Technological Advancement in Thailand

September 30, 2016
by John Websell

For more than a decade, Thailand has been working hard to develop the country’s technology sector in an effort to make it a global leader in related industries, moving away from its traditionally agricultural past. Thanks to these exertions, combined with the country’s unique culture, various multi-national companies and startup’s are increasingly being drawn to the country, looking to take advantage of Thailand’s geographic location, booming technology ecosystem, relatively cheap living costs, and welcoming culture.

Having already looked at Thailand’s social media and internet behaviour in a recent post today ABRS Ltd. switches its attention to the current state of the technology sector in the country generally, along with the government’s plans for future digital and technological advancement in Thailand.

Current state of the technology sector in Thailand

Before looking at some of the specific technology industries flourishing in Thailand at the moment, it’s worth setting the scene a little, highlighting some of the many reasons that makes the country so facilitating to business. Placing above both Indonesia and the Philippines, the 2015-2016 edition of the Global Competitiveness Report analysing 144 countries, ranked Thailand as the 32nd most economically competitive nation in the world. The study goes on to explain the country’s macroeconomic climate, physical infrastructure, and government institutions make it one of the most attractive places to conduct business, not just in Asia, but in the world.

A slightly earlier report from 2014 focussed specifically on the tech sector meanwhile, considered Thailand as one of the world leaders in IT products and services, with demand increasing consistently for the country’s IT outsourcing services, amongst other things. Indeed, based on cost index, workforce quality, and resources, the country was ranked the eighth best nation for outsourcing. The United States especially has increased its reliance on Thai workers, with 43% of American companies making use of the country’s IT services.

The popularity of Thailand’s outsourcing skills is attributed to the ceaseless support and dedication of the Thai government in nurturing a smarter, more innovative environment, whilst simultaneously striving to provide state-of-the-art IT services, explained The Thailand Board of Investment North America (BOI). An increase in intensive technology programmes hosted at universities across the country, which aim to produce 50,000 business technology students per year, as well as the country’s involvement in annual forums discussing every aspect of the technology sector, including practical applications, show these governmental policies in action.

Of course, Thailand offers a melange of opportunities in the technology sector aside from outsourcing; from software and CGI development, to online gaming and E-learning tech. The most obvious example is the country’s aforementioned adoption and development of mobile technologies. With over 97 million mobile subscribers, 77% of which using their smartphones primarily for social media activity, Thailand is becoming an increasingly tech-savvy place.

In 2014, for example, the BOI found Thailand’s electronics industry export revenues totalled $32bn, the main contributors being computer components and integrated circuits. Making up 56% and 24% of total electronics exports respectively, the popularity of these products stems from the opening of major manufacturing facilities in the country by two market leaders: Western Digital and Seagate.

More recently, statistics show that electronics and electrical appliance industries together comprised the largest share of exports in 2015, with a total of $44.5bn worth of products shipped during the year (that’s 20% of Thailand’s exports), whilst the $30.1bn automotive sector likewise contributes significantly to the country’s exports.

Additionally, there are a number of financial incentives that make Thailand the ideal place to start a business, setting it apart from other countries in Asia and the world in general. Exemptions and reductions on machinery import duties and essential materials, a 50% reduction of corporate income tax, and a 25% deduction in installation and constructions costs on facilities, are just three of the economic benefits associated with operating in Thailand. Moreover, there are various non-financial benefits to consider too. Foreign nationals entering the country for the purpose of study, business investments and the like, are granted special permissions by the Thai government, making the process of settling in the region much simpler.

Planning for the future

Although the technology sector in Thailand is prospering – the country enjoying its status as one of Asia’s leading manufacturing hubs – the government is working hard to further differentiate the country from its neighbours; its goal to expand Thailand’s participation in a number of modern industries.

Government officials have already identified four areas within the digital economy to prioritise going forward: digital commerce, digital entrepreneurship, digital innovation, and digital content. With this in mind, Thailand is hopeful domestic R&D expenditure will reach 1-2% of GDP by 2021, with a private/ public sector ratio of 70:30. In addition, the BOI is rewarding companies heavily involved in research and development with supplementary incentives, encouraging established and nascent businesses to enter the technology sector.

Mobile and internet companies especially are flourishing in response to these policies. Internet penetration has increased to 42% since the year 2000, at which point it was as low as 3.7%; statistics that will only improve as Thailand invests more in infrastructure and technological development. Though much of the population spend most of their time engaging in social media activities on their smartphones, favouring apps such as Line over more globally recognised ones such as Whatsapp, the frequency of online purchases being made by individuals via social media channels is increasing, with IT gadgets the most commonly bought items.

Notwithstanding Thailand’s changing focus, policy makers remain committed to evolving non-digital areas of technology going forward as well. For instance, Turkish manufacturer Arçelik opened a $100m production plant in 2015, with a view to producing 800,000 Beko refrigerator units, with sales figures of $500m, by 2018. Interestingly, the Turkish company is just one of a list of electrical manufacturers currently established in Thailand, sitting beside the likes of Bosch and Panasonic.

Scratching the surface

The aim of this post was to provide a decent overview of technological advancement in Thailand, however the subject is an extremely vast one. Therefore, companies and individuals interested in making the country part of their professional future, should take the time to read any of the numerous resources available on the internet.

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