Govt urged to promote at least three $1-billion tech start-ups in five years

Citing the white paper submitted to the government, Patai Padungtin, president of Thailand Start-up Association, said the country needed to quickly develop the tech start-up sector with various measures.

The industry believes that once the country has a number of high-value start-ups, with a minimum of three $1 billion-or-more start-ups, it will be able to create an estimated 10,000 positions for high-skill workers.

It said the start-up sector would then have the potential to create revenues of at least Bt8 billion per year plus create value chains in each business worth Bt50 billion in total per year. This will also attract overseas investment worth an annual Bt3 billion, it said.

“For start-ups, it’s a do-or-die time. But the government is trying to push the sector forward quickly to create a new generation of economic warriors. Therefore, we recently submitted a white paper to develop the start-up ecosystem,” said Patai.

According to the proposal, the industry has urged the government to overhaul rules and regulations by amending laws and promoting start-ups with tax benefits and other policies.

For example, the industry believes it’s necessary for Thailand to reduce its capital gains tax to attract more start-up funds since the tax in Singapore and Hong Kong is zero.

It said the government also should offer tax incentives for related start-up businesses with a corporate income tax allowance.

Thai start-ups should also be allowed to issue convertible notes so investors could invest conveniently in these operations.

For investors and personnel, the government should set up committees to vet qualified investors and start-up entrepreneurs so they could be given privileges properly.

The industry said both the convertible debt instrument and the employee stock option should be promoted as tools to develop the sector.

In addition, start-ups should be allowed to do international money transfers via Internet banking like in Hong Kong.

To attract talent, the industry said the government should make it easier to get work permits, while the Securities and Exchange Commission should amend its regulations to promote the option of initial public offerings for tech start-ups.

 

Tax privileges for start-ups

Due to unfavourable conditions in Thailand, more Thai start-ups do IPOs in overseas markets, such as through the Australian Securities Exchange, than here. 

The government should also promote the setting up of matching funds for investment in start-ups, while offering seed money to students at qualified educational institutes to build new start-ups.

There should be tax privileges for related start-up businesses such as co-worker space as well as for businesses that use start-up services.

Thailand should also have a national incubator or accelerator programme to drive start-ups during their initial stage and help them get grants worth Bt300,000-Bt500,0000 for each project.

Last week, the Finance, and Science and Technology ministries jointly announced new incentives for tech start-ups and venture capital funds to invest in the sector.

The move also aims to stimulate investment in the government’s 10 clusters of technology-based businesses, developing the capital market and enhancing the country’s competitiveness. Recently, the government introduced two new laws under Royal decree: the Revenue Code’s tax-exempt issue No 597 and issue No 602. These make technology start-ups and venture-capital business investors exempt from taxation when their ventures are tied to one or more of the government’s 10 clusters of technology-based businesses.

These sectors include automobiles, smart electronics, bio-tech, food and agriculture, and healthcare.

They have the potential to attract investors around the world and will play an important role in driving Thailand’s economy in the future.

At present, the Board of Investment is developing investment-promotion measures that focus on the 10 target industries.