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Thailand: Cutting through the gloom in export prospects
Thailand’s export prospects look gloomy this year amid weak global demand and the US-China trade spat.
The conditions have prompted several economic forecasting institutions to cut their export views. The Bank of Thailand became the latest last Wednesday, trimming its full-year export forecast to zero growth from the 3% rise seen in March.
The downward revision came after the economy grew at the slowest pace in more than four years in the first quarter at 2.8%. An export contraction for the third straight month in May further clouded the economic outlook.
Banjongjitt Angsusingh, director-general of the International Trade Promotion Department under the Commerce Ministry, sat down with the Bangkok Post to discuss how to promote services in addition to goods to boost export income in the second half.
How will you increase services income in Thailand?
The department is tasked with promoting services in four areas: wellness and medical services; digital content; supporting services; and logistics.
In the second half of this year, the department will continue the market promotion plan through roadshows, trade fairs and business matching, while pitching foreign networks to match with domestic entrepreneurs, particularly within the wellness and medical cluster, which covers spas, medical services, special clinics, services related to the elderly such as nursing homes, long stays, caregivers and home care centres, as well as Thai boxing and cosmetics.
Service businesses can be expanded either in the form of joint venture investments or subcontracts with foreign networks.
The cluster promotion will boost demand for products like furniture, food and drinks, medicine and medical supplies, garments and lifestyle products, cosmetics and body care, as well as related businesses such as tourism, interior design, insurance, hospitals, e-commerce and e-payment.
The service sector covers businesses relating to human interactions and requires skilled labour. The department has come up with programmes to develop domestic entrepreneurs under the New Economy Academy to upgrade capability to compete in the global market.
Wellness and medical businesses have huge promise in Thailand as society ages.
The department also plans to attract foreign investment from Scandinavia, Europe, and Japan, where businesses are ready to forge joint ventures with smaller Thai entrepreneurs in provinces.
This will help raise income distribution in the local economy.
Chiang Mai, for instance, could be developed into the northern region’s medical hub, given its strength as a tourist destination, as well as its many hospitals and educational institutions.
The department recently commissioned a survey and found that a physical therapy centre in Chiang Mai, where a group of doctors from Chiang Mai University formed a joint venture with German and American investors, provides physical therapy and rehabilitation services based on scientific methods in order to prevent sickness. The centre draws foreign customers from Germany, Europe and the United States. The centre also coordinates with other senior living centres to offer other services such as long stays.
The institute differentiates itself by specialising in prevention rather than treatment of patients.
Long-stay resort Vivobene Village, formed by Swiss investors and Thai entrepreneurs, is another good example. Some 80% of customers are foreigners. Some elderly customers stay for a year, and some are tourists who leave their husband or wife or parents in the long-stay resort’s care while travelling.
Vivobene is managed by a Swiss team, with more than 110 committed employees to take care of guests. Vivobene Village also has medical specialists to take care of customers once they become sick. Foreigners find the services affordable.
Can we expand the wellness and medical concept to other provinces?
This concept can definitely be developed in other provinces, such as Ranong, which has hot springs. If Thai entrepreneurs and related businesses can be developed as a cluster, the province can be developed as the region’s medical hub. The local business network is important.
Developing wellness businesses will boost income distribution to the regions, and income from wellness is relatively higher than from the average tourist or backpacker.
For the second half of the year, are there any special activities to promote services?
The department will soon organise a trade mission to Kunming in China and visit hospitals in Yangon in Myanmar to help build a network for Thai entrepreneurs.
Chinese operators in ageing businesses and hospitals from Hong Kong, Kunming and Chengdu are also scheduled to visit Chiang Mai in August for business matching and networking with local wellness operators such as Vivobene, Health Lanna Spa and Chiva Care.
The department will work with provincial commerce offices to galvanise local businesses into investing more in wellness and medical services.
All this needs cooperation among many agencies such as the Public Health Ministry, the Labour Ministry and the Education Ministry if we really want to promote wellness and medical services in provinces.
Thailand’s 20-year national strategy plan (2018-37) calls for Thailand to become the world’s medical hub at the end of the plan.
What is the department’s strategic plan?
The department is committed to promoting the country’s image as the region’s medical hub among international customers and luring investors by raising their investment exposure in provinces.
More investment will increase local employment and effective use of local raw materials and products accordingly.
Provinces in all regions in Thailand can be developed as medical hubs if they can develop strong clusters and build up networks with universities.
The department will explore both primary and secondary provinces to find their individual strengths and hold business matching events to draw investors to the provinces.
What about digital content promotion?
The department is building trade alliances and outsourcing with foreign partners for digital content, which covers games, animation, characters, software, films and documentaries.
In the second half of the year, Thailand will join film festivals in Cambodia and Taiwan, as well as the Sheffield International Documentary Festival in England and CommunicAsia in Singapore.
Thai investors, especially construction firms, will also be directed to seek opportunities at the upcoming World Expo 2020 in Dubai, which is expected to demand construction of booths, pavilions and other facilities.
Total construction value for projects in support of World Expo 2020 is estimated at US$110 billion. The projects include an elevated train and a new hotel.
The event is aimed at drawing millions of visitors, 30% of whom are expected to come from countries in the Middle East and the rest from other parts of the world.
There are also trade missions to Oman, Bahrain, Chengdu in China, and Vietnam.
The department will promote logistics networking through Tilog Logistix, the Thailand International Logistics Fair. The fair will take place Aug 28-30 in Bangkok.
How is the export value of services faring?
The department estimates that export value from the service businesses under the department’s responsibility is at least 9 billion baht this year, up from 6.83 billion baht last year.
Source: https://www.bangkokpost.com/business/1704820/cutting-through-the-gloom-in-export-prospects