Thailand in Transition

I found a quite interesting article in the Bangkok Post, describing the different states of development in the Asean countries.

As you can see Thailand is efficiency driven, but not yet in the transition status to become an innovation driven economy. I am wondering how many years that will take, because right now there are only little signs of innovation. Thailand is quite good in executing/producing, as the hard disk, automotive and camera manufacturing shows. It does have a huge service sector as well, 52 percent of the GDP. Wikipedia lists the sectors:

Automobiles and automotive parts (11%), financial services(9%), electric appliances and components (8%), tourism(6%), cement, automanufacturing, heavy and lightindustries, appliances,computers and parts, furniture,plastics, textiles and garments, agricultural processing,beverages, tobacco.

Also, Thailand is spending 4 percent of it's GDP (or 20 percent of the state budget) on education, according to a official statement in January (that might change after the coup):

http://www.mcot.net/site/content?id=52ce01bd150ba0ea6400011f#.U4VS3hQayK0

So why is Thailand not further developed? I think the answer is in the paragraph above: While spending a lot of money, it isn't spend wisely. Otherwise innovation would be much higher, as you can learn from Singapore, where education is considered the best in ASEAN.

As long as Thailands (and it's neighboring countries) education system is based on transferring knowledge rather that understanding there is little change. Certificates doen't tell anything about your ability, as we learn everyday when we try to speak English with Thai people. 

I visited a science and reserach fair last year and it was emberrassing to see how little science was done there. It looked more like a vocational exhibition. From what I know about software and app development in Thailand, cloning and copying is still considered the best way instead of developing something unique. And if done so, it is most likey to be a local version instead of targeting at least a regional market.

But, the good news is, the situation is changing. I see a lot of young people setting up small businesses, from coffee shops to bicycle dealers, having the entrepreneural spirit that is required for a society to develop further and cross borders of traditional ways of doing business. 

So, let's hope the coup and the currrent crackdown on critical thinkers doesn't last long and Thailand can go back to business as soon as possible. And someone start's questioning the curriculum and the education of teachers.

Management of finance in Thailand: I still don't get it

When I left school and after my civil service, my parents insisted that I should study something useful, so I decided to give economics a try. In the first 2 years you learn a little about macroeconomics, but a lot about business management. So I do understand business a bit.

When I watch the way people do business in Thailand, in particular the SMEs and how people manage their private finances, I always wonder how that works. It is quite different from what I learned. In our compound all houses are soled, but 10 percent is empty. Not rented out, not for sale. And as you know, buildings aren't getting better over the years, if not maintained. And the houses aren't, nature slowly starts taking over. Or the small shops, where a fruit seller just opened next to a - fruit seller. And as I mentioned earlier, 8 Seven Eleven in my street.

I learned price calculation includes all costs, like purchasing goods, rents, taxes, expected profits, salaries. That doesn't seem to apply here: it almost seems that price is made up by what the neighbour sells it for. so the business part is a big secret for me.

But even more is personal finances. Average income in Thailand is 12.000 Baht per month, with higher salaries for office workers and lower for manufacturing. Thats about 400 USD. An iPhone is 800 USD, that's two salaries. TV, iPad, washing machine, IKEA furniture, Starbucks coffee - how the hell can urban Thais afford this?

They maybe can't. The Kennan Institute published a research about Thai financial management skills.

Thais have scored very low in regard to their financial management skills, according to Piyabutr Chonvicharn, Vice-Chairman of the Kenan Institute Asia.

Mr. Piyabutr cited a recent survey by the Bank of Thailand and the Finance Ministry as showing that three groups of people most at risk in piling up on debt were students, low-income people, and farmers. Shockingly, they make up at least 70 percent of the Thai population. He said that their poor spending habits resulted in higher household debts, which had risen from 55.6 percent in 2008 to an alarming 82.3 percent in 2013.

And these are just the official numbers. Urban people may have more debts through family channels - the informal sector is huge in Thailand and you can only guess how big. Also, higher incomes have more access to corruption.

Consumption is still high in Thailand, but it comes with a price: "Thailand's Bubble Economy Is Heading For A 1997-Style Crash" wrote Forbes in November last year. Add the political situation and the related downturn in some economic sectors, and you have a recipe for a disaster.

One indicator is that while I read that banks say bad performing loans are around 2-3 percent, I remember a quote of a motorbike seller in Issan who said that 25 percent of bike sells are never paid.

Let's see if Thailand becomes a problem in ASEAN or if it can survives this crisis.