Back to previous page 1995 "Thailand IT Year," when the industry could be said to be coming of age with the imminent adoption of national policy called "IT 2000 - Thailand's IT Policy into the 21st Century." Early in 1995, commercial Internet services arrived with an access fee starting at 40 baht an hour with providers being Internet Thailand and KSC Comnet. The Internet saw a very rapid growth in less then a year The long-awaited Copyright Law covering software finally became enforceable in March and two months after the law took effect, the first raid was launched on a shop accused of selling counterfeit Sega video games, followed by the a raid of four shops in Panthip Plaza. One critical problem that Thailand still could not solve was the shortage of qualified IT manpower, despite attempts by then Banharn Silpa-archa government to allocate 2,185.5 million baht to increase computer literacy among students and to improve computer curricula, the supply could not match demand. In the public sector: IT had been implemented at many government agencies with the objective of providing more efficient services to the public. These included tax payment by computers, personal ID card registration as well as remote or distance education as well as live tele-education. The figures: The overall IT market was worth 31,184 million baht, a 39% growth from 1994. 271,300 PCs were sold. When the economy was booming, sales at the annual computer trade shows were brisk - as this view of the 1996 IT Trade Show indicates. 1996 The economic slowdown and political uncertainty which had a strong impact on private sector investment forced the IT industry growth to slow down, declining from an earlier prediction of 23 percent to be around 11 to 12 percent. However, the situation was not so bad across the board. IBM Thailand gave the whole market strong endorsement in early December with the announcement to invest in the equivalent of 14,000 million baht in a new hard disk production facility in Prachin Buri province. This past year could count as the great year for local PC manufacturers, as local brands made a great comeback after staying in the shadow of the international brands a few years ago. Atec, Powell and many more had reportedly enjoyed at least 80 percent growth as home market became of the highest growth business. The Internet had continued to be an even hotter topic this past year, with an estimated 40,000 paying users spread among the 16 registered Internet Service Providers (ISPs) now licensed. Meanwhile the concept of intranets was being introduced here. Of the 16 ISPs, some eight were actively in business. Despite promising predictions for software industry, software sales this year were reportedly fa below expectations, many software vendors had reported shortfalls of revenue by as much as 50 to 70 percent of the forecast figure. 1997 The first half of 1997 was pretty much business as usual for the information technology industry, and early forecasts in the year had promised increased sales of hardware and software - until he baht was floated on July 2, and took a nosedive against the dollar. (Actually 1997 started brightly by the introduction of a top-down policy to promote IT as a strategic industry to boost export by then prime minister Chavalit Yongchaiyuth.) The recession that followed hit IT companies hard. Some had seen their profit wiped out while others registered operating losses in 1997, though some help was forthcoming from some major suppliers. Many companies had implemented austerity plans, cutting back on staff and salaries. Samart, Sahaviriya OA Group and Olympia Thai announced salary cuts in August, followed by Datamat. The Value Systems said it planned to represent fewer products. To help customers made optimal use of their IT budgets, one strategy implemented this year was leasing which was pursued by four leading international suppliers - Compaq Computer Thailand, Digital Equipment Thailand, HP Thailand and IBM Thailand. The economic turmoil led to a new dimension for the industry - more cooperation among local IT suppliers. In October. local PC brand manufacturers formed the Computer Manufacturers Forum of Thailand in a bid to strengthen the local PC brand market and increase the quality of local brands to make them competitive with foreign products. Internet Service Providers (ISPs) also joined to establish the Thailand Internet Service Providers Club to strengthen cooperation and reduce investment costs. The year also saw an end to the troubled Revenue Department project with PCC and IBM Thailand. The project which had been the "most wanted" project of leading IT companies here when the bid opened in 1991 turned out to be a big loser for the winners as PCC and IBM finally withdrew from the project and were fined by the Revenue Department for incomplete work. The amount of the fine was not disclosed, but IBM had reported a big loss to the Commerce Ministry at the end of the year. Other projects that hit snags this year included a 23-billion baht integrated circuit plant planned by Alphatec Electronics and the government's Software Park project. One development that underlined the inevitability of globalisation was the Information Technology Agreement (ITA), to which Thailand was a signatory. Another issue that was not particular new, but which was rearing its head more ominously, was the Year 2000 problem, and Thailand's awareness to the problem was very low this year. The figures: The industry surprised everyone by ending the year at 42,646 million baht, another growth in value when compared to 36,903 million baht in 1996. However, sales volumes dropped sharply in almost every sector, meaning losses for a number of players in the industry. 