Thailand Digital Scenario – Technology Focus

Thailand has been a hub for technology startups that focus on information technology, digital, mobile applications, and gaming software for the last decade. With a growing tech-savvy population of 69 million and a mobile penetration of 133%, Thailand is an exciting destination for technology startup companies. Venture capitalists are also mushrooming every year and are scouting to fund suitable technology projects which are deemed to make a mark and expand in the ASEAN Region.

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The world is going through an era of digital transformation. According to an industry report on digital transformation in 2020, more than 4.5 billion people were using the internet at the start of 2020 while 3.8 billion people are actively using social media platforms. This means nearly 60 percent of the world’s population already has access to the internet and more than half of the world’s population is using social media.

Globally, the average time spent on the internet by a user is about 6 hrs and 43 minutes per day. However, in Thailand the average time spent on the internet per user is about 9 hrs per day, making Thailand the 5th highest country in the world in terms of time spent on the internet.

As per Bangkok Post, there are 92 million mobile subscribers which accounts for 133% of the total population and 57 million active mobile internet users which accounts for 82% of the total population. There are 51 million active social media users which accounts for 74% of the total population out of which 49 million use mobile devices to access social media platforms.

According to the Global Digital Report 2019, Thailand has maximum mobile usage in the banking sector, followed by cryptocurrency and mobile commerce sectors.  Learn more about: Crypto Currency in Thailand

The report put Thailand at the top of the global rankings for internet banking service access, at 74% of the population, followed by Sweden (71%) and Turkey (68%). The global average was about 41%.

Thailand boasts of a strong social media presence with 50 million Facebook users, 13 million on Instagram users, 4.7 million users on Twitter, and 2.4 million users on LinkedIn.  Users spend an average of 2.55 hrs per day on social media. Voice search and commands are widely used in Thailand accounting for 46% of the total internet users.

The demand for IoT devices worldwide is skyrocketing with an estimated figure of 75 billion IoT devices to be installed by 2025, five times more than what it was in 2015. The growth ensures great opportunities for large and small enterprises to build innovative IoT products.

The IoT market in Thailand is no exception and is forecasted to grow as much. Driven by consumer-related IoT, it is estimated to grow to the US $ 2.19 billion by 2030. A recent Asia IoT Business Platform survey ranked Thailand highest among ASEAN countries to incorporate IoT implementation.

IoT is the buzz word now and Thailand government under it’s initiative Thailand 4.0 which aims to provide smart cities, smart industry, and smart life in Thailand. It has set aside the US $45 billion for the ongoing development of  Eastern Economic Corridor (EEC), which is poised to be the pillar of Digital Transformation in the country.  Inside this, a Digital Park is being developed by Digital Economy Promotion Agency (DEPA), which would also house the Internet of Things Institute which would be a model to develop innovation and tech centers all over the country. DEPA is investing SD 120 million over a period of 5 years and has the mandate to complete this project by 2022.

IoT devices typically have a sensor attached to it with data transmitting abilities and connections through the internet. These devices have a breathtaking future ahead as they possess the abilities to capture, process, and transform valuable data for businesses and consumers. Limitless opportunity awaits for applications enabled by this technology.

The IoT products are not only meant for the industrial world but also to end consumers. Smart fridges, smartwatches, health trackers, smart bike locks, yoga mat are to name a few.

the 5G network launched in 2020 further strengthens the IoT adoption. The early adoption of IoT in Thailand has been in Manufacturing, logistics, and transportation. However, IoT devices are developed across many other industries as well.

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Thailand looks forward to a digitized economy that encompasses e-commerce, online media, and ride-hailing apps that are contributing rapidly to the economic growth of the country. As per IDC, by 2022, at least 61% of Thailand’s GDP would be digitized.

Thailand has experienced how digital applications can transform traditional applications effectively like visa processing, etc, and enhances customer experience which has only heightened the competitiveness in the regional and global marketplace.

The top 5 digital trends for 2021-2022 are as follows:

