In October 2019, the Thai government is set to officially launch its Thailand 4.0 policy initiative, setting out a 20-year national strategy to propel the Kingdom towards becoming a developed economy through research and innovation in digital technologies.
From a socio-economic perspective, the Thailand 4.0 concept is a much-needed panacea for the country. As it chases economic development, Thailand finds itself caught up in multiple ‘traps’, namely the ‘unbalanced trap’, the ‘inequality trap’, and the ‘middle-income trap’. These traps are caused by a combination of factors, including unbalanced growth of the country’s economy and uneven distribution of wealth.
If the Thai government is seeking a tool to unlock the nation’s economic potential, blockchain technology may prove to be the ideal choice for the implementation of Thailand 4.0.
In keeping with Thailand 4.0’s emphasis on the use of digital technologies to spur national economic growth and development, local blockchain startups have a critical role to play as catalysts for the promotion of digital innovation in Thailand. Leading by example, the Thai government is experimenting with using distributed ledgers in the operations of its various state agencies.
In August 2017, Thailand Post, the country’s state enterprise for postal services, introduced the use of blockchain for its warehousing, sorting, shipping, and delivery processes with the aim of enhancing operational efficiency. Another notable government initiative had the Electronic Transactions Development Agency (ETDA) sign a Memorandum of Understanding (MoU) with local blockchain startup Omise Co., Ltd. to build a national electronic Know-Your-Customer (e-KYC) platform, as part of the ETDA’s Digital ID project.
Other than state agencies, blockchain use has also been taking place at the ministerial level. In October last year, the Ministry of Commerce announced that it is exploring the feasibility of using blockchain in the areas of copyright, agriculture, and trade finance to boost the country’s credibility in terms of intellectual property as well as the overall competitiveness of Thai businesses. Around the same time, the Ministry of Finance announced that it is planning to use blockchain to track tax payments for the purpose of detecting tax fraud.
Fast forward to January this year, the Ministry of Science and Technology’s National Electronics and Computer Technology Center (NECTEC) announced that it has developed a blockchain-based voting system. It has been looking for trial partners to test out the system on a smaller scale, such as in elections for universities, provinces, local communities, etc.
Aside from public administration, the Bank of Thailand (BoT), which is the country’s central bank, is also spearheading the use of blockchain for Thailand’s banking and finance industry. The BoT has been collaborating with eight local banks through an undertaking dubbed “Project Inthanon.” The project was launched in August 2018 with the objective of exploring the use of blockchain’s Proof of Concept (PoC) framework to develop a Central Bank Digital Currency (CBDC) for domestic wholesale fund transfers.
Phase I of Project Inthanon, which was completed in January this year, involved the development of a CBDC prototype using R3’s Corda blockchain platform. The results of the tests showed that the use of blockchain has the potential to enhance the efficiency of interbank payment transfers, particularly during off-hours.
Phase II, which started in February this year and is expected to be completed by September, involves exploring the use of blockchain-based debt instruments issued by the BoT to reduce delivery and settlement times for interbank trading and repurchase transactions. Additionally, Phase II studies the use of blockchain for regulatory compliance and data reconciliation, particularly to facilitate the reconciliation by banks of its customer accounts with its money transfer records as part of its compliance obligations under BoT regulations.
The final phase, i.e. Phase III, commenced in August this year and is expected to be completed by the end of this year. This phase entails a collaboration between the BoT and the Hong Kong Monetary Authority (HKMA) to explore the use of blockchain for the development of interoperable ledgers for cross-border fund transfers.
With 10% of Thais owning cryptocurrencies in one form or another, it is clear that the technology will have a role to play in shaping the Thai way of life. Given the advances made by the government and central bank in embracing the potential of blockchain, it may be just a matter of time before the Southeast Asian country escapes its various traps and propel its economy towards its Thailand 4.0 ambitions.
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