Tempting tech

Tempting tech

As the government tries to woo foreign firms to invest here, green energy policies have become a crucial lure

Microsoft Thailand plans to use the nation as an AI hub in Asia by establishing an AI Centre of Excellence and developing its cloud data centre region.
Microsoft Thailand plans to use the nation as an AI hub in Asia by establishing an AI Centre of Excellence and developing its cloud data centre region.

The government of Prime Minister Srettha Thavisin has visited several large conglomerates over the past few months in an effort to increase foreign direct investment (FDI), notably in digital and high-tech industries.

The previous administration made some overtures and a few deals were reached in the early stages of this government.

During meetings in the US last month, Mr Srettha met with executives of technology giants to persuade them to invest in Thailand, noting the country is ready to serve as a production base. At a separate meeting in New York, he met with electric vehicle (EV) manufacturer Tesla to discuss investment.

The move aligns with the Digital Economy and Society Ministry's "Go Cloud First" policy, aiming to woo FDI from foreign cloud and data centre providers.

While the doors to Thailand are wide open, there are questions about the ability and attractiveness of the country to lure large tech-driven industries, particularly clean energy, as an appropriate cost structure is essential for this kind of innovation.


In November, Mr Srettha announced collaborations with Google and Microsoft.

Under the strategic collaboration with Google, the country and firm will partner to improve Thailand's digital competitiveness and accelerate artificial intelligence (AI) innovation.

According to the memorandum of understanding for the partnership with Microsoft, Thailand and the company will partner to use AI and cloud technology to strengthen the country's economic competitiveness.

Microsoft said it plans to work towards achieving 100% renewable energy usage for potential investments in the country.

Last year Amazon Web Services Thailand, the cloud computing arm of Amazon, announced a plan to invest US$5 billion in Thailand over the next 15 years.

Government spokesman Chai Wacharonke said the country's plan to adopt a "utility green tariff" is one of the factors drawing the tech firms' interest.

Recently Dhanawat Suthumpun, managing director of Microsoft Thailand, said the company plans to use the nation as an AI hub in Asia by establishing an AI Centre of Excellence and developing its cloud data centre region.

The AI hub will enable the company to invest to build a cloud data centre region, which is a cluster of data centres in the country, he said.

Mr Dhanawat said the government will have to support renewable energy resources to feed such data centres. All of Microsoft's data centres globally are expected to use renewable energy by 2025, he said.

Policymakers should amend state procurement rules to support long-term cloud usage, said Mr Dhanawat.

"We're still in discussions on the issue of government tax incentives to support the establishment of our data centres," he said.


Supparat Sivapetchranat Singhara na Ayutthaya, chief executive of hyperscale data centre firm ST Telemedia Global Data Centres (Thailand), told the Bangkok Post earlier Thailand can be a strategic regional hub for data centres as their investment value in Thailand is expected to reach 200 billion baht with a capacity of 500 megawatts in five years.

He said as electricity bills account for 40% of data centre expenses, the government should reduce electricity costs to be on par with Malaysia in order to attract more investment from data centres and tech companies.

Policymakers should deem data centres as critical infrastructure and offer attractive investment incentives, similar to other countries, proving Thailand is serious about attracting cloud providers and data centre investment, said Mr Supparat.

Energy is an important factor in the data centre business as electricity prices are based on the market and state support measures, he said. Firms have to consider electricity costs in a country and renewable energy options, said Mr Supparat.

He suggested the Electricity Generating Authority of Thailand consider selling electricity directly to data centre operators as their demand is expected to jump to 500MW in a few years.

The premier's wooing of big data centre providers could lead to high electricity demand and rising costs if there is not a measure dealing with this issue, said Mr Supparat.

If electricity generators sell power directly to data centre operators, it will help reduce energy costs and increase the country's ability to be a regional digital hub, he said.

Mr Supparat proposed the government increase promotion of solar farms to provide renewable energy as electricity demand rises with the economy entering the AI era.


The utility green tariff is expected to be implemented in January next year and should be welcomed by foreign investors, no matter the cost, according to a source at the Energy Ministry who requested anonymity.

This type of levy determines the price of power bills for factory owners that need to use clean energy to achieve carbon neutrality, a balance between carbon dioxide emissions and absorption, part of worldwide efforts to fight global warming.

