The tech industry in Thailand is booming. It is one of the few sectors that has seen a rise in demand in response to the global lockdowns, enforced to control the COVID-19 pandemic, and tech startups in Thailand have seen tremendous windfalls in revenue. Despite this, startups in Thailand, particularly in the tech industry, still lag behind on growth relative to some of its nearest neighbours.
However, the higher-level companies are reaping greater rewards than ever and are providing hope for the further development of digital industries in the Kingdom. We take a look at how some of the most prominent players are thriving during the pandemic.
Tech during COVID-19
Tech startups have jumped on the opportunities arising from the lockdown, especially the sudden shift towards digital commerce from consumers and businesses alike. One such firm, eCommerce solutions providers aCommerce, has been proliferating for several years but achieved an impressive 130% year-on-year growth between Q2 2019 and Q2 2020. They are hoping to raise over $200 million USD with their 2021 planned IPO. The firm supports brands in getting their products to end-point consumers and businesses, navigating the complex logistics and sales channels involved.
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The surge in online food delivery orders during the pandemic has allowed the payment processing and blockchain firm Omise, and its parent company SYNQA, to double their revenue since this time last year. SYNQA has been following the traditional Thai startup route, focussing on establishing a strong foothold in Thailand, and then expanding into neighbouring economies. Even with a recent boost of $80 million USD in Series C funding, Jun Hasegawa, group chief executive and co-founder is notably cautious about expansion at the moment, saying “with the pandemic we are more cautious about expending our resources”.
Similarly, Eko, and their newly formed parent company Amity, sells software that facilitates working from home and remote coordination. It has reported an incredible 200% year-on-year growth. In contrast to SYNQA, most of the Amity’s revenue is from US sales, and its chief executive, Korawad Chearavanont, is determined it will become the first international Thai tech firm.
Of course, other sectors are suffering due to the lockdown. The Singapore-based ride-hailing app Grab had to lay off 5% of its workforce, in June, while Gojek, based in Indonesia, cut its employees by 9% in the same month. Both firms offer food delivery services in Thailand, and though these saw a spike in revenue, it was not sufficient to counteract the huge losses to the taxi market as a result of lockdown.
Can Thailand be the next global startup hub?
The government aims to make Thailand a global startup hub, rivalling any competitors in Southeast Asia. It is well-placed to do so as, after Indonesia, Thailand has the largest economy in ASEAN. Add in the government’s industry 4.0 strategy, its plentiful natural resources, and a strong tourism industry bringing in money and influence and they certainly have an opportunity.
These factors, as well as the living and working costs in Thailand, have led to a booming startup market, with plenty of local innovation and foreign investments. In 2014, there were around 300 startups registered in the country, rapidly growing to 2,500 in 2015. Most were tech-based, though other areas include finance, real estate, and logistics.
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Challenges and opportunities
Despite the emerging favourable trends, the startup hub status is still far off as, according to a 2019 Google-Temasek study, Singapore and Indonesia rank far higher in terms of disclosed funding, and Thailand is also below Malaysia and Vietnam. Indeed, many tech startups in Thailand incorporate their businesses abroad to avoid regulations and benefit from attractive tax structures. Of the companies mentioned above, only aCommerce is Thai incorporated with SYNQA incorporated in Singapore, and Eko in Britain.
Singapore and Indonesia have both produced unicorns, with both Grab and Gojek reaching decacorn status, and have strong tech industries, making it a struggle for Thailand to dethrone them. Singapore enjoys global esteem as a first-class financial hub, and Indonesia’s enormous population can facilitate massive growth for initially small businesses.
However, Thai companies are optimistic. The CEO of aCommerce, Paul Srivorakul, is focussing on long-term viability. He said “We aspire to be one of Thailand’s first unicorns — one of many I hope — but at this stage instead of focusing on valuation, we are more concerned with profitability and staying profitable. Too much growth can be dangerous, especially with the current situation, so we really want to make sure we are planning safely over the next two years.”
Tech startups in Thailand have seen tremendous growth in recent years and have maintained momentum through the global lockdown, despite other industries suffering massive losses. The Thai government has high hopes for continued growth in the market. However, it’s still hard to say whether startups in Thailand can fully compete with the powerful and well-established tech industries of their neighbours.