Thailand’s Digital Boom Is Powering SMEs But New Rules Risk Slowing Growth and Increasing Costs

Thailand’s digital economy has become one of the country’s strongest engines of growth. Over the past decade, the value of online commerce has increased from around THB 160 billion to a projected THB 1.6 trillion by 202. This momentum is visible everywhere from the rise of homegrown beauty and lifestyle brands to farmers and micro-entrepreneurs selling directly to consumers through social platforms. Digital retail allows small businesses to reach customers around the world, better manage costs and compete on a more equal footing with larger players.

One example is Journal, a Thai beauty brand that built international demand for its signature body oil, with around 60% of their sales coming from e-commerce channels. Another is Alto Coffee, a small specialty roaster founded in 2010 that relies on its website, LINE Shop, and marketplace platforms to ship beans and capsules nationwide . These are not isolated cases. They reflect a broader reality: over 92% of Thai consumers have made an online purchase in the past six months and SMEs use digital platforms to access ASEAN’s US$230 billion online economy.

But even as Thailand’s digital economy accelerates, proposed reforms mean that the regulatory environment is shifting toward more burdensome and potentially costly rules that will impact the many small businesses using digital platforms including e-commerce and social media to succeed. The reforms include the recently proposed draft guidelines  by the Trade Competition Commission of Thailand and a proposed Platform Economy Act, both of which would add to the existing rules under the Royal Decree on Digital Platform Services.

The way in which some of the reforms are proposed may increase compliance costs without clearly strengthening consumer protection. Key concerns include:

• Some rules may create burden without any evidence of harm to the market or consumers
• Multiple authorities may issue rules covering similar activities, creating duplicated requirements and uncertainty for businesses.
• Vague or expansive legal language increases compliance burdens without delivering better outcomes.

This sort of heavy-handed approach risks driving up compliance costs for digital businesses. It will have consequences not only for SMEs but also for innovation and investment by the digital platforms themselves. As a result, consumers may face higher prices or diminished choice.

Analysis by the Southeast Asia Public Policy Institute shows the proposed rules could cost Thai SMEs selling online THB 5–12 billion in lost revenue. For a small seller, this is money that might otherwise go toward hiring staff, investing in digital marketing, or expanding product lines. For many small businesses already dealing with rising costs and tougher competition from regional sellers, these additional burdens could slow down not accelerate their growth.

The Institute’s analysis also indicates that higher compliance costs could reduce the overall output of the Thai digital economy by up to THB 200 billion by 2030. That is equivalent to losing one full year of expected sector growth.

We acknowledge the need for clear rules, but as other digital economies have shown, regulating the digital space can protect consumers without holding back innovation. Countries like Singapore, Japan, and Korea have taken a flexible approach. This includes thorough impact assessments before introducing new measures and maintaining ongoing discussions to understand how rules affect SMEs in practice. These countries have sought to ensure their digital regulation is effective, predictable, and targeted to specific harms.

Thailand can take a similar path. As policymakers consider new rules, several priorities can help shape long-term digital growth:

1. Focus on demonstrable harms: Regulation should be targeted at specific, evidenced harms that are not addressed by existing laws, so the burden of compliance isn’t imposed pre-emptively on businesses when there’s no evidence of behavior that needs to be regulated.
2. Conduct full regulatory impact assessments: Before introducing new obligations, regulators should also evaluate potential economic effects in detail. This allows policymakers to understand whether a requirement may create unintended pressure on SMEs, increase consumer prices, or discourage innovation.
3. Maintain ongoing consultation channels with digital businesses: Like all businesses, SMEs need clarity and predictability. Regular dialogue rather than one-off consultations helps ensure new regulations are practical and targeted.
4. Strengthen coordination between government agencies: Overlapping mandates can create uncertainty and increase compliance burdens. Ensuring coordination across government can foster a better environment for digital businesses.

Thailand’s digital transformation is powered not only by strong consumer adoption but also by the creativity and adaptability of millions of entrepreneurs who have embraced digital tools to build their livelihoods. The country’s progress depends on whether new digital specific regulations reinforce this momentum or unintentionally slow it down.