Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Chapter 1
Innovation and Competition in Thailand:
Case Studies of Electronics and Plastics Industries*

Saowaruj RATTANAKHAMFU and Warakorn AWUTPANYAKUL†

Abstract: In this paper, we study the relationship between the level of innovative
activities of firms in Thailand and the level of competition they face. Using the Orbis
database, we found that the Thai private sector, especially the manufacturing sector, had
obtained more patents over the period of our study. One explanation for this increase is
the intensifying level of market competition, which pushed firms to be more innovativein order to survive and grow. We also conduct detailed case studies of two manufacturingfirms – Eastern Polymer Group and Delta Electronics (Thailand) – both of which areleaders in innovation in their respective sectors. Our case studies broadly confirm thefindings that firms tend to increase their innovative activities to cope with increasing
competition in the market. The innovative activities performed by both firms have also
led to them having higher market power than other firms in their industries, reflected bytheir higher values of the Lerner index. We conclude by suggesting some policy
recommendations to promote innovative activities in the Thai private sector.
Key Words: innovation; competition; patent; firm; Thailand

1. Introduction
Thailand has set the target to escape from the “middle-income trap” and to transform itself
into a developed country by 2037. To achieve this goal, it needs to focus on restructuring
its economy to generate higher-value-added products. In short, Thailand has to become a* The authors would like to thank Dr. Somkiat Tangkitvanich for his valuable comments andsuggestions and Ms. Natcha Yongphiphatwong, and Mr. Mathis Lohatepanont for their excellent
research assistance.
† Thailand Development Research Institute1

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

knowledge-based economy, which concentrates on technological developments,
innovation, and human capital.
In an effort to accomplish its development goal, Thailand has identified sometargeted industries to be promoted. These are the so-called 12 “S-Curved” industries: they
are next-generation automotive, smart electronics, agriculture and biotechnology, foodfor the future, affluent wellness and medical tourism, biofuels and biochemicals, digital
economy, medical hub, automation and robotics, aviation and logistics, national defense,and education and human resource development. The Thai government has alsoestablished the Eastern Economic Corridor (EEC), a special economic zone, to attract
inward investment into the promoted sectors.
However, attracting FDI in targeted sectors alone would not be sufficient.
Thailand also needs to increase its innovation inputs and outputs. In terms of innovation
performance, as ranked by the Global Innovation Index (GII) (Figure 1), Thailand had
improved slightly in the past decade. In contrast, South Korea, China and Vietnam had
greatly improved their innovation performance over the same period.
Figure 1: Global Innovation Index (GII) During 2013-2020
80
60
40
20
0
2013

2014

2015

2016

2017

2018

2019

Switzerland

SwedenUnited Kingdom

United States of America

Singapore

Korea, Republic ofJapan

Malaysia

China

Thailand

Viet Nam

2020

Note: The Global Innovation Index (GII) provides an annual ranking of innovation performanceof 131 countries and economies in 2020, based on 80 indicators involving institutions, humancapital and resource, infrastructure, market sophistication, business sophistication, knowledge
and technology outputs, and creative outputs.
Source: Global Innovation Index1

1 Accessed from https://www.globalinnovationindex.org/analysis-indicator2

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Previous research by Rattanakhamfu and Itthiphatwong (2020) found that the
number of innovative firms is still limited in Thailand, judging from the number of patents
granted to them. Among these innovative firms, many were historically foreign-owned.
Since the early 2000s, Thai firms have started to own more patents and become moreinnovative. But while Thai firms have outnumbered foreign-owned ones, the shares ofpatents owned by majority-foreign owned firms are still higher than those owned bymajority-Thai owned firms. Furthermore, firm sizes are associated with the number ofpatents owned.
Given its slow improvement in innovation performance, Thailand has to exert
more effort in promoting innovative activities, especially in the private sector. This paper
will examine the relationship between innovation and market competition with an aim tofind insights that can be used to guide a policy to promote innovation activities among
Thai firms.
The second section reviews literature regarding the relationship between
innovation and market competition. The third section gives an overview of innovation in
the Thai context. The fourth section examines the relationship between innovation andcompetition in Thailand. The last section provides conclusions and policy
recommendations for the Thai government.

2. Literature Review
Joseph Schumpeter views capitalism as an evolutionary process with innovation – “newconsumers’ goods, the new methods of production or transportation, the new markets, the
new forms of industrial organization that capitalist enterprise create” – as the main
impulse driving the engines of capitalism. In his seminal work Capitalism, Socialism and
Democracy (1943), Schumpeter proposed the, then, highly controversial thought: the ideathat monopolies lead to more innovation than competitive markets. Defining monopolies
as “those single sellers whose markets are not open to the intrusion of would-be producersof the same commodity and of actual producers of similar ones,” Schumpeter noted thatmonopoly prices are not necessarily higher than the competitive level, nor the level of
output necessarily lower. This is owing to the benefits monopolies enjoy, which firms
under a competitive market structure do not. For example, monopolies may enjoy
disproportionately higher financial standing, a wider sphere of influence and are better
able to attract talent. These factors also allow monopolies to introduce new methods of3

