Microsoft's $1 billion data center investment in Thailand is very good news. This is seen as part of a plan to ignite the kingdom's digital growth and AI revolution. Indeed, this week the incident has brought hope to the country and Prime Minister Sureta Thabishin. It comes as a decline in manufacturing and global low-cost competition are weakening Thailand's second-generation economy, built in the second half of the 20th century, particularly the auto industry.
Microsoft's announcement on Wednesday that it would invest in a regional data center in Thailand was significant. In short, this is not just another pictorial rice cake vision, but an important step for Thailand and Chance. Saudi Arabia has an opportunity to grow its online digital economy in fast-growing Southeast Asia. Indeed, respected consulting firm Kearney estimates that Thailand could generate up to 20% of its existing economy in this sector by 2030. In other words, it's a godsend for the Thai government, which is suffering from a weak manufacturing base. Microsoft's investment is estimated to be worth between $900 million and $1 billion.
While major US companies invested $2.2 billion in Malaysia and $1.7 billion in Indonesia in a one-week deal, the commitment to Thailand came after a shorter negotiation period.
Thailand already has AWS, and has announced a $5 billion investment in 2022 with an agreement in principle with Google. At the same time, it has an ambitious green energy plan to make Thailand a low-cost competitor when it comes to energy.
Prime Minister Suretta Thabisin on Friday cited inward investment as key to Thailand's economic revitalization efforts.
Earlier on Wednesday, Sletta gave a keynote speech at Microsoft Build: AI Day in Bangkok. The event was held at the Queen Sirikit Convention Center.
The event was attended by Microsoft Chairman and CEO Satya Nadella.
This is based on a memorandum of understanding signed between Thailand and Microsoft in November last year. The announcement was made during Prime Minister Sletta's visit to the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco.
Part of the IGNITE THAILAND economic plan to expand the country as a digital services hub in Southeast Asia.Ambitions as a green energy center
Prime Minister Suretta highlighted the government's IGNITE THAILAND blueprint for growth. The plan aims to transform Thailand into a multi-sectoral regional hub. This includes healthcare, future vehicles, travel, aviation, finance, and digital services.
Additionally, as part of Thailand's vision, Thailand is moving towards greener energy. This means the Kingdom will be supplying data centers with cleaner, greener electricity.
For example, Thailand plans to generate 9 gigawatts of green electricity by 2030 under its utility green tariff system.
This is a plan devised by the Thai government to take advantage of the Carbon Border Adjustment Mechanism (CBAM) introduced by the European Union.
In effect, existing renewable energy companies will attract companies to Thailand. At the same time, they will be encouraged by the European Union's institutions, making Thai business concerns more competitive.
Furthermore, by 2040, more than half of the country's electricity will come from renewable sources.
Microsoft is already a major player in Thailand's digital economy and is certainly very active.The company's GitHub service is used by his 900,000 Thai technology developers
But there was immediate good news for Thailand on Wednesday.
Namely, the announcement that Microsoft will build a regional data center in the Kingdom.
At the same time, the company will train 100,000 Thai developers and staff on how to use AI.
Certainly, this is not an empty promise. Thailand is one of the fastest growing markets for Microsoft. For example, the US giant owns his GitHub.
Support software and web developers across a variety of tasks and activities. This includes writing code, coordinating projects, and converting ideas into finished services.
In 2023, over 900,000 internet engineers and developers were using GitHub in Thailand. Simply put, the facility grew by 24% compared to the previous year.
Therefore, it means that Microsoft is already a major player in Thailand.
AI is a real and promising growth opportunity for Thailand as the manufacturing economy declines due to years of government inertia on structural issues
At the same time, the AI technology sector could represent a significant opportunity as Thailand struggles to cope with the decline of its manufacturing economy.
consulting company carnyis one of the world's oldest and most trusted companies and estimates that this industry alone will be worth $1 trillion to Southeast Asia by 2030.
For example, Thailand could generate $117 billion, or ฿4.3 trillion, over the same period. In other words, this represents up to 20% of the kingdom's current economy.
