Deloitte Touche Tohmatsu optimistic Thailand escape “Middle Income Trap”

Optimism seems to abound when discussing Thailand’s manufacturing sector, says Adrienne Selko, Industry Week journalist. However, one of the overall economic concerns Thailand faces is that they are in a “middle income trap.” As wages rise, manufacturers often find themselves unable to compete in export markets with lower-cost producers elsewhere. Yet, they still find themselves behind the advanced economies in higher-value products. This is the middle-income trap which saw, for example, South Africa and Brazil languish for decades. Adrienne turned to three Deloitte Touché Tohmatsu partners based in Thailand, to help put into perspective both the challenges and opportunities that the country is facing. Nuanjai Gittisriboongul, Cameron Mccullough, and Stuart Simons provided background information as well as some perspective on the country’s strategic plans. “When I asked Deloitte about Thailand’s chances for moving out of the middle income trap, they were optimistic,” says Adrienne. “They explained that the government does have policies in place to go after high value manufacturing. The government understands the pressure they face from nearby ASEAN competitors,” says Adriennes, adding the BOI is focusing on targeted sectors that are “related to future global trends, such as alternative energy, biotechnology and high-value-added services.” The BOI will offer additional incentives for research and development, human resource training and environmental protection. The 2013 Global Manufacturing Competitiveness Index Report prepared by Deloitte‘s Global Manufacturing Industry group and the Council on Competitiveness ranks Thailand  11th in 2012 in terms of competitiveness (Source).

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