ASEDP. 66

HUMAN RESOURCE DEVELOPMENT TOWARD A KNOWLEDGE-BASED ECONOMY: THE CASE OF THAILAND

Edited by MINORU MAKISHIMA SOMCHAI SUKSIRISEREKUL

INSTITUTE OF DEVELOPING ECONOMIES JAPAN EXTERNAL TRADE ORGANIZATION CHIBA, JAPAN

Institute of Developing Economies Japan External Trade Org a n i z a t i o n 3-2-2, Wakaba, Mihama-ku, Chiba-shi Chiba 261-8545, Japan All rights reserved. Published 2003 Printed in Bangkok, Thailand

ISBN4-258-55066-3

CONTENTS

Preface (Preface in Thai) Contributors List of Acronyms

i vii xv xvii

Chapter 1 Thai Labour Market in Transition Toward a Knowledge-Based Economy Chanin Mephokee 1. 2. 3. 4. 5. 6.

Introduction Structural Change in the Labour Market Structural Change in Thailand’s Industry Industrial Policy with Regard to ICT A Case Study of ICT-Related Firms Concluding Remarks

1 2 20 24 33 37

Chapter 2 Educational Development Toward a Knowledge-Based Economy Kulvitra Bhangananda 1. 2. 3. 4. 5. 6.

Framework of Education Educational Administration and Management Significant Progress in Education Reform Learning Technologies in Thailand Development of ICT for Education Policies and Master Plan Assessment of the Thai Educational System: Its Strengths and Weaknesses

41 50 60 66 70 82

Chapter 3 Science and Technology Development Toward a Knowledge-Based Economy Patarapong Intarakumnerd Pituma Panthawi 1. 2. 3. 4. 5. 6. 7. 8. 9.

Introduction Thailand’s Competitiveness with Regard to S&T Development National Innovation System of Thailand: Institutes and Linkages S&T Action Plan (2002-2006) Prospects and Policy Recommendations for S&T Development ICT Development of Thailand IT-2000: The First National IT Policy The Effects of IT-2000 From IT-2000 to IT-2010

89 90 93 104 107 108 109 118 119

Chapter 4 ICT Manpower Development Somchai Suksiriserekul 1. 2. 3. 4.

Overview of the ICT Situation and Diffusion in Thailand Estimate of the Demand for ICT Manpower The Supply of ICT Manpower An Analysis of the Mismatch Between the Demand for and the Supply of ICT Manpower 5. The Government Policies Toward the ICT Manpower Development 6. The International Competitiveness of Thailand’s ICT in the Global Economy 7. Issues and Prospects

133 139 147 152 157 163 170

Chapter 5 Toward a Knowledge-Based Economy: Northern Thailand Luechai Chulasai 1. The New Economics of Information and Government Efforts for ICT Development 2. Profile of Northern Thailand 3. The Information Technology Workforce and Education 4. Key Issues for Northern Thailand 5. Concluding Remarks

179 190 205 217 224

Chapter 6 Toward a Knowledge-Based Economy: Northeastern Thailand Theerapong Intarachai 1. 2. 3. 4. 5.

The Economic Situation and the Labour Market Structural Change and Industrial Development Prospect of Industrial Cluster: A Case of Nakhorn Ratchasima The Role of Higher Education for Manpower Development The Possibility of Building Information Networks and the Linkages with Administration, Education and Private Sector 6. Concluding Remarks

227 239 245 251 261 265

Chapter 7 Toward a Knowledge-Based Economy: Southern Thailand Minoru Makishima 1. 2. 3. 4.

Introduction Profile of Southern Thailand Human Resource Development in Southern Thailand The Prospect of an Industrial Cluster and the Development of the Southern Border 5. ICT Development Strategy in the South: A Case of Phuket 6. Concluding Remarks

