Download - Thailand in the New Global Landscape Suvit Maesincee Sasin Institute for Global Affairs (SIGA)
ThailandThailandin the New Global Landscapein the New Global Landscape
SSuvit uvit MMaesinceeaesinceeSasin Institute for Global Affairs (SIGA)Sasin Institute for Global Affairs (SIGA)
• Thailand Thailand from the Outside-In Perspectivefrom the Outside-In Perspective
• Thailand Thailand from the Inside-Out Perspectivefrom the Inside-Out Perspective
During this decade
We are facing with perpetual crises
GlobalEconomic
Crisis
GlobalFinancialTurmoil
CommodityPrice
Bubble
RealEstateBubble
DotComBurst
AsianFinancial
Crisis
European European Sovereign Sovereign Debt CrisisDebt Crisis
For much of the next decade after the economic crisis, we can reasonably expect to see
• Weak global growth
• Pressure from overcapacity
• Persistently high unemployment
• Volatility in the financial markets
• Costlier capital
• A great expanded role for governments
• A much larger burden of regulation and taxation for all
Post crisis Trade-Related Scenario
• The rising tide of economic nationalism temps nations to look inward-driven more by self interest rather than by the outward- looking aspirations of collective interest that shape a deeper commitment to globalization
• A tough business cycle exacerbated by sharply rising unemployment and a muted recovery, could well reinforce the tendencies of the localization alternative
• An era of heightened trade friction, increased protectionism
Change in Geo-Climatics
Change in Geo-Economics
Change in Geo-Politics
Change in Geo-Demographics
Global Structural Change
The New World Economic Structure
Global GDP* %
1820 70 1913 50 73 2005
Developing CountriesDeveloping Countries
Developed CountriesDeveloped Countries
25
50
75
The Rise of the RestThe Triad
The Rest of the World The Rise of Asia
China/IndiaThe Rest of Asia
World Economic Structure
Change in Geo-Economics…
• In 1980, the seven largest economies in the world in USD terms were all developed economies
• That list now includes all of the BRICs
Spending power has already been shifting away from the richest countries towards a growing middle income bloc
By 2050 China and India will together account for nearly 50% of global GDP--about the same as the G7’s current share, which is expected to decline to 25%
The Asian Century
China in the Global Landscape
South Africa
IBSA
Brasil
ChinaIndia
Russia
IndonesiaJapanSouth Korea
BruneiCambodiaLaosMalaysiaMyanmarPhilippinesSingaporeThailandVietnam
ASEAN +3
KazakhstanKyrgyzstanTajikistanUzbekistan
ShanghaiCo-operationOrganization
G20
ArgentinaAustraliaBritainCanadaFranceEuropean UnionGermanyItalyMexicoTurkeySaudi ArabiaUSA
BASICs
ASEAN
ASEAN + 3
ASEAN + 6
585 Mil (9% World Population)
2,068 Mil (31% World Population)
3,284 mil (50% World Population)
The New USA
12,250 bil US$ (22% World GDP)
1,275 bil US$ (2 % World GDP)
9,901 bil US$ (18 % World GDP)
American Ideology
• Capitalism is better than Socialism
Retrospectively, the 20th century was dominated by the American ideologies
• Democracy is better than Dictatorship
• Western culture is better than all the rest
American Democracy
American Capitalism
American Culture
Americanization
Change in Geo-Politics…
Political Landscape Non-democratic state e.g., China has had the greatest success meeting the basic human needs of its people and pulling them out of poverty
Economic Landscape Capitalism is now split into distinctive and competing forms, with government owning and directing large parts of the economy in some of the most critical sectors
