To: Course instructor of SOSC219
From: Peter
Date: May 15, 2002
Subject:
Technology Development in Thailand
Thailand was one of the few countries in Asia never to be colonized. Traditionally, Thailand was an agricultural country, but since 1960, it has started and successfully developed a sizeable industrial base over the years. Diversification has been a key to Thailand economic development. In agriculture, a variety of cash crops such as maize and sugar have become important besides growing rice. In manufacturing, industrialization was increasingly based on labour-intensive manufactures such as textiles and garments, and has continued to diversify with automobiles, electrical appliances and so on.
Three
major features can be accompanied for Thailand’s industrialization, according
to Krongkaew (1995). First, many of the manufactured exports were produced by
foreign firms operating in Thailand. The spectacular growth of manufactured
exports has used more advanced technology and introduced new products. Second,
capital investment, mainly from domestic sources, has been channeled into a wide
variety of industrial, agricultural and service ventures. Third, relatively low
rates of inflation have also accompanied industrialization.
There are various channels for acquisition of technology, such as foreign direct investment (FDI), licensing, subcontracting, reverse engineering and so on. In Thailand, the acquisition of technology is mainly based on FDI, joint venture and import of capital goods.
Thailand has encouraged foreign investment and offered a number of attractive features, such as low wages, favourable attitudes the private sector and a strongly growing domestic market. FDI increased steadily from $45 million in 1970 to $2.5 billion in 1985. (Krongkaew, 1995) The manufacturing sector has been the main recipient of FDI. Manufactures of electrical appliance, chemical and petroleum products, and transport-equipment industries have received substantial foreign investment. This has contributed to the diversification of the country’s industrial structure. The most important source of FDI during the 1960s was from the United States, and the investment was channeled especially into mineral resources and manufacturing. There was also some Japanese investment during the 1960s, but the main expansion came in the 1970s, largely in import-substitution manufacturing industries.
Japan has also invested heavily in Thailand through the transfer of know-how that occurs in Thai-Japanese joint ventures and product licensing agreements. Many private Japanese firms sent Thai employees for training in Thailand and in Japan up to one or two years. An example of the transfer of know-how is the presence of Japanese consulting and construction firms that operate in Thailand. The project itself may be a form of investment since there are usually high standards enforced that act as a form training and transfer of technical and managerial know-how. However, Brimble et al (1994) point out that many foreign subsidiaries and joint-venture firms relied on their parent firms to carry out various innovative and acquisitive activities abroad, in which they tended to perform somewhat poorly in innovative and acquisitive capabilities compared with the average Thai firms.
Technology
transfer is also embodied in capital goods, machinery, tools and equipment.
There are capital-intensive industries where products include automobile
engines, plant and equipment used by production, construction and other
industries. Thailand imports of capital goods have been increasing at a
progressive rate since the beginning of the 1980s. This has accumulated the
national stock of hardware technology for an intake of more technology transfer.
It is known from Japan’s industrialization that small- and medium- enterprises have kept up with rapid technological advances and thus have maintained their importance in the national economy. Thailand government is well aware of the importance of small- and medium-scale industries as sources of income and employment generation. The potential of these industries has been acknowledged, but investment promotion programmes received limited supporting services and technical assistance. Infrastructure facilities and financial assistance remain inadequate. The government’s current endeavour to achieve growth with stability involving a more balanced distribution of economic benefits and welfare calls for a more conducive environment for the promotion of small-scale enterprises.
In accordance with promotion of development, Thailand government considers its main functions to lie in four tasks. First, it provides and manages an efficient physical and technological infrastructure for industrial development. Second, it removes the shortages of manpower in the short run and the building up of a sufficient pool of adequately trained human resources in the long run. Third, it broadens the industry-related technological and scientific basis through increasing public and private research and development expenditures. Fourth, it promotes private industries through a streamlining rules and regulations as well as encouraging the private sector to actively cooperate with the government in improving the country’s infrastructure.
Another
important issue on technology diffusion is the intellectual property rights. The
international standards regarding the protection of intellectual property in
Thailand are changing rapidly in the face of emerging technologies and the
increasing globalization of world trade. Revising Thailand’s intellectual
property laws is necessary to support the competitiveness of Thailand industries
and as a trading nation, to keep pace with the international community. Also,
given Thailand’s commitment to a strong and comprehensive intellectual
property rights’ regime, a solid foundation exists to encourage local research
and development, not just reverse engineering or copying. This will serve the
country’s needs over the long term as the economy further diversifies
manufacturing into higher technologies.
