CleantechA key engine of progress will be clean energy in an economy where over 60 percent of energy is imported and fossil fuels account for around 87 percent of power-generation sources. In response, Thailand is stepping up investments in low-carbon technologies within its power and transport sectors as part of the government’s Alternative Energy Development Plan (AEDP) 2015 – 2036. The goal is to ensure that 30 percent of primary commercial energy comes from alternative and renewable resources by 2036.
Future of connectivityConnectivity is of course a key area of opportunity and two technologies—5G and the Internet of Things (IoT)—have the potential to be especially significant for Thailand, driven by increasing consumer acceptance and demand. In Thailand, 5G ultra-fast mobile broadband that offers 100 times the bandwidth of 4G is set to skyrocket, with the number of smartphone users adopting the technology (especially young parents and metro residents) growing rapidly and the nation’s top telecommunications operators investing billions to prepare. In business, super-fast 5G connectivity (and Internet) has broad implications for organizations, supporting the creation of new services and business models linked to sensor-enabled intelligent products, and yielding new value-chain offerings (such as predictive services, personalized customer offerings, and omnichannel experience). In mobility, for example, IoT sensors and near-global coverage can help manufacturers capture vehicle signals, monitor the condition of each system in the car, and notify the owner to schedule repairs before a breakdown occurs, improving the vehicle’s durability and lifespan.
Distributed infrastructureCloud computing, where the global market is expected to grow by 15 percent annually over coming years, and edge computing (computing outside datacenters that requires local real-time processing of data generated by sensors or users), are key components of modern digital infrastructure—especially IoT. Consumer sentiment is accelerating digital transformation in Thailand (especially since the onset of COVID-19) and fueling adoption of cloud-based services, driving demand for data centers. A 2021 report by Research and Markets expects Thailand’s data-center market to gain investments of US $1 billion by 2026, when the country’s cloud computing market is expected to hit some US $700 million (with 8 percent CAGR over the period 2021–26).This trend will open up IT infrastructure and computing power, triggering a shift in importance away from traditional IT capabilities towards software development skills and the talent required. As companies pivot away from more traditional on-premise IT models, there will likely be a corresponding move to cloud-enabled “as a service” delivery. This transition paves the way for more modular configurations for business organizations built around “platforms” of activities and technology that target specific business goals: including digital transformation, new talent requirements (more system architects, for example), lower costs, and greater innovation.
How can companies prepare?When considering where and when to invest in response to this unfolding picture, companies in Thailand need to pay attention to three primary issues—the scale of the impact of the specific trend, its technical maturity, and the organizational fit of the technology. Executives can ask themselves several questions in relation to these three points:
- Scale of the impact. How important is this trend for my industry or company? Will this technology fundamentally disrupt existing value pools? Will implementing these technologies give the company a competitive advantage?
- Technical maturity. How fast do we need to react? Bearing in mind that front runners in tech adoption capture the most benefit, executives need to consider when is the right time to scale any of the technologies given their level and speed of maturity.
- Organizational fit. How do we approach the technology implementation and operationalize technologies to capture value?
The scope and scale of the technological advances on the horizon are unprecedented. They open up exciting opportunities in Thailand, but also require both businesses and whole industries to prepare. The emerging winners will be those organizations able to harness these technological advances to innovate, reinvent themselves, and transform their performance.
Noppamas (Yam) Sivakriskul is a senior partner at McKinsey & Company and managing partner for Thailand, and Harry Seip is a partner and leader of the firm’s digital and analytics practice in Thailand.
For further information please contact Alan Laichareonsup at email: Alan_Laichareonsup@mckinsey.com
Series Editor: Christopher F. Bruton, Executive Director, Dataconsult Ltd, email@example.com Dataconsult’s Thailand Regional Forum at Sasin provides seminars and extensive documentation to update business on future trends in Thailand and in the Mekong Region.