT about “choosing” industries

• Is NOT about competition policy

• Is NOT about restructuring

• Is NOT about “choosing” industries

• IS about Productivity • IS about Positioning• IS about Clustering• IS about Building

platforms for multiple industries

• IS about Strategy

• IS about Productivity • IS about Positioning• IS about Clustering• IS about Building

platforms for multiple industries

• IS about Strategy

“Is NOT” “Is”

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National AgendaNational Agenda

Grass rootEconomy

Grass rootEconomy

Global

LocalEconomic Social

Social CapitalSocial CapitalSocial CapitalSocial Capital

SustaiSustainablenableDeveloDevelopmentpment

SustaiSustainablenableDeveloDevelopmentpment

CompetitCompetitivenessivenessCompetitCompetitivenessiveness

“Tools for raising standard of living in Thailand”

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““Global Trends”Global Trends”

Economics & Finance

Geopolitics &Governance

Cultures &Societies

Values &Beliefs

Civilization &Infrastructure

EnvironmentScience

Technology

-Next wave in Energy -ICT revolution -Nano revolution in 3 science fields-Science = Business

-Asia, high potential growth -Venture capital rising-New business model in IT Era-Broader conflict, fragmented -Sole superpower

-Global Lifestyle-Changing status of women-Power of media-More complex society-Different syncretistic spirituality-The meta-values supportive of change

Source: What’s Next in Business Terrain

-Business leadsBusiness leads-Systematic thinkingSystematic thinking-Inadequate Infra.Inadequate Infra.-Climate changeClimate change-Better energy Better energy policiespolicies

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““Past global shifts”Past global shifts”

30,000 B.C.

1900

1960

2000

Agriculture AgeAgriculture Age

1840

Industrial AgeIndustrial AgeDigital Language

Oral Language

- Physics revolutionPhysics revolution- Higher productivityHigher productivity- PetrochemicalPetrochemicalDrawing Language

Written Language

Genetic code

Information AgeInformation Age

-GlobalizationGlobalization-ProductivityProductivity-New business New business modelmodel-Knowledge Knowledge economyeconomy- Mendel experimentMendel experiment

- Wave TechWave Tech- Resource-based - Resource-based productionproduction

5 : 15 : 1

390 : 1390 : 1

1000 : 11000 : 1

10 / 47““Things in what direction we are Things in what direction we are moving”moving”

2000

2002

2004

2006

2008

2010

2012

2020

ScientificRevolution

Biology

Physic-Cosmological constant

Chemistry

IT/ Knowledge divide

New Productivityby Knowledge

Climate change

Global Labor for Services

Geo-Politico-Economic reshape

Global Lifestyle

33rdrd Shift Shift

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Economic paradigm shiftsEconomic paradigm shifts

Resource-based Resource-based GrowthGrowth

Innovation-driven Innovation-driven GrowthGrowth

Scarcity of resources Scarcity of resources & diminishing returns& diminishing returns

Abundant of Abundant of knowledge and knowledge and increasing returnsincreasing returns

Perfecting the known Perfecting the known in stable environmentin stable environment

Imperfectly seizing Imperfectly seizing the unknown in the the unknown in the era of discontinuous era of discontinuous changechange

YesterdayYesterday Today & TomorrowToday & Tomorrow

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““Global Scenario to 2020”Global Scenario to 2020”

Navigating Niches

Barriers

CommonWealth

CapitalWisdom

Global IntegrationGlobal IntegrationLess

Mar

ket

Do

min

atio

nM

arke

t D

om

inat

ion

LessMore

More

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Trends of Economic DevelopmentTrends of Economic Development

1950 1960 1970 1980 1990 2000 2010 2020

ComparativeAdvantage

CompetitiveAdvantage

AdaptiveAdvantage

Understanding marketplaceUnderstanding marketplace

Developing productsDeveloping products

Understanding the worldUnderstanding the world

GrowthGrowth

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Wind of Change...Wind of Change...

