BANGKOK: Thailand’s once-booming economy now finds itself struggling to escape the middle-income trap — an economic ceiling developing countries often hit. In December, U.S. company Goodyear Tire & Rubber started building a new production line at its aircraft tire plant in Pathum Thani Province, north of Bangkok. The new plant is set to begin producing state-of-the-art radial tires in 2018. A Goodyear executive said the company chose Thailand for its prime location at the heart of Asia’s growing aircraft market. German electronics giant Robert Bosch has started construction of a research and development facility for fuel injectors in Thailand, the third of its kind in Asia after similar plants in Japan and China. Several Japanese companies ventured into Thailand to cope with the yen’s appreciation after the 1985 Plaza Accord. Improvements in transport infrastructure and supporting industries such as materials and components also prompted overseas companies to enter the country.
It is the auto and electronics industries that have benefited most. In 2012, Thailand overtook France to become the world’s tenth largest car producer with 2.45 million units. The country is also behind 30% of global production of hard disk drives. But Thai growth now seems to have lost momentum. The country has grown at an average pace of 2.7% over the past five years, ranking ninth among the 10 members of the Association of Southeast Asian Nations. The country was hit hard by floods in 2011 and a military coup in 2014. And the sluggish growth appears to be far more than just a hiccup. According to data from the Japan External Trade Organization, factory workers in Bangkok earn $344 a month, nearly twice as much as their counterparts in Vietnam and Myanmar. But delays in industrial development to meet rising labor costs have seen the country’s gross domestic product per capita remain under $6,000 since it topped $2,000 22 years ago. Nurturing highly skilled human resources, as well as tax benefits, will be key to attracting further investment. Last year, Thai state oil conglomerate PTT opened the Vidyasirimedhi Institute of Science and Technology, or Vistec, in the east of the country.
