Digital sectors to Thailand
Trends and opportunities
Thailand is a digitally-savvy, connected society with high internet
penetration rates and use of mobile applications which extend well beyond
The Thai government has an ambitious aim for the Digital sector to
contribute 25 per cent of national GDP by 2027. This economic and social
transformation agenda known as “Thailand Industry 4.0” aims to encourage
digital creativity and innovation, the development of new technology and
promote development of a stronger, digitally-driven economy.
This is supported by ongoing investment in enabling infrastructure,
regulation, an emerging digital innovation and startup ecosystem, plus
generous support for qualifying businesses wishing to establish a presence
through investment in the region by the Thai Board of Investment.
Local capabilities to meet the potential transformation demands of
Thailand’s existing industry sectors are nascent, presenting an opportunity
for suppliers to a range of industry sectors.
These sectors include electronics, automobile and household appliance
manufacturing; tourism, health and education, and also emerging industries
such as aviation, where Thailand is set in the coming years to become a
major regional base for the maintenance, repair and overhaul for major
These are sectors where demand for robotics and automation technology,
‘internet of things’ (IoT) connectivity, big data analytics, cyber
security, software and systems is required to realise productivity gains
and maintain international competitiveness.
For digital businesses, Thailand already offers very good infrastructure
including broadband internet, low rates of power shortages and competitive
labour costs, although competition for IT skills is increasing. Most data
centers in Thailand are Tier 3 Data Centers, with 99.98 per cent uptime and N+1
fault tolerant. Thailand has 96 per cent of High speed internet and penetration
rate above 4 Mbps, with average of 10.8 Mbps in Q1 2016. This combination
of infrastructure, lower wages plus ease of living is highly attractive to
businesses wishing to do business in Thailand.
e-Commerce and Digital Marketing
Thailand has a high internet penetration rate and large base (67 per cent of
population) of social media users. Facebook has 46 million users in
Thailand, versus 15 million in Australia. Instagram (11 million users) and Twitter (3.1 million active users) experienced significant growth (41 per cent and
70 per cent) respectively between 2016 and 2017. With this increase in social media
use, the market size of digital advertising in Thailand grew in 2016 to be
valued at USD $281.2 million and is the driving force behind the growth in
e-Commerce in Thailand.
e-commerce itself is growing in popularity, growing 12.42 per cent during 2015-2016
from USD $64 billion to USD $72 billion. Lazada is the most popular website
for buying online, but many small businesses have a Facebook shop where
they can answer enquiries, take orders, process payments and arrange
shipments without having to leave their home.
According to PricewaterhouseCoopers (PWC), Thailand is the largest online
C2C market in the world. The e-marketplace for consumer products is highly
competitive, while others including real estate marketplaces are enjoying
success in the market.
Fintech and Digital Startups
The number of transactions, users of mobile and online banking and
cashless cards under both bank platforms and service providers is
increasing. However the opportunity for new service or technology providers
within the cashless transaction sphere is limited, with the Thai government
itself offering a national e-payment platform PromptPay, which links
payments against mobile number and Citizen ID numbers.
Unlike most other ASEAN countries, Thais are generally well banked with
good access to personal bank accounts, but there remains a low level of
financial literacy, particularly with understanding savings and investment
strategies. While there is an opportunity for the streamlining of bank
processes, current regulation is a barrier and significant face to face
interaction is still required between consumers and their banks. Consumer
access to non asset-backed loan financing is less accessible.
Banks have recently become significant players in Thailand’s innovation
ecosystem; initiating their own startups and incubators and acting as
partners to connect API (or application programming interface - a
technology protocol that allows diverse software components to communicate)
for trials. Large corporate and commercial banks are open to and seeking
collaboration and partnership in the form of investment through accelerator
programs, or commercial partnership. In 2016, the number of VCs grew to
more than 60, and more than 75 startups funded.
Thailand is an attractive market destination with a corporate sector
receptive to new technologies and lateral business models. With most
industrial and digital sectors in Thailand having oligopoly characteristics
– with few dominating players in each sub-sector, Australian companies can
engage with key contacts and explore potential partnerships in a relatively
short time frame, but utilising the connections and assistance of Austrade
The oligarchy characteristics means firms that can offer platforms or
solutions to help grow Thai businesses vertically will always be of
interest in this market.
With a government focus on economic transformation and business focussed on
increasing global competitiveness of its established manufacturing and
services sectors, demand for IoT enabling technology, big data analytics,
cyber security, industrial software and systems is growing. Accreditation
and international reputation are attributes important to Thai companies
when considering new suppliers.
B2B e-commerce enabling platforms is seen as an opportunity, with few
competitors operating in this space.