Modernization did not bring homogenization; culture and identity are powerful enduring forces between and within societies
By hosting the Olympic Games, China, for example, has symbolically and emotionally reclaimed its historic centrality and its international legitimacy
Cultural Landscape
Challenges facing Americanization
Multipolarity
Nonpolarity
State Actors
Non-State Actors
Territorializationof Politics
Nation-State
De-territorializationof Politics
Global Civil Society
Globalization from Above VS. Globalization from Below
Hyper-conflict
Totalitarian regimes slaughter one another to establish supremacy without acknowledging any law of war or even any arbitrators
Terrorists
Corsairs
Private Armies
Pirates Mercenaries
From a “World of Enemies” to a “World of Threats & Risks”
Security
Freedom & Equality Human
Security
National Security
Management of uncertainty, risk & insecurity
Construction & maintenance of social & political order
Precaution
Laissez-faire
In the age of perpetual uncertainty, fear determines the attitude towards life
Four Southeast Asian countries are likely to face more severe consequences than the global average due to limited adaptive capabilities
Change in Geo-Climatics…
CopenhagenCopenhagen Accord
Numerical targets of emission reductions
Sectoral Approach for Heavy Emitters - e.g. Steel, Cement, Electricity , Paper pulp …(possibly including agriculture sector)
Carbon Off-shoring
Carbon Leakage
Linkage to trade measures
Emission Trading
Carbon Credits
Nationally Appropriate Mitigation Actions
(NAMAs)
Adaptation
Finance
Technology
REDD+
Mexico AccordMexico Accord
A handful of mutually agreed concepts are noted in the “Copenhagen Accord”, yet loads of contentious issues with diverting views on details remain
•Reduction of GHG Emission by both developed & developing countries;
•Low Carbon Development Pathway;
•Reduction of emissions through deforestation and degradation (REDD+);
•Copenhagen Green Climate Fund & Technology Transfer.
Climate-Related Multilateral Arrangement
Global Forces & Trends Towards Low Carbon Society
• Environmentally Awareness / Go Green
• Health Concern
Citizens
Change in Consumers’ Preferences - “Eco-buying”
• Korea To become the World 7th Green Power by 2010 and 5th by 2050• Japan Carbon Minimization in All Sectors
Toward a Simpler Life Style that Realize Richer Quality of LifeCoexistence with Nature
• US, UK, China, India etc.
Government
• Green Growth as a new economic growth engine
• Stricter rules on “less green” imports & provision of adaptation support to maintain competitive edge of domestic industries.
Carbon Leakage/Off-shoring to Developing Countries??
Examples
• Improvement of energy
efficiency to reduce costs
• Voluntary emission reduction
for “green” image
• Low Carbon, Technology-
driven
Business
Manufacturing Services
Source: DB Research
Double Winners
Double Losers
Beneficiaries from Climate Change under Government Control
FoodIndustry
Tourism
Auto-motive
Chemical Industry
Textile & Clothing
Building Materials, Paper IndustryMetal Industry
Energy Sector (Fossil Fuels)
Renewable Energies
Mechanical& ElectricalEngineering
Finance Agriculture & Forestry
Construction& Associated Sector
Transportation
Regulatory Market
EconomyCondition
(+)
(-)
Environmental Climate Dimension (+)
(-)
Beneficiaries from Government Measures with Climate Risks
CC is affecting or will affect a wide range of industry sectors, some more than others
Are Thai’s Companies still fitting in ?
Green Green Green GreenThai’s
Companies ??
?
