Thailand

Index performance

Survey highlights

• 47% say their business unit stores most or all of its data in the cloud

• 62% have five or more digital partners

• 67% say government policy will be important to the success of their own digital transformation

#8

Overall

#8Digital

infrastructure

#8 Human capital

#8

Industry connectivity

Overview

At 8th place, Thailand ranks in the bottom half of the Asian Digital Transformation Index, behind the region’s more technologically developed countries but ahead of India, the Philippines, and Indonesia. Multiple weaknesses weigh the country down in all three pillars of the Index—digital infrastructure, human capital and industry connectivity. Anecdotal evidence suggests that network and other digital infrastructure has improved in recent years, as has support for technology entrepreneurs. Like their neighbours in South-East Asia, Thailand’s businesses are constrained by shortages of skilled digital and other technology talent. The digital transformation environment has also suffered from inconsistent government support for, and policies toward, digital development.

Overall Score

Average 45.8

1. Singapore 75.6

2. South Korea 72.5

3. Japan 70.7

4. Hong Kong 65.7

5. Taiwan 65.1

6. Malaysia 42.0

7. China 33.9

8. Thailand 23.9

9. India 19.3

10. Philippines 18.8

11. Indonesia 16.0

The environment for digital transformation

Policy weaknesses in areas such as ICT law-making and support for ICT development, amongst others, do much to explain Thailand’s 8th place ranking in the digital infrastructure category, ahead of only Indonesia, the Philippines and India. No more than 18% of Thailand business executives surveyed by the EIU say the country has been ‘very successful’ at providing a conducive environment for its companies’ digital transformation, most respondents (60%) deeming it ‘somewhat successful’.

In terms of access to different categories of ICT infrastructure, such as affordable broadband networks, 4G mobile networks and others, Thailand trails most of its Asian neighbours. However, according to Jérôme Le Louer, an entrepreneur who has co-founded three online businesses in the country, network infrastructure has improved considerably in recent years and is adequate for most companies’ needs. This progress helps explain Thailand’s steady improvement in recent years in other global ICT indices, such as the World Economic Forum’s Networked Readiness Index.

The survey respondents indicate, moreover, that they are able to make ample use of advanced digital technologies, such as data analytics and networked sensors (which power the Internet of Things).

A dearth of technology talent, however, is a significant constraint on digital development efforts of Thai businesses. Like most countries in the Index, the shortages are particularly acute in

advanced digital fields such as data analysis, UX (user experience) and design. According to Mr Le Louer, even big companies have problems hiring these experts, such that poaching from tech start-ups is commonplace. “The large firms just double their salaries; small companies can’t compete with them.”

The frontline: digital transformation of businesses

Those Thai businesses that are pursuing digital transformation are generating results, judging by the survey. Nearly nine in 10 respondents (87%) say their investments in digital transformation have already proven their value. Most of the digital initiatives undertaken to date appear to have been in pursuit of marketing objectives: social media has been by far the major technology focus of digital transformation initiatives, as stated by 72% of respondents. Looking ahead, they expect a greater focus on areas such as process automation.

Half of executives in the survey group report that cost savings have been the chief benefit of digital transformation efforts thus far. Large numbers, however, also say they’ve benefitted in other areas. This includes expanding their reach into new markets (45%), as well as developing more innovative ideas for new products and services (42%).

The benefits notwithstanding, Thai businesses experience numerous difficulties in pushing through digital initiatives. As indicated earlier, skills shortages hold companies back as do weaknesses in broadband infrastructure. Obtaining financing for digital projects can also be a significant impediment, the survey respondents report. Arguably tougher obstacles, however, are found in the offices of senior management. Half of respondents—the largest share in the survey—report that a lack of strategy and new ideas are the chief impediment they face in pursuing digital transformation. Another 43% point to a lack of technology solutions within their organisation.

