Digitalisation of Thai SMEs offers Bt1-trillion boost to GDP: study

FRIDAY, JULY 31, 2020

Digitalisation of small and medium businesses (SMBs) in Thailand could add between US$35 billion and $41 billion (Bt1.01 trillion-Bt1.28 trillion) to the country’s GDP by 2024 and contribute to economic recovery post Covid-19, according to the 2020 Asia Pacific SMB Digital Maturity Study.

The study, based on a survey of SMBs from across the region conducted by International Data Corporation (IDC) and commissioned by Cisco, shows that SMBs that are more digitally mature enjoy twice as many benefits in terms of revenue and productivity compared to those that have an indifferent approach to digitalisation.
According to the Office of Small and Medium Enterprises Promotion (OSMEP), the sector accounts for 85.5 per cent of Thailand's total workforce and contributes to 43 per cent of total GDP. As such, SMBs will play a key role in the economic recovery and growth in a post-Covid world.
The study shows that 73 per cent of SMBs in Thailand are looking to digitally transform to bring new products and services to market, while 50 per cent recognise that competition is transforming and they must keep pace, and 23 per cent are transforming due to demand from customers.
"The SMB sector has been among the hardest hit by the Covid-19 pandemic. However, they have been agile and have taken various measures to overcome the situation. One of the key trends that we have seen is that of SMBs adopting technology to ensure they can continue to serve their customers during the period," said Vatsun Thirapatarapong, regional managing director for Thailand and Indochina at Cisco.
"As Thailand starts to ease some of the restrictions and consumer activity starts to pick pace, digital transformation of SMBs will play a pivotal role in their recovery and contribute to the country's overall economic growth. Cisco is committed to work with SMBs to help them emerge stronger with the right digital solutions and strategy."
The study shows that purchasing or upgrading IT software (20 per cent) is the top technology investment priority for Thai SMBs, followed by purchasing and upgrading IT hardware (15 per cent) and investing in cloud (11 per cent).
However, SMBs are also facing challenges. According to respondents, a shortage of digital skills and access to talent is the top hurdle (20 per cent) for SMBs in their digital transformation efforts. This is followed by the lack of lack of a proper digital transformation roadmap (18 per cent) and lack of necessary technologies (15 per cent).
"SMBs have an unprecedented opportunity. However, for them to derive the greatest long-term value, all stakeholders need to come together to address the key issues faced by the industry. This includes government, educational institutions, large corporations, and industry bodies. No one entity can solve these alone. At Cisco, we are proud to be playing our part. From a talent perspective, the Cisco Networking Academy has trained over 2.5 million students across Asia Pacific, Japan and China in various ICT skills since its inception. On the technology front, we have launched a series of curated products and solutions specifically for the SMB sector under the Cisco Designed portfolio," said Bidhan Roy, Cisco’s managing director of Small Business for Asia Pacific, Japan and China.
For Asia Pacific, digitalisation of SMBs could add between $2.6 and $3.1 trillion to the region's GDP by 2024. Asia Pacific's GDP is expected to grow between $10.6 and $14.6 trillion, according to forecasts by IDC, with SMB digitalisation accounting for as much as 25 per cent of that growth.
The study highlights that nearly 70 per cent of SMBs in Asia Pacific are accelerating digitalisation as a result of Covid-19. Eighty-six per cent of respondents say they believe digitalisation will help in developing resilience against crises like Covid-19.
Despite the challenges, the region's SMBs continue to make progress in digitalisation. According to the study, 16 per cent are now in the advanced digital maturity stages (3 and 4), compared to 11 per cent in 2019. Slightly more than half of SMBs have embraced digitalisation to become “Digital Observers” (stage 2). Only 31 per cent of SMBs have made hardly any efforts to transform digitally (stage 1).
Four stages of digital maturity
Stage 1 – Digital Indifferent: A company that is reactive to market changes and digital efforts do not exist
Stage 2 – Digital Observer: A company whose digital efforts have started but remain tactile and in bite-sized initiatives
Stage 3 – Digital Challenger: A company that has a strategy for the use of digital technologies and is more proactive in market responsiveness
Stage 4 – Digital Native: A company that has an integrated digitalisation strategy and is focused on driving continuous innovation
Within the region, SMBs in Singapore, Japan and New Zealand continue to lead the Digital Observer group, with no changes in their ranking compared to 2019. However, mainland China, Taiwan and Thailand surpassed South Korea, Hong Kong and Malaysia, respectively. There has been notable progress made by SMBs in Indonesia and Vietnam.
The 2020 Asia Pacific SMB Digital Maturity Study analysed data from over 1,400 SMBs across 14 markets to assess the challenges and opportunities the companies face in their digital transformation journey. The 14 markets are Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, Taiwan and Vietnam.