Value creation is the key focus in transforming Thailand under the Thailand 4.0 model. In the manufacturing sector, robotics and automation technology plays a key role in creating value -- and that's why it has become a key player in the country's future, according to the Thailand Board of Investment (BOI). Thailand 4.0 is that Thai government’s bid to a new economic model, aimed at pulling Thailand out of the ‘middle-income trap’.

Over the last three decades, Thailand has become a leader in the global automotive and electronics and electrical appliance industries – the two main industries that drive global robotics and automation growth. As the world's second-largest global producer and exporter of hard-disk drives and the world's sixth-largest commercial vehicle producer, Thailand has been using robotics and automation technology.

With continuous adoption of such technology, it is now time for Thailand to go for more advanced technology to support the transformation of its economy under the Thailand 4.0 model says the Thailand BOI. The country is also influential in the textile industry, particularly in garment making.

Changing landscape drives higher demand

Duangjai Asawachintachit, secretary general of Thailand BOI, said at the end of last year (2017): "Advanced technologies are changing the business landscape, especially in the manufacturing sector."

"We now see many companies transitioning into Industry 4.0, making use of artificial intelligence (AI), big data management and the Internet of Things (IoT) to seamlessly work together to exponentially increase both production and productivity," said Asawachintachit.

Over the past few years, manufacturers in Thailand have invested heavily in machinery and systems to increase the utilisation of automation systems and remain competitive in the global manufacturing arena. In addition, 50% of Thai manufacturers are considering the adoption of automation systems within one to three years while medium-sized businesses will be ready in three to five years, followed by small companies in five years or more. This development has opened greater opportunities in Thailand's robotics and automation industry, said the Thailand BOI.

The industrial robotics industry in Thailand has expanded dramatically over the past decade due to a strong customer base. The size of Thailand's shipments of industrial robots is estimated to increase by 133% from 2,131 units in 2013 to 7,500 units in 2018.

Supporting ecosystem readiness

While demand is constantly increasing, Thailand's infrastructure and ecosystem are ready to support the robotics and automation industry, according to the BOI.

The Thai government has had robotics and automation among its targeted future industries for a number of years. To support its policy, educational institutions have provided support for research and development and human resource training. For example, the Institute of Field Robotics (FIBO) of King Mongkut's University of Technology, Thonburi, is offering undergraduate and graduate programmes in robotics and automation engineering. In 2015 alone, 76 universities and 83 vocational schools produced 82,259 graduates in engineering and related courses.

The BOI offers a wide range of tax and non-tax investment incentives for projects that meet national development objectives. The BOI offers up to eight years of corporate income tax exemption on machinery and import duty for raw material for export production. For projects related to assembling robots or automation equipment and/or automation parts, investors will enjoy five-year corporate tax exemption, said the BOI.

Those investing in robotics and automation in the Eastern Economic Corridor (EEC) will also be given another 50% corporate income tax reduction for another five years. Meanwhile, other non-tax incentives include permission to bring in expatriates, own land and take or remit foreign currency abroad.

Workforce

However, with the rise of robotics in the region, Thailand will have to find new opportunities for its workforce, particularly in textile and apparel manufacturing – a sector which is traditionally labour-intensive. The rise of robotics in the US and Europe will also affect the workforce in countries such as Thailand as automated factories in Europe and the US, such as SoftWear Automation’s Sewbots, is bringing manufacturing back to the consumer, resulting in shorter lead times, a smaller carbon footprint and the ability to customise garments.

For example, in 2017 global brand Adidas opened its first Speedfactory in Germany, which was planned to employ just 160 people. According to Adidas at the time, one robotic production line would make soles and the other production line the upper part of shoes. Speedfactories have since been opened in the US, with the first one being in Atlanta, Georgia.

Created the traditional way, an Adidas shoe takes 18 months to produce from idea to shelf. The aim of the Speedfactory was to reduce this to five hours, with customers able to customise their orders in store.

“Our goal is to decentralise production and set up a global network of Speedfactories closer to where the consumers are,” explained Katja Schreiber, spokeswoman for Adidas, in 2016.

As manufacturing closer to the consumer becomes more affordable, factories in Thailand, and others like it, could face closure. According to the International Labour Organisation (ILO), countries within the Association of Southeast Asian Nations (ASEAN) economic area, which includes Thailand, Cambodia, Indonesia and Malaysia, are the nations in which jobs are most susceptible due to growth of robotics.

The ILO estimates that 56% of Thai-based jobs are at high risk of being automated during the next two decades, and similar statistics apply to surrounding nations – garment and footwear manufacturing jobs are among the most endangered. With the government initiative to focus on the development of robotics, mechanics, AI and automation and the view to “ensure that these technologies play a larger role in the industrial sector,” Thailand (and its neighbouring countries) need to ensure that they can re-skill the workforce to be ready for Thailand 4.0.

Have your say. Tweet and follow us @MCornforth_WTiN and @WTiNcomment