• 12.30-The right environment for innovation is missing from Thailand, by Pukky, this blog’s neutral economic and business analyst

Thai innovation suffers as Thaksin suffers in-injustice

• Thaksin brought new things to Thailand

One of the things that made Thaksin such a great PM was that he combined many different ideas and concept into a brand new idea-very much like the Thais of old days were good at like combining Duck from China to curry from India that created a great new thing for the world. The question is, what was it that was going on that resulted in Thaksin being able to do that. Some say it is Thaksin gift to the world, while others would say it is the environment that pushed Thaksin into having to solve some serious problems for Thailand-yet other says it is the combination or a lucky fluke or something like that.

• Thai innovation backed by liberal values

For Thailand, tracing and investigating the cause is difficult. But we can identify certain periods in Thai history where the economy flourished. While on the surface, many economist would classified those flourishing periods as being driven by trade, by investments, by capital availability and others. In fact, underlying those great expansionary and prosperity period was nothing but innovation. It was innovation that drove Chartchai to declare Indochina as a market and it was Thaksin’s innovation that brought about “Thaksinomics,” for example. Indeed, these two examples occurred during the time of liberal values in Thailand.

• Innovation and Thai Business Cycle

While there are those who would say that during the Chartchai-Suchinda-Banharn-Chaovalit-Chuan transition period, overall it could be considered a liberal and thus should result in some innovation for Thailand, but why did it end in a crash? Should not innovation lead to prosperity? The answer is that innovation did not result in enough added new value, to off-set the ups and down of the business cycle-meaning for example, the new Thai and Indochina trade opened up by Chartchai, did not overcome the runaway real estate investment.

But in a few certain time, Thailand’s innovation-be it product, political concepts, business model-or what ever-flourished enough to off-set the business cycle. And one modern example of this was during the Thaksin period, characterized by very liberal values. Anyone who lived through the Tom Yum Koong crisis would remember that at the time, most believed that the crisis will take 5-7 years to cure. When Thaksin came in with his Thaksinomics, most said it was a “Marketing Wet-Dream.”  But Thaksin’s innovative Thaksinomics, broke the trend and the business cycle and also the excesses-and got Thailand recovering in a rush.

• Innovation in non-liberal environment 

Today we are in a brand new age, in That Thailand is being run by a military backed government, where liberty and free flow of information is being restricted. But the government has decided to copy’s Thaksin’s Thaksinomics. It resembles somewhat like China’s restrictive political environment, but an open capitalist system. And since China is growing leaps and bounds, why will it not work with Thailand? What is wrong with doing that?

• Innovation and Copy-Catting

Actually, Thaksinomics may work in the hands of the current government-military alliance regime. As Thailand enjoyed a period of quite good prosperity during the Prem administration, that very much represents today’s government-which is that the outter core is democracy but the inner core is military. But the problem is is about “sustainability.” In the medium and long-term, only innovation-resulting in new value being added, will result in sustainable growth.

And this is the true differences between Thaksin and the current government. That is, those liberal values of the Thaksin era, resulted in Thaksin being innovative. But today, it is the restrictive regime that is copy-catting Thaksin’s old innovation. The critically important point to remember, is that Thaksin added true new value, while the current regime-is only copy-catting-and so not really adding any new value at all. The current regime, is just influencing the business cycle and that is all it is doing.

• The Thailand vs The China vs the US Model

In conclusion, Thailand’s innovation suffers and seldom occurs-from being political non liberal and fractured. China doesn’t really have innovation but prospers as a result of being non liberal, but copy-catting. And the US has great innovation capabilities as a result of a liberal political system-but suffers from being non-ethical which really means going off the path of being a society with justice. And what makes it harder for Thai innovation is, under the current regime, where are ethics and justice?