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

production in a way that is “hardly conceivable with perfect—and perfectly prompt—
competition from the start,” as occurs under perfect competition with no barriers to entry.
Dasgupta and Stiglitz (1980) set up the theoretical model of the market in different
competitive environments and solved for a partial equilibrium; they gained several
insights on the nature and consequences of competition on R&D. In line with
Schumpeter's framework, R&D investment is more likely in a market presently
dominated by a monopolist than in a competitive market, simply because there are more
profits to be gained in the less competitive post-invention market. But competition in
R&D can lead to even more investment in research than in monopolistic markets,
sometimes resulting in excessive expenditure on R&D relative to the social optimum.
Although there is empirical evidence supporting Schumpeter’s suggestion, suchas the previously mentioned Dasgupta and Stiglitz (1980), Gilbert and Newberry (1982),
and Hashmi and Van Biesebroeck (2016), which is to be mentioned subsequently, there
is an alternative idea proposed in the literature, where the Schumpeterian effect is only
part of a larger system of effects. One of the most influential papers is by Aghion et al.
(2005). They posit that the relationship between the two variables forms an inverted-U
shape. That is, the level of innovation increases with the level of competition until itreaches the peak of the inverted-U shape, but then subsequently decreases (Figure 2).
Figure 2: Innovation and Competition: The Neck-and-Neck Split

Source: Aghion et al. (2005), p.720

4

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

The inverted-U shape can be explained theoretically in terms of the tension
between two concurrent effects: the ‘Schumpeterian effect’ and the ‘escape competition
effect.’ The former suggests that more competition reduces profits along with the
incentive to innovate. On the other hand, the latter suggests that firms innovate to avoid
neck-to-neck competition with their rivals since a successful escape means that the firm
can enjoy more profits. In an economy, when the level of competition is low, a larger
proportion of sectors feature neck-to-neck competition and the escape competition effectdominates. The more neck-to-neck the competition in an industry is, the steeper the
inverted-U curve is predicted to be, as depicted in Figure 2. Conversely, as the level ofcompetition intensifies, the profit incentives to be gained decreases and theSchumpeterian effect dominates.
Aghion et al. (2005) found strong evidence of an inverted-U relationship between
competition and innovation by using data from the United Kingdom (UK). Innovation ismeasured by the average number of patents taken out by firms in an industry, weighted
by the number of times each patent is cited, to acknowledge the heterogeneity among
them. Competition, the other key variable, is measured in relation to the Lerner index(price-cost margin). The use of these measures for innovation and competition are
illustrated in Figure 2 above. Using the Lerner index, as opposed to the Herfindahl
concentration index, benefits this research because it circumvents the issue of having todefine particular product and geographic markets; the degree of competition some multinational firms analysed face cannot be captured by constraining research to a local
geographical boundary.
Recent empirical studies investigating the relationship between industry
concentration and innovative activity have mixed results. For example, Tingvall andPoldahl (2006) and Hashmi (2013) found evidence to support the hypothesis of theinverted-U relationship, while Beneito, Rochina-Barrachina and Sanchis (2017) obtained
a positive relationship between competition and patents.
Following Aghion et al. (2005), Hashmi (2013) used data from the United States(US) to show that the technological gap influences the relationship between competition
and innovation. He also found that the inverted-U relationship applies in the case of theUK, but not for the US, where the relationship is mildly negative. Unlike Aghion et al.
(2005), Hashmi (2013) provided industry-level partial equilibrium analysis, which carries
the advantage of being able to avoid unnecessarily restricting different industries tohaving the same level of competition.

5

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

In his analysis, he incorporated the Lerner index to measure for competition levelbut controlled for the endogeneity of competition using a source-weighted average ofindustry exchange rates as an instrument for the variable. Innovation is also measured
using citation-weighted patents. The industry-level technological gap is arrived at bytaking an average of the firm-level technology gap.
A possible explanation for the above results can be captured by assuming a smaller
technological gap in UK manufacturing industries compared to their US counterparts,
making the competition more neck-to-neck rather than leader-laggard. Accordingly, theUK manufacturing industry, with neck-to-neck competition, can induce innovation due
to the ‘escape competition effect.’ However, in the case of the US, laggards can only
innovate from the spill-over of leaders in highly competitive settings; since the ‘escapecompetition effect’ does not apply, the ‘Schumpeterian effect’ dominates, and therelationship between competition and innovation is negative.
Both Aghion et al. (2005) and Hashmi (2013), however, did not factor in thepossibility of laggard firms exiting the industry. Beneito, Rochina-Barrachina andSanchis (2017) repeated their analysis with data on Spanish manufacturing firms from theSurvey of Business Strategies (ESEE), introducing the possibility of inefficient firms
facing the threat of exit when competition intensifies. The key contribution of their modelis the exit rate, which is measured as the proportion of firms exiting the market that year
due to bankruptcy. With the addition of this measure, coupled with the empirical data, it
was revealed that the relationship between competition and innovation is positive anddoes not follow an inverted-U shape.
While most empirical works focus on analysing the relationship between market
competition and innovation at the cross-industry level, some studies focus on therelationship in a single industry. For example, Goettler and Gordon (2011) investigatedwhether AMD spurs Intel to innovate more in the microprocessor industry. They measure
innovation directly through tracking the technology's performance on benchmark tasks,
instead of measuring the variable indirectly using patents. Furthermore, they estimatedconsumer preferences and firms' innovation efficiencies, which determine the costs andbenefits of innovation, in a dynamic model; they then solved for equilibrium in various
competitive scenarios. Consistent with Schumpeter's predictions, the rate of innovationin product quality would be 4.2 percent higher if Intel were a monopolist. Similar findings
apply in the case of a duopoly where the market remains highly concentrated: it was foundthat equilibrium innovation rates increase monotonically as preferences for quality
increase and as price sensitivity declines.
6

