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How Thailand can put indigenous innovation on agenda
Publication Date : 15-10-2012
With the global economy still weak and domestic industries around the world feeling the strain, it is unsurprising that there have been moves internationally to try to curb or penalise Chinese imports by toughening up trade policies.
The key targets so far have been solar panel producers and auto parts manufacturers which have been putting pressure on the European and American industries.
In September the European Commission launched an investigation into dumping allegations against China by European manufacturers of solar panels. The same month, the United States said it would launch a complaint with the World Trade Organisation (WTO) about Chinese subsidies for automobiles and car parts. India is also considering imposing anti-dumping duties on China, Malaysia and Taiwan.
In response, China has filed a counter complaint with the WTO, saying that America's action lacks transparency and threatens China's export trade with that country, worth about US$7.2 billion a year. And a Chinese delegation went to Europe to discuss the European Commission probe, later indicating that the discussions were promising.
Even if these cases never proceed, China must certainly be considering taking steps to protect its own industries. One way of avoiding future heavy penalties is to move production facilities offshore.
Since Thailand is the largest solar panel producer in Asean and the largest auto parts manufacture, Thailand would be a prime destination.
Pleasingly, Thailand's Board of Investment has made alternative and renewable energy a priority industry and earlier this year the Thai government signed a cooperative agreement with China in telecommunications, technology, energy and agriculture.
However, instead of just providing a base for Chinese producers to put a "Made in Thailand" tag on their products, Thailand should make the most of this opportunity by trying to achieve transfers of technology from China to Thailand as part of an investment package.
This will certainly be easily understood by China where a determined approach to technology transfer is actively driven by the government. Plans to develop specific technologies have become an integral part of China's five-year plan, and the government is also running a campaign to promote indigenous innovation as part of its goal to become a technology powerhouse by 2020 and a global leader by 2050.
The concept was launched in 2006 with the "Medium and Long-Term Plan for Science and Technology Development (MLP)" plan. This identified four basic research programmes and 27 breakthrough technologies to be promoted including high-speed rail, robotics and electric cars. Foreign investors competing for government contracts and subsidies were even required to transfer their proprietary technology and IP to their Chinese partners, until later forced by outside pressure to stop this practice.
While not advocating that Thailand should attempt anything as draconian, it is definitely timely for Thailand to develop its own indigenous innovation policy. This will help it to make use of the upcoming opportunities and ensure that technology transfer and sustainable growth become an integral part of new foreign investment.
The writer is the Chief Executive Officer of Bangkok Bank (China).