The Ministry of Digital Economy and Society (DES) has urged related agencies to consider a waiver of capital gains tax for venture capital (VC) funds investing in local tech startups, as another drive for startup investment in the country.
The move is also a part of the strategies to build a digital business ecosystem as well as improve the country’s competitiveness.
The government is also gearing up for development of digital infrastructure, especially platforms to help strengthen small and medium-sized enterprises (SMEs) as well as national digital ID and cybersecurity.
DES minister Chaiwut Thanakamanusorn said the government realises the importance of digital technology as one of the key factors to drive economic growth and national development.
According to the IMD Digital Competitiveness index, Thailand was ranked 39th in 2020, improving from 40th in 2019.
The DES Ministry expects to see a better ranking of the country’s competitiveness for 2021, or three consecutive years of improvement from 2019, he said.
Mr Chaiwut said startups and SMEs still face many obstacles.
For startups, one of the pain points is the existing capital gains tax, which discourages VC funds from investing in local startups as they have to be taxed for the gains from the sale of shares in startups in the future, he said.
The capital gains tax pushes local startups to register abroad to attract funding from VC funds, particularly in Singapore where capital gains tax is waived for VC funds that invest in startups.
“I informally talked with the finance minister two times about this in the cabinet meetings but this issue has yet to be settled,” Mr Chaiwut said.
According to him, local SMEs are facing limitation in tech application adoption, access to funding sources and business expansion through innovation.
The government has set out guidelines to help SMEs find a way out and enhance their competitiveness through various projects with cooperation from both private and public sectors.
The Electronic Transactions Development Agency (ETDA) has outlined its national strategic plan for e-commerce for 2021 and 2022, targeting to lift the country’s ease of doing business index to top 20 rank by next year.
Thailand was ranked 21st out of 190 countries in the World Bank’s 2020 ease of doing business rankings.
The plan focuses on four core development programmes – digital ID support, digital services and cross digital platforms, e-transaction standard and e-transaction intelligence centre.
For digital ID support, it focuses on online identity verification as an important feature that would support e-commerce transactions.
ETDA also supports e-transaction standards that would promote e-transaction and e-business practices, which could ensure safety, privacy and accountability.
Entrepreneurs will be supported with guidelines for compliance.
SMEs are facing various challenges in the fast-changing business world, according to Mr Chaiwut.
The Digital Economy Promotion Agency (Depa) continues to support 900 projects meant to facilitate digital adoption. The projects have generated 20 billion baht in economic value.
The projects support digital adoption among SMEs, shops and community vendors.
Since 2018, 5,492 SMEs and shops have adopted digital platforms and solutions, including e-commerce platforms and point-of-sales technology.
Mr Chaiwut said 1,000 startups have engaged in the digital promotion projects since 2018, including 112 under Depa’s startup portfolio.Internet Explorer Channel Network