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Similarly, Hashmi and Van Biesebroeck (2016) analysed the relationship between
competition and innovation in the automotive industry on a global scale. They set up themodel of industry equilibrium with forward-looking innovation decisions and estimatedparameters; they treated innovation as a continuous variable, differing from existingmodels that treat innovation as a 0-1 decision. Under their dynamic model, the firm can
influence market share and profits by choosing the price of their product and investment
in R&D, with price only impacting current profits and has no impact on future decisions.
They found that market structure has a nuanced effect on innovation incentives, making
it difficult to summarise overall patterns.
Regarding papers related to innovation and competition in Thailand, Srithanpong(2014) found that production plants in the food production and chemical productionindustries are more likely to invest in R&D and are more innovative compared to plants
in other industries. His analysis follows a two-step model: first, research activity
influences innovation output, and second, innovation output influences productivity.
Innovation, in particular, is modelled as a binary indicator proxied by both product andprocess innovation. It is a function of latent innovation effort and a vector of otherexplanatory variables. A shortcoming of this study, however, is precisely the problematic
variable definition: innovation surveys available convey relatively little information on
firm characteristics, especially for non-innovative firms.
Based on empirical studies, in Thailand, the success of R&D in producing
innovation depends on several factors. Charoenporn (2005) examined a sample of 310
firms in the Thai manufacturing sector using data collected from the Thailand
R&D/Innovation Survey 2000 by the National Science and Technology Development
Agency (NSTDA). He found that, in line with Soutaris (2000), “the availability oftechnological human resources, R&D intensity, competitive market condition, [access] totechnology information, and good external communication are the determinants ofinnovative success” in a developing economy such as Thailand. Furthermore, he also
found that product-innovative firms need a higher degree of innovative successdeterminants than process-innovative firms.
Recent literature on innovation in Thailand is by Sujarittanonta and Kamsaeng(2017). In Competition: Missing Piece in Innovation Equation, they identified therelationship between competition and innovation in Thailand as following an inverted-U
shape at the firm level. To uncover the level of competition, Sujarittanonta and Kamsaeng(2017) weigh the firm-level Lerner index by sales to capture the stronger competitive
impact of larger firms. The Lerner index was calculated using data from the Stock
7

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Exchange of Thailand Market Analysis and Reporting Tool (SETSMART) and therelevant industry for the firm was identified using two-digit International Standardof Industrial Classification (ISIC) codes. The firm’s R&D intensity, namely the ratio
between total R&D expenditure plus one to total sales, was calculated from a survey data
conducted by National Science Technology and Innovation Policy Office (STI). The STI
also supplied figures for TFP, hence technological gap, calculations.
Finding an inverted-U shape lends at least partial evidence that the Schumpeterian
effect is in place and that monopolies need not lead to less consumer welfare since they
induce innovation. They conclude that “competition regulation should emphasize an
objective of maximizing dynamic efficiency where innovation is a main concern, rather
than focusing solely on static efficiency that aims to reduce market power and hence an
incentive to innovate.” Yet, they do not find a significant relationship between
competition and innovation in non-manufacturing industries; thus, there remains the needfor further investigation on the issue to form coherent policy suggestions.
Our paper contributes to the literature in several ways. Firstly, our paper analyses
the relationship between the level of innovative activities of firms in various sectors in
Thailand and the level of competition they face. Secondly, our paper provides detailed
case studies of two manufacturing firms – Delta Electronics (Thailand) and Eastern
Polymer Group and – both of which are leaders in innovation in their respective sectors.
Finally, the results of this study help provide a better understanding of the relationshipbetween innovation and competition in manufacturing sectors in Thailand in order toguide policies to promote innovation activities among Thai firms.

3. Overview of Thailand’s Innovation
Thailand has spent relatively little on R&D since 2013. Thailand’s gross domestic
expenditure on R&D (GERD) has increased gradually. In 2019, it reached 182 billion
baht or 1.11 percent of GDP in 2019. Compared with other upper medium-income
countries 2 , Thailand's R&D intensity is lower and is lagging far behind developed
countries, such as South Korea, Japan, and Israel (Figure 3).
2 World Bank (2020) classified upper middle-income countries as countries with gross national
income ( GNI) 4,046 - 12,535 USD per year. In 2020, there were 56 upper middle- income
countries, such as Indonesia, Malaysia, Thailand and China. (Source: Umar Serajuddin and Nada
Hamadeh, “New World Bank country classifications by income level: 2020-2021,” World Bank,
8

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Figure 3: GERD as a Percentage of GDP
6

5

4

3

2

1

0
2013

2014

2015

2016

2017

2018

China

IsraelJapan

Malaysia

Republic of Korea

Singapore

Thailand

United Kingdom

United States of America

World

Upper middle income countries

Sources: UNESCO3; MASTIC4; National Research Foundation5; NXPO6

Furthermore, the share of public-funded R&D expenditure in Thailand has
continued to decline since 2014 (Figure 4). Of the total GERD, the public-funded GERD
has reduced from 24 percent in 2014 to 12 percent in 2017. In contrast, our neighbouring
countries, such as Singapore and Malaysia, have a much higher ratio of public-funded
GERD to increase their national innovation capabilities. For example, Singapore’s public

July 1, 2020, https://blogs.worldbank.org/opendata/new-world-bank- country-classificationsincome-level-2020-2021.)
3 “Science, technology and innovation: Gross domestic expenditure on R&D (GERD), GERD asa percentage of GDP, GERD per capita and GERD per researcher,” UNESCO,
http://data.uis.unesco.org/index.aspx?queryid=74.
4
Malaysian
ScienceandTechnology
Information
Centre(MASTIC),
https://mastic.mosti.gov.my/statistic?field_statistic_category_target_id=192.
5 “National Survey of R&D in Singapore 2018,” National Research Foundation, December, 2019,https://www.a-star.edu.sg/docs/librariesprovider1/default-document-library/newsevents/publications/national-survey-of-r-d-2018.pdf.
6 “NXPO announces survey results of 2018 R&D expenditure and R&D personnel,” Office of
National Higher Education Science Research and Innovation Policy Council, June 30, 2020,
https://www.nxpo.or.th/th/en/5008/.
9

