Thailand in the Blockchain Era

With Thailand leading the world in the proportion of internet users owning cryptocurrencies (20.1% of Thais aged 16-64), it’s clear why many companies are choosing to either invest in or facilitate this hugely popular and rapidly growing market, gradually shifting the dynamics of money and finance with important implications for the country’s future. Notably, SCB purchased a Thai-based cryptocurrency exchange, Bitkub, last November for 18 billion baht, propelling the unicorn startup, which started in 2018, into the top ten global cryptocurrency exchanges.

Although the most famous and widely discussed blockchain technology is cryptocurrency, there are many pillars within blockchain technology frameworks which need to be better analysed and understood to fully understand their benefits, together with the pros and cons, and their implications to maximize their effects on productivity and the broader economy.

Bitcoin, the most well-known cryptocurrency, was the first to employ blockchain technology. It is a digital currency that employs encryption techniques to control monetary unit creation and verify fund transfers. The first crypto transaction was apparently over two pizzas. But fast forward to today, and with the huge markets that have developed, many Thai companies are supporting this trend and now accepting cryptocurrencies as payment for goods and services. For instance, customers of The Mall Group can use cryptocurrencies to pay for goods, services, and vouchers at its department stores without any fees. Likewise, leading real estate developers have taken the plunge, including power players Ananda and Sansiri, who now accept cryptocurrencies as payment for their houses and condominiums offering an innovative pathway to home ownership.

However, there is a flipside to the growing popularity of cryptocurrency as a payment method as it may have an impact on financial stability and the overall economic system posing risks to consumers and businesses through price volatility, as well as cyber-theft, personal data leakage, and money laundering. Recognising the potential and risks of cryptocurrencies, Thailand was among the first Asian countries to draft new rules on the custody of digital assets intending to strengthen investor protections. To limit financial risk, Thailand's central bank will also test a central bank digital currency and took a hard line, setting guidelines that prohibit digital asset operators from facilitating cryptocurrency payments for goods and services. However, other public agencies are taking some steps, working within the broader framework to support the industry with Thailand's Revenue Department abandoning its intended withholding tax on cryptocurrencies.

Nevertheless, the blockchain is significantly more adaptable than just a cryptocurrency. With the use of blockchain technology, the financial industry can reduce financial services infrastructure costs between US$15-20 billion per year by 2022. It has also helped reduce the supply chain’s energy consumption by 17% and could remove 15,000 tons of carbon dioxide from the environment each year.

The BOI is currently conducting an in-depth study to assess blockchain technology to ensure that Thailand is prepared and well-organized, through education and awareness, and to eventually plan for targeted promotions that can attract foreign investors to the Thai market, supporting and benefiting the country’s digital and blockchain landscape.

This new technology can give a boost to Thailand’s IT infrastructure and develop professional IT services in line with global standards – better equipping the country to exploit a blockchain future.

In addition, a number of highly relevant sectors in Thailand, including healthcare, smart grids innovation, and education, among others can further streamline their processes using blockchains – with further gains seen as the technology continues to evolve.

The BOI recognises the enormous potential of the blockchain industry and hopes to support its future growth. To accelerate the country’s digital transformation and contribute to a more digital friendly future, Blockchain technology could provide support for digital platforms and can assist a range of supply chains with the digitization of transactions, under Category 5.10 “Development of Software, Digital Platform or digital content. The BOI, in offering corporate income tax exemptions for up to eight years, aims to carefully assess the value of this new platform and its contribution to Thailand together with further industry developments.

Source: The Bangkok Post