Thailand's Digital Competitiveness Declines: Urgent Reform Needed to Adapt to AI Era

"Digital Competitiveness" is a key indicator of a country's ability to compete in the digital age. A mere drop of one rank is more than just a number—it signals a warning that the country is not yet ready to handle the “transition to the AI era” that is transforming global economies.

The Thailand Management Association (TMA) revealed the 2025 World Digital Competitiveness Ranking (WDCR), showing that digital competitiveness is crucial for economic efficiency and national resilience to crises. A strong digital policy framework, flexible business practices, and the development of high-skilled personnel are essential factors for boosting a country's digital capabilities in this intensifying digital age.

This year, Thailand dropped one rank to 38th place, with technology being the main drag on its competitiveness. Urgent structural reforms are needed to face the challenges of the AI era.

Thailand’s Digital Competitiveness in 2025

The 2025 ranking placed Thailand at 38th out of 69 economies, marking a 1-rank drop from last year. This decline is mainly due to a significant drop in the technology factor, which fell by 6 ranks, from 23rd last year to 29th this year. Previously, technology was one of Thailand's key strengths.

When considering the sub-factors under the technology category, including regulatory framework, capital, and technological framework, it was found that the rankings have declined across all areas.

Key Factors Affecting Digital Competitiveness

1. Knowledge: Thailand ranks 37th, improving by 3 ranks from last year’s 40th. This improvement comes from better talent and training and education initiatives.
2. Technology: This is the main reason for Thailand’s overall decline, with a 6-rank drop to 29th. The decline reflects poor progress in several sub-factors, including regulatory frameworks, capital, and technological framework. A key weakness is the lack of private investment in AI, despite strong potential in this area. However, this does not mean Thailand is in reverse—it is merely lagging behind faster competitors.

Additionally, several technology indicators remain stagnant due to insufficient growth, such as low R&D investment and the slow adoption of advanced technologies like AI and automation in industries, which is lagging behind expectations.

3. Future Readiness: Thailand ranked 45th, down from 41st last year. This factor highlights challenges in adapting to regulations and user behavior, particularly around issues like intellectual property violations and cybersecurity.

4 Main Causes of Thailand's Declining Technology Competitiveness

The significant drop in Thailand’s technology factor in the WDCR 2025 report is driven by both internal domestic factors and the rapid advancements of competing countries:

• Faster Competitors: The decline in ranking does not indicate a regression for Thailand, but rather that other countries are adopting technologies and innovations faster, causing Thailand to lose comparative advantage.
• Stagnation in Technology Indicators: There is insufficient growth in key areas such as R&D investment, the lack of new innovations (e.g., unicorn startups), and the slow adoption of advanced technologies like AI and automation in industries.
• Skills Gap: Thailand faces a shortage of both quantity and quality in STEM workers, with its education system not yet able to produce a workforce that matches the needs of the modern labor market.
• Structural and Regulatory Obstacles: While Thailand's basic IT infrastructure is good, it lacks the necessary quality to foster technological innovation. The complexity of the bureaucracy and the challenge of implementing policies have slowed technological progress.

Transition to an 'Innovation-Driven Economy' Needed

Thailand’s declining digital competitiveness ranking signals that the country must transition from focusing on basic digital usage to fostering an innovation-driven economy with high value-added growth.

IMD suggests that industry performance is mainly influenced by three key drivers: infrastructure, skilled personnel, and swift regulatory frameworks. These are necessary to facilitate the adoption and integration of technology. The government must:

• Increase serious investment in R&D.
• Address the skills gap by reforming the education system and implementing upskilling programs.
• Streamline regulatory frameworks to attract and stimulate private investment and innovation.

Global and ASEAN Competition Landscape

The WDCR 2025 report reveals increasing uncertainty and complexity for businesses and governments in coping with the competitive landscape. The top 10 countries for digital competitiveness out of 69 in 2025 are:

1. Switzerland
2. United States
3. Singapore
4. Hong Kong
5. Denmark
6. Netherlands
7. Canada
8. Sweden
9. United Arab Emirates
10. Taiwan

Notably, Singapore remains the strongest digital hub in ASEAN, holding the top 10 spot despite dropping from 1st place last year. Singapore excels in all three main categories, with its regulatory framework ranked first globally.

The “geopolitical divide” is also increasingly affecting the digital capabilities of countries, with competitors accelerating their technology and innovation adoption.

The digital competition is akin to a marathon, where countries must race against time and rivals. If Thailand fails to accelerate innovation and investment, it risks falling behind, as it is already losing ground compared to faster-moving competitors globally.

The World Digital Competitiveness Ranking (WDCR) 2025 is produced by the World Competitiveness Center of the International Institute for Management Development (IMD), Switzerland.