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

sector expenditure on R&D accounted for 38 - 40 percent of total R&D expenditureduring 2013 - 2017. Similarly, most advanced countries, such as South Korea, Germany,
the US and the UK, have significant public funding of R&D, contributing to more than
20 percent of GERD.
In general, the share of public and private R&D expenditure varies over the pathof national economic development. When the level of economic development is low, thepublic sector often plays the role of the main investor in R&D expenditure to enhance thenational innovative capabilities because the private funding of R&D is scarce. On theother hand, as the economy develops, private funding becomes more abundant, and publicfunding should gradually reduce its share of national R&D investment. In the case ofThailand, however, the share of public funding of R&D fell too quickly.
Figure 4: Ratio of Public Research Funding to Total GERD
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2013

2014

2015

2016

2017

China

Japan

Malaysia

Republic of Korea

Singapore

Thailand

United Kingdom

United States of America

2018

Source: UNESCO7

Besides the low share of public funding of R&D, the level of government
funding to support private investment in R&D is relatively small, having accounted forless than 1 percent of total private investment on R&D during 2014 - 2018 (Figure 5). On
the other hand, governments of some developed countries, such as the US, the UK,
Canada, Singapore and South Korea, provided funding to the private sector to support

7 Ibid.
10

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

R&D, averaging 5 - 8 percent during the same period. It is noted that these advanced
countries are in a period of declining funding of R&D to the private sector as theireconomies are more developed. Their business sector is playing a growing role in R&D
investment; concurrently, the government sector’s role becomes more muted.
Illustratively, the US government contributed to 30 percent, and 20 percent of the private
sector funding for R&D in the 1980s and 1990s, respectively, but this figure has dropped
to about 10 percent or less since 2000.

Figure 5: Ratio of Private R&D Investment Funded by the Public Sector
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%

Australia

Canada

2014

China

Germany

2015

Israel

Japan

2016

Malaysia Republic Singapore Thailand United
Unitedof Korea
Kingdom States ofAmerica
20172018

Source: UNESCO

Now, we turn to consider Thailand’s R&D output. In terms of the number ofscientific and technical journal articles per 1,000 population, Thailand was at a similarlevel to Malaysia and China in 2000. However, Malaysia and China rapidly surpassed
Thailand over the last two decades (Figure 6). Noticeably, South Korea and Singapore
have also made significant progress in the area of scientific and technical journal articles.

11

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Figure 6: Number of Scientific and Technical Journal Articles per 1,000 Population
2.50

2.00

1.50

1.00

0.50

0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

China

United Kingdom

Japan

Korea, Rep.

Malaysia

Singapore

Thailand

United States

Source: World Bank

In line with the preceding analysis, in terms of patent applications filed byresidents, Thailand performed similarly to Malaysia and China in 2000 (Figure 7).
However, China significantly improved its performance over time to the extent that its
performance in 2018 has exceeded some countries such as the US. Again, South Korea
had made striking progress in patenting activity over the period between 2000 - 2018.

12

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Figure 7: Number of Patent Applications by Residents per 1,000 Population
3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
China

United Kingdom

Japan

Korea, Rep.

Malaysia

Singapore

Thailand

United States

Source: World Bank

Overall, Thailand has made more progress in R&D input than in R&D output.
Thailand’s GERD as a percentage of GDP has increased from 0.4 percent in 2013 to 1.1
percent in 2018. This is mainly the result of the significant contribution of the private
sector expenditure on R&D, which accounted for 35 percent of total GERD in 2000 andincreased to 80 percent of total GERD in 2017.8 As for R&D outputs, Thailand, Malaysia
and China used to be at the same level in 2000. However, China and Malaysia have both
surpassed Thailand in terms of R&D output performance over the past twenty years.

8 “ Research and development investment in Thailand,” Office of National Higher Education,
Science, Research and Innovation Policy Council, accessed from http: / / stiic. sti. or. th/ stat/ indrd/rd-t001/ on December 1, 2020)13

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

4. Innovation and Competition
In this section, we analyse the relationship between innovation and competition. We startby describing the overall picture of innovation across industries in Thailand. Then, westudy the innovative activities and market competition in specific industries, namely, thesemiconductor and other electronic components manufacturing and plastic productmanufacturing.
Using the number of patents granted as the proxy indicator of firms’ innovative
activities, we found that there were 358 innovative firms during 1970 - 2019, with 2,854
patents granted to them during the period (Figure 8).
Figure 8: Number of Innovative Firms in Thailand
400

350
300
250
200
150
100
50

1971
1975
1977
1980
1983
1985
1986
1987
1988
1989
1990
1991
1992
1993
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

0

Source: The authors, calculated from the Orbis IP database

Excluding firms with missing data, our dataset is composed of 335 innovative
firms with a total of 2,662 patents granted (Table 1). Manufacturers were found to engage
in innovative activities much more so than other sectors, accounting for up to 62.8 percent
of patents granted, and are followed by the wholesale and retail trade (27.5 percent) andthe administrative and support service sectors (3.9 percent). The manufacturing sector
also had the highest number of firms with patents granted: 49.3 percent of total firms with
granted patents were in the manufacturing sector, followed by the wholesale and retailtrade (27.2 percent) and the professional, scientific and technical service sector (4.8
percent).
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Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Table 1: Number of Patents Granted and Number of Innovative Firms, Classified
by Industries
NACE Rev. 2 main section
Agriculture, forestry and fishing
Mining and quarrying

Number ofpatents
granted
3
10

Manufacturing
Electricity, gas, steam and air
conditioning supply
Construction
Wholesale and retail trade; repair ofmotor vehicles and motorcycles
Transportation and storage
Accommodation and food service
activities
Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific and technicalactivities
Administrative and support service
activities
Public administration and defence;compulsory social security
Human health and social work activities
Arts, entertainment and recreation

