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Thailand in the New Global Landscape New Paradigm, New Vision, New Action Suvit Maesincee Sasin Institute for Global Affairs (SIGA) Civilization in the Making Society Agriculture Industry Knowledge Community Rural Urban Virtual Days Seconds Pace of Change Months Centricity Country Corporation Citizen Regime Imperialism Capitalism Cosmopolitanism Changing the State of Nature Country A B C Nation-State Company People Solid Modernity Liquid Modernity • Connectivity • Interactivity • Mobility • Virtuality Three Major Gaps CURRENT FUTURE Given environmental trends, what will be the likely organizational vision? Assumptions What are our scope About About of business? Mission Mission Assumptions What are our core About Core values/competencies? Competencies Transformation Gap Assumptions What is our organization Assumptions About About environment? Environment Environment Strategic Gap Given our organizational vision, what will be the likely our scope of business? Capability Gap Given our future scope of business, what capabilities/values will be necessary? • Global Dynamics • Global Forces & Trends • Thailand’s Lost Decades Passing through the Sea of Change Geo-Political Change Demographic Climate Change Change Geo-Political Change… Global Power Shifts Power Diffusion Globalization from Below Citizen The Rise of the Rest Corporation Country Power Transition European Century American Century Asian Century Geo-Political Change… The New World Order Uni-polarity • Military Power Multi-polarity • Economic Power Non-polarity • Transnational Relations Source: Joseph S. Nye; The Future of Power Geo-Political Change… Power Transition World Economic Structure Global GDP* % 75 Developed Countries The Triad The Rise of the Rest 50 Developing Countries The Rest of the World 25 1820 70 1913 Source: The Economist 50 73 The Rise of Asia 2005 The Rest of Asia China/India Geo-Political Change… The New USA Source: ADB (2011) Geo-Political Change… Regional Integration 3,284 mil ASEAN + 6(50% World Population) ASEAN + ASEAN 2,068 Mil 3 (31% World Population) 585 Mil (9% World Population) 12,250 bil US$ (22% World GDP) 9,901 bil US$ (18 % World GDP) 1,275 bil US$ (2 % World GDP) Economic Structure of All ASEAN Nations 1,200,000 1,000,000 800,000 70,000 In 2009, ASEAN’ GDP is 1,496,341 US$ million • 1,359,113 millions or about 90.8% is from ASEAN6 • 137,228 millions or 9.2% id from CLMV. 1,033,000 62,200 60,000 50,30050,000 40,000 580,300 600,000 30,000 416,400 400,000 351,200 20,000 292,200 278,100 14,700 200,000 10,000 8,700 15,4202,400 0 29,460 2,000 Lao (2009) Cambodia (2007) 60,070 3,100 3,500 4,300 19,880 1,100 Burmar (2009) 0 Vietnam (2009) Philippines Indonesia (2009) (2009) GDP Malaysia (2009) GDP per capita Thailand (2009) Singapore (2009) Brunei (2008) Source: CIA World Fact book • In 2009 CLMV’s population was about 28% that of ASEAN; their economy size, however, was only 137,228 US$ Million, about 9.2% that of ASEAN. • Indonesia has the biggest economy in terms of GDP while Singapore performs the best in terms of wealth distribution. Economic Structure of All ASEAN Nations 100% 0.00 90% 20.50 29.80 14.90 27.20 43.20 70% 31.70 60% 31.70 45.60 74.10 46.80 40.20 30.00 41.60 20.00 Agriculture 40% 72.80 30% 20% 10% 0.70 10.40 29.00 80% 50% 13.70 9.10 54.60 38.50 41.00 36.80 39.20 49.30 38.30 Manufacturing Service 44.00 25.30 0% Source: CIA World Fact book Net FDI in ASEAN Net FDI Inflow to ASEAN (2010), Million USD Country Intra-Region Inter-Region Total FDI Share of FDI (%) Brunei 89.6 539.9 629.5 0.8 Cambodia 349 433.6 782.6 1.0 Indonesia 5,904.2 7,400.1 13,304.3 17.6 Laos 135.4 197.2 332.6 0.4 Malaysia 525.6 8,630.2 9,155.9 12.1 Myanmar - - - - Philippines (7.8) 1,720.8 1,713 2.3 Singapore 3,377 32,143.2 35,520.2 46.9 Thailand 433.6 5,886.1 6,319.7 8.3 Vietnam 1,300 6,699.1 8,000 10.6 ASEAN 12,107 63,650 75,757 100 Source: ASEAN Sec ASEAN’s Business Environment Country Domestic Minimum Market Wage Size Export Cost Ease of Ease of creating getting business credit finance Thailand Singapore Malaysia Philippines Indonesia Brunei Vietnam Burma Laos Low Competency N/A Medium Competency N/A High Competency N/A