Private Sector Power

“…At the macro level the role of R&D can be viewed as a basis of competitive advantage, which is the basis of international trade. At the firm level, the objective is to change the market conditions in its favor under which it operates. This plays an important part of the competitive strategy of the firm. It may also help the firms to grow and diversify (Hay and Morris, 1991).”

The above statement is quite true for developing countries, including Thailand, which need to rethink the country’s economic strategy, as well as its positioning in the global market. Globalization makes international trade competitive and exporting countries have to face cost competition and uncertainty.

Thailand’s economy depends very much on our core competency: agriculture. Many governments try to transform our competency into industry, to make Thailand a manufacturing base of choice for investors as an original equipment (OEM) contractor or business partner. However, what the government should consider very seriously is how to turn OEM to original design manufacturing (ODM), and then to brand name products before shifting ultimately to a total system and services. The transforming process requires innovation through research and development.

R&D is an important component of competitive advantage, as long as it involves the creation of marketable innovations. The incentives of R&D activities are better quality, lower cost, and faster time to market. The combination of these three outcomes will boost the country’s competitive position, and eventually profits and stability.

Expenditure on R&D is a key indicator of government and private sector efforts to obtain competitive advantage in science and technology. The parameter used for international comparisons is gross domestic expenditure on R&D. The amount of GDP spent on R&D in Thailand during 2001–2006 was quite stable, from 0.24 to 0.26 percent. However, that figure is much smaller than the percent of GDP spent on R&D by Japan (3.39), Korea (3.22), Malaysia (0.64), and most other countries in the region. Furthermore, in 2007, the amount of GDP dedicated to R&D by Thailand decreased by 16 percent, to 0.21 percent. In developed countries, however, business expenditure on R&D is always higher than the government’s, so an investment in R&D from the private sector is key to driving the country’s competitiveness in science and technology.

For Thailand, the money spent on R&D by the private sector is relatively small compared to developed countries in Asia. Therefore, the private sector must increase R&D expenditures in order to gain back competitive advantages that we have lost due to globalization, free trade, and competition from early innovators such as Vietnam. Investments can be short- or long-term, internal or by partnering with a university.

Founded in 2005, Betagro Science Center (BSC) was the brainchild of the Betagro Group in collaboration with the National Science and Technology Development Agency (NSTDA). The objective was to create a think tank on R&D in science and technology, as well as establish a first-class laboratory capable of testing food and feed quality, monitoring animal health, and diagnosing infectious diseases. Knowledge and outputs created in this center help improve production procedures, their efficiency, and the production of high-quality and safe food.

R&D in the private sector has totally different objectives and uses key performance indicators (KPIs) that will reflect the return on investment. Simply put, it must be aligned with business policies and directions, and focused on specific outcomes. One of BSC’s strategies for establishing R&D capability within the firm is to build up networking with well-known research institutes and universities. That is why BSC is located at Thailand Science Park (TSP)—to show other private companies in Thailand that commitment to R&D is one of the factors that will help the firm grow and maintain competitiveness.

“Locating at TSP is also a very good corporate image and we strongly believe that the ‘science’ atmosphere and ‘learning’ environment in TSP will motivate our R&D staff to be able to deliver innovative outcomes within a timely manner.” — Mr. Vanus Taepaisitphongse, President of Betagro Group

Rutjawate Taharnklaew, DVM, EMBA, is the General Manager, Betagro Science Center Co., Ltd., and R&D Director, Betagro Group.