Outlook for next year even rosier.
Mobile firms ready to start 4G network
The mobile sector is one of the big winners this year, escaping the country’s sluggish economy as mobile communications are expected to have an effect on nearly every aspect of life and business.
Major mobile operators project a slight increase in revenue this year.
Thailand has 110 million mobile subscribers, expected to rise to 150 million in 2016, says the National Broadcasting and Telecommunications Commission (NBTC).
This gain will be fuelled by the continued growth of mobile data users and the arrival of machine-to-machine communications or the Internet of Things.
Thailand has more than 40 million mobile internet users and only 35 million desktop internet users. It is a mobile-first country.
Pete Bodharamik, chief executive of Jasmine International, the parent firm of JAS Mobile Broadband, said its average fixed-line broadband household owned up to five internet-enabled devices, with at least three of the devices mobile.
JAS will launch its commercial fourth-generation (4G) service early next year.
Thailand’s mobile market is valued at 300 billion baht annually.
Somchai Lertsutiwong, chief executive of Advanced Info Service Plc, the country’s largest mobile operator, said his company’s 2015 data revenue surged thanks to mobile traffic, which is driven primarily by the proliferation of data-hungry mobile devices.
“The mobile data market is going to explode in 2016 thanks to the arrival of full commercial nationwide 4G service,” he said.
An Ericsson ConsumerLab report shows 89% of Thai consumers use social media on a weekly basis.
Traffic on mobile networks will continue to grow at an impressive rate, driven by the uptake of smart devices and apps. This rapid growth is having a significant impact on networks.
Global research firm IDC said average mobile internet usage in Thailand would increase to 192,265 Mbps per number per month over the next five years, up by 165% from this year.
Mobile internet service could also generate new revenue streams for other ICT-related businesses, particularly e-commerce. Thailand has more than 500,000 e-commerce merchants via many channels including social media, websites and online marketplaces. The country’s e-commerce sector has grown by 20% annually.
The value of Thailand’s e-commerce market is expected to reach 2.1 trillion baht this year, up by 3.65% from last year, which surged 165% from 700 billion in 2013 thanks to intense discount promotions and greater availability of high-speed wireless broadband networks.
Studies suggest doubling internet broadband speeds can add 0.3% to GDP.
Tech start-ups ready to ring in innovation
Thailand's tech start-up industry is one of the three most attractive in Southeast Asia thanks to a proliferation of mobile internet users and capable world-class tech talent.
The development of tech start-ups is part of the government's policy of promoting innovation among small and medium-sized enterprises.
According to Thailand's "Tech Startup Report 2015" compiled by TechSauce.co, as of last month Thai tech start-ups had raised US$84.5 million from 53 projects compared with three projects worth $2.1 million in 2012.
The biggest tech start-up investment in Thailand in 2015 was worth $10.7 million, while the biggest in 2012 was worth $2 million.
The number of venture capital funds in Thailand jumped to 12 worth $79 million in 2015 from three in 2012 worth $7 million.
Nattawut Pungjarernpong, fund manager at Bangkok venture capital firm 500 Tuktuk, said the early stage of the local start-up market was just blossoming.
Indonesia and Malaysia are other attractive destinations for global venture capital in Southeast Asia, given their large populations and strong start-up ecosystems.
Mr Nattawut urged policymakers in Thailand to provide more attractive incentives for tech start-ups and ease regulations to promote investment.
The government provides tax exemptions for capital gains when companies invest in tech start-ups, but the country needs more incentives to reduce the risk of investment losses, he said. Thai tech start-ups can continue to grow for another few years as capital pours into Southeast Asia.
E-commerce continues to bloom
E-commerce saw strong growth this year thanks to the proliferation of smartphone and mobile internet users.
Thailand has 40 million mobile internet users, with the smartphone penetration rate exceeding half the population.
The e-commerce market will continue to blossom next year, with a host of key regional players jumping on the bandwagon.
