Thailand Industrial Groups Boost R&D Spending

[Jacob Maslow]

Thailand companies are trying to bolster sales and stay ahead of developing competitors. At a time when the Thailand economy is struggling, research and development is essential for companies that want to be able to remain profitable.

Neighboring countries are offering competitive products at a lower price, causing many businesses to expand their premium products. Thailand companies have been increasing R&D expenditures into high-end products to remain competitive.

Siam Cement has raised their research and development budget greatly in 2015. The company is now spending 4.8 billion baht, or 1 percent of the company’s total sales, on research and development. Thailand’s third-largest company, Siam Cement is known for their higher-margin, premium products. Just last year, these products accounted for 35 percent of the company’s total profits.

The Thai government has been promoting an increase in R&D by offering tax deductions for companies willing to spend money to expand operations and increase product development. As a result, the government is allowing tax deductions of 300% of the money spent on R&D.

Siam Cement isn’t the only company increasing research and development. The country’s biggest oil and gas company, PTT has also increased their R&D to 2.25 billion baht. This is a slight increase over the company’s R&D of 2.08 billion baht in 2014. PTT has a company policy that ensures 3 percent of all income will be spent on research and development.

Companies are reluctant to spend a lot of capital on R&D due to Thailand’s struggling economy. With a weak outlook in 2015, many companies are afraid that demand for new products will not exceed money spent on research and development this year.

Companies are trying to find ways to control costs while still being able to bolster research and development. The current tax deductions are a step in the right direction.

-- 2015-03-27

[Costas2008]

"Companies are reluctant to spend a lot of capital on R&D due to Thailand’s struggling economy. With a weak outlook in 2015, many companies are afraid that demand for new products will not exceed money spent on research and development this year."

This a prime example of Thai mentality and the strength of Thai industry.

Without R&D and introduction of new products to the market, or improvement of existing products the company has no future.

Even in difficult times their research and aim for improvement should never stop.

Otherwise we will be hearing them complaining about foreign companies taking over the market in Thailand as they have the know how and spend huge amounts of money in R&D.

I hope more of them follow the example of SCG.

Edited March 27, 2015 by Costas2008

[fred Kubasa]

What R & D spending ? They have never developed a new product and do not have any Patents nor Nobel candidates ! A square pineapple ?