Wednesday, December 11, 2019

Taking steps to advance Thailand’s Industry 4.0 ambitions

Nov 13. 2019
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By Saksith Chalermpong
Special to the Nation

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The announcement by the Transport Ministry to legalise ride-hailing services by March 2020 comes in good time. The Internet economy has, for the first time, crossed the $100-billion (Bt3.03 trillion) mark, according to a report by Google, Temasek and Bain & Company (footnote 1).

The government is taking steps in the right direction to make sure that Thailand is well-positioned to reap the financial benefits of a booming industry.

The demand for ride-hailing services across the region is undeniable, with the number of active users ballooning five times to reach more than 40 million today, from just eight million in 2015.

For Thailand, the gross merchandise value of its Internet economy shows a growth rate of 29 per cent since 2015.

However, as regulators in Thailand begin to craft guidelines around the implementation of a ride-hailing framework, there are several areas that we must continue to watch carefully. Ride-hailing has already proved beneficial to citizens and visitors to Thailand as it offers convenience, safety, value and access to services that were previously difficult to obtain. It is useful to look at some of the common aspects of best practices across the world to find a balance in ride-hailing regulation which keeps consumers at the centre while still giving business and innovation room to grow.

Firstly, governments strive to develop policies that bring about the best benefits for their citizens. When regulating ride-hailing, countries like Singapore place the safety of passengers and commuters at the forefront. Ride-hailing firms across the world have been innovating with safety tech features to give their users greater peace of mind, such as an in-app emergency SOS button, live location sharing via mobile GPS, and even more advanced tech like selfie recognition for drivers and passengers to deter potential crimes.

These innovations address public demands for greater safety in their day-to-day commutes. The good news is that traditional players need not reinvent, as they can leverage these existing in-app safety features by tech companies, which are easily scalable and implementable for all users. Setting minimum safety standards for all players in the transportation network will be a crucial step in serving the needs of our people – their demand for safe point-to-point travel.

Secondly, governments need to consider how to ensure a level playing field to empower all drivers across traditional and ride-hailing models to access equal economic opportunities through technology. I have shared my opinion that ride-hailing is here to stay and will continue to play a significant role in uplifting the transportation sector. At the same time, we must find a way for ride-hailing and traditional taxi businesses to co-exist. Traditional taxis are a critical backbone of every country’s public transport network, and they continue to serve commuters through street-hails.

Seeing ride-hailing versus traditional taxi industry as an “either/or” choice is limiting. The mindset needs to shift to how an integrated industry of drivers can continue to stay relevant to the changing needs of commuters, and how taxi drivers could use ride-hail jobs to supplement their street-hail income and earn better incomes. Starting from a mindset of coexistence, regulations can ensure that all players integrate in a seamless mobility network geared toward serving the public’s critical transportation needs.

Take, for example, the successful case of seamless integration of industry for the benefit of consumers in Singapore. The largest taxi player, Comfort DelGro, worked to create its competitive edge by improving its app for passengers and helping its drivers to embrace change and pick up digital skills to take advantage of technological improvements (footnote 2).

The taxi company is also set to introduce a dynamic pricing system for its drivers and enable them to gain a new revenue stream through ride-hailing.

Blue Bird, the biggest taxi operator in Indonesia, has also worked on advancements to become more competent, employing electric vehicles and leveraging data to improve efficiency and lower costs (footnote 3). These forward-looking initiatives have propelled taxi operators to coexist successfully with ride-hailing players to contribute to a public transportation system that aims to maximise benefits for consumers.

Lastly, governments can work with the private sector and leverage digital innovation and data to solve long-standing problems for their nation. By digitising different modes of transport, the Thai government can work with ride-hailing operators to analyse traffic patterns inferred from anonymised GPS ride data to help them gain insights into how to solve urban problems. This could be a game changer for crowded cities such as Bangkok, as governments are looking for solutions to encourage people to rethink owning vehicles, to reduce frustrating jams and air pollution.

For example, the Transport Ministry and relevant government authorities are working with private sector players like Grab and Toyota Mobility Foundation and academic institutions such as Chulalongkorn University to use Rama IV Road – one of the most congested roads in Bangkok – as a test bed to develop smart mobility solutions that can help contribute to easing traffic congestion and pollution. Starting with Rama IV Road as the pilot, this will then be scaled to other congested areas in Bangkok.

Here, our government will play a critical role in formulating the right policies which will create a balance between safeguarding public interests and allowing space for innovation to flourish. Supportive regulation for digital transformation by private enterprises creates better efficiencies and synergies, which in turn increases countries’ global competitiveness and encourages more innovative services and products that ultimately benefit all Thais.

Prime Minister Prayut Chan-o-cha pledged in his most recent policy manifesto to increase the country’s digital competitiveness and move Thailand into the “new economy”, powered by innovation to complement existing industries. This is to ensure that no Thai gets left behind in this digital age. As Thailand advances its Industry 4.0 ambitions, it needs to show its readiness to embrace digital businesses and technological innovations. This positive progress in the legalisation of ride-hailing, which has accelerated the growth of Thailand’s Internet economy at an unprecedented pace, is the best testament to its people.

There is potential for Thailand’s Internet economy to grow even faster – at the pace of Indonesia and Vietnam, which are leading the way forward. The legalisation of ride-hailing in Thailand is a stride in the right direction. It not only shows the new government’s drive to allow innovation to flourish for technology businesses, but also its commitment to enable every Thai citizen to be part of the fast-growing digital economy and have more choices and opportunities to improve their livelihoods.

Amid the rise of technologies and innovations, the world continues to shift to meet public demands and behaviour. Ride-hailing is a good example of this transformation. Thailand will be able to reap the full benefit of such innovations if it continues down this path towards 4.0.

Associate Professor Saksith Chalermpong

Contributed by Associate Professor Saksith Chalermpong, PhD, deputy director at the Transportation Research Institute, Chulalongkorn University.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of the Nation editorial team.

1. https://www.temasek.com.sg/en/news-and-views/subscribe/google-temasek-e-conomy-sea-2019.html

2. https://www.straitstimes.com/singapore/transport/cab-firms-need-to-improve-apps-cabbies-have-to-develop-digital-skills-josephine

3. https://asia.nikkei.com/Business/Company-in-focus/Grab-and-Go-Jek-face-resurgent-rival-in-Blue-Bird

 

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