Actions needed, rather than words, leader says

Software Park chairman says incentives are inadequate, retraining a dire need

A leading voice in Thailand's computer software industry has made a plea for government policies to encourage the industry's development.

Software Park Thailand's chairman, Manoo Ordeedolchest, who is also a former president of the Software Industry Promotion Agency (Sipa), said that because software was an engine of economic growth, government policies should assist in building the local industry to make it attractive to foreign investors.

These should include the provision of facilities, special treatment for immigration and work-permit formalities, human resource development, and promotion and incentive packages.

Manoo said that if Thailand wanted to become a destination for software development, the government should provide park facilities to welcome software companies and give them a place to do business. Currently, the only facility is the Software Park in Bangkok. It has not yet expanded to other regions of the country, and were it not for private attempts to provide software parks, such as the Chiang Mai Software Technology and Outsourcing Centre and Software Park Phuket, these facilities would not exist outside Bangkok.

He said regulations surrounding immigration and work-permit procedures were important factors because the software industry was a knowledge-intensive business requiring experts from abroad to come and work in Thailand. These processes should be made more convenient for software companies. Even though there have been some moves towards this, they remain at policy level and are not practical at operational level, he said.

"In this area, our neighbouring countries are doing better than us. In Thailand, we have a one-stop immigration and work-permit service when overseas people first arrive, but when they need to renew their work permit or visa they have to show up personally, and this is not convenient for foreign executives," he said.

Since software is a knowledge-based industry, the development of human recourses is another key area in which government policy-makers should be helping to give the local industry more strength. It is unclear which organisation is supposed to oversee human resource development for the software industry and from where the money for this task is to come. Although the Software Industry Promotion Agency (Sipa) and the Ministry of Education both seem to be in a position of responsibility, in fact there is a vacuum in human-resource development for the software industry, Manoo said.

"Software is young industry that requires a lot of government support. If there is not enough action in support of, and encouragement for, the industry, then it will be difficult to drive the software industry to become economically significant. It will also be difficult to attract big foreign investors like Intel, IBM and Microsoft, who have [already] invested in neighbouring countries like Vietnam and Malaysia," he said.

The Software Park chairman said Thailand's promotion and incentive packages for the software industry were also important. The present promotion package is not sufficiently attractive, and relies simply on Board of Investment incentives. To stand out from regional competitors, Thailand needs more promotional packages of higher quality.

"Comparing government promotional packages in China, Vietnam, Malaysia and Thailand, Thailand is ranked fourth. These countries realise that foreign investment brings not only investment, but also jobs and technology transfers to their countries. Thailand's 'distinguished promotion' package is only the BoI's ability to waive a company's income tax for eight years," Manoo said.

The BOI has been active in providing its support and its incentive package, and about 30 or 40 foreign software companies come to Thailand every year, Manoo said. However, this is too small a number and most of the companies are small businesses, so there is no significant impetus for the software industry as a whole and there is no impact on the country's economy.

Manoo said the priority now was to develop retraining programmes. While about 80 per cent of Thailand's 40,000 programmers are familiar with traditional technologies, new software technologies are now reducing the cost of usage by more than 50 per cent.

The cost of retraining one programmer is around Bt200,000, so to help local software companies to improve the abilities of their staff, the government should provide easy access to sources of funds.

"Angle funds [a form of business venture capital] is a must for building up the country's software industry. But it is so difficult to execute this in Thailand. We need to change the point of view about the free conditions of these funds. If around 50 per cent of projects receive angle-fund financing and are successful, these will create job opportunities for more people, even though the other 50 per cent of projects may fail because they don't get funds," he said.

Manoo said that if there was no action in these areas, Thailand would never claim a place on the world software map. Instead, the country's software industry will remain a family-based industry without economic significance.

At present, a paradigm shift in software technology is opening more opportunities for Thailand's software industry, he said. This paradigm shift, mainly involving three important technologies: service-oriented architecture (SOA), web2.0, and open-source technology, is offering Thai software houses more chances to develop niche software in less time and with lower costs.

"The challenge is how to effectively retrain our people on these new paradigms of software development," said Manoo.

There are good signs in Thailand's second ICT master plan, covering the years from 2009 to 2013. The master plan aims to turn the country into "Smart Thailand", populated by "Smart People" and led by a "Smart Government". Its first strategy - called the Information Literacy strategy - is focused on human-resource development.

Moreover, it aims to improve the country's ICT readiness, so it is better positioned on the world stage, and to increase to 20 per cent the contribution of the ICT industry to the country's gross domestic product (GDP). It also plans to encourage Thailand's export of niche software, increasing its contribution to about 30 per cent of total software revenue. 

By the end of 2013, the plan says the software industry will become a major income generator for Thailand. It will be worth Bt150 billion per year, of which about 50 per cent will come from local software development.

The second ICT master plan is expected to be officially deployed within this year, and the local software industry is hoping its proposals quickly become actions.