The government has been concentrating on small and medium enterprises (SMEs) but the even smaller ones like startups also require supports if they are to survive the economic downturn, experts said on Monday.
“Entrepreneurs are being neglected big time, especially by recent governments, where most economic policies are directed toward the centralization of economic power and big businesses,” Korn Chatikavanij, the chairman of Thai Fintech Association and leader of Kla Party, told Thai Enquirer.
“You can see that during the COVID pandemic, very few policies have come out to help reduce the pain for SMEs which I think is a real shame. Startups have been left high and dry,” he added.
According to BuyShares.co.uk, a UK-based brokerage, nearly 70,000 tech-startup employees have lost their jobs worldwide between March and June. Most of them are in transportation, finance, and travel sectors.
There are about 1,500 startups in Thailand as the digital economy is part of the current government’s national agenda for the country.
Amarit Charoenphan, the co-founder of HUBBA and Techsauce, Thailand’s first co-working space, told Thai Enquirer what startups require right now is no different to what they have been asking for before the outbreak.
These include funding, market and talent.
“Most startups do not qualify for loans as they are not open for that long and many are not profitable yet,” he said, referring to the government’s soft loan policy.
This includes the Bank of Thailand (BOT)’s 500 billion baht budget that is being disbursed through commercial banks. They are already reluctant to give out loans to SMEs amid rising nonperforming loans.
The majority of the soft loans from the Government Savings Bank’s 250 billion baht budget so far has also gone straight to SMEs which hires about 10 million in this country.
“No startup that I know, and I advise about 20 on fundraising at the moment – none of them have got their hands of those soft loans,” Amarit said.
“They do not have collateral and they are not regular customers of these banks where the measures might look good on paper, but there is no implementation for these startups,” he added.
He said since the Small and Medium Enterprise Development Bank of Thailand and the Export-Import Bank of Thailand are more SME-orientated, the government should encourage more venture capital (VC) firms in the country.
“We need a lot more VC funds that will compete for good deals,” he said. “More funding competition for deals, higher valuation, more money for startups to expand and hire,” he added.
This can be done by revamping the VC regulations to meet that of the current standard in other countries and encourage matching schemes such as the ones in Singapore and Malaysia.
There are now about 30 VC funds in Thailand, most of them are corporates.
According to Google-Tamesek’s e-Conomy SEA report 2019, of the US$7.6 billion raised by Southeast Asian internet firms in the first six months of 2019, only $100 million were raised in Thailand.
“If we want to play in the big league, we need to give our startups the right resources,” he said.
Pun-Arj Chairatana, the executive director of the National Innovation Agency (NIA), told Thai Enquirer that his agency has set aside 100 million baht to support projects by startups that have been hit by the outbreak in 2020.
But he also admitted that this is far too little.
“Startups are also experiencing the sudden shortage of liquidity, especially the ones in the service sector, such as travel tech and MICE, are in deep trouble,” he said.
“Some of them have received funding in the previous fundraising round but they are making no income in return,” he added.
Pun-Arj also echoed Amarit that the lack of collateral is the startups’ main predicament in gaining access to liquidity at the moment.
“This is similar to the situation that SMEs within the hotel and restaurant sectors are facing with the banks because there is higher uncertainty,” he said.
He said the NIA is now concentrating on providing funds for university students that are working on startups businesses in health tech, as 100,000 students are expected to be unemployed in 2020 because of the outbreak.
So far, approximately 50 million baht worth of grants and subsidies have been given to more than ten innovation projects which include GSB’s supported zero-interest loans valued at 3 million baht.
But according to Pun-Arj, he said it is still not enough
“We are asking for another 150 million baht between [2020] and [2021] but this is nothing compared to what other governments in the region are pouring into startups.”
Amarit said the government should encourage further digital transformation of government agencies and SMEs to give startups a chance to sell.
“Startups could be the suppliers instead of giving them to large corporates,” he added.
For the NIA, Pun-Arj said his agency has created a platform with 40 startups to cater to an estimate of about 750,000 Thai people who require the use of telehealth technology, such as people living with diabetes.
“The next step is to provide more funds for these health-tech startups so that they can scale up by matching them with the private sector,” he added.
The NIA is also helping them engage with the National Health Security Office as public hospitals are also in need of such solutions and the NHSO is a big buyer in this field.
He said these NIA measures, such as government-provided funding, platforms and matching startups with private and public buyers, could be replicated in other agencies and sectors as well.
Amarit added that there aren’t many qualified programmers in Thailand that have cutting edge knowledge and actually want to code which means there is big competition from corporate.
Many programmers, therefore, do not want to work for a startup as they can make more money at a larger corporation.
Pun-Arj said the NIA is working to create more coders and people who understand deep tech.
“We are not only experiencing a shortage in coders… but we also need scientists that are working on emerging technology,” he said.
“Silicon Valley was built by technologists before coders came into play. A coding nation can only answer vertical problems, we cannot just make apps and hope for buyers,” he added.