1,672

Total

2,662

Share
(%)
0.1
0.4
62.8

12
23

0.5

Number offirms withpatents granted
2
2
165

Share
(%)
0.6
0.6
49.3
1.8

0.9

6
16

733
6

27.5
0.2

91
5

27.2
1.5

3
7
4
14

0.1
0.3
0.2
0.5

2
4
4
12

0.6
1.2
1.2
3.6

65

2.4

16

4.8

104

3.9

6

1.8

2
1
3

0.1
0.0
0.1
100.0

1
1
2

0.3
0.3
0.6
100.0

335

4.8

Source: The authors, calculated from the Orbis IP database

Within the manufacturing sector, the Top 5 industries with the highest number ofpatents granted are household appliances manufacturing; commercial and service
industry machinery manufacturing; ventilation, heating, air-conditioning, andcommercial refrigeration equipment manufacturing; semiconductor and other electronic
components manufacturing; and plastic product manufacturing (Table 2).
We also examine the relationship between innovation and market structure at theindustry level in two selected industries – the semiconductor and other electronic
components manufacturing and plastic product manufacturing; both are among the Top 5
innovative industries and are related to S-Curve industries.
To measure the market power in each industry, cjt, we apply the Lerner index(price-cost margin), commonly used in the literature:
15

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

li𝑖𝑡 =

operating profit 𝑖𝑡 − financial cost 𝑖𝑡
sales𝑖𝑡c𝑗𝑡 =1∑ li𝑖𝑡N𝑗𝑡𝑖∈𝑗Here, 𝑖 indexes firms, 𝑗 indexes industries, 𝑡 indexes time and N𝑗𝑡 is the number offirms in industry 𝑗 in year 𝑡. The value of the Lerner index is between 0 and 1. The lower
the value of the index, the more competition the firm faces; the higher the value, thehigher the market power the firm has. As pointed out earlier, the use of the Lerner index,
as opposed to the Herfindahl concentration index, has the benefit of being able to avoid
having to define particular product and geographic markets. To compute the Lerner index
in each industry, we use all firm data points that lie in between the tenth and ninetiethpercentiles in the Lerner index distribution to avoid the problem of outliers.
Table 2: Top 20 Industries with the Highest Number of Patents Granted and with
the Highest Number of Firms with Patents Granted
NAICS
2017
code
3352
3333

3334

3344
3261
3399
3259
5331

4234

Numberofpatents
grantedNAICS 2017 description
Household Appliances
Manufacturing
Commercial and Service Industry
Machinery Manufacturing
Ventilation, Heating, AirConditioning, and Commercial
Refrigerator Equipment
Manufacturing
Semiconductor and Other
Electronic Components
Manufacturing
Plastic Product Manufacturing
Other Miscellaneous
Manufacturing
Other Chemical Product andPreparation Manufacturing
Lessors of Nonfinancial Intangible
AssetsProfessional and Commercial
Equipment and Supplies Merchant
Wholesalers
16

Share
(%)

Number offirms withpatents
granted

Share
(%)

498

18.7

7

2.1

322

12.1

4

1.2

237

8.9

6

1.8

193

7

171

7.3
6.4

17

2.1
5.1

162

6.1

18

5.4

88

3.3

1

0.3

86

3.2

1

0.3

72

2.7

12

3.6

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

3341

3252
5417
3112
3363
3329

3345
3351
3251
5614
3262

Computer and Peripheral
Equipment Manufacturing
Resin, Synthetic Rubber, andArtificial Synthetic Fibres andFilaments Manufacturing
Scientific Research andDevelopment Services
Grain and Oilseed Milling
Motor Vehicle Parts Manufacturing
Other Fabricated Metal Product
Manufacturing
Navigational, Measuring,Electromedical, and Control
Instruments Manufacturing
Electric Lighting Equipment
Manufacturing
Basic Chemical Manufacturing
Business Support Services
Rubber Product Manufacturing
Others
Total

2,662

60

2.3

4

1.2

44

1.7

8

2.4

41
36
33

1.5

1.5

1.4
1.2

5
4
9

24

0.9

5

1.5

24

0.9

1

0.3

24
23
23
22
479

0.9
0.9
0.9
0.8
18.0
100.0

2
4
3
5
212

0.6
1.2
0.9
1.5
63.3
100.0

335

1.2
2.7

Source: The authors, calculated from the Orbis IP database

4.1. Semiconductor and Other Electronic Components Manufacturing
In Thailand’s semiconductor and other electronic components manufacturing sector, there
were 7 firms with patents granted during 1970 - 2019 (Table 3). Among these innovative
firms, Delta Electronics (Thailand) PCL. is the leader; its innovations account for morethan 80 percent of the total patents granted in the industry. More details on Delta
Electronics (Thailand) PCL. can be found in Box 1 below.

17

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Table 3: Innovative Firms in the Semiconductor and Other Electronic
Components Manufacturing
Company name
Delta Electronics (Thailand) PCL.
Hitachi Metals (Thailand) Co. Ltd
Mektec Manufacturing Corporation (Thailand) Ltd.
Ener Saver (Thailand) Co. Ltd.
Salom Electric (Thailand) Co. Ltd.
Johnson Control-Hitachi Component (Thailand) Co. Ltd.
SVI PCL.
Total

