The Shaping of Thailand´s Entrepreneurship Ecosystem
This year has afforded me the opportunity to visit dozens of nations and talk with their entrepreneurs. One nation remained elusive to me. In 2011, Thailand participated for the first time in Global Entrepreneurship Week (GEW) and I was keen to visit in either 2011 or 2012, but despite good faith efforts, I have been unable to make it there, mostly due to the likes of tragic flooding, the worst in 50 years last year for the country. So I turn today to virtual research.
For the launch of Global Entrepreneurship Week, students from Chulalongkorn University’s Hi-Tech Entrepreneurship Club “mapped” the country´s entrepreneurial ecosystem through a comprehensive listing of support groups, activities and resources for entrepreneurs. I am happy to report this entrepreneurship ecosystem looks much stronger a year later, with Startup Weekend events, the 3 Day Startup entrepreneurship education program, stronger emphasis on entrepreneurship at the University of the Thai Chamber of Commerce, the Thai-US Creative Partnership, the Chiang Mai Creative City initiative, and other players all combing for and nurturing local startup talent.
Thai people have always showed a can-do ethos and business creation has long been the main vehicle of Thai economic growth. Global Entrepreneurship Monitor (GEM) research confirmed that entrepreneurs constitute a large proportion of the adult workforce in the country. In 2005, for instance, Thailand had the highest Total Entrepreneurial Activity (TEA) index with over 20 percent of the adult population claiming to be engaged in some form of entrepreneurship. Even those who were not themselves active entrepreneurs expressed a positive attitude towards entrepreneurial activity, with 86 percent of those aged between 18-64 years saying they would be willing to start new businesses.
Clearly, there is huge potential in this population of 64+ million. The key is to transform Thailand from a ‘start and stay small business’ economy, to one that nurtures high-growth, high-impact firms. A large part of new Thai business remains in the risky informal sector. According to the GEM survey, about 69 percent of entrepreneurial activity in Thailand takes the form of small business ventures, such as small restaurants or street stalls, small-sized spas, ‘mom- and-pop’ stores, and the provision of personal services for localized markets. The OECD in turn estimates that about 30% of entrepreneurs in Thailand are “necessity” entrepreneurs, while the other 70% are pursuing a business opportunity.
This is not an easy or quick task, but fortunately the cultural capital already exists. Beyond acceptance for entrepreneurship as a career choice, many Thai social and cultural norms are aligned with entrepreneurship. According to some observers, the thinking of the entrepreneurial class in Thailand has been embedded in the hard-working values of Confucianism, such that attitudes towards failure and success appear to be irrelevant as long as there is working spirit. Buddhist values are also said to contribute to the tolerance towards failure among the entrepreneurial class in Thailand. In many cases, family and kinfolk provide supportive networks.
With entrepreneurship education and interconnected networks, I can see the country flourish into a more favorable ecosystem for entrepreneurship to reach its fullest potential. While still nascent, grassroots movements for entrepreneurs are growing strong, as the success of Global Entrepreneurship Week last month shows. This bodes well for a burgeoning startup movement. Their participants are inspired by local success stories like the Thailand-based ebook specialist Ookbee, which has recently announced that it has received $2 million in funding, and Chalermpol Punnotok, founder of CT Asia and CT Asia Robotic, who set out to develop call-centre software and next generation of service robots for use in nursing homes and hospitals. Entrepreneurs like them are helping push a thriving sector of manufacture of high-technology products, which contributes significantly to the country’s export-led growth.
At the government level, things are also looking good. According to the Index of Economic Freedom Project the overall regulatory framework is evolving gradually in ways that promote the emergence of a dynamic private sector and encourage broad-based employment growth. And Thailand’s Ease of Doing Business rank is quite surprising. It ranks 18th among 183 economies, largely due to the easy for starting a business: no minimum capital requirement and registering a business takes only slightly less than the world average of 30 days and seven procedures.
Beyond the regulatory framework, the government has implemented various policies to boost business creation. Among the most recent to open capital markets to entrepreneurs, it created in 2001 the Market for Alternative Investment (MAI) where companies can list with less stringent conditions in terms of paid up capital and minimum number of shareholders, compared with the Securities Exchange of Thailand. The MAI capital market aims at enhancing funding for small and medium-sized enterprises and high-growth venture capital companies. I am curious on the impact of this measure.
Ultimately, however, it will be the entrepreneurs themselves who shape the future of Thailand’s entrepreneurial ecosystem. In a country where the youth have no qualms about self-employment, I am sure the new generation of globally interconnected minds will write the new chapter in Thailand’s economic history. I will try to be there in person to report on their success!
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