Thailand’s economy has made impressive progress in social and economic development over the past four decades. It has become an upper middle-income country in less than a generation, with continuous strong growth and a broad reduction in poverty. The opportunity for Nordic tech companies in Thailand is highlighted by four key advantages: A rapidly developing country and digital infrastructure, attractive government incentives and availability of capital.
Rapidly Developing Digital Infrastructure
The next leap for Thailand is to become a high income, knowledge-based economy. The key to achieving this goal lies in the digital revolution. In order to leverage the vast social benefits of digitalization, the government of Thailand has adopted several reform strategies in recent years. Part of “Thailand 4.0” is the “Digital Thailand” -strategy, that sets out to transform Thailand into a country that maximizes the use of digital technologies to develop infrastructure, human capital, and other resources.
The long-term digital ambition is also laid out in Thailand’s 20-year strategic plan for attaining developed country status through broad reforms. The realization of this digital vision has progressed, for example with the implementation of “smart city” pilots in Phuket and Chiang Mai, with a target of 100 smart cities to come by 2022.
Moreover, large ICT infrastructure improvements are underway, such as extending the coverage of broadband internet to all villages in the country, not to mention the optical fiber submarine cable that brings cross border link between Malaysia, Cambodia, and Thailand. Additionally, the government is building cutting-edge facilities for digital companies located in Digital Park Thailand (EECD).
Thai Society Beginning to Embrace the Change
Consumer habits have shifted with the changes in environment, especially regarding purchasing behavior. E-commerce has been booming with 57 million internet users in 2018, a 24% increase from 2017. The market is valued at US$3.5 billion. Thailand Ministry of Finance strongly supports the move, and in 2017 it distributed 550,000 electronic data capture terminals across the country.
With the support of consumers and government, banks in 2019 and beyond will continue to shift more products and services to online and mobile banking platforms to claim first-mover advantages, and a larger customer base.
Attractive Government Incentives
Additional to the aggressive investment plans, the Thailand Board Of Investment (BOI) offers a wide range of incentives for foreign investors from desired sectors, such as innovation, research, and high technology. These incentives range from smart working visas to more significant ones, such as tax exemptions, that can last up to 13 years in an optimal situation. (See more at BOI Policies for investment promotion)
Regarding the blockchain movement, the Thai government has become increasingly outspoken and welcoming of blockchain projects since the start of 2018. The great progress of Thai regulators has attracted foreign companies by providing clear and explicit guidelines for foreign companies to operate in. The positive atmosphere surrounding blockchain in Thailand provides great opportunities for international blockchain companies. (Thailand – A Blockchain metropolis).
Thai Venture Capitalists Targeting Strategic Sectors
The overseas investment decisions of Thai investors are well aligned with national aspirations. The three biggest sectors targeted by Thai investors are all Tech related, claiming 91% of all the investments that are outsourced into startup companies. Thailand represents a significant opportunity for Fin- and Deep -Tech, accompanied by E-Commerce focused tech-savvy startups from the North, not only in form of a business opportunity but also in the form of potential investors. It has been estimated that there is going to be more millionaires in Asia, than in Europe or North America by 2024, and the wealthy already express growing interest in startup investments, especially from Family Office structures. The growing number of Thai Venture Capitalists during recent years is a perfect example of this. (Tech sauce)
All together Thailand represents a range of significant opportunities for Nordic startups. While competitive landscape and differences in culture and business procedures do represent challenging factors, these can be managed by proper planning and with the aid of multiple supporting organizations.
UUKU Consulting Oy is leading a workshop titled “How to build and maintain relationships with Asian partners” during the Arctic15 Helsinki. Anyone who is interested in exploring Asian internationalization and investment opportunities should join the workshop at Arctic15.
About the Author
Roope Kangas works as a COO for UUKU Consulting Oy. UUKU Consulting Oy was founded to help Nordic companies in their internationalization to Chinese and Southeast Asian markets. Founders of the company have 20 years of combined experience living and working in Asia. UUKU Consulting Oy bridges the gap between the Nordics and Asia for small to mid-cap businesses who acknowledge Asia as an important part of their long-term growth strategy.