Brand Thailand, In Ruins?

[GungaDin]

Author: Kurlantzick

is fellow for Southeast Asia at the Council on Foreign Relations.

The End of Brand Thailand

How mismanagement and mistakes turned a high-growth democratic paradise into a violent mess.

One misstep was a failure of long-term thinking. During the good years, neither Abhisit’s Democrat Party nor Thaksin’s Thai Rak Thai Party, which first took power in 2001, invested enough in overhauling an archaic education system, which emphasizes basic literacy and rote memorization. Taiwan, Singapore, China, and India invested in university education, English-language instruction, and higher-value skills, and as a result managed to build innovative companies with a global outlook, and sizable English-language outsourcing industries. But Thailand’s government and its major business groups remained wedded to lower-value manufacturing for foreign companies. Unlike China or Singapore, the government failed to create effective incentives to help Thai companies improve their workforces and expand globally. Large Thai conglomerates, historically protected by tight ties to government leaders, moved slowly to embrace real international competition, even as Thailand inked free-trade deals with China and other Southeast Asian states.

The failure was obvious. Thailand’s scores on the TOEFL exam, the test of English skills for students heading to university, now consistently rank among the lowest in Asia. No Thai-owned companies have emerged that compare with the Taiwanese computer giant Acer or the Indian IT giant Infosys. And as China gobbles up more and more low-end manufacturing, high-tech firms ignore Thailand. Intel built a $1 billion chip-assembly plant in Vietnam, a country that in the 1980s and 1990s lagged far behind Thailand. Last year Taiwanese manufacturers pledged to invest billions in Vietnam, compared with just $200 million pledged in Thailand, according to the Associated Press. Because Thailand has been unable to move into higher-value industries, and has been incapable of using government spending to prop up the economy indefinitely in an era of global financial crisis, its growth rates over the past four years have tumbled badly, from 5.2 percent in 2006 to 4.9 percent in 2007 to 2.5 percent in 2008 and minus 2.3 percent last year.

More here, in Newsweek.

[chaoyang]

One misstep was a failure of long-term thinking. During the good years, neither Abhisit’s Democrat Party nor Thaksin’s Thai Rak Thai Party, which first took power in 2001,invested enough in overhauling an archaic education system, which emphasizes basic literacy and rote memorization. Taiwan, Singapore, China, and India invested in university education, English-language instruction, and higher-value skills

All very true, but the negligence stretches back much further than a single regime. It's a systemic problem that has been with Thailand since it was called Siam. The godfathers and feudal system still in operation have never had an interest in reforming anything. They want to maintain their overwhelming privilege.

[samuibeachcomber]

One misstep was a failure of long-term thinking. During the good years, neither Abhisit's Democrat Party nor Thaksin's Thai Rak Thai Party, which first took power in 2001,invested enough in overhauling an archaic education system, which emphasizes basic literacy and rote memorization. Taiwan, Singapore, China, and India invested in university education, English-language instruction, and higher-value skills

All very true, but the negligence stretches back much further than a single regime. It's a systemic problem that has been with Thailand since it was called Siam. The godfathers and feudal system still in operation have never had an interest in reforming anything. They want to maintain their overwhelming privilege.

The weathy and educated wanting to retain their priveledged status is the stumbling block to advancement for anybody else.And the number one stumbling block imho is poor education,thais laziness in learning,is another.

[dumball]

I thought this thread would be about 'Branding'or 'Logoing' , that is what large enterprises have spent millions of dollars on over many years to put their name or product to the fore-front of consumers thinking , for instance , people do not ask for tissue , they ask for Kleenex . Thailand has done the same thing in its advertising of the country for many years quite successfully , but reports back home tended to change that and put a different slant on what Thailand was mostly about , now with the years of silly infighting and squabbling about petty issues , much of this advantage has been wiped out and an ominous backdrop has replaced all of the industrious work over the years . A good reputation takes a lot of good work to establish , especially on a world wide scale , but just a few good 'Bloopers' can destroy that reputation quite rapidly , look how rapidly the tainted baby milk from/in China raced around the world , now many of their products are given more than just a second look .

Just my slant on things , no knicker knots please .

[mahtin]

Amazing.

Maybe there's still hope for a better rate of exchange

[phetaroi]

When I moved to Thailand in May of last year, I had at least a half-dozen friends and colleagues who had tentative plans to visit me this summer or next. They saw it as a golden opportunity to visit a country they had heard such good things about.

After the riots I left and have returned to the States. All of those who were planning to visit me in Thailand said that they had followed the political demonstrations, arson, and rioting enough in the western press to know they would never have visited, even had I stayed.

They may not be at all representative. But they certainly went from having a vague but positive view of Thailand, to having an overwhelmingly negative view of Thailand. And, as for myself, after more than a dozen vacations in Thailand, and then living there for about 13 months...I don't regret my many visits, I saw and enjoyed wonderful sights and history (an avocation of mine), and met lots of wonderful people...but I lost my taste for the place when the dense black smoke billowed down our soi on May 19.

[mahtin]

Well, I have a friend who will still be visiting this summer.

Who dares, wins.

[Tejas]

All very true, but the negligence stretches back much further than a single regime. It's a systemic problem that has been with Thailand since it was called Siam. The godfathers and feudal system still in operation have never had an interest in reforming anything. They want to maintain their overwhelming privilege.

I think you just got to the core of a rotten apple.

[roamer]

I posted this a while back:

"Remarkably few. Its a bit of a red herring to look at how the baht is doing against currencies that are weak at the moment or conversely those that are stronger. If your looking towards the future then the economies of nations like Oz or UK will recover, their economies are diverse, a better educated and more flexible workforce, stronger governments etc, not perfect but enough to weather the storm. Thailand on the other hand seems to be a one trick pony, in the right place after the currency crisis of the 90's with a booming world economy ready to soak up the goods from the factories that the multi-nationals rushed to set up at the time. So when that world economy starts to get moving again so will LOS right ? Well maybe not, those same multi-nationals will use this period to retrench and look to other places where production costs are lower, governments more flexible in terms of extending the hand of welcome and certainly more stable. How long since you picked up a pair of brand name trainers or T shirt with a made in Thailand tag ? The vast majority of that business switched to Vietnam , Cambodia, Sri Lanka, let alone China years ago. Easier to do as the equipment and production facilities simpler to set up. A very large chunk of Thailand's exports are heavy machinery and electrical, automotive etc and its those companies that will be looking to retrench during this economic slowdown. Its not just about the baht, its also political and the political situation in Los remains as clear as the Chao Praya river. There has been no forward planning just a blind belief that the carousel would keep turning, even now with the music stopped and the fairground emptying there doesn't appear to be anyone listening."

The only thing that surprises me is people still believing in the Thai economy. Sure it has huge foreign currency reserves, a surplus where many more advanced economies are running deficits. Long term its simply not sustainable for all the reasons stated above. Its xenophobic attitude towards adopting English as an official second language in a country where few outsiders speak the language. The completely useless education system. I noticed someone commenting that Thai's are lazy learners, so would anyone be in this rote memorisation don't question the teacher system. There was a real window of opportunity that has been missed. Those currency reserves and the strong baht seem to be a symbol of national pride to the government.

If you had spent less than 10% of them on a crash program to improve the education system for all then there would have been a future. You didn't need the political problems to kill your tourist industry when your monetary policies were already doing it for you. It was an agrarian economy, it will go back to being one.

[mahtin]

So still hoping for a better ROE