Incumbent Thai Rak Thai party plans to build on the accomplishments of its policy initiatives by working to strengthen the economy even more and solidify Thailand's position in the global market

Story by CHATRUDEE THEPARAT and WICHIT CHANTANUSORNSIRI

Raising the country's value proposition, particularly in the services sector, will stand as the key challenge facing Thailand over the next few years, according to Pansak Vinyaratn, chief policy adviser to Prime Minister Thaksin Shinawatra.

The incumbent Thai Rak Thai party, over the past four years, has set in motion a host of policy initiatives aimed at increasing economic opportunity for rural communities, reducing business costs and increasing productivity and efficiency throughout the economy.

Mr Pansak said now was the time to move to the next stage, by continuing various policy initiatives to strengthen the domestic economy while solidifying the country's position in the global market.

Thailand, he believes, needs to capture the very essence of "Thainess" and local "wisdom" if the country is to distinguish itself among global competitors.

Mr Pansak said it was in the area of services, not industry, that the country could develop a comparative advantage.

Thai companies have been finding it increasingly difficult to compete in industry and manufacturing, whether in terms of price against low-cost producers such as China, or at the high end against countries such as Japan or the United States.

As a result, the country needs to adopt a new paradigm, and develop new "niche demand" in the global market.

"We know from the start that we cannot depend on new investment for exports, given that we are directly competing with China. Price competition in the market is murderous," Mr Pansak said.

"At the same time, we cannot ignore exports as a key element of our policy. No, we instead need to develop a new structure of domestic growth to meet the new `niche demand' in the world market."

Through technology, design and an increase in marketing savvy, huge potential value could be unlocked if Thai rice, Thai clothing or Thai services could be established as leading global brands.

Mr Pansak said to further this goal, the Thai Rak Thai-led government had established design centres, learning centres and other initiatives to encourage "lifelong learning" and innovation.

Provincial and regional branches and museums would be established to disseminate knowledge throughout the country and encourage informal education to help spur development.

Rural entrepreneurs, small and medium-sized businesses would also be given increased opportunities to access capital, knowledge and technology to help strengthen their competitiveness and move up the value chain.

Products and services that were based on Thai wisdom, and combined with modern technology and design, would enjoy a comparative advantage in the global market, Mr Pansak said.

"Value creation of Thai services is very important in order to define where Thailand will stand in the world market," he said.

"Over the next seven years, the global population will increasingly age. Thailand needs to think about what we should produce to meet the demands of an ageing society. This production should be based on Thai `services', as it is here where we have the advantage."

Businesses who failed to grasp this principle, and continued to rely on overseas designs for low-cost domestic assembly, would eventually lose out, given the growth of China.

"Some Thai entrepreneurs neglect to invest in research and development, in technology. A large part of the middle class continues to enjoy gains through speculation on stocks or property, just as before the crisis. They are ignoring the chance to create their own opportunities."

Producers need to anticipate shifts in the global market, whether it be the trend towards an ageing population, production surpluses, oversaving, social instability and violence and demand shifts in products and services.

Mr Pansak said entrepreneurs who were able to plan for these changes would have greater opportunities than others.

Thai Rak Thai also will continue to support initiatives to open new doors of opportunity throughout society.

Mr Pansak said the party, in its time in government, had succeeded in raising Thailand's standard of living, with foreign and public debt both lower and foreign reserves, income, household assets and savings now all higher compared with four years ago.

"Yes, some problems remain in how opportunity is distributed, mostly due to operational constraints," he acknowledged.

"But Thai Rak Thai will look to the next four years to accelerate income distribution, through projects such as the village investment funds, the asset capitalisation programme, the SML (small-medium-large) programme and learning initiatives."

The SML programme will give villages nationwide funds to address local problems, with spending and allocation decided by community assemblies.