The Country Private Sector Diagnostics (CPSD) for Thailand report is a joint World Bank and IFC project aimed at assessing the challenges and opportunities for private sector led growth in the context of living with COVID-19. It finds that to put Thailand’s growth trajectory back on track, a new development model can embrace the digital and circular economy as levers for growth. But seizing on this opportunity would require addressing the following important constraints to investment:
- Enhance competition: Increasing competition and creating an even playing field can promote the emergence of an innovative private sector.
- Promote foreign direct investments (FDI): Restrictions to foreign direct investments further reduce competition and stall the benefits of knowledge and innovation spillovers that might result from greater participation of foreign firms in the economy.
- Expand access to the workforce skills of the future: The supply of appropriate skills is missing due to falling working age population, few foreign professionals, underemployment, obsolete curricula. On the other, demand is high for innovative skills leading to a mismatch.
- Expand access to innovative finance: Despite a mature financial sector, low access to innovation financing further impedes the ability of firms, especially MSMEs, to adopt new circular business models and technology.
- Address key sector specific constraints: (a) Disruptive and digital technology: Highly complex digital regulatory framework. (b) Circular economy: Create a more targeted regulatory framework covering circular economy, institutional fragmentation in understanding and adoption of circularity, and supporting physical infrastructure, specifically reverse logistics system.
To meet these short- and medium-term challenges, Thailand needs to foster a new innovation-led growth model to jumpstart its path to reaching high income status and create better jobs in the future. The CPSD has outlined a list of recommendations to help unlock potential. The top priority ones are:
- Strengthen competition laws enforcement can help create more competition and promote easing of restrictions to hire of expatriate and foreign experts.
- Improve the Foreign Business License (FBL) especially on capital requirements for FDI and operating expense requirements.
- Introduce a skill-monitoring system and include the private sector perspective in curriculum design. Increase efficiency in the TVET system
- Increase the number of child development centers to support female labor force participation.
- Strengthen financial infrastructure and increase SME access by ensuring effective implementation of a digital-factoring initiative to promote supply-chain financing and enable SME access to key value chains.