269 270 280 290 301 310

PREFACE The rapid and universal application of information and communications technology (ICT) is considerably conducive to the economic development of nations. ICT is a combination of information technology (IT) and communications technology (CT). The former involves the processing and packaging of information, while the latter is concerned with the interaction, exchange and linkage with information and databases among users via networking. The coverage of ICT goes beyond such activities as programming, networking and analyzing. It enables the use of computers and related tools to enhance the quality of products, labour productivity, international competitiveness and quality of life. The fact that new knowledge is made available and widely disseminated through ICT can lead a traditional and energy-based economy into a knowledge-based economy (KBE). KBE, therefore, refers to an economy in which a significant proportion of the population performs knowledge-related activities. Globalization plays a crucial role in integrating and converging knowledge and economic activities between developed and developing countries. One measure of a nation’s economic development in the future can be by its ICT development. Improving ICT human resources in developing countries to keep up with those in the developed countries can narrow the disparities that create digital divides between and within countries. The Institute of Developing Economies, Japan External Trade Organization (JETRO), in collaboration with academicians, government officials and experts in Thailand, wanted to study the Thai ICT sector and analyze Thailand’s potential for becoming a KBE. Since a smooth transition to a KBE depends substantially upon appropriate and desirable ICT human resources, an analysis on the human resource development in relation to ICT issues in Thailand was especially needed. A joint research project entitled “Human Resource Development Toward a Knowledge-Based Economy: The Case of Thailand” was undertaken to achieve those objectives. The research highlights four major aspects: the Thai labour market in ICT-related industry, education development toward a KBE, science and technology (S&T) development toward a KBE and ICT manpower development. Also, it includes case studies to present the current ICT situation of three regions of Thailand. The research findings reflect strengths for the Thai Government to sustain and

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weaknesses to remedy. The research also highlights issues entitled to consideration from Japanese technical cooperation as well as from other international bodies. Contributors to this volume present the findings of that project. Chapter 1 discusses the labour market in Thailand in transition toward a KBE. The chapter consists of two objectives: First, it attempts to explain the structural changes in the Thai labour market and in Thai industry. Due to changes in Thai industry, the Thai economy is moving toward a knowledge-based economy that requires new labour skills, especially science and technology (S&T) skills. However, the Thai labour market has not improved significantly in labour quality. Therefore, the Thai labour market is not ready for the new era of a knowledge-based economy. The second objective is to investigate the attempt by both public and private sectors to develop Thai human capital. The first part investigates the Government’s industrial policies in regards to human resource development and then it investigates the strategies by Thai firms in ICT-related industries on human capital improvement. There have been several plans and policies to deal with ICT-related human resources development. The main targets are improving both quantity and quality of ICT-related human capital in Thailand. One major factor keeping Thai firms from improving their competitiveness is the lack of sufficient incentives provided by the Government for these risky activities. Therefore, the investment in research and development among Thai private enterprises is too low. The chapter concludes that the result of this attempt is below the desired achievement. Chapter 2 focuses on education development toward a KBE. Since education is the most important factor for empowering all people and improving the competitive advantage of the country, reform of the education sector is now a national agenda for Thailand for restructuring its economy and society in order to achieve sustainable development. Significant progress has been made since the enactment of the 1999 National Education Act, particularly in ensuring basic education for all and the reform of the education system in order to enhance people’s potential and capacity to improve the country’s development and international competitiveness. The reform of higher education also has been initiated accordingly. For e-learning technology in Thailand, major policies and plans regarding ICT for education have been developed. In this chapter, the strengths and weaknesses of the Thai education

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system are pointed out. In order to meet the demands of a KBE, Thailand urgently needs to reform its entire performance-based budgetary allocation and utilization; it needs improvement and enhancement of teaching and learning activities in general, and specifically, it needs to focus on ICT-curriculum development. Chapter 3 focuses on science and technology development toward a KBE. Special attention is paid to the development of information and communications technology. The National Innovation System Concept is used here to analyze characteristics of Thailand’s stage of science and technology development. On the whole, Thailand’s National Innovation System (NIS) is weak and fragmented. Not many firms have the capability to innovate, and research and development activities in firms is rare. Knowledge linkages between firms both vertically (i.e. supplier-user relationships) and horizontally (i.e. cooperation between firms in the same or related industries) are generally weak. Institutional supports for firms’ technological capability development and innovation is ineffective. Likewise, the university and industry linkage is underdeveloped because most of the surveyed firms perceive universities only as sources of producing human resources. They are considered to be either irrelevant or unimportant for firms’ technological activities. However, as regards ICT development, Thailand has made significant progress in recent years. A committee, headed by the Prime Minister, responsible for IT policy making has been established for more than a decade. Two IT master plans have been implemented rather successfully. At present, Thailand has adequate infrastructure. Many schools throughout the country have free Internet access. Utilization of IT in the public sector has obviously increased. Chapter 4 discusses ICT manpower development in Thailand. The market value of ICT has rapidly grown after a substantial drop due to the 1997 economic crisis. But the application and spread of ICT is uneven in Thailand. More people in Bangkok own computers and have access to the Internet than those in other regions. The majority of the ICT workforce has a Bachelor’s degree, are young (25-34 years old) but have limited work experience (1-3 years). The demand for ICT personnel is affected by annual economic growth and the ICT infrastructure investment of the Government. With an assumed annual economic growth rate of 2.5 percent, 4.5 percent and 6 percent, it is estimated that there will be a need for 122,100 ICT workers in 2004, 157,547 in 2005 and 184,123 in 2006. There was a shortage of ICT