Source: OSMEP The Rise of ASEAN Middle Class • ASEAN Middle Class: 156 million people (26% of ASEAN population) • Financial Times expects ASEAN to have middle class population at approximately 300 million people by 2015 • By 2030, the number of middle class segment in Indonesia could rise by more than 50 million, in Malaysia by 20 million and in Thailand by more than 25 million Affluent: Brunei, Singapore Mainly Middle Class: Malaysia, Thailand Transitioning to Middle Class: Indonesia, Philippines, Vietnam Low Income: Cambodia, Laos, Myanmar ASEAN Class Structure IMD Overall Competitiveness 2007 – 2011 Rankin 0 g 2007 2 2008 2 2009 2010 2011 1 3 10 3 10 15 17 19 20 16 18 20 18 19 Malaysia 23 27 27 29 30 26 30 33 40 Thailand 26 31 35 40 39 42 43 27 32 37 Indonesia Philippines Singapore China Mainland India 41 45 50 51 54 59 60 Source: IMD World Competitiveness Yearbook 2011 * out of 59 countries ASEAN Country Analysis Thailand Indonesia Malaysia Strengths • Major Agricultural production base of the world • Located in the center of the region • Relatively strong basic infrastructural system • Strong banking system Strengths Large market size Highest number of Muslim people Large and diverse natural resources i.e. coal, gas, crude oil and metal High Skilled Labour Strong banking system Strengths High GDP per capita (rank 3rd in ASEAN) Large oil and gas reserve Strong Infrastructural system High Skilled Labour Weaknesses • Majority of labour are low-skilled labour • Production technology is limited to medium advancement Weaknesses The geographical country structure is mainly scattered small islands Relatively weak infrastructural system (esp on transportation) Weaknesses Relatively low number of population Labour shortage (esp low-skilled labour) Source: NESDB, DTN ASEAN Country Analysis Brunei Philippines Vietnam Strengths • High GDP per capita (rank 2nd in ASEAN) • High political Stability • Export crude oil (rank 4th in country with highest amount of crude oil reserve) Strengths Relatively large market size (rank 12th in highest population country) Use English as major communication language Strengths Relatively large market size (rank 14th in highest population country) Large oil reserve High political stability Low labour wage Weaknesses Small market size Labour shortage Weaknesses Located in a more distance than other ASEAN country Relatively weak infrastructural system and social well being Weaknesses Relatively weak infrastructural system High business transaction cost (land, and rent) Source: NESDB ASEAN Country Analysis Cambodia Laos Burma Strengths • Abundant natural resources • Low labour wage (1.6 USD/ day) Strengths Abundant natural resources High Political Stability Low labour wage (2.06 USD/ day) Strengths Abundant natural resources (oil and natural gas) Located next to China and India High political stability Low labour wage (2.5 USD/ day) Weaknesses Small market size Labour shortage Weaknesses Located in a more distance than other ASEAN country Relatively weak infrastructural system and social well being Weaknesses Relatively weak infrastructural system High business transaction cost (land, and rent) Source: NESDB ASEAN Country Analysis Singapore Strengths Highest GDP per capita in ASEAN High political Stability International Financial Transaction Center High Skilled Labour High capability in human and business management Good transportation location Weaknesses • Rely on importation of raw material a lot • Low-skilled Labour shortage • High Business transaction cost Source: NESDB Thailand’s Trade & Investment Policy 1960s: 1970s: 1980s: 1990s: Early 2000s: 2015 & Beyond: Import Substitution Export Promotion Foreign Direct Investment Trade Liberalization Dual Track Development Asian Economic integration ASEAN Community Objectives • To accelerate the economic growth, social progress and cultural development of the region • To promote regional peace and stability in the region • To promote active collaboration and mutual assistance • To maintain close and beneficial cooperation with international and regional organizations Source: ASEAN Sec ASEAN Community – The 3 Pillars One Vision, One Identity, One Community ASEAN Political Security