# Closing the innovation gap in Thailand

- Link: https://www.thailand-business-news.com/finance/299799-closing-the-innovation-gap-in-thailand
- Published: 2026-04-16T03:22:00+07:00
- Author: Boris Sullivan

**The Thai economy is caught in a structural growth trap, with continuously weakening
growth rates.** This clearly reflects that the old growth model, which relies on“
quantity,” is no longer sufficient. Thailand needs to transition to “quality growth”
driven by productivity and added value sustainably.

## Key Takeaways

 * **Thailand’s growth challenge**: The economy is stuck in a structural slowdown,
   showing that the old growth model based on quantity is no longer sufficient. 
   The country must shift toward _quality-driven growth_ powered by productivity
   and innovation.
 * **Weaknesses in innovation system**:
    - Thailand’s Global Innovation Index ranking has fallen to 45th (2025).
    - R&D spending remains below 2% of GDP.
    - Research personnel numbers are declining (23 per 10,000 people in 2023).
    - Patent applications are very low (13 per million people in 2024).
 * **Financial system gaps**: Businesses developing innovation, especially tech 
   and startups, struggle to access funding due to reliance on physical collateral.
   Intellectual property (IP) is rarely accepted as loan security (only 0.07% of
   collateral assets in mid‑2025).
 * **International lessons**: Countries like Singapore, South Korea, and Malaysia
   use _risk-sharing mechanisms_ between government and financial institutions, 
   covering 50–90% of defaults, alongside standardized IP valuation and joint investment
   funds.

**“Innovation” is a key engine for this transition,** but Thailand’s innovation 
development system still has several weaknesses that need urgent attention in order
for the country to move towards quality growth and truly enhance its growth potential.

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### “Thailand’s innovation system” has not yet been able to truly translate research into commercial use.

 * (1) Thailand’s innovation ranking in the Global Innovation Index, which has been
   declining for three consecutive years to rank 45 out of 139 countries in 2025,
   sending a clear signal that Thailand is losing its innovation capabilities compared
   to its competitors in the region.
 * (2) The proportion of research and development (R&D) investment in Thailand is
   still below 2% of GDP, which is the country’s mid-term goal.
 * (3) The number of R&D personnel in Thailand is beginning to show signs of slowing
   down, decreasing to only 23 people per 10,000 people (2023 data), reflecting 
   the continuously weakening fundamental factors in creating new innovations.
 * (4) The number of patent applications per 1 million people is at a low level 
   of only 13 (2024 data), and the number of patents currently in effect is at a
   low level.

These data reflect that the problem with Thai innovation is not a lack of effort,
but rather “Thailand’s innovation system” which is not yet conducive to converting
research and development potential into real economic value.

### The financial system is not yet ready for innovation: The “public-financial risk sharing mechanism” is key.

Businesses that develop innovative solutions, especially technology businesses and
startups, have high growth potential but often face difficulties accessing funding
due to a lack of tangible asset collateral for loans.

Currently, there are structural gaps in the allocation of funding to Thai innovation
businesses, both on the supply and demand sides. On the supply side, financial institutions
lack international standards for valuing intellectual property (IP) and continue
to primarily rely on physical collateral. This results in risk assessments that 
do not align with the highly uncertain revenue streams and technological aspects
of innovative business models.

On the demand side, there are not many Thai businesses ready to invest in new innovations
and capable of commercialization, reflecting an economic structure that is not conducive
to creating and expanding innovation-based businesses. This gap is clearly reflected
in the use of intellectual property as collateral in Thailand, which, as of June
2025, will only account for 0.07% of all collateralized assets.

Lessons from various countries clearly show that a “risk-sharing mechanism between
the public and financial sectors” is key to unlocking funding for innovative businesses.
This is especially true when addressing issues on the supply side of capital.

For example, Singapore, South Korea, and Malaysia utilize a joint risk guarantee
mechanism where the government guarantees 50-90% of the outstanding balance after
a borrower defaults, reducing the risk burden on financial institutions. This is
coupled with establishing internationally recognized and credible IP valuation standards
and setting up public-private partnership funds. These mechanisms play a crucial
role in stimulating the demand side of capital, incentivizing businesses to invest
more in commercializing innovation. The risk-sharing mechanism acts as a “bridge”
connecting the capital supply and the demand for innovation, enabling them to occur
simultaneously.

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In the world ahead, economies will increasingly be driven by “intangible assets.”
Countries that design “innovative finance systems” that allow capital and innovation
to progress hand-in-hand will be able to sustainably enhance their growth potential
and competitiveness through innovation.

### Thailand needs to design an “innovative finance system” that is part of building an innovation ecosystem.

To truly drive the Thai economy through intellectual property and innovation, it
is necessary to design and adapt the financial system to support an innovation-driven
economy. This is not simply about allocating additional capital, but about **making
the financial system “willing to provide funding” and the business sector “willing
to invest” at the same time, through the following four pillars:**

**1. Adjust lending criteria to accommodate intellectual property as collateral**,
reducing reliance on physical collateral and assessing business potential based 
on its ability to create future value. This will enable innovative businesses to
access funding in line with the innovation and commercialization cycle.

**2. Systematically implement a “risk sharing” mechanism between the government 
and the financial sector,** ranging from loan guarantees and support for IP valuation
costs to mechanisms for assuming default risk, in order to remove limitations in
risk management for financial institutions and increase incentives for lending to
innovation.

**3. Develop a central database system and practical IP valuation standards** to
provide the funding side with reliable information and tools to assess the risks
of innovative businesses, reduce uncertainty, and facilitate greater capital flow
into commercially viable innovative businesses.

**4. Create “demand” incentives to encourage continuous investment in innovation
development.** Without a starting point for the demand for high-quality innovations
to create business opportunities, innovation cannot truly be commercialized and 
create added value for the Thai economy.

**These four pillars must be driven simultaneously through key stakeholders** such
as the Ministry of Finance, the Department of Intellectual Property, the Office 
of National Science and Technology Development Agency (NSTDA), the Bank of Thailand,
and the Thai Bankers’ Association, in collaboration with the internationally recognized
organization, the World Intellectual Property Organization (WIPO), which specializes
in this area. Only then will the Thai financial system successfully function as 
a “link” between capital, innovation, and the enhancement of Thailand’s long-term
economic growth potential.