By SUSAN LAHEY
Reporter with Silicon Hills News
Thailand is known for a lot of things: medical tourism, friendliness, elephants, tigers, beaches, sticky rice, automobile manufacture, sex change operations…. But they’ve never been known as a hub for tech, software and animation and they’re determined to become so.
They invited a group of tech journalists to spread the word—bring us your tech companies and investors. We can offer you three engineers for the price of one and a host of tax incentives. Plus entrée into the ASEAN market, a group of 10 Southeast Asian countries with a population of nearly 600 million people that in 2015 will become one unified market—like the European Economic Community.
As serial entrepreneur and Capital Factory mentor Fred Schmidt is fond of pointing out, these days almost any company can tap the global market. Why restrict yourself to the U.S. when some companies find a bigger, more enthusiastic market base overseas? Case in point, 7-Eleven. The company tanked in the U.S. but there’s one on every corner in Thailand. Plus, for any company that relies on social media, Thais are among the world’s biggest users. Facebook has 104 percent penetration in Bangkok—the largest of any city in the world.
So for five days, Supisara Chomparn and Anawat Chullasewok of the BOI wined and dined us, took us to see tigers, elephants and Buddhist temples and introduced us to Thailand Software Park and other incubators, members of the BOI, and companies that create enterprise software, robots and animated feature films. Two of the founders were expats from the U.S. and Canada who—like many Austin transplants—came for a visit and fell in love with the place.
The trouble is, while Thailand—which has had plenty of military juntas since the end of the absolute monarchy—treats the whole thing like a political “time out” from a frustrated parent, Westerners get pretty wigged about things like military juntas. So it’s hard to see that, really, there is a lot of opportunity.
The Labor Force
Thailand’s universities churn out 6,000 engineers every year, but many never take engineering jobs. As in the U.S., engineers are looking for stable jobs working on interesting problems. And many of the engineering jobs are in automobile manufacturing and similar industries present few creative challenges, particularly since Agile methodology hasn’t caught on with many Thai manufacturers yet. With a national unemployment rate of .7 percent, engineers and other techies can afford to be picky.
“They just don’t want to work in a factory,” said Apinetr Unakul, president of the Thai Embedded Systems Association (TESA) and a professor of engineering. “They prefer something in electronics and telecommunications.” Some employers, like Reuters in Bangkok which derives the bulk of its revenues from software development, has little trouble hiring and retaining qualified people because it has created the kind of culture contemporary Thai techies are looking for and can’t always find in traditional companies: a non-hierarchical employment structure, an office in the center of Bangkok, interesting problems to work on and community building activities.
But Thailand’s engineering graduates can prove challenging to employers. Many students graduate with little or no real-world experience and require an immense amount of training at the outset, a problem that—to be fair—is hardly restricted to Thailand. The U.S. deals with it, too.
“There’s so much demand for engineers, this country probably has eight-to-10 positions for every qualified engineer,” said Steven Prussky, founder of Aware, a consulting and developer of custom software and IT solutions in Chiang Mai. Prussky is getting ready to launch Aware Academy, which will be a finishing school for engineers and computer science graduates.
While many of the people he takes on as interns and employees are skilled engineers, designers or project managers, he said, “They have no business sense at all. “ In Chiang Mai, which is a hotbed of creativity, it is easy to find talented designers who know nothing about what intellectual property is, what an invoice is and who have never taken a single accounting course, he said.
Several organizations are working to combat that problem. Soft Square Group, which works with universities in Bangkok as well as Thailand’s northern provinces, offers internships and training not only in hard skills like programming, but also in soft skills like dealing with customers, managing your boss and change management. The organization hires developers then, after they’ve had sufficient training, incubates and spins off their own startups with an equity stake. Software Park Thailand incubates startups and works on “maturing people.” Chiang Mai University in Northern Thailand has begun requiring tech graduates to take business courses. It also works with area software and animation companies to create internships and offer opportunities for students to work abroad.
