SCG makes strong case for more R&D spending

Kan last week said that to grow the country through R&D, both the government and private sectors had to think in the same way. Many companies now realise the importance of R&D spending. Thailand’s R&D spending is about 0.02 per cent of the country’s gross domestic product (GDP), which is still low.

He said R&D spending by the private sector could strengthen companies’ businesses, and increase their returns. The benefit finally will return to the government through higher tax income. The government can then utilise the tax revenue for useful developmental projects, including R&D from state agencies.

"We [the private sector] have to change politicians’ mindset to recognise the importance of R&D spending, and shift to spending more on R&D. The government’s duty is to strengthen the private sector," he said.

Kan spoke of SCG as an example of a strong company that is able to pay taxes to the government through many ways. The company’s R&D spending for creating high value-added (HVA) products in the past years could increase its earnings. In 2009, for instance, the company’s sales were Bt240 billion and net profit Bt24 billion. It paid corporate income tax of Bt11.5 billion. The government also received value-added tax (VAT), and income tax from SCG employees. These tax revenues should be used fruitfully.

In 2011, SCG’s sales from HVA products accounted for 32 per cent of total sales of Bt360 billion. However, the innovative products contributed a net profit of about 50 per cent of the company’s total net profit.

Realising the importance of R&D, Kan said SCG grew its R&D spending every year. The figure for 2011 was Bt1.11 billion, while this year Bt2 billion has been allocated – an 80-per-cent increase from the previous year. The amount accounts for 0.5 per cent of the company’s expected sales. It also spends for improving and training its employees by providing scholarships and training courses at famous universities abroad.

This year, SCG has initiated to give scholarships to PhD students under the Royal Golden Jubilee PhD Programme operated by TRF. SCG had always wanted to collaborate with academic institutions by providing scholarships to researchers. The benefit of the cooperation is that the private sector can use the research commercially, he said.

Under the collaboration with TRF, Kan said both would give scholarships to 25 PhD students, five each year. SCG will support half of the total expenses for each scholarship, about Bt850,000. The PhD students will be committed to produce research projects in accordance with SCG’s requirements.

"The benefit of this model is that we can have good research and, at the same time, support the PhD students in completing their doctoral degrees. Their research will also meet the industry’s needs, and the works can be used commercially. The country will then have good human resources to help develop the country," he said.

SCG has the right to buy the intellectual property of the research projects from the PhD programme. The PhD graduates also can be recruited by the group.

SCG has the vision to become a sustainable business leader in Asean once the Asean Economic Community comes into effect in 2015. The company is expanding its businesses heavily in the region; most of them through acquisitions. All operations in this region will grow through innovative products.

"Without innovation, it is hard for a country to survive. The combination of university wisdom and industry experience will create smart R&D people," he said.

Amaret Bhumiratana, director of the Royal Golden Jubilee PhD programme, said Seagate Technology Thailand was the first private company that had entered into such a collaboration with TRF, followed by SCG. The fund is in talks with a number of companies such as Toyota, Michelin, PTT, Western Digital and Betagro for similar cooperation. If all can have agreements with TRF, it expects to fund 25 scholarships this year.