研究論文

Thailand 4.0 as a Long-Term Economic Policy:
Realization of a Self-Sustaining Innovation Ecosystem
as a Condition for Becoming a Developed Country
Takeharu Kiyoshi
Komatsu University

Abstract: The purpose of this study was to clarify the possibilities for realizing Thailand
4.0 and the challenges surrounding this endeavor based on local information sourced
through interviews and related conferences, as well as a review of existing literature on the
topic. The direct interview was with Amata Corporation manager and staff, who were in
charge of the project in the industrial park. I also had the opportunity to hear from many
stakeholders involved in Thailand 4.0, including a lecture by Kromadit. V, CEO, Amata
Corporation. In addition to highlighting the background issues that led to the implementation of this policy, we classified the specific trends of various firms toward the realizationof Thailand 4.0 according to the efforts of industrial estates. In conclusion, this paper
points out that the creation of a self-contained ecosystem-like network for bringing innovation with economic value will lead to the success of this policy. The foreign capital-dependent economic growth model currently being promoted in Thailand was effective inrealizing a middle-income country status; however, its effectiveness in transitioning it to ahigh-income country is limited. This implies that conversion is required.
Keywords: Thailand 4.0, Innovation with economic value ecosystem, Middle-income trap,
Endogenous development, High-income country

1 . Introduction
In an effort to break away from the current economic situation in which middle-income countries, such as
Thailand, find themselves, and evolve into a high-income country, the Thai government formulated a newpolicy, referred to as “Thailand 4.0” as part of the country’s long-term economic and social vision1）. This
policy aims to achieve economic and social transformation that can create sustainable added value2）.
However, growth due to labor force growth and capital accumulation such as infrastructure isapproaching its limit. Hence, the Thai economy is entering what is called a “middle income trap.” A“middle-income trap” refers to a situation in which the economy is stagnant at the middle-income level
and cannot enter the developed world. In the future, it will be important to promote industrial
sophistication through efforts such as stimulating innovation power. Therefore, the purpose of this study─ 33 ─

Takeharu Kiyoshi

is to clarify the possibilities and challenges of implementing this policy. This article first describes the
background issues that led to the development of this policy. Then, it clarifies the specific trends andefforts of individual management entities toward the realization of Thailand 4.0 based on the efforts of
Amata City Chonburi industrial estates. Lastly, the paper specifies the issues that make Thailand 4.0
policy difficult to realize, and the author proposes to study the feasibility of the innovation ecosystem.
The author, however, believes that the creation of an innovation ecosystem (a self-contained ecosystemlike flow line for realizing innovation with economic value) will lead to the success of Thailand 4.0.
2 . Literature review
Izumi (2017a, 2017b) and Suehiro (2018), among others, are representative of prior studies in this field.
They contributed to showing the current state and challenges of Thailand 4.0 as a policy, where theirfindings are not always clear. Oizumi (2017a, 2017b) considers the direction and content of Thailand’slong-term development policy using the Thai government’s recently announced concept of “Thailand 4.0”
as a keyword. He says that it is important for Japan as a developed country to contribute to the economic
development of Thailand, since both have strong economic ties. This study also examined how Japanesecompanies should conduct business in Thailand such that it contributes to Thailand 4.0. In his paper,
Suehiro (2018) pointed out the effects of Thailand 4.0. He indicates that this strategy can overcome the“middle income trap.” The paper also pointed out that Thailand “should aim for a balanced society” rather
than a high-income country. The basic knowledge, that is the premise of this paper, was obtained fromthese previous researchers; based on the information obtained therefrom, we conducted field interviews.
3 . Methodology
For this study, we used previous research information, as well as current information sourced throughinterviews with Amata Corporation manager and the staff, who were in charge of the project in theindustrial park. I also had the opportunity to hear from many stakeholders involved in Thailand 4.0,
including a lecture by Kromadit. V, CEO, Amata Corporation, and other conference lectures. Manycompanies in Japan are directly investing in Southeast Asia, especially Thailand. Such investments
promote this kind of research, ones that help understand the economy of Thailand. In the corporate
world, it is desirable to carry out decisions based on the external environment or the macroeconomic
situation. As can be seen from the above situation, many suggestions could be obtained from the previous
researchers. The initial information was research based, which led to further information collection froma beneficial interview, and a synergy was born.

