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 Home > About Thailand > Manufacturing > Government Policy

Government Policies Pertaining to the Manufacturing Sector

Over the past 35 years, the government has prepared seven National Economic and Social Development Plans. The broad policy directions of the Thai government have been laid out in these and evaluation of the specific policies towards industrialization been made according to the economic situation. The plans have increasingly reflected the importance of industrial development in the overall development of the country.

For over three decades, successive governments have consistently held to two basic policies, which and be traced back to the earliest industrial development efforts of the government. The first of these policies was that the private sector would be the motivating force behind industrial development and that the government would not make industrial investments which were in competition with the private support to industry in the form of physical infrastructure, technological resources and manpower development.

These basic policies are found in each of the national development plans and confirm the commitment of the government to a mixed economy. The major changes in the government's orientation towards industrial development involve the direction of the sector and the role of industry in the overall economy.

One of the main objectives of the Seventh Economic and Social Development Plan (1992-1996) was to maintain economic growth rates at levels that would ensure sustainable growth and stability. The industrial sector, targeted to grow at 9.5 percent per year, is driven by growth in the petrochemical, engineering, electronics and basic industries. This should occur as a result of the continuing trend of Japan and the East Asian newly industrialized countries (NICs) to relocate their industrial bases to this region to take advantage of competitive labour costs, and opportunities to reap the benefits of Thailand's increasing domestic purchasing power.

The annual growth rate targets under the Seventh Plan in percent are:

GDP growth: 8.2 Industrial growth: 9.5 Export growth: 14.7 Private investment growth: 8.8

Economic policy-making during the Seventh Plan has been based on the conviction that liberalization is the key to enhancing the competitiveness of the Thai economy. Industrial policies are designed to encourage competition, reduce restrictions on the private sector, and transform the government's role from one of control to one of support and supervision.

In an increasingly competitive international environment, Thailand can sustain its growth potential only by competing successfully in the world market. In this respect, it is the government policy to create an environment conductive for private businesses, to invest and upgrade production to higher level, and to use higher production technology to enable the industries to compete successfully in new products.

To accomplish this, the government has launched measures to reduce the supply of skilled labour, and upgrade production standards to international levels. Other areas which have become increasingly important to industrial policy-making in the 90's include environmental protecting, R & D, and the supporting industries. Measures have been established to speed up supporting industry development in areas which help upgrade technology, increase the industrial capability of the country and encourage industry to grow and develop efficiently.

Growth in manufacturing will also be supported by government efforts to develop trade and investment with the countries of Indochina: Lao PDR, Cambodia, and Vietnam, as well as Myanmar and southern region of the People's Republic of China. As they develop, these countries will demand manufactured goods, such as basic construction materials and consumer goods.


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