"It is not the strongest of the species

that survives, nor the most intelligent;

it is the one that is most adaptable to

change.“

Charles Robert Darwin (1809-82)

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Key success factors in KBE...Key success factors in KBE...• Focus on Fundamentals

– Quality of government bureaucracy– Quality of people– Quality of physical and technology

infrastructure• Looking Outward

– International orientation• Respond and Reinvent

– Turning disadvantage to strength – Turning danger to opportunity

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Global Global TrendsTrends

InternalInternalAssessmentAssessment

Thailand’sThailand’sDreamsDreams

““Visioning Thailand”Visioning Thailand”

“Outside-In” “Inside-Out”

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Thai Thai EconomyEconomy Strategic Gap I

“Get out off the Crisis”

KnowledgeEconomy

Next Level of Global Competition

Current Level of Global Competition

Economic Crisis

Strategic Gap II“Our Competitive Position in the New Economy”

Where are we now?Where are we now?

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Sources : 1. IMD survey data of 49 countries 2. WEF survey data of 75 countries

Where are we now?Where are we now?Rank of Thailand’s CompetitivenessRank of Thailand’s Competitiveness

31

41

36 3538

34

1821

30 3033 31

2540 2541 2542 2543 2544 25455050

4040

3030

2020

1010

11

WEFWEF

IMDIMD

1613 14 13

New IMDNew IMD

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Determinants of CompetitivenessDeterminants of Competitiveness by IMDby IMD

Source: IMD World Competitiveness Yearbook, 2002

Where are we now?Where are we now?

2540 2541 2542 2543 2544 2545

Overall

Economic

Government

Business

Infra

5050

4040

3030

2020

1010

11

38

3432

27

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4 (4)3 (7)

21 (23)27 (30)31 (33)61 (48)67 (63)

SingaporeTaiwanS.KoreaMalaysiaTHAILANDPhilippinesIndoneasia

CountryCountry OverallOverall

17 (18)2 (4)

18 (9)26 (22)41 (39)52 (40)65 (61)

TechnologyTechnology

7 (6)27 (24)32 (43)33 (38)39 (41)70 (63)77 (65)

Govern’tGovern’t

1 (1)6 (15)10 (8)

20 (20)11 (16)32 (28)53 (41)

EconomicEconomicEnvironmentEnvironment

Source : The Global Competitiveness Report, 2002 ( ) : Rank in 2001

WEF Ranking in 2002WEF Ranking in 2002

Compare to others…Compare to others…

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““Our stocksOur stocks””

FinancialFinancialCapitalCapital

PhysicalPhysicalCapitalCapital

HumanHumanCapitalCapital

SocialSocialCapitalCapital

-The most The most important factor important factor in KBEin KBE

-Supporting factorSupporting factorthat was underutilizedthat was underutilized

-Natural resources Natural resources less criticalless critical-Technology infra. = Technology infra. = investing for futureinvesting for future

-Triumph the Triumph the capitalism worldcapitalism world

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Economic powerEconomic power

Financial Financial CapitalCapital

• Effectiveness of

direct taxation and

collection

• High saving rate

StrengthsStrengths WeaknessesWeaknesses• Low access to finance for business

• Rely on factors of production (capital and technology) from abroad

• Depend on 3 major export markets (USA EU Japan)

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Investment for future...Investment for future...

Physical Physical CapitalCapital

StrengthsStrengths WeaknessesWeaknesses

• Bio-diversity • Availability of Infrastructure (comparing with other competitor countries)

• Limited accessibility to technology

• Limited value added R&D

• Inefficient utilisation of ICT infrastructure

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..To surf knowledge economy.....To surf knowledge economy...

Human Human CapitalCapital

StrengthsStrengths WeaknessesWeaknesses

• Abundant workforce

• Wages and fringe benefit for workers are good

• Low mobility of skilled labour

• Poorly educated workers/ high unemployment rate

of youth workforce• Lack of skilled labor/ low labor productivity

• No incentive for learning new technology/ creativity

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Low leveraged supporting factorLow leveraged supporting factor

Social Social CapitalCapital

StrengthsStrengths WeaknessesWeaknesses

• Low cost of living

• Non-discrimination

• Unique culture and tacit knowledge

• Inadequate health care service

• High openness without internal immunity

• Highly expanding urbanization resulting in social and environmental problems

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“Efforts and

courage are not

enough without

purpose and

direction.”

John F. Kennedy

What direction we are heading…What direction we are heading…

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Dare to Dream…Dare to Dream…“Imagination will carry us

to worlds that never were.

