Thailand 4.0 policies will have a major impact not just on traditional business and operational processes in the manufacturing sector, but crucially on its current and future workforce.

Thailand houses one of the strongest manufacturing bases in the Asean region, with its automotive manufacturing sector ranking 12th largest in the world and the largest regionally. Manufacturing has long been a benchmark of economic vitality. But the manufacturing sector is undergoing radical structural changes with the onset of new technologies, which have not only changed factory production processes with automation and robotics, but also consumer expectations of manufacturing’s end-products.

Various programmes could be implemented to develop Thailand’s manufacturing workforce of the future.

Impact of the Experience Economy: Manufacturing is now being driven by the “Experience Economy”, where the quality of the customers’ experience of a product is going to be the key differentiator for success, rather than the make of the product per se. To thrive in the age of the Experience Economy, Thai manufacturers have to move away from the traditional production-based business model to an innovation-based business model.

As automation technologies become more accessible for manufacturers of all sizes, repetitive tasks in production are being increasingly automated to fulfil time-to-market demands amid fast rising competition. The skills of the current workforce of manufacturers, large and small-medium sized alike, need to evolve away from execution of linear production workflows to management of complex new work plans focused on delivering customer value.

People are at the heart of successful business transformation. For businesses to thrive in the “Thailand 4.0” era, they require a workforce not just with technical expertise to harness digital technologies effectively, but the ability to innovate, create and manage new solutions.

In training the current workforce and recruiting the future workforce, businesses need to focus on skills that artificial intelligence and automation cannot replicate. According the World Economic Forum’s “The Future of Jobs” 2018 report, the top three skills of future industry will be complex problem-solving, critical thinking and creativity. Among the range of jobs set to experience increasing demand in the future are data analysts and scientists, software and applications developers and e-commerce specialists.

However, the chronic shortage of people with these skills crucial to the Digital Age is potentially the stumbling block to the sustainable growth of Thailand’s manufacturing sector and overall economy. If current conditions persist and the labour deficit grows, so will the quantum of unrealised revenues stemming from the inability of manufacturing businesses to transform digitally.

Transforming the workforce: Leaders across production and value chains need to drive business transformation by elevating and enabling their workforces. This entails putting people at the centre of the business, to cultivate their mindsets and skill sets away from repetitive production work, which is fast being automated, and towards becoming “makers and innovators” of their products, rather than just producers.

While it is tempting to point to technology as the key differentiator for business success of future industry, ultimately an organisation’s competitive strength lies in its workforce. For technologies to be deployed effectively, they need to be programmed and operated by skilled people.

Responsible leaders in manufacturing must make enabling workers their top priority, and in doing so, will be in a better position to accelerate growth and value for their organisation, individuals and communities. Already Thailand’s manufacturing sector is rapidly losing the “low cost” advantage to other rising manufacturing hubs in Vietnam, Myanmar, Cambodia and Laos. The only way to maintain competitiveness is to move up the manufacturing value chain which will require “makers and innovators” in the workforce.

However, given the accelerated rate of technological progress demanded by the Experience Economy, formal education alone is not enough to create Thailand’s future workforce of makers and innovators. Leaders from industry, government, labour unions and academia must forge new multi-stakeholder partnerships to develop industry-relevant education and training programmes to ensure the continued employability of the current workforce and cultivate the workforce of the future.

Whether it is filling the existing talent pipeline, delivering compelling employee value propositions or protecting workers’ interests, each stakeholder group can contribute to building a robust and inclusive industry ecosystem to transform the workforce.

In addition to cultivating new skills in the internal workforce, Thai manufacturers should also look towards developing an agile external workforce strategy to find, attract and recruit new digital specialists, the type of talents typically drawn to global technology companies. To do so, Thai manufacturers must increase their attractiveness and develop creative ways to engage with these talents by cooperating with universities and research institutes, or forming partnerships with leading technology companies.

Importantly, business leaders need to take on new mindsets in solving the complex challenges of a rapidly transforming workforce.

A lifelong process: My advice to manufacturing businesses is that the time to act is now to plan and implement a people transformation strategy. Thailand’s manufacturing sector, amongst all its S-curve industries, is the most vulnerable to changes brought forth by globalisation. Developing the manufacturing workforce of the future is not for the distant future, but for now, because the whole sector is already in the midst of digital transformation.

Workforce transformation is not just about adopting new technologies and adding new digital talent; it goes together with an enterprise-wide transformation of existing values, mindsets and practices. Manufactur-ing businesses will need to be much more conscious of how they on-board and train their workforce, which will be a continuous process, not just at the start of careers, but throughout the lifecycle of careers.

Contributed by ERIC CHOW, academic lead for Asia Pacific South at Dassault Systemes.

Last Sunday, US President Donald Trump tweeted: “For 10 months, China has been paying tariffs to the US of 25 per cent on $50 billion of High Tech, and 10 per cent on $200 billion of other goods. These payments are partially responsible for our great economic results. The 10 per cent will go up to 25 per cent on Friday on $325 billion.”

Krungthai Bank’s Global Business Development and Strategy Group predicted back in January that Thailand’s exports would grow by 4 per cent in 2019, a decrease from last year’s 6.7 per cent.

However, after weak export performance in the first quarter of this year, they have revised down their export growth forecast to a mere 2 per cent.

