Recently, the National Science, Technology and Innovation (STI) Act (2008) was enacted to provide a framework for public and private sector institutions to strengthen the nation’s STI capabilities. Capabilities to be strengthend include S&T manpower, S&T infrastructure, public awareness on S&T, and S&T management and administration systems. Compliance with this STI Basic Law requires management mechanism for implement. Monitoring and evaluation systems, and flexibility of rolling improvement. According to the law, a new supra-ministerial structure-the National Science, Technology and Innovation Policy Committee, has been found, to be chaired by the prime minister. Members of the Policy Committee include ministers from key ministries relevant to science, technology and innovation, together with respected resource persons. To execute National and innovation, together with respected resource persons. To execute National Science Technology and Innovation Act(2008), National Science Technology and Innovation Policy Office (or STI) was established. The office is committee to assist the country in moving towards knowledge-based economy in order to promote the country’s capacity and strength. The science technology and innovation strategic plan and policy recommendations provided to the government by the office are expected to improve the country’s competitiveness and enhance socio-economic sustainability. STI principally works with the industry, government, academics, and local community sectors in undertaking its activities. Collaborative networking is an essential part of the office and is emphasized by the creation and promotion of active collaboration through strong linkages and exchange programs with local, overseas, and international organization. Nonetheless, it is still premature to evaluate the effectiveness of STI.
5.8.2 Perception on the Roles of Government in strengthening private firms
Direct grants and public equity participation are quite limited in Thailand both in terms of variety and amount of support. This is because there is a long standing reliance on neoclassical economic thinking among Thai bureaucrats. The market menchanism is believed to be the best in allocating resources. Thus, government internvention should be limited. Firms should be able to help themselves. Government roles should be limited to providing adequate infrastructure and a favorable business environment with transparent and stable rules. Selective financing innovation policies aiming at helping particular sectors, cluster, types of firms, or activities are viewed as market distortions. That is why there are few grant and public equity participation schemes, and even fewer selective ones, in Thailand. On the other hand, science and technology policy making has largely been in the hands of scientists who believe in a ‘linear model of innovation.’ As a result most schemes focus on ‘R&D’ and neglect other aspects of capabilities development including production, engineering, design, problem solving, utilizing other firms’ knowledge and intellectual property right, branding and so on. Since innovation is narrowly viewed as ‘commercialization of R&D’, other types of innovation, which are not R&D-led, like new services, new business models, new applications and solution are very much ignored.
5.8.3 Corruption and Attitudes on Corruption
Corruption is a more major concern in Thailand. There are concerns that grants and, to lesser extent, direct equity participant from government will be in flavor of particular firms and individuals. This is one of the major reasons why these direct supports are very few, and why R&D tax incentives require project by project scrutiny. Similarly, ‘selective’ policies targeting particular industrial sectors, types of companies, products, and activities are also subjected to this negative view. As a result, such selective policies are very difficult to conceptualize here.
5.8.4 Laws, Regulation and Norms
In Thailand, there is a widely accepted notion of how ‘public money’ should be used. Public money must be recoverable. It should not be spent in the ways leading to no returns, though with good intention. Government officials who authorize such spending can be individually accountable, if mistakes happen. Therefore, grants, or even direct equity participation from government to firms’ risky activities or particularly risky types of firms such as startups are quite rare in Thailand.
5.8.5 Entrepreneurship
While there is plenty of ‘necessity-based’ entrepreneurship (i.e., people become entrepreneurs because they need to economically survive) such as in the case of street vendors, it is doubtful whether there is a critical mass of ‘opportunity-based’ entrepreneurs who seize and execute risky opportunities through innovations. Innovation surveys show that risk taking attitude is rather low among Thai entrepreneurs, though it has improved in recent surveys. Thai traditional wisdom is more on conforming to existing societal values and ideas of senior persons rather than challenging them.
5.8.6 Trust
Inter-firm collaborations are quite limited because of a lack of trust among firms. University-industry linkages are also low (Intarakumnerd, 2006a). The Chinese Thai family –ownership-control-type business and joint investment co-operation among different companies within the same family affiliates but only few co-operations among various enterprises of different families (Suehiro, 1922:390 and East Asian Analytical Unit 1995:78).
5.9 Conclusion
Thailand is a middle-income country with an impressive GDP growth rate of approximately 7% over the past half century. Facing a ‘middle income trap,’ Thailand is struggling to move from labor-intensive industry to higher value added activities, such as advanced engineering, design and research and development (R&D). So far the failure in overcoming such a trap is, to a large extent, due o weak and fragmented national innovation system. Passive and slow technological learning of firms, ineffective and incoherent government policies, isolated education and training institutes, technologically unsupportive and risk-avert financial institutions, incompetent and politicized trade/industry associations and unfavorable institutional context has been perpetuated circumstances for the past fifty years of Thailand’s industrialization. Though there are some major initiatives recently, they failed to instill an effective and long-lasting learning process in the Thai NIS leading to successful industrial and technological catching up.
Concerning with financing innovation policies and underlying institutions, following key characteristics can be observed.
A) Financing innovation policies did not change significantly in response to changes of innovation systems and the development level of the country. There is little co-evolution between the two.
B) Most policies instruments in Thailand are, to a large extent, limited to tax incentives and are mainly for R&D activities. Grants and public equity financing have not been used extensively to finance activities ranging from starting up new companies, implementing new production technologies, engineering, design, R&D, R&D commercialization, marketing and branding.
C) There is low level of flexibility in getting rid of ineffective instruments and/or converting between instruments, such as converting a scheme from tax incentives to grants.
D) Only a few policy measures ‘selectively’ target strategic sector, clusters, activities, or development stages of firms.
E) Most of the incentives are offered and operated by Ministry of Science and Technology, not ‘economic’ ministry especially Ministry of Industry.
F) Policy processes in Thailand are weak in term of cross-agency coordination, monitoring, evaluation, and learning.