But without it we go

nowhere.”

Carl Sagan

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whole new world

3.3. World Leader World Leader in Niche Marketsin Niche Markets

6.6. Society of Society of Cultural Pride with Cultural Pride with

Global SenseGlobal Sense

2.2. Active Active International International

PlayerPlayer

5.5. EntrepreneurialEntrepreneurialSocietySociety

7.7. Country of Country of Decent EnvironDecent Environ..

for Livingfor Living

1.1. Economic Economic DevelopmentDevelopment

PlatformPlatform

4.4. Innovative Innovative Nation with Wisdom Nation with Wisdom andand Learning BaseLearning Base

Thailand’s DreamsThailand’s Dreams

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ProductiveProductiveBusinessBusiness

SectorSector

Fair Fair IncomeIncome

DistributionDistribution

SustainSustainEconomicEconomic

GrowthGrowth

1. Economic Development 1. Economic Development PlatformPlatform

-Dual-Track ApproachDual-Track Approach-Global reach, Local linkGlobal reach, Local link-Sound economic Sound economic

foundation and foundation and

environmentenvironment-MacroeconomicMacroeconomic-InfrastructureInfrastructure-LegalLegal

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2. Active International Player2. Active International Player

Country LevelCountry Level

Business LevelBusiness Level

encouraging cooperation to balancing power of the existing world order -Global : WTO, Strategic Partners-Continental : ACD, APEC, Asian Fund -Regional : ASEAN-Neighbor : GMS, IMT-GT

linking investment and production in the region-Thailand Overseas Investment

31 / 473. World Leader in Niche 3. World Leader in Niche MarketMarket• Kitchen of the World : Ready-to-Eat

Food, Spicy Food, Tropical Fruits / Finest and Healthiest Cuisine

• World Health Service Centre : Alternative Medical Care & Herbal Products

• Detroit of Asia: Pick Up Production

• Asia Tourism Capital : Regional Tourism, Aviation Transport Hub, Convention and Exhibition Centre

• Asia Tropical Fashion : Finest Hand-made Fabric

32 / 473. World Leader in Niche 3. World Leader in Niche MarketMarket• World Graphic Design and Animation Centre

: Regional Centre of Design & Technology Services

• World Furniture Mart : Finest Home Decoration/ Wooden Furniture & Handicrafts

• World Hospitality International School

• World Leader in Rubber and Rubber products : Automobile tires

33 / 474. 4. Innovative Nation with Innovative Nation with Wisdom and Learning Base Wisdom and Learning Base

• Continuous investment in R&D and technology and extending the frontiers of knowledge

• Well environment for attracting and stimulating innovation

• High accessibility to knowledge and information across the nation

• Fluent English as a second language

• Possessing strong learning basis :- Passion for reading, Better accessibility to cheap but good

books

- Thinking school with innovation movement

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5. Entrepreneurial Society5. Entrepreneurial Society

• Sound environment for business formation and development : Capital, Regulations

• Commercial oriented production

• High start-up business rate

• Venture Capital takes financial support role

• Fair competition arena

35 / 47 6. 6. Society of Cultural Society of Cultural Pride with Global SensePride with Global Sense

• Appreciate our cultural identity

• Willingness to learn and share other cultures

• Strong social institutions

• Peaceful and non-discriminatory society

36 / 47 7. 7. Country of Decent Country of Decent Environment for LivingEnvironment for Living

• The best place to live and raise the family

• Thai citizen and businesses are well

conscious of environment and natural

resources preservation

• Efficient mechanism for managing and

utilizing natural resources

• Effective policies of sustainability

regulations

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An old quote...An old quote...

"Every great achievement was

once considered impossible."

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Dare to Do…Dare to Do…"Vision without action is merely a dream.

Action without vision just passes the time.

Vision with action can change the world."

Joel Barker

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What have we done?What have we done?

