Thai­land’s Im­ple­men­ta­tion of a Dig­i­tal Econ­omy

Thai-American Business (T-AB) Magazine - - Contents - Writ­ten by: Au­dray Souche, Kraisorn Rueangkul, Ku­nal Sachdev, and Kayla Moore

Sev­eral months ago the Thai gov­ern­ment re­leased its plans to trans­form Thai­land into a Dig­i­tal Econ­omy. Prime Min­is­ter Prayuth Chan- Ocha has made clear the gov­ern­ment’s in­ten­tions to pro­mote the use of in­ter­net in busi­ness and gov­er­nance and has made plans for dig­i­tal­iz­ing the econ­omy a key ini­tia­tive of his regime. Our ar­ti­cle looks at the sta­tus of the dig­i­tal econ­omy ini­tia­tive and out­lines what can be im­me­di­ately ex­pected ( based on an un­der­stand­ing of sim­i­lar ini­tia­tives across the globe) and how the dig­i­tal econ­omy will af­fect busi­nesses in Thai­land.

WHAT IS A DIG­I­TAL ECON­OMY?

In lay­man’s terms, a dig­i­tal econ­omy refers to an econ­omy that is based on dig­i­tal tech­nolo­gies and the In­ter­net with the aim of cre­at­ing smarter cities. In re­cent times, due to the high pen­e­tra­tion of tech­nol­ogy in our lives, the dis­tinc­tion be­tween a “nor­mal” econ­omy and a “dig­i­tal” econ­omy has be­come blurred. This am­bi­gu­ity is also present in Thai­land; even be­fore the pro­posed re­mod­el­ing of Thai­land into a dig­i­tal econ­omy, con­nec­tiv­ity has be­come a way of life for ev­ery­day Thais, at least in ur­ban ar­eas. Thai cit­i­zens are al­ready us­ing their mo­bile phones to ac­cess bank­ing and fi­nanc­ing op­por­tu­ni­ties and are con­stantly con­nected on so­cial me­dia. Presently, mo­bile broad­band pen­e­tra­tion in Thai­land is at 100%. In terms of in­ter­net us­age, Thai­land is sec­ond be­hind ASEAN’S other es­tab­lished dig­i­tal econ­omy, Sin­ga­pore.

RE­MOD­EL­ING THAI­LAND’S ECON­OMY

De­spite high lev­els of mo­bile broad­band pen­e­tra­tion, Thai­land is poised to be re­mod­eled as a dig­i­tal econ­omy and the gov­ern­ment is jump­ing at the op­por­tu­nity to de­velop a tech­no­log­i­cally ca­pa­ble econ­omy with a slew of leg­is­la­tion. The forg­ing of Thai­land’s dig­i­tal econ­omy im­plies the pass­ing of ten new bills. The rel­e­vant leg­is­la­tion pack­age in­cludes, among oth­ers, the Na­tional Dig­i­tal Com­mit­tee for Econ­omy and So­ci­ety Bill, Min­istry of Dig­i­tal Econ­omy and So­ci­ety Bill, Elec­tronic Trans­ac­tion Bill ( amend­ment), Com­puter- re­lated Crime Bill ( amend­ment), Cybersecurity Bill, Per­sonal Data Pro­tec­tion Bill and the Broad­cast­ing and Telecom­mu­ni­ca­tion Reg­u­la­tor Bill ( amend­ment).