Number ofpatents granted
158
29
2
1
1
1
1
193

Share (%)
81.87
15.03
1.04
0.52
0.52
0.52
0.52
100.00Source: The authors, calculated from the Orbis IP databaseBox 1: Case Study on Delta Electronics (Thailand) PCL
Delta Electronics (Thailand) PCL is the Thai subsidiary of Delta Electronics, anelectronics manufacturing company headquartered in Taiwan. Delta is listed on the
Stock Exchange of Thailand but over half of its shares are owned by international Delta
entities. The Bangkok office oversees Delta’s operations in all of Southeast Asia, India,
and Australia. The company was established in 1988 and currently focuses on threebusiness segments: 1. manufacturing power electronics, such as fan and thermal
management systems and electric vehicle solutions, 2. automated systems, and 3.
infrastructures, such as ICT infrastructure and energy infrastructure. The company's
stated goal is "to provide the most efficient and reliable energy-saving solutions forcustomers."9 In 2019, Delta had an annual revenue of 51 billion baht. It has recently
benefitted from increased demand as the US-China trade war forced buyers to buy morefrom Thailand.
Delta’s approach to innovation is driven by a keen eye for markets with highgrowth. Many of Delta’s innovations are targeted around future-oriented industries; its
five-year strategic plan focuses on industrial automation, data centres, electric vehicles,
renewable energy and energy storage systems. As Delta’s CEO explained, “We believein the importance of researching and developing new technologies that correspond to
global megatrends.”10
Several innovations have drawn wide interest. One is the development of“quick charge” charging systems for electric vehicles which is intended to support
growing demand for electric cars in the future11. Delta has also been responsive to
9 “Annual Report 2019,” Delta Electronics (Thailand) Public Company Limited,https://www.deltathailand.com/en/pdf/ir/Annual_Report_Delta_2019_EN.pdf.
10 “Delta wins Thailand electric vehicle charging company of the year 2019,” Biz Focus
Magazine, May 26, 2019, https://bit.ly/3rC3ycZ.
11 “Delta joins Amata to develop Smart City in EEC,” Prachachat Turakij, October 5, 2020,
https://www.prachachat.net/economy/news-531776.
18

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

emerging issues in Thai society. In 2019, the company exhibited innovations aimed atregulating air quality inside buildings, such as green home solutions and air filtration
systems12, in response to worsening air quality in Bangkok and other areas in Thailand.
Additionally, Delta is known for its digital infrastructure, including cloud services,
artificial intelligence, and IoT solution, which helps power services such as smart
manufacturing and smart surveillance.
Delta’s approach to innovation involves both internal investment into researchand development and partnering with external partners. Delta has research centres
around the world, such as Thailand, China, India, Germany and the US, and in 2018
spent 6.8 percent of sales revenue on R&D. In Thailand, 535 people were employed,
and 5.26 percent of operating revenue was spent to conduct R&D in that year. Delta
has also cooperated with other companies to collaborate on innovation. For example,
it is considering partnering with the Amata Group to jointly develop “Smart City” plans
in industrial estates in the Eastern Economic Corridor. Delta also partnered with the
Ministry of Industry to set up the “Delta Angel Fund” to support start-ups related toindustrial automation, energy management and future-oriented innovation 13 . Thispartnership resulted in new products such as Thailand’s first EV charging platform,
sterilizing robots and cane-cutting machines aimed at reducing air pollution. Finally,
Delta has also partnered with universities to set up “Delta Industrial Automation Labs,”
which are equipped with cutting-edge automation technology. The labs will help
alleviate the shortage of engineers skilled in industrial automation14.
Source: The authors, compiled from various sources

The average Lerner index of the semiconductor and other electronic components
manufacturing is around 0.2 - 0.3. As a leading company in the industry, Delta has a muchhigher value of the Lerner index than other firms, reflecting its higher market power(Table 4). Based on the interview with a Delta Electronics executive, electronics
manufacturers are likely to compete for cost control because prices of older models often
go down, while costs, such as labour and raw materials, tend to go up all the time. Largefirms without R&D would produce labour-intensive products that result in a low profit
margin. On the contrary, small companies providing system integration (SI) services may
have a high profit margin because they sell customized solutions, thereby positioning
themselves not merely as designers but also as solution-makers. To escape from the costcompetition and low profit margin, Delta executives have a policy to sell “live” fish, not“dead” fish. That is, their products need to be adjusted and improved upon frequently.
12 “Delta Future Industry Summit 2020,” Biz Focus Magazine, October 21, 2020,
https://bit.ly/3jyefKF.
13 “Delta Angel Fund is granted to SMEs and start-ups to support the business to success,”
Prachachat Turakij, August 28, 2020, https://www.prachachat.net/economy/news-513065.
14 “Smart Lab and Smart Classroom for Food- Agriculture 4.0,” Krungthep Turakij, November
11, 2017, https://www.bangkokbiznews.com/news/detail/780731.
19

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Therefore, Delta has continuously invested in R&D. Delta also focuses on their profit
margin rather than sales.
Table 4: The Lerner Index for the Semiconductor and Other Electronic
Components Manufacturing Sector
1Lerner Index
Delta Electronics (Thailand)
All firms2

2011
0.26
0.18

2012
0.29
0.20

2013
0.46
0.22

2014
0.48
0.25

2015
0.46
0.27

2016
0.46
0.28

2017
0.43
0.28

2018
0.41
0.28

2019
0.41
0.28

Notes: 1 Lerner index is calculated by the share of gross profits in sales.
2

The shown Lerner index is the average value for all firms. To avoid the problem of outliers, weuse all firm data points that lie in between the tenth and ninetieth percentiles in the Lerner index
distribution. The total number of firms is 179, 192, 380, 496, 511, 509, 505, 520 and 481 firms
for 2011-2019, respectively.
Source: The authors, calculated from the Orbis Asia-Pacific database

4.2. Plastic Product Manufacturing
In Thailand’s plastic product manufacturing sector, there were 17 firms with patents
granted during 1970 - 2019 (Table 5). The Top 2 innovative firms, namely Nippon Steel& Sumikin Materials (Thailand) Co. Ltd. and Aeroklas Co. Ltd., accounted for more thanhalf of patents granted in the sector. It is noted that Aeroklas Co. Ltd. and Eastern
Polypack Co. Ltd. are subsidiaries of the Eastern Polymer Group (EPG).
While Nippon Steel & Sumikin Materials (Thailand) Co. Ltd. is a wholly owned
Japanese subsidiary of Nippon Steel Chemical & Material Co. Ltd., EPG is wholly Thai
owned (see the case study of EPG in Box 2 below).

