Thailand’s digital economy has expanded tremendously in recent years and is poised for additional growth. In line with this, the Thailand 4.0 strategy seeks to turn the nation into Southeast Asia’s innovation and knowledge-based digital centre.

The country is well on its way. The European Centre for Digital Competitiveness classified Thailand as the second most digitally competitive country in 2020, attributing its success to expanding its ecosystem and the region’s shifting perspective toward recognition.

Despite the considerable growth potential for Thailand’s digital economy, the country faces several obstacles to reaching its full potential. These include a digital talent shortage and a delay in the adoption of digital solutions by small and medium organisations.

Both the public and private sectors are eager to learn about successful digital transformation methods as they recognise such insights are critical for businesses to survive and grow in the current digital landscape.

Fostering Digital Transformation and Competitiveness in Thailand

In an exclusive interview with Dr Kasititorn Pooparadai, Senior Executive Vice President, Digital Economy Promotion Agency, Ministry of Digital Economy and Society, Thailand OpenGov Asia explored the nation’s digital transformation journey.

Dr Kasititorn shares that the country has achieved its national target in the Thailand Digital Economy and Society Development Plan, which is in line with Thailand’s 20-Year Strategy. To fully integrate digital technology into every aspect of business in Thailand, they have been working on this plan since 2018.

This national plan is comprised of 4 phases 1) digital foundation 2) digital inclusion 3) full digital transformation and 4) global digital leadership.

“We are off to a solid start as our first two phases have been successfully implemented and influencing Thai’s economy are currently in the third phase.”

Even a cursory observation shows that there is a high level of digital awareness among Thai people, while analysed data reveals more.

As per a survey by the National Statistical Office of Thailand, 93.8% of the country’s population use mobile phones and 68.1% take advantage of mobile banking in 2021, giving Thailand the top spot in the world. In addition, 86.3% use the internet and 87.7% have access to the internet at home.

Dr Kasititorn emphasises that Thailand is very well equipped for the impending transformation that it will experience soon. “To bolster the depa’s efforts through the Digital Economy Promotion Master Plan, we have been supporting the use of digital technology in diverse sectors, starting with agriculture, manufacturing and services and moving on to communities to progress towards Thailand 4.0.”

As of today, most industries have already surpassed a 2.0 digital density index, with the service sectors like finance and tourism leading the way.

To cater to the demand side of the digital economy, the depa also promotes the supply side, including digital entrepreneurs and suppliers. As a digital workforce is essential for effectively transforming the nation, the depa has been working with various groups of individuals for training, retraining and upskilling.

“We aspire that Thailand achieves digital transformation on a national scale with all sectors and all groups of people embracing digital technologies,” says Dr Kasititorn.

They intend to accomplish this goal by first, getting all sectors, particularly SMEs, ready for digital transformation. The industry must recognise the power of digital technology that could support the expansion of their businesses. This strategy makes use of mechanisms like awareness-raising, capacity-building, business matching and finance in the form of incentive vouchers for matching money.

Second, increasing the capacity and standards of digital service providers. Without dependable digital services, indigenous industries would not be able to achieve digital integration. The depa strives to increase the capacity and level of service offered by digital service providers.

The standardisation voucher, startup fund, RDI fund, and other similar funds are all tools used to assist digital service providers. To ensure that the sector has enough talent to fuel the development of product and service innovation, the digital industry can also be promoted through the development of its human resources.

Third, Building a digital ecosystem in Thailand. Thailand Digital Valley (TDV) aims to build Thailand’s digital ecosystem and prepare Thailand to serve as an ASEAN Digital Hub.

TDV will stimulate investments from top-tier technology corporations and startups while promoting the growth of digital services and technologies. TDV will also support the development of Thai entrepreneurs and digital service providers’ competitiveness and competence so that they can compete on a global scale.

When asked if digital transformation needs a cultural paradigm shift, Dr Kasititorn concurs. She is convinced that such a shift results from the necessity to alter the entire system. For entrepreneurs to transition from the analogue era to the digital one, they must adopt a new and distinct style of thinking.