The pro­posed Thai Dig­i­tal Econ­omy plat­form is char­ac­ter­is­tic of dig­i­tal econ­omy plans around the world in its fo­cus on eco­nomic growth, in­no­va­tion, and a de­sire to bol­ster pri­vate com­pany in­vest­ment with gov­ern­ment sup­port to en­sure mu­tual ben­e­fits for both busi­ness and cit­i­zenry. In­ter­na­tional stan­dards for bring­ing a fron­tier mar­ket into a bustling dig­i­tal econ­omy are still be­ing writ­ten, but a path to es­tab­lish­ing a com­pet­i­tive dig­i­tal econ­omy can take a cue from the best prac­tices of es­tab­lished states, such as the U. S. and EU. The United States Strat­egy on Amer­i­can In­no­va­tion has em­braced stan­dards of open­ness in ac­ces­si­bil­ity of in­ter­net, sup­port of en­trepreneurs, its role as tech leader, fa­cil­i­ta­tor of pri­vate in­vest­ment for pub­licly ben­e­fi­cial re­search and de­vel­op­ment, and the state gov­ern­ment play­ing an es­sen­tial role in pub­lic in­vest­ments in ed­u­ca­tion and in­fra­struc­ture. Thai­land’s Dig­i­tal Econ­omy Mas­ter Plan is based on APEC and EU stan­dards which would place it in a po­si­tion akin to U. S. stan­dards.

Lessons learned from an­a­lyz­ing ef­fec­tive ex­am­ples of suc­cess­ful dig­i­tal economies show that the suc­cess of a dig­i­tal econ­omy, par­tic­u­larly from a Thai per­spec­tive, is de­pen­dent on two crit­i­cal fac­tors: ( a) the ef­fi­cient de­ploy­ment of broad­band net­works and hav­ing an ap­pro­pri­ate struc­ture for the telecom­mu­ni­ca­tion sec­tor, which is con­sid­ered to be the foun­da­tion of any dig­i­tal econ­omy; and ( b) an ef­fec­tively gov­erned and trusted in­ter­net to har­vest in­no­va­tive po­ten­tial and se­cure us­age of new ser­vices.

THE INI­TIAL PRO­POSAL FOR A DIG­I­TAL ECON­OMY

Since its ini­tial release, the pack­age had been sub­ject to much crit­i­cism from the pub­lic. The pub­lic’s main con­cerns sur­rounded the fact that the en­tire dig­i­tal econ­omy pack­age pre­dom­i­nantly ad­dressed cy­ber se­cu­rity which was open to abuse of power by grant­ing enor­mous lee­way to gov­ern­ment of­fi­cials to ac­cess pri­vate in­for­ma­tion of busi­nesses and the pub­lic with­out their knowl­edge or per­mis­sion.

THE NEW PRO­POSAL

The pack­age was ini­tially drafted by the Elec­tronic Trans­ac­tions De­vel­op­ment Agency, which since the ini­tial pro­posal has re­con­sid­ered its po­si­tion and re­vised the pack­age to ad­dress pub­lic con­cerns. Kroekkrai Chi­raphaet, the head of the com­mit­tee propos­ing the dig­i­tal econ­omy agenda, ex­plained that the ex­ist­ing dig­i­tal econ­omy pro­posal will be re­mod­eled to rely on dig­i­tal con­nec­tiv­ity wherein ev­ery sec­tor of the pop­u­la­tion makes use of the in­ter­net.

The re­vised pro­posal has not yet made it into the pub­lic realm but as of Au­gust 11, 2015, the Na­tional Re­form Coun­cil ( NRC) has en­dorsed agen­das re­lat­ing to the de­vel­op­ment of a dig­i­tal econ­omy, for which the mem­bers of the NRC unan­i­mously voted in fa­vor. The re­vised dig­i­tal econ­omy pack­age is now ex­pected to be lodged to the Na­tional Leg­isla­tive As­sem­bly for its con­sid­er­a­tion by the end of Au­gust.

HOW WILL THAI­LAND’S BUSI­NESS BE AF­FECTED By THE DIG­I­TAL ECON­OMY?

As a dig­i­tal econ­omy is com­prised of tech­nol­ogy which con­nects en­trepreneurs,

fos­ters in­no­va­tion, and in­creases the con­nec­tiv­ity through­out the en­tire King­dom, the plan bodes well for Amer­i­can busi­nesses in­ter­ested in launch­ing dig­i­tal plat­forms for con­sumer ser­vices or ac­cess­ing re­li­able in­te­grated net­works to con­nect with sup­pli­ers.