20

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

Table 5: Innovative Firms in Plastic Product Manufacturing
Company name
Nippon Steel & Sumikin Materials (Thailand) Co. Ltd.
Aeroklas Co. Ltd.
Poranunt Co. Ltd.
Royal Industries (Thailand) PCL.
Nawaplastic Industries Co. Ltd.
Asian Mos Co. Ltd.
Cosmo Group PCL.
Royal King Infant Products Co. Ltd.
Pasina Co. Ltd.
Eastern Polypack Co. Ltd.
The Next Foam Co. Ltd.
Yuen Yong Enterprises Co. Ltd.
Union Precision Engineering Co. Ltd.
Asada Chemical Co. Ltd.
Enzpire Industry Co. Ltd.
Bookook Tech Co. Ltd.
Chiem Cosmetic Packaging Co. Ltd.
Total

Number of patents
granted
53
43
16
14
8
8
7
6
6
2
2
1
1
1
1
1
1

Share
(%)
30.99
25.15
9.36
8.19
4.68
4.68
4.09

171

100.00

3.51
3.51
1.17
1.17
0.58
0.58
0.58
0.58
0.58
0.58

Source: The authors, calculated from the Orbis IP databaseBox 2: A Case Study of Eastern Polymer Group (EPG)
Eastern Polymer Group (EPG) is a holding company founded by the Vitoorapakorn
family. The group is a specialist in the polymer and plastics conversion industry. Its
main wholly owned subsidiaries include Eastern Polypack (EPP), which focuses on
one-time-use plastic packaging, and Aeroklas, which specializes in automotive parts
and accessories. Exports make up around 10% of EPP’s revenue, with main
destinations being South Korea, Canada, Australia and other ASEAN countries.
Aeroklas’s revenue is 70% export, mainly to countries in North America and Europe.
As of 2019, EPG had an annual revenue of 10 billion baht, with Aeroklas and EPP
contributing 4.7 billion baht and 2.4 billion baht, respectively. EPP was founded in2001 through EPG’s purchase of Thai Modern Plastic Industry, while Aeroklas wasfounded when EPG expanded into the automotive parts industry in 1996.
EPG has many strengths. Firstly, EPP is known for its wide product range,
with the ability to utilize a wide variety of plastics, while Aeroklas has a comprehensive
offering of truck parts, including bed liners, canopies, deck covers and side steps.
Secondly, EPG has received several international accreditations, and its brands aretrusted by large multinationals. Thirdly, EPG’s size and efficient management make itcapable of fast and wide delivery. Aeroklas, in particular, has a global reach, with21

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

subsidiaries in the US and Australia (for distribution), and China and Malaysia (forproduction). It is the world’s top producer of truck bed liners.
Product innovation has been a crucial factor in EPG’s success. EPP holds 44
patents and Aeroklas holds 83 patents and petty patents combined. One key
development for EPP was a plastic container that can both be frozen at a temperatureof -40 °C and microwavable for over three minutes. This is crucial for food sold in
convenience stores; 7-11 and CP's EzyGo brand currently use EPP’s packaging.
Another innovation is the production of a sturdier plastic cups for instant noodles which
prevent taste spoilage15. Aeroklas invented technology for installing flexible bed liners
without the need to drill into the car.16 It has also focused on making its products morerecyclable and protective.
EPG continues to invest at least 1% of annual revenue into R&D17. It has also
benefitted from technology transfer via acquisitions: Aeroklas Australia purchased
companies such as Flexiglass and its fibreglass canopy technology, along with Bocar
and its heavy-duty trays.
EPG’s main strength is to create innovative products and protect them withpatents. According to deputy CEO Chalieo Vitoorapakorn, the company believes ininnovation as a path towards becoming the market leader, rather than engaging in pricewars or cutting costs. An example of this approach was the aforementioned innovation
in instant noodle packaging, which increased manufacturing costs by less than 30% but
reduced taste spoilage. This innovative corporate culture was set from the very top.
EPG president Pawat Vitoorapakorn established the EPG Innovation Centre 18 andretains the title of Chief Innovation Officer, so he can supervise the centre’s researchand lead the company towards innovation.
Source: The authors, compiled from various sources
Similar to the semiconductor and other electronic components manufacturingsector, the average value of the Lerner index for the plastic product manufacturing sector
is about 0.2. Unlike other firms in the industry, Aeroklas Co. Ltd. and Eastern Polypack
Co. Ltd, which are subsidiaries of EPG, have larger values of the Lerner index, reflecting
their higher market power (Table 6). The interview with EPG’s executives revealed thatthe company’s business model is innovation-led growth. EPG has owned approximately
600 patents and petty patents, enabling EPG to grow from having sales of approximately
15 “Chalieo Vitoorapakorn leads the EPG group to the top 3 in the world,” Prachachat Turakij,
February 20, 2014, https://bit.ly/3jxhzG1.
16 “Annual Report 2020,” Eastern Polymer Group Public Company Limited, March 2020, p.25,
https://investor.epg.co.th/misc/ar/20200623-epg-ar2020-en-03.pdf.
17 “EPG innovation family under creative innovation organization,” Money and Wealth, August
2016, http://www.epg.co.th/Portals/0/news/Money%20and%20Wealth%20EPG.PDF.
18 “Rubber man stretches his innovative power,” Bangkok Post, December 6, 2014,
https://www.bangkokpost.com/thailand/general/447615/rubber-man-stretches-his-innovativepower.
22

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

0.3 million USD about 40 years ago to over 330 million USD at present. The company
definitely believes in innovation as a path towards becoming the market leader, rather
than engaging in price wars or cutting costs.
Table 6: The Lerner Index for the Plastic Product Manufacturing Sector
Lerner Index1

2011

2012

2013

2014

2015

2016

2017

2018

2019

Aeroklas Co. Ltd.

