Thai service sector needs to prepare

Nithi Patarachoke, managing director of SCG Logistics Management, suggested that the best way to prepare human resources for the upcoming Asean Economic Community (AEC) would be to encourage more Thais to work overseas.

"Building the capability of workers would have to span from high-ranking officials to unskilled labour," he said.

Nithi was sharing his ideas at the "Free Flow of Service" seminar organised by Chulalongkorn University’s Sasin Graduate Institute of Business Administration, together with Thailand Management Association (TMA) and MBA Magazine.

SCG Group is one of the country’s leading conglomerates that has spent the past decade preparing for the AEC.

When all Asean nations open their doors, the AEC will have a combined population of 600 million, a gross domestic product of US$1.5 trillion (Bt47.27 trillion), $50 billion in foreign direct investment and 65 international tourists, ranking second globally next to France.

Nithi said the "middle-class" population was growing globally, with the largest proportion coming from Asean. According to a study in the Asia-Pacific region, this group is expected balloon from 28 per cent in 2009 to 54 per cent in 2020 and 66 per cent in 2030.

He went on to say that Thailand’s geographical positioning was the most advantageous, because it was close to India and China and could also access high-sea freight traffic in Malaysia. Though the Kingdom is lacking in efficient logistics cost management, with a ratio of 15 per cent to GDP compared with 8.3 per cent in the US, 10 per cent in Japan as well as the EU, it ranks third in Asean after Singapore and Malaysia. He added that Thai businesses should also take advantage of the Kingdom’s good road network that offers easy links to other Asean countries.

Nithi said that over the past decade, Thai firms would be offered many opportunities once the AEC single-market kicks off. However, the single market will also bring new challenges, particularly in terms of manpower. "We will lose talent to those who pay more," he said.

He explained that unskilled labour tended to move from countries where raw materials are based to production centres, while white-collar workers will move from production-based countries to those with a strong service sector. Hence, Thailand is likely to have an inflow of unskilled labour for Cambodia, Laos, Myanmar and Vietnam because it is considered a production- and service based country. Meanwhile, it might also lose professionals in some business areas to Singapore and Malaysia, which are even stronger in the service sector.

"Preparation is key for the service sector," Nithi said, adding that the best thing enterprises can do is understand customers’ tastes and requirements, as well as enhance language skills, take preventative measures for the loss of workforce and keep a constant watch on strengths and weaknesses.

"Of course, the impact from the AEC will not be felt overnight," he said.