 “If the tariffs President Trump threatened are implemented, Thai export growth in 2019 could go below 2 per cent,” said Phacharaphot Nuntramas, senior vice president of the Global Business Development and Strategy Group, during an interview with The Nation.

“The increase in tariffs from 10 per cent to 25 per cent, as threatened by President Trump, includes electronic parts produced in Thailand, sent to China for further processing before being exported to the US,” he explained.

Yuan to depreciate

Phacharaphot said the Chinese yuan will depreciate as a result of the higher tariffs, to absorb the rise in the prices of Chinese exports. However, the yuan depreciation will not be able to fully absorb the impacts from the rise in US tariffs, which in turn will lead to further economic setbacks for both Thailand and China.

He urged Thai exporters to focus more on risk management amid the volatile market conditions. Demand from the US, China and other regions could change as the global economy may slow down further if these tariffs are implemented, he said.

Meanwhile, he suggested the public sector step up their efforts to penetrate new markets with high growth potential for Thai exporters to diversify their destinations.

Further integration with the Asean region would also help in the long term, considering that Thailand is this year’s Asean Chair. Currently, some 20 per cent of Thai exports are shipped to the Asean region each year. However, this solution alone will not be able to mitigate the immediate negative impacts from the trade war, he said.

Phacharaphot stated that Thailand does not stand to benefit in terms of investment resulting from an escalation of the trade war. Most international manufacturers have already set up bases in various countries across Asia. Hence, they may simply start to produce more at their production bases that are not located in China, he continued.

If tariffs on Chinese goods are raised, the global economy will slow down and global demand will also fall. This may not necessitate the relocation of manufacturing bases.

Standard Chartered Bank adopts a more optimistic view, maintaining its export growth forecast for 2019 at between 3 and 4 per cent.

“It is still too early to say whether the potential escalation of the trade war from President Trump’s tweet will cause Thai exports to dip below 3 per cent growth this year,” said Tim Leelahaphan, Standard Chartered Bank’s economist, during a separate interview.

“However, the impacts of the trade war on the Thai economy have been negative overall since the middle of last year. If tariffs are further increased between the US and China, it will definitely have negative impacts on the Thai economy,” he stated.

Leelahaphan noted that the trade war has caused the Chinese government to use various measures to stimulate its economy, causing Chinese demands for consumer products to increase. “From here, we see that Thai exports of agricultural goods to China have increased continuously in 2019,” he said.

Leelahaphan concurred with Phacharaphot, arguing that investment diversion into the Kingdom may not increase as a result of the trade war escalation as many manufacturers may already have a production base in Thailand.

“Although there is potential for investment diversion, it is more likely that there will only be a shift in production volume instead of a full relocation of production bases from manufacturers in the region,” Leelahaphan said.

He urged exporters to prepare their capabilities and capitalise on the opportunities that arise from the trade war, such as replacing Chinese goods in the US market to make up for the reduced shipment orders to China or exporting more to the Asean region.

Furthermore, the government should strengthen the economic fundamentals of the country to create a buffer against the negative impacts of the trade war, such as promoting tourism and investment throughout the year, Leelahaphan said.

The Export-Import Bank of Thailand (Exim Thailand) is seeking State Bank of Vietnam’s (SBV) support to establish its first representative office in Vietnam.

During a meeting with the SBV’s deputy governor Doan Thai Son on Tuesday, Warangkana Wongkhaluang, vice president of Exim Thailand, said her bank wanted to open the office in Vietnam to boost its operations in the country.

At the meeting, Son said seven Thai credit institutions already have branches or representative offices in Vietnam, noting that the presence of Thai banks in the country had contributed to the development of the banking system and helped promote economic, trade and investment relations between Vietnam and Thailand.

In recent years, economic and trade co-operation between the two countries has continued to develop and achieve positive results, Son said, adding that Thailand is currently Vietnam’s largest trading partner within in Asean while Vietnam was Thailand’s second largest trading partner and Thailand was among the 10 largest sources of foreign investment in Vietnam.

Many foreign banks in Vietnam have also expanded their transaction networks and increased their charter capital in recent years in a bid to increase market share, especially in the retail banking sector. – Viet Nam News

The funds will go on 335 projects that come under two main road development schemes to benefit 55 smaller cities.

The director-general of the Department of Rural Roads (DRR), said that one of the schemes covers the so-called Thai Riviera, which incorporates coastal provinces in the South; Bt1.83 billion will go towards 111 projects there. The other scheme will see spending of Bt3.82 billion for 224 projects in the 55 provinces with the secondary cities.

Approval for the funding plan follows a May 2 meeting with between representatives of the DRR and the Ministry of Tourism and Sports. The spending is in line with a master plan set out under the national strategies on tourism. The masterplan covers the period to 2037.

 “The DRR has proposed setting aside the Bt5.65 billion from the central expenditures budget for the fiscal year 2019 for these two main scheme, with the project period covering 2019 to 2023,” Kritthep said.

The budget will be used to finance construction, maintenance and safety features on tourism routes in these 335 projects. The upgrading of main and local roads fits in with plans for connecting the roads with double-track railway lines and a high-speed railway. The Thai Riviera scheme is being developed under a collaboration involving several agencies, Kritthep said.

The first phase will provide for the development of the 659-kilometre coastal road in the South, from Samut Songkram to Chumphon, costing Bt4.67 billion. The DRR will be responsible for 126 kilometres of the road. The second phase will involve the development of a 555-kilometre coastal road network in the South, an extension of Chumphon-Songkhla.