0.29

0.30

0.29

0.28

0.29

0.27

0.27

0.27

0.31

Eastern Polypack Co. Ltd.

0.22

0.28

0.26

0.27

0.30

0.29

0.42

0.39

0.44

All firms2

0.16

0.17

0.17

0.18

0.19

0.21

0.21

0.20

0.21

Notes: 1 Lerner index is calculated by the share of gross profits in sales.
2

The shown Lerner index is the average value for all firms. To avoid the problem of outliers, weuse all firm data points that lie in between the tenth and ninetieth percentiles in the Lerner index
distribution. The total number of firms is 1,080, 1,090, 2,086, 2,480, 2,482, 2,481, 2,547, 2,614
and 2,606 firms for 2011-2019, respectively.
Source: The authors, calculated from the Orbis Asia-Pacific database and EPG financial
statement data

5. Conclusion and Policy Recommendations
It is well known that innovation is an important engine of a country’s growth. Thailand
has tried to improve its competitiveness through innovation. In terms of R&D inputs,
Thailand’s GERD as a percentage of GDP has increased from 0.4 percent in 2013 to 1.1
percent in 2018 as a result of significant private sector R&D expenditure, which
accounted for 35 percent of total GERD in 2000 and increased to 80 percent of total
GERD in 2017.19 While R&D input has increased, Thailand still lags behind on R&D
outputs. Despite being at par with Malaysia and China in 2000, both countries had
managed to surpass Thailand in terms of R&D output performance over the past twenty
years.
How can we improve Thailand’s innovation performance? The private sector
plays a main role in innovative activities. Since Aghion et al. (2005), it has been
hypothesized and empirically confirmed that the level of innovative activities of firms

19 Office of National Higher Education, Science, Research and Innovation Policy Council,
accessed from http://stiic.sti.or.th/stat/ind-rd/rd-t001/ on December 1, 2020.
23

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

increases with the level of competition they face until the level reaches the peak of theinverted U-shaped curve, before subsequently decreasing. In particular, Sujarittanonta
and Kamsaeng (2017) confirmed the hypothesis in the case of Thailand and argued thatcompetition is the missing piece from the Thai innovation policy framework.
In this paper, we study the relationship between the level of innovative activities
of firms in various sectors in Thailand and the level of competition they face. Using theOrbis database, we found that the Thai private sector, especially the manufacturing sector,
has obtained more patents over the period of our study. One explanation for the increaseis that the Thai private sector has been facing increasing competition in the market andneed to be more innovative to survive and grow.
We then analyse the level of innovation of firms in Thailand in two specificindustries, namely, the semiconductor and other electronic components manufacturing
and plastic product manufacturing industries. The number of patents granted is used as aproxy for innovation output in each sector, while calculations based on the Lerner index
is used as a proxy for the market power. We also conducted detailed case studies of two
manufacturing firms – Delta Electronics (Thailand) and Eastern Polymer Group – bothof which are leaders in innovation in their respective sectors. Our case studies broadly
confirm the findings that firms tend to increase their innovative activities to cope withincreasing competition in the global market. As a result of their innovative activities, both
Delta Electronics (Thailand) and Eastern Polymer Group have higher market power thanother firms in their industries, as reflected by their higher values of the Lerner index.
Policy Recommendations
If a policy goal is to promote innovation activities in an economic sector, it is important
to determine whether the level of competition in the sector is on the left or the right-handside of the peak of the inverted U-shaped curve.
As Thailand is a small and open economy, most large firms in the manufacturingsector are forced to export and face competition in the global market. Since many
manufacturing firms in Thailand are increasing their innovation activities, they arepresumably situated on the left-hand side of the inverted-U peak where the level ofcompetition is relatively low. Hence, there is already demand for innovation activities,
but still at low level.
As a result, government intervention aimed at promoting innovation should focus
on the supply-side, i.e., helping firms to lower the cost of conducting innovation. Thiscan be done through providing research grants and tax incentives to promote such
24

Koichiro KIMURA, ed. (2021) Impacts of Innovation on Firm Performance and Industrial Development in East Asia
(BRC Research Report), Bangkok: Bangkok Research Center, JETRO Bangkok.

activities, facilitating the mobility of R&D manpower from the public to the private
sectors and facilitating foreign R&D personnel and highly skilled professionals to workin Thailand.
The same supply-side interventions can be used to assist firms that are on theright-hand side of the inverted U-shaped curve – those facing severe competition that tend
to lower the innovation activities.
Additionally, liberalisation of trade may be needed to induce innovation in some
sectors. Firms in the service sector seem to engage less in innovative activities. Many ofthem face little competition, partly due to the “non-tradable” nature of their services.
Thus, these sectors need to be liberalized to allow more competition to promote
innovation. This is the big “missing piece” in innovation policy in Thailand, pointed out
by Sujarittanonta and Kamsaeng (2017). In particular, the Foreign Business Act (FBA)should be radically revised to allow free entry of foreign service-providing firms, unlessexplicitly prohibited. In other words, the mode of service liberalization should be basedon a “negative-list” approach, instead of the current “positive-list” one.
Finally, the Trade Competition Act should be enforced more strictly to prevent
blatant abuse of dominance and collusion.

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