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BEIJING - Skills shortage in IT sector is holding up Thailand’s plan to transform from cash-based to high-tech economy.

Astate-of-the-art IT infrastructure is not very useful if no one knows how it works. 

Although Thailand has a high level of mobile phone and Internet penetration, it does not have enough people with the skills to enable the kingdom’s transformation into a digital economy.

“The main challenge in becoming a full digital economy is the requirement of human capital,” said Luxmon Attapich, senior country economist for Thailand at the Asian Development Bank (ADB). 

“To sustain a digital economy, IT skills are needed. This is something Thailand will have to invest in. The silver lining here is, the hardware is there and it’s improving.”

According to a report by the Economist Intelligence Unit published in February, Thailand ranks eighth out of 11 countries in its Asian Digital Transformation Index. 

The index assessed the overall environment for digital transformation in organizations across three pillars: An enabling structure for information communication technology (ICT), a pool of relevant talent and the willingness to partner with others.

Digital transformation in Thailand cannot succeed if the country faces a shortage of skilled workers, especially in banking and logistics, said Jarit Sidhu, research manager of the International Data Corporation, a market intelligence firm.

Data specialists are not the only ones emphasizing the problems that result from the shortage of digital workers. 

Prinn Panitchpakdi, Thailand country head at investment firm CLSA, noted that education is a big issue in the kingdom. 

“The country needs to train people to prepare them for higher end industries,” he said. “ICT is creating more jobs and e-commerce is helping the government in these areas.” 

Prinn added that other growth areas that will require a higher level of technological skills include financial technology (fintech) and electronic registrations of national identity cards. 

E-payments, for instance, a subcategory of fintech, are growing as a result of government initiatives. Since October, Thailand has been deploying the first phase of its national e-payment system with the goal of transforming the country into a cashless society. 

The first phase involved launching an electronic money transfer service, called PromptPay, at all major Thai banks for peer-to-peer transfers. The second phase allows electronic payments for goods and services, personal income tax returns, and subsidiaries and welfare services. 

E-payments are poised to see rapid growth this year as the government has pledged to boost the service nationwide.

As of December 2016, Thailand had 475,000 electronic data capture, or EDC, devices, and the government aims to almost double that number this year to 800,000. EDC terminals are used to gather information from electronic payments, but they can be expensive for vendors, which has slowed the adoption rate.

“The collaborations between private and public sectors are helping to digitalize Thailand to benefit people and the nation as a whole. People are also receptive of this change,” said Sowakhon Udomvisesying, a communications and event manager at Digital Ventures, a fintech startup in Thailand.

The Thai mobile payment market is expected to record a compound annual growth rate of 37 percent from 2017 to 2021. Last year, the market registered a growth rate of 62.3 percent over 2015, reaching US$4.29 billion.

In terms of value, by 2021, Thailand is expected to reach US$23.4 billion in transactions, increasing from US$6.65 billion in 2017. 

However, shortcomings often associated with developing markets could hold the industry back.

“Thailand is an emerging market in the area of fintech and the demand for tech talent seems to be one of the key challenges for the growth of fintech in the near future,” said Udomvisesying.

The ADB’s Attapich agreed, pointing out that the country’s economy has long been based on cash, with the switch to digital still at a nascent stage.

“Thailand is still very much a cash economy,” he said. “Digital forms of payment are still not widely used.” 

More technical experts are needed to enable the switch to a more high-tech economy, Attapich added. 

Having said that, the government is putting more effort into increasing digital literacy, starting with its own officials. Prime Minister Prayut Chan-o-cha has put forward a Thailand 4.0 model, which aims to develop a value-based economy.

The policy not only aims to change the Thai economy but also to boost IT skills among government officials and to ensure access across different digital platforms by helping state agencies provide more effective, user-friendly services.

A lack of understanding among citizens on what digital transformation means is one thing. A lack of skills among government officials to help the public is another.

According to a survey conducted by Thailand’s Electronic Government Agency from October 2015 to April 2016, 86 percent of officials in most state agencies still lack digital literacy skills while public services remain non-user-friendly. 

In April, the government kick-started its digital skills training by partnering with two local institutes. It will run assessments for 15,000 government authorities and public officials to determine their skills level this year.

The goal of Thailand 4.0 is to change the country’s traditional farming businesses and small and medium-sized enterprises (SMEs) to “smart” enterprises, and help traditional services evolve into high-value services. 

SMEs play a significant role in the Thai economy, with 2.7 million SMEs and startups providing more than 10 million jobs nationwide. In total, these businesses are estimated to account for nearly 40 percent of GDP.

However, only 500,000 to 600,000 of these businesses are registered with the Ministry of Commerce. 

In addition to going cashless, the Thailand 4.0 policy aims to integrate digital services in all sectors including agriculture, tourism, education, the medical profession, investment, disaster prevention and public administration.

The prime minister hopes to complete Thailand’s digital transformation by 2021. 

“Besides the public sectors, the government also aims to drive the country to be ready for a digital transformation by rolling out the Thailand 4.0 policy,” said Udomvisesying at Digital Ventures. 

“This kind of activity helps facilitate innovation to take place in Thailand easily and effectively while still ensuring consumer protection stability. Take PromptPay — this newly launched service helps ensure the security of mobile and Internet financial transactions for customers.”

Implementing the policy with coherence and raising awareness is key to successfully transforming the Thai economy. 

About half of respondents to a February survey of 13,505 people did not know anything about the Thailand 4.0 concept, and only 27.7 percent of participants fully understood what it meant. The survey was carried out by Bansomdej Poll.

With a low ranking in global competitiveness, it will be a long journey for Thailand to become fully digitalized. It is now more important than ever to transfer knowledge across the country and prevent a digital divide. 

Dhiraphol Suwanprateep, a Bangkok-based partner at law firm Baker & McKenzie, acknowledged the challenges that the kingdom faces.

“In the short term, the biggest hurdles in the way of Thailand’s transformation to a digital economy largely depend on how Thai citizens, business sectors and government officials adapt to new technology and the digital ecosystem,” he said, “as well as their willingness to embrace new laws which may affect their daily lives and business operations.”

Published : May 20, 2017

By : China Daily/ANN