Cisco: Thailand 4.0 will produce billions in productivity gains

The manufacturing sector’s adoption of advanced technologies that are part of Thailand 4.0 could create over $50 billion in productivity gains over the next decade, according to a study released last week by Cisco and A.T. Kearney, the American technology and management consulting firms.

“Thailand [is one of] the leading ASEAN countries with readiness to adopt Industry 4.0 as [it has] complex, large and export-oriented industries, with government policy support and technology infrastructure,” said Naveen Menon, president of Cisco in ASEAN (Association of Southeast Asian Nations).

Huge productivity gains as a result of technology fueled economic gains in developed countries drove economic growth during the 1990s but fell off after that. Thailand and some other developing countries that are investing in and welcoming to newer more advanced technologies still stand to gain, however, from growth resulting in part from productivity gains related to those new technologies.

Thailand 4.0 is a 20-year national strategy to transform the Kingdom into an economy and society in which advanced technologies, green development, innovation, creativity, and research and development are significant sources of growth and competitiveness.

Cisco commissioned a study by A.T. Kearney entitled “Accelerating Industry 4.0 in ASEAN: An Action Plan for Manufacturers.” In 2018, the ASEAN manufacturing sector was worth $670 billion, for 21 percent of gross domestic product, and the study predicts that value will double by 2028.

The study said that productivity gains would mostly drive growth: an incremental increase of $45-50 billion in Thailand from additional revenue streams via new products and quality improvements as well as lower cost when manufacturers adopt Industry 4.0 technologies.

Industry 4.0 employs five emerging technologies across the manufacturing value chain. Those are the Internet of Things (IoT), artificial intelligence, 3D printing, advanced robotics, and wearables.

Menon said that Thailand stands to gain from the rise of labor costs and automation in China because businesses will be looking for new locations to set up shop. U.S.-China trade tensions could also encourage that trend.

This presents Thailand and other ASEAN countries with opportunities to attract more business and investment by raising their technology level through digitizing manufacturing.

The region as a whole could see productivity gains of as much as $275 billion over the next decade, Menon added.

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