Thailand's dream of becoming the new ICT hub in Southeast Asia within the next two years is "very ambitious" and could face "many obstacles", according to analysts familiar with the region.
The country's ICT goal was revealed in June when ZDNet Asia spoke with Kraisorn Pornsutee, Thailand's Permanent Secretary for the Ministry of Information and Communication Technology, and is likely to be reinforced at the annual Bangkok ICT Expo.
"It's not impossible… [but], unless they can rapidly ramp up their infrastructure, I think it's very difficult to achieve that goal."
-- Sandra Ng
IDC Asia-Pacific analyst
The five-day conference and exhibition, which opens today in the Thai capital city, is a key element to showcase Thailand's ICT capabilities to the region and beyond, Kraisorn said. According to a MICT press release last month, over 300 companies from more than 20 countries have committed to participating in this year's event. In addition, over 10,000 foreigners are expected to visit the exhibition.
Sandra Ng, vice president for communications, peripherals and services research at IDC Asia-Pacific, noted that there were challenges Thailand would have to face, particularly in terms of infrastructure and culture.
To begin with, Thailand needs to clearly define the concept of "hub", Ng said. Its plan to be an IT hub appears to be the country's move to reduce its dependence on tourism, and attract foreign investment and technology partners, she said.
While some technology companies have based their Asean headquarters in neighboring countries such as Malaysia, this was "not quite the case" in Thailand, she added. Ng attributed this to the country's telecoms infrastructure which is still "not as developed" as countries such as Singapore.
To become a hub, the government also needs to put in place proper telecoms legislation, the IDC analyst pointed out.
In addition, mindsets need to be changed, she said. Government-related processes and decision-making cycles of Thai government-linked companies tend to be rather long, she noted, a scenario that needs to be improved to speed up the investments Thailand needs to achieve its target.
"It's just very ambitious for [Thailand to put down] a 2008 timeline," said Ng. "It's not impossible… unless they [can] rapidly ramp up their infrastructure, I think it's very difficult to achieve that goal."
Chris Perrine, vice president of Springboard Research, said that Thailand also has to contend with other economies in the region that have been ramping up their ICT capabilities.
"Many countries in Asean already have expanded rapidly in [their] ICT [plans], and have [such] a large lead on Thailand that will [make it] tough for the country to overcome in the short term, and from a broad perspective," he explained.
"Thailand also has to grapple with the fact that English is not its native or commonly spoken language, which is an advantage that countries like Singapore, the Philippines, and Malaysia have," Perrine noted.
He added that infrastructure and IT skills--two critical components in a successful ICT hub--are issues that Thailand has to think about. The country not only needs to raise the national level, it also needs to beef up resources in these two areas, particularly outside the city of Bangkok.
Paving the way forward
Undeterred, the Thai administration has initiated several key IT projects which include e-passports and chip-based identity cards. It is also in the process of implementing a
central nervous system to connect the country's various government departments and agencies, and facilitate e-government services.
Its per-capita public sector IT expenditure--currently at US$7.41--is also expected to be one of the fastest growing in the region, according to a report released by Springboard Research last week.
According to Kraisorn, software development is a key industry for Thailand and is forecasted to be the fastest-growing ICT market expanding at a compound annual growth rate (CAGR) of 23 percent between 2005 and 2008.
He added that the Thai government is hoping to invite Indian software companies to invest in the country, so that the technology know-how can be transferred to the locals.
The communications market, which is expected to grow at a CAGR of 22 percent between 2005 and 2008, is another area to watch out for in Thailand. Kraisorn noted that the level of broadband penetration in the country is a key success indicator of how far Thailand is from achieving its goal of becoming an ICT hub.
His ministry is looking to increase the number of broadband subscribers in Thailand from 6 million or 7 million--about 10 percent of its population of 62 million--by 2008, a ten-fold increase over the current 1 percent penetration rate. Before 2002, there were some 20,000 broadband subscribers.
For that to happen, IDC's Ng pointed out that the "price [of broadband subscription] has to drop very low". The government would also "have to provide a lot of incentives" for service providers to reduce their rates.
According to Kraisorn, the MICT has helped make broadband charges more affordable, bringing it down to about US$25 for access speeds of 1Mbps (megabits per second) from US$500 four years ago.
The Thai government also intends to increase the number of Internet service providers and improve infrastructure to spur broadband uptake, he said.
The first 3G license is also expected to be issued next year, creating more momentum in the communications industry, said Kraisorn. There are currently around 31 million mobile users in Thailand.
IDC's Ng also observed that the telecoms industry is becoming more open. Discussions with telcos in recent months had impressed upon her that the companies were "not laid back and pretty forward looking", which augured well for the industry, she added.
In addition, Aidan Lawes, CEO of itSMF, noted that the recent formation of a Thai chapter of the IT Service Management Forum (itSMF) may help boost the level of professionalism in Thailand's ICT industry. The forum is an independent non-profit organization that aims to drive IT service management standards and best practices with 33 chapters worldwide, including Australia, Hong Kong, India, Singapore and the United Kingdom. The Thai chapter, according to Lawes, is expected to be launched later this year.
Shift in strategy needed?
Springboard Research's Perrine added that Thailand may wish to avoid having a broad goal of being an ICT hub, and focus instead on areas where it has experience and can compete effectively.
"A more niche strategy can help Thailand overcome its infrastructure and language challenges," he noted. "By leveraging areas that Thailand is strong in like agriculture, manufacturing [and] especially automobiles, tourism…and applying specific technology solutions and strategies to these areas, Thailand can probably foster more investment and greater gains than going with a broad strategy to become a hub."
"This strategy could also allow the country to compete long-term with Vietnam--an up and coming country that has many of the same challenges that Thailand has, but has the advantage of [offering] even lower costs," explained Perrine.