EEC and target industries Thailand’s Hope for Economic Recovery (Part 1)

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 By salika -September 3, 2021

“In its role as Thailand’s hope to revitalize the economy of a country heavily affected by the Covid-19 epidemic, The author will analyze the history of the EEC and its implications for the Thai economy. The overall policy in driving the EEC, the labor policy of the EEC in the past, and finally, will present a guideline for making a labor policy that is in line with the changes in the current world.”Suchart Pornchaiwisetkul   Deputy Permanent Secretary, Ministry of Labor understand before taking readers into the content of the EEC article and the target industry. Thailand’s hopes for economic recovery written and published in the media of Ministry of Labor.

With the interest and views of the authors useful to the development of targeted industries in the EEC, especially in the field of labor policy. on the Salika website Therefore, it has been presented for everyone to follow and read, divided into 2 parts.

History of the EEC

 EEC is a development project in 3 eastern provinces, namely Chonburi, Rayong and Chachoengsao. The objective is to build on from the Eastern Seaboard (ESB) development project to enhance the country’s competitiveness.

In retrospect, ESB was a project initiated under the Fifth National Economic and Social Development Plan (1982 – 1986), which initiated industrial development (Industrialization) of Thailand by changing the policy Import-substitution Strategy that focuses on production to replace imports has become Export-based Strategy that focuses on production for export. It was around the same time that natural gas was discovered in the Gulf of Thailand in 1982 that became the primary feedstock for the manufacturing industry.

In addition, there is a policy to promote foreign direct investment (FDI), especially investment from Japan as a result of the appreciation of the yen under the Plaza Accord in 1985, causing Japan to lose its ability in export and have to relocate production bases abroad, Thailand thus benefited in the 1987 decade.

 As a result, the rate of expansion of gross domestic product ( GDP) during the years 1982 – 1996 or the blazing era averaged at 8.0 percent. In 1988, GDP grew by 13.3 percent, the highest rate in Thai economic history before experiencing the Asian Financial Crisis in 1997 and unable to return to the same level of expansion.

Since the 1997 economic crisis, Thailand’s GDP growth rate has steadily declined. This is consistent with the growth rate of private investment (Investment Growth) in the same direction. This was mainly due to the deceleration of FDI as a percentage of GDP. In addition, the lower investment also resulted in the problem of Thailand’s export structure, as can be seen from the proportion of exports.  The information and communication Technology (ICT) category has continued to decline.

It shows that Private investment is a key factor in determining the direction of Thailand’s GDP, so efforts have been made to develop the EEC from the ESB with the hope that It will be a mechanism to attract investment and drive the economy to grow at a high level again.

Potential 3 provinces EEC

Knowing that the EEC has been set as an important policy to raise the GDP of the country, this section will discuss the importance of the EEC to the Thai economy in 2019 before the Covid-19 crisis.

By considering the Gross Provincial Product (GPP) of the 3 provinces, which can be seen that the value is up to 2,439,557 million baht, accounting for 14.44% of the total GDP of the country. Chonburi has the highest GPP in the EEC at 1,059,797 million baht,followed by Rayong and Chachoengsao at 993,978 and 385,783 million baht, respectively.

If considered by industry, it is found that the EEC is an important area of the mining and quarrying industry accounting for 67.17% of the country, followed by electricity, gas and water supply / production / and water supply, management and wastewater treatment accounted for 32.08%, 28.51 and 13.95, respectively.  

Chonburi has the highest GPP in the manufacturing industry compared to all industries, like Rayong and Chachoengsao, with a value of 524,115 million baht, but has a distinctive point than the other two provinces. Chonburi is an important tourist city of the country. Thus reflecting the economic value of the GPP of the automotive wholesale, retail and repair industry , accommodation and food services valued at 117,952 and 89,991 million baht, respectively, which, when compared, can be seen clearly.

 While Rayong’s GPP is similar to Chonburi, where the manufacturing industry has the highest value at 452,299 million baht, the interesting point is Rayong has a high mining and quarry industry value of 272,907 million baht, or 98.31% of the EEC area.

