Expert views on emerging scenarios

Leading economic gurus give suggestions on how Thai corporations can adjust themselves to cope in the new economic landscape.

Go Greener, Make Alliances

Former deputy prime minister and Bangkok Bank executive chairman Kosit Panpiemras said the era of "scarcity and expensive goods" could persist for "a longer period than we think" because of a global imbalance.

"It will cause us hardship for quite a long time," he said.

But citing the cases of many companies that have recovered and grown from the 1997 crisis, Kosit said small- and medium-size enterprises (SMEs) must thrive by applying knowledge to their businesses. SMEs must use knowledge for improving the quality and standard of their products and services, for product development and to build their brands' identities, he said.

In addition, Kosit said, companies must adjust themselves to cope with at least two new "mega trends":

n Go greener: The "green concept" will become mainstream, including reusing and recycling. Return on investment from green projects will increase even in the time of high oil prices and high inflation. Going with this trend, Bangkok Bank has launched its "Bualuang Green" scheme, which offers loans to green projects.

n Alliances and partnerships will be essential for everyone's work in the next 10 years. Nobody will be able to achieve things by themselves. The ability to find alliances and partnerships will determine competitiveness. SMEs must find their alliances and partners to jointly develop their products and services, for research and development, for logistics, etc.

Kosit also said risk management is important. Companies should consider his Majesty the King's "self-sufficiency economy" concept, which suggests that people live moderately and have enough "immunity" to cope with fluctuations, he said.

80% changes: 20% stability

The world is undergoing a structural change; one is the "democratising of power and wealth", which should provide opportunities for Thai businesses, while the other is a global imbalance, which is a threat, leading strategist Suvit Maesincee said.

Things will become more "abstract" and harder to predict.

"In the past, there may have been 80 per cent stability versus 20 per cent change. From now on, we will have to spend almost all of our time managing the changes and uncertainties and have only 20 per cent that is routine or stable," he said.

Suvit, who wrote a few books with renowned marketing guru Philip Kotler, said shortages of food, water and energy would continue to be a problem for at least the next 10 years. Thailand will have to cope with four major issues - inflation, financial instability, wealth inequality and a demographic change in its labour force. The growing inequality of wealth could lead to a confrontation between the middle class in the cities and the rural people, he said.

Also, he said, the world is changing from a knowledge-based economy into a "humanistic society". Businesses must find the balance between performance and "conformance", to get a "licence to operate", he said.

"In the future, you'll be asked how much 'social content' your company has. This is the same as the sufficient-economy philosophy," Suvit said.

Do not stop investing

Depending on each business, but as a general rule, corporations are advised against scrapping their investment plans during a downturn. "Don't stop investing. Speed up improvements, build up your workforce," PricewaterhouseCoopers (PwC) Southeast Asian Peninsula joint executive chairman Prasan Chuaphanich said.

Prasan said many companies would think about shrinking their payroll during a problematic period, but people are the resources that are difficult to replace and cannot be simply brought in when needed.

The PwC executive said organisations should use this stagnation period to spend more time to think about ways to prepare for future growth. "We have a good lesson from the 1997 crisis. Thais are not afraid now. We know if it happens again ... it will recover."

Be fully prepared

Krung Thai Bank chairman Chaiwat Wibulswasdi said businesses and individuals must adjust themselves and be aware that the high-oil-prices, high-inflation era will last long. Companies must attempt to reduce energy and other costs, waste and pay particular attention to risk management, especially about managing their finances.

Everyone should also watch out for the political-risk factor, he said.

He also said "sufficiency economy" is suitable to the current situation, as people should become self-reliant and not spend beyond their capacity.

"All these have to be based on the conditions that [you] must have knowledge, understanding, be well-rounded, discreet, ethical, up to date, hard working, patient, sharing and have wisdom," Chaiwat said.