Global Supply Chain
DevelopedCountries
DevelopingCountries
AgingSociety
Dynamic Young Society
Towards the Century of Geo-Demographical ImbalanceChange in Geo-Demographics…
DevelopedCountries
DevelopingCountries
AgingSociety
Dynamic Young Society
A First World of the aging industrialized nations
North America, Europe, and Asia’s North America, Europe, and Asia’s Pacific Rim (Including Japan, Pacific Rim (Including Japan, Singapore, South Korea, and Taiwan, Singapore, South Korea, and Taiwan, as well as China (after 2030)as well as China (after 2030)
DevelopedCountries
DevelopingCountries
AgingSociety
Dynamic Young Society
A Second World of fast growing & economically dynamic countries with a healthy mix of young and old inhabitants
Brazil, Iran, Mexico, Thailand, Turkey, and Vietnam, as well as China (until 2030)
Demographic Challenges & Issues Facing Thailand
Potential supportive ratio
7
6
5
4
3
2
1
0
2000 2020 2050Source: Kua Wongboonsin
Shortage of LaborEconomic
Socioeconomic Lower potential supportive ratio
Sociological 1:2:4
DevelopedCountries
DevelopingCountries
AgingSociety
Dynamic Young Society
A Third World of fast growing, young, and increasingly urbanized countries with poorer economies and oftenweak governments
The rest of the world
Three Great Waves of Outsourcing
Foods & Agriculture
Resource War--The world will demand 70 percent more food by 2050, outstripping population growth
The First Wave
The Second Wave
The Third Wave
Manufacturing Services
Change in Geo-Climatics
Change in Geo-Economics
Change in Geo-Politics
Change in Geo-Demographics
Global Structural Changes
• The Third Wave of Outsourcing
• Geo-Demographic Imbalance
• Asian Century
• The New Global Middle Class
• The Impact from Climate Change
• The World at Risk
• The Age of Philanthro-Capitalism
E) The Third Wave of Outsourcing
B) Geo-Demographic Imbalance
A) Asian Century
C) The New Global Middle Class
D) The Impact from Climate Change
F) The World at Risk
G) The Age of Philanthro-Capitalism
A1) Internal Consumption A2) Regional Logistics A3) Increase Pan-Regional Integration A4) Similar Culture/Easy Market Access A5) Internationalization A6) Strong Competitors in world marketA7) Strong Trade Bloc
B1) Halal Food / Kosher / Hispanic B2) Long Stay B3) Senior Tourism B4) Brain Drain B5) Service Trade (Medical,Education) B6) Imported Labour
C1) Increase in Commodities Prices C2) Demand for High Protein Content Food C3) Demand for Health Food/Health Products C4) Tourism Industry Opportunity C5) Service Trade (Healthcare/Education)
D1) Food & Fuel Security0 D2) Carbon Footprint D3) NTBs D4) Green Products D5) Waste Management D6) Higher cost of imported products
E1) Global Land Grab E2) Technology Transfer
F1) Security/ Terrorist F2) Higher cost of imported products F3) Insurance Service & Security Service Opportunity
G1) CSR G2) Higher cost of imported products G3) Service Trade (certify body)
H
M
L
HML
C3
A1
A3
A2
A4
A5
A6
A7
B1
B5
B2
B3
B4
C1
C2
C4
C5
D1
D5
D2
D3
D4
E1
E2
F1
F2
F3
D6
G3
G2
G3
Impact
Pro
bab
iliti
es
Opportunities & Threats Matrix
Source: Dept. Export Promotion, MOC
Can Thailand accommodate global risks and opportunities?
Change in Geo-Climatics
Change in Geo-Economics
Change in Geo-Politics
Change in Geo-Demographics
• Thailand Thailand from the Outside-In Perspectivefrom the Outside-In Perspective
• Thailand Thailand from the Inside-Out Perspectivefrom the Inside-Out Perspective
Revisit the Asian Financial Crisis 1997
RealSector
PublicSectorFinancial
Sector
PeopleSectorAttacked by
Hedging FundsUnemployment
Social Unrest
Political Instability
Bankruptcy
Credit Crunch
Collapse ofFinancial Institutions
Capital Outflow
Gap II
Gap I
High PerformanceEconomy
EconomicRestructuring
A Nation in Crisis
Closing Strategic Gaps--1997
Economic Recovery
The Current Compounding Crisis
PrivateSector
PeopleSector
PoliticalTurmoil
EconomicVulnerability
SocialFragmentation Climate
Change
Pandemic
Global Economic
Crisis
PublicSector
Gap II
Gap I
High PerformanceEconomy
Competitiveness
A Nation in Crisis
Closing Strategic Gaps: 2010
Cohesiveness
Current Political Battlefield
SocialConflict
Political Conflict
Economic Conflict
UltimateReality
PerceivedReality
Bias
Distortion
A huge gap between ultimate & perceived realityCohesiveness…
Bias
DistortedUndistorted
Unbias
DangerousZone
ReconsiderVs.
Ignore
FramedVs.
