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Thailand 4.0: An Economic Model that Marries High-Tech and High-Touch
The government unveiled the “Thailand 4.0” economic initiative in 2016, touting it as the “…master plan to free Thailand from the middle-income trap, making it a high-income nation in five years.” Although the time frame of the plan may need to be extended a bit longer to account for the impact of Coronavirus, Thailand is well on its way to achieving the Thailand 4.0 goals.
Decades ago, agriculture was the hallmark of Thailand 1.0. That era gave way to Thailand 2.0, characterized by light industry, textiles, and food processing. Under Thailand 3.0, heavy manufacturing and energy accounted for up to 70% of Thailand’s GDP.
Although Thailand 3.0 was a step toward economic betterment, it led to the middle-income trap, inequality, imbalance, and environmental degradation. Also, heavy industry played well to Thailand’s high-tech expertise, but it ignored the country’s unparalleled ability to meld high-tech with high-touch.
To transcend the limitations of the past and transform itself into a value-based economy built upon science, technology, innovation, and creativity, Thailand adopted Thailand 4.0.
The four objectives of Thailand 4.0 are:
- Economic prosperity
- Social well-being
- Raising human values
- Environmental protection
Boosting economic prosperity will be attained through innovation, technology, and creativity. To achieve this end, Thailand plans to increase research and development expenditures to 1.5% of GDP, raise economic growth to annual rates of no less than 5% within five years, and boost national per-capita income per capita to US$15,000 by 2032 from US$5,470 in 2014.
Promoting social well-being and raising human values will be achieved by providing clear paths for all members of society to reach their full potential and reducing social and income inequality. The Thailand 4.0 model also aspires to develop human capital by transitioning cost-effective labor into a skilled workforce.
To protect the environment, the Thai government will ensure that natural assets can sustainably produce their full economic potential. Clean air, water, and the resilient biodiversity that supports food production and human health will be safeguarded.
What industries does Thailand 4.0 target?
Initially, Thailand 4.0 concentrated on five existing high-potential industries and five new targeted industries. These industries are known as the “New Engines of Growth” for driving the country into the future.
Here is a listing of the “New Engines of Growth,” with the existing high-potential industries listed first:
- Smart electronics
- Next-generation automotive
- Agriculture and biotechnology
- Affluent, medical, and wellness tourism
- Food for the future
- Aviation and logistics
- Biofuels and biochemicals
- Medical hub
These ten “New Engines of Growth” have recently been joined by three other industries. In a banner announcement on its website, the Thailand Board of Investment (BOI), the country’s primary investment promotion authority, explains that 13 targeted industries now realize the Thailand 4.0 vision. The new categories are:
- Alternative dispute resolution
- Human resource development in science and technology
- Environmental management and renewable energy
In applying the Thailand 4.0 economic model, the BOI introduced the SMART Visa to encourage people to work in invest in the country. The most attractive visa Thailand has available, the SMART Visa does away with the need for a work permit, and it extends to eligible spouses and children. SMART Visas can be granted to investors, executives, entrepreneurs, and talented individuals in any of the 13 target industries.
Are you looking to set up your business in Thailand and make your first hire? You can also check out this article on Navigating Thai Labor Law
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Aster Lion is an Employer of Record (EOR / PEO) & Payroll provider headquartered in Thailand that can assist with Thailand visa & work permit application, employee contractor management and payroll solutions. You can reach out to us for any inquiries on how we can assist you with your staffing & employment requirements in Thailand.
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