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Thailand pushes Software and Data Center firms

Thailand also offers strong government support to promote development of the software, software animation and data center sectors. The Board of Investment (BOI) classifies software development as a priority activity crucial to the country’s prosperity. As such, the BOI offers maximum investment incentives to software ventures, including tax breaks and exemption on import duties for machinery.

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Software, software animation and data center businesses are playing a vital role in Thailand’s push for a creative economy. Along the way, these sectors also offer lucrative opportunities for investors. Such information technology companies find Thailand to be an excellent investment location for many reasons.

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The country’s enhanced information and communications technology (ICT) infrastructure offers resources vital to software products development. These include reliable and swift broadband Internet, network security, low incidence of power outages, and outstanding R&D and production facilities. There are nearly 40,000 technical personnel in the country’s lively software sector. In addition, foreign investors benefit from local wages that are half of those in the United States and the European Union.

Thailand also offers strong government support to promote development of the software, software animation and data center sectors. The Board of Investment (BOI) classifies software development as a priority activity crucial to the country’s prosperity. As such, the BOI offers maximum investment incentives to software ventures, including tax breaks and exemption on import duties for machinery.

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Thailand also offers strong government support to promote development of the software, software animation and data center sectors.

BOI offers investment incentives to software ventures

The government’s commitment to pushing Thailand well up the technology value chain is complemented by sophisticated organizations such as the Software Industry Promotion Agency (SIPA), Ministry of Information and Communication Technology (MICT), Software Park Thailand, National Electronics and Computer Technology Center (NECTEC), Thailand Software Process Improvement Network, Association of Thai Software Industry, Thai Software Export Promotion Association, Thai Animation and Computer Graphics Association and Thai Game Software Industry Association.

In particular, SIPA, which is under the MICT, works to enhance the software sector through human resources development and improvement of product quality. Software Park Thailand is also mandated to help strengthen the sector through training and certification on quality standards. It also assists start-up companies in obtaining incubation space. Currently, there are more than 50 software companies operating at the facility. Another dedicated facility is the Korat Software Park in Nakhon Ratchasima Province of northeast Thailand.

Moreover, the NECTEC’s Software Engineering Laboratory has launched a series of projects in software process engineering, requirement analysis, design, implementation, testing, evaluation and maintenance to promote and support high-quality Thai software products.

The government’s ICT Master Plan 2009-2013 continues to provide the framework for stable progress.

Dynamic Software Sector

Market value of the Thai software sector in 2010 stood at 67 billion baht. Demand for software products and services in Thailand will only get bigger. Entrepreneurs can see a wealth of opportunities, especially in areas such as finance, logistics, communication, localization, entertainment and scientific research.

The sector continues to be dominated by enterprise software products, which have the lion’s share at about 80% of the market. Even so, steady growth is taking place in segments for software animation, mobile applications and embedded software. The sector offers investors a youthful verve, as most of the professionals at the country’s 1,300 software companies are under the age of 30.

Among the prominent companies in Thailand’s software sector are DST, Microsoft Thailand, Reuters Software and SAS Software, which has announced a tripling of its local workforce within the next three years. Further testimony of the sector’s strength came when several other Thai software companies were named prizewinners at the 2010 Asia Pacific Information and Communication Technology Awards held in Malaysia. These included Geomove, Neo Invention, Larn Gear, Phuket Software Factory and ThaiQuest.

Computer software has already expanded to a 16% share of sales in Thailand’s entire ICT industry, which is valued at 595.60 billion baht. Among the various sectors, enterprise software revenue totaled 58.07 billion baht, embedded software hit 3.42 billion baht and software maintenance services reached 1.27 billion baht in 2010, according to NECTEC figures.

Spending on computer software in the country is mainly by private corporations, the government, and households or small home offices, which account for 29%, 28% and 7% of the market, respectively.

Whereas in past years software piracy was a substantial problem, the Thai government has beefed up enforcement of laws and copyright protection, and conducted nationwide sweeps on illegal products. An occurrence in December 2010 demonstrates the tremendous progress achieved. That month a Thai software executive went on record as praising police officials at the Economic and Cyber Crime Division for effective raids on pirated goods.

Software Animation among World’s Best

With reliable quality, a knack for innovation and low prices, Thailand deserves its reputation as one of the world’s top software and animation hubs. Companies from Hollywood to Europe to Japan outsource their work to the Thai industry and purchase local releases. By excelling both as subcontractors and original creators, Thai software and animation enterprises helped boost the country’s digital industry (animation and games) to an estimated value of 22.8 billion baht in 2010.

