Thailand has great potential to become a regional hub for trade and investment under the Asean Economic Community (AEC); however, the country urgently needs to solve the shortage of skilled labour as well as develop its education system to ensure upper-industry growth, a key foreign observer says.
In an exclusive interview with The Nation, Karl-Heinz Heckhausen, president of the German-Thai Chamber of Commerce (GTCC), said German investors were very confident that the Kingdom’s economy would flourish under the AEC because it has many advantages over others in the region.
With a good, solid relationship between Thailand and Germany, this country is one of the most favoured destinations for German investors in Southeast Asia.
The GTCC foresees that Thailand will no longer be able to rely on manufacturing and industries that are labour-intensive because of rising wages. Thus the Kingdom needs to move into upper-echelon industries that rely on technology, and German enterprises are well placed to transfer such technology and provide training in how to use it, as well as help develop the education system.
“Thailand has high possibilities for becoming a hub in several industries, in particular those that rely on high technology and service. But the main problems that need to be solved concern labour shortages and a lack of skilled workers,” the GTCC president said.
Industries that German investors have shown high interest in for the Kingdom include education, renewable energy, waste management, automobiles, hotels and hospitals.
“We know some automotive firms will expand into Thailand this year because it is well suited to be an automotive-production base,” he said. However, he declined to disclose the names of these companies.
Heckhausen said the development of education to serve industrial expansion should be a priority for Thailand, otherwise the lack of skilled workers such as engineers would lower investors’ confidence.
The labour problem has been raised for several years by many foreign investors. However, Thailand has not come up with concrete solutions to solve the problem, he said.
The GTCC president said the Kingdom needed to encourage every company to help train young people to serve industrial growth. Educational development and training for skilled workers should be implemented to ensure Thailand’s ability to become a centre for technology transfer from Germany and a hub for Asean high-technology industries.
For instance, every German company needs to set up programmes to train youngsters so that they can take industrial expansion in the right direction. The GTCC also foresees that Thailand could be a hub for Germany to export goods to neighbouring countries – mainly Myanmar, Cambodia and Laos. Volker Treier, deputy chief executive and managing director for international affairs at the Association of German Chambers of Industry and Commerce, said Thailand had a big opportunity to be a centre of development to support the growth of many advanced industries. Although Thailand is not the top destination for German investors in Asean, some German companies foresee greater chances to expand their investment in many high-technology industries here.
Thailand is already a logistical centre in Asean. The domestic market is also large, and seamless borders under the AEC will ensure strong trade among Asean member states and with countries outside the region, he noted.
Treier said Thailand needed to increase its skilled workforce by at least 10 per cent, as the current labour situation is quite tough.
So far, Indonesia has drawn the largest amount of German investment in Asean. If Thailand wants to draw more investment, the government needs to think about educational development seriously as well as continuing to develop its established strengths, he added.
The GTCC has also encouraged Thailand to begin negotiations quickly with the European Union on a free-trade agreement, since it would promote stronger trade and investment between the two sides.
According to the chamber, Germany is the most important trading partner for Thailand among the EU member states. The value of bilateral trade was bilateral trade was 8 billion euros (Bt322 billion) in 2012, and Thailand has enjoyed a trade surplus with Germany.
The chamber says German trade and investment with Thailand is stable and firms are poised to seize new opportunities in the future ahead of Asean integration.
The Board of Investment of Thailand reported 31 applications with expected combined initial investment worth Bt3.14 billion from Germany last year.