Bangkok--18 Jul--SCB
The Siam Commercial Bank Economic Intelligence Center (EIC) recently organized a “Mastering the Game in an Era of Connectivity” seminar. The Bank received the honor of having Transport Minister Dr. Chatchart Sittipan as keynote speaker. The seminar also featured Dr. Sutapa Amornvivat, Chief Economist & Executive Vice President, Siam Commercial Bank Economic Intelligence Center, Mr. Charamporn Jotikasthira, President of the Stock Exchange of Thailand, Dr. Sorachak Kasemsuwan, President of Thai Airways International PCL, and Mr. Kan Trakulhoon, Chief Executive Officer and President of Siam Cement PCL. The seminar received a positive response from participants.
Speaking about the seminar, SCB Chief Economist & Executive Vice President Dr. Sutapa Amornvivat said that, "Connectivity is a real ‘megatrend’ that is transforming the competitive landscape, and will create both opportunities and challenges for Thai businesses over the next five years and beyond. Companies that adapt to the changes will come out ahead. Success requires keeping well informed of the new conditions and using this knowledge to execute better tactics and strategies. ‘Connectivity’ of all types is clearly growing:
— Infrastructure investments that are enhancing transportation.
— The improvement and interlinking of supply chains throughout the region.
— Surging online connectivity and social networks.
— Freer, faster trade flows.
— Liberalizations that increase the mobility of workers and professionals within ASEAN.
— Increased fundraising across national borders.
These changes are increasing market access, trade, and economic growth throughout Southeast Asia and beyond; providing new channels to reach consumers; generating increased migration; and reducing the cost of capital.
The SCB Economic Intelligence Center has identified five strategies that companies should adopt in order to master the game in the era of connectivity. These strategies call for implementing a broad range of actions and tools that increase revenue and strengthen operations.
1. Focus on high-growth markets. Opportunities will grow in provincial markets that benefit from investment in new and better transport infrastructure. Urbanization will drive the growth of the formal services sector, as demand rises in sectors like retailing, real estate, and tourism. This has happened before. Construction of Laem Chabang port, for example, spurred annual growth in Chonburi’s services sector to 9% per year after completion, up from 2%. Businesses can clearly benefit from working to serve new demand upcountry. Thai businesses will soon be able to reach more easily across borders throughout Southeast Asia. The ASEAN Economic Community, set to begin at the end of 2015, will streamline trade procedures, greatly reducing costs and increasing the viability of exporters.
2. Explore online channels. Thailand’s Internet penetration has increased six-fold since 2006, helping online retailing grow at an annual rate of 6%. This trend creates opportunities for companies to sell products directly to a broader range of customers at lower costs than before. Social networks let companies better target their communications and engage in a richer dialogue with customers.
3. Work to attract and keep good employees. The liberalization of labor movement across borders in ASEAN might lead to a net loss of talent in Thailand. When rules were relaxed in Europe years ago, large numbers of workers and professionals emigrated from Eastern Europe to countries with higher pay, such as Germany and England. Thai companies will need to optimize compensation to stay competitive in the coming regional market for human resources.
4. Build flexibility into supply chains. Regional supply chains are becoming more tightly coupled. One sign of this interdependence can be seen in the production of electronics parts and devices in East Asia. In 2000, imported inputs like parts and materials accounted for only 28% of the value of these manufactures in the region. The ratio rose to 53% in 2011. But greater reliance on supply chains exposes manufacturers to the risk of disruptive shocks from disasters like floods or earthquakes. Companies therefore need to source from multiple locations or connect with suppliers who can serve as back-up sources on demand.
5. Source funds abroad. As ASEAN financial markets become increasingly interconnected, the difference in funding costs between Thailand and other countries might decline. That could create opportunities for Thai companies to raise money more cost-effectively via their operations abroad or other foreign sources.
"Companies that adapt to the new competitive environment will flourish. Some will win big. Thai firms should move quickly and aggressively to take advantage of the new opportunities, which can help prevent new foreign entrants from becoming competitors", concluded Dr. Sutapa.
Photo Caption:
Transport Minister Dr. Chatchart Sittipan and Siam Commercial Bank President Mrs. Kannikar Chalitaporn jointly preside over the the opening ceremony of the “Mastering the Game in the Era of Connectivity” seminar. Held recently at the Plaza Ath?n?e Bangkok, Bangkok, the seminar featured distinguished executives from leading organizations and SCB's Economic Intelligence Center (EIC), who provided insights to help businesses prepare for emerging trends in business connectivity.
From left:
Dr. Sutapa Amornvivat, Chief Economist & Executive Vice President, Siam Commercial Bank Economic Intelligence Center, Mrs. Kannikar Chalitaporn, President, Siam Commercial Bank, Dr. Chatchart Sittipan, Transport Minister, Mr. Prasan Chuaphanich, Independent Director and Member of the Audit Committee, Siam Commercial Bank, Mr. Arthid Nanthawithaya, Senior Executive Vice President, Wholesale Banking Group, , Siam Commercial Bank