Thailand wants to be Minnesota’s economic “gateway to Asia”

The country’s Board of Investment shares its plan for an economic transformation

By Brian Martucci
Mon, 2017-06-05 10:43

Thailand is the United States’ 25th biggest trading partner by total value of exported goods, according to the U.S. Department of Commerce.

Some big-name Minnesota companies do business in the kingdom. Cargill operates Thailand’s largest chicken processing plant, and recently invested $50 million in a facility expansion slated to add 1,400 jobs to its 13,500-strong Thai headcount. Nalco Water, an Ecolab company, has a bustling service center in Rayong. And 3M Thailand, the Maplewood company’s local subsidiary, just celebrated its 50th anniversary.

The BOI’s Charge

That’s not good enough for the Thailand Board of Investment, the royal government’s ever-enthusiastic economic booster group. Last week, I spoke with BOI Deputy Secretary General K. Ajarin Pattanpanchai, who was in Minneapolis to give a breakfast seminar on her team’s plan to turn Thailand into Minnesota’s economic “gateway to Asia.”

She was blunt about what she’s up against. “Most people in Minnesota, including business people, know little about Thailand” beyond its reputation as an exotic, reasonably safe, affordable tourist destination.

Thailand 4.0

Thailand, she explained, is in the midst of an economic transformation. Like southeast Asian neighbors Vietnam and Malaysia, both partners in the 10-member ASEAN free trade alliance, Thailand is restructuring its economy to escape the “middle-income trap” — a recipe for “growing income inequality and imbalanced development,” according to the BOI. The long-term goal is an “innovation-driven” economy that supports cutting-edge research and high-tech manufacturing in country.

The BOI dubs the plan “Thailand 4.0,” a reference to the three prior phases of Thai economic development: agriculture, resource extraction and unskilled manufacturing supported by cheap labor, and higher-order manufacturing for the global supply chain.

Thailand is already a thriving automotive manufacturing hub, for instance, but its value-add for global automakers is its generous reserves of automotive expertise and relatively low wages. Right now, that highly capable workforce assembles components designed and prototyped in Dearborn and Stuttgart. What’s stopping them from doing everything in Bangkok or Pattaya?

The Eastern Economic Corridor

In theory, nothing. In practice, a lot.

One of the biggest challenges is infrastructure. Thailand is a big country. Outside Bangkok and a handful of other regional hub cities, the general state of roads, railways, airports, and other bits of key infrastructure simply isn’t conducive to the “innovation-driven” economic activity that’ll make or break Thailand 4.0: robotics and automation, smart electronics, next-generation automotive technologies, biofuels, biotechnology.

The Eastern Economic Corridor, a gritty coastal region extending south and east from Bangkok, is the BOI’s test case for the power of improved infrastructure. The area has good bones: existing port facilities, a naval base, a major motorway heading up to Bangkok, cargo and passenger rail lines, and a major airport built by the U.S. military during the Vietnam War. The area is also the seat of Thailand’s petrochemicals industry, thanks to abundant offshore oil and gas reserves.

In the next five years, the Eastern Economic Corridor will get a major upgrade.

The military airport will be reborn as U-Tapao International Airport, Bangkok’s third international airport and the region’s principal aviation maintenance and training center. U-Tapao is much farther from central Bangkok than the city’s two existing commercial airports, but a new high-speed rail line will connect to the capital (and the other airports, because why not) in under an hour.

A new deep sea port, Sattahip, will substantially improve the area’s logistics capacity. Another port, Laem Chabang, will substantially expand its cargo handling capacity to 18 million TEU containers and 3 million Thai-made cars annually.

A new double-track cargo rail line will connect the corridor’s major industrial zones with distant industrial zones beyond Bangkok. And the existing motorway out from Bangkok will add lanes, on-off capacity, and safety features.

It’s time for Minnesota-based businesses to discover what’s waiting for them in Thailand, DSG Pattanapanchai told me. She’s not wrong.