The greatest impediments to digital transformation at respondents’ companies (top responses)

1. Digital Infrastructure

Average 47.9

1. Singapore 80.1

2. South Korea 74.4

3. Hong Kong 70.7

4. Taiwan 66.5

5. Japan 63.5

6. Malaysia 53.7

7. China 36.4

8. Thailand 22.5

9. Indonesia 19.3

10. Philippines 18.8

11. India 17.9

2. Human Capital

Average 46.0

1. South Korea 82.2

2. Japan 80.2

3. Hong Kong 76.1

4. Singapore 74.5

5. Taiwan 68.0

6. Malaysia 42.5

7. China 28.9

8. Thailand 20.6

9. Philippines 16.3

10. India 10.8

11. Indonesia 5.7

3. Industry Connectivity

Average 39.7

1. Japan 78.9

2. Singapore 64.7

3. Taiwan 57.8

4. South Korea 55.2

5. Hong Kong 40.4

6. India 33.6

7. China 33.3

8. Thailand 31.9

9. Philippines 20.5

10. Indonesia 11.0

11. Malaysia 9.2

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10

20

30

40

5050%

43%

25%

22%

40%

Lack of strategy and/or new ideas

Lack of technology solutions within the organisation

Lack of nancing

Lack of managem

ent support

Lack of talent, e.g. difculty in

nding em

ployees with digital skills

Digital connections

Few companies will be able to succeed in the digital economy going it alone. Leveraging external resources and knowledge through collaborative associations with other companies, networks and communities will be integral to helping build a company’s digital capabilities. Involvement in open innovation communities—where data and ideas are shared that help the parties address common digital challenges—is one such form of collaboration. Seven in 10 survey respondents from Thailand say their firm has benefitted substantially from their involvement in such communities.

Digital partnerships with other organisations are another means through which companies share ideas or pursue joint initiatives that have the result of enhancing their digital capabilities. Thai companies are involved in numerous such associations, judging by the survey: 62% report being involved in five or more such partnerships, and 27% are involved in more than 10. The most frequently cited benefit from digital partnerships is more innovative ideas for new products and services.

As fruitful as their partnerships have been, the same executives acknowledge that they should be getting much more out of them. Nearly nine in 10 confirm they must get better at leveraging their digital partnerships.

Agree or disagree: Companies going it alone (without digital partnerships) will soon be a thing of the past

Agree Disagree

71%

29%

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Kick-starting digital entrepreneurship

Jérôme Le Louer is more familiar than most with the hurdles that block the path of digital entrepreneurs in Thailand, as well as the opportunities that are starting to open up to them. He has lived in the country for 12 years, working as finance director for Thai, other Asian and Western companies before becoming a local entrepreneur in his own right. In the past three years he has co-founded a small business advisory firm (smeCFO), an online beer retailer (Wishbeer) and, most recently, an online accounting service (plizz).

Thailand’s network and other digital infrastructure may be inferior to that of other countries in South-East Asia but, Mr Le Louer believes, it has improved considerably in the past five years and is now adequate to support companies conducting online business. Thailand’s

greatest weakness, in his view, has been the absence of an ecosystem to support tech start-ups. The latter are fundamental to the digital transformation of Thailand’s broader business sector, as they not only supply the software and services many larger companies use to advance their own digital development, they also provide inspiration to other aspiring entrepreneurs.

The country now has the makings of a thriving ecosystem, says Mr Le Louer, having grown substantially in just the past three years. As evidence he points, for example, to the sprouting up of several incubators, accelerators and co-working spaces supporting start-ups in fintech, healthcare technology, data services, gaming and numerous other fields. Just as important is the recent growth in venture capital funding for digital start-

ups, which Mr Le Louer and his co-founders have themselves benefitted from.

What the ecosystem needs most now, believes Mr Le Louer, is a helping hand from the government. Providing clearer rules would be a good start. “It’s currently not clear what online businesses can or cannot do,” he says. “It’s easier to set up digital ventures in countries such as Vietnam and Indonesia.” More active support of start-up accelerators and incubators would also be welcome.

Judging by the Index, the government has substantial room for improvement in its support for digital development. It ranks last in all three policy-specific indicators: ICT laws, government success in promoting ICT and importance of ICT to government vision.