Thailand’s $45 Billion Leap to Industry 4.0

Focus: technology-driven economy
Somkid Jatusripitak, an economist and Thailand’s Deputy Prime Minister, has been busy as of late drumming up new business and investments for the country’s brash, new Eastern Economic Corridor (EEC) initiative.

The EEC is a massive 5,000 square miles stretching along the Gulf of Thailand from the province of Rayong to those of Chonburi, and Chachoengsao. Thailand’s intention is for the EEC to become a high-tech manufacturing hub (there’s even a smart city in the plans).

A similar, national mega-project from the 1980s catapulted Thailand into industrial leadership in the ASEAN (See: Maps). Thirty-five years on, however, Thailand, although still an industrial powerhouse in Asia ($400 billion GDP), has witnessed its GDP growing unspectacularly; its per capita GDP half what it should be; and its GDP growth rate sluggish at 3.7 percent. Most point to overdependence on manual labor and over-reliance on its seemingly inexhaustible trove of rich agricultural resources for its current plight.

Thailand needs all the help it can get. The prospect of an EEC success has the country’s leadership hoping that lightning will strike twice. Of course, the aid of some close friends like Japan and China are very much needed.

Thailand’s current status finds itself teetering on the edge of the dreaded middle- income trap, where wage inflation makes industries less competitive. Jatusripitak, along with most everyone else, blames the country for failing to upgrade technology and foster skilled workers.

Fortunately for Jatusripitak, 2018 opened with fresh promise. “Thailand’s GDP soared to a five-year high in Q1 of 2018. The Thai economy grew by 4.8 percent…surpassing predictions.” The surge has prompted a reassessment of its growth predictions for the year, forecasting 4.2- 4.7 percent. Also encouraging, the country’s first quarter exports rose by 11.3 percent, their highest level in seven years.

Good news enough for Jatusripitak to use during major talks with Japanese investors in Tokyo and his recently concluded Bangkok sales pitch to a task force of over 500 Chinese industrialists.

Call it: Thailand 4.0
To prime the investment pump, the Thai government has just authorized $45 billion in what the Nikkei Asian Review tabs a do-or-die leap to a technology-driven economy. Over $6 billion is slated for robotics and logistics upgrades.

A government slide presentation promoting the EEC lists a string of projects to be pursued: $1 billion for highways; $2.8 billion to expand ports; $6 billion to upgrade the U-Tapao International Airport; $6.7 billion to build railways, including one for high-speed trains; $12 billion for new cities and hospitals and $15 billion for industry.

In addition, the country has bent over backwards with tax breaks and incentives that fit neatly into automation and robotics, like “corporate tax exemptions up to 13 years for businesses using advanced technology and innovation, or conducting R&D activities; and import duty exemption for machines and raw materials.”

The EEC’s ten targeted industries: Next-gen automotive, intelligent electronics, tourism for high-income tourists and medical tourism, agriculture and biotechnology, food processing, robotics, logistics, and aviation, including biofuels and biochemicals.

According to Industry Minister Uttama Savanayana, the EEC project will be particularly kind towards robotics, even going so far as to encourage Thai businesses to adopt robots and robotics technologies into their manufacturing and production processes.

Another reason for increased robot automation is people, or lack thereof. “The National Economic and Social Development Board projects that Thailand’s workforce, those aged 15-59 years old, is expected to fall by about 6 million to 37 million.”

See also:
Thai Robotics & The Godfather’s Backstory
Thai robotics comes of age and the man who made it happen