The other challenge is possibly connected with Thailand’s culture which tends to reward deferential rather than aggressive behavior. According to John Douglas, founder of Mycos Technologies, that means fewer techies will self-train in various skills such as programming languages. On the other hand, Douglas said, “The younger generation knows that that independent way of thinking is okay,” he said. Partly with his encouragement, his team is more willing to take the lead in innovation. “They’ll say ‘Why aren’t we using SignalR communications framework for sending messaging across different platforms? We’ve got to be on Java 2.8….’”
But while they may be less aggressive than developers in his home town of Denver, they’re consistent.
“Burnout really doesn’t exist here,” Douglas said. “In the west coast there’s this philosophy that you generate huge amounts of enthusiasm early on—‘We’re crazy, we’re going to take over the planet with our app.’ The sustainability, from my view point, is not so good. In Thailand, things get done. Nobody’s jumping up and down but they come in every morning and do their job and they come back and do their job.”
Thailand’s Political Troubles
Over the decades, Thailand has continually rebounded from one disaster after another to be named a success story by the World Bank. In 2012, after a flood devastated the country the year before, Thailand’s GDP was around six and a half percent, after growing steadily for 30 years. But its current battle over control of the government seems to be tanking its economy, whose GDP is now closer to two percent. Resolution over the issue has caused many investors to be cautious about putting money into the country.
In March, Moody’s Investor’s Services gave the country high marks, saying that the country’s rating was still high given “prudent monetary, macroeconomic and debt management, sustained external strength despite erosion of the post-Asian financial crisis current account surplus, a relatively strong growth outlook and an overall healthy banking system.” But it warned that if the country’s political issues aren’t straightened out by the second half of 2014 with a new election, the rating could drop. That’s right about now.
The Land of Smiles
I’m not an investor or even a startup. But I wound up thinking several times: I could live here. The weather is awesome by Texas standards. The jungles are beautiful. The fruit is twice as flavorful and a fourth the price. You can get an hour long massage for $5 and a nice two-bedroom apartment for around $250 a month. And the people are just…so….nice. Coming from Austin, that’s a big statement.
In all our high level meetings, government representatives and industry leaders were honest and self effacing about the places where the country is behind. And there was always a lot of laughter.
While some companies have dealt with bribery, the U.S. and Canadian entrepreneurs we talked to hadn’t experienced that. The BOI tries to make it easy for companies in sectors it’s interested in—like software. Qualified companies get corporate income tax exemption for three to eight years, double deduction on public utilities costs, and exemption or reduction of import duties on raw materials and machinery. The BOI office also helps handle visas and other immigration issues with an on-site immigration office.
But one of the easiest ways to get into Thailand, representatives said, was building partnerships with companies that are already there. In the U.S., you might be able to take a vague idea to an engineer and he or she will help you iterate. That’s not so much the case in Thailand where people are used to more direction.
But “Partnering is easy,” Douglas said. “Just call me.”
You might want to wait until the military junta’s over. Or not.
• Thailand ranks 18 in a World Bank list of easiest places to do business in and 91 in a list of easiest places to start a business. Though, if filtered for East Asia it ranks 5th and 11th.
• It takes 156 days, on average, to get a business up and running in Thailand, as compared to Singapore, where it takes 26.
• Thailand is outranked by Malaysia, Korea and Singapore in some categories but beats them when it comes to construction permits, registering property and some other measures.
• Thailand ranks first in the HSBC Expat Survey for best places to live as an expatriate, compared to Singapore which ranks sixth.
• The cost of living in Thailand is roughly half that of the cost of living in Singapore.
• According to JobStreet, monthly salary ranges for software engineers in Singapore range from $2,500 to $4,800 whereas the range in Thailand, sources said, is $500 to $5,000.
Editor’s note: Susan Lahey’s trip was sponsored and paid for by the Thailand Board of Investment (BOI), Thailand’s national economic development agency,