  1. Cloud and Cloud-Native – Vertical integration of technology stacks (networks, storage, servers, data, and applications) has reduced the number of hardware purchases for every company now. With the introduction of public cloud and related solutions, companies can easily and effectively set up digital businesses and run businesses in a pre-packaged technology and commercial setup.
  2. Citizen developers– Digital coders are the key to the powering digital business in the future. For any SME, developing numerous applications in a limited time is a big challenge. With the emergence of low code, no-code platforms, application development has been more democratized and is no longer the primary domain of specialists.
  3. Artificial Intelligence – This powerful technology which was earlier thought to be meant only for large corporations, has now integrated into several software solutions that can be extensively used in the SME sector. As per IDC, it is estimated that one-third of screen-based applications will be AI-enabled user interfaces and process automation. Read more about Artificial Intelligence in Thailand.
  4. Sharing Economy– This upcoming economic model of the future unfolds a peer to peer process of acquiring and sharing access to goods and services, packaged together for the convenience of business and consumers. Now, startups in Thailand have access to co-working spaces, crowdsourcing, etc as a part of the shared services which can be an important influence on startup growth.
  5. Augmented Reality and Virtual Reality – AR and VR have been taking the online marketing community by storm since the last few years. While VR has been more popular so far, but AR is expected to outpace it in the next two years. Consumers today want to experience products before they purchase and only AR can fulfill that. A reality experience can persuade consumers to buy and brands understand that. So an increasing trend to introduce AR in retail would be expected.

Almost three-quarters of the world internet population between the age of 16-64 buy something using an online platform. e-Commerce adoption rate is considered highest amongst internet users of Thailand, Indonesia, and Poland. As of early 2020, Thailand ranked 2nd in the world with 82% of it’s internet users being active in online sales as compared to the world average of 55%.

e-Commerce platforms are more successful in sites that cater to the language needs and cultural preferences of local shoppers.

Thailand’s e-commerce market is growing at a rapid pace. A recent study by Google and Temasek has predicted Thailand’s e-commerce market to grow to US$11.1 billion by 2025 at a CAGR of 29, This  will make Thailand’s e-commerce sector the second largest in the South East Asian region after Indonesia.

In Thailand, digital buyers and e-commerce users make up about 17 percent of the current population. However, it is expected to rise to 27 percent by 2022, an overall increase of 10 percent. Per capita digital spending is also expected to surge, nearly doubling by 2022 to reach US$ 470.40.

The drivers of digital commerce in Thailand are in line with broader social trends, particularly rapid urbanization. Currently, half of the Thai population lives in cities. Internet use is set to increase substantially, a trend that will partly be driven by increasing smartphone penetration. By 2021, smartphones will be used by 76.4 percent of the total population, up by more than 10 percent compared to the current population.

Thai shoppers are smart online shoppers, focused on value for money with half of them searching for the best deals before they actually purchase. But they are also loyal to the brands and stores that are committed to their consumers. 78% of the users appreciate loyalty program applications and desire for a multi-channel experience.

These growth prospects in Thailand are attracting interest from many global players who consider Thailand as an exciting investment destination.

Digital Banking 

Digital Banking is becoming the new norm for banking and financial institutions. Every banking and financial institution needs to have a clear roadmap to enable digital banking functionality for their customers. This is essential for the banking and financial institution to stay relevant and be competitive in the digital era.

Thailand is already at the top of the world in terms of mobile banking. They are making the right move in being sensitive to emerging trends and technologies and acting on them quickly.

In a bid to improve the overall banking landscape, Thailand is considering digital banks as an option, as declared by the Bank of Thailand (BOT). However, whether these Digi-banks will have licenses or not that’s yet to be determined. For now, comprehensive studies are being considered to look into all dimensions. Costs can be drastically reduced by taking the ‘brick and mortar’ out of banking institutions, enabling them to pay more attractive annual personal yields on savings. 

Virtual banking service has been growing with a shift in consumer lifestyles and tech development. To give you some examples there are many fintech firms in Thailand who have been making digital strides that provide financial services like payment via a digital platform.

With a digital-only bank, consumers would no longer be plagued by a complex range of hidden fees, such as those for keeping an account open with a low balance, making direct deposits, or making payments through different channels.

According to a recent analysis of the Fintech market conducted by the World Bank, the Fintech market has developed rapidly in Thailand, with almost 140 Fintech companies registered during the 2018-2019 period, and half of them as brand new startup companies. About 43% of all the Fintech companies in Thailand are focusing on the development of various digital transaction services.

Read More about Fintech Industry in Thailand .

Thailand’s manufacturing sector could see incremental growth of US$50 billion (1.6 trillion baht) in productivity gains in 2028 by embracing Industry 4.0 technologies, according to a study by Cisco and A.T. Kearney.

The recent US-China trade war could impact Thailand’s manufacturing in a positive way as manufacturing bases have the potential to shift to Thailand due to the increased labor cost and automation in China. The need exists for Thailand to digitize manufacturing to attract overseas factories to migrate and improve the supply chain.

Manufacturing and industry have played a significant role in Thailand’s economic growth. At present, Thailand is the second largest manufacturer in ASEAN at $136 billion, behind Indonesia. Food, beverages and tobacco, electrical products and electronics, and Automobile vehicles and parts are the top three largest contributors to Thai manufacturing.  Thailand’s robust manufacturing infrastructure contributes to about 60% of the GDP growth through exports.

