Thailand 4.0 – A step towards Digital Future

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Across the globe and in Thailand, the nature of work is being transformed by an interconnected and complex set of factors like the unparalleled speed of innovation, technological advancement, climate change, demographic shifts, increasingly disintegrated production systems, and rising inequality. These initiatives foster a greater understanding of the changes and help the nations in developing effective policy responses that proactively shape the future.

The government of Thailand is striving hard to endorse “Thailand 4.0” as its new ploy and economic model for towing the country out of the middle-income trap and offer an impetus to the country to move into high-income range group.

Why Thailand 4.0?

In the initial model, “Thailand 1.0,” importance was given to the agricultural sector.

The following model, “Thailand 2.0,” focuses was on the light industries that helped promote the country’s economy from low-income to middle-income status.

In the late model, “Thailand 3.0,” the government is stressing on heavy industries for continuous economic growth. In this phase, the country has stuck in the middle-income trap and is facing imbalanced development and disparities.

Moving towards a value-based economy

The Thailand 4.0 initiative emphasizes on a value-based economy, as the nation requires dealing effectively with disparities and inequity between the society and the environment. Thailand 4.0 comprises of three elements that mark a noteworthy change in the nation’s production and economy.

Moving into the high-income nation group
The first component purposes to improve the country’s standing in becoming a high-income nation by being a knowledge-based economy, emphasizing science and technology, research and development, innovation, and creative thinking. The model aims to increase Research and Development (“R&D”) expenditure to 4% of GDP, increase economic growth rate to full capacity rate of 5-6% within 5 years, and increase national income per capita from 5,470 USD in 2014 to 15,000 USD by 2032.
Moving towards an inclusive society
In the second component, Thailand would attempt toward an inclusive society with unbiased access to development and prosperity. The objective is to completely transform into the social welfare system within 20 years and develop at least 20,000 households into “Smart Farmers” within 5 years and have at least 5 Thai universities are ranked amongst the world’s top 100 higher education institutions within 20 years.
Focusing on sustainable development and growth
The third component emphasizes sustainable development and growth for achieving sustainable development and economic growth and without jeopardizing the environment. The targets are to develop at least 10 cities into the world’s most livable cities, reduce terrorism risk, and increase the proportion

What is Thailand 4.0?

The modest answer is Thailand 4.0 initiative is an economic model that is based on innovation, creativity, high-quality services, and new technology, employed for boosting the quality of life. This initiative is, however, a stepping stone in the advancement of the country’s development. Thailand 4.0 would focus on rotating the country’s labor force into knowledge workers across key economic segments.

The process of achieving this is through exploring the use of technology, science and innovation for boosting Thailand’s economy, concentrating on agricultural and industrial sectors, public health and medical technology, collectively with the overall trend for a robotics industry

In the steps for embracing a viable, value-based economy, building digital advanced start-up networks, developing digital communities, and creating digital parks for SMEs (Small and Medium-sized Enterprises), has become a priority for the Thai government. It is easy to apprehend knowing that there are 2.7 million SMEs which account for 98 percent of all the business units in the country that also account for 37 percent of the country’s GDP, 25 percent of exports, and offered more than 11 million jobs in 2015. ICT (Information and communication technology) therefore, is the key driver for national development, predominantly for gaining the transition to the knowledge-based economy needed under Thailand 4.0 implementation.

The digital economy has the potential for socio-economic impact and the country could build on the digital strategy for securing new opportunities for the nation.

Within the last two decades, the digital economy globally today worth $11.5 trillion, equal to 15.5 percent of the global GDP.
In the year 2016, Thailand formed the Ministry of Digital Economy and Society, setting in place a 20 year National Digital Economy Masterplan, spread across four phases:

Setting the digital foundation
Realizing digital inclusion
Moving to total transformation, and
Accomplishing global digital leadership

Since then, the country has propelled initiatives such as Thailand 4.0, Digital Thailand, and a special program to develop the Eastern Economic Corridor.
The 20-year National Digital Economy Masterplan is on the right track with numerous worthwhile initiatives:

Establishment of hard infrastructure
Hastening of the digital economy
Encouraging digital government, digital society, soft infrastructure, and workforce development

Thailand would be reaching its desired digital frontier by concentrating on evolving these key areas:

Transformative business models
Digital foundations (data sharing, future-ready networks)
Cross-cutting institutions related to agile policymaking and strategic foresight
Digital skills

As a part of our Startup in Thailand incubation project, Azure Computers Thailand, has been assisting leading Thai banks with mobile technology application development for digital convergence on 4.0.

