BANGKOK (15 September 2022) — Technology-based startups in Thailand have grown rapidly in recent years, although startups with a high potential for development impact remain at a nascent stage, according to a new report by the Asian Development Bank.

A combination of indigenous entrepreneurship and a supporting ecosystem of policies and supporting players have helped drive the growth of the country’s tech startup scene, according to the report, Thailand’s Evolving Ecosystem Support for Technology Startups, released today. Fintech and e-commerce dominate the landscape, while startups with high development impact—those focused on education (edtech), health (healthtech), agriculture (agritech), and the environment (greentech)–have developed more recently.

These sectors are considered especially important because of their potential to contribute to human capital development, agriculture productivity, and climate change mitigation. However, they tend to attract less venture capital and support for several reasons. Rather than services, they often offer products, which must be manufactured and require advanced manufacturing capability. In addition, product development takes time, while venture capital seeks short gestation periods and quick returns.

Weak demand can limit the emergence of more startups with high development impact, according the report. However, the COVID-19 pandemic gave a big boost to demand in areas like education and health care, where remote, digital solutions were needed.

“The use of digital solutions was gaining pace prior to the pandemic, but the ‘pandemic effect’ boosted demand in key areas—and that effect is continuing,” said ADB Economist Paul Vandenberg, one of the report’s co-authors. “In some areas of health and education, the government is a key customer and its openness to adopting solutions offered by startups is critically important.”

The government plays a key role in setting policy and offering programs that support startups. For Thailand, 2016 was a watershed year, with a variety of new initiatives, said Sakdipon Juasrikul from the University of the Thai Chamber of Commerce, the report’s other co-author.

The Ministry of Digital Economy and Society (MDES) was created in 2016, and the National Startup Committee was established to generate ideas for improving the startup ecosystem. A year later, the new Digital Economy Promotion Agency was created under MDES with a mandate to support startups. At the same time, incubator and accelerator programs and financing institutions, include venture capital, sprung up to support tech startups.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

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