Chachoengsao is a province that does not stand out in any particular respect other than the manufacturing industry with the highest value, like Chonburi and Rayong at 258,456 million baht.

EEC driving policy and target industries

The government has a policy to support the EEC drive by defining the country’s target industries as proposed by the Ministry of Industry in accordance with the Cabinet resolution on November 17, 2015, which is defined as the 10 target industries. Subsequently, it was increased to 12 target industries.

However, when examined in detail, I see that all 12 target industries are both industry categories and sub-categories under the Thailand Standard Industrial Classification (TSIC), which is used to calculate GDP and collect data on the current Thai labor market. TSIC If the target industry is used to formulate policies without reference to or comparable to the standards of the country in use, it will cause discrepancies.

Because no agency currently reports GDP or the number of workers in the 12 target industries. The author has brought 12 target industries compared with TSIC to see the connection between the economy and the labor market. Including as a guideline for further labor policy formulation.

From the comparison, it can be seen that the 12 target industries are already important to the Thai economy as the original cost, reflecting the GDP generated for the country at 54.98% and the labor accounted for 60.51%. When considering the GDP value by industry, it was found that agriculture, forestry and fisheries had the highest value at 1,374,987 million baht.

Followed by the production of motor vehicles, trailers and semi-trailers. /production of computer products, electronics and optical equipment/accommodation and food service. And when considering the number of workers, it was found that agriculture, forestry and fisheries had the largest number of workers at 12.567 million people, followed by accommodation and food services/public administration and defense sector/Food production/Transportation and Storage location.

The author would like to raise two interesting points:

1) Thailand is the most prominent in agriculture and tourism. This is reflected in the GDP value and the number of workers concentrated in the agriculture, forestry and fishing industries, the accommodation and food services.

2) Manufacture of motor vehicles, trailers and semi-trailers / manufacture of computer products, electronics and optical equipment is an industry , despite its high value but has a small labor force, meaning that workers in this industry can generate a comparatively higher economic value per person.

The analysis above shows the importance of correlating the target industry with the standards the country is using. Without a link, the differences in each industry cannot be analyzed. For example, the agricultural industry, forestry and fisheries/ accommodation and food services have a large workforce. Although some are laborers in establishments such as hotels and resorts. But most of them are freelance workers involved in agriculture and food distribution. It is different from the automotive, trailer and semi-trailer manufacturing / computer product manufacturing,electronic and optical equipment with all workers in the workplace.

Therefore, the policy design must analyze and take into account these differences. This is because the country’s development policy should not be one size fits all or charter policy . But it must be a Tailor Made policy that is different in detail and targeted. Including must cover both horizontal (Horizontal Level), which is the overview of the country’s industry and vertical (Vertical Level) refers to the characteristics of each area. As in the case of the EEC, although they are in the same area, the three provinces are distinguished by their analysis. Therefore, the implementation of the policy to support the 12 target industries, whether in the EEC area or other areas of the country, should also take into account such issues.

Labor policy in the past EEC

The Ministry of Labor has implemented a policy to support workers in the EEC and target industries continuously. The labor administration center in the Eastern Special Development Zone was established in Chonburi Province to act in driving the policy towards the goal. From the performance data of the  center, it can be seen that Labor policy in the EEC can be considered in two forms:

1) Proactive policies related to the mission of the Department of Employment and the Department of Skill Development which creates opportunities and develops the ability to work; and

2) Responsive policies related to the mission of the Department of Labor Protection and Welfare and the Social Security Office. This creates safety and guarantees from work. However, one of the proactive policy missions performs poorly than the other, that is labor training. In spite of the fact that such missions are of great importance in a world where work skills are rapidly changing according to the emerging technologies of the Fourth Industrial Revolution era, it also involves the workforce in strategic areas of the country.

On the expectation that it will be the main driving force in creating economic value towards the goal of being a high-income country. The author therefore considers the proactive policy workforce training mission in the EEC area is not working at its full potential and should be improved to support economic recovery after Covid-19.

And the establishment of labor training policies that are proactive in the EEC area to support economic recovery even while this crisis is not over and after the covid crisis should be Follow the answer in part 2.

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