For software animation in particular, Thailand is especially strong in cartoons and characters, computer-generated imagery, web-based applications and interactive applications. Animation products ring up 10 billion baht worth of sales in Thailand annually. Experts see that climbing to 14 billion baht in 2013 under the government’s creative economy campaign and with increased demand for Thai animation products from neighboring countries.

Thai companies such as Anya, Magic Software, Kanchorn, Monk Studio, TIGA and Kantana are among those driving progress in the software animation sector. The Kantana group, sought out by everyone from 20th Century Fox and Warner Brothers to Walt Disney and DreamWorks, is also known as the creator of “Khan Kluay,” Thailand’s first 3-D animation feature film.

Among recent major developments in the software animation sector, Thai animation and computer graphic products bagged over 500 million baht in sales at Digital Media Asia Festival 2010. Organizers of the event said this hefty haul shows that Thai enterprises are capable of outstanding creative work as well as reliable subcontracting.

Key Players in Thai Software Industry 

  • Ministry of Science and Technology
    • National Electronics & Computer Technology Center (NECTEC)
      (www.nectec.or.th)
  • Ministry of Information Communication Technology
    • Software Industry Promotion Agency (Public Organization) (SIPA)
      (www.sipa.or.th)
  • Private Sector
    • The Association of Thai ICT Industry (ATCI) (www.atci.or.th)
    • The Association of Thai Software Industry (ATSI) (www.atsi.or.th)
    • Thai Software Export Promotion Association (TSEP)
    • Thai Animation and Computer Graphics Association (www.tacga.net)
    • Thai Game Software Industry Association
      Thailand Software Process Improvement Network (www.Thailand Spin.com)

 

Data Centers Ensure Industry Stability

With an estimated value of 5.677 billion baht in 2010, up 16% from the previous year based on NECTEC and SIPA figures, Thailand’s data centers and disaster recovery centers sector is a rising star.

By definition, data centers are high-integrity facilities that house the servers of many clients, generally storing them in the multiple- rack cabinets of specially designed rooms. Such centers, which can occupy one room of a building, several floors or even an entire building, provide services such as server storage, data backup and security, and environmental control to help ensure business continuity for clients.

T.C.C. Technology Co., Ltd. (TCCT) is one of the leading providers of commercial data center services in Thailand. Net Niche Call and Data Center also stands at the forefront, and Fujitsu Systems Business (Thailand) remains a top foreign- invested company.

Thailand’s young data centers sector recently has taken several big strides, sharpening the country’s technology competitiveness. It was in 2010 that the BOI, under efforts to strengthen Thailand’s position as an ICT regional hub, added data centers to its list of activities eligible for investment incentives. The measure aims to encourage more investment in information technology businesses. Businesses in this new category will be eligible for an eight-year corporate income tax exemption as well as an exemption from import duty on machinery, regardless of location.

SIPA’s board also recently approved funds to support 84 projects by software startups in celebration of His Majesty King Bhumibol Adulyadej’s 84th birthday in 2011.

In another big step, TCCT, the country’s biggest provider with 29,700 square feet of data center capacity in Bangkok, has entered into a collaborative project with IBM to build a state-of the-art “green” data center. The facility aims to provide ultimate efficiency, maximizing TCCT customers’ investment in the company. IBM will specially engineer the new TCCT center to ensure green compliance with world standards, particularly on electrical, emergency power and cooling systems. It will feature a dynamic setup of raised floors, heat-resistant walls, humidity controllers, automatic doors, fire protection, and environment- friendly systems.

Industry experts project that by 2030, data centers worldwide will consume 12% of global energy. Green facilities such as this one show that Thailand’s information technology industry is doing its part to protect the environment.

Prince of Songkla University has also launched a project to establish a data center that would promote the yachting industry in Phuket, one of Thailand’s world-class ocean resorts. Still in the development stages, the project receives some funding from the Ministry of Industry, with the data center expected to be running in early 2011. Research is still being conducted on whether it should exist solely online or as a physical office. Phuket’s marinas currently service about 1,300 vessels of 30 to 100 feet in size. The goal is for the increased information flow from the data center to boost service to 5,000 such yachts.

Thailand’s software, software animation and data center sectors are achieving big gains, but competition on an international level grows more intense with each passing second. As such, the biggest challenge facing Thai software and information businesses is the need to improve continuously to stay abreast of low-cost makers in China and India and with advanced producers in the West.

With the support of the BOI and many other government agencies, it is clear that Thailand is competitive on many levels, as investors have already discovered.

 

More at BOI: http://www.boi.go.th

 

 

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