State Policy towards the Industrial Sector

Highlights

• Over the years, the shape of industrial development in Thailand has changed with changing state policy. Such policies have played an important role in the process of industrialization since 1960, when the first legislation to promote investment in industry was enacted. The initial policies focused on import substitution. Over time, the focus shifted more towards export industries and in 1977, new legislation to promote investment in industry was enacted reflecting that shift. Because of economic problems at the time of the petroleum crisis, the success was limited, but the period 1986 through 1996 was an important turning point for industrialization for Thailand as the effects of the Plaza Accords led the Japanese to relocate many of their factories in Thailand and resulted in Thailand becoming one of the worlds major exporters of industrial goods. However, following the crisis of 1997 the government quickly saw the need to change industrial strategies towards greater use of technology and value-added approaches. Political turmoil extending over a number of years slowed industrialization to below potential.

• The industrial development policy over the next period should maintain a focus on industries with value-added strategy that is in consistent with the country's