Action needed to woo investment
The economic head at South Korea's embassy issues a challenge, writes William Hicks
Thailand needs to "wake up" and find aggressive, proactive means to attract foreign businesses and investment or it risks falling behind Vietnam, says the economic head at the South Korean Embassy to Thailand.
Jeon Joyoung, deputy chair of mission at the Embassy of South Korea, said Korean investors commonly overlook Thailand when deciding to open factories or move supply chains, preferring the work ethic and incentives of Vietnam.
"The world economy is starting to recover and companies are looking for places to put funds in development, so the Thai economy needs more momentum to attract foreign investment," he said. "Thailand needs to upgrade to capital-intensive industries as opposed to labour-intensive ones to further develop."
Thailand's GDP in 2019 of US$544 billion far surpassed Vietnam's $262 billion. However, Vietnam continued to grow during the pandemic while Thailand significantly shrunk. Vietnam also has a younger and larger population than Thailand, and has been the primary benefactor of supply chains moving out of China as the result of the trade war.
While Thailand was a regional hub in the 1980s, it might not be for too much longer, he said.
Mr Jeon contends human capital in Thailand is lacking. Workers do not want to work the long and focused days that Korean businesses expect and there is often a shortage of skilled workers, especially in more technology-focused sectors.
"Thailand needs to show foreign businesses in what areas it has an advantage compared with other developing countries," he said. "The government also needs much more ambition in how it is willing to attract this investment."
There are between 300 and 400 Korean businesses operating in the Eastern Economic Corridor, Thailand's special economic zone for manufacturing and industrial firms. The Korean firms are mainly electronics and mobile phone parts factories, but the country can attract a greater variety of segments by being more aggressive about attracting Korean funds, said Mr Jeon.
He would like to see the government become more proactive in providing incentives and making the advantages of the area more apparent to Korean firms.
Mr Jeon said the country should invest in more educational programmes to upskill and reskill workers, attracting more high-tech industries and sectors that require skilled factories able to work alongside robotics and automated systems.
While the pandemic stalled many new development deals because of the barriers to face-to-face meetings, he said a flurry of economic activity is likely once the pandemic subsides, though Thailand will need to prove itself to capitalise.
"The Thai government can lead this cooperative process and develop knowledge-sharing programmes with Korea," said Mr Jeon.