Thai Startup Growth Hampered by Limited Tech Talent

ADB report reveals Thailand’s booming startup scene is slated to slow as it faces challenges with a lack of tech talent and entrepreneurs wanting to embark on a digital journey.
Bangkok, Thailand (Kiripost via Waranont)
Bangkok, Thailand (Kiripost via Waranont)

While the value of investments in Thailand’s startups increased a hundredfold from $3 million in 2012 to $311 million in 2021, the nation of 70 million faces a limit of tech talent and human capital to grow new startups.

The number of startups and investments in startups has increased substantially in the past seven years, but the trend may be leveling off for several reasons according to a new report.

Paul Vandenberg, senior economist at Asian Development Bank (ADB) and also the lead author of this year’s startup reports on Cambodia and Vietnam, assessed the current ecosystem for tech-based startups in Thailand with his co-author, Sakdipon Juasrikul.

“In some areas of health and education, the government is a key customer and its openness to adopting solutions offered by startups is critically important,” said the ADB economist.

“A combination of indigenous entrepreneurship and a supporting ecosystem of policies and supporting players have helped drive the growth of the country’s tech startup scene,” ADB said in its release on Thursday.

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Despite the tech startup community in Thailand growing, the nation “has taken a long time to develop rules and regulations, such as the draft Startup Act, which creates uncertainty in the ecosystem.”

Thailand’s Evolving Ecosystem Support for Technology Startups
Thailand’s Evolving Ecosystem Support for Technology Startups

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Thailand’s tax administration continues to offer no support for startups, especially in e-commerce or other platforms. The September report added, “The number of people with technology expertise (ie tech talent) is limited, making it difficult to attract the skilled workers needed to launch new startups.”

It notes that many tech experts fail to embark on the startup journey because of this uncertainty. In addition, the survey found a shortage of developers, programmers, data scientists, researchers, and marketers.

In 2019, universities produced 34,700 graduates in information and communication technology, natural sciences, mathematics, and statistics. However, many of these graduates seek employment in large companies because they offer stable employment and good benefits, according to the ADB’s findings.

“As a result, the supply of technical and business talent for startups is limited,” it said.

The Thai government believes startups will represent a new engine of growth that can move the economy out of the middle-income trap.

To foster a robust startup ecosystem, in 2018 the government issued the SMART visa for foreign tech talent, a five-year income tax exemption, and tax incentives for angel investors.

“The government plays a key role in setting policy and offering programs that support startups. For Thailand, 2016 was a watershed year, with a variety of new initiatives,” said Juasrikul, from the University of the Thai Chamber of Commerce.

The startup scene in Thailand started to emerge in the 2000s, about a decade ahead of Cambodia. It was not until 2011 that it gained more attention from the Thai government, in particular after the Advanced Info Service (AIS), a telecommunication company like Cambodia’s Smart Axiata, organized the AIS Startup Weekend.

The ADB report, Thailand’s Evolving Ecosystem Support for Technology Startups, noted, “The number of startups receiving investment grew more than tenfold between 2012 and 2021, from 4 to 57. The number of venture capitalists, angel investors, and corporations investing in Thai startups expanded in tandem.”

Among the top sectors for startup investment are e-commerce and fintech. Agritech, AI, and big data have also “emerged as intriguing sectors for investors”.

One-third of Thai startups use AI, machine learning, virtual and artificial reality, big data, and the Internet of Things. Of 215 startups surveyed, 22 percent owned patents or had patents pending.