Community •A rules-based community with shared values and norms •A cohesive, peaceful and resilient region with shared responsibility for comprehensive security •A dynamic and outwardlooking region in an increasingly integrated and interdependent world ASEAN Economic Community •Single market and production base •Competitive economic region •Equitable economic development •Integration into global economy ASEAN Socio-Cultural Community •Human development •Social welfare and protection •Social justice and rights • Environmental sustainability • ASEAN identity Source: ASEAN Sec ASEAN Community – AEC ASEAN Economic Community (AEC): Single Market and Production Base Free Flow of Goods To eliminate trade barriers (Tariff and Non-Tariff) among ASEAN countries Free Flow of Services To remove all restrictions on trade in service sectors as well as allow more shareholding in service companies by ASEAN people Free Flow of Investment To provide enhanced protection to investors and promote investment in ASEAN under the National Treatment Principle Free Flow of Capital To strengthen and integrate the ASEAN capital market and allow greater capital mobility Freer Flow of Skilled Labour To facilitate the movement of skilled labor in ASEAN countries (based on the prevailing regulations of each receiving country) Source: ASEAN Sec, DTN ASEAN Community – Benefits Bigger Market Size - Large Population (ASEAN: 590 million people = 8.8% of world’s population) - Economy of Scale (Lower production and transportation costs) - Increased FDI (ASEAN had approximately 3.7 billion USD of FDI inflow in 2010) More Negotiating Power - Strength through coalitions when negotiating with other countries or regions - Better terms to attract FTA Better Production and Resource Network - Full utilization of ASEAN resources - Lower material and production costs - Greater variety of output Geo-Political Change… Asia Trans-Pacific Partnership (TPP) • • • PNG Thailand Philippines • • • Indonesia South Korea Japan • • Malaysia Vietnam • • Brunei Singapore • NZ • Chile • • Australia • • US Peru • • Mexico Canada America Russia Geo-Political Change… A Major Change in the Realm of Global Politics Nation-State Global Civil Society • Territorialization of Politics • De-territorialization of Politics • Globalization from Above • Globalization from Below • Uni-polarity/ Multi-polarity • Non-Polarity Geo-Political Change… Along the Journey of Civilization Occupy Wall Street Vs. Arab Spring Differences Common Occupy Wall Street • Inequality of Power Arab Spring Rich Ruler Poor Ruled • Inequality of Wealth • Inequality of Opportunity • Personal Technology X Social Network as Enabler - Hallo Effect - Snowball Effect - Domino Effect Plutocracy Democracy Autocracy/ Absolute Monarchy Democracy Geo-Political Change… Arab Spring: Fundamental Transformation Revolution 2.0 Closed Society Open Society Secularization Islamization Autocracy/ Absolute Monarchy Liberal Democracy Geo-Political Change… What is the New Regime? Secularization Critical Issues • Nation Re-Building • The New Political Environment Liberal Democracy • Role of Women • Sharia Vs. Freedom • External Intervention Autocracy/ Absolute Monarchy Islamization Geo-Political Change… Possible Outcomes • Restoring of the Old Regime • Military Takeover • Unruly Fragmentation/ Civil War • Creeping Islamization Transition Period: 10-30 years Geo-Political Change… The Evolution of War Total War Source: Joseph S. Nye; The Future of Power Interstate Wars New Age of War • Intrastate Wars + Transnational wars involving non-state actors • War among the people • Hybrid wars--a fused mix of conventional weapons, irregular tactics, terrorism, and criminal behavior in the battle space Geo-Political Change… The terrorist risk is transforming the foundations of international politics Formalization of War Individualization of War Direct / Certain Indirect / Uncertain Scope State 2 State Individual (s) 2 Mass Pattern Many 2 many Few 2 Many Approach Geo-Political Change… What differentiate the old nation-state security agenda from the new post-national security agenda is the regime of non-knowing Agent Agent Potential Intention Nation-State Security Agenda Potential