Tech Start-up Ecosystem in Thailand

Tech Start-up Ecosystem in Thailand

Introduction

The importance of startups in the Thai economy has risen significantly in the past few years as it has the potential to double the prospect of economic growth by drawing the interest of various stakeholders including large corporations, financial institutions, government, independent investors, academic institutions. The promotion of tech startup culture made sure that the Thai economy became more vibrant as these disruptive businesses provided new services and products through the application and creation of new and innovative technologies. 

Growth of tech start-up ecosystem in Thailand

The growth and development of the startup ecosystem and culture in the Thai economy is a comparatively new phenomenon. As per the report of the Asian Development Bank, since 2015 startups provided an additional boost and served as a development engine for the Thai economy (ADB.org, 2022). As per this report, the development of edtech, healthtech, agritech, and cleantech has contributed significantly to economic development. These tech startups have positively influenced the broader development objectives by helping small-scale farmers and agricultural labourers, constructing human capital and meeting sustainable environmental needs. Since the 2000s small-scale software businesses started to grow by experimenting with different business models. In the last decade, an enormous telecommunication business organised "AIS Startup Weekend" to foster better digital innovation and networking which improved startup activities in Thailand. During 2015-16 Thai government realised the potential of startups and admitted the success of tech startup ecosystems and Silicon Valley. 

The public-private partnership was promoted to improve the tech startup ecosystem. From 2012 to 2021, investment in startups grew tenfold in Thailand. Despite the growth of the startup ecosystem in Thailand, it is noted that tech startups, especially software startups are considered as newly appearing businesses which are anticipated to better aid business growth. In this context, a study by (Nanthaamornphong & Wetprasit, 2020) mentioned that tech startups usually go for different business models as these startups are expected to support a variety of businesses and industries in the Thai economy. Although the aims and objectives of these tech startups vary significantly, they rarely invent unique business models or adopt advanced research and technologies in their startups.

Success stories

Various tech startups in Thailand have gained significant success in the past few years. The startup ecosystem in Thailand has contributed to their success. In this context, the success of companies such as Omise, APPMAN, and Aware Corporation Limited can be considered as examples regarding the exact condition of the tech startup ecosystem in Thailand. Omise is one of the most successful fintech startups in Thailand that enables online payment in Thailand, Indonesia, Japan and other countries. As per Susilo (2020, p.157), Omise can be considered a great example of a scalable startup providing "premium online payment" services" in adjacent countries. Omise was awarded the "Digital Startup of the Year" award in the past due to its exemplary performance in the tech startup industry.

APPMAN on the other hand is a company that provides digital solutions to its clients. This company has improved its service quality by applying AI and ML technologies. This company has helped to elevate employee engagement for its client companies with AI along with providing courses and training to future HR leaders (Appman .co, 2023). Applications such as APPMAN Background Checker and AppMan E-inspector have helped its client companies deal with enormous tasks of background verification while choosing contractors and partners (Appman .co, 2023). Additionally, the HR systems of client companies have improved significantly after adopting APPMAN solutions proving the importance and success of this company in Thailand's economy. 

Aware Corporation is an IT services and Software development company based in Thailand. It designs flexible and scalable software technology and solution services for businesses (Aware.co, 2024). The company has gained multiple partners over the years by delivering exceptional technological solutions to its clients. This company noticed and efficiently utilised the potential in the cultural centre of Thailand along with making sure that Chiang Mai, the HQ of Aware Co. Ltd. is considered as a technology hub helping with further economic development of the region (Aware.co, 2024). The company has effectively provided hundreds of companies with new and modern ways and solutions to work (Aware.co, 2024). It has only been 20 years since the company came into existence and the achievements of this company thus far can be considered as testaments to its success. 

Challenges faced by entrepreneurs 

Despite immense growth in the tech startup ecosystem in Thailand, entrepreneurs in this field face multiple challenges. One of the most significant challenges for Thai entrepreneurs is the existence of vast competition in larger markets. Additionally, most of the skilled labour force is often noted to move abroad for better earning and employment opportunities (Phonthanukitithaworn, Ketkaew & Naruetharadhol, 2019). Thailand being a developing nation can not provide as many employment opportunities to its human resources compared to competitor countries which reduces the quality of skilled labour. This in turn negatively impacts the growth of tech startups in the country. Studies have shown that Thailand is a developing nation, and tech startups and SMEs in the country face new challenges regarding the exploitation of opportunities and changes that determine the survival of such businesses (Sriboonlue, 2019). Adapting to new opportunities and changes is essential for any startup to compete in the industry. Since tech startups in Thailand often fail to notice these changes and adapt to such changes, their revenue decreases.

Figure 1: Total revenue of startups worldwide and in Thailand

(Source: Phonthanukitithaworn, Ketkaew & Naruetharadhol, 2019)

As per the above diagram, it is quite evident that the revenue of startups in Thailand is meagre compared to the revenue earned by startups worldwide. Apart from certain major tech startups such as Omise, APPMAN, Aware Co. Ltd. and others, most startups lack the necessary funding and face extensive market competition to make their survival problematic. The majority of Thailand's market is dominated by a few startups leaving a miniscule space for new tech startups to develop and flourish. Additionally, startups in Thailand lack organisational readiness to deal with emerging economic and political issues and adapt according to market changes (Amornkitvikai et al. 2022). The existence of extensive market competition worldwide in the tech industry makes it even more difficult for startups in this field to thrive without having organisational readiness to adapt to market changes and make the most of present opportunities. 

