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Unveiling Thailand's growing data centres and cloud services landscape
Thailand Board of Investment
The spread of COVID-19 has been a catalyst in the acceleration of the adoption of technology across various industries. In this changing environment, the data centre and cloud services business has been gaining ground in Thailand. This sector also benefits from various enabling factors that include changing consumer behaviour, digital transformation among business sectors and national-level priorities to grow the digital economy.
Thailand currently has more than 30 data centre and cloud service providers, including both domestic and foreign operators.
THE POSITIVE IMPACT OF CHANGING THE BEHAVIOURS OF CONSUMERS
The shift in consumer behaviour from offline to online has resulted in increasing use of online platforms in daily life. This includes cloud gaming, over-the-top platforms (OTT), social media and E-commerce, all of which are made possible by the rapid increase in the access to, and use of the Internet among the public. Facilitating this change, Thailand has made significant progress in its digital infrastructure. According to the Global Digital Report 2023, 61.2 million of the 71.7 million Thai population, accounting for 85.4%, have access to the Internet. Meanwhile, the Speedtest Global Index shows that Thailand ranked 6th for fixed broadband speeds during March 2023 with an average speed of 201.02 megabits per second for downloads, which is higher than the world average of 79.00 megabits per second and placing Thailand’s Internet as the third fastest in Asia, after only Singapore and China.
Rapid urbanization in Thailand has also made it easier to access services on various digital platforms, with more than 52.9% of the Thai population doing so. Indeed, more than 95% of urban residents in Thailand are e-commerce users, while more than 78% use food delivery services. According to the Prime-Time for Real Time 2022 report from ACI Worldwide, the volume of real-time transactions in Thailand has reached 9.7 billion, ranking the country third in the world after India and China. The growth of e-Commerce is also a key driver of the country's digital economy. According to the e-Conomy SEA 2022 report, the value of Thailand's Digital Economy in 2022 was 30 billion baht and it is expected to reach 53 billion baht in 2025.
THE FUTURE OF DATA CENTRE AND CLOUD SERVICES INVESTMENT
As consumers’ lifestyles are increasingly dependent on online services and platforms, business operators have higher demand for data centres and cloud services as business solutions. This opens a window of opportunity for investors to enter this high-potential industry. Thailand currently has more than 30 data centre and cloud service providers, including both domestic and foreign operators. The local market leaders with a significant share of this market include TRUE IDC, NTT Global and STT GDC Thailand. The government's investment promotion policy has also successfully attracted foreign investors to Thailand, with Huawei being the first global service provider to operate in the Eastern Economic Corridor (EEC). At the same time, Amazon Web Services (AWS) is planning to open an Infrastructure Region (AWS Asia Pacific) in Thailand and to invest an estimated US$ 5 billion in Thailand during the next 15 years. AWS’s plans will help to advance Thailand’s position as an innovation hub in Asia and a top destination for investment. According to Ken Research, the data centre market is expected to grow at an 8.8% CAGR to reach US$ 840 million by 2027, while the cloud services market will grow at 21% CAGR to US$ 3.6 billion in the same year.
THE GOVERNMENT'S PROMOTION PROGRAMMES AS A DRIVING FORCE BEHIND THE EXPANSION
To achieve full digital transformation by 2027, the government has taken many steps to improve the country’s human resource capacity, promote knowledge and skills and develop its digital infrastructure, particularly through the government Data Center and Cloud Service (GDCC).
By late 2022, approximately 900 governmental organizations had used the GDCC to manage 3,000 systems. According to the Office of National Digital Economy and Society Commission (ONDE), GDCC projects have the capacity to lower the burden on the government budget by approximately 854 million baht per year while also elevating the potential of data analytics to maximize the benefits of Big Data utilization.
In 2023, the ONDE intends to expand GDCC services under the management of National Telecommunication Plc. To uplevel the GDCC from Infrastructure as a Service (IaaS) to Platform as a Service (PaaS) and Software as a Service (SaaS), allowing agencies to consolidate databases more easily. According to Ken Research, almost 90% of Thai government entities use at least one softwaredriven product or service. In the future, this trend will increase spending by government agencies on SaaS as they strive to develop various systems and stimulate the expansion of the data industry and cloud services.
Apart from government-led infrastructure development, the government has also encouraged entrepreneurs to participate in the industry-wide development. The Thailand Board of Investment has provided promotional benefits for entrepreneurs who invest in data centre and cloud industries. These include tax-based incentives such as an exemption of an eight-year corporate income tax with no cap and import duties on machinery together with non-tax incentives such as a permit to own land and to bring skilled workers and experts into the country. To enhance country’s attractiveness to high-potential individuals, the Long-Term Resident Visa (LTR) programme was launched with an aim to facilitate their entry and stay in the country. Privileges offered to LTR visa holders include a 10-year renewable multiple entry visa, permission to work in Thailand (Digital Work Permit) and a 17% personal income tax rate for the main visa holders in the “Highly Skilled Professionals” category among others.
In the future, cloud computing will be used for more than just data storage, with platform and software services being added to expand the digital toolkits of agencies and organizations.
Contact Details:
The Office of the Board of Investment
Tel: +66 2 553 8111
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