Advice that’s all too familiar


  • Letters
  • Sunday, 11 May 2003

By M. Veera Pandiyan

IT WAS a torrid week in Thailand, with temperatures rising up to 42.6°C, but the hottest topic among business circles was a cool farang (foreigner) – management guru Michael E. Porter. 

The country's top businessmen, bureaucrats and legislators sat in rapt attention last Sunday as the Harvard Business School professor evaluated the country's economy and recommended his remedies. 

Porter, who reputedly ranks sixth in the list of top 10 global management consultants jointly with Peter F. Drucker, dished out his panoply of economic cures and summarised that Thailand could emerge as the “Ireland of Asia,” provided it did things right within the next few years. 

If Porter had been speaking in Kuala Lumpur, the advice would have sounded all too familiar. 

In a nutshell, the voluble professor told the Thais what Prime Minister Datuk Seri Dr Mahathir Mohamad had been stressing to the corporate and public sectors in Malaysia: the only way to progress is to focus on productivity and competitiveness. 

Porter said raising productivity should be the centre of Thailand's economic policy, warning that the country's competitiveness had fallen behind its neighbours in the region. 

“It doesn't matter what industry you are in. Every industry can be productive. High-tech and low-tech are meaningless distinctions. Many nations try to move from their traditional industries to new ones but you need to raise the productivity of them all,” he said. 

For the past four months, Porter had been working with a team at the Sasin Graduate Institute of Business Administration to study Thailand's competitiveness against other countries in the region. 

The study, commissioned by the National Economic and Social Development Board, reportedly at the cost of 30mil baht (about  

RM3mil), scrutinised five strategic industries – motor, tourism, IT, fashion and food. 

His verdict? Thailand was lagging behind the others in all five sectors and has to get its act in order. 

Singling out the Thai bureaucracy as a stumbling block to growth, he noted that the country was “world-class in making plans but not so world-class in implementation.” 

On the motor industry, the guru surprised pundits when he suggested what has been tried in Malaysia – a home-grown vehicle with an international brand. Porter proposed that Thailand should create its own pick-up truck, noting that the country was the largest market for such vehicles after the United States. 

He also called for the growth of industrial clusters where private firms and government agencies joined together to not just compete, but cooperate for mutual benefit. Sounds a bit like the Malaysian “smart-partnership” concept, doesn't it? 

On the plus side, he praised Prime Minister Thaksin Shinawatra and his Cabinet for displaying determination in handling Thailand's competitive weaknesses and for making changes to the administration. He said the private sector too had to buck up to the changes taking place. 

Porter also propounded more “not so new ideas” – that Thailand go ahead with negotiating free trade agreements, speed up the liberalisation of the telecommunication industry and work towards an Asean “open skies” agreement for the aviation sector. 

Drawing comparisons between Thailand and Ireland, he said the kingdom had plenty of geographical advantages and high potential to emerge as a regional economic gateway, as the republic had become in Europe. 

It may be too soon to ask about steps the Thai Government would take in implementing the guru's advice, but Deputy Prime Minister for Economic Affairs Somkid Jatusripitak has announced that the government would set up a new organisation to continue research into competitiveness strategies. 

“To grow and prosper, we can no longer rely on the old model of depending on low wages and foreign capital inflows. We need to be more efficient and competitive. This is the most critical challenge facing Thailand today,” he said. 

Porter's headline-making speech must have tasted trite and insipid to the average businessmen and the man in the street, if the many letters to newspapers are a reflection of public opinion. 

Danuj Kamolvahthin, a reader of The Nation, wrote: “There could have been many other more productive ways to spend 30mil baht of taxpayers' funds. Tell us something we don't already know. 

“Yes, we understand that if we do not do something soon to improve our competitive edge, we will be left behind. Yes, if we do not attract more investment funds, we will experience the reverse gear of globalisation. Yes, if we do not improve our intellectual capacity, we will not grow. 

“We know the problems and truly understand the severe circumstances of not acting in a timely manner. Tell us something we don't know.” 

Another reader, identified only as “A retired business consultant,” wrote: “A great speech but not about the real Thailand. His agenda ignores the underlying Thai business environment, culture and international image. 

“Comparing Thailand to Ireland is unrealistic. Take the time to examine the Irish educational system, the analytical skills of Irish workers, the Irish legal process, financial system, and the list could go on and on, and you are forced to see that the comparison sounds great in a speech but sadly lacks supporting facts. 

“Thailand needs business consultants that have successfully implemented large-scale projects, consultants that will work side by side for months and months with Thai business leaders and workers to improve all aspects of productivity. We are talking about a long, hard job.” 

Like many others here, the retired consultant felt that without political support from leaders with courage and wisdom to improve the educational, financial, legal and legislative systems, it would just be all about what Thailand is full of this summer: a lot of hot air. 

 

  • M. Veera Pandiyan is Editor, Asia News Portal, based in Bangkok (e-mail: veera@nationgroup.com )  

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