Cloud Computing and Digital Economy Briefing
The ACCA hosted a closed-door industry discussion with stakeholders from the Thai cloud ecosystem on 10 March 2016 in partnership with C-Asean. The discussion included seven presentations and an open dialogue among the 29 participants according to the Chatham House rules. The discussion focused on the Draft Personal Data Privacy Act, the status of cloud and the digital economy in Thailand, and an overview of innovative and emerging cloud services.
Legislative update: The Draft Personal Data Privacy Act
As of 10 March 2016, the Thai cabinet were reviewing the Draft Personal Data Protection Act. The Draft Act stipulates that data may only be collected by data controllers for lawful purposes directly related to the activities of the person collecting the data, that individuals need to be informed prior to or during collection of personal data, and that data controllers have the obligation to implement appropriate security measures to prevent the loss or disclosure of data. Personal data violations may be punished with sentences up to two years’ imprisonment and fines of up to THB 2 million (USD 56,960).
With regard to the language of the draft law, there are concerns over the lack of clear definitions for the term data controller and in for what constitutes a personal data violation. Participants voiced concern over the composition and powers of the Personal Data Protection Committee, which will be charged with enforcement of the Act.
The participants felt that the Committee must include broad stakeholder representation on in order to ensure a holistic focus on personal data protection. At present, it appears the Committee will be both very close to the government and that many of its members will be part-time appointees from industries that also constitute the main data controllers. The public sector and financial services will be over-represented on the Committee, while there will be less representation from civil society – and no representation from the healthcare sector. There are significant concerns that the draft may favour Thai service providers, ostensibly to address privacy issues related to cross-border data flows, and obliquely, the desire to keep data on-shore – which raised red flags as this is an indication that the Thai government may be leaning towards data residency legislation.
Participants also voiced concern over the consolidation of powers related to the digital economy. The Personal Data Protection Committee is being brought under the Digital Economy Commission – the umbrella Commission that will also deal with cybercrime and national security. Participants likened this to setting the fox to guard the geese – the draft cybersecurity bill, which is being discussed in parallel with the draft Personal Data Protection Act – grants legal indemnity to anyone directed by the Digital Economy Commission.
Cloud and the digital economy in Thailand: Focus on the supporting infrastructure
Developments have focused on investments in data centres, extending connectivity and supporting infrastructure for the digital economy. Digital transformation and software development lag behind.
As the second largest economy in ASEAN (after Indonesia), there is significant interest in and potential opportunities in the Thai digital economy. However at 37%, internet penetration is low – lagging behind Singapore, Malaysia, Philippines and Vietnam – and there are significant challenges to the development of adequate infrastructure for the Thai digital economy. Restrictions of foreign ownership and foreign operators’ concerns about the enforcement of competition laws compounds the lack of investment in the platform and software side of the digital economy.
The Thai 4G spectrum auctions in November and December obtained the highest price in terms of USD per MHz per capita seen anywhere in the world. Combined with the high price on international connectivity, partially due to restrictions on cable landing stations, this illustrates the complex backdrop for emerging cloud services in Thailand.
Among cloud-related industries, data centres saw the strongest growth in terms of revenue from 2014-2015, followed by network support services and IT consulting. In parallel to the booming data centre market, there are 300 state-owned data centres in Thailand, costing an estimated THB 10 billion (USD 28.7 million) to run annually, with an estimated utilization as low as 16%. To extend internet penetration, the Ministry of ICT has launched a THB 38 billion (USD 1.1 billion) investment scheme to extend broadband to 70,000 villages over the next five years. This indicates an ongoing focus on building infrastructure to support the digital economy.
The Ministry of Finance has approved funding for Thai start-ups and SMEs. Funding and tax exemptions offered are linked to spending requirements on “domestic machinery”, so that many start-ups in struggle to qualify. Enterprises focused on digital content must have project that include software development processes specified by the Software Industry Promotion Agency (SIPA).
Innovative and emerging services in the digital economy
There are many young graduates that are active in start-ups, including software development, but longer-term opportunities are limited as companies struggle to access growth capital. Other barriers include requirements for Thai certification of IT skills and difficulty to obtain work-visas for foreigners, which may limit the involvement of foreign companies and foreign employees in the digital economy.
The Board of Investment of Thailand (BOI) offers tax exemptions for software development companies, real estate development for data centres and software parks, and cloud services that “locate in at least two data centres in Thailand”. The government has been promoting software development as part of its Digital-based clusters in Chiang Mai and Phuket. However, software development was the second slowest-growing segment of the digital economy from 2014-2015 – only hardware maintenance services saw slower growth as enterprises outsource their IT to cloud providers.
There has been rapid growth in IoT consumer technologies and connected cars, while eCommerce revenue is projected to double in the next four years. The participants discussed innovative Thai mobile services that are “born in the cloud”. Examples include software that focuses on linking marketplaces to social media, combining behavioural analytics with targeted advertising, and location-based services. Examples include apps targeting tourists to provide news feeds and mobile wallets, and services that combine mobile payment with information about hotels, attractions, flights, car rental, vat refunds, insurance, hospital and police contacts, and taxi bookings.
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This ACCA publication summarises an industry discussion. The content of this document dies not necessarily represent the views of the individual discussion participants, nor the ACCA.