The local e-commerce market increased at a double-digit rate this year, overtaking GDP, thanks to aggressive marketing and attractive discount campaigns among e-commerce companies.
There are an estimated 14 million online shoppers in Thailand and more than 500,000 online merchants.
The advent of full commercial fourth-generation (4G) wireless broadband service next year will transform the local mobile commerce and mobile payment markets.
“Thailand’s retail e-commerce [business-to-consumer or B2C] market was Southeast Asia’s largest in 2014, worth US$11.7 billion,” said Surangkana Wayuparb, chief executive of the Electronic Transactions Development Agency (ETDA).
Malaysia’s B2C market was valued at $9.6 billion, followed by Singapore ($3.4 billion), Vietnam ($2.9 billion), Indonesia ($2.6 billion) and the Philippines ($2.3 billion).
However, compared to developed countries, Thailand trailed the US ($359 billion), China ($322 billion), Japan ($118 billion) and South Korea ($25.4 billion).
Mrs Surangkana said Thailand’s B2C market was expected to grow by 15.2% to 475 billion baht in 2015.
An ETDA survey of 502,676 e-commerce operators countrywide from April-October showed electronics, cosmetics and fashion were the three best-selling products in retail e-commerce.
The survey found the top three payment channels were e-banking, credit or debit cards and mobile payment.
Mrs Surangkana expects mobile payment will surpass other channels in 2016 thanks to the proliferation of smartphones.
Pawoot Pongvitayapanu, president of the Thai e-Commerce Association, said operators must expand abroad, particularly to other Asean members, instead of focusing only on the domestic market.
Paul Srivorakul, chief executive of aCommerce Group, said next year’s launch of commercial 4G service would further cement Thailand’s leading position in mobile internet and accelerate the growth of mobile commerce.
Thailand is already one of the most mobile-enabled countries in the world, with the average Thai user having 1.4 mobile devices, he said.
The country’s mobile internet penetration of 56% already exceeds that of the US and China, at 40% and 34%, respectively.
However, e-commerce accounts for only 1% of Thailand’s total retail market. Local e-commerce is expected to reach double-digit figures within the next four or five years.
Local e-commerce has grown by 20-25% year-on-year despite the stuttering economy, Mr Paul said.
Meanwhile, a number of retailers and manufacturers have been tapping opportunities from the online channel.
Among them are major retailers such as Central, The Mall and Tesco Lotus as well as furniture chain Index Living Mall and Mc Jeans, which already have online shopping platforms.
Their online sales have grown in the range of 10-100% this year, depending on product category.
Popular items are cosmetics, apparel and electrical appliances.
Next year, these operators hope to boost online sales and attract more young-generation customers.
An increasing number of companies plan to expand via the online channel, as they can access customers not only in the domestic market but also abroad.
When they have succeeded in providing online shopping platforms on their own, some operators such as Central plan to serve as a marketplace, selling products for other producers, Mr Paul said.
High hopes pinned on tourism rebound
Tourism has been singled out as the economy’s biggest hope and a powerhouse this year amid the export slump.
The sector has strongly recovered from the last year’s political instability and passed through the economic storm and the deadly Erawan Shrine bombing.
Foreign tourist arrivals are expected to reach almost 30 million in 2015, exceeding the official target of 28.8 million.
The Erawan bombing on Aug 17 caused a brief hiccup in tourism’s recovery, and the industry bounced back in a couple of months.
The sector’s resilience led Tourism and Sports Minister Kobkarn Wattanavrangkul to declare her ministry was confident total international tourist arrivals would hit 29.5 million by year-end.
As of last Wednesday, Thailand had welcomed 29 million foreign visitors.
The tourism revenue target of 2.2 trillion baht is being maintained.
Of that total, 1.4 trillion baht will come from foreign tourists and 800 billion from local travellers.
Tourism’s strong recovery has benefited the hotel business, with many chains reporting healthy performances this year.
