The Thai Government announced a 20 Billion THB investment to accelerate 2,500 existing startups, with a target to increase the number to 10,000 by 2018. The government’s efforts in seeding startups will be a very important one, but they must ensure the program’s effectiveness and transparency. According to Pumin Yuvacharuskul, CEO at Eatigo,
Thailand’s ecommerce landscape is held back by unfavorable cross border investment policies and limited talent pool, which means that the government should roll out initiatives to sustain and grow start-ups as well as getting it off the ground.
Thai laws limit foreigners to holding 49% of the shares in an ecommerce business, as opposed to Singapore’s 100%. Law also states that the company needs to hire four Thai people to one foreigner. In order for Southeast Asia’s ecommerce landscape to flourish, opening up the market would help foster the local economy. Indonesia has taken initiative and currently the Investment Coordinating Board (BKPM) is finalizing guidelines that will allow 100% foreign ownership of an ecommerce business with a minimum investment of US$8 million, or businesses that create 1,000 employment opportunities. In China, the government has poured a lot of money into startups and there are well established tax and tech-park incentives.
Governments can help create incentives for banks to support funding to help startups that have potential, and not only to SMEs. Although this is a good initiative for a growing digital economy, it will take a long time to see results if local and international VCs are not involved in seed funding. Opportunities for regional collaborations will also boost business. Recently, The governments of Thailand and Singapore announced a partnership to promote digital start-ups and mentoring for existing startups.
“Several drawbacks for startups operating in Southeast Asia are the limitations on users and monetisation given the combination of low GDP per capita and low credit card penetration in the region,” said Eddie Thai, a venture partner with the early-stage VC firm 500 Startups. “These challenges will be overcome with time in most countries, but it will be hard for any country to match Singapore, let alone Silicon Valley, without overcoming infrastructure and corruption issues.”
A version of this appeared in Bangkok Post on June 20. Read the full article here.