The Productivity Challenge
Countries around the world are dealing with productivity slowdowns, and each is taking up the challenge through digital technologies. For Thailand, the pursuit of a digital economy is front and centre within the Thailand 4.0 framework of S-Curve industries, the “Digital Thailand” plan, the development of Smart Cities, and the BCG economy. Workplaces and business operations in Thailand are changing. This transformation was taking place prior to the pandemic but COVID-19 only compressed the challenge and then accelerated the pressure to change. The new normal has arrived at many companies which are rapidly incorporating digital technologies to improve how they operate, improve their workforce capabilities, and give a boost to their performance. Companies are needing to tap into a range of technologies to keep pace with ongoing advancements and to develop their businesses ensuring they are aligned with the latest innovations in collaborative and digital solutions benefiting their workforces and keeping them at the forefront of technology and productivity enhancements.
Addressing Multiple Criteria
In today’s digital age, organisations need the agility to operate with maximum efficiency and to be whenever and wherever their customers need access to them. The essence of agility is centred on pace, productivity, innovation, and flexibility – all of which are now key goals for most companies. Productivity matters because over the long run, it is the measure of how much more effectively a society can turn its available resources into valued goods and services. The Thai government and the BOI are focused on supporting strategic digital investments that contribute to longer-term productivity benefits to the economy and society. Achieving these objectives requires increased digitisation and the interconnection of all physical elements and infrastructure under the control of more advanced and intelligent systems. Digital technology adoption offers numerous advantages: it leads to business solutions which helps expand market opportunities, augments capital and contributes to gains in higher skilled jobs, further supporting improved workforce development. Thailand’s policy approach is one that integrates numerous agencies to work in concert, including the NIA, ONDE, and DEPA which are driving a more digital and competitive landscape, together with utilities companies working to strengthen the country’s digital backbone through submarine cable projects and support for digital infrastructure businesses.
Ready for a New Productivity Paradigm
To ensure that companies do not slip behind on digital adoption, the BOI is incentivising manufacturing and services businesses to adopt digital technologies with an eye to boosting productivity having recently added this option with an eligibility period through to the last working day of 2022. This is being done in conjunction with human resource development to accelerate training and grants for an advanced and high performing workforce, for which an MOU was signed last year. The link between increased use of digital technologies and greater productivity were shown in Accenture’s “digital density” index report, 1 demonstrating that a country’s “digital density” can provide a productivity boost that contributes to improved GDP, determined by a scorecard comprising over 50 indicators, including the volume of transactions conducted online, the use of cloud or other technologies to streamline processes, or the pervasiveness of technology skills in a company. Thailand is strengthening its digital index, together with the complementary need for the right human capital as companies that have better access to key technical, managerial, and organisational skills can fully reap the benefits in terms of overall productivity gains. As companies strive to lift their growth and competitiveness; the BOI unveiled an important boost – having added digital technology adoption for productivity improvement. Companies can receive a three-year CIT exemption accounting for 50% of the invested amount to improve productivity. Efficiency improvement measures are open to BOI and non-BOI promoted businesses, with an investment amount of no less than one million baht per project or 500,000 baht per project (for SMEs), excluding cost of land and working capital, and with a required digital technology adoption plan with no requirement of investments on machinery or equipment.
Speeding up Digital Technology Adoption
The technology revolution is transforming the world at an unparalleled speed. Thailand is no exception with 54.50 million internet users in Thailand and an internet penetration rate at 77.8 percent at the start of 2022.2 The BOI’s approach is to not only support digital technologies that provide gains to companies in terms of productivity enhancements – but also with an eye to broader societal gains and impacts. This effort is supporting the country’s continued embrace of technology, which will be essential for its future success. The sooner companies adopt digital technologies the better, for example, the cloud enables companies to utilise other technologies successfully, such as artificial intelligence, machine earning and big data analytics – which are covered in the BOI plan with privileges of up to eight years. The country is also at an advantage as a range of Thai companies have invested heavily in digital early on, notably the telecoms players in upgrading their networks, while many took advantage during the pandemic to sharpen their focus towards new digital platforms and technologies contributing to improved operations and workplace efficiency. Digital transformation is, therefore, an important component of the BOI’s efforts to support Thailand over the long-term and to build on continued gains – by recognising that these technologies offer vast potential to enhance the productivity of companies while having the ability to transform the economy.