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personnel in 2001 of 18,522 persons, and at the estimated growth rate, the shortage will increase to 26,053 workers in 2006. An appropriate approach to coping with the skill shortage relies on an improvement in the ICT training by the private and public sectors alike. Thailand’s competitiveness in the computers and accessories exports to the global market keeps declining. The only strength of the international competitiveness of Thailand’s ICT sector rests on the liberalization of its ICT market. The ICT sector’s weaknesses, however, are many and include the non-existence of e-commerce laws and enforcement, the lack of qualified ICT manpower, limited supports from the Government, a scanty investment in research and development, a widespread violation of intellectual property rights and insufficient ICT infrastructure to attract private investments. ICT strategies for turning the Thai economy into a KBE focus on five major sectors: e-education, e-government, e-business, e-society and e-industry. Chapters 5, 6 and 7 present case studies of regional development toward a KBE. Chapter 5 addresses the development strategies in the northern region toward a knowledge-based economy. It finds that less than 5 percent of manufacturers use information and communications technology. Most of the firms in the North are small and medium enterprises (SMEs), and the high cost of leased-lines is an obstacle to e-business. The North is highly attractive for investments because of its abundant labour force working for lower wages than in Bangkok as well as its location near domestic and foreign markets. The majority of electronic firms in the Northern Region Industrial Estate (NRIE) are Thai affiliates of foreign-owned companies. The firms in the NRIE have an advantage in the lower cost of production than overseas competitors, but sophisticated production that needs advanced manufacturing technology is operated by other affiliates overseas instead. There is little evidence that ICT is used to improve product design and manufacturing processes. Local firms have the misunderstanding that ICT only benefits high-tech businesses and is not relevant to traditional manufacturing and service businesses. Local major businesses, such as handicrafts, food processing and tourism, need to enhance their ICT knowledge, skills and creativity to improve their services and productivity. Although there have been a number of efforts made in applying ICT to local SMEs, they are not enough in meeting the needs of the SMEs. Many local firms have not succeeded in competing with overseas competitors, not only in terms of productivity, innovation and quality but also

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in ability to manage their basic internal business operations. Business operations and accompanying problems need to be clearly identified and subjected to improvement through the use of ICT. Chapter 6 addresses development strategies in the northeastern region toward a knowledge-based economy. In the view of the economy and labour market, the existing situation of the Northeast is not favourable for ICT development. Its gross regional product (GRP) amounts to 8.9 percent of the country’s gross domestic product. The region has one third of the Thai population and the highest incidence of poverty. Thus, in terms of per capita income, the Northeast ranks the lowest and represents only 12.5 percent of the per capita income of the Bangkok metropolitan area. The majority of the population older than 15 years is poorly educated and unskilled. Industrial development in the Northeast, measured by the GRP industrial sector, shows an improvement in its performance and significant structural changes. Most enterprises are found in the agri-based industry. Public universities play a major role in higher education and the information centre of the region. The information network management in the Northeast is chaotic. Education institutions, public agencies and private firms have developed their own network independently with different objectives. This is an issue to which a public ICT organization should pay serious attention. The digital divide in the Northeast presents the greatest challenge for policy makers, strategists and planners who are responsible for ICT development. In the move toward a knowledge-based society, intensive training programmes, especially in how to utilize ICT for lifelong learning and improvements in the standard of living, should be widely implemented in the region. Chapter 7 addresses development strategies in the southern region toward a knowledge-based economy. It notes that the industrial structure of the South depends upon natural resources such as agricultural products, fish and rubber, which are not easily conducive for developing industrial clusters. However, there is considerable potential for becoming a gateway for trade and investment with neighbouring countries through a regional framework such as the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). Moreover, Electric Data Interchange (EDI), as is pointed out, would be effective for the expansion of the transportation network. The chapter includes discussion on an ICT development project in Phuket and surrounding areas. The success of that project rests upon the Government’s initiative in relaxing regulations for work

