NESDC: High-tech transformation vital for Thailand's GDP growth

THURSDAY, MAY 23, 2024

Industry must transition quickly to meet demands of digital era, warns national economic planning agency

Thailand’s national economic planning agency has issued a stark warning that the country’s GDP growth will continue to trail the rest of ASEAN unless it transitions from a medium to a high-tech industrial economy.

The National Economic and Social Development Council (NESDC) said on Wednesday that without substantial change, Thailand’s economic growth will remain an outlier in the region.

NESDC secretary-general Danucha Pichayanan reported that Thailand’s GDP grew by 1.5% in the first quarter, driven by a 6.9% increase in private consumption and the service sector, during an interview on Krungthep Turakij’s “Deep Talk”.  

Exports rose by 2.5% and private investment by 4.6% in the same period.

Despite this growth, the NESDC has lowered its annual GDP growth projection from 2.2%-3.2% to 2-3%, citing risks from the ongoing US-China trade war and geopolitical conflicts.

Domestically, Danucha highlighted that Thai industrial productivity has fallen 18 months in a row, underscoring the need for transformation.

“Most Thai industries are mid-level with limited growth potential,” he said. “To maximise our capability, Thai industries must move to high-technology products and services, which are rare in Thailand will require further foreign investment.”

NESDC: High-tech transformation vital for Thailand\'s GDP growth

He noted that the government had introduced policies to promote new high-tech industries, including electric vehicle (EV) manufacturing, EV battery, upstream electronic manufacturing, and advanced chip manufacturing.

However, Thailand is still unable to make the computer chips essential for the digital era, he said.  

“A good example is the manufacture of hard disc drives, which Thailand used to export in huge quantities,” said Danucha. “However, as the technology advanced to solid state drives that require a controller chip, Thailand’s HDD industry has contracted drastically as manufacturers cannot produce this chip on their own.”

Transitioning to high-tech manufacturing will require knowledge and technology transfer, substantial investment, and workforce skill development, he added.

Educational institutes need to design curriculums and training courses based on industrial requirements, with a focus on advanced technology, he continued.

Upskilling and reskilling of Thai workers would benefit both workers in industry and agriculture, as the latter would be able to use modern agricultural techniques to maximise their output.

“Restructuring the industrial sector will require cooperation from both the private sector and the government, with the latter providing tax benefits, supporting subsidies, and measures to attract foreign investment," he said.