Members of the newly formed ASEAN Economic Community (AEC), which includes Thailand, have a big responsibility: building an innovative entrepreneurial culture. The end result is contributing and participating more meaningfully on the regional and world stages.
Thailand, like many of its neighbours, has a tradition steeped in the development of the worker. Education and even cultural and social attitudes honour hard work and loyalty as core merits. Through this, Thailand has built a strong agricultural and manufacturing base, as well as a global reputation for hitting and exceeding production goals. In essence, Thailand is known as a traditional labour based economy.
However, Thailand seems to be losing those titles; Vietnam and India have overtaken the country as the world’s largest exporters of rice, and manufacturing is fighting a losing price based battle with India and China.
In December of 2015, the Association of Southeast Asian Communities (ASEAN) brought down the gauntlet with the formation of the AEC. In part, the AEC was formed to create an integrated and globally competitive economy in Southeast Asia. and to make other member countries more competitive with the powerhouses of China and India.
Start up thinking
However, Thai entrepreneurship is already evolving; many start-ups are making their mark through the adoption of new technological innovations, giving an advantage to small business over large. Advanced Info Service (AIS) hosted “The Start-up 2015” event in October. The competition, designed to identify potentially globally competitive Thai start-ups, then gave them the opportunity to enhance their offering through access to experienced business people and additional funding. The winner was Flow Account (flowaccount.com), an accounting software firm that offers small businesses a free accounting package, scalable to a paid service that they grow. Built on Amazon Web Services’ platform and therefore requiring no infrastructure, Flow Account is easily downloadable. Due to its simplicity and adaptability, it has an offering compelling enough to compete in the Asian market and beyond.
This is where traditional ‘work ethic based’ education yields a distinct advantage for Thailand. Where western countries like the United States encourage broader thinking in terms of opportunities in the workplace and self-employment, Thailand’s students are generally focused on available work and doing it effectively. As a result, graduates go into paid jobs and gain real world experience, while many western entrepreneurs do not have a grounding in the realities of commercial enterprise.
Through a focus on solving relevant problems using new and readily available technology – requiring less physical infrastructure – Thai tech entrepreneurs are ideally placed to take advantage of the cloud revolution. Through their commercial awareness and empathy for workers within businesses, they will be able to readily identify problems.
Flow Account’s tagline says it all – ‘Free, easy to use cloud accounting software for Thai start-ups and SMEs.’
The advent of the cloud has substantially diminished the physical advantages that more affluent countries with larger populations had over Thailand. Entrepreneurs can now scale their businesses in line with growth and need no significant capital outlay to do so. Online tools mean that a business can start, based on a problem in need of solving, from anywhere – even a bedroom or a kitchen table. The real challenge for government to address is transitioning these businesses ‘from the bedroom’.
Small businesses and entrepreneurs require access to the best minds and advice to take the next step in growth. It is likely that small business ownership in Thailand with continue to increase; in fact, a 2014 Global Entrepreneurship Monitor showed that Thailand had the highest new business ownership rate compared to other ASEAN countries of 17% and, along with the Philippines, the highest nascent entrepreneurship rate with 8%.
Avoiding the middle income trap
The challenge of the government assisting these businesses in transitioning to higher levels of growth is one which, if measures are not taken quickly, could mean that the competitive advantage is lost. While a significant percentage of GDP is being assigned to R&D, the other task will be to move entrepreneurs into the mainstream through the creation of communication hubs and a pathway to improvement. There is also an opportunity for Thailand to invest directly in these businesses rather than relying on external venture capital – which will inevitably move partial ownership offshore and make the country a supplier to other nations, rather than a hub of innovation. This presents another challenge: avoiding the ‘middle income trap,’ where countries make money through supply to other countries but fail to capitalise on their own strengths, becoming a shop for other, more affluent countries and commercial enterprises to profit from. To avoid this, maintaining ownership and continuing to foster innovation are key. The challenge of attracting international investment while keeping the good ideas and people in Thailand is a difficult balancing act and an ethos of ‘ethical investment practices’ is vital.
A correlation between agriculture, manufacturing and tech is likely to prove fruitful, as many businesses look to innovate in the more traditional areas through new technology and practices. This will further enhance Thailand’s prospects for export growth, reducing unemployment and creating even more opportunities for the next generation of Thai thinkers and innovators.
It is important for Thailand to focus on its strengths, such the education system and cultural norms that create a culture of ‘hard work’, which is the foundation of effective small business growth. The maximisation of this ethos and utilising the new and more globally aware generation in advancing Thailand forward are problems that many other members of ASEAN would be envious of. A country that can leverage the opportunities presented by the technological windfall that is the cloud and carve out a niche as a hub for innovators, thinkers and doers will be a powerhouse in Southeast Asia.
Thailand is perfectly positioned to lead the ASEAN entrepreneurship revolution and in doing so become a nation that not only honours a solid work ethic, but translates that into something that can change the world.