Exclusive: Thailand’s plans to invest $425m in startups
Interview with the Permanent Secretary of the Ministry of Finance.
The taps are open in Thailand. The country is spending US$425m (THB15,000m) to boost its startup ecosystem.
It’s all part of the plan to become “the ASEAN hub for startups”, Somchai Sujjapongse, the Permanent Secretary of the Ministry of Finance tells GovInsider.
He caught up with GI to explain his plans, set out his priority areas, and discuss how he’ll measure success.
The government has identified four key areas that are “the new growth engine” for the economy, he explains. These are: food and agriculture; high tech (robotics, smart devices and sensors); healthcare; and lifestyle and culture (particularly tourism).
These areas create “lots of opportunities that value add to the Thai economy”, the Permanent Secretary says. “Once we provide the appropriate ecosystem for startups to grow in Thailand, we believe that startups from other countries will come in.”
The first step to building a startup culture, he says, is to “increase the awareness” of the citizens of financial opportunities. One of the ways he plans to do this is by setting up competitions among startups to achieve specific tasks.
The National Startup Committee (NSC) will first identify problems and services that can be fixed or improved on to encourage innovation. For instance, “how can we set up the Thai version of Line?” he says. Startups will be encouraged to contribute solutions and will be given cash incentives as rewards.
[blockquote]”How can we set up the Thai version of Line?” [/blockquote]
Startups often start with tight funding so to save on rent, staff will be offered co-working spaces by government. These shared work stations can be occupied by multiple startups at the same time.
The government is also restructuring the “nationwide university curriculum to better educate the new generation about startups”, he says. Universities will formulate the course structure online, and will teach new courses on these topics.
High tech startups are to be exempted from income tax, capital gains tax and dividend taxes, he says. The Government Savings Bank will also provide them credit lines up to THB10m per startup, while the Thai Credit Guarantee Corporation, in collaboration with the Thai SME Bank, will give a load of THB30m per startup (US$851,000) with an overall budget of THB15,000m (US$425m).
The private sector will advise on how to manage these investments, he adds. “The funding decision making process is most efficiently made by the experts in the venture capital/ private equity industry”.
What will this achieve?
“With the new ecosystem that we are building, we expect to create at least 3,000 startup projects within the first year of running the programme, and ultimately produce 18 ‘unicorn’ projects in the long run”, the Permanent Secretary adds.
The government plans to build four startup districts in Bangkok, and if successful - expand across the country. The districts will be “the centre for networking between startups and investors, as well as for exchanges and transfers of knowledge and experience between startups”.
The four districts in the pipeline are: Yothee Startup District in Payathai; Krung Thon Buri Startup District in Thonburi; Siam Square Startup District in Pathumwan; and Charoen Krung Startup District in Sampanthawong. The first one is scheduled to be ready by this year, and the latter three by 2017.
Lessons from overseas
The NSC is also turning to other countries with startup expertise for help. “We look into the success stories of those countries”, he says, and invite them as speakers to speak at events to establish ties with them.
So far, China, Korea and Japan are guiding them - providing advice and manpower so they are mentored from the get-go. These are professors and “very successful” business people in the startup arena, he adds.
Thailand isn’t just confining its views to the east, however. “We have got to learn more from other countries that are successful in promoting startups. For example, Israel or other European countries”, Sujjapongse says.
The NSC also has plans to build a national web portal to serve three functions: a digital marketplace for websites to network between startups; a centralised source of information; and as a tool to promote awareness to the public.
“We may face some of the problems along the way”, Sujjapongse, but “we are going to do our best to reach our goals”. The government is certainly putting its money where its mouth is.
Now read: Exclusive interview, Thai Prime Minister’s Digital Advisor
Image by Mark Fischer, licensed under CC BY-SA 2.0