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The Next Big Thing in Thailand's Digital Economy

If you are thinking of expanding in Thailand, you may be aware of Thailand's plans to shift from an industry-driven to a high-tech driven digital economy. 'Digital economy' is defined as application of internet-based digital technologies to production and trade of goods and services. According to official plans, within a decade, a quarter of Thailand’s GDP will be created by the digital sector.

Thailand is currently in 'Thailand 4.0' phase, which aims to make it into a high income-low inequality country by leveraging innovation and creativity across sectors. It is an ambitious target, nevertheless achievable with the right steps. Thailand 1.0 was about empowering agriculture. Thailand 2.0 helped light industries proliferate. Thailand 3.0 invited FDI and foreign tech to develop heavy industries.

Bangkok's Skyline (Source: The Case Farm)

Thailand needs to digitize for growth, productivity and innovation. It is faced with an ageing population with people aged 60 years and over accounting for 12.3% of its population. This number is expected to increase to 26.6% in 2030. Additionally, there is an increase in competition in labour-intensive industries from neighbouring countries such as Vietnam and Myanmar where population is growing much faster.

The shift to a digital economy will boost the country's competitiveness across all sectors, create new opportunities for businesses, and make new avenues to access overseas markets and to participate in global e-value chains.


Manufacturing Sector

For Thailand to remain competitive in regional manufacturing markets, the use of automation and robotics is critical to maximize its efficiency, reduce costs and solve labour shortages. Less sophisticated processes now have to rely on automation using robots to perform programmed tasks.

An estimated 30% of manufacturers in Thailand already use robots. The Government wants to increase this figure to 50% in five years. The International Federation of Robotics has identified Thailand as an important and growing market for robotics.

Manufacturing sector is important to Thailand because its economy is highly reliant on exports of automotive and parts and electronics and electrical. It is a regional manufacturing hub for these goods. Manufacturing sector accounts for 34% of its GDP.

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Use of Robots in Thailand (Source: Robotics Tomorrow)

To further enhance its position as a manufacturing hub, Thailand is taking steps to build a robotics and automation supply chain domestically. It is providing generous incentives for companies to invest in the robotics and automation industry for following areas namely conceptual design solutions, engineering design, system integration and manufacturing.

Incentives include tax holidays, exemption of import duties on machinery and raw material for export production of related robotics and automation products. Other incentives cover permit to bring in expatriates, permit to own land and permit to take or remit foreign currency abroad.

Major automation and robotics companies are already present with manufacturing facilities in Thailand such as ABB, Delta, Daifuku, Nachi and Celestica. However, Thailand still faces competition from China to attract investors in the robotics and automation industry, due to China's large and ready eco-system.


Services Sector

Services sector is seen as the new driver for the digital economy. Services sector currently makes up the majority of Thailand's GDP (56.5%) and accounts for 17 million jobs (40% of workforce). It includes many areas namely tourism, banking, retail, health, transportation, communication, consulting and finance.

Thailand is making steady progress to improve its digital infrastructure, which plays a central role in the success of a digital economy. Thailand is improving availability of internet access with sufficient internet speed across Thailand. It is also taking steps to build state of the art and world class data centres for cloud services. The new data centres are required to support the increasing spend on public cloud services. This trend is largely fuelled by increase in digital transformation efforts.

Thailand has also introduced many innovative financial platforms to facilitate online payments. Banks in Thailand are also making the 'digital banking' shift by moving users to online banking, which rationalises banks' branch networks and improve cost efficiencies. In terms of regulation, Thailand has broad plans to increase e-governance by developing an e-Government law that mandates standards, data protection and security.

To help build its' digital workforce, Thailand has opportunities for education and e-learning solutions. Thailand faces acute shortage of skilled worker, which may hinder high-tech companies from investing in the country. For example, Japan External Trade Research and Organisation claims that Thai-based Japanese businesses are finding it difficult to hire enough engineers.

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Robot Nurses in Thailand's Hospital (Source: YellRobot)

In healthcare, service robots are being developed. Thailand already has world-class medical facilities with more than 1,000 public and 300 private hospitals, and now aims to be the medical hub of Asia. Therefore, it has adopted innovations in medical robotics while welcoming international expertise. Medical robots are used in many areas including surgery, diagnosis, rehabilitation and services.


Agriculture Sector

Agriculture is the backbone of the country due to majority of the population living in rural areas. However, Thailand's agriculture sector is highly fragmented with most farms hiring between 1 and 3 workers, and using traditional and low-scale technology. This practice is therefore unsustainable, as Thailand has an ageing population. It will need to rely more on industrialised farming methods such as smart farming to provide cost and labour efficiencies, similar to developed economies.

A large portion of Thailand's land is used for agriculture (42.8% of total land area equivalent to 22 million hectares). Thailand is currently the world’s largest exporter of rice, natural rubber, canned tuna and prawn products. It is also the world’s second largest exporter of sugar, after Brazil. Thailand’s naturally fertile land serves as a strong foundation to propel it into forefront of global agri-business.

As part of smart farming, Thailand is introducing precision farming to increase yield per square meter. Precise watering and fertilising technique is aimed to be carried out using data by closely monitoring related variables, such as humidity and mineral levels in the soil.

Smart Farming, Sensor, Precision Farming, Agriculture Data Analytics Smart Agriculture for Vegetables
Precision Farming - Sensor (Source: OneSoil)

Data processing systems will also collect data from drones and satellites to help farmers customise production and harvest plans. Use of these technologies helps farmers monitor their lands in real time and respond to changes in advance.

Hence, adverse weather conditions will no longer be a major deterrence as artificial intelligence will be able to generate algorithms to predict different weather conditions and allow for farmers to put in protective measures in advance.



Manufacturers and service providers are increasingly looking to robotics and automation solutions to achieve greater production efficiencies amid labour shortage and increasing competition.

There are untapped areas in parts and components in robotics and automation industry, as well as manufacturing of high-tech robots in Thailand. Services such as data centres and cloud services, financial platforms, education and training play an important role to support the digital economy. Therefore, opportunities exist for investors in these high-tech technological products and services.

Basically, Thailand's success in the digital economy will greatly depend on its ability to increase availability of digitally-skilled talent, improve its digital infrastructure and increase spending on research and development. Big expectations are riding on the continued expansion of digital economy in the country.

What do you think about Thailand’s progress in its digital economy? Leave a comment below. If you require further information on Thailand's market, contact us.


References:, Thailand – Banking Systems,, published 24th July 2018

Food and Agriculture Organization of the United Nations (FAO), Country Fact Sheet on Food and Agriculture Policy Trends – Thailand,, published February 2018

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