Thailand is one of the countries in Southeast Asia with an ambitious digital transformation program. The program is summarized in one policy called “Thai 4.0”. The Thai 4.0 policy itself is a policy that promotes digital industrial-scale transformation while establishing an economic corridor in eastern Thailand (“Eastern Economic Corridor”) (EEC, n.d). The Thai 4.0 policy is part of Thailand’s more extensive digital transformation policy, namely “A National Digital Blueprint,” which targets the development of Thailand’s digital economy in the next 20 years, where the Thai government targets Thailand to become a developed country in 2037 (Jongwanich, 2022a).
The National Digital Blueprint policy has been formulated by the “Office of the National Economic and Social Development Board” or NESDB since 2019 through the “Digital Outlook” study. The study produces digital transformation indicators and methods by gathering all stakeholders – including government, the private sector and related industries. This study will discuss opinions, suggestions or observations regarding the planned survey of digital transformation indicators, including Thailand’s digital economy. Thailand’s studies and policy formulation were carried out with consultation and evaluation by the OECD “Organization for Economic Cooperation and Development” (Santhika, 2022). From its advocacy function, the OECD also provides “Assessments and Recommendations” to the Thai government regarding digital transformation policies (OECD, n.d).
Thailand’s digital transformation policy looks very ambitious and promising. Various factors support this policy starting from infrastructure and regulations to geographical position. In 2020, 84 percent of the population shopped online compared to a global average of 77 percent, according to the 2021 Global Digital Report compiled by research firms “We Are Social and Hootsuite” (SCMP, 2021). This large number of internet users makes Thailand a good location for investing in the digital economy. The regulatory factors through the “Thai 4.0” policy above make Thailand one of the countries in Southeast Asia with the most expansive 5G network and the construction of the most advanced technology zone in the “Eastern Economic Corridor.” Thailand’s very strategic position also supports this vision where Thailand is in the “middle” of the Southeast Asia region, connecting the Pacific Ocean in the East and the Blue Continent in the West. All these factors support the ambition of “The Asia’s Next Digital Hub” in the Southeast Asia region (BangkokPost, 2021).
However, the ambitious policy poses several obstacles in its implementation. Some of these obstacles can be summarized into two: first, the selection of industries in Thailand to carry out digital transformation which seems not yet ready, especially in the EEC corridor.
According to Kohpaiboon (2020), this happened because the contours of Thailand’s economy, which has not yet been diversified, still show vulnerability from industrial-scale digital transformation – because Thailand’s economy is still very dependent on tourism. As many as 6 of the 10 selected industries only contributed 50 percent of gross manufacturing output. This uncertainty is even worse in the era of disruptive technology (Kohpaiboon, 2020).
Budget constraints hinder digital transformation progress in Thailand. Private investment in Thailand’s digital economy only amounted to 4 percent of Gross Domestic Product in 2019. Limited budget allocations in a number of government agencies are also a problem, especially the relatively small funds allocated to the Ministry of Digital Economy and Society as well as the Ministry of Education and the Ministry of Higher Education, Science, Research and Technology to promote digital transformation in respective fields (Jongwanich, 2022b). This can be seen from the digital transformation fund allocation of only 2.5 billion baht which will be set aside for digital development projects that will be financed by the Digital Economy and Community Development Fund (DE Fund), while Thailand’s education budget itself is 300 billion baht (Sharon, 2022; Lessa-Nguansuk., Suchit, 2023). This shows the contrast in allocating funds for digital transformation needs with other primary priorities in Thailand.
Suppose you look at it from Indonesia’s side. In that case, Indonesia also has the vision to become a developed country in 2045, with digital transformation being one of the main pillars or instruments in its “Indonesia Maju 2045” program. Indonesia is also on its leadership in the G20 2022 and the ASEAN Chairmanship in 2023, bringing various digital transformation initiatives to both conferences. As in the 2022 G20, Indonesia initiated the 2022 “Digital Economy Working Group” (DEWG) and Indonesia initiated the formation of the “Digital Economy Framework” at its chairmanship in the ASEAN 2023 Chairmanship. Despite being one of the key players in the development of digital transformation in the region, Indonesia also found various challenges in carrying out the transformation process.
In contrast to Thailand, whose challenges are focused on two causes: diversification and budget, Indonesia is experiencing challenges in terms of human resources, access and digital infrastructure in its implementation. In the context of human resources, Indonesia currently lacks digital talent (digital talent gap); where 1000+ technology companies in Indonesia are actively looking for technology talent in 2018, a 5x increase from 2017 while there is a gap of 600,000 per year between tech talent/digital talent with demand from the technology sector in Indonesia (ITB, 2021). This is exacerbated by the fact that only 20% of the total 4,000 campuses in Indonesia have Information and Communication Technology (ICT) study programs.
Regarding access and infrastructure, Indonesia still needs to have adequate access and infrastructure development, which has created gaps. The gap in access and infrastructure in Indonesia is caused by many, from the broad geographic contours to the limited electricity resources that are evenly distributed. The gap is also reflected in significant differences in bandwidth power (outside and within Java), the unavailability of adequate and affordable internet devices such as modems, the inability to produce local content and knowledge, including a lack of literacy, adequate digital skills and gender-based gaps (ELSAM, 2022). Infrastructure gaps like this hinder the digital transformation process in Indonesia.
Referring to the 2023 “Digital Quality of Life Index” issued by Surfshark, Indonesia is ranked 67th out of 121 countries assessed globally. Meanwhile, Thailand is ranked 51st or 16 points ahead of Indonesia. In the Asian region, Indonesia is ranked 21st while Thailand is in 12th position out of 35 countries in Asia assessed. This index assesses five variables: internet quality, affordability, cyber security, online government services, and electronic infrastructure. From these five variables, Thailand outperforms Indonesia. According to Kaziukonis, CEO of Surfshark, Indonesia has the opportunity to improve all sectors related to Digital Quality of Life, especially regarding internet affordability (CNN, 2021).
As two middle-power countries and quite influential in Southeast Asia, Indonesia and Thailand are “competing” with each other in the digitalization process to win the race. With its unique characteristics and challenges, each country can start to resolve the problems arising from this ambitious policy. Thailand can diversify its economy, which depends on tourism, or Indonesia should take advantage of the demographic bonus as digital-ready talent after graduating from college. Both countries have the same potential to achieve their respective goals of becoming digital countries by the 2040s. However, one question needs to be addressed and is worth to be pondered: Do innovation and transformation need to be suppressed by policy or do we need policies that are also innovative to accommodate these changes?