Government support for innovation and entrepreneurship

The government in Thailand noticed the contribution of startups to the economic growth of the country. Hence, after 2011 government support for the development of the startup ecosystem in Thailand has increased significantly. In 2016 the government transformed the "Ministry of Information, Communication and Technology" into the "Ministry of Digital Economy and Society" (MDES) after recognising that startups need a different business environment and ecosystem to flourish (ADB.org, 2022). The "National Startup Committee" was established to brainstorm and develop ideas regarding the ways the ecosystem can be improved further. Additionally, in 2017 "Digital Economy Promotion Agency'' was set up under MDES to support startups (ADB.org, 2022). Additionally, the "Startup Thailand 2016" event was organised by the government to raise awareness about startup culture in Thailand (ADB.org, 2022). These steps by the Thai government have significantly contributed towards the growth of startup culture and improved the startup ecosystem.

Furthermore, “The Department of Industrial Promotion” was created to act as one of the main agencies for the development and promotion of startups in Thailand (Rujopakarn, 2022). This department focuses on networking and interconnection among existing, new and emerging startups. It helps create the ideal ecosystem to support the growth of startups. Expanding startup networks and capital networks ensure gaining a better opportunity towards raising funds for startups. Additionally, it also helps with market network and academic network which helps with resource development and better revenue generation. Moreover, the government has taken necessary steps to reform and restructure "The Department of Business Development" to strengthen the startup ecosystem (Thailand.go.th, 2023). The "Department of Intellectual Property'' has helped with patent protection, managing IP disputes and searching existing trademarks which is essential for any startup to gain necessary revenue and become successful in the long run. These government institutions supported startups to deal with red-tapism and legal and political roadblocks in the Thai economy which ensured better participation of entrepreneurs. 

Opportunities for Indian firms to enter Thai Tech industry

Thailand's economy is open to foreign businesses and investment and Thai consumers as well as businesses are eager to explore and find better services and products. This can be specifically applied to a dynamic sector such as IT. In this open economic environment, Indian firms can enter and thrive in the tech industry of Thailand with a competitive offering. IT security and Industrial IT are two major sectors in Thailand that require better attention for further improvement (Embassyofindiabangkok.gov.in, 2022). IT security has become a significant concern across every sector of Thai Business and Societal life. Indian companies can explore these opportunities and emerge as strong tech players in the Thai economy. Industrial IT on the other hand is a primal area of focus in Thailand and Indian companies can strive to be at the front position in developing this sector. Moreover, Indian firms can explore opportunities presented by the E-health sector in Thailand as this sector is highly fragmented.

Indian firms can bring modern telemedicine and medical technology to the Thai market to improve the overall structure and quality of e-health services. The presence of extensive opportunities in the Thailand market made the companies and even the government of Thailand invite Indian businesses to search and explore the variety of business opportunities. The private sector in Thailand is interested in cooperation with Indian firms and therefore recently Thailand has invited Telengana-based businesses from India to invest and explore new opportunities in Thailand (Thehindu.com, 2022). India has cooperated with Thailand on multiple occasions and in multiple sectors to promote the interests of both nations for the past 75 years. Thailand inviting Indian firms to invest in their economy and cooperate with Thai businesses has the potential to open further opportunities for Indian businesses to operate in Thailand. 

Conclusion

The startup ecosystem in Thailand is highly resilient and provides multiple opportunities for existing and new tech startups to flourish. The growth of startups in Thailand started during the 2000s. The Thai government acknowledged the potential of startups to contribute to the development of the Thai economy in the last decade. Various departments, and government organisations since then were established to promote a better startup ecosystem and support the growth of new startups. Despite multiple opportunities, entrepreneurs face challenges such as inadequate human resources, skill gap, the drain of better quality human resources, lack of funding and others to develop tech startups in Thailand. Despite these challenges, existing opportunities can be explored by Indian companies as Indian firms try to collaborate with Thailand's private sector. Although critical insight was gathered during this article from previous studies, government reports and newspaper articles, it seems that further research is necessary on this topic specifically concerning tech startups. Future studies therefore can focus on conditions and opportunities for tech startups present in Thailand.

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Ngawang Gamtso Hardy

Economic Analyst, Deputy Editor-in-Chief

Royal Thai Embassy, New Delhi

References

• ADB.org, (2022). THAILAND’S EVOLVING ECOSYSTEM SUPPORT FOR TECHNOLOGY STARTUPS. Retrieved on: 30 June, 2024 from: https://www.adb.org/sites/default/files/publication/817496/thailand-ecosystem-support-technology-startups.pdf
• Amornkitvikai, Y., Tham, S. Y., Harvie, C., & Buachoom, W. W. (2022). Barriers and factors affecting the e-commerce sustainability of Thai Micro-, Small-and Medium-Sized Enterprises (MSMEs). Sustainability, 14(14), 8476. https://doi.org/10.3390/su14148476
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• Phonthanukitithaworn, C., Ketkaew, C., & Naruetharadhol, P. (2019). Relevant factors for success as an online entrepreneur in Thailand. Sage Open, 9(1), 2158244018821757. https://doi.org/10.1177/2158244018821757
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• Sriboonlue, P. (2019). Strategic entrepreneurial awareness and business performance: Empirical evidence from small and medium-sized enterprises in Thailand. Procedia computer science, 158, 653-661. https://www.sciencedirect.com/science/article/pii/S1877050919312700/pdf?md5=8e0592f1a7716bcada1f7806191e9442&pid=1-s2.0-S1877050919312700-main.pdf
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