Ignore
Dangerous Zone
• No mutual trust• No mutual respect• No shared value• No collaboration
• Hyper-conflict• Instability• Insecurity
Cohesiveness…
Post-May 19, 2010Scenario
War against Terrorism
Pre- May 19, 2010
Last Decades
ThisDecade
War against Poverty
War against Communism
Future ScenarioCohesiveness…
Thailand’s Overall Competitive Position
First Sphere
Second SphereSecond Sphere
Third SphereThird Sphere
PoliticalDisorder
Mature/Stable Liberal Democracy
Mature/Stable Market Economy
Stagnant/ChaoticEconomy
•ThailandThailand
• Singapore
• South Korea
• Vietnam
• Dubai
Source: Tanaka Akihiko
Competitiveness…
Overall Thai Industry’s Competitive Position
Lea
der
s
Tec
hn
olo
gy
and
Des
ign
Fo
llow
ers
Low Cost
Competitive Advantage
Differentiation
Italy (2)
China (1)
Thailand (11)
Design/ Differentiationbased competition
Low cost-based competition
Hong Kong (3)
Apparel
Apparel Competitive Nutcracker
Competitiveness…
The Current Compounding Crisis
Current Development PositionCurrent Development Position
So
cial
Dev
elo
pm
ent
Economic Development
Developmental Imbalance
Ideal Position
ActualPosition
InitialPosition
(+)
(-)
(+)(-)
From the year 1946 to 2009
• Population increased 3.7 times (From 17mil to 63mil)
• GDP increased 32 times (From 0.133bil to 4.2bil)
• Income/capita increased 10 times (From 6,600 Bahts to 64,500 Bahts)
• People under poverty line (From 24mil in 1986 to 5 mil in 2007)
Economic Success
Vulnerable Social Capital
• One in every ten children are born from the adolescent parent
• High divorcing rate of 1 in every 4 new spouses
• One fourth of the elementary school students does not live with their parents
• 39 % are families which are violent to their children
• 62% are families with alcoholic parents
• 46% are families with smoking parents
Social Failure
4.8
3.6
2.9
4
3.9
.6
3.6
3.9
.9
3.2
.9
.8
.7
5.3
3.4
.7
4
21.7
22.2
22.5
22.6
23.4
24.8
28.5
28.5
29.9
29.9
32.8
33.1
33.4
34.9
37.8
38.4
44.7
47.2
64.5
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Japan
Sweden
Korea
Finland
Norway
Canada
Indonesia
India
USA
Vietnam
Singapore
China
Thailand
Hong Kong
Sri Lanka
Malaysia
South Africa
Bolivia
Namibia
Share of Income (%)Poorest 10 Percentile Richest 10 Percentile
Income Inequality
0
100,000
200,000
300,000
400,000
500,000
600,000
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
GPP (Million Baht)
GPP/Capita (Baht) GPP vs Per Capita GPP
Remark: not including BKK
A wide gap of wealth exists among 76 provinces
Turning from Constructive to Destructive Social Structure
Inequality Wealth
Power
Opportunity
Privilege
Corruption
Not Clean & Clear
NotFree & Fair
Not Care
&Share
DestructiveSocial
Structure
Building a Clean & Clear Society
Good
Bad
Anti-corruption Measures
TightLoose
Go
vern
ance
Building a Free & Fair Society
Yes
No
Degree of Freedom
YesNo
Fai
r P
ract
ice
Building a Care & Share Society
Yes
No
Free & Fair Society
YesNo
Cle
an &
Cle
ar S
oci
ety
NaturalInequality
Unacceptable Inequality
ForcedInequality
FeltInequality
Le
vel o
f In
equ
alit
y
Acceptable Inequality Level
Sufficiency Economy
Over
Under
Actual
OverUnder
Per
ceiv
ed
Sufficient
Sufficient
• Parochialism• Nepotism• Cronyism
• Materialism• Consumerism• Hedonism
Economic
SocialPolitical• Authoritarianism• Profitism• Populism
Norms & Value
• Law & Regulation Reform
• Tax Reform
Instrumental Reform
• Land Reform
• Budgeting Reform
.
.
.
.
.
Gap II
Gap I
High PerformanceEconomy
Competitiveness
A Nation in Crisis
Closing Strategic Gaps: 2010
Cohesiveness
1960s: Import Substitution
1970s: Export Promotion
1980s: Foreign Direct Investment
1990s: Trade Liberalization
2001-2007: Dual Track Development
2007- : ??
