Multi-Dimensional Review of Thailand (Volume 1) by OECD

Author:OECD
Language: eng
Format: epub
Tags: Development
ISBN: 9789264293311
Publisher: OECD Publishing
Published: 2018-04-08T16:00:00+00:00

A holistic approach is required for cluster development

In the context of Thailand 4.0, the government selected a set of priority sectors which builds off the existing industrial base in November 2015, comprising “First S-Curve” and “New S-Curve” industries (MOI, 2015). The “S-Curve” concept posits that during the infancy stage, an industry’s growth is relatively slow due to limited market size; once economies of scale take hold and the market expands, output rises rapidly, and eventually growth levels off due to demand saturation. First S-curve industries aim to upgrade the existing industrial base and include sectors such as agro-products processing, automobile and electronics manufacturing, and tourism, with a view to maintaining growth momentum in the short and medium term. They include next-generation automotive (e.g. electronic vehicles), smart electronics (e.g. high value-added ICT products), medical and wellness tourism, agriculture and biotechnology, and food for the future (e.g. functional foods). New S-curve industries are found in sectors identified as promising drivers of growth in the long term, based upon further technological sophistication. They include robotics, aviation and logistics, biofuels and biochemicals, the digital industry and the medical hub.

To support the development of these priority sectors, the government has launched investment promotion measures in designated Special Economic Zones (SEZs), located in different areas and with specific purposes (Table 2.3). SEZs are based on the concept of clusters designed to improve industrial value chains by strengthening linkages among firms, research and academic institutions, and public organisations within a geographical area. The government designates the SEZs and provides financial incentives (e.g. tax reduction and subsidies to innovation and human resource development by firms), as well as non-financial stimuli (e.g. simplifying visa procedures for skilled foreign labour and easing the regulation of foreign equity and land ownership). In July 2016, the government designated three provinces in the east coast area as the Eastern Economic Corridor (EEC). This flagship SEZ builds on the existing manufacturing and energy industrial base. The government has an ambitious target for public and private investment in the EEC of THB 1.5 trillion (some 10% of 2016 nominal GDP) over 2017-21.

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