We spoke with Juckchai Boonyawat, Mercer’s CEO for Thailand, to get his thoughts on the country’s path to economic recovery and the trends that will help shape Thailand's future.

It has been a tumultuous time here and around the world. What conditions can Thai companies expect in the next 12 to 24 months?

 

The Bank of Thailand estimates a contraction of 7%-8% in our economy this financial year, and it might take up to two years to return to pre-pandemic activity levels. The COVID-led recession is quite different from downturns like the global financial crisis (GFC) or the 1997 Asian financial crisis. In 1997, there were systemic problems and, therefore, distinct levers for economic recovery. In this recession, although financial and government stimulus measures are vital to the recovery effort, they are having less impact because we are not yet able to control the catalyst of the crisis — coronavirus. 

 

Uncertainty is high, and companies are operating in an ecosystem of exceptional competition and low demand. To successfully navigate through the next 12 to 24 months, companies need to balance immediate remedial actions with long-term strategy. The economy is likely to look vastly different in two years and what your business is surviving on now might not be what is needed then. 

Aside from technology, what’s another key area in which Thailand can upskill? 

 

Research and experience show us that an uplift in financial literacy can have a huge impact on improving lives. Better financial literacy not only increases market participation and individual wealth creation, but also improves the quality of life in retirement over the long term.

 

At Mercer, we are huge advocates of improving financial literacy and providing better access to financial markets for every single Thai. We want to deliver the best of regional and global investment capability and professional knowledge — not just to our clients but to the local communities that our clients work with. To that end, for our financial intermediary clients, we are providing regular updates and training on a broad range of fundamental investment and financial topics, from macroeconomics to portfolio recommendations, and from asset allocation to fund selection.

 

In recent years, Thai investors have become more knowledgeable and increasingly sophisticated in their asset allocation strategies as well as platform and product selection. To meet the needs of this new generation of investors, we’re continually enhancing our services, from tools and advisory to Outsourced Chief Investment Officer (OCIO). We stay ahead of the curve.

Why are digitizing and upskilling so important to our economy? 

 

Digitizing and upskilling will increase our share of the global value chain.

 

In the past decade, Thailand has moved on from an agricultural economy and emerged as a newly industrialized country, thanks to the royal Thai government’s very deliberate transformation strategy. 

 

In spite of the progress, we remain a labor-intensive country, which is not maximizing its position in the increasingly technology-dependent global value chain. Instead of seeing AI and automation as threats to our labor force, we should embrace technology, using it to free people up for reskilling and upskilling. We need to do this consciously — to produce more value with our workforce — in order to be regionally and globally competitive. 

 

We have achieved our newly industrialized status by strategically shifting the economy toward technology products such as computer chips and auto-part components. However, technological innovation moves extraordinarily fast, and some local companies are not keeping up with global trends. We need to stay with, if not move ahead of, market trends. 

Aside from technology, which you have talked about, what are important growth sectors? 

 

I see three key growth areas. Tourism makes up about 20% of the Thai economy, so it is critical. General recovery will gain momentum when we are open to international tourists again. Food production and medical services are two additional industries that will position Thailand competitively in the medium to long term. There’s flourishing demand for food production services across the region, and Thailand’s worldclass medical standards attract global medical and wellness tourists. In fact, the government is well underway in planning to safely reopen the sector. 

What do you think will help drive recovery?

 

We need to focus on an SME-led recovery, because SMEs (small and medium-sized enterprises) are the backbone of any economy and make up 99.8%* of ours. The vast majority of Thailand’s labor force works in SMEs, and activity in the sector plays an imperative role in driving our country’s domestic consumption.  

SMEs are part of Thailand’s economic fundamentals and, as such, need to be protected as well as cultivated. 

Historically, SMEs have tended to underutilize government support, but it’s crucial that they now fully leverage the government’s pandemic stimulus package. 

Assistance, such as government-facilitated access to commercial bank credit and SME tax incentives, can make a difference to business continuity. 

Generally, SMEs are less resilient than large multinationals to major disruptions such as COVID-19 and the GFC. They don’t have the same global support infrastructures, so issues like liquidity (for example, short-term cash flow, change agility, access to technology, talent shortages and speed to new markets) can hugely impact business survival. 

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Beginning with the March lockdown, we have been advising SME clients on proactively communicating with their employees and managing their businesses for the future. Our advice focuses on three key ‘R’s: Respond, Return and Reinvent. We are providing guidance on how best to respond to the crisis, return to work safely and, most importantly, reinvent for a rapidly changing future. More than seven months on from the beginning of the crisis, our key recommendations to the SME segment continue to be strategic workforce reskilling and future orientated retooling.
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SMEs need to future-proof themselves, strategically digitalizing and upskilling their workforce in line with the market. In times of crisis, data-backed expert advice can be vital — SMEs must choose high-quality business support services. Every lever needs to work in concert to ensure a speedy recovery. 

Young business woman having a break drinking an hot coffee on the rooftop of his office building in downtown Seoul, South Korea.

How is Mercer helping Thai businesses navigate the pandemic recession? 

 

Companies need support in workforce management through all stakeholder levels, from the employee all the way to the board. Encouragingly, rather than cutting their workforces reactively, our clients continue to underline the importance of human capital and take strategic approaches to workforce management. 

 

The pandemic downturn is giving businesses a unique space to transform. They can use it to see what skills they need in the future and which functions and types of work could be streamlined or digitized.  

 

Companies are investigating different options to protect business continuity, including exploring joint venture opportunities, introducing flexible working hours, and reskilling and upskilling. 

 

Businesses also want guidance on building resilience in their workforces, as well as strategies and practices for safely returning to work, and, importantly, advice on how to reinvent themselves for the future.  

 

Finally, health has never been more prominent nor vulnerable, so Mercer is working with companies on cultivating proactive physical and emotional wellbeing.

Finally, how do you see Mercer’s role in building a brighter Thailand? 

 

Since establishing ourselves in Thailand in 1990 by acquiring a strong local business, we’ve been and remain resolutely committed to helping businesses and communities grow. We form strong partnerships and provide our clients with databacked strategic advice on managing their people, business and organizations efficiently and effectively. Leveraging our global expertise, we seek to solve their challenges with local solutions, whether it’s improving the careers and health of their employees or helping institutions protect and grow their investments. 

 

When the pandemic hit, we immediately responded with a series of webinars to help Thai clients navigate their most pressing challenges around pension obligation, rewards and wellbeing. Our staff also volunteered in a medical-supply packing program and donated money to public hospitals, including Thammasat Hospital, which saw urgent shortages in personal protective equipment.  

At Mercer, we’re truly privileged to be able to make an impact on the lives of millions of Thais. When businesses prosper, so do their employees and their families. The benefits then flow on to the wider economy. That’s what drives us every day, and that’s how we hope to build a brighter Thailand.

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