What’s Next ?
Thailand’s Trade Policy
Market-led Economy
Knowledge based Society
Entrepreneurial Spirit
Regional Integrated
Remove the systemic impediment that currently render Thai enterprises uncompetitive and make Thailand an unattractive place for place for multi-national corporations to do business
Move forward to overcome the shortfall in both managerial and technical knowledge by drawing heavily on the outside world. There is no way back. Thailand must move forward to be knowledge-based.
For Thailand to be adaptable in its AEC strategy, and to re-energize the growth engine in the economy, entrepreneurialism will be crucial.
Thailand ’s greatest opportunities, and greatest competitors, lie within 2000 km. of Bangkok. Thailand needs to become a tightly integrated insider in this region
Globally Connected
Thailand has long history of self reliance, but will fail to realize its potential if it continues to pursue this approach. The country’s real opportunities going forward are to become the best globally connected country in this region
Thailand’s Strategic Intent
Thailand’s Trade & Investment Architecture
Agriculture
Manufacturing
Services & Tourism
Enabling Infrastructure
Trade & Investment Policy
Global Dynamics
Capacity Building
MarketPenetration
Market Facilitation
MarketAccess
ASEAN Economic Community
ResourceResource
Production
Service
• Rubber• Automotives • Tourism and Aviation• Fashion • Food • Education• Logistics/Transportation• Agriculture and Fisheries • Wood • ICT and Healthcare • Electronics • Financial Services• Energy• Construction
Singapore
Thailand/ Malaysia/ Indonesia/ Philippines/Vietnam
BruneiCambodiaLaosMyanmar
AEC-Thailand Trade Structure
AEC
Matured Countries
Advanced Countries
Emerging Countries
• African Countries• Middle East
• The US/Canada• Western Europe• Japan/South Korea
• China/India• Russia• Argentina/ Brazil/ Chile• Mexico• South Africa
Using AEC as a stepping stone to enhance Thailand competitiveness in the global markets
Thailand
Aviation/Education/Healthcare
Cultural Tourism
Automotives
Rubber/Leisure Tourism
Textile
Jewelry: THA,MYN,CAM
Land Transportation: THA,MYN,LAOS,CAM,VIET,MAL,SING
Food & Restaurant: THA
Regional Hub
Global Reaches, Local Links
Cluster Cluster of Provinceof Province
ProvinceProvinceVillageVillage GlobalGlobalRegionalRegional
Social Cohesion
International Competitiveness
Efficiency Cost effective Productivity Innovation
Sufficiency Community Building Cultural Identity Family Value
SocialWell-Being
Economic Wealth
Human Wisdom
Environmental Wellness
Rebuilding Thailand
GreenSociety
Value Creation Economy
DemocraticCulture
WelfareWelfareStateState
The New Nation Architecture
• Entrepreneurial Society• Innovation Driven• Pro-competitive Eco-structure• Local Linked, Global Connected
• Low Carbon Economy• Climate Resilient Society• Green Growth Industry
• Open Society• Rule of Law• Plurality• Civility
• Social Assistance• Social Safety Net• Social Insurance
Challenges facing our nation
Wil
lin
gn
ess
to C
han
ge
Yes
No
Ability to Change
YesNo
Know When to Change
Know Howto Change
Know Whyto Change
Know What to Change
Ability to Change
Leadership in the New Global Landscape
Hard Power
Soft Power
• Assertive• Competition• Authoritarian• Focuses on commanding the behavior of others
• Collaborative• Participative• Integrative• Aims to co-opting the behavior of followers
Mandate for Change
Abilityto Change
MandateFor Change
Willingnessto Change
Leadership
Every morning in Africa, a gazelle wakes up.It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.It knows it must outrun the slowest gazelle or it will starve to death.
It does not matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.
African Proverb
“If You want to go quickly, go alone;
if you want to go far, go together.”
African Proverb
“It is not the strongest of the species that survive,
nor the most intelligent,
but the one most responsive to change.”
Charles Darwin