"Rising Above Disruptions: A Call for Action"
Keynote Remark by Dr. Veerathai Santiprabhob
Governor of the Bank of Thailand
National Directors Conference 2018
Thai Institute of Directors
21 June 2018, Plaza Athenee Hotel, Bangkok Thailand
Dr. Bandid Nijathaworn,
Mr. Andrew Sheng,
Secretary General Rapee Sucharitakul,
Chief executives,
Directors,
Distinguished guests,
Ladies and gentlemen.
A very good morning to you all.
First of all, I would like to express my sincere thanks to the Thai Institute of
Directors (IOD) for inviting me to be a part of this exciting and important event. I have
always had strong appreciation for IOD's mission and work to improve director
professionalism and corporate governance in Thailand. I would also like to
commend the IOD on organizing this year's conference with a proactive and forward
looking agenda that goes well beyond its focus on corporate governance. This year's
conference program concentrates on areas that we need to collaborate to ensure
the future success of our country. It is therefore such an honor to be here today to
share my thoughts with distinguished directors and key leaders who play an integral
role in driving Thailand forward.
Ladies and gentlemen,
We are living in an unprecedented period of profound changes where
exponential advancement in technologies is transforming everything we know. The
speed, scope and impact of this technological change are unlike anything we have
experienced before. It is disrupting and transforming the whole value chains, across
all sectors in all corners of the globe, at an extremely fast pace.
The effects of this digital revolution are far reaching. We have seen it affecting
a wide spectrum of industries ranging from agriculture to automobile, encompassing
a broad range of professions from farmers to financial professionals. Drones can now
be used to monitor agricultural yields and provide logistic services. Artificial
Intelligence (AI) can now predict certain forms of cancer more accurately than
doctors and enable cars to be self-driven. From 3D printing, to genome mapping, to
Internet of Things (IoT) and, very soon, Internet of Everything, the possibilities are
limitless.
As a country, how we respond to these challenges will determine Thailand's
position in the world economy and the path our future generations take. Of course,
no one can accurately predict where this path of technological advancement will
lead us to and how our digital future will unfold, but what we can be certain of is
that traditional ways of conducting businesses have been upended and leaderships
are being challenged. Board members and executives are faced with strategic risks
that could threaten viability of their organizations if they do not make timely changes
to their business models to remain relevant and competitive. Equally important is
how to manage risks associated with this digital transformation. As all directors know
well, executing successful strategic transformation is not an easy task. Executing
successful digital transformation when the ecosystem is still evolving will be even
more challenging.
Ladies and gentlemen,
Amidst these rapid technological advancements, I believe everyone here
agrees that a wait-and-see strategy is inadequate. Hence, I very much concur with the
conference's theme of "A Call for Action." It takes courage to lead a transformative
journey into an unknown territory. The collective wisdom shared among directors
here will enable all of us to make better informed decisions and lead our
organizations, and more importantly, lead Thailand, onto the right path - the path
which will rise above disruptions, as the IOD has eloquently put it.
As Thailand embarks on the journey for digital transformation, we must focus
on three key imperatives of productivity, immunity, and inclusivity. Technological
advancement provides tremendous opportunity for us to uplift these three areas like
never before. While policymakers and regulators can provide support at the
infrastructure level and promote a stable environment conducive for innovation, it is
at the firm level that actions can be and must be taken to drive meaningful changes
for the country as a whole.
First, on productivity: uplifting the country's productivity is necessary to
ensure continued long-term economic growth. Specifically, structural changes due
to an aging workforce have hastened the need for our country to improve
productivity just to maintain output level. In fact, Thailand's labor productivity
growth has been on a decline. From 2002 to 2017, our annual growth of labor
productivity averaged 2.9 percent, a significant drop from an average of 5 percent
during 1986 to 2001. In contrast, countries such as China and Indonesia have been
experiencing rises in productivity growth. Should this trend continue, Thailand will
not be able to maintain its competitiveness and output level.
