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COVID-19 IS STARVING STARTUPS

Thailand Tech Startup Association (TTSA) in an open letter, has called for supporting Thai products and services, plus financial aid scheme for startups because high percentage of the startup sector is poised to starve as the capital and revenues dry up.

COVID-19

Up to 80% of the local startups are struggling financially with revenue drying up in the wake of the Covid-19 pandemic, consequently some have to lay off staffs or pay cut, according to the TTSA President Panachit Kittipanya-ngam, at a Facebook Live press conference, in the recently online presence of representatives from over 60 members.

He said local startups want to survive and to be an integral part of the country’s digital economy, by providing products and services that could speed up digitalisation in both the public and private sectors.

Support for local startups would mean valuable data would be kept in the country, he said.

A key problem is that capital and revenue is drying up and they can sustain for only next 3-5 months them is drying up, because the startups’ high fixed cost is the wages of staffs and these high skilled workers received an average 50,000 baht in monthly salary.

However, the financial support operated by the government did not suit the nature of startup business causing them an obstacle for financial loan assist. The business of startups so far has focused on investment and their operations mostly have been yet profit so the association asked for the credit criteria that take into account their growth potential.

He said local startups is an integral part of the country’ s digital economy, driving Thailand 4.0 by providing products and services that could speed up digitalisation in both the public and private sectors as well the general public.

The TTSA had submitted an open letter to policymakers keeping the ecosystem of startups based on three standpoints.

Firstly, the public should play a part supporting startups by purchasing products or services provided by startups. Not just the public sector, but also the private and general public can opt for business solutions and services made by startups. “We would like to see the collaborative support of locally made and locally used action.”

Secondly, the financial supporting measures in terms of grants and loans to preserve the companies’ liquidity.

Finally, the government should deliver tools to boost the investment and “merger and acquisition” among startups with large businesses, investors and venture capitals.

“We believe that in the post Covid-19 world, digitization will accelerate driving Thailand 4.0 faster. Having the local platform means valuable data will be kept in the country,” he said.

According to Patai Padungtin, first and former president of the TTSA, local startups in many sectors of tourism, event organizers and services were affected by the global pandemic crisis and were trying their best to adjust their business to survive, but their incomes so far could not compensate the loss.

Unless an urgent support by the government, the startups cannot survive, only half of total startup sector will be left and will cause a serious problem to the overall economy. The foreign platforms with high capital will take advantage and dominate the market in Thailand at the post Covid-19.

Another former head of the TTSA, Vachara Aemavat, said some countries, such as South Korea, imposed a digital boundary for foreign operators, to groom domestic startups. If there is only foreign platforms left, the market will then be dominated by foreign players who will have the power to control prices of products and services, as the case of increasing gross profit of food delivery platform.