(source: Thailand Investment Review, December 2016)
As the world has entered the digital era, it is undeniable that the global economy is being driven by technological advancements and shifting towards increased use of online platforms. The importance of the digital world is underlined by the fact that 3 out of the 10 fastest growing Fortune 100 companies are in the technology sector.
With a surge in online activities, strong government support, and advances in digital infrastructure, Thailand is undergoing a huge transformation towards becoming a digital economy. The widespread use of digital devices among the Thai population, and the dramatic growth in the e-commerce market, venture capital firms and startups, are all reshaping Thailand’s economy and transitioning the country into an investment hub of ASEAN, given its rapidly growing digital ecosystem and the increased regional convergence.
Digital Landscape on the Rise
The fast-moving world of technology presents tremendous opportunities in an era of connectivity and digitalization. Transactions can be done seamlessly throughout the globe in the blink of an eye. The value of the e-commerce market in Thailand has been growing rapidly, together with growing numbers of Thai consumers who not only trust, but also have quickly embraced the convenience of conducting business and completing transactions using online platforms, allowing Thailand to achieve the highest percentage in the online consumer-to-consumer (C2C) market in the world.
Together with a jump in the number of internet users and the increasing number of online market transactions, Thailand’s unique market strengths and favorable geographic location continues to attract foreign companies, driving interest and investment in the country’s digital economy.
Digital Sector is a High Priority
Moving to Thailand 4.0, the Thai government has prioritized transforming the country into “Digital Thailand.” Through the 20-year Thailand Digital Economy and Society Development Plan, Thailand aims to drive the new S-curve industries by leveraging its well established nationwide digital technologies and infrastructure.
The Digital Thailand Plan is divided into four main phases over a multi-year period, beginning with laying a strong Digital Foundation, to providing Inclusion to all Thai citizens, engaging in a Full Transformation, and finally focusing on Global Digital Leader-ship. PromptPay, an internet and mobile banking money transfer service that links citizen ID card and mobile number with a bank account number, is a significant development in Thailand’s e-payment system. All 15 commercial banks and 4 specialized financial institutions are ready to enhance the speed, accuracy, and reliability of cash transfers throughout the country. With full government support, Thailand is advancing into the digital economy era.
The Emergence of Venture Capital Firms
While many hope to succeed in the digital economy, financial support is unavoidably the core driver of the digital evolution. In terms of the digital economy, Venture Capital (VC) or funds that invest in more risky projects, typically in startups, is the main driver that will play a major role in further promoting the Thai digital ecosystem.
While the Thai government has recognized the importance of such funding through the injection of government support, including the SME VC Fund, Thailand Equity Fund, and Thailand Recovery Fund, the private sector also has a major role to play. Recognizing the disruptive landscape made by fast-moving innovative startups, numerous banks and telecommunications service providers such as Siam Commercial Bank, Kasikorn Bank, Bangkok Bank, DTAC, AIS, True, and also private firms such as 500 Tuk Tuk, Ardent Capital have established their own presence in the world of venture capital.
In this issue, we are privileged to get the opinion of Dr. Arak Sutivong, Chief Strategy Officer of Siam Commercial Bank, and Mr. Thana Thienachariya, Chairman of the Executive Committee of Digital Ventures, on the digital impact to the banking sector. The bank is committed to improving Thailand’s digital ecosystem through relentless efforts in advancing internet banking, mobile banking, and digitizing core banking activities. Additionally, the company has established a wholly-owned subsidiary called Digital Ventures; designed to serve as a corporate venture capital laboratory to turn FinTech ideas into practical solutions that are in line with the strategic direction of the bank. It also acts an incubator for new startups that lack sufficient funding.
Putting it all together
As the country undergoes a major digital transformation, lucrative investment opportunities arise in many industries that serve as the backbone of Thailand’s economy. Digital economy opens up new investment potential in many areas, for instance, agritech, edutech, and healthtech. In combining the strength of the rapidly growing internet-led consumer market together with highly-committed government support, Thailand is a leading investment destination that will prove to be a tremendous success in the future.