Cambodia, Laos, Myanmar, Vietnam and Thailand must embrace innovation or else risk losing their competitive edge, Thai Prime Minister, Gen Prayut Chan-o-cha on Monday told a sub-regional economic forum.
Despite the CLMVT region becoming a main player in the global value chain, the region faces threats from rapid technological development and geopolitics, Gen Prayut said at the opening speech of "CLMVT Forum 2019: CLMVT as the New Value Chain Hub of Asia". The event was held on Monday at the Renaissance Bangkok Ratchaprasong Hotel.
"These new technologies will render our existing production network obsolete. For example, contract manufacturing and production will slowly decline as new production networks in different regions, which embrace the modern value chain, take their place," Gen Prayut told the forum attended by industry and trade-related ministers from Cambodia, Lao, Myanmar, Vietnam and Thailand as well as ambassadors, guests from related private sectors and academics.
In terms of geopolitical threats, countries in the bloc must have effective risk management in place to cope with the changes in the global market, he said.
The sectors most vulnerable to disruption are agribusinesses, textiles, automobile, and electronics, all traditional strengths of the CLMVT region.
"Businesses need to incorporate various technologies, such as digital transformation, to elevate and enhance the efficiency of their operations from the upstream to the downstream value chain. This can include product design that meets customers' demands and timely production of quality products," he said.
The service industry within the CLMVT region will also be affected by these trends, he said: "Therefore, the service sector must incorporate cutting-edge technologies into their business models. This is especially critical for the main players in the sector such as logistics, retail and wholesale, business services, and financial services."
He urged the governments to work together to support the sub-regional economy.
"Shared prosperity within the CLMVT region must be led by the private sector and academics, and the governments must play the role of facilitators by building the groundwork for development.
"So far, the private sector in our region has demonstrated their ingenuity in business expansion and innovation, as well as their key contributions to various successful initiatives," he said.
In 2017, CLMVT's GDP grew by 5.1%. From 2013-2017, external trade grew at an annual average of 4.6%, while intra-CLMVT trade rose by 7.1% and investment went up by 15.7%.