Resilience and Agility: The New Mantras for Thai Businesses in the Post COVID-19 Era

The Thai government has introduced many measures in recent years to support a vibrant ecosystem for startups, with an aim to drive innovations and strengthen competitiveness of the overall economy. The country’s rapidly advancing digital industry has driven the development across the economy from hardware to software, data, system integration, application development, logistics services and the creative economy. The trend also boosts the prospects of Thai startups which thrive on its resilient and agile business models looking to scale up to the global market.

Thailand’s e-commerce, which is currently standing at 3% of the country’s total retail sales, is growing rapidly in light of Thai people’s shift towards online transactions and their strong entrepreneurship. This, along with the Thai government’s proactive actions to accelerate digital transformation in business and public services, expand hard infrastructure investment, improve human resource development and revamp regulatory frameworks towards a business-friendly environment have promoted the country’s startup industry to blossom, resulting in more successful deals and funds raised since 2011.

As the COVID-19 pandemic has a profound impact on businesses and people’s daily lives, an increasing number of Thai tech startups are leveraging core technologies such as 5G, AI, machine learning and robotics as well as the country’s strength in e-payment business, highly-competitive telecommunications infrastructure, robust medical and healthcare, automobile, agricultural and biotechnology sectors as well as the strong ecosystem of the government’s support to create innovations and attract investors.

Arising Opportunities for Thai Startups

While the COVID-19 pandemic serves as a litmus test for growth strategies of businesses across the globe, some of Thailand’s most successful startups are reaping revenue, including e-commerce, e-payment, payment processing, blockchain and software that promotes remote working1 sectors as a result of the surge in transactions via digital platforms.


Thailand’s vibrant startup scene is a result of a robust ecosystem of the public sector support from agencies such as the National Innovation Agency (NIA)2, the Digital Economy Promotion Agency (DEPA)3, the Ministry of Science and Technology’s Startup Thailand4 and Thailand Board of Investment (BOI), whose missions are to support entrepreneurs, investors and accelerators through accommodative regulatory framework, various funding programs and technical support to tech-savvy talents to build innovations.

Since the beginning of 2020, Thai startups have raised over US$130 million, compared with around US$97.55 million by 35 Thai startups in 2019, and US$61.15 million raised by the same number of startups in 2018. Fintech had the most successful startup deals in 2019, at 20% of the total, followed by e-commerce at 17%, property tech at 9%, and food and restaurant tech, health tech, auto tech and education tech, each at 6%5. As at the end of September, around 314 startups had registered with Startup Thailand, the main agency supporting local startups.

To date, Thai corporates are the largest investors in Thai startups at the growth stage both in the form of fund-of-fund shareholding and direct investment. Meanwhile corporate venture capital funds (CVCs) support most of the Thai startups at the pre-seed and Series A levels.

There have been several major startup funding rounds during the past few years, including Series C, highlighting the growing prospects of the Thai startup ecosystem. Some of them do not limit their ambitions to Thailand, but plan to earn most of their revenue and raise funds from the international market. On the reverse side, the resilience and prospects of Thai supply chains are proving a prominent market for investment by global unicorns.

A Dynamic Backbone

With the COVID-19 pandemic having caused major disruptions to international travel, global trade and connectivity, MSMEs in Thailand and elsewhere have taken a severe hit due to weakened demand and unfavourable market conditions. As many industries are comprised almost entirely of MSMEs, these small enterprises are crucial to the supply chain continuation of several products. The Thai Government is gearing up aid packages in order to help the country’s many affected MSMEs revive and expand their operations.

Thailand’s MSMEs are the backbone of its economy, accounting more than one-third of the country’s GDP in 2019, at 3% YoY growth. MSMEs in manufacturing are the largest contributors to the economy, followed by MSMEs in retail, wholesale, and automotive repair businesses, respectively.

The Office of SMEs Promotion (OSMEP) reported that in 2019, MSMEs exported approximately US$33 billion worth of goods, or 13 percent of the country’s total exports. The top three exported products are gems and jewellery, sugar and confectioneries, and machinery and electrical appliances.

Led by OSMEP, a new focus of support has seen the policy expand from covering small and medium enterprises (SMEs) to include micro-sized business. Hence the coining of the new term – micro, small, and medium enterprises (MSMEs) to include enterprises with less than five employees and a net income of less than 1.8 million THB per year. Nationwide, the MSME sector accounts for more than 3.1 million entrepreneurs.

For MSMEs affected by the pandemic, the Thai government has swiftly rolled out a COVID-19 relief package composed of three key measures. Overseen by the Ministry of Finance and the Bank of Thailand, these measures include a six-month loan payment holiday for all MSMEs with a credit line not exceeding THB 100 million (around USD 3.2 million), soft loans to support liquidity for SMEs with a credit line not exceeding THB 500 million (around USD 16 million), and a reduction of the Financial Institutions Development Fund (FIDF) fee to ease the burden of loan interest.

In addition to the immediate relief package put forward by the government, investment promotion measures and non-tax incentives are available for MSMEs which adopt technology to enhance productivity.

BOI Encouraging Technology Application

Under the BOI’s 2020 vision of “Think Resilience, Think Thailand” a comprehensive package has been made available to enhance the competitiveness of MSMEs. In the first two quarters of 2020, the number of applications for investment promotions under the SME scheme has grown by 86% from the same period in 2019.

The BOI allows the ceiling of the Corporate Income Tax (CIT) exemption for Thai majority MSMEs with investment in high technology (A1-A4) such as automation and robotics as well as digital technology to be at 200% of the total investment capital, excluding land fees and working capital. This measure is intended to support MSMEs in developing their capabilities, achieving sustainable growth, and gaining access to funding and opportunities on the international market. Also, additional CIT exemption is granted on merit-based activities such as a 300% CIT exemption of the total investment amount on research, technological development, and innovation. Meanwhile, investment in high technology training and original packaging design can enjoy an additional 200% of CIT exemption.

Besides the tax incentives, the BOI also offers local activities that support business linkage and connection with the supply chain. Through the Thai Enterprise Development Division (BUILD), various business matching opportunities are made available. These include a marketplace where suppliers can showcase their products to potential buyers, a joint venture network where BUILD matches potential investment requests with MSMEs and start-ups, and the vendors meet customers (VMC) initiative where potential suppliers will be invited to visit buyers’ factories to learn and receive insights into the buyers’ procurement selection criteria as well as specific know-how concerning product manufacture.