Intention Post Nation-State Security Agenda Demographic Imbalance… The World Population Growth 1950 2.5 bn 1975 4.1bn Resource Constraints 2000 2025 2050 6.1bn 8.0bn 9.2bn • Shortage of Foods • Shortage of Energy • Shortage of Water Source: UN, FAO, BBC The First World of the Aging Industrialized Nations South Korea Developed Countries The First World North America, Europe, and Asia’s Pacific Rim The Second World The Third World Developing Countries Aging Society Dynamic Young Society • It’s total population is projected to decline by almost 9% by 2050 (from 48.3 million to 44.1 million) • Its working-age segment is expected to drop by 36% (from 32.9 million to 21.1 million) • The number of citizen aged 60 and above will increase by almost 150% (from 7.3 million to 18 million) The Third World of fast growing, young, and increasingly urbanized countries with poorer economies and often weak governments Developed Countries • Today, roughly nine out of ten children under the age of 15 live in developing countries The First World The Second World The Third World Developing Countries Aging Society Dynamic Young Society • Over 70% of the world’s population growth, between now and 2050, will be concentrated in 24 countries, all of which are classified by the World Bank as low income or lower-middle income The Second World of fast growing & economically dynamic countries with a healthy mix of young and old inhabitants Thailand’s Potential Supportive Ratio The First World The Second World Brazil, Iran, Mexico, Thailand, Turkey, and Vietnam The Third World 7 6 5 4 3 2 1 0 2000 Source: Kua Wongboonsin 2020 2050 Climate Change… Asean countries are likely to face more severe consequences of the climate change than the global average due to limited adaptive capabilities Climate Change… Climate change is affecting or will affect a wide range of industry sectors, some more than others Environmental Climate Dimension (+) Double Winners Beneficiaries from Climate Change under Government Control Construction& Associated Sector Tourism Building Materials, AutoPaper Industry motive Metal Industry Energy Sector (-) (Fossil Fuels) Chemical Industry Textile & Clothing Transportation Mechanical & Electrical Engineering Finance Renewable Energies Agriculture & Forestry Regulatory Market Economy Condition (+) Food Industry Beneficiaries from Government Measures with Climate Risks Double Losers (-) Source: DB Research Climate Change… Both developed and developing countries actively engaged in the Copenhagen Accord last year Mexico Accord 2010 Copenhagen Accord 2009 • • • • Reduction of GHG Emission by both developed & developing countries Low Carbon Development Pathway Reduction of emissions through deforestation and degradation (REDD+) Copenhagen Green Climate Fund & Technology Transfer Linkage to trade measures Carbon Credits REDD+ Emission Trading Adaptation Nationally Appropriate Mitigation Actions (NAMAs) Carbon Off-shoring Numerical targets of emission reductions Sectoral Approach for Heavy Emitters - e.g. Steel, Cement, Electricity , Paper pulp …(possibly including agriculture sector) Finance Carbon Leakage Technology Climate Change… Food and Fuel Security Food Fuel • Focus on climate change mitigation or resilience plan • Improve farm productivity through education and other supportive measure i.e. land utilization, irrigation system, infrastructure and technology etc. • Offer incentive to attract more investment on food production • Form a collaborative network with other countries to do R&D on food security issue • Improve energy efficiency • Encourage on renewable energy • Classify and separate type of food base on purpose i.e. food for hunger and food for energy and formulate plan focusing on the purpose of each type of food • Form a collaborative network with other countries to do R&D on energy issue Climate Change… Offshore Farming The 1st Wave Manufacturing The 2nd Wave Services The 3rd Wave Food & Agriculture Resource wars – the world will demand 70 percent more food by 2050, outstripping population growth Cash-rich Arab and Asian governments are buying up arable farmland all over developing world - Chinese businesses are investing in South America