|Thailand Update | November 29, 2018
Authors: Riley Smith, Ella Duangkaew and Monica Chritton
December 4, 2018 - December 6, 2018: 2018 Business Mission to the 18th ASEAN Telecommunications and Information Technology Ministers Meeting: The USABC will lead a Business Mission to the 18th ASEAN Telecommunications and Information Technology Ministers Meeting (TELMIN) taking place Tuesday, 4 December to Thursday, 6 December, 2018 in Ubud, Indonesia. The deadline to register has passed, but please contact Ella Duangkaew (email@example.com) for late registration information.
|THE COUNCIL'S TAKE|
Thailand Announces “Advancing Partnership for Sustainability” as 2019 ASEAN Chairmanship Theme
On November 15, Prime Minister Prayut Chan-o-cha announced Thailand’s official theme for its ASEAN 2019 Chairmanship: “Advancing Partnership for Sustainability”. The theme will promote initiatives that include a focus on connectivity and developing a strong digital economy.
Prime Minister Prayut further elaborated on Thailand’s choice for its theme in a speech after accepting the ASEAN Chairmanship at the symbolic handover ceremony from 2018 ASEAN Chair Singapore. Prime Minister Prayut stated that the “advancing” aspect of Thailand’s Chairmanship theme will focus on driving advancement in technology and infrastructure, the Fourth Industrial Revolution and development toward a “Digital Asean”. The “partnership” element of the theme speaks to the need for continued cooperation among ASEAN member nations and Dialogue Partners amid challenges the region will face with uncertainties such as “trade and political competition, disruptive technologies, transnational crime, inequities, and changes in the region’s social structure”. The theme’s focus on “sustainability” will be all-encompassing, from promotion of economic growth and security to a green economy and sustainable development, according to Prime Minister’s speech. Thailand’s vision for its 2019 Chairmanship will also build upon the priorities ASEAN has set in recent years.
Prime Minister Prayut touched on current and expected challenges at both the national and regional levels in his 2019 ASEAN Chair acceptance speech. At the national level, at a time when the international spotlight is shining brighter on Thailand as the ASEAN Chair for 2019, the country will simultaneously be preparing for its first national elections since the current military government came to power in 2014, with a new government potentially seated by May. Underscoring the delicate scheduling that will have to take place, Thailand has already taken the unusual move of pushing back the first ASEAN Summit date in anticipation of the election. The clearing of space on the official ASEAN calendar for 2019 is one of the stronger indications that the much-delayed national election actually could take place next year. The government is expected to announce the official date of the election next month (for more information on the elections timeline, see our previous update here).
At the regional level, Thailand will have to maintain, if not preferably strengthen, regional cohesion amid political shifts and realignments in other ASEAN member states and geopolitical headwinds that in the past have driven a wedge between countries in the region, such as flareups in the dispute over the South China Sea. Perturbations in the global economy, potentially caused by the fallout from Brexit or the U.S.-China trade war, could put added pressure on a region that has seen high levels of economic growth but is still susceptible to currency weakness and capital outflows. However, it is not strictly challenges that Thailand may face. The 2019 ASEAN Chair could also gain from major developments in regional initiatives, such as the finalization of the Regional Comprehensive Economic Partnership, on the horizon.
Ministry of Digital Economy and Society to Prepare Plan Supplementing Thailand’s ASEAN Chairmanship Theme
Supporting Thailand’s recently announced 2019 ASEAN Chairmanship theme, “Advancing Partnership and Sustainability”, Thailand’s Ministry of Digital Economy and Society (MDES) is preparing a plan that aims to support continued cooperation among ASEAN nations and catalyze Thailand’s digital transformation.
Minister of Digital Economy Dr. Pichet Durongkaveroj said that the 2019 ASEAN Chairmanship theme will boost the country’s digital transformation through further collaboration in the region, according to the Bangkok Post. The ASEAN digital economy is on track to reach US$240 billion by 2025, according to a Temasek and Google report. The latest projection is $40 billion more than the 2016 estimate of ASEAN’s digital economy. Regional cooperation and collaboration will be key to MDES’s plan to foster a digital ecosystem that helps meet the goals set forth in Thailand’s 20-year digital roadmap.
Although specifics of MDES’s plan are still being developed, Minister Pichet said achieving the five targets of the 20-year digital roadmap, which are “the development of infrastructure, governance, cyber security, technological development, and manpower”, would help the government achieve three critical objectives by 2020 – of modernizing rural areas, reducing income disparity and increasing capacity to thrive in the digital age. Minister Pichet also said that in the coming year Thailand will continue enhancing the Bangkok-based ASEAN-Japan Cybersecurity Capacity-Building Center and is proposing a 2019 ASEAN Digital Agility Leaders’ Meeting. For more information on the ASEAN-Japan Cybersecurity Capacity-Building Center, please see our update here.
The potential for growth and innovation in Thailand’s cyber capabilities is clear. Currently, Thailand has the second largest internet economy in ASEAN, valued at US$12 billion in 2018 and with a 27% compound annual growth rate (CAGR) from 2015-2018, according to the Google and Temasek report. Thailand also spends more time than any other country on the internet and recently claimed the title for the world’s first blockchain-supported elections, which were held by the Democrat party primary election earlier this month. Thailand’s technology startup ecosystem is also growing as evidenced by ASEAN unicorn startup GrabTaxi’s $50 million payments joint venture with Thailand’s KBank and Bangkok based startup Eko, a B2B messaging platform, successfully securing a $20 million investment from an Indonesian VC firm SMDV.