The low level of financial literacy combined with a variety of financial
products offered in the market means there is opportunity for
robo-advisory, gamification, and data analytics. Simplifying processes and
gamification tools to change the ways banks operate are areas banks are
exploring, however systems remain constrained by regulation.
Insurance companies and advisory firms also look for Insuretech. With a
government plan to launch national (decentralised) digital ID systems, identity facilitation business is another opportunity for Australian
companies to explore.
Depending on the level of market saturation and qualification of existing
players, some areas such as broadband internet service may be highly
competitive. Nevertheless, some telecommunication companies prefer working
with a limited number of partners in order to handle projects more
Major American technology companies, such as Cisco and IBM, and the strongest
Chinese newcomer, Huawei, have strong presence in the market. Thai
companies see technology companies with presence in the market as more
trustworthy and believe local presence would better support their business
and assist with troubleshooting. To avoid high-risk investment in setting up
office, Australian companies may look to local technology companies to
represent them in approaching customers in the market at the first stage.
With regards to industrial or specialised software and embedded software
systems, some sectors such as oil and gas industries are more open to foreign participation than other sectors which develop domestically
including restaurants and food service. We should take note of long term
established relationships between Thailand and Japan in automotive and
manufacturing robotic sectors, as a result working with Japanese technology
providers to service the market may be a good market entry choice.
At consumer level, we have not seen new entrants who are technology
disruptors, given large corporates and banks are dominating markets due to
their credibility, service coverage and extended relationship which
creates barriers of entry. As industry evolves, we may see some structural changes as small players work aggressively to gain market shares.
Australian companies who have unique preposition and have gained reputation
regionally still have a chance.
The local e-marketplace in the C to C segment is highly competitive,
requires Thai language, local payment options and substantial marketing
effort in order to attract customers to sites. Cross border transactions
are required to comply with traditional import duty regulations, however
consumers are experienced in making international purchases, through sites
such as Amazon.
Banks and financial institutions are interested in financial technologies
to create better customer experience, reduce costs and broaden their
financial product portfolio. They prefer to work in partnership with proven
fintech companies, and are very open to international collaboration.
Tariffs, Regulations and Customs
The Thai government through the Board of Investment offers a wide range of
tax and non-tax investment incentives including corporate income tax
exemption, waiving of import duty on machinery and raw material, permission
to bring in expatriates, permissions to own land and take or remit foreign
currency abroad. For more information, please visit the Thailand Board of Investments.
With regards to Fintech, the Bank of Thailand and Securities and Exchange
Commission have opened a fintech regulatory sandbox to enable developers to
experiment their services and business. Regulators are invited to consider drafting or
revising laws and regulations including proper eKYC (Know Your Customer)
and national digital ID to open access to potential use of technology.
Marketing your products and services
For the IT and software sector, offerings in the market should take into
consideration some specific constraints such as the ability for government
to setup annual maintenance budgets and training services. In many cases,
Australian companies must demonstrate the ability to convince customers the
long term benefit of employing their technology, by that it may also mean offering total package solutions together with local consortium or system
integrators rather than individual unit or segregrated systems whose price
per unit is higher than that of competitors. Also important to note is that when dealing with
state-owned enterprises and government, companies may also be required to
designate local representatives in order to comply with the companies’
procurement rules and standards.
Business should take into account cultural context, language issues, and
level of compliance for example, some KYC (Know Your Customers) standards
and practices in Thailand are still rigid and administrative (eg.
self-declaration in Australia VS due diligence in Thailand) , as a result
Australians who do not understand this context may be perceived as in a loose control solution.
For manufacturing and industrial technology, given the dominant role of
Japanese supply chain in Thailand, it may be wise to consider working with
established Japanese technology providers in Thailand who have a customer
base to support expansion in the market. Due to relatively low labour costs,
targeting SMEs are reluctant to invest in technology. This means either
Australian companies not focusing on SME levels need to be prepares to
educate their customers and clearly point out cost benefits of automation.
Fintech and Digital Startups
Generally, Thai established corporates are receptive to work with
Australian companies who have a certain degree of good business or have a record of expansion, to help develop the market for Thailand and CLMV (Cambodia,
Laos, Myanmar, Vietnam) countries. Dealing with these companies and VC
under them also let to market channels and and connection which strongly
Australian Fintech and Startup brings along matured experience that are
integrated into offered technologies, and as a result it is deliberate and
create good user experiences. We believe this is the area that should be
highlighted when discussing with allies and partners in the market.
Links and industry contacts
Thailand-Australia Free Trade Portal
Thailand’s Board of Investment
Ministry of Digital Economy and Society
Office of Digital Economy
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