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Thailand 4.0 as a Long-Term Economic Policy: Realization of a Self-Sustaining Innovation Ecosystem as a Condition for Becoming a Developed Country

4 . Results
The development of the Thailand 4.0 policy
Thailand 4.0 is targeted at transforming Thailand into a value-added society by accelerating thedigitization3） of the economy. This strategy is a long-term development policy aimed at propelling thenation into a developed country in about 20 years (Oizumi, 2017a). The country’s agriculture, lightindustry, and heavy chemical eras, which represent Thailand 1.0, 2.0, and 3.0, respectively, show the
progress of its economic and social development thus far (Figure 1). The country is currently in the third
stage, and through a national-level strategy formulated to achieve the fourth stage, it is looking toadvance past this level. That is, the Thai government is in pursuit of revolutionizing the country into an
economy that can sustain added-value creation or an “innovation-driven economy.” All four stages areshown in Figure 1. In this strategy, as shown in Figure 2, the key industries of focus to help achieve─ 35 ─

Takeharu Kiyoshi

Thailand 4.0 are the high-tech areas and industries, depicting a significant shift from its current focus on
the existing industries. Important industries to realize Thailand 4.0 are largely changing. These industries,
called “Target industry,” are, for example, Next Generation Automotive, Smart Electronics, Medical &Health Tourism, Agriculture and Biotechnology, Feeding Foods, Robot Industry, Airlines, Logistics,
Biofuels and Biochemicals, Digital Industry, Medical Hub Industry, and so on.
One of the reasons for introducing this development policy is to escape the “middle-income
4）

trap.” Thai economy has maintained high economic growth rates over the past half century. Despite thecurrency crisis, economic crisis, the global economic crisis that followed the Lehman Brothers’ shock, andthe disastrous fall in production base due to the flood, the economy has shown stable growth; however, in
recent years, the growth rate has tended to be blunt. A middle-income trap refers to a situation where aless-developed country has achieved economic growth and a moderate income level but has subsequently
fallen into a slow-growth state, which prevents it from developing further and reaching the “developed
country” status. It is characterized by “a growth trajectory that has relied solely on low-wage labor andthe additional input of low-cost wages has reached its limits with rising real wages and inefficientinvestment funds” (Suehiro, 2018). One of the indicators that Thailand is now trapped in this economic
situation is depicted in Figure 3, which shows Thailand’s real GDP growth trend in comparison with thoseof other ASEAN countries. In recent years, the country’s average annual real GDP growth rate has notexceeded those of emerging and developing countries (2016 IMF published 4.4%, 2017 IMF published4.8%). Figure 4 shows the recorded and projected changes in Thailand’s labor force. It can be seen thatthe decrease in labor force and the GDP growth rate are in proportion. In order to cope with theanticipated rapid birthrate and aging society, the government pursued a drastic improvement inproductivity, and measures to achieve this were required. For this reason, the government identified “threetraps” that the country has to overcome and formulated a strategic response to do so (Suehiro, 2018).

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Thailand 4.0 as a Long-Term Economic Policy: Realization of a Self-Sustaining Innovation Ecosystem as a Condition for Becoming a Developed Country

