Phase II of the Thai-German Programme for Enterprise Competitiveness

GTZ hosted the 4th Advisory Board meeting of the Thai-German Programme for Enterprise Competitiveness (TG-PEC) on December 11, 2008. H.E. Dr. Hanns Heinrich Schumacher, German Ambassador to Thailand and Mr. Chatchai Boonyarat, Vice Chairman of the Thai Chamber of Commerce graciously presided over the event. The annual event is to report the Programme’s achievements during the previous year as well as the achievements of the Phase I (2005-2008) of T-G PEC to the advisory board members, comprising both German and Thai senior executives of the business community and partner institutions. The meeting also gave its outlook on Phase II (2009-2012).

Focus on Outreach and Energy

For Phase II, GTZ and its Thai partners will continue to work together to strengthen the competitiveness of SMEs in the agricultural sector. The main objective is to disseminate the successful results of Phase I to reach out to more SMEs and farmers. To achieve this, GTZ will focus on two main strategies: first, to scale up the results by further developing private sector business, financial and eco-efficiency services, and secondly, to enhance the policy framework and the role of business membership organizations.

The programme will further address weaknesses within the value chains and special focus will be placed on innovations and certification schemes which may help further enhance the competitive-ness of Thai companies, and facilitate access to foreign markets with high quality products. Energy efficiency and renewable energy will receive special attention because of its huge saving and market potential as well as its environmental value. Moreover, in phase II the PEC will continue to facilitate trilateral cooperation between Thailand and Germany, in order to jointly support the less developed neighbouring countries in the region. The Advisory Group noted that for the interventions on standards & certification, besides the economic benefits (e.g. new markets and corporate image), entrepreneurs will also realize the environmental and social values that underpin the standards. Participants provided important guidance to provide TG-PEC with an appropriate and agreed focus during its implementation of Phase II, and endorsed the following principles:

• PEC shall continue its cooperation with ‘multipliers’ such as business membership organizations in order to gain cost-effective access to larger target groups.
• PEC shall continue to increase the level of involvement of its Thai partners in designing interventions, in order to address their needs even better. This will also help build a higher sense of ownership and pride, as well as building capacity.
• Apart from serving as a facilitator, GTZ might itself take on a role as service provider in the future, especially for large-scale and complex tasks, which need international expertise.
  Achievements of Phase 1

The first phase of the Programme focused on strengthening the competitiveness of Thai SMEs in five selected agricultural sub-sectors: palm oil, shrimp, fruit and vegetable, saa paper and tapioca. The focus of the two components, 1) business and financial services, and 2) eco-efficiency services, were on improving productivity, product quality and management, introducing innovations and efficient use of resources. The achievements of the successful Phase I can be summarized as follows:

Palm Oil Industry

A total of 2,363 small-scale oil palm growers participated in the training activity, resulting in a 10% increase in palm fruit yield, equivalent to an additional annual income of 44 million baht.  Soil and palm leaf analyses conducted to identify a suitable fertilizer formulation increased oil palm yields by 15-20%, equivalent to an additional income of 20%.

Sixteen participating palm oil mills were able to reduce loss of income amounting to 753 million baht by reduction of oil loss during the production process, and by efficient resource utilization.  They also earned an additional income of 51 million baht from the sale of electricity generated from biogas. 

Shrimp Industry

The soil analysis and improvement pilot project increased shrimp yields by 10% in participating shrimp farms, and the energy-efficient pilot project achieved a 15% reduction in energy consumption.  To date, the initiative to promote organic shrimp production and access export markets has resulted in new orders for 60 metric tons of certified organic shrimps from participating shrimp farms, with an estimated total value of 750,000 euros (16,665 million baht).  It is anticipated that orders for organic shrimps will rise further to 500 metric tons during 2009.

Saa Paper Industry

The Saa Paper Project succeeded in reducing saa paper production cost by 6.4% through efficient use of chemicals, water and energy.  The highest reductions of chemical and water usage were 20% and 10%, respectively, and some producers also reduced energy consumption by 40%.  One of the environmentally friendly production standard criteria established by the Programme specified the substitution of sodium hydroxide with potassium hydroxide, which does not affect water quality.  On the financial side, profits from the sale of environmentally friendly saa paper products increased from 16.87% to 33.37%. In light of these encouraging outcomes, a collaborative initiative was launched in Lao PDR with relevant governmental offices, in order to improve the quality of mulberry bark. Much of the mulberry bark used in Thailand for saa paper production is imported from Lao PDR.  Besides improving the quality and grade of raw materials supplied to the Thai producers, Laotian farmers earn additional income from the initiative.
Fruit and Vegetable Industry

Certification is an important step to increase export opportunities for Thai fruits and vegetables. To strengthen the industry, the programme assisted 50 small-scale growers to achieve GlobalGAP Option2 certification, generating an additional income of 16% and a yearly committed purchasing order.

Moreover, the Tangerine Input Supplier Advisory Service, by recommending appropriate chemical fertilizer application to 1,200 orchards, resulted in a 6% lowering in production costs. Longan Farm Management Service was able to increase the yield of grades AA and A longan by 46% while reducing costs by 17%.  Moreover, introduction of a new drying technology reduced energy costs by 19%.

Tapioca Industry

Six tapioca starch processing factories participated in the pilot project. After participating in a benchmarking exercise and application of a MIS (Management Information System), the factories implemented steps to improve the efficiency of energy and resource consumption to improve overall eco-efficiency, and in the process were able to save costs of up to 76 million baht monthly.  Their achievements convinced another six factories to adopt the concept in November 2008.  Moreover, the project has provided support to stakeholders of sustainable production of tapioca for ethanol production.