26.3 C
Bangkok
Monday, June 17, 2024

Thailand’s Export Industry Faces Challenges Amidst Technological Shift


In the heart of Thailand’s economic landscape lies its export industry, a pillar that contributed over half of the country’s GDP in 2020. Yet, amidst the global trade currents, it faces the looming shadows of technological advancements and stiff competition from its regional counterpart, Vietnam. Emerging as a juggernaut in high-tech exports, Vietnam holds sway in crucial sectors such as electronics, buoyed by a resurgent global demand for technological commodities like computers, semiconductors, and smartphones.

For Thailand, the battleground primarily lies in electronic exports, particularly integrated circuits (IC) and printed circuit boards (PCB). However, these commodities find themselves entangled in a web of fierce pricing wars and technological advancements, offering little in terms of added value. Danucha Pichayanan, the Secretary-General of the National Economic and Social Development Council (NESDC), highlights the historical significance of products like hard disk drives and peripherals in Thailand’s trade repertoire.

Yet, as the technological tides shift, the demand for hard disk drives dwindles, relegated predominantly to data center usage. Thailand’s attempts to establish chip manufacturing facilities have been hampered by a lack of requisite incentives from the investment board.

Beyond mere incentives, the foundation of a robust high-tech industry rests upon a skilled workforce, an asset Thailand has struggled to cultivate. To address this deficiency, several universities have forged partnerships with international institutions, birthing chip design centers within Thailand’s borders.

Despite legislative efforts to enhance competitiveness, financial support remains wanting. A chunk of the 2024 budget, totaling 16 billion baht, was earmarked for the Competitiveness Enhancement Fund, aimed at luring major chip production firms to Thailand.

In a bid to circumvent the constraints of traditional budget allocations, the government mulls over a continuous funding mechanism, potentially fueled by revenue from the global minimum tax (GMT) initiative championed by the Organisation for Economic Co-operation and Development (OECD).

Having signed onto the global tax reform agreement, Thailand inches closer to fortifying its high-tech sector with the impending enactment of the Top-Up Tax Act. Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries (FTI), underscores the challenges faced by Thailand’s electronics manufacturing sector, citing escalating labor costs and technological disruptions that have seen the nation’s earnings trail behind regional competitors like China and Malaysia.

To pivot towards the midstream industry, Thiennukul advocates for infrastructural improvements, workforce development, and sustainable energy provisions. Independent analyst Aat Pisanwanich attributes Thailand’s struggles in nurturing high-tech industries to its erratic foreign direct investment (FDI) policies, juxtaposing Vietnam’s steady regulatory environment and stringent laws that have enticed investors from global powerhouses like the US, China, and Taiwan.

In the wake of six consecutive quarters of manufacturing output decline, as highlighted in a recent NESDC report, Thailand grapples with a 1% dip in its goods exports for the first quarter of the year.

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

1,073FansLike
358SubscribersSubscribe
- Advertisement -spot_img

Latest Articles