These traps include the (1) middle-income trap, (2) economic inequality trap, and (3) imbalance between
economic development and environmental conservation trap. Through the formulated strategy, the country
responded by promoting (1) innovation-led growth, (2) inclusive growth, and (3) green (eco-friendly)
growth. Suehiro (2018) described the transition that ensued as “From goods to innovation, from industries
to technology and creativity, from goods to services and services” (p. 83.). This mission can be viewed as
an intention to transform the economic system itself.
Trends toward the realization of Thailand 4.0—Reinvesting in the strategic areas
One of the major impacts on the realization of Thailand 4.0 was Prime Minister Shinzo Abe’s (of Japan)
visit to China in October 2018. This visit triggered the transition of Japan–China economic relations
toward cooperativeness, which led to collaboration between the two countries in promoting China’s policy
for the “One Belt, One Road” area,5）a huge economic zone. One concrete form of such cooperation is thatof a Japanese–Chinese company jointly developing a business in a third country, in this case, Thailand.
The specific initiatives of this venture include the use of AI and IT technologies to improve energy
efficiency, transportation network efficiency, urban convenience, etc. In fact, this set of initiatives is apolitical move to intentionally and indirectly indicate cooperative posture from Japan’s side to China’s
wide area economy. The development in Thailand thinks that Japan with technical advantage is led by thelead. The targeted development areas include the Amata City Chonburi Industrial Estate in Thailand,
which is located in the Eastern Economic Corridor (EEC), a strategic area that aims to become the centerof industrial advancement in Thailand.
The EEC is an existing development area for three provinces in eastern Bangkok (Chonburi,
Chachoengsao, and Rayong) (Oizumi, 2017b) (Figure 5). This area is different from previous privately
led developments. It was positioned as a national project to realize the “20-year National Strategy”

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Takeharu Kiyoshi

stipulated by the Constitution and is dedicated to investment in infrastructure development at the national
level. The area is being developed to further enhance the eastern coastal industrial zone, which wasestablished as an industrial agglomeration zone. The intention is to increase its feasibility. As apreferential policy in special economic zones (special investment preferential areas), preferential
treatment, such as corporate tax exemption, has been determined for foreign-affiliated companies
investing in these areas.
Amata City Chonburi Industrial estate and the Smart Plan
The Amata City Chonburi Industrial Estate6）, located in the EEC within the Chonburi Province, wasopened in 1989 by Amata Corporation (the CEO of which was Wikrom Chromadit at the time). Thisestate is a representative Thai industrial estate with a total development area of 4,000 ha and lies
approximately 57 km east of Bangkok (in 2018, the property name was changed from “Amatanakorn
Industrial Estate” to “Amata City Chonburi Industrial Estate”). More than 60% of the current 730 resident
companies in this estate are Japanese-affiliated, and well-known companies such as Komatsu,
Bridgestone, Denso, and Daikin are listed among them. The total number of employees in the industrial
estate is approximately 180,000, of which approximately 3,000 are Japanese. The proportions of theindustries operating within the area are 32.7% for “automobile-related,” 32.6% for “steel/plastic/rubberrelated,” 9.2% for “service/R&D/logistics/sales-related,” and 8.6% for “electrical and electronic-related”
industries (The Bank of Tokyo-Mitsubishi UFJ, Ltd. 2017).
Among the recent issues recognized by industrial estates is the aging of the entire energy
management (energy saving) facilities, and the necessity to repair them is becoming more prominent. In
order to motivate foreign companies considering new occupancy at Amata City Chonburi Industrial
Estate, the addition of distinctive functions is required. The industrial estate hopes to attract companies

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Thailand 4.0 as a Long-Term Economic Policy: Realization of a Self-Sustaining Innovation Ecosystem as a Condition for Becoming a Developed Country

entering the market by making it smarter.
Creating a city that makes use of smart factories will differentiate it from other industrial estates.
For example, the utility of industrial estates is enhanced by improving their transmission networks so thatthey can control and optimize the flow of electric power from both supply and demand (smart grid) andthe effects of traffic congestion detection and traffic regulation (smart traffic). The Amata City Chonburi
Industrial Estate assumed that these will eventually lead to the provision of an optimal environment for
tenant companies.
On one hand, since a general smart plan to achieve this level of innovation has been deployedin cities and local communities, various stakeholders, for example, landowners, city designers such as
government, utility companies (electricity, gas, water, traffic, and communication), equipment
manufacturers, software companies, etc., will be involved. The involvement of various actors withdifferent business types and models indicates that a consistent smart process is difficult to achieve. Thatis, due to vertical division, consistent smarter promotion will be difficult. On the other hand, the Amata
City Chonburi Industrial Estate smart plan can be integrated and promoted. Even if the estate is not acollection of smart functions within an industrial estate, there is a possibility that a situation benefitting
all tenant companies can be realized. If successful, the multifaceted development will expand. The estate
has the potential to be a model initiative for achieving economic and social transformation that creates
sustainable added value.
Clarification of issues that make it difficult to implement the policy
The Thailand 4.0 policy is based on strategy and planning. However, it must be pointed out that themethodology for promoting Thailand 4.0 relies on the current advanced technology and planning powerof foreign companies. This means that, excluding the individual micro-level Thai workers in a particularforeign-owned enterprise, it will be difficult for other Thai workers to gain added value universally inproportion to the rising wages. Thus, it is likely that the cause of the “middle-income trap” will not be
solved.
To escape from the “middle income trap” and evolve into a high-income country, it is necessary
for a country to shift from an economy based on mimicking technologies imported from developed
countries to an economy driven by innovation. This solution is also premised on the existence of highhuman capital that can support such an economy (Ueda, 2018). Unfortunately, in Thailand, thequantitative expansion of education has not kept pace with the sophistication of industry. Figures 6 and 7
include tables showing the comparison of educational levels for Thailand and Vietnam. Vietnam has alower GDP than Thailand. Nevertheless, it can be seen that the percentage of Vietnamese students who
have not reached the basic proficiency level in Scientific Literacy, Reading Comprehension, Mathematics,