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permits and visas for ICT foreign specialists and other incentives in cooperation with the private and education sectors. Also, the necessity of ICT-related human resource development is demonstrated in the chapter. Efforts for upgrading IT literacy, including Japan’s technical cooperation, are elaborated and the need for human resource development in relation to a KBE is stressed. A major conclusion drawn from this study is that the current human resource development is inadequate to move the Thai economy toward a KBE in the near future. Key obstacles responsible for this include the weak ICT-related labour market, poor science and technology education development, a low level of research and development in science and technology and insufficient ICT manpower with desirable qualities. Moreover, the human resource development is even weaker in other regions compared to the Bangkok metropolitan area. Despite a leading role played by the Thai Government in solving these problems, assistance from Japanese technical cooperation and other international agencies is of importance in accelerating the Thai economy to attain success in a KBE, as anticipated. We would like to express our deepest appreciation to all of the contributors. We would also take this opportunity to show our gratitude to those persons who had played an important role in providing ideas, comments and information to this study. Also, thanks to those persons who have extended kind assistance and cooperation through proofreading this volume, in completion of the study. Any opinions expressed in this volume are those of the authors and not of the organizations to which they are affiliated.

March 2003 Editors

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CONTRIBUTORS Chanin Mephokee Director, Economic Research and Training Center (ERTC) Associate Professor, Faculty of Economics Thammasat University Kulvitra Bhangananda Educational Officer Office of the National Education Commission (ONEC) Patarapong Intarakumnerd Project Manager of Thailand’s National Innovation System Study National Science and Technology Development Agency (NSTDA) Pituma Panthawi Former Researcher of National Electronics and Computer Technology Center (NECTEC), NSTDA Somchai Suksiriserekul Associate Professor, Faculty of Economics Thammasat University Luechai Chulasai Associate Professor Faculty of Economics and International Center Chiang Mai University Theerapong Intarachai Team Executive, HR Shared Service Team Bank of Thailand Northeastern Region Office Minoru Makishima Visiting Fellow The Human Resource Institute, Thammasat University, Thailand, and Senior Research Fellow Institute of Developing Economies, JETRO, Japan

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List of Acronyms AERIN APEC ATSI BAAC BOI BOT CAT CIO CMPEG EDI EdNet EPZ ESCAP FDI FTI GDP GERD GHB GINet GIS GIZ GPP GRP GSB HRD IC ICT IDE-JETRO IFCT ILO IMD IMT-GT IT ITA ITZ MOE

Andaman Environmental Resource Information Network Asia-Pacific Economic Cooperation Association of Thai Software Industry Bank for Agricultural and Agricultural Cooperative Board of Investment Bank of Thailand Communication Authority of Thailand Chief Information Officer Cyber Media Park for e-Gravity Electronics Data Interchange National Education Network Export and Production Zone United Nations Economic and Social Committee for Asia and Pacific Foreign Direct Investment Federation of Thai Industries Gross Domestic Product Gross Expenditure for Research and Development Government Housing Bank Government Information Network Geographic Information System General Industrial Zone Gross Provincial Product Gross Regional Product Government Savings Bank Human Resource Development Integrated Circuits Information and Communications Technology Institute of Developing Economies and Japan External Trade Organization Industrial Finance Corporation of Thailand International Labour Organization International Institute for Management Development Indonesia-Malaysia-Thailand Growth Triangle Information Technology Information Technology Agreement Information Technology Zone Ministry of Education

xvi

List of Acronyms (continued) NECTEC NESDB NIE NIS NITC NOLP NRIE NSO NSTDA OECD ONEC PCBA R&D RTO S&T SIFCT SME TNC TOT UNDP UNINET US

National Electronics and Computer Technology Center National Economic and Social Development Board Newly Industrializing Economies National Innovation System National Information Technology Committee NSTDA Online Learning Project Northern Region Industrial Estate National Statistics Office National Science and Technology Development Agency Organization of Economic Cooperation and Development Office of the National Education Commission Printed Circuit Board Assembly Research and Development Public Research Technology Organization Science and Technology Small Scale Industrial Finance Corporation of Thailand Small and Medium Enterprise Transnational Corporation Telephone Organization of Thailand United Nations Development Programme University Network United States

xvii