2000

2010

2020

2002

2003

National National competitiveness competitiveness committeecommittee

2004

-7 Dreams-Restructuring Budget-PM meets Private

Michael Porter’s studyMichael Porter’s study

Institute of Institute of CompetitiveCompetitiveStrategyStrategy

-Foundation for competitiveness -Cluster strategy

3 Strategic Modules3 Strategic Modules

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Strategic ApproachStrategic ApproachDeliverables

• Vision and Goals and high level Targets

• Strategies and initiatives• Implementation roadmap• Detailed Target and measurement

• Implementation Master Plan• Implementation structure and

system to monitor implementation

• Progress/result measured• Additional initiatives emerged• Implementation making impact

I. Translate Dream to Vision and Goals

II. Develop strategy and initiatives

III. Implementation setup

V. Monitor and feedback

Qu

ick

win

s

• Initiatives being implementedIV. Implement

Phase

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Competitiveness BlueprintCompetitiveness BlueprintI. Translate Dream

to Vision and Goals

II. Develop strategy and initiatives

III. Implementation setup

Develop dream

Define Vision and Goals

Conduct analysis on

pending issues

Generate gap closure options

Review existing strategy

Develop integrated Implementation Master

Plan and Targets

Monitor implementationIdentify constraints

and solutionsMobilize resources

for solutions

Identify governmen

t champions

Define Key

Success

Factors

Develop structure to manage overall implementation

IV. Implement Implement initiatives

Define development framework Develop

initiative action plan and targets

Review external factors

Benchmark

Review internal capabilities

Co

mm

un

icat

ion

Sim

ula

tio

n m

od

elin

g

Develop strategy

Develop integrated strategy

Develop initiatives

Review ongoing/ planned

initiatives

Draft overall implementatio

n roadmap

Revise Vision and Goals

Set measurement

and target

Identify and secure commitment from

‘HOST’

Define implementation structure

Mobilize team

/resourcesDefine

tools to motivate

team

Handover to team

Build public commitment

Revise Implementation Master Plan and TargetMonitor team

performance

V. Monitor and feedback

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Microeconomic Foundations of Microeconomic Foundations of

DevelopmentDevelopment

Sophistication of Sophistication of

Company Operations Company Operations

and Strategyand Strategy

Sophistication of Sophistication of

Company Operations Company Operations

and Strategyand Strategy

Quality of the Quality of the

Microeconomic Microeconomic

Business EnvironmentBusiness Environment

Quality of the Quality of the

Microeconomic Microeconomic

Business EnvironmentBusiness Environment

Macroeconomic, Political, and legal Context Macroeconomic, Political, and legal Context

for Developmentfor Development

Macroeconomic, Political, and legal Context Macroeconomic, Political, and legal Context

for Developmentfor Development

Growing the forest…Growing the forest…

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Competitiveness Agenda 2003Competitiveness Agenda 2003

• Upgrade the Business Environment

• Decentralize More of Economic Policy to

the Regional Level

• Activate Cluster Development

• Redefine the Roles of Business and

Government

• Transform Company Strategies

• Lead a Cross-National Strategy

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Dare to Differ…Dare to Differ…

Think...

““Think the Unthinkable”Think the Unthinkable”

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The parking meter A journalist

The ball point A sculptor

The vacuum cleaner

A bridge builder

The morse code The painter

Pop Quiz…Pop Quiz…

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Development platformDevelopment platform

Government

BusinessSector

People

EducationSector

-Fully creating the environmentfor innovation movement

-Value creation-Use of knowledge and best practice-Innovation & Quality management-Focused on markets and investment in productivity

-Training for employability-Cultivate skill

-Employ an innovation mindset-Learning differently-not just qualifications, but a questioning mind, passion and drive-not just leaders, but every level

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• Cooperate for clustering

• Go competition

• Think outside-in and globally

•Play an proactive role in development

• Value creation

• Use of knowledge and best practice

• Innovation & quality management

• Opportunities acquirer

• Employ an innovative mindset

• Crave the questioning mind, passion, and drive

• Learn differently

•Learn

•Relearn

•Unlearn

IndividualIndividual BusinessBusiness AssociateAssociate

“People who fail not because of crises... but because they run out of ideas.”

Cruise through the knowledge Cruise through the knowledge economy...economy...

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"The important

thing is not to stop

questioning."

Albert Einstein

Any Question?Any Question?

Think Economicand Social Strategy,Think NESDB.

Think Economicand Social Strategy,Think NESDB.

Further information, Please visit our website : www.nesdb.go.th