Fortunately, many technological advancements available at much lower costs
today hold huge promises for raising productivity. Cloud computing, robotics and
automation have allowed businesses to save significant costs. Big data, artificial
intelligence and machine learning capabilities can now offer insights that enable
more targeted services. I urge you all to seize this opportunity and leverage on new
technologies to improve the productivity of your firms, your industries, and
eventually our country.
Second, on immunity: for growth to be sustainable we must have
sufficient immunity to withstand unexpected shocks. We are living in a time of
great changes, where outcomes can be sudden, unpredictable, and volatile, bringing
with them new forms of risks. Not only will firms face risks related to strategy,
finance, and operation, but they will also face risks associated with driving digital
transformations. Managing the transformation process in the digital environment
requires fostering an organizational culture that is agile and nimble-to gain flexibility
and speed that drives productivity and innovation. But, at the same time, a strong
culture on risk management must also be instilled to safeguard firms' resilience.
As industries increasingly rely on data and data-driven technologies, cyber
security must be considered a top priority. Globally, the number of threat incidents
have been rising, with increased frequency, sophistication and scale of their impacts.
For instance, in 2010 McAfee Labs recorded about 60,000 new malwares per day, but
by 2017 that number had risen almost ten folds to 500,000 or about 350 new
malwares per minute. It is also estimated that the cost of cybercrime will be in
excess of USD 600 billion this year. As such, organizations must build up sufficient
cyber resilience by putting in place safeguards to improve threat prevention and
detection and ensure preparedness for response and recovery should a cyber attack
occur.
Third, on inclusivity: economic development without fair distribution can
induce social and economic instabilities, threatening long-term sustainable
growth. This is one area we must improve as a country. According to Credit Suisse
Global Wealth Report, 58 percent of the nation's wealth is controlled by the richest 1
percent of the people. Meanwhile, 61 percent of land is owned by the top 10
percent of the land owners, and three quarters of the population do not own any
land.
Like previous industrial revolutions, the digital revolution brings with it
challenges in income and wealth distribution, as those with higher skills and access
to capital are much more likely to reap the benefits and get larger pieces of the pie.
This calls for increased efforts to address this issue to make sure that no one is left
behind. If this issue is neglected, the digital divide will widen inequality gap even
further.
Ensuring easy and affordable access to technology and innovation can help
reduce inequality and promote Thailand's inclusivity. Lower-income groups and
people in remote areas need to have access to quality services essential to
improving their welfare, such as education and banking services. It is therefore crucial
that basic infrastructures are put in place starting, for instance, with national-wide
internet broadband access points and the PromptPay electronic fund transfer system.
Moreover, these infrastructures must be interoperable and open to all, which
would definitely require collaboration of the whole industry, not just an effort of any
one firm. Our PromptPay infrastructure was the result of close collaboration between
the Bank of Thailand and the Thai Bankers' Association. It has spurred healthy
competition amongst banks, catalyzing enhancement in the e-payment landscape
such that it provides increased opportunities for many small merchants and
consumers.
Another important factor for inclusivity is digital literacy. It is imperative to
equip people with necessary skills to survive and thrive in this digital era. This is an
enduring task and one that requires active participation at every level. This effort can
begin with individual staff in one's own organization-working from tech-savvy juniors
to technologically-challenged peers.
Ladies and Gentlemen,
I believe the three key imperatives of productivity, immunity, and inclusivity
will help Thailand navigate through this digital disruption and continue on the path
for sustainable economic growth.
Before I end my remark this morning, I would like to emphasize once again
that while this new digital ecosystem is still evolving and the future remains
uncertain, we cannot afford to hold back. We must strategically adapt and adopt
technologies now to remain relevant and competitive and provide support for
sustainable improvement in the standard of living of the Thai people.
In closing, I would like to congratulate the IOD once again for fittingly
organizing this Call for Action conference. Actions taken at the firm level can
determine the direction of our country and whether we can efficiently catch up with
rapid technological changes. These changes will also inevitably affect the whole
ecosystem of Thailand. Therefore, I urge you all to think on a bigger picture on how
your firms can help make Thailand's digital transformation successful and fruitful.
So, think big, stay informed, and act wisely. Only then we can be certain that
together we could truly rise above disruptions.
Thank you for your attention.
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