Authorities are working on the tariff calculation, but have yet to decide on a final rate, said the source.

The process requires a public hearing and should take more than a month before the tariff rate is published in the Royal Gazette, which is expected in 2024.

The rate will include discounts based on the types of renewable energy and power consumption, the source said.

Whether the green tariff will be expensive should not be an issue because foreign investors are more focused on a stable power supply for their businesses, said the source.

"Large companies will accept the rate if it is calculated in a transparent manner," noted the source.

The green tariff would form part of the second phase of the state renewable energy scheme, with planned electricity generation capacity of 3.6 gigawatts.

The scheme was delayed because of the lengthy process of forming a new coalition government following the general election in May.

The source said clean energy supply can be a strong point for Thailand in attracting foreign investment amid global campaigns to promote businesses that create a smaller carbon footprint.

Mr Srettha meets Ruth Porat of Google at a meeting last month.


Thailand has abundant renewable resources to attract foreign businesses, but prices of renewable energy are so high they can deter investors, said the Federation of Thai Industries (FTI).

Solar, wind, biomass and biogas can serve clean power generation, which is increasingly crucial as entrepreneurs worldwide are adapting businesses to cut carbon dioxide emissions and avoid non-tariff barriers imposed for carbon-intensive manufacturing, such as the EU's recent regulation, said Kriengkrai Thiennukul, chairman of the FTI.

"The availability of raw materials used as renewable energy fuel puts Thailand at an advantage in a competition to draw foreign investment, but unfortunately our renewable prices per unit are much higher than those from fossil fuel-derived energy," he said.

"Fair and appropriate prices should be established for clean power trade in the country, similar to those in other countries."

The power tariff for domestic electricity is mainly generated from fossil fuels and is costly, said Mr Kriengkrai. The government cut the power tariff to 3.99 baht per kilowatt-hour (unit) from 4.45 baht a unit, but it is still higher than rates in neighbouring countries.

Gas makes up around 60% of the fuel used for power generation in Thailand.

A reduced domestic gas supply caused the country to import more liquefied natural gas (LNG) last year. Fluctuations in LNG prices were blamed for driving up electricity prices in Thailand.

According to the Energy Ministry, Thailand expects to finalise its new national energy plan (NEP) by the end of this year, which is based on its commitment to cut carbon dioxide emissions.

Under the NEP, renewables will make up almost 50% of fuel used for power generation by 2037.

Mr Kriengkrai said the government should carefully set the green tariff rate to ensure it will be attractive to draw foreign investment.

Authorities should check the green tariffs in other countries and use this information to determine the Thai tariff, he said.


An EV policymaker who requested anonymity said convincing Tesla to set up an EV production base in Thailand would not be easy as the company already has a plant in China with plenty of capacity to cover the global market, including Asia.

The policymaker does not see a need for Tesla to set up a Thai production base, other than to play off geopolitical tension between China and the US.

In addition, the volume of EV production required to set up a factory is a minimum of 30,000 units per year, reaching 100,000 units annually within 2-3 years, said the source.

The domestic volume has not yet reached that level, said the policymaker.

The government also reduced the battery EV subsidy from a maximum of 150,000 baht per unit for EVs with a price not exceeding 2 million baht and a battery capacity of 30 kilowatt-hours (kWh) or more, to only 100,000 baht per unit with a battery capacity of 50kWh or more.


Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the private sector has been monitoring the government's policy of attracting FDI in technology-related industries.

Thailand's active promotion has led several Chinese companies to enter the market, establishing production facilities in the country.

"The premier has opened new markets and led Thai businesses to participate in roadshows in China, Saudi Arabia, Japan and many other countries," said Mr Sanan.

"The strategies prioritised by the government and collaborative efforts with the private sector, known as Team Thailand Plus, are crucial in advancing economic goals."

However, he said the private sector knows to continue attracting FDI to Thailand, the country needs to produce many more skilled personnel in modern technology.

Furthermore, Thailand's shift into an "ageing society" has reduced the working-age population, Mr Sanan said.

The government needs to prepare suitable incentives, such as facilitating visa and work permit procedures, tax-related measures, and appropriate residential accommodation policies to help attract skilled foreigners to work and reside in Thailand, contributing to the country's development, he said.

Wichit Chantanusornsiri and Phusadee Arunmas

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