A great example of the need for a perspective is the agricultural sector. According to the study findings of the depa’s Digital Density Index Series 2021, the concentration of digital technology adoption in agriculture (ranging from 1.0 to 4.0) is still around 2.0 at every step of production.

Most farmers who do not use digital technologies are inexperienced small farmers with limited resources. Given that Thailand is primarily an agricultural country, the sector may need to undergo the greatest change.

It must transition from the traditional labour-intensive one to the technology-intensive one. For instance, using drones, robots, sensors, big data and artificial intelligence for farm operation and supply chain management.

For the agriculture sector to be digitalised, there will need to be a paradigm shift in mindset, significant investment in training new generations of farmers and substantial initial expenditure.

Most Thai manufacturing companies already understand that they must embrace digital transformation if they are to survive and grow in the new era of production. As manufacturing involves a significant amount of business and technological expertise as well as long-term investment commitment, businesses are cautiously and slowly transitioning to the digital era.

To support this, it will be necessary to leverage technologies like ERP, IoT, Big Data, AI, Advanced Robotics, AR/VR, and 3D printing for a variety of purposes, including cost-cutting, boosting productivity and operational efficiency, managing supply chains and developing new goods and services.

Finally, when it comes to the service sector, Thailand’s tertiary companies have made significant progress in their digital transformation efforts. Tourism and allied businesses, transportation and logistics and finance and banking are the main industries that have excelled in the digital revolution.

The tourism sector has undergone a significant digital revolution, as most tourists now buy goods and services online. Thailand has gradually digitised its transportation and logistics systems, which has had a multiplicative impact on the effectiveness and productivity of other economic sectors. Sectors like health and education that are undergoing constant digital transformation come after these top performers. As across the globe, Thai banks and other financial institutions have long since gone digital, ensuring almost all offerings and services can be availed offline.

The third phase of the Digital Thailand programme, which aims to fully integrate digital technology into every sector, is now underway in Thailand, according to Dr Kasititorn. “We have done quite well in terms of basic telecommunications infrastructure with numerous wired and wireless networks nationwide to provide services at a relatively affordable rate with exceptions on the very remote area.”

At this point, Thailand’s challenge is to make sure that these networks are utilised to their full potential. In the agricultural, industrial, and service sectors – which employ practically all the labour force in the nation – they are attempting to speed up the transformation.

During the post-pandemic period, the industrial sector showed signs of improvement while sharing a 2.0 digital adoption rate. The service SMEs that are still falling behind will require more attention, even though the service industries may have been performing relatively well in the digital transformation.

To encourage stakeholders across all industries to go outside of their comfort zones and begin their digital transformation processes, it is still of utmost importance to inform them about the potential that comes with digital technology and innovation.

“We do this with various kinds of support from financial incentives such as tax reduction, exemption, grant funding, and matching funds to non-financial measures such as capacity building, networking, business matching and technical support,” Dr Kasititorn asserts.

Increasing Thailand’s Digital Transformation for Future Landscape

According to Dr Kasititorn, digital transformation is the process of inducing and designing changes that are required to disrupt present processes or practise – at the organisational, industry, or national levels – and is supported by digital innovation. It is necessary to take a comprehensive strategy for transformation, and technology is only one component of what must be done.

At the national level, it frequently entails changes in the thinking of all players involved, notably leaders, as well as laws and rules governing how the country and government operate. In terms of technology, one must recognise that digital is not just an enabler but also a disruptor, necessitating a new way of thinking and planning.

“To drive Digital Transformation in Thailand to make big changes, we should not be only technology users but also be able to build the capacity to create and generate digital innovation along the way.  With this, we need to build human capital in both qualitative and quantitative terms,” Dr Kasititorn says emphatically.

