Thailand's digital economy accelerated?

– Cr. Chayanid (Mint) Kovavisarach
kovmint@gmail.com

Ben Kiatkwankul
rkiatkwankul@mcg-asia.com

At the time of writing, the novel coronavirus has infected over 3 million people worldwide. Labeled as a ‘pandemic’ for the first time in over a century, COVID-19 has shaken the fundamentals of life as we know it. Many countries have resorted to complete lockdowns and closing borders resulting in mandates for working remotely, the more commonly known phrase being ‘work from home’, and a market-driven spike in e-commerce. Necessitating the migration of life as we know it into the online sphere, an analyst with research from the global technology market research firm, IDC told Financial Times that this pandemic may have accelerated the communications and collaborations market by seven years.

In Thailand, video conferencing app Zoom became a household name amongst other apps launched by Google and Microsoft; delivery services such as Get, Grab, Foodpanda, and LINE MAN instantly became an essential need. The Minister of Digital Economy and Society has combined efforts with telecommunications operators and platform providers such as those mentioned above to help not only support the operations of companies but the continuation of youth education and advancement of health services.

The compulsory shift towards technology is particularly beneficial for the realisation of Thailand 4.0, a visionary scheme that aims to transform Thailand into a value-based and innovation-driven economy, relying significantly on technological innovation and advancement. Social distancing has – and will continue to – lead to new, innovative ways of consumer patterns which will stay in trend and our exponentially increased online footprint allows big data to capture our new preferences and interests. Enabling key stakeholders within the e-commerce industry with this newfound and reliable insight, it is entirely possible for us to see a big expansion of tech companies in both efficiency and prevalence, ranging from Lazada, and Shopee, to food delivery services such as Grab and LINE MAN, and could very well include other traditional retail businesses, Central Department Store, The Mall Group, OneSiam (Siam Paragon, Siam Center, and Siam Discovery), or even Thailand’s largest duty free outlet, King Power.

Students and alumni of Thai universities have also gathered in Facebook groups dedicated to members of each institution in a form of social marketplace, for example Chulalongkorn University, and Thammasat University. Hyped and busy, each group holds together over 100k members trading and discussing ways to survive during the pandemic. From solely providing platforms for third-party vendors, we may see the expansion into production of ‘approved’ versions of products, similar to what we observe at Amazon.

COVID-19 and the pressure it places on certain various goods and service providers to venture into the online sphere will not only empower Thailand tech giants further but force both citizen and government hands to exponentially improve tech literacy and competence. With current and prospective changes in consumer behaviour, we will most likely see expansions throughout logistics and e-marketing companies as well as cross-industry once competition fiercens up. We are already beginning to observe this with Grab’s experimentation in the finance industry in providing micro-loans. As the pandemic changes the rules of the game, we will see more clearly the fluidity and agility of individual companies, raising themselves as trailblazers in an increasingly dynamic and intersectional economy.

The central bank has played a key role in exploring the transformation towards a digital economy. The central bank has experimented with the idea of a national digital ID (NDID) that would verify customer identity with greater convenience. Through this, the central bank verified NDID would foster growth in digital loans with attractive interest rate offers as a result of greater accuracy in credit scores all while enabling convenience of Thai citizens. The Bank of Thailand has also been collaborating with eight local banks to explore the use of blockchain in developing a Central Bank Digital Currency for domestic wholesale fund transfers. We also briefly touched upon this in our previous article, noting that Dr Veerathai Santiprabhob, Governor of Bank of Thailand, participated in the World Economic Forum at Davos for guidance and advancement of the project. Phase II of the project has already started in February, which includes delving into the use of blockchain-based debt instruments to reduce logistics times for interbank trading, uses for regulatory compliance, and data reconciliation. The final phase entails collaboration with Hong Kong Monetary Authority to investigate the use of blockchain for interoperable ledgers for international fund transfers.

