SCG ups expense to 1% of sales as it cements support for R&D

Employing 400 researchers and product developers, SCG is expected to be a key driver in achieving the goal of Bt130 billion in national R&D expense within two years in line with the 11th National Economic and Social Development Plan.

Kan Trakulhoon, president and chief executive officer, said yesterday he believes the 1 per cent milestone would be a key trigger point in lifting the country out of the middle-income trap. With the government’s effort, the private sector would be stronger financially and more competitive.

Kan was delivering the keynote address at the CEO Innovation Forum organised by the Science and Technology Ministry, Bangkok Bank and SCG.

Over nine years, SCG has shifted its focus to moving up the value-added chain by innovating through intellectual property development and management.

Last year SCG spent Bt2.7 billion on R&D, nearly 1 per cent of sales, while this year the company has earmarked Bt4.89 billion, equivalent to 1 per cent of group sales.

Kosit Panpiemras, executive chairman of Bangkok Bank, said that besides the importance of science and technology for the economy, government input was also needed to help bridge the communications gap between small- and medium-sized enterprises and academics.

“Thai conglomerates are no worry, but I’m quite concerned about SMEs building their business with R&D, as they lack knowledge and funds,” he said.

“To survive in this volatile economy, the supply side, which includes local investors and companies, need to make a difference and create value with knowledge and experience. Another area is marketing strategy to overcome new challenges,” he said.

 

More choices in AEC era 

Once the Asean Economic Community (AEC) is in place, the country cannot rely on the demand side, which mainly comes from foreign direct investment.

“Thailand might become less attractive to foreign investors after the AEC comes into being, as there will be more choices to invest in the region,” he added.

The Science and Technology Ministry has set an ambitious goal of convincing the private sector to co-invest Bt130 billion in research and development for innovation, equivalent to 1 per cent of GDP, next year.

“The investment in R&D from the public sector alone is not enough, private participation through public-private partnerships or ‘PPP’ is also needed to co-create an innovation society. It’s the right time to make a change,” said Pichet Durongkaveroj, the science and technology minister.

Based on the forecast of Bt13 trillion GDP this year, combined R&D investment via PPP should be Bt130 billion, he said.

R&D investment was important for the future, so the ministry has come up with the “Talent Mobility” policy to encourage the private sector to focus more on R&D for innovation. 

The Cabinet last month approved this policy, which includes incentives that allow firms to deduct up to 300 per cent of their R&D expenses from their corporate income taxes.

“We want to leave the middle-income trap and become a developed country,” he said.

This strategy was part of the transformation of the country to an innovation-driven economy, he said.

Kitipong Promwong, deputy secretary-general of the National Science Technology and Innovation Policy Office, said that last year, total R&D investment was 0.5 per cent of GDP, while this year it was expected to reach 0.7 per cent. In 2013, R&D investment surged to Bt57 billion, or 0.47 per cent of GDP, from Bt20 billion or 0.37 per cent of GDP in 2004.

Of total R&D investment last year, 60 per cent came from the private sector, equivalent to Bt26 billion, mainly from key industries including chemicals, food and beverages, petroleum research and development services and mechanics and equipment.