Promoting Thailand’s digital transformation and competitiveness - unlocking THB2.5 trillion in annual economic value by 2030

Thailand’s digital economy has grown significantly in recent years and is well-positioned for further growth. In 2020, the European Center for Digital Competitiveness ranked Thailand as the second most digitally competitive country, based on the progress made in developing its ecosystem and the shifting mindset towards digitization in the East Asia and the Pacific region. The Thailand Board of Investment estimated that the country’s digital economy is poised for greater growth and is expected to contribute about 25 percent of Thailand’s gross domestic product (GDP) by 2027, up from 17 percent in 2018. Propelled by the increasing Internet usage and growth in e-commerce, recent research by Google and Temasek has found that Thailand’s Internet economy was worth USD18 billion in 2020, and could grow further at 25 percent annually to reach USD53 billion by 2025. The government has also identified the country’s digital economy as one of the key levers of economic growth; its “Thailand 4.0” strategy aims to transform the country into an innovation and knowledge-based digital hub in Southeast Asia.

However, the country faces several barriers to unlocking its full digital transformation potential. Despite the significant growth opportunity for Thailand’s digital economy, the country faces several challenges in realizing its full potential. These include a digital talent gap and relatively slow adoption of digital solutions by businesses. A 2020 study comparing digital adoption rates by businesses across countries found that only 33 percent of businesses in Thailand were embracing digital transformation and planning to invest for the future, as compared to the global average of 59 percent. The study attributed this to the lack of digital skills and tech know-how. The low digital adoption rate of businesses in Thailand has also been attributed to a shortage of tech graduates and the perceived high cost of investing in technology infrastructure such as fifth-generation (5G) networks.

AlphaBeta’s latest report (commissioned by Google) examines the economic significance of digital technologies in Thailand, especially in non-technology sectors. This study finds that if leveraged fully by 2030, digital technologies could create up to THB2.5 trillion (USD79.5 billion) in annual economic value in Thailand.

Key messages from the research include:

  • There is a significant economic prize attached to accelerating Thailand’s digital transformation. If fully leveraged by 2030, digital technologies could create up to THB2.5 trillion (USD79.5 billion) in annual economic value. This is equivalent to about 16 percent of the country’s GDP in 2020. Although Greater Bangkok (i.e., Bangkok and vicinities, including Samut Prakan, Pathum Thani, Samut Sakhon, Nakhon Pathom and Nonthaburi) constitutes only slightly more than one percent of Thailand’s overall land area, 40 percent of the projected digital opportunity could go to this largely urbanized region in 2030 – suggesting a geographic digital divide that is important to bridge. Of the total digital opportunity, a substantial 65 percent could be driven by technologies that help businesses and workers mitigate the economic impacts of COVID-19. Beyond managing the immediate impacts of the pandemic, digital transformation will also be important to boost resilience in the post-pandemic future – the use of online e-commerce platforms, for example, will be crucial to boosting Thailand’s heavily pandemic-impacted export sector.
  • There are three areas of action required for Thailand to fully capture its digital opportunity: (i) lower barriers to digital adoption by businesses; (ii) enhance digital skills training and education, and (iii) develop a conducive environment for digital trade. While a range of policies is already introduced to accelerate digital transformation such as the “Net Pracharat” program, there is scope for Thailand to consider further actions. These include providing financial and advisory support for small and medium-sized enterprises (SMEs) lacking in digital expertise, developing support programs incentivizing firms and individuals to continue upskilling in highly demanded digital skills, and participating in multilateral digital trade agreements to establish digital trade rules (e.g., “Digital Economy Partnership Agreement” signed between Singapore, New Zealand and Chile to facilitate cross-border data flows).
  • Through its programs and products, Google has been instrumental in advancing Thailand’s digital transformation. Google has contributed to each of the three areas of action. By introducing infrastructure such as Google Cloud and online digital marketing resources such as “Think with Google”, Google enables businesses to adopt advanced digital tools and leverage data-driven insights to improve their services. Through programs such as “Saphan Digital” and “Skillshop”, Google is supporting the development of a digitally skilled workforce. “Google for Startups Accelerator: Southeast Asia” enables start-ups in Thailand to access its global network of industry partners to expand internationally. By establishing the “Framework for Responsible Data Protection Regulation”, Google is promoting the protection and privacy of data and information to facilitate cross-border data flows. The company also supports benefits to businesses and consumers. Businesses and consumers in Thailand are estimated to derive total annual economic benefits from Google’s products worth THB144.5 billion (USD4.8 billion) and THB378.7 billion (USD12.7 billion), respectively. Google also supports benefits to the wider society in Thailand. By enabling businesses to unlock new revenue streams and expand their businesses through the use of Google Ads, AdSense, and YouTube, Google indirectly supports over 63,000 jobs in Thailand. Furthermore, the Android operating system also supports more than 58,000 jobs in Thailand’s economy.
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