Thailand: A Manufacturing Snapshot

Ten years ago, you would have seen textile and heavy industrial factories lining the seaboard around Bangkok. Today, the country's manufacturing scene has shifted upwards on the production scale.

Competing with other Asian countries -- namely, China, Singapore, Malaysia, and Vietnam --- for manufacturing contracts and direct foreign investment, Thailand's top three exported products are electronic components and devices, automotive parts, and petrochemical products, says Ajarin Pattanapanchai, senior executive investment advisor at the Thailand Office of the Board of Investment. The country is currently the No. 1 producer in hard disk drives, and it is the largest auto producer in Southeast Asia and the world's second largest producer of pickup trucks.

While rice, rubber, agriculture, and food processing also have good standing on the export list, textiles have not ranked among the top 10 outbound products for the last few years, Pattanapanchai told journalists and site-selection consultants (people who help multinationals assess and select destinations for planned expansion, new market entry, or relocation) during a meeting in Bangkok.

Coming off a tough 2011 when severe flooding dragged down GDP growth from 2010's 7.8 percent to 0.1 percent, the country is poised to reach GDP growth of 5.5 percent to 6.5 percent this year, said Pattanapanchai.

Besides building out the three key segments, the country is looking to develop its alternative energy, software, machinery, and biotech sectors.

Although Thailand is an attractive place to do business, it's not without its challenges, notes Judy Benn, executive director of the American Chamber of Commerce in Thailand. Administrative bureaucracy, outdated customs practices, a government focus on political conciliation between the red shirts and yellow shirts, and a shortage of skilled workers (Thailand has an unemployment rate of 0.7 percent) are some of the main issues.

One of the ways the country is filling the gaps is by further developing its national research and development centers and strengthening R&D ties to universities in Bangkok. The Thailand Science Park, for instance, now has 60 tenants, 300 R&D personnel, and had 640 R&D projects in 2010, with 354 of them being commercialized, said Korkwan Kwanboon, assistant manager in the marketing and cluster promotion division of Thailand's National Science and Technology Development Agency. Construction on two parts of a business incubator building will be completed next year, and by 2016, the organization expects to have 1,500 R&D personnel and 1,500 R&D projects in the works, with 900 of them going commerical, she added.

Thailand Science Park's new incubator will open in 2013, and is expected to significantly increase R&D projects and personnel.

I will be reporting back from Thailand every day this week. Please also check out our sister site, Velocity, for a story about the challenges and benefits of entering emerging markets. Next week, we'll be taking a closer look at Thailand's flood recovery efforts and how the hard disk drive industry is doing.

For full disclosure, the trip is sponsored by the Thailand Investment Board and is part of an international press tour. All stories, however, reflect independent reporting, writing, and analysis.