ECONOMIC DEVELOPMENT / INTERNATIONAL ADVICE

World Bank : Bangkok should be the 'Milan of East Asia'

PARISTA YUTHAMANOP

Thailand should create an environment that supports innovations in the fashion and jewellery industries, thanks to the ''great spillovers'' generated by both sectors for the economy, according to the World Bank.

East Asian countries must find new industries to replace exports from labour-intensive industries that have suffered from cheaper prices in China and India. Meanwhile, they should boost economic growth through high productivity, the World Bank said in its Post-Industrial East Asian Cities report.

The report looked at certain industries important to each economy: robotics in Tokyo; biotechnology in Singapore; online video games in Seoul; electronic sectors in Beijing; construction in Shanghai; and fashion and jewellery in Bangkok.

Shahid Yusuf, an author, said Thailand's fashion industry had only a 2% share in the global market, which showed that it should improve its brand-building and retail network, including e-business.

The garment sector currently employs 81,000 people, accounting for 3% of GDP and 7% of the country's exports.

Trends toward consolidation of global brands could make it more difficult for local companies to enter the world market, Dr Yusuf noted.

''Bangkok should have ambitions to be the Milan of East Asia. It wouldn't make sense to have less ambition,'' he said. ''It should draw lessons from Taipei, Taiwan and Korea in building brands. ... A large part of it is about good managerial capability. Thai firms need to ensure they have that.''

Dr Yusuf noted technological changes that save labour have increased the importance for the region to develop new industries that increase employment.

The region should focus on its urban economy, as its contribution to the economy has risen rapidly.

At present, cities contribute 85% of gross domestic product in developed coundh tries, and 55% in developing countries.

Bangkok contributed 36.3% to Thaidhland's GDP in 2000, compared with 39% in 1995 and 40.5% in 1990.

However, he said that cities are the centre of services, including finance, legal, and accounting. ''Chances for innovations will increase in urban areas as it is an agglomeration economy that combines several alternatives in one place.''

Dr Yusuf said Thailand should raise productivity growth to 2.5% from 1%, through improving secondary education in mathematics, science and English.

''Innovations require heavy investment by private firms in R&D; incentives in fiscal policy, education and government purchases of goods and services; and in people themselves.''

To strengthen new industries, regional economies must ensure comprehensive support from financial markets, urban developers, industrial and professional bodies.

Universities should, he suggested, increase links with international research institutes and other universities. Meanwhile, the region's cities should improve their ability to attract local talent by ensuring quality amenities and public services.

China would remain a key challenge to the region, as it had quickly developed a knowledge-based economy, Dr Yusuf said.

Bangkok Post
Wednesday January 31, 2007