Digital economy should shift focus to start-ups

Digital economy should shift focus to start-ups

The government's digital economy plan should focus more on developing domestic technology start-ups to attract future venture capital, says a start-up expert.

"You would have a lot more value to gain if you help the start-ups at the earlier stages because if you help them and you keep them here, then they are going to go to the next level and get venture capital and investors [coming to] Thailand," said David Shelters, founder and editor of Thailand's start-up review website.

"Then tech start-ups are going to get deals with private equity people and eventually initial public offerings. I think it is more productive to support the early stage companies as they can eventually bring value throughout the successive stages until they become listed," he said.

There should be more policies geared towards crowdfunding by the Securities and Exchange Commission and providing greater funding for software development entrepreneurs engaged in technology start-ups, which can subsequently help major businesses with technological system development, said Mr Shelters.   

Greater liberalisation and transparency in the telecom sector should also be examined in order for companies, both major ones and start-ups, to reap benefits on a level playing field, he said.

Mr Shelters said there were also different departments following their own digital economy agenda, which is not an ideal way to formulate an integrated strategy to transform Thailand's economy into a digital one.

The digital economy plan is a flagship initiative proposed by the military government, but scepticism persists as the timing of the 4G spectrum auctions remains uncertain, while draft legislation related to the digital economy, particularly the cybersecurity bill, has ignited concern among experts and activists about the possibility of the abuse of power by the state.

Section 35 would allow the national cybersecurity committee, established under the bill, to gain access to people's personal information through email, telegraph, fax and electronic devices in the name of national security.

Although the government's intention to provide tax breaks and incentives for international companies to establish their headquarters in Thailand could attract greater corporate relocations, it is difficult to compete with Singapore in this sphere and the plan would only help companies situated at "the top of the food chain", said Mr Shelters.

Policies involved with registering a business in Thailand and auditing laws are the main obstacles hindering the development of domestic technology start-ups since these policies and laws are based on traditional business models that do not support cash-strapped start-ups in the first few years, he said.

"The cost of doing all these monthly filings is too high for a company that does not make much revenue and it prevents foreigners setting up a start-up here," said Mr Shelters.

Many Thai tech start-ups have opted to register in Hong Kong or Singapore to avoid the hefty registration fees here and obtain greater institutional funding overseas, he said. Last year's funding for domestic tech start-ups hit US$41 million with 19 transactions, up from $7 million for 11 transactions in 2013, noted the Thai Startup Funding Report.

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