OBG talks to Prasert Boonchaisuk, Minister of Industry

Interview: Prasert Boonchaisuk

What can we expect to see as a result of the Board of Investment’s new industrial incentives?

PRASERT BOONCHAISUK: The Board of Investment is putting in place incentives to restructure the Thai industrial sector. These will prioritise value-added production, including high-technology products, the employment of environmentally friendly procedures that use less energy and labour, and the preservation of important target industries such as automotives and electronics. We also want greater investment in food processing products, where Thailand enjoys a competitive advantage.

These steps will act as a catalyst for the creation of a knowledge-based industrial sector that engages extensively with research and development initiatives to create value-added products. At the same time, the government is prioritising the development of industrial clusters promoting the concentration of related suppliers and industries within the same geographical zone. This will improve logistical efficiency for the private sector, while also encouraging the growth of specialised services that cater to these clusters.

What impact will increased regional and global trade have on the Thai industrial sector?

PRASERT: In 2012 Thailand saw its highest level yet of projects submitted for investment promotion, totalling BT1.4trn ($46bn). In 2013 the amount was BT1.1trn ($37bn). Having said that, there undoubtedly remains much room for growth in Thailand. This is particularly true given the country’s central location and the establishment of the Asian Economic Community (AEC) in 2015. Thailand should position itself as a regional centre of production and distribution, and Thai industries will benefit from a liberalised, more open trading environment. This can be achieved through the AEC but also through enhanced relationships with major markets lying on the periphery of the AEC’s borders.

New markets will stimulate manufacturing activities within Thailand, in turn creating new jobs and generating further economic growth. Of course, there will also be challenges, such as greater competition from countries that benefit from lower production costs. In this environment, the government is strongly committed to supporting Thai industrial companies operating abroad, and will continue to encourage them to grasp opportunities in the region, as well as farther afield.

How is Thailand’s green industry evolving?

PRASERT: To develop an industrial sector that operates according to international environmental standards, the government is ensuring greater oversight and inspection of production activities before operating licences are granted. The government is in the process of developing world standard pollution control systems for factories, which we expect to be implemented in the coming years. As for current industrial production sites, we have strengthened the follow-up process, which is designed to monitor ongoing industrial activity and mitigate its impact on local communities.

Furthermore, Thailand’s eco-car programme has entered its second phase, requiring newly manufactured vehicles to satisfy Euro 5 environmental standards. This phase will concentrate on consumer and social goals, dealing with incentives designed to encourage the development of the automobile industry, passenger safety and fuel efficiency, as well as the expansion of cities through reductions in carbon dioxide emissions.

How is the government assisting small- and medium-sized enterprises (SMEs) to minimise the impact of increased labour costs in Thailand?

PRASERT: While implementing a minimum wage of BT300 ($10) per day has affected industry, the impact has not been severe. Many businesses already pay above minimum wage, and fewer than 500 SMEs were significantly affected by its introduction, out of a total of around 2.6m. Nevertheless, the Ministry of Industry is cooperating closely with other ministries, as well as representative SME groups, to help smaller players in the sector develop business strategies to handle this change.