The Development of Thailand Effective Index – TE Index (2):(Private Sector Effectiveness Index – PPE Index)

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The Development of Thailand Effective Index – TE Index (2):(Private Sector Effectiveness Index – PPE Index)

In last January, the committee members of the Wisdom Council Thailand completed a survey on PVE index. The survey structure of PVE index was consisted of three different parts which were contribution to economic growth, social responsibility and private institution.
 
From the survey of 1,227 Thai citizens and the interview of 200 entrepreneurs about the effectiveness of the private sector; the survey suggested that Thai citizens gave private effectiveness only a passing level with the 61% for the overall.
 
By considering each indicator, it revealed that - private sector helps in increasing economic growth due to its expert and specialization in doing business. Indicators related to contribution to economic growth got the highest score of 62.4% compare to social responsibility and private institution which got score of 61% and 59% respectively.
 
Through the analysis of indicators related to contribution to economic growth, the result revealed that private sector can respond very well to the consumer’s demands in both terms of products and services with a score of 67.8%. However, weakness has been revealed in the creation of industry linkage which got a score of 60% because of its inability to set up new upstream, downstream industries and new businesses that can connect with the whole supply chain system. Consequently, Thai businesses could not increase value-added on products and services as much as it should. Moreover, another weakness of private sector was on resource management with score of 59.5%. It indicates that Thai private sector is incapable of seeking, managing and allocating resources to receive high benefit.
 
In the aspect of social responsibility, this aspect got a score of 60% as people saw that private sector tends to follow the legal obligations, volunteer for public works, reveal information transparently and pay attention to consumer demands. Yet, people gave lower score for corruption, social responsibility and social campaign with a score of 58.7%, 58.8% and 58.9%, respectively. The result illustrated that private sector is portraying an untrustworthy image and considered as one of the sources to corruption and bribery. Moreover, this sector seems to leave negative impacts on the society without taking enough responsible actions for social problems.
 
One important observation from this aspect is that the private sector will focus and concentrate only on meeting the legal requirements and the things that directly affect consumers. However, it appears that the private sector will pay attention less once it comes to social responsibility that businesses do not have to comply with the laws and not relate directly with customers.        
In the aspect of the private sector as the institution, the survey has shown the main weakness in innovation with low score of 57.9%. The private sector creates only few innovations because it requires high financial investment. Similarly, innovation needs longer time period to be explored followed by longer profit booking cycle and high probability of failure in improving innovation projects. Thus, majority of organizations in private sector does not invest in innovation.   
 
In term of entrepreneurship, the private sector obtained score of 58.6% which suggests that Thai businesses are not good at starting a new business and are reluctant to adapt to current economic changes because large numbers of Thai businesses are in manufacturing business or only serve as a middle man. 
 
Additionally, the indicator on innovation and entrepreneurship is related to the indicator on resource management and the creation of industry linkage because the inability to create innovation and low entrepreneurship reduce the effectiveness of managing resource and creating continuous industries.
 
In conclusion, the public opinion on private sector reflects that although businesses have contributed to economic growth but majority of Thai corporate still lack of long-term competitiveness due to the lack of innovations and entrepreneurship. Furthermore, corruption problem is still there. Thus, the private sector should continuously conduct self-evaluation and turn its weaknesses into strengths in diverse areas in order to remain responsive towards people’s demands, to survive through competition and to be an important part of a nation development.
 
Thailand’s Private Sector Effectiveness Index: PPE Index

 
Prof Dr Kriengsak  Chareonwongsak
Senior Fellow : Harvard University