Source: The board of Industries

Eastern Economic Corridor (EEC)

Thailand’s Eastern Economic Corridor (EEC) is poised to be the Thailand hub for trade, investment, and regional transportation, alongside being a strategic gateway for SE Asia. Covering an area of 13,000 Kilometers encompassing the eastern provinces of Rayong, Chonburi and Chachoengsao – the plan is to transform the Thai economy into Southeast Asia’s engine of growth and propel Thailand into a high-income nation.

The EEC is slated to attract approximately US$46 billion in investments focussed on “S-curve” industries – namely, next-generation automotive, aviation and logistics, smart electronics, medical tourism, food, robotics, agriculture, and biotechnology. Thailand has identified these 10 industries, growth of which would ultimately transform them to be a developed nation. The S-curve industries are divided into two categories – S-curve and New S-curve.

Source : Boi.co.th

Great initiatives have been taken by the Thai government to attract foreign investors under the EEC, including the relaxation of certain laws and regulations to facilitate. These include zero percent corporate income tax for up to 15 years, exemption from existing foreign land ownership restrictions, long-term land lease agreements up to 99 years for commercial and industrial areas, five-year business visas, and a personal income tax rate cap at 15 percent.

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Digital Parks

Propositions for a 100-hectare digital park is launched, signaling a colonel step forward in the country’s digital aspirations. The Digital Park Thailand, situated in Sri Racha district of the Chonburi Province, was revealed at The Digital Thailand Big Bang Conference 2017. The site would be targeted particularly at technology and digital industries and it is expected that more than 58,000 people would live and work together.

The new district would be developed over the next 10-15 years and is within the EEC special economic zone. Together with promoting the digital industries, there would be a range of education and science facilities and the formation of a new residential community.
This arrangement would also complement and support present industries and people in the expanse, embracing schools, universities, and segments including agriculture and automotive.

The master plan is designed by a global conglomerate which includes Savills, Broadway Malyan, and the TEAM Group, and would see the creation of several specialist clusters concentrated around a central park and lifestyle and retail hub. It would include a hotel and MICE facilities for supporting the business group within this Digital Park.

The plan would be planned around the digital boulevard and green connector joining the diverse clusters and a sizeable living zone would provide an array of quality housing facilities designed within an opulent, landscape backdrop, in close vicinity to community facilities. This would-be cyclist and pedestrian-friendly with access to the public transport network of buses linking to a wider transit system which includes High-Speed Rail and key airports.

The first phase would concentrate on the development of a data center cluster and IoT Institute building. The Institute would include a mix of uses, like teaching, research, and conferencing. The institute would seek to draw a number of anchor tenants, signifying the strategic cluster industries in the Digital Park.

The development assists the Thailand 4.0 agenda and country’s Digital Government Plan 2017-2021. Initiated in March 2017, the plan aims to create digital capabilities across sectors such as tourism, agriculture, health, education, disaster prevention, investment, and public administration for driving social and economic progress.

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Tax breaks for encouraging investment

The Thai government has set an aim of furthering investment in R&D to 1% of GDP over the next 3 years.

The Thailand Board of Investment would offer tax incentives for businesses investing in particular categories for helping improve Thailand’s competitiveness in them. It includes technology, creative and digital industries, bio-industries, advanced manufacturing, and high-value businesses.

Similar incentives would also be provided in several other sectors like minerals, agriculture, light industry, ceramics and basic metals, electronics & electrical appliances, machinery & transport equipment, paper & plastics, and chemicals. The Board of Investment would offer businesses an 8-year income tax exemption aligned with its 7-year investment promotion strategy (2015-2021).

The board would also liaise with several institutions, such as Kasetsart University and the National Science and Technology Development Agency (NSTDS) and The National Centre for Genetic Engineering and Biotechnology (BIOTEC), for promoting and developing core technologies. The board is also in talks with local and foreign investors for investing in technology so the knowledge acquired overseas could be used locally. However, it is required to develop human resources for supporting innovation and new technology and thereby supporting the demands of the market.

The Thai investors had invested 0.6% of GDP in research and development and are expected to rise to 1% by the year 2020. In the past investment in research and development had been 70% and 30% private, however, the board hopes the tax incentives would promote a better involvement from the private sector. In brief, the Board of Investment is hopeful of attracting 600 billion Baht as a foreign investment by the end of the year as compared to 584 billion Baht last year.

Japanese investors surpassed other investors, followed by the Chinese, who were among the biggest new investors in sectors like automobile equipment and solar cell technology.

Thailand BOI would also help in boosting local investment and creating confidence among the local investors. The Thai government believes that growing investor confidence will also drive the nation towards Thailand 4.0.

Today, Thailand is seen as the investment hub for petrochemicals, electronics, and automobile industries and these investments would drive the growth of the country’s exports and would help in using the technology expertise received overseas in the local markets. Read more about Investment Opportunities in Thailand and how startup specialists can help you to start a business in Thailand.

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