Many small and medium-sized enterprises across ASEAN, including Thailand, are looking to transform their business through investment in upgrading technology platforms and digital transformation as digitalization has become crucial in business.
Thai Prime Minister General Prayut Chan-o-cha asks the Board of Investment in a meeting to focus on advancing small businesses and the grassroots economy by coming up with an approach to attract competitive businesses to Thailand and look for ways to improve the country’s competence.
Thailand and Digitalization
Digitalization in Thailand is directed by the private sector, especially in retail, tourism, payment services, and other services like food delivery (e.g., Foodpanda) and transportation (e.g., Grab). Digital services are also increasingly being offered by government agencies. In many instances, applications are only accepted online. On the other hand, many services still require paper, particularly in the countryside. Generally, the paperless office is still decades away.
In fact, the global health crisis has accelerated digitalization in business. Even small companies are making investments in digital infrastructure to support work-from-home options and other similar arrangements. Thailand is attempting to become a significant player in Southeast Asia’s cryptocurrency and digital asset markets, with Singapore continuing to be the market leader.
Thailand’s progress to a digital future, however, is under question, especially the lack of human capital and insufficient and uneven distribution of digital infrastructure. In 2020, only 1 percent of the population had advanced Information and Communications Technology (ICT) skills, while around 20 percent had basic ICT skills. Plans for digital transformation need to be reinforced in terms of policy framework coherence and interagency coordination of policies. To avoid policy overlap and shortcomings in policy coordination and enforcement, the Ministry of Digital Economy and Society could actively participate in coordinating digital transformation plans across institutions.
With the advent of digitalization in the economy, established laws and regulations should be closely monitored and updated to address public concerns. To promote trade in the area and safeguard customers’ security and privacy, it is crucial for the region to further its cooperation on regulatory compatibility. Governments must serve as facilitators in easing labour market friction, facilitating the movement of workers from one place to another, and promoting upskilling and reskilling to reduce the negative effects of digital transformation, particularly potential job losses. Cooperation with the private sector is essential to share information about job creation and layoffs across businesses and industries.
The Five-Year Investment Promotion Strategy
The Board of Investment has approved Thailand’s next Five-Year Investment Promotion Strategy, aiming to identify industries and sectors essential to the country’s long-term development and competitiveness. This strategy will take effect in 2023 running through 2027. BOI will create accommodating policies and services to boost domestic and foreign investment in these industries.
It carries an overarching theme of directing Thailand into the “new economic era”, broadly aligning with Industry 4.0 (application of artificial intelligence, automation, and smart technology in the economy). The strategy states that the restructuring of the economy toward the new era will follow three core concepts:
- Innovation, technology, and creativity;
- Competitiveness and the capability to adapt quickly; and
- Inclusiveness (the practice of inclusivity), taking into consideration environmental and social sustainability
These concepts are not confined to specific issues or industries. Instead, they serve as principles to guide how Thailand should develop the facets of the new economy and strengthen its status as a regional hub for trade, business, and logistics.
The Strategy’s Pillars and Implication to SMEs
The strategy has seven pillars for expressing the Board of Investment’s promotion policies and fulfilling its vision. They are as follows:
- The upgrade of existing industries and building new industries in which Thailand has a high potential and an all-inclusive strengthening of the supply chain.
- The acceleration of the industrial transition to smart and green industries through decarbonization, automation, and digital adoption investments.
- The promotion of the country as a business center, an international trade and an investment gateway for the region.
- The strengthening of SMEs and startups, ensuring they are linked to the global market and supply chain.
- The promotion of investments anywhere in Thailand fits the potential of each region and enables inclusive growth.
- The promotion of investments that will boost community and social development.
- The promotion of overseas investment to expand business opportunities for Thai firms.
The seven pillars highlighted a number of themes, including the necessity to digitize the economy, the creation of green industries and processes, and the promotion of inclusive growth across the country’s regions and communities.
Digitalization plays a significant role in furthering a business, especially SMEs. Once the Thai government successfully implements the investment promotion strategy, automation, digital adoption, and meaningful business growth will follow, benefitting small and medium-sized enterprises. Because Thailand aims for zero carbon by transitioning to smart and green industries, the industries that stand to benefit include bio-circular green industries, electric vehicle manufacturers, and automated manufacturing systems. Furthermore, the government will put particular emphasis on developing innovation and R&D capabilities and a stronger knowledge-based economy.
Over the next five years, the BOI will promote all these pillars through incentives, service support, and policies that enhance the business environment.
Conclusion
Digitalization has greatly impacted the process and growth of businesses today. With more significant applications of artificial intelligence and other innovative technologies, as well as the government’s strategic implementation of business plans, we may see the business landscape changing completely.
Reliance Consulting can help you take the first step into Thailand by helping you to overcome the legislative hurdle of company registration and getting all the necessary licenses approved. Contact us today for a no-obligation discussion.
