Tech agencies urged to back local startups

Tech agencies urged to back local startups

Indonesia provides model for association

A House committee plans to urge the Digital Economy Promotion Agency (Depa), Electronic Transactions Development Agency (ETDA) and the National Innovation Agency (NIA) to help local startups thrive in a market now dominated by foreign players.

The three agencies need to discuss how they can help strengthen local startups, including legal issues, said Pakornwut Udompipatskul, vice-chairman of the Committee on Communications, Telecommunications and Digital Economy and Society.

The Startup Act has yet to be implemented because it has been under consideration by the Council of State for two years.

"Our committee plans to call on the agencies to support startups, as they are important engines driving the country towards Thailand 4.0," Mr Pakornwut said.

His remarks came after the Thailand Tech Startup Association recently told the committee that a policy was urgently needed to shore up local startups.

One of the association's proposals concerns the Indonesia model, under which data sovereignty and fair tax collection from startups are assured. For example, only local startups are allowed to have access to the government's transport data.

"All major unicorns [valued at over US$1 billion] from Indonesia are local startups, such as Tokopedia and GoJek," said Panachit Kittipanya-ngam, president of the association.

Thailand still has no unicorns, he said, and the major players are mainly foreign operators such as e-commerce and ride-hailing providers.

Accordingly, important data such as spending behaviour is collected and owned by foreign operators.

Policymakers should adopt data sovereignty and make data subject to laws and governance structures within the nation, Mr Panachit said.

Fair tax measures should also be heeded, he said.

"If the government cannot collect VAT from foreign operators' services, it should lower taxes applied to local operators to create fair competition," Mr Panachit said.

Instead of inviting major global players to invest in Thailand, the government should look to promote local operators, he said, and policymakers should find ways to support local startups' services to boost their revenue.

The government can serve as the startups' customer; for example, a policy can be rolled out to encourage each ministry to support at least one product provided by a local startup.

The government can help accelerate private companies' investment in local startups by setting up a matching fund.

For example, investment in the fund by the government and the private sector could be at a ratio of 2:1, targeting education technology startups, Mr Panachit said.

Additionally, the government can provide an open API (application programming interface) platform to help local startups save on costs and time.

Policymakers can also support local startups to expand overseas by offering subsidies for trademark registration cost or loans for overseas registration, Mr Panachit said.

Thailand has too many startup events and exhibitions held by state agencies, a source at a startup said, adding that these functions tend to be aimed at image-boosting rather than improving the local industry.

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