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Takeharu Kiyoshi

and Literacy is extremely low (Figure 6, Figure 7). Therefore, it would be difficult to claim that
Thailand’s human capital has developed and accumulated in proportion to income.
Search for human capital development and accumulation
What measures are being planned to contribute to solving the above-mentioned issues related to thedevelopment and accumulation of human capital? An interesting fact about the Amata City Chonburi
Industrial Estate is that it focuses on providing an education system that will contribute to theadvancement of Thai human capital working for companies in the industrial estate. This is one entity
whose policies match those of Thailand 4.0.
For a Japanese company, there is always the problem of how to reduce the number of managers,
particularly Japanese managers, who require financial support to work within the country. To achieve this,in addition to making the factory itself smarter, it is essential to upgrade the Thai human capital (on the─ 40 ─

Thailand 4.0 as a Long-Term Economic Policy: Realization of a Self-Sustaining Innovation Ecosystem as a Condition for Becoming a Developed Country

other hand, smarter factories make it possible to execute sophisticated and complex work, and they areable to respond even to non-skilled personnel on the production line). The fact that an industrial estate
can inherently support this mechanism is a very big incentive. Therefore, the industrial estate is planningto establish a Master’s of Science (MS) in Engineering program at Amata University. In addition, it aims
to create an academic city by actively attracting universities from overseas, such as Taiwan, Singapore,and Japan to set up campuses therein. It can be said that this initiative aims to develop human capital for
employers in the industrial estate and achieve a positive cycle in which the established human capital
contributes to the productivity of the affiliated companies. University education can also respond to thedevelopment and accumulation of high levels of human capital. It is anticipated that the development andaccumulation of substantial human capital can be achieved in order to transform the country to an
economy led by innovation.
5 . Discussion
This paper has highlighted the issues and challenges inherent in the pursuit of Thailand 4.0, such as theneed to develop and accumulate human capital, and the plans for the Amata City Chonburi Industrial
estate, which has the potential to contribute to solving these issues. The point of uncertainty in the efforts
made at the industrial estate is whether it will be expanded into a universal innovation hub. Indeed, on
the surface, the industrial estate’s multifaceted development has the potential to expand and have apositive impact on the Thai economy and society. However, Thailand’s industrial estates are operated byforeign companies such as Japanese corporation. Therefore, it is important to develop and accumulate theThai human capital as employees of foreign companies. This will ultimately contribute to the
productivity of foreign companies. The realization of economic development through foreign capital is a
useful strategy. However, if the Thai themselves cannot create autonomous business processes that lead tothe creation of derivatives or related industries utilizing foreign-owned technology, or if the developmentof technology does not enable the realization of a Thai company’s own flow of innovation, it will bedifficult to avoid the middle-income trap. In other words, endogenous industrial development in theregion is needed in the future. In addition to achieving industrial transformation that can facilitate thecreation of added-value products, the realization of innovation in the productivity of Thai companies isalso crucial. In any case, it is necessary for the Thai people to realize innovation creation throughautonomous business development while taking advantage of foreign technology. The achievement of thecreation of an innovation ecosystem, defined in this paper as “a self-contained ecosystem-like flow line
for realizing innovation with economic value,” will lead to the success of Thailand 4.0.
Ecosystems are defined in various ways. Originally, the term ecosystem referred to circulationin natural sciences. However, it is often used in the form of regional economic collaboration, such as─ 41 ─

