The industrial sector risks losing competitiveness because of the labour shortage, a high minimum wage, infrastructure project delays, poor-quality education and energy imports, says a government think tank.
The National Economic and Social Development Board (NESDB) forecast Thailand will be classified as an ageing society within eight years, putting pressure on the industrial sector in terms of labour supply. The proportion of citizens aged 60 and above will grow, while the number of those aged 14 and younger and working people aged 15-59 has been declining amid growing demand for industrial labour.
Meanwhile, labour costs are relatively high in Thailand compared with other Asean members, said NESDB secretary-general Arkhom Termpittayapaisith.
With a daily minimum wage of 300 baht, equal to just over US$9, Thailand has the third-highest costs in Asean after Singapore and the Philippines.
Cambodia has the lowest labour costs in Asean, with a minimum rate equal to $2 a day, followed by Vietnam, Laos, Indonesia and Malaysia.
High costs and the worker shortage have already hit Thailand's industrial sector, particularly in labour-intensive sectors that together require 5.7 million workers, said Mr Arkhom.
He said national competitiveness has stagnated from delays in infrastructure development.
Thailand's investment in research and development (R&D) is only 0.2% of gross domestic product, much lower than 1.8% in Malaysia, 2.8% in Singapore, 1.8% in China, 3.4% in Japan and 3.8% in South Korea.
The domestic supply of oil is forecast to run out within the next 3.5 years, while natural gas will be depleted in four years.
Thailand will then rely more on energy imports at a higher cost, affecting manufacturing competitiveness even further, said Mr Arkhom.
Thailand's education system requires much improvement, as it currently ranks bottom among Asean members, he said.
The NESDB proposes Thailand focus on strategic manufacturing sectors such as rubber products, food processing, petrochemicals and plastics, biodiesel and ethanol, automobiles and auto parts, and electrical and electronic goods.
Industrial sectors that should develop further are clean energy, health care, biochemicals, aviation and aerospace, services and creative goods.
For instance, Thailand is the top exporter of creative goods in Asean and sixth largest among developing countries, with an export value for the sector of US$5 billion.
The NESDB also proposes the government focus more on environmentally friendly industries by developing and adjusting manufacturing processes.
Mr Arkhom said the government should promote the commercialisation of R&D work, which would in turn reduce reliance on foreign technology and meet the real needs of the market.
Industrial development should reduce poverty and enhance income distribution by emphasising local employment, skill development and the use of local raw materials, he said.