Speech of the Minister of Industry by accinent

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									      Speech of H.E Phinit Jarusombat, the Minister of Industry
        On the occasion of 62nd year anniversary of establishing
                             the Ministry of Industry
                                     5 May 2004



Ladies and Gentlemen,


       Today is the 62nd year since the establishment of Ministry of Industry. The
Ministry of Industry was elevated from the Department of Industry, the Ministry of
Commerce to be the core organisation with the sole responsibility for undertaking the
whole industrial activities of Thailand.


       In retrospect, the Ministry of Industry has demonstrated performance by
utilising the industrial sector as the main conduit for promoting the national economy.
In the financial crisis beginning in 1998 whereby Thailand has to ask the International
Monetary Fund (IMF) for emergency loans, the Ministry of Industry has taken part in
recovering the economy, and saved the country from economic difficulties. In 2003,
Thailand could turn around the economic growth from minus growth level to 6.3 per
cent of Gross Domestic Product (GDP). So far the industrial sector has played an
important role in driving the country’s economy, evidenced by a growth rate of 13.7
per cent of the gross production, totalling THB 2.08 million million. This reflects the
highest possible growth rate of 36.1 per cent of GDP made by all production sectors.
After all, such efforts contribute to the improvement of the people’s standard of living
in 2003. The Ministry of Industry is thus selected by the government to be one of the
key economic ministries to reform the government administration system.


       The Ministry of Industry has successfully resolved chronic problems, for
example, the problems afflicting the cane and sugar industry.         The Ministry of
Industry has strictly followed the policy measures devised by the cabinet and indeed
seen the results in terms of loss reduction by nearly THB 6,000 million in the season’s
crop of the years 2003/2004.




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       Taking into account the economic environment in Thailand, the Ministry of
Industry has set the target to expand the industry by 14.5 per cent in 2004. To this
end, the Ministry of Industry has involved in the enactment of strategies including the
support of knowledge-based industry, and the development of small- and medium-
sized enterprises (SMEs). Under the strategies, the Ministry of Industry also provides
support to the outstanding community products by pushing them to a higher level of
scaled-up production. Clearly, the Ministry of Industry is responsible for helping
SMEs to expand the production, aiming to increase the community’s revenue and
strengthen the competitiveness according to the import substitution policy. Further,
the Ministry of Industry is engaged in promoting high quality products, making the
products conformed to international standards so as to achieve competition in the
international market. A number of policy measures have been initiated, for example,
imposing a ban on the import of sub standard products, bringing the results of R&D
undertakings to commercial use as well as encouraging the development of
innovations. These policies and strategies constitute the basis for competition in the
world of high speed and technology.


       In the year 2004, the Ministry of Industry has initiated the Entrepreneurs
Development Programme to create new business start-ups of 50,000 within 18
months: 25,000 through the Federation of Thai Industries, 20,000 through the Thai
Chamber of Commerce, and 5,000 through the Department of Industrial Promotion.
The thrust of the programme is to develop high quality entrepreneurs.             This
programme is aimed at creating the jobs for people and reducing failures commonly
found at the early stages of business start-ups. A key and on-going function of the
Ministry of Industry is to effectively utilise the resources and develop the human
resources in the right direction according to the principle of competence-based
training - turning weaknesses into strengths. A further strategic emphasis of the
Ministry of Industry is the customer focus and customer-oriented approach, with
concerns about the environmental impact. Regarding the financial strategy, the SME
Bank has been set up to give loan support to SMEs. The projects with high return
prospects are encouraged to contact the SME Bank for loan application.


       The Ministry of Industry has supported the industries by sector and the
improvement of production capabilities to make high-value products. Efforts have

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been directed at raising the production system from employment towards brand
ownership. The project of Bangkok Fashion City is aimed at promoting the tourism
industry, the markets in jewellery design and garment design. The Kitchen of the
World project is initiated to promote the food industry. The Ministry of Industry has
set a strategic plan to push Thailand a centre for manufacturing and exporting
automobiles – the Detroit of Asia. Also, the Ministry of Industry has encouraged
world-class companies in the Hard Disk Drive (HDD) industry, the microchip and
software industry to invest in Thailand. The Ministry of Industry pursues activities
aimed at systematically managing the agriculture industry and bio-technology
industry. The poor farmers and agriculturists are encouraged to take part in the
industrialisation process by supplying the raw materials for the industry. The
government-initiated Contract Farming system has been implemented in the industries
of cane and sugar, alcohol, ethanol and rubber. The Ministry of Industry renders
support in terms of providing machines, high tech equipment, and low cost energy to
the poor and arid area for use as a production factor to reduce cost and increase
productivity.