Thai hotel chain Onyx Hospitality saw its operating profit rise 36% year-on-year in the first nine months, with properties in Thailand contributing 70% of revenue, president and chief executive Peter Henley said.
He expects the strong performance will continue next year.
For next year's first quarter, Onyx forecast an 8.1% increase in room revenue for properties in Thailand.
Patrick Basset, AccorHotels’ chief operating officer for East and upper Southeast Asia, called Thailand an attractive destination for tourists from around the world.
The country’s tourism has a strong reputation, boasting natural beauty and a rich cultural heritage.
It also offers a variety of attractions that appeal to a wide range of visitors from business travellers to eco-tourists.
Mr Basset remains concerned about political uncertainty, which could emerge as a major risk for Thailand and tourism in the future. Tourism has been very sensitive to political problems.
Meanwhile, the Association of Thai Travel Agents (ATTA) is satisfied with tourism’s recovery this year and projects the sector will continue to outperform next year even though Thailand will face many negative factors such as the global economic slowdown and risks of terrorism.
“Thailand remains a popular destination, with many main feeder markets within three hours’ flying time,” ATTA president Charoen Wangananont said.
Prior experience of dealing with crises provides proof that Thailand can sail through many negative situations and recover in a short period.
As of Dec 20, ATTA reported the number of international tourist arrivals via its member agents had grown by 63% to 5.06 million.
ATTA said 2015 was another good year for tourism after several years of stagnation due to political conflict.
However, the government must boost all industries next year, not just rely on tourism revenue, Mr Chareon said.
Tourism and sports permanent secretary Pongpanu Svetarundra said the weaker baht following the interest rate hike by the US Federal Reserve would benefit both the export and the tourism sectors.
Budget carriers seize the helm in air wars
Low-cost carriers (LCCs) have continued to evolve and flourish in 2015 to outshine other business sectors against the backdrop of economic doldrums.
Having opened the skies over Thailand and other parts of the world for millions of travellers, budget airlines are now a force to be reckoned with in the aviation industry.
Growth has been particularly dramatic in Thailand, where LCCs continue to raise their passenger share and spur traffic in a way that full-service carriers (FSCs) are unable to mimic.
Several LCCs in Thailand continue to stimulate air travel by lowering fares and opening new routes and destinations — the primary drivers of their proliferation.
Higher growth in Thailand's tourism industry due largely to political stability has sent traffic soaring for LCCs, a popular transport mode for leisure travellers.
Passengers travelling on budget airlines through the six major Thai airports run by SET-listed Airports of Thailand Plc (AoT) surged 34.1% in the first nine months of 2015 to a record 33.4 million from 24.9 million in the year-earlier period.
That pushed LCCs' share of the overall passengers passing through those airports during the same period including Suvarnabhumi and Don Mueang to 41.3%, up from 38.5% in the year-ago before period.
LCC aircraft movements — take-offs and landings — rose in tandem to 229,921, up by 28.9% year-on-year, according to AoT statistics.
Tassapon Bijleveld, chief executive of Thai AirAsia (TAA), Thailand's biggest LCC, said the foregone conclusion was LCCs in places such as Thailand in particular and Southeast Asia in general would continue to consolidate their profiles in air transport.
"What we see taking place in Southeast Asia is similar to Europe, where LCCs account for up to 75% of intra-European air travel," he told the Bangkok Post.
In Thailand, the share of LCCs in the overall passenger market is set to rise by 3-4% annually over the next several years to reach the high levels seen in Europe.
Given the trend apparent in the first 10 months of this year, indications are the LCC passenger tally for the whole of 2015 will reach 45.5 million, according to industry executives.
Next year, the LCC share of passenger totals will grow to 46%, Mr Tassapon said.
Several LCCs have seen improvement in their balance sheets due to enhanced business performance.
For instance, TAA posted a record net profit of 1.47 billion baht in the first nine months of 2015 compared with a net loss of 265 million in the same period last year.
AOT shares closed yesterday on the SET at 344 baht, down three baht, in trade worth 427 million baht.