Takeharu Kiyoshi

collaboration on the market economy and autonomous startups found in Silicon Valley. In recent years,
the trend among actors forming a business model has been termed “co-creation,” which creates new value
by incorporating different skillsets and technologies that cannot be created from outside the organization.
This is almost synonymous with “open innovation.” A point to be noted for organizations seeking cocreation is whether they possess the necessary core knowledge and skills. Without these, is theorganization will simply have to rely on other organizations’ knowledge and technology.
In the case of Thai companies, their core knowledge and skills are often not competitive. Byutilizing the connection with foreign-affiliated companies, we hope that the elements that become the coreof the organization will be polished and developed with autonomy. To achieve this, a core actor is needed
to connect the companies. In this case, a foreign company plays a central role in strategic management,
which leads to the creation and functioning of an ecosystem. In other words, it determines the extent towhich foreign-affiliated companies are responsible. Then, for Thai cooperative companies, the extent towhich they will be responsible will be decided based on how to make them more sophisticated andbroader. This translates to creating innovation through “co-creation.” This is different from traditional role
sharing, which relies on low wages.
To that end, it is necessary to develop and accumulate human capital for Thais, who can draw
and execute the autonomous flow lines underlying them. An even greater focus is on improving public
education at the national level in terms of quality and quantity. In addition, at the individual managementlevel, it is essential to develop competitive human capital based on the market. In an uncertain market
economy, it is necessary to create human capital with independence and autonomy to reduce various risks
and create development.
6 . Conclusion
The purpose of this study was to clarify the possibilities and challenges for realizing Thailand 4.0 basedon local information. In addition to showing the background issues that led to the implementation of thispolicy, we clarified the specific trends of individual management entities toward the realization ofThailand 4.0, given the efforts of industrial estates. It clear that the Thailand 4.0 policy was implemented
with the recognition that Thailand may be in a “middle income trap.” This policy was an initiative to
introduce digital technology and other technologies into the Thai economy and society based on thenational strategy to realize industrial sophistication and improve productivity. The plan was to focus on
the EEC as a realization area and proceed effectively.
This paper points out that the creation of a self-contained ecosystem-like network for realizing
an innovation with economic value ecosystem will lead to the success of this policy. In other words,
although the foreign capital-dependent economic growth model currently being promoted in Thailand was─ 42 ─

Thailand 4.0 as a Long-Term Economic Policy: Realization of a Self-Sustaining Innovation Ecosystem as a Condition for Becoming a Developed Country

effective in realizing middle-income country status, its effectiveness in transitioning it to a high-income
country is limited. This implies that conversion is required.
Notes
1)

This paper is a complete academic revision and update of Kiyoshi (2020), which was written as anarticle for local companies. Access to information gathering has been facilitated by joining theAdministration and Management College, King Mongkut’s Institute of Technology Ladkrabang.

2)

According to comments from senior officials of the Ministry of Industry obtained from various lectures,
Thailand 4.0 is based on Industrial 4.0 drafted in Germany. Suehiro (2018) said that given thedigital economy that Thailand 4.0 is aiming for, Professor Kotler’s Marketing 4.0 also had a strong
influence.

3)

It is often used to create value by utilizing digital data.

4)

It means an intermediate country between “developed countries” and “developing countries,” and theWorld Bank assumes that the gross national income per capita is approximately 1,000 to 13,000 US
dollars. It is a concept that is loosely shared in development economics.

5)

A broad economic zone concept developed on the “Silk Road Economic Belt” on the land route called“One Belt” and on the “21st Century Maritime Silk Road” on the sea route called “One Road.”6)

It is not only the creation/sales of the factory location and mediation of rental factories. In the adjacentarea, there are residential facilities, banks, hospitals, convenience stores, gas stations, shopping
malls, and golf courses. Town planning is conscious. The opening of Hotel Nikko Amata City
Chonburi is expected in 2021.

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