TDRI: Government badly needs AI strategy for competitiveness

TDRI: Government badly needs AI strategy for competitiveness

Thailand has yet to formulate its strategy and allocate significant budget for artificial intelligence (AI) development, said Somkiat Tangkitvanich, president of the Thailand Development Research Institute (TDRI).

Sadly, public services and education have been relatively insulated from the disruption, even though their changes are required for the adjustment of the aforementioned sectors, said Mr Somkiat. As a result, the public sector and the education system are increasingly out of sync with the rest of the economy.

TDRI outlined different scenarios for what could happen to Thailand as disruptive technologies affect its economy.

In the first scenario, Thailand will not be able to respond adequately to disruptive technology changes. For example, it uses too few robots and automated processes, making its cost of production more expensive than in countries that do. As a result, economic activities would relocate to other countries and domestic value added would shrink. In this scenario, Thailand's GDP growth would average 2.1% per year over the next 20 years and per capita income would be around US$8,600 (283,905 baht) in 2036. Around 3 million jobs would be lost.

In the second scenario, the government becomes aware the country is facing disruptive technological changes and tries to respond. Specifically, it introduces measures to deal with the disruption by announcing the Thailand 4.0 policy.

This includes developing physical infrastructures and providing investment incentives under the Eastern Economic Corridor (EEC) programme to attract foreign investment. It also promotes the use of industrial robots and automation.

Mr Somkiat said the Thailand 4.0 policy would partly save Thailand from serious damage caused by disruptive technologies. However, the policy has three weaknesses.

First, the government may not devote sufficient resources to develop a skilled labour force. As a result, investment in high value-added activities, such as R&D, would not be located in Thailand.

A second weakness is the current Thailand 4.0 policy does not include a clear AI strategy. Third, there is no plan to create new jobs for workers whose existing jobs are made redundant by the use of robots and automation.

Under this scenario, the jobs lost would be cut by half to around 1.5 million, according to TDRI. Thailand's GDP would grow at an average rate of 3.1% per year and its income per capita would reach $10,300 (340,013 baht) in 20 years.

These are significantly below the government's target of 5% annual GDP growth and $15,000 per capita income at the end of the "20-year strategic plan" in 2036. It also means Thailand would not be able to escape the so-called middle income trap in 20 years.

TDRI's model includes an AI adoption strategy on top of the Thailand 4.0 policy. It also proposes the creation of new jobs to replace those lost to technology by creating the "3C Economies": craft (producing high value-added products rather than mass-produced items that can be manufactured by robots), creative (producing goods and services using creativity) and care (delivering services with a human touch).

In this scenario, the Thai economy would grow 4.3% annually, income per capita would be $12,500 in 20 years, and the country would escape the middle-income trap.

TDRI researchers Supanutt Sasiwuttiwat and Nuthasid Rukkiatwong found that more than half of workers at high risk of losing their jobs from technological disruption are those with both low education and low income. They include retail salespersons, clerks, drivers, machine operators and manufacturing assembly workers. Some professionals, including lawyers, underwriters and radiologists, are also at risk of losing their jobs from technology disruption.

The government should play an important role in supporting training and encouraging workers to constantly re-invent themselves, said Mr Somkiat. In Singapore, for example, the government provides more than 24,000 skills training courses. It also subsidised training expenses by as much as 50-90% and compensates companies that allow their staff to attend.

Thailand's basic education system focuses too much on subject content while education for the 21st century needs to focus on attitudes, skills and knowledge, said the TDRI researchers. Coding and algorithmic thinking are also largely absent from the curriculum. Thailand can learn from Estonia's coding education experience, which has been a success because of broad cooperation between the government, businesses and non-profit organisations, said TDRI.

Social welfare systems related to work also need to be improved in a world disrupted by technological changes. Worawan Chandoeywit, a lecturer at Khon Kaen University, and Wichsinee Wibulpolprasert and Boonwara Sumano Chenpguengpown, TDRI research fellows, argue that disruptive technologies have affected both formal and informal workers.

Some formal workers might be able to shift to informal work as "gig workers" as digital technologies allow them to work on online platforms, for instance. Their research suggests the government should start collecting data from online platform-based workers to form appropriate policies.

Thailand's 150-billion-baht unemployment insurance fund is adequate to cover compensation at the current rate of unemployment for at least seven years. However, if workers are replaced by technology en masse, the period would be shorter.

To avoid this scenario, Thailand should utilise the unemployment insurance fund to actively upgrade the human capital of Thai workers, said TDRI. Unemployed workers should get a chance to attend training courses to improve their skills and return to the labour market, contributing to economic development and paying taxes.

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