Innovation in Thailand

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Thailand has performed substantially in terms of GDP growth and lowering unemployment rates over the past decade.

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Thailand’s economic development has helped provide an excellent climate for foreign investments. FDI inflows into the economy from Japan, Singapore, Hong Kong, the USA and China have been increasing. More opportunities have been provided for foreign investments. Although EU Science, Technology and Innovation based companies have been less active, they have the opportunity to consider investments in Thailand.

Background: Thailand's economy ranks as the 8th largest economy amongst the 48 Asian countries, with a GDP of $543 billion. The economy also boasts one of the lowest unemployment rates in the world of 0.8% (2020). In addition, Thailand has a low level of public debt and growth has been overall consistent over the past decade.

Governed by a Monarch, Thailand has a “command economy” in which market operations are strongly regulated by the government.

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False

Foreign investors do not have to worry about over-burdening government regulation and can enjoy economic freedoms, operational profits, the ability to own private property and fair competition. The limited government involvement allows for an economy based on a level playing field.

Background: Thailand has a mixed economy - with a strong private sector, combined with good economic planning and fair government regulation. A strong open market remains the fundamental development strategy for the country in its aim for economic prosperity. To provide further context, Thailand ranks well in terms of economic freedom (especially in business freedom, labour freedom and monetary freedom) – with a score of 69.7, making the economy the 42nd freest country in the world included in the 2021 Economic Freedom Index.

Thailand is an agricultural-based economy.

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Thailand’s continued pursuit of a service-based economy provides many opportunities for foreign companies operating in the service sector (including financial services, health, education and tourism) and ensures economic growth.

Background: Prior to globalisation in the late 1980s, Thailand was an agricultural-based economy. This is no longer true, as the country has shifted into a service-based economy, with services contributing to almost two-thirds of the GDP (World Bank, 2020). The service industry provides around 17 million jobs, approximately 40% of the total labour force. The government plans that services further develop, to form 70-80% of the GDP in the coming years. The continued commitment to reform Thailand’s service sector can help drive the country’s long-term growth.

Thailand has been achieving excellent growth in R&D spending.

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Foreign R&D focused companies can more comfortably operate in countries that already have a strong R&D sector. The Thai government and private investors have already invested more than €30 billion in areas such as environmentally sustainable smart cities, digital technology parks, fast rail links, sea ports and other facilities.

Background: Thailand’s public and private sectors invested a record 1.11% of the GDP in R&D in 2019. Thailand expects the spending on research to increase to 1.23% by the end of 2021 and up to 2% in 2027. R&D expenditure is likely to focus on mobilisation of the bio, circular and green economies for sustainable growth, innovation-driven restructuring of the industrial and service sectors, as well as support of science and innovation for the country's development.

Investment in infrastructure is the main driver of tourism in Thailand.

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Although the country has invested well in its tourism infrastructure, it can be argued that the driving reason behind Thailand's tourism popularity is the people, the culture and the natural environment. As tourism has grown in Thailand, it has created a snowball effect – driving more business opportunities and jobs.
Also, though the global pandemic has caused tourism activities to slow in 2020, Thailand expects tourism growth to re-start from the end of 2021. (For more information, read the CUBE IN article "Understanding the Tourism Industry in Phuket, Thailand")

Background: Thailand’s geographical location in the heart of Southeast Asia and its well developed infrastructure makes the country an important regional hub for tourism. It is recognised for its cultural tourism, vibrant cultural heritage and natural beauty. In 2019, the Global Destination Cities Index ranked Bangkok as the top city destination, with 22.78 million visitors surpassing Paris and London. The tourism industry is one of Thailand's main economic sectors, accounting for 6-7% of its GDP.

Thailand is on the road to graduating from an upper middle-income to a high-income country.

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By the late 2030s, Thailand will likely be a completely different market. It is on the road to becoming a high-income country with an economic climate that encourages firms to invest, research more and have the confidence to take risks and innovate. In addition, higher living standards and an improvement in life expectancy is anticipated, making the Thai economy one of the best places not just to operate businesses but also to live!

Background: Thailand has developed a robust national plan for economic resilience. The idea is to move towards a high-income country by 2037. This move will be implemented through a 20-year national strategy (2018-2037), in which the government aims to drive Thailand towards being an innovation-driven economy. The plan, in line with Thailand 4.0 vision, will nurture Thailand's economy with an efficient, self-contained environment capable of fostering production and innovation.

In recent years, Thailand has gone down the rankings in the ease of doing business.

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Government policies, and entrepreneurial and open market culture have all played a role in improving the ease of doing business in Thailand and attracting domestic and foreign investment.
Foreign investors can enter the Thai market through public-private partnerships. Indeed, the government has been stressing the importance of such collaboration models and investors that can benefit from subsidies and beneficial tax policies.

Background: Thailand has made some impressive gains in recent years in the World Bank's Ease of Doing Business index, moving from 46th to 26th to 21st position in recent years and ranked as “very easy” in doing business. The Thai government has an ambitious goal to further raise the country's standing in the ranking and to jump to the top 10 by 2022. The steps being taken to reach this goal include improving digitalisation, providing access for skilled labour, pivot towards e-commerce, reduce bureaucratic hassles and prioritise business transparency and public-private partnership.

Government policies and programmes are great drivers of entrepreneurship in Thailand.

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False

It is beneficial for governments to implement policies and programmes that help create networks and develop a community of entrepreneurs, in which ideas can be shared and collaborations facilitated. The Thai government has indeed been providing such policies and programmes, helping put Thailand on the map as one of the leading economies in entrepreneurship and innovation in the region.

Background: Based on the GEM Thailand study (2020), the top three fostering factors for entrepreneurship in Thailand were government policies, entrepreneurship skill-sets and internal market openness. This is fueled by the ASEAN Economic Community (AEC) and EEC (Eastern Economic Corridor) activities of the government.
To encourage entrepreneurship, the Thai government has also helped implement activities such as a one-stop-shop service for start-up entrepreneurs, including government, universities, banks and venture capital providers. The government has also helped establish decentralized government agencies which can be easily reached by entrepreneurs and which operate transparently.

What drives tourism in Thailand? Does the monarchy interfere in the economy? Find your answers in our quiz about innovation in Thailand!

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