Although Thailand has placed an emphasis on building capacity with its ASEAN-Japan Cybersecurity Capacity-Building Center and other initiatives intended to bolster its digital economy, its regulatory environment must also be conducive to achieving its digital economy goals. Most recently, Thailand’s latest Cybersecurity Bill has drawn concerns from foreign and domestic businesses and state agencies for its creation of a powerful National Cybersecurity Committee and for its potential to jeopardize confidential data and limit data flows. For more information, read our previous update here.
Thai Fintech Act Expected This Year
Thailand’s Fintech Act is on track to be enacted by the end of the year according to industry groups that have been involved in drafting. The Fintech Act, which the Council first covered in 2017 in this update, will include measures on electronic transactions, know-your-customer rules, and due diligence. It will also require the government to provide open data sources to entrepreneurs to support innovation. This work to build the regulatory infrastructure of a digital financial services system will be critical to building a thriving and modern financial ecosystem, which has lately been a priority of the Thai government and especially the Bank of Thailand.
Outsourcing Regulations Evolving in ASEAN
Financial services regulators in ASEAN have recently been re-examining regulations how financial institutions outsource IT systems, with changes to regulations in Thailand, Vietnam, and Malaysia.
Thailand: On October 1, Thailand’s Capital Market Supervisory Board (CMSB) issued a new outsourcing regulation that greatly reduces regulatory burden for securities companies. Unlike the previous regulation, which requires securities companies to obtain approval from the Office of the Securities and Exchange Commission (Office of the SEC) prior to outsourcing, now companies only need to notify Office of the SEC within 15 days after they outsource business functions to external providers.
Under the new, more lenient regulation, a securities company may outsource any of its functions if they meet two requirements: (1) the company may not reduce itself to an empty shell and (2) if the outsourced function is a central utility function, the company may only outsource to a provider who has been approved by the Office of the SEC. There is no clear definition under this regulation as to what is considered a “central utility function.” However, the Office of the SEC commented in a public hearing document that fund service platform function and electronic payment for a settlement of securities and derivatives may constitute central utility function. The regulation also stipulates requisite provisions which an outsourcing agreement must contain. A sub-outsourcing arrangement is also permissible provided that the securities company consents to the arrangement and the arrangement contains the same requisite contents that was agreed upon between the securities company and the principal external provider. The SEC is authorized to issue further guidance on the regulation so clarification on some points may emerge in the future.
|IN THIS UPDATE|
Thailand assumes Asean chairmanship Bangkok Post 15th Nov 2018
Political party donations now tax deductible, says government Bangkok Post 27th Nov 2018
Thaksin's son tipped to help lead Pheu Thai campaign Bangkok Post 26th Nov 2018
First day for senate candidate registrations passes quietly Bangkok Post 26th Nov 2018
2,000 southerners join Thai Raksa Chart Party Bangkok Post 25th Nov 2018
EC to investigate cash handout spree Bangkok Post 23rd Nov 2018
Debt moratorium for millions of villagers waiting Cabinet approval The Nation 26th Nov 2018
Somkid: 4% growth 'achievable' via exports Bangkok Post 22nd Nov 2018
BoT tweaking lending to support SMEs Bangkok Post 21st Nov 2018
PTT joins Sertis for smart building hub Bangkok Post 29th Nov 2018
IEAT requests LNG demand for Map Ta Phut decision Bangkok Post 28th Nov 2018
PTTEP evolves with the times Bangkok Post 26th Nov 2018
PTTEP hunts for resources as prices firm Bangkok Post 23rd Nov 2018
Thailand keen to explore areas of cooperation in SCORE The Star Online 22nd Nov 2018
PTT revising investment to shore up oil risks Bangkok Post 16th Nov 2018
Power Surge Asian Legal Business 15th Nov 2018
Agribusiness slow to adopt tech, far from 4.0 Bangkok Post 27th Nov 2018
Guideline prices for high-value lumber prioritised Bangkok Post 29th Nov 2018
New rubber price subsidy is 'unfair', says RNRF Bangkok Post 29th Nov 2018
Durian quality scheme gets growth boost Bangkok Post 27th Nov 2018
Rubber farms stretched as US-China trade war saps demand Bangkok Post 25th Nov 2018
A major milestone Bangkok Post 27th Nov 2018
Public, private sectors must do more to support rising number of Thai seniors, says Thonburi Healthcare chief The Nation 27th Nov 2018
Prayut to use S44 to settle weed patents Bangkok Post 27th Nov 2018
Govt urged to lift ban on e-cigarettes The Nation 25th Nov 2018
AI to help students select majors Bangkok Post 27th Nov 2018
IoT regulations due next year Bangkok Post 26th Nov 2018
E-tax update on the cards Bangkok Post 24th Nov 2018
NBTC nudges MCOT for spectrum return Bangkok Post 23rd Nov 2018
Govt reveals digital transformation master plan Bangkok Post 22nd Nov 2018
Boost in workers’ skills necessary to propel nation forward: minister The Nation 20th Nov 2018
Role of 5G put under scrutiny Bangkok Post 20th Nov 2018
Big tech firms pledge training for workers in Southeast Asia Bangkok Post 19th Nov 2018
Treasury Department's land scheme ready in a few years Bangkok Post 26th Nov 2018
Bang Sue mega-station to operate by January 2021 Bangkok Post 23rd Nov 2018
Terminal put on ice pending feedback Bangkok Post 22nd Nov 2018
BoI offers incentives to meet Bt300-bn EEC target The Nation 20th Nov 2018
Street vendor rules in Bangkok 'hurting tourism' Bangkok Post 27th Nov 2018
TAT promotes weekday trips to lonely provinces Bangkok Post 26th Nov 2018
E-visa on arrival service now operating at 3 major airports Bangkok Post 22nd Nov 2018
Visitor numbers down in Oct as Chinese stay away Bangkok Post 21st Nov 2018
Making a home for digital nomads Bangkok Post 21st Nov 2018