‘Creative destruction inevitable for Thai growth’

‘Creative destruction inevitable for Thai growth’

THE NATION September 2, 2013 1:00 am

THAILAND HAS to face another era of creative destruction if has to maintain its competitiveness, Bank of Thailand economists said last week. Creative destruction – the shift of labour to high-growth industries and the death of some non-competitive businesses – is going on, but not at the same level in each industry and not in all industries. Their paper entitled “Thailand’s Quest for Economic Growth: From Factor Accumulation to Creative Destruction”, aims to show the economic environments that are supportive of the change or hinder the process.The paper is one of six to be presented at the annual BOT Symposium on September 19-20, whose theme this year is the foundation for Thailand’s economic sustainability.

The authors attributed the past growth story to creative destruction. In the beginning, the economy accumulated production factors particularly labour. The labour force grew in line with the population.
In the beginning, the labour force was concentrated in old production modes – particularly agriculture – which resulted in low productivity.
In the past two decades, like other developing countries, Thailand witnessed the shift of the labour force to new and higher-productivity industries, which benefited from the free flow of new technology.
In stark contrast, countries in Latin America witnessed the shift of production factors from high-productivity areas to low-productivity areas.
“The process shows that Thailand’s economy has been reconstructed from time to time and the reconstruction supported overall growth. Accumulation of production factors [labour and capital] also propelled past growth.
“Yet, such accumulation has emitted weakening forces. Capital accumulation has been declining while the labour force expands slowly in line with declining population growth.
Thailand’s technology and productivity are inching near their limits. Although industry shows high productivity, it could not effectively draw resources.
“This shows that the growth pattern could see its demise soon,” they said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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