To achieve th­ese plans, the gov­ern­ment has launched the fol­low­ing ini­tia­tives un­der the dig­i­tal econ­omy plan: ( i) cre­ation of a Dig­i­tal Econ­omy Mas­ter Plan ( 2016 – 2020) to re­place the cur­rent ICT Min­istry plan; ( ii) abol­ished the Min­istry of In­for­ma­tion and Com­mu­ni­ca­tions Tech­nol­ogy and cre­ated the new Min­istry of Dig­i­tal Econ­omy and So­ci­ety; ( iii) bas­ing the Dig­i­tal Econ­omy Mas­ter Plan on five plat­forms; ( iv) cre­at­ing a na­tional broad­band sys­tem; ( v) the cre­ation of the big­gest data cen­ter in ASEAN; and ( vi) al­low­ing dis­tant learn­ing through on­line por­tals.

We look be­low at some of th­ese key ini­tia­tives and dis­cuss how the new changes could af­fect busi­nesses op­er­at­ing in Thai­land.

CRE­ATION OF THE MIN­ISTRY OF DIG­I­TAL ECON­OMY AND SO­CI­ETY

One of the pro­posed bills un­der the dig­i­tal econ­omy pack­age is the Min­istry of In­for­ma­tion and Com­mu­ni­ca­tion Tech­nol­ogy Re­form Bill. The Bill will set up the Dig­i­tal Econ­omy Min­istry and abol­ish the In­for­ma­tion and Com­mu­ni­ca­tions Tech­nol­ogy Min­istry. The Dig­i­tal Econ­omy Min­istry will oversee the plan­ning, pro­mo­tion and de­vel­op­ment of the dig­i­tal econ­omy in ac­cor­dance with the Dig­i­tal Econ­omy Mas­ter Plan.

THE FIVE- PLAT­FORM AP­PROACH FOR THE DIG­I­TAL ECON­OMY MAS­TER PLAN

In the cre­ation of the Dig­i­tal Econ­omy Mas­ter Plan, a five- plat­form ap­proach has been uti­lized to drive the eco­nomic sec­tors of the Dig­i­tal Econ­omy. The five plat­forms fo­cus on the gov­ern­ment’s re­la­tion­ship with the pri­vate sec­tor and ed­u­cat­ing Thais to lever­age the in­creased ac­cess to re­li­able in­ter­net ser­vice. The five plat­forms used as a ba­sis for the cre­ation of the Dig­i­tal Econ­omy Mas­ter Plan are:

( a) Hard In­fra­struc­ture

Hard in­fra­struc­ture fo­cuses on the gov­ern­ment co­op­er­at­ing with the pri­vate sec­tor to pro­vide suit­able in­for­ma­tion- tech­nol­ogy in­fra­struc­ture to sup­port a dig­i­tal econ­omy, such as high- ca­pac­ity broad­band in­ter­net, var­i­ous data cen­ters, and dig­i­tal gate­ways. This is high­lighted through the gov­ern­ment’s part­ner­ship with In­tel, Corp and DTAC Wire­less. In­tel is offering an en­tre­pre­neur con­nec­tiv­ity class with in­for­ma­tion on us­ing dig­i­tal tools to launch busi­ness. DTAC Wire­less has de­vel­oped dig­i­tal ap­pli­ca­tions for the farm­ers to track weather pat­terns, soil is­sues and mar­ket con­di­tions for agri­cul­tural goods.