She has been involved in at least five national ICT policies during his nearly 20 years of research.  The latest and current one is the 20-year Thailand Digital Economy and Society Development Plan, driving towards Digital Thailand. She believes that all her research contributes somewhat to the policy-making process and categorises his research into two different groups.

The first group is the research conducted with the drafting of ICT policy or plans as the objective from the outset.

The second group of research is to conduct research on specific issues ranging from research on the current and future situation of the ICT industry and markets to an international trade negotiation affecting the ICT and digital industry. “Normally, we provide policy recommendations which translated into internal policy or strategy preparation.  We are not typically part of the negotiation process, though.”

As a part-time lecturer, Dr Kasititorn teaches courses on either ICT public policy or the socioeconomic implications of technology. “I frame my course in such a way that I will use my practitioner’s experience working in the policy arena to extend the student’s breadth of thinking, rather than theory.”

In this approach, she hopes that learners would grasp Thailand’s digital ecology and terrain, as well as the rapid changes that occur. She wants people to deeply comprehend the socioeconomic progress that digital technology has driven or influenced. “However, I intend to demonstrate how society can determine the path of technology, as well as the interplay between many elements and stakeholders. I like to bring global and national phenomena into the classroom to spark discussion.”

By 2027, most Thais should have inexpensive access to wired and wireless (4G/ 5G service networks), as stipulated by the 2nd Digital Economy Promotion Master Plan (2023–2027), led by the depa, and possess a suitable level of digital literacy. With almost 100,000 digital-based businesses, Thailand’s real-world industries are expected to reach the 3.0–4.0 stage of digital adoption.

The foundation of practical applications that result in long-term socioeconomic effects will be digital technologies such as 5G, IoT, Big Data, AI, Robotics, Blockchain, AR/VR. Robots and AI, for instance, will replace labour-intensive industries like agriculture, manufacturing, and even the service sector, increasing productivity and revenue.

“As a result, we anticipate integrating digital technology and innovation across all sectors – agriculture, manufacturing, and services – to boost the GDP of the nation,” Dr Kasititorn explains.

Included in the 5-year term, the 2nd Digital Economy Promotion Master Plan (2023 – 2027) has been developed to focus on 4 strategies.

1. Reskill, upskill, and fill a digital talent pool to create 500,000 digital workers for the digital economy and society;
2. Transform the traditional economy into a high-value digital economy, with targets of 100,000 digital-based firms and all actual sectors, including local communities, reaching a Digital Density Index level of 3.0;
3. Create new opportunities and inclusive economic development, with one city ranking among the top ten livable smart cities in the world and around 95% of people having digital access and literacy; and
4. Optimise the usage of digital infrastructure with the goal of establishing two new significant digital infrastructure projects to build up deep-tech capability and attract three global technology companies to invest in Thailand.

Dr Kasititorn added that to ensure long-term growth, they are constructing a digital ecosystem with the necessary infrastructure. Thailand Digital Valley (TDV), a 12-acre digital innovation centre located in Thailand’s Eastern Economic Corridor (EEC), has been built for this aim.

The TDV consists of five cutting-edge buildings equipped with the necessary infrastructure, innovation labs, and a digital ecosystem for world-leading technology firms and Thai digital startups to coexist, fostering the kind of synergy that will aid in the development of new digital products and services that to be sold in both domestic and global markets.

Investors in this special economic zone are also entitled to tax and non-tax benefits such as up to 13 years of exemption from the company and personal income tax, flat-rate personal income tax, and Smart VISA privileges.

Thailand’s primary priority is expected to be digital transformation. The final objective cannot be accomplished just by the government but must be accomplished in partnership with alliances and partners both at home and abroad.

“Our digital vision for Thailand 4.0 is solid, but the sharing of ideas and views is critical to the mission’s success,” says Dr Kasititorn.

The country is looking to explore partnerships and relationships that contribute to the country’s development as well as the world at large. In this vein, she is excited to collaborate with OpenGov Asia and its international networks to identify new opportunities and projects to help Thailand realise its digital potential.