Business challenges have prompted the Federation of Thai Industries (FTI) to come up with new projects, hoping to strengthen local entrepreneurs.
The group sees an urgent need to help small and medium-sized enterprises (SMEs) still reeling from the impact of the pandemic to become outstanding business operators.
Devising ways to develop agribusiness, a core sector of the economy, and upgrading the capabilities of auto parts makers to cope with the disruption caused by the fast-growing electric vehicle (EV) industry are also on the FTI’s agenda.
“A new economy is being formed by technological advancement and tougher competition,” said Kriengkrai Thiennukul, chairman of the FTI, stressing the need for closer cooperation between the federation and entrepreneurs to cope with these challenges.
SMART SMES
The FTI is improving SMEs’ competitiveness with its “Three Go’s” policy following previous measures aimed at increasing their sales.
“We want to transform ordinary SMEs to smart SMEs,” said Mr Kriengkrai.
The global economy changed over the past two years and remains uncertain, with some SMEs facing lower sales and difficulty in accessing financial resources, he said.
SMEs need better tools to successfully run their businesses, said Mr Kriengkrai.
The three Go’s policy emphasises new capabilities for entrepreneurs and market expansion plans.
DIGITAL EMPHASIS
The first prong focuses on digital. The federation wants SMEs, which comprise the majority of FTI members, to use more computer programs to improve their operations and reduce operating expenses.
As certain software is expensive and SMEs have limited budgets, Mr Kriengkrai asked the FTI’s Digital Industry Club to design and compile necessary computer programs, then sell them to SMEs at affordable prices.
Essential programs cover accounting and production control.
The government has been promoting robotics and automation systems under its Industry 4.0 initiative (fourth industrial revolution), which encourages factory operators to blend digital technology with data analysis.
However, an Industry Ministry survey in 2020 found only 2% of Thai industries were at the Industry 4.0 level, using advanced technology in their operations.
The FTI also wants to encourage SMEs to develop technological innovations to add value to their products.
The second prong values innovation and the federation worked with the Higher Education, Science, Research and Innovation Ministry to set up Innovation One, a 2-billion-baht fund helping SMEs and startups develop new business projects based on using technologies.
The third prong encourages SMEs to go global, helping them sell their products overseas.
Former FTI chairman Supant Mongkolsuthree, known in media circles as “MiT man”, initiated the Made in Thailand (MiT) campaign to increase sales of SMEs via state procurement projects.
The campaign encourages authorities to use more locally made products, especially from SMEs, and forms part of the FTI’s efforts to help businesses that struggled during and after the pandemic.
To grow their businesses, entrepreneurs should think about how to build and expand their customer base abroad, said Mr Kriengkrai.
“Under the three Go’s policy, SMEs will gain better access to markets and sources of funding,” he said.
Sugar cane has the potential to become value-added products as officials and the FTI attempt to promote smart farming. Jiraporn Kuhakan
SMART FARMING
The FTI wants to strengthen agro-industry by teaming up with universities to pilot an agriculture project that can support farmers and factory operators.
The project makes use of farming technologies to add value to produce, and was developed by Rajamangala University of Technology Phra Nakhon in Bangkok.
The university will offer advice on farming and technological innovations as well as help the FTI share know-how gained from this project with farmers in other provinces and members of the FTI nationwide, according to university chancellor Natworapol Rachsiriwatcharabul.
According to the FTI, the agricultural sector generates 1.5 trillion baht in value, contributing 8% to GDP.
There are roughly 12 million farmers in Thailand, compared with 6.15 million workers in the industrial sector.
This project will be based on the concept of agriculture on demand, said Mr Kriengkrai, meaning demand from industries in certain areas will determine which and how many crops farmers will grow.
The FTI previously established the Institute for Agro-Based Industries to work with the government on building a new generation of farmers who can combine modern technologies with marketing to better sell their products, helping to drive the economy.
The federation wants farmers to seek methods to add value to their crops, a move welcomed by the Thai Sugar Millers Corporation (TSMC), which earlier suggested sugar cane farmers adopt bio-economy strategies to increase their revenue.
The bio-economy uses renewable resources as raw materials to produce energy, food and other value-added products. TSMC said the segment can become a new source of revenue.
Farmers and sugar millers were advised not to depend solely on farming because it can be stunted by water scarcity.
In the 2023-24 crop year, sugar cane output in Thailand, the world’s second-largest sugar exporter after Brazil, declined as a result of severe drought.
Sugar cane harvests fell by 11.7 million tonnes, down from 93.9 million tonnes in the 2022-23 crop year, according to the Office of the Cane and Sugar Board.
TSMC urged farmers and sugar manufacturers to consider methods to develop sugar cane, sugar and even waste from manufacturing processes into new products.
For example, molasses can be used to make ethanol, which can be mixed with gasoline to make gasohol. Bagasse, the dry pulp residue from sugar cane, can be sold as fuel to power plants.
Other materials from the sugar industry can be used to develop pharmaceutical and biochemical products.
Electric vehicles on display at the 2023 Fast Auto Show Thailand & EV Expo. EVs are causing local parts makers, mostly SMEs, to adapt to electric mobility technology. Wichan Charoenkiatpakul
FUTURE MOBILITY
The FTI is also helping SME original equipment manufacturers, who make up the majority of the 1,700 local auto parts makers, to adapt to the rapid growth of EVs.
These manufacturers are adept at making components used in the assembly of internal combustion engine (ICE) cars, but they need to learn new technology that can enable them to shift to producing parts for EVs.
A cluster under FTI Mobility-ONE (CFM-ONE) was established as a new unit to develop the Thai automotive industry and help the auto parts supply chain deal with the challenges of EV technology.
The FTI wants auto parts producers to team up with car makers from Japan, Europe, the US and China to develop their businesses.
Under CFM-ONE, Chinese EV producers were asked to support Thai auto parts companies to transform their ICE-related technology into suitable systems for EVs, said Suphot Sukphisarn, chairman of the FTI’s Auto Parts Industry Club and secretary of CFM-ONE.
Chinese car manufacturers are rapidly developing EV and battery technologies, as well as expanding their investment in Thailand.
Thai auto parts firms should take this opportunity to align with the growth of the zero-emission car industry, according to the FTI.