       Conceptually, the Ministry of Industry has planned a number of policy and
legislative measures to help SMEs have the land for cultivation, set up small
businesses to undergo operation in the embryonic stages. The Ministry of Industry
also offers the service of license extension whereby the licence application can be
made over the internet.     The rules and regulations governed by the        Board of
Investment Office (BOI) have been revised to encourage SME investment.
Amendment of rules has particularly been made to the important sectors of the
country.   For example, the requirement of minimum investment of the food
processing industry must be no less than THB 500,000. Policies to develop skills,
technology and innovation for the textile, automobile, and Information and
Communications Technology (ICT) industries have been set to enhance the country’s
competitiveness. The Ministry of Industry further streamlines the licensing process
for trade promotion applications.    Indeed, the Ministry of Industry supports the
upstream industries that Thailand lacked and still lack such as the steel industry, the
microchip industry, the automobile industry, etc.




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       The Thai government has deployed a policy to promote investment in the
Greater Mekong Subregion (GMS) consisting of Thailand, Laos, Cambodia, Vietnam,
Myanmar, Yunan of China and India. This embarkment is designated to promote
investment and new emerging market of Asia. Needless to say, these markets are
important to the future of Thai economy as they account more than 50 per cent of the
world population. It is convinced that once a free trade has been established and
means of communication between Thailand and these countries expanded, the cost of
freight would have been further reduced. Compared to Thailand’s main markets in
Europe, Japan and US, the shipment to these three countries has to pass Singapore,
thus increasing the tonnage and insurance services fee. However, the Asian Highway
linking Asia to Europe, about 130,000 kilometers long, is expected to be complete
soon. At the same time, there are route developments within the GMS. For example,
the Lanna and Mekong rivers were deepened and expanded to allow the commercial
traffic of 150-ton ships from Yunan, China to Thailand in all seasons. The socialist
countries which used to trade internally have now turned to open market economies
and applied to join the World Trade Organisation (WTO). These trade agreements
substantially facilitated and expanded the international trade of Thailand.


       Thailand’s Prime Minister Thaksin Shinawatra signed the Economic
Cooperation Strategy (ECS) agreement on 19 May 2003 with Cambodia, Laos and
Myanmar. Later, Thailand signed an agreement on 12 November 2003 on the Bagan
Declaration. This agreement is an important step in normalising cooperation in five
sectors. According to the statement No.5 regarding cooperation on agriculture and
industry, Thailand places emphasis on the readiness of the private sector corporations
and the neighboring countries in implementing the Contract Farming for the
agricultural products. Thailand could now buy the products of sweet corn, corn for
animal feed, castor oil plant, soy bean, peanuts, potatoes, cashew nuts and eucalyptus
with no duty tax imposition. Thailand has issued a statement declaring a cooperation
in the study committed to the development of Industrial Estate and Special Economic
Zone between Thailand-Cambodia and Thailand-Myanmar. The Ministry of Industry
and the Industrial Estate are assigned to follow up the performance and progress of
this task. The Minister of Industry together with high rank officers, and private sector
corporations have begun trade visits to Myanmar to encourage international
investment. The Industrial Estate has negotiated with Myanmar on the set up of

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economic zone in Myanmar and on Thailand-Myanmar state border line. In respect of
cooperation between Thailand and the countries in GMS, the Minister of Industry
together with the high officials of the Board of Investment have brought Thai
entrepreneurs to meet Vietnam’s investors. The negotiation has reached a successful
outcome. However, the meeting with Laos on the same issue was adjourned for
reasons that Laos is not ready for foreign trade.
         The private sector corporations interested in investing in the aforestated
countries could obtain a range of investing information from the Ministry of Industry.
The investment in agriculture-based manufacturing is essential for the industry’s
future since these countries offer potential for investment. The mining and the natural
resources cultivation would be of higher importance when the communication system
is improved. The Second Mekong River Bridge in Mukdahan would be complete in
the next two years. The communication lines bridging Suwanna Khet District of Laos
and the East could provide a link to Laos-Vietnam borderline via the major port cities
in the East. The lines could go further north to Hanoi and China. The Western lines
run through Mukdahan-Kalasin-Khon Kaen-Phitsanulok-Tak-Mae Sod to Burma and
India. Also, the lines in Northern Thailand provide a connection between Chiang Rai
and Burma, or the line connections could be made between Laos and Kun-Ming of
Yunan.
         Thailand is situated at the centre of the new trade, enabling the country to have
advantages in terms of human capital, investment, knowledge, technologies and
skilled labor. Most people in the region share similar customs and follow similar
religions. These are the necessary factors that would provide prospective investment
opportunities to Thailand.       The Thai government has helped cultivate mutual
understandings and define government-to-government agreements on trade and tax
issues. Also, Thailand has cooperated with the neighboring countries to invest in
public infrastructure and necessary lines of communication to facilitate business
undertakings.
         On the auspicious occasion, may I wish all of you - state agency officers,
government officers, and industrial entrepreneurs - happiness, great prosperity, and
health to support the industrial and economic development of our country.


Thank you.



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