Mobile and e-commerce penetration healthy but research and infrastructure shortcomings impede progress
Low spending on research and development, coupled with "shallow" digital infrastructure that includes some of the world's slowest 4G speeds, will impede the progress of Thailand's drive towards a digital future, according to The Economist Intelligence Unit (EIU).
The country placed 49th out of 82 countries surveyed in the Technological Readiness Ranking for 2018‑22 released recently by the EIU. Within the Asia Pacific region, it scores above average in subcategories such as mobile-phone subscriptions, scope of e-government and the quality of its e-commerce business environment.
However, the country lags in terms of patent applications, R&D investment and research institutions. The country is poised to make only gradual progress on this front as it implements its long-term Thailand 4.0 plans, meaning that it will not increase its advantage over other countries in the region.
"The fundamental criterion for assessing technological readiness in our assessment is access to the internet," said the EIU. In this regard, Thailand has a middling rank: there were an estimated 37.1 internet users per 100 population in 2017, which is above the average for regional neighbours such as India (36.5) and Indonesia (27.7), but below that of Malaysia (81.2).
The EIU expects fast growth in internet subscribers and users by 2022, with the former forecast to reach 20.4 million, up from an estimated 10.4 million in 2017. The internet user penetration rate will increase to 82.4 per 100 by 2022. This will be achieved in part by public investment in infrastructure: high-speed wireless internet access in public spaces will be boosted under the Smart Thailand initiative, which plans to establish nearly 400,000 free access points around the country.
As the digital economy expands, Thailand will experience significant changes in consumer behaviour patterns, including the increasing use of e-commerce and e-government facilities. Indeed, such trends have already been striking in the country.
Thailand's e-commerce market is one of the fastest growing in Southeast Asia, with approximately 12.1 million online shoppers in 2017, according to eshopworld.com, an e-commerce technology provider. It expects the figure to rise to 13.9 million by 2021.
According to eMarketer, a research firm, in the second quarter of 2015 Thai consumers spent 155 minutes per day on smartphones, compared with 140 minutes in the Philippines and Indonesia. As of January last year, 90% of internet users accessed online content through their smartphones in Thailand.
In addition, the government is expanding its presence on the digital platform. In June 2017 the Digital Economy and Society Ministry announced plans to create two new state broadband operators with the aim of boosting internet access. The new enterprises, National Broadband Network Company and Neutral Gateway and Data Centre Company, are expected to be operational by the end of November 2018.
Shallow infrastructure in the way: Despite being poised for rapid growth in its digital economy, Thailand's infrastructure remains wanting. Long-Term Evolution (LTE) network coverage, by which networks are future-proofed for later upgrades, is expanding quickly, but take-up of these services remains low. Only around 31% of all mobile subscriptions were 4G in 2016, according to GlobalData, a market research firm.
A recent report by OpenSignal, a market intelligence company, covering the period from October to December 2017 shows that 4G availability (based on the proportion of time users have access to a network) reached 85.6%. However, the country was near the bottom of the 77 countries covered in terms of speed, at an average of just 9.6 Mbps.
Low investment in R&D (representing only 0.6% of GDP in 2017) and the lack of adequate skill levels have also held back development in this area.
"Overall, therefore, the outlook for Thailand's technological readiness is relatively subdued; a below-par performance for a country that is devoting much of its industrial policy efforts towards high-technology sectors," said the EIU.
"The risk of political instability arising from the transition back to elected government, which is expected to take place in 2019, also means that investors will be wary about making new commitments in the early part of the forecast period. In the past political transitions have been difficult and destabilising to the business environment."
"Nevertheless, we expect future governments to remain broadly faithful to the junta's 20-year National Strategy, which was first proposed in 2015," the EIU said. "This military government's Thailand 4.0 strategy also fits within this -- a sector-specific industrial policy that aims to attract new investment towards mechanisation, highly skilled labour and the digital economy.
"Such initiatives will eventually create a new line of investment opportunities in Thailand and pave the way for gradual progress in the country's technological readiness. However, we expect most of the benefits of this policy to come to fruition beyond our 2018‑22 forecast period."
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Quelle/Source: Bangkok Post, 05.07.2018
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