Southeast Asia’s second-largest economy is still in the rut. The May numbers unveiled by the Bank of Thailand show a rise of 1.3% from April for its consumption index, but a 0.5% slip in private investment.
Additionally, domestic demand and exports, Thailand’s two main growth drivers, are still lacking behind expectations. Exports fell in 2013 and 2014, and the numbers for this year are not looking good, says the Thai National Shippers’ Council
Exports, which account for more than 60% of the Thai economy, slipped for the fifth month in a row in May, and by more than expected. The central bank expects a third year of contraction.
The automobile industry especially took a hard hit. Domestic car sales dropped 18.3% in May year-on-year, while automobile production fell 8.8% according to the Federation of Thai Industries.
Meanwhile, production of television sets plunged 86% and hard drive output dropped nearly 20% in May from a year earlier.
High-Tech: The Solution for a Weak Thai Economy?
So the trend is clear; Thailand has lost its competitiveness in many industries and the government is alarmed.
Deputy Prime Minister Pridiyathorn Devakula, who spoke at a seminar titled “Thailand: A Regional Trading and Modern Industry Hub,” believes that it is time for Thailand to enter its “third wave” of its economic development. The mission? To uplift Thailand to become “a trading nation with competitive modern industries”.
To set out on that goal, the BOI (Board of Investment) revamped its investment packages to promote and attract modern and high-value added industries, such as aerospace, nano-technology, biotechnology, and medical devices.
Pridiyathorn said that it is time for Thailand to move up from automotive to aerospace industries, from electrical appliances to “Internet of Things” products; and from food processing to medical foods.
And Thailand is making good progress in that direction, doubling its expectation of getting about 100 modern-industry projects approved during the first half of this year — the BOI approved 1,094 projects valued at 145 billion baht (US$4.3 billion), of which 216 are in modern industries.
Modern-industry projects approved range from specialty materials and eco-friendly products; digital-economy projects; electronics projects; human-resource development and regional training centers; science, technology and innovation projects; medical products; and automotive projects, such as engine parts.
These results show that investors still have confidence in Thailand and that the country’s pivoting strategy towards modern industries is being taken up well. Pridiyathorn is optimistic and hopes, “This can be the third wave of what we call modern industries.”