In the context of the economic model known as Thailand 4.0, the government selected a set of priority sectors in November 2015 comprising “First S-Curve” and “New S-Curve” industries. The “S-Curve” concept posits that an industry’s growth is relatively slow during the infancy stage due to limited market size, but output rises rapidly once economies of scale take hold and the market expands, and that growth eventually levels off due to demand saturation. “First S-Curve” industries include five sectors that can be upgraded in the short or medium term by adding value through advanced technologies: next-generation automotive (e.g. electronic vehicles), smart electronics (e.g. high value-added ICT products), high-income tourism and medical tourism, efficient agriculture and biotechnology, and food innovation. “New S-Curve” industries include five sectors identified as promising drivers of growth in the long term: robotics, aerospace, biofuels and biochemicals, digital industry and medical hub.
To support the development of these priority sectors, the government launched investment promotion measures in designated Special Economic Zones (SEZ) in different locations and with specific purposes. SEZs are based on the concept of clusters to improve industrial value chains by strengthening linkages among firms, research and academic institutions, and public organisations, within a geographical area. The government provides both financial incentives (e.g. tax reduction and subsidies for innovation and human resource development) and non-financial incentives (e.g. simplifying visa procedures for skilled foreign labour and easing regulation of foreign equity and land ownership). In July 2016, three provinces in the east coast area were designated as the Eastern Economic Corridor, which is to be the flagship SEZ and leverages off the existing manufacturing and energy industrial base there. The government has set an ambitious target of THB 1.5 trillion (Thai baht), or some 10% of 2016 nominal GDP, for public and private investments in the corridor from 2017-21. This initiative is a good example of how government can translate a policy into an implementation model.
