Over recent years, the rise of the digital sector in Thailand has been fortified by the strong entrepreneurial spirit and rich creativity of its tech-savvy digital generation. At the forefront of this new courageous digital era, the country has seen its economy persistently ratify its readiness to embrace the global digital revolution’s new opportunities.
In Thailand’s commitment to driving investment for digital transformation, the country is pursuing six main strategies: dynamic digital infrastructure, digital business promotion, equitable access creation via digital technology, digital government, workforce development, and enhanced trust in digital business. Through efforts like enhancing ICT capacity efficiency and providing e-government services, Thailand’s competitiveness in attracting investment in the digital sector has increased. The country is the third-highest ranked nation from the ten-member ASEAN on the World Economic Forum’s Global Competitiveness Index in 2019, following Singapore and Malaysia.
Thailand’s 5G and Friendly Rulings Stimulate the Digital Revolution
Thailand is considered one of the frontrunners in ASEAN when it comes to 5G technology adoption. The auction held back in February 2020 further improves and facilitates the nation’s deep technology capabilities, including cloud computing, machine learning, AI, and Big Data5.
Thailand is building a new international submarine cable system on top of its six existing submarine cable lines. In addition to strengthening the internet connection between the country and the Asia Pacific, this endeavour will also upgrade the internet capacity around border regions linking Laos, Cambodia, and Myanmar to enhance Thailand’s leading digital status within the area.
As part of the attempt on investment climate development for the digital sector, Thailand has reconstructed its regulatory frameworks associated with digital activities during the past several years, such as through Personal Data Protection Act, Electronic Transactions Act, Computer Crime Act, and Thailand Cybersecurity Act.
Due to Thailand’s proactive development in the regulatory environment and ICT facilities, the country currently possesses one of the biggest consumer bases worldwide for fintech mobile banking and e-commerce.
Thailand ranked top worldwide for internet banking service access at seventy-four per cent of the population. Moreover, the country ranked fifth globally for e-commerce, with 8% of its total internet users shopping online.
Aside from investing in hard infrastructure plans, the Thailand government is pursuing a project to bring forth a vibrant digital business ecosystem supporting SMEs and entrepreneurship in the digital economy.
Thriving Market for Start-Ups
To facilitate Thailand’s financial industry’s digital transformation, the Bank of Thailand has worked towards utilizing a multi-pronged strategy to drive digital platform adoption at customer, corporate, and international levels. The central bank’s PromptPay, an e-payment platform that binds user accounts to their phone number or ID, was introduced back in 2017 and has fifty-five million registered user IDs and twenty million transactions every day at peak.
During the COVID-19 pandemic, mobile banking and e-commerce have grown considerably as more people adopted cashless transactions to maintain social distancing practices. The utilization of digital technologies in banking services has also integrated facial recognition and biometrics systems for identification.
At the business level, the Ministry of Finance, along with the central bank, introduced a P-2-P (peer-to-peer) lending platform at the beginning of 2020, enabling a match between the individual lenders and the individual borrowers. This fintech solution aimed to support start-ups and the SME sector.
Moreover, to encourage fintech and e-banking in the future, the central bank is developing its infrastructure, including introducing the new financial transaction reporting standard of ISO 20022 that will facilitate e-factoring and e-invoicing while helping companies to make better use of the financial transaction data of customers.
The Thai government has also deployed various measures to build a vibrant start-up ecosystem to further support the booming digital technology and powerful Thai entrepreneur environment. These measures include incubating, funding, and accelerator programs, as well as non-tax and tax incentives.
Professional company registration services providers can help start-ups register a Thai company and find the right incentives to maximize digital technology adoption.
BOI Encouraging Investment Across Digital Sectors
To further reinforce the digital industry’s ecosystem, the Board of Investment or BOI is promoting the digital sector, focusing on four groups, specifically infrastructure, software, technology development, and start-ups. BOI is supporting these groups through the measures below:
- Corporate income tax exemption of five to eight years for software development and digital services, such as games, software applications, Big Data, IoT, and AI.
- Corporate income tax exemption of five to eight years for digital infrastructures, such as data centres, submarine cables, cloud services, fabrication centres, Maker Space, and digital parks. Co-working spaces will obtain non-tax incentives.
- Ten years of corporate income tax exemption for Digital Technology Development for targeted technology transfers’ development in collaboration with academic researchers and development institutions. Projects situated in promoted areas are entitled to an extra two-year tax exemption, whereas those situated in the Eastern Economic Corridor are entitled to an extra one to three years (not exceeding thirteen years) of tax exemption.
- Smart distribution centres are entitled to corporate income tax exemption for up to eight years on income derived from goods’ distribution. However, e-commerce businesses will only be entitled to non-tax incentives.
Thailand has put in numerous attempts to create the right environment for entrepreneurs and businesses to thrive and embrace every opportunity presented by the digital revolution. 5G technology adoption, effective government implementation policy, infrastructure revamping, and BOI tax and non-tax incentives have allowed Thailand to become one of the leading nations in the digital transformation race.