Thailand must carve out niche in service sector
THAILAND should turn its focus to the service sector to drive economic growth over the next few decades while reducing dependence on manufacturing and heavy industries, according to Pongsak Hoontrakul, author of a new book on Thai and Asian economic transformation.
In his opinion, the country’s competitive advantages in tourism, medical and other service sectors can be further developed to take on new challenges resulting from the digital economy and increased global economic uncertainties.
In his book, entitled “Economic Transformation and Business Opportunities in Asia”, Pongsak provides unique perspectives on emerging global trends by linking economic development theories with investment and business strategies with practical case studies.
The book, published by Palgrave Macmillan of New York, also argues that the different pace of economic transformation in Asia means different levels of prosperity and an emerging middle class.
The Lewis Turning Point (LTP) is also used to give insights into the dynamic of a disruptive and uncertain world.
Pongsak said Thailand has already passed its “golden era” in terms of abundant cheap labour from the countryside as evidenced by higher wages and indigenous labour shortages.
Uphill task
The country will face an uphill task if it aims to excel in engineering and cutting-edge technology fields, but it will likely succeed in nurturing innovative service sectors, especially those concerning hospitality, healthcare, medicine and other areas.
Regarding the government’s ‘Thailand 4.0’ initiative, he said the policy is good but cautioned that a widespread adoption of automation, robotics, and artificial intelligence will lead to less jobs which will in turn hurt the economy in terms of domestic consumption and investment. The digital economy tends to promote capital-intensive investment but creates few jobs so there will be economic and social issues resulting from an uneven distribution of wealth.
As a result, the country should consider an alternative route with focus on innovative service sectors which tend to create a lot of jobs while using digital and related technologies to further enhance the competitiveness of various service sectors.
The healthcare sector, for example, can be developed to ease the fiscal burden which will rise as a result of Thailand’s ageing society that is entering an advanced stage.
About 20 per cent of the entire population will soon be aged 60 and above.
In addition to serving the domestic population, the country’s healthcare system, facilitated by advanced digital, telecom and other technologies, can also serve foreigners with potentially lucrative economic returns.
“Digital and other modern technologies can get rid of many inefficiencies in Thai hospitals nationwide. Then, we can develop the entire system to also tap business opportunities in Asia’s healthcare and longevity economy,” he said.
According to Pongsak’s book, many Asian economies have advanced while their populations age so there is the so-called “longevity dividend” which has an enormous economic value chain based on the pursuit of health and quality of life.
“The global market for the elderly is worth US$15 trillion for pharmaceuticals and healthcare mainly for chronic and non-communicable diseases,” he wrote.
The book also sheds light on the crucial demographic trends in Asia, digitalisation rates, consumer preferences and levels of sophistication which vary across Asian countries.
Vanity capital, longevity and leisure economies offer new niches to be developed.
On China, India and other Asean countries, the book said governments are attempting to create more jobs and open up new frontiers for more sustainable economic growth by pursuing integration of Asian and European interests and promotion of low-carbon and related businesses as well as the digital economy.
