Thailand's IT competitiveness slips

INFORMATION TECHNOLOGY RANKINGS

Thailand's IT competitiveness has slipped to 49th in 2009 from 42nd last year due to political unrest affecting the business environment as well as a lack of IT infrastructure, according to a study by the Economist Intelligence Unit (EIU), sponsored by the Business Software Alliance (BSA).

Carlo Parlade, BSA Director of Software Policy Asia Pacific, said this was a result of declines in both its foreign-investment policy ranking and PC-ownership ranking, which is a heavily weighted indicator in the IT-infrastructure category that is one of six key criteria for IT industry competitiveness.

This year, Thailand's foreign-investment policy ranking slipped to 35th, down from 29th last year. Despite an increase in personal computer ownership, its relative ranking fell by five places, from 47th in 2008 to 52nd this year.

In addition, Thailand also ranked 50th in the world in terms of IT infrastructure, a slight drop from 49th last year, because of the low broadband penetration rate.

For another criteria, business environment, Thailand saw a slight drop from 28th place last year to 30th this year due to political instability. In terms of legal environment, another key criteria, Thailand ranked 57th in the world in 2009, a small drop from 56th last year because the country still does not have a data privacy law and strong legal protection of intellectual property (IP).

In the Asia Pacific region, Thailand ranked 11th, down from 9th place last year.

The top five of the region also rank among the top 20 countries globally while the United States remains the top with Finland, Sweden, Canada, Netherlands, United Kingdom, Australia, Denmark, Singapore and Norway among the top 10, respectively.

Economies where broadband is pervasive scored highly in both the IT infrastructure category as well as the overall rankings. Many countries in Europe rank in the top 10 because they invest in broadband with Finland shifting its rank from 13 last year to second this year.

Australia, which falls within the overall top 10 ranking, is among the world's most prominent countries in developing broadband stimulus plans, showing how much importance their governments attach to improving broadband access. There is evidence to show that for every 10 percent rise in broadband penetration, there is a 1.3 percent rise in GDP.

However, broadband penetration and PC ownership continue to languish in emerging markets, putting their IT sectors at a disadvantage vis-a-vis more developed markets. While most developed economies boast PC (desktop and laptop) ownership rates ranging between 60 percent and 85 percent of the population, rates in many emerging markets with rapidly growing IT sectors such as China, India and Vietnam stay under 20 percent.

Broadband networks are a vital factor for IT competitiveness, and the competitiveness gap could widen for economies with slower adoption. If Thailand would like to lift its rank, it should rollout better infrastructure, both fixed and wireless broadband.

Protectionism will hinder recovery efforts and longer term sector competitiveness. According to the study, governments must strike a balance between support that encourages industry growth and investment, and that which introduces unfair market practices and protectionism that can harm competitiveness.

It is critical that governments in the Asia Pacific continue to support the growth of a strong technology sector, the study concluded.