Digitalisation in Thailand

published on July 17, 2018

 

Interview with Philip Ende

       

 

If the topic of digitalisation in Germany is written on the agenda, it can be expected that you will not just get a plain definition for the term. The repeatedly mentioned keywords are “disruptive technologies”, “innovative business models” or “autono­mization”, which in turn is often summarized under the term “Industry 4.0”. But today we want to talk about Thailand. Please give us a brief insight into what is meant by the term digitalisation in Thailand.

Digitalisation in Thailand makes an impact on different sectors. As for the political field, Thailand presented the “Thailand 4.0” business plan which aims at sustainably establishing modern and future-oriented industries in the country. With regard to administrational issues, public authorities continue to successively establish electronic communication, while the transition will definitely take some time to succeed, though. The existing systems frequently exhibit quite some technical teething problems (especially web based services tend to be partially inaccessible). Talking about economics, Thailand enjoys a most vivid digital start-up community. Various private initiatives focus on the establishment of digital business models, i.e. in the field of FinTech and several other fields of business. For 2018, analysts predict a two digit growth rate for the digital sector. As a consequence, we observe more and more hackathons taking place. Meanwhile, the “Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ)” also recognized Thailand´s promising potential and initialized a project promoting digital clusters.

 

Digitalisation is a cross-industry and cross-company topic. How do you assess the current situation in Thailand - Has society already internalized the topic, do companies understand the change or is it more likely to try and endure the topic? Which sectors are already on the road to success, which are lagging behind, maybe even traditionally?

We need to differentiate between the urban and the rural population. Digitalisation mainly affects the industrial sector and the metropolitan areas, being far more developed in urban than in rural regions. The most noticeable changes refer to the consumers´ preferred payment methods. There is definitely a noticeable trend towards cashless payment by smartphone; payments via QR code or PromptPay in particular being more and more widely accepted. As a consequence, banking institutions and financial service providers are taking the lead in the field of digitalisation, the company Omise e.g. being one of the spearheading pioneers.

  

We may further expect the telecommunications and media sector to continue moving towards digitalisation, especially with regard to the “Internet of Things”.

 

E-commerce will certainly continue to increase, especially with regard to transactions via social media platforms. Thai people are particularly enthusiastic Facebook users, generating a corresponding growth potential. It will further be interesting to monitor the development of services in the fields of transportation (Uber, Grab Taxi), food (Foodpanda, UberEats) and other deliveries (Lineman, Honestbee).

     

Where do you see the best chances for German and European companies to position themselves in the market with disruptive business models in Thailand?

German entrepreneurs are well advised to invest into promoted business sectors. The Thai Board of Investment offers e.g. attractive promotions for the following industries: Smart Electronics, Next-Generation Automotives, Wellness and Medical Tourism, Food for the Future, Agriculture and Biotech, Medical Hubs, Digital, Aviation and Logistics, Automation and Robotics, Biofuels and Biochemicals. 
 

German companies still benefit from the strategic advantage of being considered warrantors for quality work and high-class workmanship.

  

What challenges and opportunities do you see for companies that already work locally to master this rather difficult mammoth task?

The regulatory framework might be considered a challenge, while professional consultancy may definitely minimize the risks. The emerging new markets and technologies occasionally generate a need for regulatory restrictions. The Bank of Thailand e.g. recently announced the implementation of regulatory measures for the crypto currencies trade in order to inhibit money laundering and other criminal activities. As a consequence, various large banks suspended the trade in crypto currencies for the time being. Companies must be prepared to deal with such changes at short notice.
 

Interesting opportunities are lying in the comparatively well-educated and digitally enthusiastic Thai population, as well as in attractive promotions offered by the Thai Board of Investment. Furthermore, Thailand´s geographical position at the heart of ASEAN provides an additional strategic advantage. Entrepreneurs are thus well advised to not only restrict their view onto the Thai market itself. Thailand should rather be considered as an interesting stepping stone into the region.

  

What points must be given special attention in the transformation in the Philippines (for example: cybersecurity, data protection, change management, cloud computing, ERP systems, (tax) compliance systems, digital payroll, value change, blockchain technologies, etc.)? Do you see local cultural, social or economic advantages that speak in favor of an easier transformation?

Cybersecurity and cyber-compliance are major issues. Particularly in the field of financial services and crypto currencies, Thailand is most likely to severely tighten the existing regulations in order to secure personal and public security as well as public policy. The internet´s wide popularity in Thailand will certainly help in further pushing forward the country´s digital transformation.

 

The digital change needs to be lived up to and promoted by the company leadership in order to prevent the transformation from being jeopardized. Does the local government provide support and funding opportunities for the first steps towards digital transformation? Are there investment programs to attract ambitious digital pioneers? Have incubators been installed in order promote innovative business models and to accelerate e.g. the establishment of start-ups?

Direct investments in Thailand may be subsidized by the Board of Investment. State-of-the-art technologies and modern working methods are definitely decisive eligibility criteria. Furthermore, Thailand established special Digital Parks as hotbeds for clusters of innovative companies.
 

There are many private incubators available which are supposed to support start-ups. The government is planning on special programs in order to assist founders during the starting phase of a new company in financial and other business aspects.
 

 From the article series

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Philip Ende

Associate Partner

+66 2 0263 2589 71
+66 2 6700 673

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