Undoubtedly, this could be an escape card for Thailand's pro-Thai government from the economic turmoil caused by decades of inertia. In short, past governments failed to address the country's structural problems.
Thailand's manufacturing sector is particularly worrying after 18 months of weakness. In particular, the country's automobile industry, which was previously the backbone of industrial production.
Mr. Ng Yin questions the desirability of the Bank of Thailand's independence and launches an attack.
The central bank announced that the economic growth rate in the first quarter was 1%, although the manufacturing industry index declined for 18 consecutive months.
By Thursday and Friday of this week, analysts were focused on Microsoft's announcements regarding Indonesia and Malaysia.
Officials told the media that Thailand's investment was lower than Malaysia and Indonesia's because of Thailand's late participation.However, it is competitive
The US technology giant has committed to investing $2.2 billion in Malaysia. In fact, this is the largest investment in Thailand's southern neighbor in 32 years.
It also plans to train up to 200,000 Malaysians.
On the same day as the Bangkok event, Microsoft simultaneously announced a $1.7 billion investment in Indonesia. 840,000 people will receive training and certification in the country.
A source close to the Thai government explained this to the media.
Firstly, the scale and value of the investment in Thailand is yet to be confirmed. Some proposals put it at $900 million to $1 billion. In fact, the value of the investment is still being discussed with Microsoft.
However, the source said Thailand was in an advantageous position. Not only does it already own AWS and Amazon, which announced a huge investment of $5 billion in 2022, but it also has a number of major investments from China.
Cloud computer company AWS opens store in Bangkok, Amazon becomes major investor in Thailand
The prime minister met with Canadian Prime Minister Trudeau at the US summit and urged them to conclude a free trade agreement between Canada and Thailand.
Additionally, the Kingdom has also signed an agreement with Google regarding investment in Thailand.
Thailand has just emerged from the “freeze” era of military and semi-military governments since Prime Minister Suretta Thavisin's government took office in September 2023.
The person clarified that the reason why Thailand's investment scale was low was related to timing.
Thailand is just emerging as an option for Western technology companies. Previously, the country suffered from a “freeze period” on inward investment. In other words, it was during the military regime and the post-military regime of General Prayut Chan-o-cha.
The new government of Prime Minister Suretta Thabisin was only inaugurated in September 2023.
“Thailand does not lack potential as a data center. It just got off to a later start than neighboring countries,” an industry analyst told reporters.
Meanwhile, Thailand has succeeded in securing investment from China through companies such as Alibaba and Huawei.
Alibaba set up a $1 billion data center in Thailand in 2021. As part of the program, training was provided to one million Thais. Additionally, the venture aimed to support 100,000 Thai startups.
US companies may not be able to use Chinese cloud infrastructure
However, US companies are beginning to dominate the cloud computing market in the Asia-Pacific region.
The reason is the accessibility of US software and systems. At the same time, the US government is encouraging its companies to avoid using Chinese networks and cloud services.
Simply put, they pose significant security risks while also expanding the scope of US sanctions.
At the same time, the growth of cloud computing in China is starting to slow.
Previously, this started in 2021 with the pandemic-era recession. The industry has not been able to return to past growth levels. Meanwhile, American companies are taking over the market.
Today, Chinese companies survive by offering cloud-based services at low cost. The current rate is about 50% of what US players are charging.
A dual Internet ecosystem is emerging, with Chinese companies and users on one side and the United States and Western markets on the other.Thailand is still in both states.
One such company is Thailand's Narai Intertrade, which promotes Naraya lifestyle products as a brand.
Notably, we use the Alibaba cloud infrastructure network to deliver our products. The reason is that many of our customers are in China.
Nevertheless, China's cloud computing market still grew by 8% in 2022.
AWS or Amazon, Microsoft, and Google together accounted for 67% of the cloud computing market in Southeast Asia last year.
This trend is growing even as China's influence weakens. At the same time, the cloud computing market is growing by 25% annually.
Indeed, we are moving toward a dual Internet system with the United States and the Western world on one side and China on the other.
But for now, Thailand, like other countries, remains connected to both countries as part of the internet ecosystem.
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References:
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