Digital deficit must be addressed

Digital deficit must be addressed

Local operators require more support

Thailand should consider the "digital deficit" when planning the country's economic future because of the huge spending on digital services provided by foreign operators, says e-commerce pundit Pawoot Pongvitayapanu.

The spending on such services is estimated to reach 200 billion baht a year.

The Revenue Department said it collected 3 billion baht in value-added tax (VAT) on e-services provided by foreign online platforms between September 2021 and January 2022. The e-service tax law came into force on Sept 1 last year. The department previously forecast that some 3 billion baht would be collected for an entire year.

The five-month period saw Thai consumers spend 44.5 billion baht on the e-services provided by foreign platforms, including online advertising, e-commerce, music, movies, game subscription services and online bookings, said Mr Pawoot, a founder of Tarad.com, a local e-commerce solution provider.

This tally only includes the 172 foreign service providers registered with the Revenue Department. The true total could reach 200 billion baht per year as many foreign digital service providers are still not registered, he said. The amount is certainly higher than the 107 billion baht generated by the country's rice exports, or the 172-billion price tag for oil imports last year, said Mr Pawoot.

"To put it simply, Thailand needs to double rice exports to catch up with the spending on digital services provided by foreign operators," he said.

Mr Pawoot said the government should work with various digital-related organisations in Thailand to draw up a "digital framework" to move local digital service operators forward as part of a short- and medium-term plan, while imposing some barriers on foreign operators.

"South Korea and Indonesia are providing support to local digital industries while ushering in measures that are not too friendly for foreign operators to provide services there, known as non-trade barriers," he said.

Thailand also needs to analyse which kinds of digital services are dominated by international players, said Mr Pawoot. Online advertising and e-commerce have foreign firms controlling the local markets.

Digital media spending in Thailand grew 18% to reach 24.8 billion baht in 2021, according to a report jointly commissioned by the Digital Advertising Association of Thailand and market research firm Kantar Thailand. It is forecast to grow 9% in 2022. According to the "Digital 2022: Thailand" report, Thailand had 54.5 million internet users as of January this year, or 77.8% of the total population.

The latest "e-Conomy SEA 2021" report by Google, Temasek and Bain estimated Thailand's digital economy at US$30 billion in 2021, a jump of 51% year-on-year.


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