Deep digitalisation and transformation are the keys to speeding up Thailand's recovery from the pandemic, says the World Bank.
Speaking at a virtual event, "Thailand Economic Monitor. Living with Covid in a Digital World", Ndiame Diop, World Bank country director for Brunei, Malaysia, Philippines and Thailand, emphasised the importance of deep digitalisation.
He said the Covid-19 pandemic has created a unique opportunity for Thailand to catalyse innovations by inducing firms and customers to embrace digital solutions.
"Thailand is in a unique position to capitalise on these digital dividends created by the pandemic," said Dr Diop. "[Deep digitalisation] represents a key building block to an innovation-led growth model which has emerged as a critical strategy for Thailand to escape the middle-income trap."
According to the bank, deep digitalisation is characterised by the digital transformation of back-end business solutions, internal business processes and supply chain management solutions. These factors are linked to higher resilience and superior firm performance, revenue, and resiliency.
Fastrack factors
For deep digitalisation to happen in Thailand, Dr Diop urged Thai policymakers to pay more attention to three areas -- digital market competition enhancement, better accessibility to financial innovations, and expansion in digital and complementary skills.
The bank's senior economist, Jaime Frias, said Thailand must accelerate its adoption of technology first before it can reach the ambitious target of becoming a high-income country by 2037.
He offered three key areas that need major improvement -- competition in digital markets, innovation finance for digitalisation, and digital and complementary skills.
"Thailand must introduce regulations that can stimulate dynamism by promoting the entrance of new firms to the digital economy. It is also important to promote data availability and data sharing without infringing data privacy," Mr Frias said.
Thailand, he said, should expand mechanisms to promote transparency and provisions to prevent spectrum hoarding so that all firms have equal access to quality broadband services.
Nonetheless, he praised Thailand for introducing policy instruments that promote equity, such as a private equity SME trust that has been implemented since 2017.
Thailand could scale up the efforts by aligning regulations with international practices, he said. Global investors believe that Thailand's market is not as attractive because there are only a few options to exit, the bank found.
What's more, the country should expand its female labour force participation and enhance the availability of foreign professionals to bridge skills gaps.
Recent highlights
Thailand has been hit hard by the pandemic. Still, the World Bank said the country's resurgence in exports, the border reopening, and significant fiscal support have contributed to a gradual recovery.
Nonetheless, the timing and strength of the recovery lies in the progress of vaccinations.
"This is an important challenge for Thailand, which is behind many countries in the region including Malaysia and Indonesia," he said. "Good progress will improve the prospects for consumption and investment and allow a fuller reopening of the country to international tourists, which is critical for the economy."
Looking beyond Thailand
The pandemic is hindering economic progress and disrupting the momentum of the global recovery. One example is supply chain challenges. These have allowed an imbalanced recovery to fester.
According to the bank, China is projected to have faster-than-expected GDP growth of 8.5% in 2021, while other Asean members such as Indonesia and Philippines are expected to grow at above 5%.
The bank said the global recovery is set to continue next year, but it will be slow progress as the pandemic's unpredictability remains a big factor.