Digital industry set to record strong growth

Digital industry set to record strong growth

Depa anticipates double-digit boost

Mr Nuttapon says the digital industry will achieve double-digit growth this year as users continue to shift to use digital services.
Mr Nuttapon says the digital industry will achieve double-digit growth this year as users continue to shift to use digital services.

Thailand's digital industry is expected to see double-digit growth this year, buoyed by a strong digital service sector, according to the Digital Economy Promotion Agency (Depa).

The digital industry is projected to reach 727 billion baht in value this year, up from 650.5 billion baht in 2020.

"The digital industry will achieve double-digit growth this year as users continue to shift to use digital services," Depa president Nuttapon Nimmanphatcharin said in a virtual event that disclosed the agency's Thailand Digital Industry 2020 survey results.

The survey was jointly conducted by research and technology training provider IMC Institute.

To continue momentum and innovation, Thailand needs to ease the legal burden to attract foreign investment, he said. There is a need to support the Employee Stock Ownership Plan (Esop) and amend the Foreign Business Act to encourage the establishment of joint ventures by overseas companies.

The digital services industry had shown exponential growth, reflecting a consumer behaviour shift under the new normal. Meanwhile, the hardware and smart devices sector shrank sharply in 2020, but still remained the sector with the highest value, he said.

Thailand's digital industry is moving towards a more service-based economy, he said.

While the market value of the software market contracted slightly, the digital workforce increased in every industry, although it is still insufficient to meet the needs of entrepreneurs, especially when it comes to advanced digital professionals such as programmers and developers, he said.

Last year, the digital service sector showed year-on-year growth of 44.4% to 244 billion baht, including 100 billion baht from online media, 68.1 billion baht from e-logistics, 45.3 billion from e-retail, 18.4 billion baht from fintech and 7.6 billion baht from e-tourism.

In 2021, the digital service sector is expected to grow 25.1% to 306.3 billion baht.

Workforce in the digital service industry rose 17.9% year-on-year to around 86,000 people, mainly in the e-logistics business, including delivery drivers, Mr Nuttapon said.

Many digital service operators are voicing concerns about the shortage of talent, particularly programmers, he said.

The software and software as a service (SaaS) market in 2020 saw a 2.61% drop in value to 131 billion baht, weighed down by a sluggish economy due to the pandemic.

Although business operators have tried to adjust to a new business model by focusing on digital transformation, there are some organisations that have postponed investment and this cannot stimulate overall software market growth as normal, Mr Nuttapon said.

The survey also showed the hardware and smart devices market fell 8.34% year-on-year to 274 billion baht in 2020, resulting from the pandemic-induced lockdown.

The sale of computers in 2020 declined by 5.63% compared to 2019 but in terms of total computer market value there was an increase of 4.62%.

According to Mr Nuttapon, the enforcement of e-service law from Sept 1, which obliges foreign digital service providers to register for value-added tax (VAT) and pay VAT in Thailand, is expected to help drive the Thai digital industry towards an e-service based economy.

Thanachart Numnonda, executive director of IMC Institute, said the pandemic is the driving force for society to adapt faster to the use of digital technology.

In the software segment, there will be a shift towards cloud computing usage, he said, noting that the hardware and smart device market also saw a decline in import value in 2020.

However, the hardware and smart devices market is expected to bounce back this year to compensate for the decline seen last year.

"The digital service industry in all sectors will still grow as consumers change their behaviour through the use of more online services," Mr Thanachart added.

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