Unicorn may be hard to find as Thai SMEs are behind in digitalization
While most of Thailand’s neighbors have one or two unicorns to boast their success in digital transformation, Thailand is still looking for one.
One of the reasons that a unicorn is hard to come by is the fact that Thai entrepreneurs are slow in adopting to digitalization.
In 2017, only 28.7 percent of Thai companies used computer in their operation, despite an increase in tech adoption rate since 2012, according to the National Statistical Office of Thailand.
Small companies are less likely to use technology in the workplace. Only 25.7 percent of companies, with less than 10 employees and representing 95.5 of the total surveyed companies, used computer in their operation. Large companies fared much better as 99.7 percent of companies with over 200 employees have embraced internet technology in their operation.
The survey also shows that most of small firms have not used electric commerce to promote their business. Most of them (74.6 percent) used internet for searching for information or exchanging email (70.8 percent). Only 27.3 percent used internet to trading their products and services.
Meanwhile, Thai companies using digital technology for financial transaction increased noticeably from 9.4 percent in 2012 to 15.4 percent in 2017, largely because of the push by new digital services offered by financial institutions in line with the cashless society trend.
The digitalization era comes with both challenge and opportunity. Small firms can now expand their business online without having to invest a large sum of money in brick and mortar stores
However, Thai companies are still behind other countries. And the low tech adoption rate is a reason that Thailand cannot compete in terms of technology with many countries in the world.
The World Competitiveness Ranking of International Institute for Management Development (IMD) put Thailand on No. 40 from 63 countries in terms of digital tools and technology.
The Digital Economy Report 2019 released by the United Nations Conference on Trade and Development (UNCTAD) also reported that Thailand’s proportion of small and large enterprises receiving orders over the internet of Thailand standing at 10 percent, making Thailand No. 42 out of 46 countries surveyed. Singapore topped the chart with the highest rate of 60 percent.
The figures show that Thailand still lacks a perfect matching of high-tech savviness with business management to create a unicorn.
Unicorn means a tech startup that reaches USD1 billion market value. Most of Thailand’s neighbors all have unicorns to brag about, such as Malaysia’s Grab service platform and Indonesia’s Traveloka, the online travel agency.
The unicorn requires a smart blend of tech knowledge and business management, which requires the qualified talent.
However, Siam Commercial Bank’s Economic Intelligence Unit reported that there is a shortfall of information technology (IT) experts in the job market.
The market needs IT executive by additional 1,500 position, from 2,400 positions currently, showing an increase in demand by 64 percent. Moreover, the market needs computer designers and analysts by additional 4,100 positions and programmers by 6,200 positions, representing an increase of 32 and 24 percent, respectively.
Small firms require IT experts more than the larger ones. SCB research unit reported that companies with less than 10 employees need additional 15,000 IT staff members.
Overall, SCB reported that in 2017, Thai companies hired around 440,000 IT employees, increasing 18,000 people from 2012. An increasing demand for IT personnel move in the opposite direction to the overall lackluster Thailand’s job market.
At any rate, the future may soon change as a number of potential startups are being nurtured. Early this year, Thailand’s Industry Ministry formed a new venture capital firm, InnoSpace Thailand Co. with a number of large private sectors to incubate aspiring unicorns.
Also, a number of financial institutions have become “accelerator” by setting up venture capital firms to invest in startups with potentials.
The latest development should help create a supportive ecosystem in Thailand to incubate a prospective unicorn in line with digitalization transformation trend.