1998 1998 saw Thailand's IT market suffer a big setback with the value of the overall industry being only 25,953 million baht, a 39% drop from 42,646 million baht in 1997. Many medium or smaller-size IT companies closed down their operations following the slump in demand. Many of those remaining on the scene survived by selling a stake in their business to foreign investors - often to those where an earlier business relationship existed - while others have trimmed down their operations to focus on core competencies. Several of those businesses that were still a wholly Thai entity were forced to reduce their size following years of rapid expansion during the economic boom period. Two leading IT distributors - Sahaviriya OA Group and The Value Systems - have sold stakes in their operations to foreign partners. Sahaviriya OA also announced in March that it had closed eight subsidiaries and had foreign debt to the tune of US$75 million and that it would to sell its office tower. The SVOA Group sold part of the company to its suppliers Acer Computer in Taiwan and Epson Computer in Japan, with both companies agreeing to convert their debt into common shares of the group. Its subsidiary, Sahaviriya System also failed a keep firm grip on Macintosh computers and Apple Computer announced in November that it would set up a representative office here in early 1999 and to appoint other distributors. Operations of subsidiaries such as SV Advanced Products, SV Telecom, Spectrum House, Thaisoft, SV Digital, SV-Hitachi Data System, SV Com Service and SV Communications were those shut down in March, while SV-Acer and SV-EDS dropped the "SV" part of their name in August. Meanwhile, another major distributor of IT products The Value Systems announced a partnership in November with NatSteel, the world's sixth largest contract electronics manufacturer. Meanwhile, Datamat has been selling shares to a foreign IT company. Three companies without turning to foreign investors were Control Data Group, TN Information Systems and Metro Systems, all system integrators, some of which have reduced certain unprofitable activities while keeping a focus on their core businesses. Another by-product of the recession was the large number of IT professionals that were laid off or "downsized". This changed the marketplace considerably, from being one where a skilled IT professional could name his salary to one where the would-be employer could again determine this. To cope with the sudden surplus of IT staff, in late 1997 the Siam Commercial Bank established the Foundation for Research on Information Technology (FRIT) to help find jobs for the many IT professionals made redundant last year and this year. Although the Government's IT budget had been reduced heavily this year and many IT projects had been scrapped or postponed, the Software Park project finally took off and it has been allocated some 262 million baht to buy space in the Vilailak building. Software is seen by many as the big hope for Thailand to assume a role in the world market in the information age and as acknowledging this, some industry movers and shakers joined together to form the Association of Thai Software Industry (ATSI) in the middle of 1998. The BSA and the SPA both said that the problem of software piracy had become worse as more Thai companies were allegedly using counterfeit software and home users continued to demand new software (games and educational software) but were unwilling to pay for the original product. These organisations announced in June that the piracy rate in Thailand had risen last year by 4% to 84% of all packaged software sold, while the value of packaged software circulating in Thailand in 1996 had dropped to $94.4 million from $137.6 million. However, computer game maker Electronic Arts World Inc has been moving in the opposite direction, competing head-on with the pirates with an aggressive pricing strategy and product localisation to combat the sale pirated copies of its software games. The big swing globally to embrace the Linux open source software operating system has had a strong component in the Thai marketplace, and this has been fuelled by several announcements over the past year, including a commitment by Informix Thailand to provide a choice of three flavours of Linux and a free version of Informix's database software. Also offering a strong endorsement to Linux was the National Electronics and Computer Technology Centre (Nectec). Nectec is working now on a draft national Electronic Commerce Framework. Six laws related to electronic commerce are expected to be submitted to the Cabinet before May 1999, according to Nectec. They include a data protection law, a computer crime/computer-related crime law, an electronic data interchange (EDI) law, a digital signature law, an electronic fund transfer law and a law ensuring the operation of the telecommunications business and organisations benefits the general public. Other new players arriving on the scene in 1998 included two Swedish suppliers of enterprise software, Intentia with Movex, and IFS - underscoring a healthy market for ERP software. QAD Inc announced a joint venture with Iris-Ifec Company Ltd to establish a regional hub in October California-based networking supplier, Linksys, and Ascend both opened offices here while Smart card supplier GemPlus also opened a representative office. Conclusion: Despite the continued economic slowdown, the IT industry is forecast to grow four percent this year, according to a joint survey by the ATCI and the Vendor Group of the Computer Association of Thailand. Continued demand this year is seen as coming from urgent needs from the government and the private sector to fix the Y2K problem, while the Government also predicts that the economy would improve slightly by the second half of this year. Any improvement in business climate should promote IT investment, since this is seen as a strategic tool to help increase efficiency in business competition. Back to top