Yet, to ensure follow through of these projects, the Thai government should consider loosening its grip over data and electronic equipment. In recent years, Thailand has been closely following China’s governance style, passing a cyber security bill that grants the government the right to seize data and electronic equipment without a court order in the interests of national security as well as ensuring that information of citizens must be stored in-country and accessible on demand to authorities. Almost counterintuitively to this mentality, a Personal Data Protection Act which will come into force in May 27 is modelled the GDPR laws established in the EU and will be regulating all private entities’ use of personal data.

Nevertheless, under the Prayuth regime 2.0, the state has been able to establish some form of hierarchical capitalism, “characterised by their crafting of a hierarchical mode of economic participation and reinforcement of power asymmetries in the economy, in the circumvention of a ‘level playing field’ competition”. With increasing cooperation between the current administration and business tycoons, a coordination between these two interest groups is most likely to form. Concurrently, while some Thais may oppose greater surveillance on personal data, it is likely that COVID-19 will push people to prioritise life and well-being as well as stability over online privacy.

With these images in mind, the question thus turns to the effect of digitalisation on ordinary Thais. From working-from-home modalities and remote learning for students to e-commerce and delivery of health services, it has become glaringly apparent that the COVID-19 survival kit rests on the assumption that individuals are connected online and have the skills to engage in the world of information. Though there has been an increase in connectivity reach, 25% of the population remains offline, which demonstrates dire conditions under current circumstances. Currently, there is also a shortage of skilled and knowledgeable members of society to translate into the workforce for a digital economy, reducing the competitive advantage enjoyed by tech companies in Thailand. According to the UNDP Human Development Report 2019, this digital gap can ‘become barriers not only in accessing services or enabling economic transactions but also in being part of a ‘learning society’. This gap has become ever more glaring over the past several months and the impact of this gap will only become more severe in the upcoming months, as the country grapples with a transforming society and the recovery of the pandemic. It is thus also imperative that the advancement of the private sector and digitalisation of the public sector does not come at the cost of Thais being left behind: the technological environment that emerges at the end of the pandemic must be progressive as well as inclusive.

Maverick says:

The outbreak of COVID-19 has undoubtedly accelerated the development of Thailand’s digital economy, necessitating a major adjustment of businesses and way of life of individuals to the imposed social distancing mandate. Like many countries around the world, the Thai administration has ordered businesses to shut down their physical stores, causing a chain of losses to economy at the macro- down to the micro-levels. The archaic bureaucratic process of the Thai government has also seen adaptation of digital technology into many aspects of its operation. Recently, the Thai administration has also recalled the regulation legitimising virtual meetings, and is drafting a bill to officialise meetings, such as AGM, to be able to legally conducted through electronic means. “e-Meetings” had not been recognised by the Thai law until 2014.

While huge effort is being put into flattening the curve, this shift towards a more digitised lifestyle inevitably will force the government to think long and hard about the ways to regulate and facilitate the growth of e-businesses. Critics have voiced against the series of digital laws which offer too much authority for the government to intervene, and some targeting only at pinning large tech firms under the government’s control. Unlike before when the digital market was dominated by large conglomerates, the COVID-19 pandemic has changed the landscape quite rapidly as smaller players and start-ups are becoming more creative and taking their brick-and-mortar storefronts online. We hope thus to see digital laws be more democratised and more accommodating for technology development.

Important Digital Laws for Business:

Electronic Transactions Act B.E. 2544 (2001) (English)

• Amendment No. 2 B.E. 2551 (2008) (English)

• Amendment No. 3 B.E. 2562 (2019) on e-Signature and e-Contract (Thai)

• Amendment No. 4 B.E. 2562 (2019) on Digital ID (Thai)

Computer Crime Act B.E. 2550 (2007) (English)

• Amendment No. 2 B.E. 2560 (2017) (English)

Cybersecurity Act B.E. 2562 (2019) (English)

Personal Data Protection Act B.E. 2652 (2019) (English)

Emergency Decree on Electronic Meetings B.E. 2563 (2020) (English)