BCG ECONOMY AS ANSWERS TO MANY CHALLENGES
published : 19 Aug 2020 at 12:00
In response to global economic challenges and international commitments to address the climate change, Thailand is promoting Bio-, Circular and Green Economy (BCG) as a model to drive the economic growth which is in line with development towards a value-based economy.
Thailand has identified five industries namely food and biotechnology; biochemicals and biofuels; medical and wellness and smart electronics technology as new sources of economic growth over the coming decades. These industries serve the development of BCG which leverages on the country’s robust agricultural sector, advancing competitiveness in biotechnology and growing pool of skilled workforce.
Two World Bank’s studies reaffirms Thailand’s overall competitive business environments. In the 2020 Ease of Doing Business Index, Thailand is ranked 21st out of 190 economies1. In the Logistics Performance Index biennial study, Thailand was ranked 32nd out of 160 countries in 2018, second only to Singapore in ASEAN2.
As a testament of the country’s progress on reducing greenhouse gas emissions, consultancy firm Dual Citizen ranked Thailand at the 2nd place in ASEAN and 27th place out of 130 countries on its 2018 Global Green Economy Index. The ranking reflects the country’s performance in leadership and climate change, efficient use of resources, markets and investment, and environment3 indicators.
Thailand’s competitive advantages in BCG is on an improving trend as the public sector is pushing ahead plans to promote BCG industries and accelerate large investment projects in bioeconomy including biochemical and biorefinery facilities and technological upgrade in the food industry.
Tapping the Country’s Food Security and Saving the Planet
Thailand is building on the momentum of strong global demand for its food and processed food products during the pandemic to improve competitiveness of the food industry, with a target to become ASEAN’s leading hub for processed food by 2027.
The Ministry of Industry is investing US$ 213 million worth of budget over nine years to upgrade technology across food-related industries’ supply chains, ranging from R&D to processing, packaging, marketing and exports. The Thai government predicts that the development plan for food industry to crowd in an investment of US$ 71 million as part of the development plan within the timeframe.
The objective is to place Thailand among the world’s top ten food exporters with the total shipment value of US$ 46 billion, comparing with the position of the world’s eleventh largest food exporter and the total shipments worth US$ 33 billion in 2019. The Federation of Thai Industries Thailand forecasts Thailand’s food exports to hold up or increase slightly, at a range between US$ 33 billion to US$ 34 billion in 2020, despite global impacts of the pandemic4.
Having one of the world’s largest plantation of cassava, sugarcane and oil palm, Thailand also possesses growing prospects of the biofuel and biochemical industries to feed the production of high-value products ranging from amino acid, ethanol, electricity, biopharmaceutical products as well as polylactic acid and Polybutylene succinate: PBS used for production of bioplastic products.
Thailand’s Office of Industrial Economics estimates that biotechnology products will grow 14% annually worldwide, with biochemicals recording the highest growth at 16%, following by bioplastics and biopharmaceuticals. This trend represents a significant opportunity for Thailand’s BCG economy.
The Public Private Partnership for Sustainable Plastic and Waste Management has launched a pilot project in Rayong Province. Led by the provincial governor, the project has proven to be successful with the participation of 17 municipalities. Moreover, waste segregation has created jobs in some of these municipalities. The income deriving from this project can cover the cost of the communities’ waste treatment and can be spared to fund other waste segregation-related activities.
Joining Global Efforts to Curb the Pandemic
Thailand’s strength in biotechnology and medical sector and the country’s preparedness to handle pandemics have underpinned the country’s success in containing the pandemic of the COVID-19 virus.
Local biotechnology researchers and medical device manufacturers have played an important role to ensure frontline health practitioners and Thai population are well equipped with protective gears and speedy diagnostic approaches.
The National Science and Technology Development Agency (NSTDA)’s National Omics Center has successfully developed test kits which enables local laboratories to detect ribonucleic acid (RNA) from the SARS-CoV-2 virus with a more affordable price tag than using commercial kits. The National Center for Genetic Engineering and Biotechnology (BIOTEC) has innovated “Loop-mediated isothermal amplification” technique to detect DNA and RNA of the virus almost at an equivalent efficiency of real time PCR method. Thai laboratories also use immunochromatography method to detects the virus for proactive tracking of new infections.
More importantly, Thai researchers have joined the global race for vaccine development against the COVID-19 virus. Thailand is carrying out experiments and clinical trials for three types of the vaccines: DNA, mRNA and plant-based proteins. Thai researchers could emerge as an inventor of the vaccine later this year with mRNA method now making the most advanced progress. The human testing for the vaccine is expected to begin within this year for the vaccine to be produced and distributed locally towards end of 2021.
Thailand’s Ministry of Public Health pledges strong support for local mass production of any successful vaccine prototypes for use not only in Thailand, but also the group of Cambodia, Laos, Myanmar and Vietnam (CLMV) and other member countries of the Association of Southeast Asian Nations (ASEAN).
In a partnership with Mahidol University, Thailand Centre of Excellence for Life Sciences is also studying active compounds in Thai herbs that could control the COVID-19 virus, potentially leading to drug development in preparation for any possible future outbreaks.
The research found extracts from finger-roots and gingers have the capability to inhibit growth of the virus. The result was proven by comparison tests with FDA-approved drugs used to treat the COVID-19 patients5.
Local researchers are well known for application of genomics technology to treat life-threatening diseases such as thalassemia, cardiovascular illnesses, AIDS and leukemia in children, as well as identifying genomic markers that cause adverse drug reactions. The result has laid the foundation for Thailand’s development of its personalized medicine-based business.
BOI Measures Driving BCG Economy
The BOI is offering an exemption of corporate income tax for up to eight years to a comprehensive range of the agricultural biotechnology industries. Eligible sectors under the incentive program include plant and animal breeding, economic crop plantation, biofertilizer production, animal husbandry, food production, and more advanced agricultural biotechnology such as active ingredient and medical food productions.
To promote BCG model further, the BOI’s board meeting on 17 June 2020, agreed to offer five-year tax incentives to plant factory projects. The technology is aimed at aiding the steady production of high-quality plants all year round by controlling the cultivation environment.
Moreover, the BOI has increased tax incentives to encourage Environment-friendly technological adoptions, innovation and sustainable development in businesses including pet food and animal feed production, grading, packaging and storage of farm products, and production from agricultural waste.
As part of non-tax privileges, the BOI grants permission to promoted non-Thai companies to own land and their non-Thai shareholders to hold unlimited sharing holding. The BOI grants so-called smart visas that enable high-skilled professionals, investors, executives, and entrepreneurs in startups in Thailand’s 13 targeted industries and their families to stay in the country to up to four years without having to obtain a work permit.