Can Thailand Catch Up With Singapore As A Digital Hub?

Economy & Business.

Can Thailand Catch Up With Singapore As A Digital Hub?
Image by Daniel Dino-Slofer from Pixabay

Can Thailand Catch Up With Singapore As A Digital Hub?

Written By - Thai Business Box. 02-12-2020.

Singapore has been making waves as a country that is fast emerging as Asia’s  digital capital.

The city-state of 5.6 million people is benefitting from the US-China rivalry especially in tech as both Chinese and US tech companies race to expand and set up offices in Singapore, using it as the launch pad for emerging digital markets in Asia.

Some of China’s biggest technology firms such as Tencent and Alibaba are expanding their operations in Singapore while TikTok owner ByteDance is reported to be investing billions of dollars.

Relations between Washington and Beijing have been increasingly hostile particularly over technology, while Singapore maintained good ties with both the US and China and is considered neutral territory.

With the heightening risk of decoupling, it has become important for Chinese tech companies to separate operations in China and outside of China. 

Regional headquarters, operate on behalf of parent companies and act as the foreign investor in other countries in the region, which helps Chinese companies avoid the appearance of a Chinese investment.

Singapore is considered an ideal location for Chinese firms due to it’s comparative advantage in tech, it’s geographic proximity to China and as an innovation hub in South East Asia.

 Western companies such as Google, Facebook, LinkedIn and many more, attracted to Singapore’s advanced and legal system, have made the city-state their Asia Pacific headquarters for a while now, so its natural that it’s firmly on the radar of Chinese companies .

How did Singapore achieve this

The city-state has been working on it’s tech ambitions since 2010.

Singapore now has more than 270 VC funds, more than 4,000 tech startups and is home to four prime unicorns (startup valued at $1 billion or more) Grab, DEA,Lazada and Razer which have a combined value of $20b, employing close to 22,000 people.

Central to Singapore’s digital growth strategy has been in attracting skilled global talent, providing incentives to bring in venture capital funds, incentivise startups and form partnerships with global tech investors.

The city-state’s success to attract world-class talent has been driven by open immigration policies, world class universities and billion-dollar R&D initiatives.

Besides its ability to attract world-class talent, Singapore has also cemented its position as a digital R&D hub.

Steve Leonard, Founding CEO, SGInnovate said, “ Singapore’s consistent investment in high- quality scientific research, together with its record of academic excellence has given the nation a strong foundation of human capital. The high-potential talent pool is the cornerstone that cements Singapore’s ability to shape how technology can help us build not only a Smart Nation, but a sustainable world.”

The combination of a healthy start-up ecosystem and established global businesses in Singapore has created a rare ecosystem in which technology is at the forefront.

How can Thailand catch up

For Thailand to catch up with Singapore , it may take time but not impossible.

Key to the success of moving Thailand forward as a digital hub is to foster a healthy startup ecosystem.

Global tech companies prefer to invest in countries that have a healthy startup ecosystem because in the world of tech, no company can stand alone, there requires collaboration between global companies, who are the leaders of digital reinvention and innovation, but need the fresh thinking of startups.

Therefore, the country needs to look at it’s education system to rival those of Singapore’s and other developed nations which would create our own pool of talent. 

It’s no secret the country’s education system is sadly lacking and may take years before we will see highly qualified talent pool that can compete globally.

However, there are options the country can take to jumpstart the creation of  a tech startup ecosystem.

The need to attract global tech talent and tech startup investments with open immigration and company formation policies is crucial to the plan.

In the past, Thai policies towards foreign talent or investments at the startup level have been restrictive, aiming to protect Thai workers and SMEs. 

However, with few tech talent in the country and even fewer tech startups in the country, it’s best to move from a protectionist stance to an open one.

Fast tracking the creation of local talent pool can also be jumpstarted by government support for businesses to start tech educational institutes that offer 2-3 years courses. 

The need to incentivize homegrown tech startups requires government policies to provide financial access, tax breaks, facilitate technology flow between sectors and industries, create R&D initiatives and make it more convenient and cost effective for Thai companies to hire foreign talent.

Thailand may take a while longer to catch up with Singapore as a digital hub but with concerted effort between the government and the private sector, it could happen sooner than we think.