The Digital Economy Fund will be supervised by Thailand’s National Digital Economy Committee (NDEC), chaired by the prime minister
Thailand is set to launch a THB 5 billion (US$147 million) fund aimed at growing local startups; the estimated launch date is September of this year.
According to a report by The Bangkok Post, this Digital Economy Fund will serve four functions:
- Support development of tech companies
- Increase R&D efforts
- Support the operations of the Digital Economy Promotion Agency (DEPA)
- Support the expenses of the National Digital Economy Committee (NDEC)
The Digital Economy and Society (DE) Ministry — formed last year to replace the ICT ministry — will be responsible for allocating funds to the Digital Economy Fund. An operational committee to oversee the disbursement of these funds will be set up soon.
This operational committee will, in turn, be managed by the NDEC, which is chaired by Prime Minister Prayut Chan-o-cha.
The Bangkok Post also added that, along with the new fund, “the DE Ministry, the Revenue Department and the Board of Investment are working on proper incentives packages to be offered to startups.”
Various agencies are also working with the ministry to help Thailand’s workforce become tech literate.
Launching a digital innovation park
Additionally, Thailand is in the midst of constructing a THB 10 billion (US$294 million) digital innovation park in Sri Racha, Chon Bur (Southeast of Bangkok on the Gulf of Thailand). The park will feature digital infrastructure such as data centres, cloud computing, internet gateway services and fibre optics.
It will also allow startups to access “transport and logistics such as a deep-sea port, airports, railways, expressways and CAT’s (a telecom company) submarine cable landing station,” reported The Bangkok Post.
The park, which is supported by the CAT Telecom and the Industrial Estate Authority of Thailand, is expected to launch in 2018.
Digital economy roadmap
The Digital Economy Fund is yet another piece of Thailand’s growing body of initiatives to transform the country into a disruptive tech-led economy.
This roadmap is called Thailand 4.0. To put it a broadly, it is a push to create more digital intellectual property, and rely less on traditional manufacturing industries.
For example, Thailand wants to leverage IoT and other smart tech innovations to revolutionise its agriculture sector. It also plans to accelerate the growth of e-payments in the country. This strategy, Thailand hopes, will help its workforce escape the “middle-income trap” and enter into the high-income category.
With neighbouring countries such as Singapore and Malaysia racing to become the top tech hub of the region, it is clear that Thailand wants to play catch up.
But it is important to note that the seeds of this ambition were first laid more than a decade ago. The Thai government set up the National Innovation Agency (NIA) in 2003 to foster the growth of innovative enterprise solutions. So this is a renewed drive to put tech at the forefront of its economy.
Last year, Thailand’s tech players clinched over US$108 million in funding. Although this figure has grown by 30 times growth as compared to four years ago, it is a mere fraction of what Singapore collected, which stood at around US$3.5 billion. Exit opportunities for Thai startups are also only one-third that of Singapore.
Thus, it is little surprise to see Thai government launch volley after volley of tech-focused funds and programmes — complete with enough acronyms to make your head spin — to jumpstart its tech industry.
In May last year, the Ministry of Science and Technology launched a THB 500 million baht (US$14.2 million) fund of funds (FoF), which will be channelled towards verticals such as smart cars, robotics, medical tourism, digital health, agritech, biotech, aviation, biofuels and food.
The Finance Ministry also set up a fund called the Competitiveness Fund, which will make investments in similar fields.
In addition to funding, Thailand has eased regulations for both VC firms and startups. For example, the government will waive taxes for VC investments in startups for at least the next five years; and startups can offer employees stock options so that they will be encouraged to stay with their companies.
Thailand is also making it easier for foreign entrepreneurs or tech specialists to work in the country — to the extent that it will offer permanent residence.
And speaking of foreign talent, there has been also been an uptake in foreign investments in the country.
The largest retailer in the world, China’s Alibaba, signed an agreement with the Thai government to boost the country’s e-commerce readiness. Another Chinese e-commerce conglomerate, JD, is also looking to enter the market.
Thailand also wants to make listings more accessible. To that the end, it is launching a stock exchange that will cater to startups with no revenue.
The surge in funds, initiatives and other programmes will go a long way to develop entrepreneurs and startups. But if it takes a village to raise a child, well, then all villagers will have to cooperate and work towards a common goal or the kid is going to grow up with conflicting values (and maybe, become an ill-adjusted misfit).
“Thailand woefully underinvests in its human capital, as well as its knowledge base. The percentage of the working age population with any sort of tertiary education is only 12 per cent, compared to 30-45 per cent for the other three countries,” Ark wrote in an article in e27.
Thailand also only invests half a percent in civilian R&D applications, compared to 2 to 4 per cent in other countries.
If Thailand wants to truly embrace the spirit of innovation, it also needs to find a compromise with the tech industry’s illiberal attitude towards social and political values.
As the idiom goes, you can’t have your cake and eat it.
Image credit: sepavo / 123RF Stock Photo
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