Research
and Development (R&D)
Since R&D needs a strong commitment as well as political will, such efforts need huge financial support from the government. However, Thailand’s expenditure on R&D is inadequate, resulting in a lack of training, learning and discovering new knowledge, which directly limit access to new technology.
Regarding the lack of competent manpower, especially in the fields of science, technology and engineering, the government has opened more ways to private universities since the beginning of the 1980s. Also, several science and technology institutions have also set up and some of them will be briefly introduced below.
Thailand Institute of Science and Technology Research (TISTR). Its main function is to initiate and conduct research and provide scientific and technological services to state agencies and private enterprises for the country’s economic and social development. Some research and development of TISTR include solid fuel industrial waste, prefabricated wall for toilet to save time and construction cost and water purifier and membrane production technology. TISTR also provides research, engineering consultancy and testing services to both the public and private sectors.
Department of Science Service (DSS). It is the government’s central laboratory. It provides chemical, physical and biological analysis services to governmental and private organizations, and carries out research works on the utilization of the nation’s natural resources and industrial wastes for economic benefits. DSS’s activities are mainly in analysis and testing services, industrial research, science and technology information services and tertiary education.
The Thailand Research Fund (TRF). It was establish in 1992 in order to support research in the areas of science and technology, social science, policy research and other applied research. The rationale for establishment of the TRF is that Thailand has not been doing sufficient research to prepare itself for future. Therefore, it is necessary to operate a fund to promote research continuously and efficiently with the aim of making a significant impact on society.
The
Ministry of Industry (MOI). It is indirectly involved in S&T policy and
development, but is empowered to grant factory licenses and to restrict the
construction or expansion of factories in accordance with the status of the
competitiveness of domestic industries. However, in recent years the MOI has
become more liberal and very few industries are now prohibited from establishing
or expanding factories. The MOI provides managerial and technical assistance to
small-scale industries by involving extension work and training.
Analysis of Thailand’s development pattern show a persistent under-investment in human capital development. (Krongkaew, 1995) There are insufficient linkages between the private sector users and the public sector producers of S&T manpower, both quantitatively and qualitatively. Therefore, there are serious manpower shortages, especially in the areas of skilled technicians and engineers.
In Thailand there are currently acute shortages in some fields, such as material sciences, electronics and information technology and a serious lack of experts. However, there are excess suppliers of some types of technicians due to mismatches, the high expectations of job seekers, imperfect labour markets and inadequate on-the-job training to compensate for inability of educational institutions to supply S&T manpower in sufficient quantities and skills.
In the education institutions, there is also a higher proportion of students in non-S&T fields, showing the need to allow market factors to play a greater role in incentives and patterns of remunerations.
Thailand
government has implemented some measures to development S&T manpower. First,
to accelerate production of engineers, scientists, mathematicians and
technologists in areas with strong demand, it encourages public educational
institutions to spend up manpower production in shortage fields. Second, it
upgrades the status of technicians and skilled craftsmen to attract capable
students in order to accelerate production of technicians and skilled workers in
areas of shortage. Third, it send more students abroad to take master and
doctoral courses at leading universities to accelerate the production of
university professors and researchers. Fourth, to place high priority on
training, a system of public and private sector cooperation in training is
established and private sector is encouraged to organize their own training
programs by setting up a skill development fund. Finally, the administrative and
operational system of research organizations improved for better working
environment especially for R&D to retain high quality personnel in the
public sector.
Although Thailand government has offered various incentives and financial support for R& activities in industrial enterprises, these have not been effective. First of all, the policies are mostly aimed at small- and medium- sized enterprises, which usually do not pose sufficient in-house technological capabilities to engage in R&D. Also, most firms need recreation and assimilation of knowledge from elsewhere (especially foreign sources), more than new technical knowledge. Besides, many firms are not aware of the importance of in-house technology, not only R&D.
There
are also some challenges to Thailand’s sustained industrial development. The
severe shortage of technical manpower remains to be solved. Also, Thailand will
require a substantial upgrading of its industries, but the country may not have
enough skilled manpower to serve higher knowledge-based work. Besides, the
access to advanced know-now is increasingly constrained by both the complexity
and size of the technology itself.
Brimble and Sripaipan (1994), Science and Technology issues in Thailand’s industrial sector: The key to the Future
Krongkaew (1995), Thailand industrialization and its consequences
Wojcik and Yuthavong (1997), Science and Technology in Thailand: Lessons from a Developing Economy
United Nations Industrial Development Organization (1992), Industrial Development Review Series: Thailand Coping with the strains of Success