WEF's Thailand Competitiveness Survey 2012-2013 Preview: The Good, Bad and Ugly

Overall, Thailand has moved up one notch from last year, with a score of 4.5 on the scale of 7. This year, for the first time, the majority of the survey was online, and below is a preview of Thailand’s scores from the 51 online questions as compared to last year’s survey. The score of 7 is the highest, or most desirable, while 1 is the lowest.

 

The Good

Financial environment: 

Once again, Thailand’s hallmark is financial stability, though financial access is still a drag. Across the board the scores are slightly better than last year except for financial service competition. These rankings are either above or at par with China, India and the Asean 4 (Thailand, Malaysia, Indonesia and Vietnam).

 

                                                         2012 2013

Financial Market Sophistication: 4.96  5.04 Financial  Services Competition: 4.89  4.88 Soundness of Banks:                    5.08  5.14

Ease of access to loans:               3.48  4.75

Venture capital availability:         2.86  2.92

 

The overall score for financial market sophistication is slightly higher along with soundness of banks. On the other hand, access to capital, especially for new start ups is still problematic. The biggest improvement is in ease of access to loans, perhaps due to ample global liquidity.

Physical infrastructure:

Overall our physical infrastructure is quite good with the score improvement as follows:

                                                                                                              

                                            2012    2013   

Overall infrastructure quality: 4.74     4.82    

Quality of roads:                      4.99     5.02

Railway infrastructure:            2.65     2.52

Quality of ports:                     4.74     4.58

Quality of airports:                  5.71      5.68

 

All physical infrastructure in Thailand, except railways, is above or at par with China, India and the Asean 4. The highest mark is for airports, second only to Singapore as per last year. The consistently worst score in this category is railway infrastructure, not just this year, but for every year in the last five. Overall quality of roads and ports is stable.

 

 

Virtual community and infrastructure 

It is intriguing to see private engagement in social media and cyberspace going from strength to strength, but the public sector still sliding.

                                                                                                                                                                               

                                           2012   2013

Virtual social networks use:       5.00    5.70

Accessibility of digital content:  4.76    4.73 Internet access in schools:         4.54    4.16

ICT access to basic services:     4.34 3.86

ICT and gov’t productivity:         4.16    3.96

 

The highest improvement comes in social network usage. Still, we are behind China, India and Indonesia when compared with last year’s data. On the other hand, ICT and government productivity is slipping and still the lowest when compared to last year. If Thailand wishes to improve productivity and increase public institutional support it must enhance ICT capacity for government agencies and become more computer based.

The saddest thing is that the biggest drop year on year is for Internet access in schools, particularly public schools. In order for the government to implement its free-tablet policy successfully, perhaps a nationwide wireless-Internet system must first be installed.

 

Innovation and technology 

This sector is holding ground well. Surprisingly, the availability of the latest technologies is among the highest in Asean. 

 

                                            2012 2013

Availability of latest technology:    4.77  5.08

Firm-level technology absorption: 4.73  5.02

FDI & technology transfer:              5.02 4.61

Quality of scientific research:         5.02 4.61 University/industry 

research collaboration:                   4.15 3.80

 

Our technology level is advancing but we need to do more in technology transfer from foreign investment partners. The biggest concerns are in the quality of scientific research and reduced research collaboration between universities and industry. We need to strengthen these areas.

 

The Bad 

The ability of the government to tax is stable and above the passing grade (3.5) but still below the Asean 4 average.

 

                                         2012  2013

Extent and effect of taxation:   3.70   3.70   Agricultural policy costs:         3.43   3.32

Burden of Gov’t regulation:      3.57   3.44

Intellectual property:                3.09  3.04

Reliability of police:                  3.72   3.42

 

On other hand, the survey shows failing grades on bureaucratic services and agricultural policy costs, though this has not changed much year on year. With the government’s policy on agriculture, the score slides marginally. 

In the Asean 4, Malaysia fairs best, while in Asia, China scores high on this policy. This makes one wonder what lessons Thailand should learn from them. Thailand only fares better when compared to India.

Concerns on property-rights protection drops as the gap between Thailand and the Asean 4, China and India widens adversely. Again we are inferior when compared to China, India and the Asean 4.

 

The Ugly

Government and public institutions in the eyes of business executives has hit another record low. 

 

                                                2012  2013 

Public trust in politicians:                 2.36  2.02

Gov’t spending:                                 3.55  2.46

Gov’t effectiveness in  

reducing poverty:                              3.24  2.70 

Favouritism in decisions    

of gov’t officials:                                2.98  2.46 Effectiveness of lawmaking bodies: 3.23  2.71

 

The lowest score of all is for public trust in politicians – down from 2.36 last year to a record low of 2.02. This is the worst in Asia. The biggest drop in percentage points comes for governme     nt spending. This implies that fiscal spending is either wasteful or ineffective. One interesting aspect is that executives view the current administration’s effort to reduce poverty and inequality as worsening. Perceived effectiveness of lawmaking bodies has also dropped.

 

Conclusion

Thailand’s strength is a good financial and sound banking environment with good physical infrastructure, except railways. The big surprise is that private sector and households ranked higher in terms of social media and cyberspace connection, though the public side is a drag on productivity. Another surprise is private initiative in technology readiness and innovation, but collaborative research between universities and industry needs to be more focused.

Thailand still suffers chronic issues in its political system and bureaucratic organisation. Worst of all is the complete lack of public trust in politicians and the lawmaking process. Despite the new administration and new policies, efforts to reduce poverty and address agricultural issues are not well received.