Government banking on BCG model to propel recovery
The bio-, circular and green economy is a global trend
The bio-, circular and green (BCG) economy is being touted by the government as a new model to bolster economic recovery.
The first meeting of a management committee to drive the BCG economy, chaired by the prime minister, in January approved a five-year strategic plan to promote the BCG economy spanning 2021 to 2026.
The government also agreed to place the BCG economy on the national agenda to speed up development because the sectors can increase the value of farm products and the BCG economy is part of a global development trend.
"The government is serious about pushing BCG to boost Thailand's economy, which is battered by the Covid-19 outbreak," said Kitipong Promwong, director of the Office of National Higher Education, Science, Research and Innovation Policy Council.
"The Thai economy depends too much on external drivers, and BCG seems to offer the best solution to drive economic growth propelled by domestic drivers."
According to Mr Kitipong, based on Thailand's strengths in agriculture, rich natural resources and diversity of biological resources and physical geography, the BCG strategy will focus on promoting four industries: farm and food; healthcare and medical services; energy and biochemicals; and tourism and the creative economy.
Science, technology and innovation will be employed to enhance the capacity and competitiveness of players in the value chain, both upstream and downstream, in all four segment, coupled with supportive policy, legal and financial measures, he said.
Farm development calls for upgrading productivity and increasing the value and standard of major products including rice, sugar cane, rubber, tapioca, palm, maize, vegetables, fruit, shrimp and dairy cattle, as well as promoting goods that have high value such as herbs, beef cattle, fancy fish and insect protein. This scheme includes smart farmer development.
The government needs to amend laws and regulations about plants, genetically modified organisms, biological substances, vaccines and control measures for foreign workers in the farm sector, said Mr Kitipong.
Value can be added through novel food products for groups of people such as patients and the elderly, as well as via functional food, functional ingredients and street food, he said.
The government targets the food industry contributing 5% of GDP in 2024, some 906 billion baht, up from 4% or 638 billion in 2019.
The government also wants to increase the use of farm products and biomass in renewable energy, bio-plastics, oleo-chemicals from oil palm, biochemicals, and cosmetic ingredients.
For healthcare and medical services, the BCG model aims to reduce the import value of pharmaceuticals and vaccines, worth more than 100 billion baht a year.
The strategy includes intensive capacity building of technology and human capital in R&D and production technology for vaccines, biopharmaceuticals and medical devices, as well as clinical research and product registration of pharmaceuticals and medical devices.
This is all in support of Thailand's healthcare policy of promoting preventive and precision medicine.
Platforms to facilitate the utilisation of genetic data as well as clinical research among researchers, industry and regulatory bodies is another goal.
According to Mr Kitipong, the government needs to reduce import duties on materials used to make medical equipment to 0% from 30%; upgrade medical equipment standards and promote education institutes to use locally-made medical supplies and equipment.
For energy and biochemicals, the BCG model aims to promote ethanol production standards to achieve industrial and pharmaceutical grades, as well as producing ethanol fuel cells for electrical vehicles. Another goal is to settle on a mechanism for carbon pricing and a green tax, as well as establishing a fund for the bio-refinery and biochemical industry.
He said as part of a circular economy, the government needs to support recyclable waste and establish waste hubs in each region; use financial tools to support the recycling of sugar cane leaves and rice straw; reduce food loss and food waste; and support environmentally friendly construction and smart city development.
For tourism and the creative economy, the government goal is to upgrade Thailand to become a quality tourism destination.
Technology and innovation can upgrade infrastructure and create a digital platform to improve the tourist experience, said Mr Kitipong.
Science and technology can help to define national guidelines for tourism, such as carrying capacity, sustainable tourism standards, and conserving and rehabilitating the environment, he said.
Regarding the creative economy, there are links to other service industries to target niche markets such as tourism for wellness, cooking, eco-tourism, culture and sports.
"Under the five-year BCG strategic plan, Thailand aims to generate 4.9 trillion baht in income by 2026, up from an estimated 3.6 trillion in 2021, 3.8 trillion in 2022, 4 trillion in 2023, 4.3 trillion in 2024 and 4.6 trillion in 2025," said Mr Kitipong.
"The government also set a lofty goal to develop BCG to generate income worth up to 6.5 trillion baht in 2030."
In 2018, the BCG economy generated 3.4 trillion baht, making up 21% of GDP and creating 16.5 million jobs.
He said to achieve such lofty targets, the government needs to attract the private sector to play a bigger, more active role in BCG investment.
In 2021, total investment in BCG is estimated at 375 billion baht, 30% of which stems from the government sector, or 113 billion, and 262 billion from the private sector.
In 2026, total investment in BCG is forecast to be 750 billion baht, with public investment contributing 150 billion (20%) and private investment 600 billion (80%).
"By 2030, total investment in BCG is projected at 1 trillion baht, with the private sector expected to account for 850 billion baht and the public sector 150 billion," said Mr Kitipong.