(source: Thailand Investment Review, March 2016)
Data is one of the most valuable assets of the 21st century and its seamless ow is more important than ever. Greater connectivity, the presence of mobile networked devices, social networking enabled by widespread internet use, are just a few hallmarks of the digital age we live in. Governments are increasingly turning to digital strategies to transform their economies, while businesses are using them to drive growth. The recent approval of the National Digital Economy Master Plan (2016-2020) which aims to constructively use information technology to benet the nation was a significant step. Current digital trends also reveal promising growth.
M-Commerce On the Rise
People are increasingly adopting a digital lifestyle as evidenced by the skyrocketing number of internet users; Thailand ranks second in ASEAN in terms of internet usage. Thailand had 38 million internet users and 84 million mobile phone subscribers, with growth rate of 47% and 15%, as of 2015. According to Mr. Ariya Banomyong, the Managing Director of LINE Thailand, the country has the potential to hit 50 million internet users in 2016.
‘E-commerce’ is rapidly evolving to become ‘m-commerce.’ Data obtained from the Bank of Thailand confirms this trend; the number of mobile banking accounts is expected to increase from 9 million in 2015 to 12 million in 2016. With mobile phones becoming the centerpiece of the Thai user’s digital lifestyle and their increasing demand for technology solutions that afford more convenience, the opportunities in the digital sector for both local and international investors are manifold.
National Digital Economy Master Plan (2016-2020)
To drive further digital innovation and create new business opportunities, the Master Plan lays out a long-term strategy that involves the development of infrastructure, workforce and other resources to serve rapidly evolving public and business needs. The six areas spotlighted in the plan include Hard Infrastructure, Soft Infrastructure, Service Infrastructure, Digital Economy Acceleration, Digital Society and a Digital Workforce.
Laying A Digital Foundation
The government plans to work in cooperation with the private sector to improve Thailand’s hard infrastructure, so that it is capable of supporting a digital economy. The Master Plan calls for the government to lay a digital foundation over the first
1.5 years, by providing 10,000 free WI-FI spots across country, creating a nationwide broadband network, providing internet coverage in 30,000 villages and doubling the capacity of submarine cables (these are communication cables that are laid out at the bottom of the ocean to carry data).
Developing soft infrastructure involves lowering the cost of mobile network investments and boosting consumer confidence regarding standards and regulations. Service infrastructure will also be upgraded. Digital economy acceleration, the development of a Digital society, and the creation of a Digital workforce, are all part of the plan. Long-term strategies for economic development include encouraging community enterprises and Small and Medium sized Enterprises (SMEs) to invest in the digital sector and establish at least 10,000 online shops (at least 15,000 one-stop online SMEs merchants will be targeted). The plan also calls for promoting 1500 tech startups a year and transforming both Phuket and Chiang Mai into Smart Cities. Socially, the government’s plan for improvement includes the establishment of Electronic Health Records (EHER), 600 community digital centers and massive open online courses (MOOC).
Putting It All Together
Thailand is taking a broad, multilayered approach to help the country transition into a digital economy and the government is making it appealing for investors to invest in this segment by providing them with attractive incentives. Given the massive strides in digital development that the country is making, Thailand looks well set to position itself as a prominent digital hub in the ASEAN Economic Community.
Digital Super Cluster Development Sees Rise of Smart Cities
Over the years, Thailand has gained a solid reputation as a business hub thanks to its low tax rates, good infrastructure, cost-effective workforce and excellent geographic location at the center of ASEAN. The growing integration of digital computing technologies into our social fabric is ushering in a new era. Not only does it open up the possibility of enhanced foreign trade and investment but it is also turning us into a digital society.
Thailand’s Smart Cities
As part of the government's digital economy policy, Phuket will be transformed into a 'Smart City' this year, with Chiang Mai slated to be the same in 2017. Chosen for their readiness, favorable locations and international ties, the move is expected to attract technology startups to these cities, enhance digital-related investment, improve the standard of living for residents, and boost the tourist industries there. The government has allocated THB 97 Million to turn Phuket into a smart city; this is part of the broader 'Smart Thailand' initiative that seeks to transform the country into an ASEAN digital hub.
The comprehensive action plan aims to meet many objectives. Public services will undergo an upgrade, with internet speeds being increased to match global speeds, enabling technologies for the Internet of Things [IoT]. More surveillance cameras will be installed to monitor traffic violations along with supporting networks capable of performing advanced data analysis, to enhance public safety. A new data center equipped with sensor technologies will track environmental data to watch out for natural disasters and improve marine environments. All these developments are expected to facilitate business operations and attract new businesses to the area.
The Board of Investment (BOI) offers an attractive range of investment promotion incentives to projects that help realize the government's vision for a digital economy. As per the BOI’s cluster policy, businesses that use advanced technologies and future industries belong to the Super Cluster. Both Phuket and Chiang Mai belong to the Digital Super Cluster and the activities that are eligible to receive BOI incentives under this cluster are software (such as embedded software, enterprise software, and digital content), cloud services, data centers, software parks, movie towns, and Thai motion picture production and motion picture supporting services.
The BOI offers attractive tax and non-tax incentives to eligible activities. The tax-based incentives include an 8-year corporate income tax exemption without cap and an additional five-year reduction of 50%. This also includes an exemption of import duty on machinery. For future industries of significant importance, the Ministry of Finance will consider granting 10-15 years of corporate income tax exemption. The non-tax incentives include the consideration of granting permanent residence to leading specialists and permission for foreigners to own land to implement promoted activities.