( b) Soft In­fra­struc­ture

Soft In­fra­struc­ture fo­cuses on boost­ing busi­ness owner and con­sumer con­fi­dence about on­line trans­ac­tions such as ver­i­fi­ca­tion sys­tems to iden­tify in­di­vid­u­als on­line and cybersecurity in or­der to en­cour­age e- commerce. The soft in­fra­struc­ture is also the open­ing of op­por­tu­ni­ties for en­tirely dig­i­tal in­vest­ment. As re­ported in their monthly news­let­ter, the Thai­land Board of In­vest­ment is re­view­ing its reg­u­la­tions to ex­pand the op­por­tu­ni­ties for crowd- fund­ing meth­ods with the aim of giv­ing in­creased sup­port to small and medium en­ter­prises.

( c) Ser­vice In­fra­struc­ture

The Ser­vice In­fra­struc­ture will be pro­pelled by the Elec­tronic Trans­ac­tions De­vel­op­ment Agency’s plan to in­tro­duce e- doc­u­ments in the hopes gov­ern­ment- run of­fices will of­fer more ef­fi­cient ser­vices to the pub­lic, in­clud­ing dig­i­tized doc­u­ment search. Laws will be pushed to cre­ate con­nec­tiv­ity among of­fices. Also, the gov­ern­ment will set up a cen­tral­ized “ICT Law Cen­ter” to pro­vide bet­ter in­for­ma­tion to ev­ery party in­volved in on­line busi­ness and on­line trans­ac­tions.

( d) Pro­mo­tion and In­no­va­tion

The sec­tor fo­cus of Dig­i­tal Econ­omy Pro­mo­tion has the gov­ern­ment’s sight set on de­vel­op­ing the dig­i­tal skills of en­trepreneurs to im­prove their ef­fi­ciency. It will uti­lize dig­i­tal tools to sup­port the busi­ness growth in sec­tors such as bank­ing, ser­vices and man­u­fac­tur­ing. It will uti­lize IT to sup­port small and medium- sized en­ter­prises.

( e) So­ci­ety and Knowl­edge

Fi­nally, the Dig­i­tal So­ci­ety and Knowl­edge Re­source sec­tor will pro­vide univer­sal ac­cess to on­line chan­nels, en­sur­ing ev­ery­one can ac­cess the in­ter­net at an af­ford­able price. The gov­ern­ment has promised to es­tab­lish in­ter­net con­nec­tiv­ity for over 1,500 schools in Thai­land by the com­ple­tion of the Dig­i­tal Econ­omy Mas­ter Plan in 2020.

While the in­for­ma­tion pre­sented above merely in­di­cates what Thai­land can ex­pect when the dig­i­tal econ­omy pack­age is sub­mit­ted to the Thai Cab­i­net, we can­not com­ment on how ef­fec­tively the leg­is­la­tion will be im­ple­mented in prac­tice. One thing is clear given the pub­licly avail­able in­for­ma­tion in re­gard to the in­cep­tion of the dig­i­tal econ­omy; if im­ple­mented ef­fi­ciently, the ben­e­fi­cial ef­fects on the Thai econ­omy will be sig­nif­i­cant. The tar­gets set by the gov­ern­ment seem, on their face, achiev­able. Only time will tell how the new leg­isla­tive in­stru­ments im­pact spe­cific sec­tors of the econ­omy and in the mean­time it is rec­om­mended that busi­nesses op­er­at­ing in Thai­land closely fol­low the im­ple­men­ta­tion of the dig­i­tal econ­omy.

Au­dray Souche is Part­ner and Kraisorn Rueangkul, Ku­nal Sachdev and Kayla Moore are Le­gal Ad­vis­ers at DFDL Thai­land. They can be con­tacted at: au­dray. souche@ dfdl. com, kraisorn@ dfdl. com, ku­nal@ dfdl. com, and thai­land@ dfdl. com.

In­ter­na­tional stan­dards for bring­ing a fron­tier mar­ket into a bustling dig­i­tal econ­omy are still be­ing writ­ten, but a path to es­tab­lish­ing a com­pet­i­tive dig­i­tal econ­omy can take a cue from the best prac­tices of es­tab­lished states, such as the U. S. and EU.

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