Thailand alongside Singapore and Malaysia are the best-equipped countries in the ASEAN Region to adopt Industry 4.0 as they have large export-oriented businesses, with government policy support and technology infrastructure in place.

Thailand 4.0 is underpinned by five emerging technologies being used across the manufacturing value chain. Those are the Internet of Things (IoT), artificial intelligence (AI), 3D printing, advanced robotics, and wearables. Apart from the small and large manufacturing companies in Thailand who have turned their focus to IoT product developments, it is important for local startups to leverage the infrastructure offered by the government and develop sensors and industrial applications as well.

IoT is destined to manage the supply chains of smart factories and industries that are technologically-intensive, such as automobiles, electronics, retail stock management and even tracking patient health in new, connected hospitals using 5G wireless technology.

Eastern Economic Corridor: 10 key industries have been supported by the Board of Investment to invest in Eastern Thailand in the form of privileges. These are next-generation automotive, intelligent electronics, advanced agriculture, food processing, medical tourism, digital, robotics, aviation, healthcare, and biofuel/chemical. There are several benefits offered by the Thai Government for the investors who contribute to these industries like Income Tax exemptions, land ownership, Smart visafor 5 years, import duty exemptions of machinery, etc.

Rising trend of medical tourists and The Board of Investments privileges, Thailand has become the hot spot for medical device manufacturers to showcase and test the market.

Thailand has so far been known as a great adventurous spot for vacations. Water sports, beach, music, arts and crafts were counted as the specialties of the country. Thailand’s market economy is largely dependent on the tourism sector but in recent years, the Government of Thailand has taken countless measures to improve the economy and compete with the fast-growing world. To achieve this level of growth, the government is offering foreign investment opportunities especially to businesses in the technology sector.

The software and technology industry has always been considered to be a significant sector for any nation. Several surveys and studies have claimed that the international level of competitiveness progressively depends upon the Information and Communication Technology (ICT) infrastructure of the country.

The ICT infrastructure of a country has the potential to affect the country both economically as well as socially. Thailand’s government has understood the prospects and therefore making efforts to expand this sector. The increased usage of the Internet and IT apps in the country is gradually pushing the overall market value of the IT industry upwards.

Initiatives by the Government 

It has been more than a decade since the government of Thailand is striving to position the country as one of the leading nations in the technology sector. It has made huge investments in infrastructure improvements, developing a high-tech talent pool, and offering a larger and more favorable business environment, especially for multinational IT companies. The country has succeeded in achieving its goal to a great extent. Today, the nation is counted among the leading provider of IT products and services.

The Thailand Board of Investment (BOI) had issued a new policy recently to endorse Thailand as a place that has the potential for future high-tech developments in the field of Software and IT. It also encourages the promotion of IT business and the production of computers and related IT products. The BOI has also adopted the latest Skill, Technology, and Innovation (STI) policy. STI policy is a cross-sector approach that works to expand investments in the way of improving the IT skills and know-how of the people of Thailand.

The BOI actively promotes new incentive packages and IT industry expansion in front of international investors. As a result of all these efforts, Thailand’s IT industry is thriving. The country has experienced a remarkable growth in foreign demand for its IT services. An increasing number of companies are setting up businesses in Thailand to benefit from the nation’s trained IT workforce, comprehensive IT infrastructure, and efficient outsourcing services.

Thailand’s augmented business-friendly atmosphere is reinforced by various recent initiatives meant to escalate business opportunities in Thailand and attract corporations looking to expand business operations in Southeast Asia and specifically in Thailand.

Under the Thailand 4.0 initiative, the Thai government highlighted investment in ten target industries which would serve as the engines of growth for Thailand. Digital technology is one of them. A 100-hectare digital park has been set up in the Chonburi province focusing on technology and digital sector and employing about 58,000 technology professionals. Read more about Thailand 4.0 – A Step towards a Digital Future and the new initiatives of BOI.

A relatively new scheme has been offered by the Government under the ‘Smart Visa’ program which is targeted towards entrepreneurs and professionals and offering them 4 years of multiple entry visas along with other benefits. Read more here.

Thailand is ranked among the top countries providing outsourcing service based on the country’s cost index, resources, and availability of skilled professionals. Thailand foresees substantial growth potential in the field of IT outsourcing.

Outsourcing is considered as an ever-increasing domain in Thailand, which will continue to be in demand in the long run. This is one of the significant factors that contribute to the growth of Thailand’s economy and it’s IT industry.

Startup in Thailand has assisted several foreign IT companies in successfully starting up business operations in Thailand. Contact Startup in Thailand for a free business consultation.