and Africa, not only to gain access to commodities, but to get in position to profit from sales to the emerging middle class - China is also buying up large tracks of land throughout Africa to produce biofuels and to produce food - India's companies have formed a consortium to invest in corporate farming of oilseeds in Latin America, most notably Uruguay and Paraguay The Age of Extremity Nature Extreme Economic Extreme Political Extreme Social Extreme e.g., floods, droughts and other effects from global warming that occur more often with more severe damages. e.g., economic and financial crisis in EU that may lead to the end of Eurozone or the “Occupy Wall Street” phenomena in the United States. e.g., Arab Spring, Wiki-Leak e.g., income disparity and inequality that happen around the world, even with the United States, or the resource hoarding between local people due to the extremity of nature. The Age of Constraints Sustainability Bounded Prosperity Stability Security • Global Dynamics • Global Forces & Trends • Thailand’s Lost Decades Independence Global Forces & Trends Individualization Democratization Humanization Commonization Dependence Source: Suvit Maesincee—Thriving in the New Age of Global Capitalism Interdependence Commonization… Globalization of Risks & Threats Global • Financial Turmoil • Economic Crisis • Pandemics • Climate Change Local • Terrorism • Mass Production of Refugee • Extreme Poverty • Genocide • Civil War Local Global Gearing towards the Free Culture New Principle • Free to Share • Free to Take • Wikipedia • MIT open courseware • Open source software New Practices • Nobody owns • Everybody can use it • Anybody can improve it Migrating towards Open Collaborative Platform • IBM, Intel, AT&T, Eli Lilly and many others are decentralizing R&D Proprietary • At Google, the motto is “the many •are smarter than the few” • The fastest growing academic fields are sciences like behavioral economics Open Close and nanotechnology, which combine experts from many different fields to solve problems • China, India, Brazil and South Korea have begun moving away from Public Domain proprietary, closed software and toward an open-source model Humanization… The New Age of Global Capitalism Communal Value Care & Share Society Knowledge Society Self-Centered Value Industrial Society Secular Rational Value Source: Suvit Maesincee “Thriving in the New Age of Global Capitalism” Self Expression Value Moving towards Philanthro-Capitalism Global Corporate Citizenship Social Corporate Social Entrepreneurship Corporate Social Responsibility Corporate Philanthropy Economic Corporate Governance Local Global Democratization… A Flood of Democratizations Democratization of Consumption From the Top of Pyramid to the Bottom of Pyramid Democratization of Consumer From Product Centricity to People Centricity Democratization of Innovation From Intellectual Property to Wisdom of the Crowd Democratization of Ownership From Private Investors to Citizen investors Democratization of Politics From Representative to Participative Democracy Democratization of Consumption Top of the Pyramid Middle of the Pyramid Bottom of the Pyramid Democratization of Consumer • Creating Space Consumer • Blogs, UGC, Podcast C2C • Social Networks, Virtual Worlds B2C Business • Connecting Space • Collaborating Space • Wiki, Open Source • Reacting Space B2B • Tags • Organizing Space Business Consumer • Forum, Ratings, Reviews Market are conversations, consisting of human beings, not demographic sectors Democratization of Innovation Close Open From R&D to C&D Free Revealing Model Private Investment Model Close Collective Action Model Free Riding Model Open P&G sets up a new position called Director of External Innovation who is responsible for connecting internal development with external innovation It is projected that within 5 years, half of P&G’s innovations will come from outside P&G has 8,600 in-house scientists with the new product development knowledge, while it has a whopping 1.5 million external people Individualization… An Emergence of Individualized Culture • Self Defined Culture • De-traditionalization • Self-Invention/ Reinvention • Collective Individuals • Contra-Individuals • Technology enables everyone to be an expert • Individuals are becoming authors of their own lives and identities • People trust institutions less Macro We are living in a pluri-cultural environment Global Culture Cosmo Culture Micro Self National Culture State Local Culture Non-State Independence Global Forces & Trends in the Different Contexts Individualization • Country Level Democratization • Corporate Level Humanization Commonization Dependence Interdependence • Citizen Level Independence Implication: Country Level National Sovereignty Regional Integration Global Governance Dependence Source: Suvit Maesincee—Thriving in the New Age of Global Capitalism Interdependence Independence Implication: Corporate Level Competitive Edge Co-opetition Compliance Dependence Source: Suvit Maesincee—Thriving in the New Age of Global Capitalism Interdependence Independence Implication: Citizen Level Self Expression Value Care & Share Value Communal Value Dependence Source: Suvit Maesincee—Thriving in the New Age of Global Capitalism Interdependence • Global Dynamics • Global Forces & Trends • Thailand’s Lost Decades Thailand is in an Extremely Vulnerable Position Perpetual Crises Financial Political Quasi Crisis Turmoil Man-made Flood 1997 2007-2010 2011 Thailand’s Strategic Traps Credibility Traps Public People • A Quest for Legitimacy • A Quest for Integrity • A Quest for Competency Private Inequality Traps Value Creation Traps • A Quest for Fair Accessibility • A Quest for Global Vision • A Quest for People Empowerment • A Quest for New Growth Engines • A Quest for Common Ground & • A Quest for New Set of Capabilities Common Goals Challenges & Issues Facing Thailand Challenges Issues Hyper-conflict Responsiveness Complexity Competitiveness Uncertainty Inclusiveness Scale & Scope of Change Peacefulness Rebuilding Thailand Wealth of the Nation Dignity of the Nation The New Social Contract Reshaping Our Future The Nation’s Strategic Thrusts Investing in Our People Restoring the Dignity of the Nation • Nationalism - Strong Versus Weak Nationalism - Moderate Nationalism • Cultural Realignment - Conflicting Cultures - Cultural Lags - Productive Vs. Unproductive Culture • Strong Strategic Intent - Gearing towards a First World Nation - Crossing Middle Income Traps The New Social Contract • Legal State, Rule of Law & Due Process of Law • Acceptable Inequality - Forced Inequality - Felt Inequality • Fairness Principle - Horizontal Equality • Equality of Distribution • Equality of Opportunity • Equal Distribution of Power - Asymmetry in Initial Conditions • Need-Based Fairness • Scale Distribution • Scalar Distribution of Responsibility - Contractual Agreement • Procedural Distribution • Right-based Fairness • Equal Distribution of Responsibility Challenges & Issues Felt Inequality Level of Inequality Unacceptable Inequality Forced Inequality Acceptable Inequality Level Natural Inequality Reshaping Our Future • New Growth Engines - Growth for People not People for Growth • New Socio-Economic Platform - Asean, Asia & The World • New Set of Competitive Edges - Culture as a National Competencies - Human-Technology Interactions Investing in Our People • Strategic Dimensions - Doing Good & Doing Well - Global & Local Context • 3L Model - Love to Learn - Learn to Learn - Learn to Love - Learn to Live People Empowerment Political Reengineering People Empowerment Unlocked Policy Dilemmas Public Administrative Renewal Unlocked Policy Dilemma • Grand-Ground Strategy • Centralization-Decentralization • Capitalism-Democracy • Fundamental-Populist Policies • Globality-Locality Political Reengineering • Struggle for Political Power - From Monopolization of Politics to Democratization of Politics • Struggle for Political Ideology - From Management of Election to Management of Nation Public Administrative Renewal • Function-Agenda • Input-Outcome • Conformity-Flexibility • Big-Small Government • Division of Labor-Public Private Partnerships Thailand: A Decade Ahead Wealth of the Nation Political Reengineering People Empowerment Unlocked Policy Dilemmas Dignity of the Nation The New Social Contract Public Administrative Renewal Reshaping Our Future Investing in Our People