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Introduction

With the introduction of the Software Park in Thailand in 1998, the information technology sector will have an opportunity to develop within the boundaries of the country, and not rely on the outside world to meet the country's
IT needs. When Intel signed the Memorandum of Understanding with Thailand to establish the Park, it was clear that this company represented a new found optimism about Thailand's future. The company's commitment to this long-term venture will inevitably help Thailand move forward, despite the country's current economic difficulties.

Software Development back to top

The packaged software market experienced the highest growth rate within the IT market of Thailand at 23%, reaching a total monetary value of $204 million. Within software development, in 1999, application solutions software has experienced a growth rate of 28%, application tools 20%, system software/utilities 18%, and middleware 12 percent.

There are no domestic commercial products for Internet, e-commerce or EDI applications and tools in the country and so foreign software products have little to compete against as they market their goods to the Thai population. Once the software is imported however, there is a big market in the customization of it for the Thai market. It is also a popular trend among banks and ISPs to develop their own customized software for internal use. This is also the case for several of the bigger corporations.

One of the biggest threats to software development in Thailand is the high rate of piracy. However, the government recognizes this weakness and is beginning to address it by implementing stricter policies and backing the legislation up with real enforcement. The software piracy rate dropped to 82% in 1999 from 85% in 1998.

Software Park back to top

In 1998 Intel Corp (www.intel.com) signed a memorandum of understanding with the National Electronics and Computer Technology Center (NECTEC) (http://www.nectec.or.th/) to create a Software Park. This park would include an Intel architecture laboratory to support the development of local software in Thailand. According to CEO Craig Barrett, Intel considered its investment, "in a time of economic change in emerging markets, as a competitive necessity, not a luxury".¹

Pros and Cons to Investing Here back to top

Pros	Cons
Proximity to a world center of software development, Malaysia's Multi-Media corridor	Language and communication issues, Thailand's general population has limited English skills
Relatively good local education levels, particularly in science and technology	Thailand still has a small software market, since only a small percentage of the population is computer literate.
Low cost labor	The Software Park still has small, decreasing economies of scale
Favorable exchange rates	General poor public infrastructure
Support of the Government	Internet access is still expensive and the connections are poor
Benefits of diversification of locations for software production	The deregulation process of the Communication's Authority of Thailand monopoly on Thailand's communications market is still not complete
Low investment costs
Low cost work space rental
Board of Investment Opportunities
No limit on percentage of foreign ownership
Corporate income tax exemption for 8 years
E-business services
Special discount for professional training organized by Software Park
Special marketing services provided by Software Park
Exemptions of import duty on machinery

Source: "Software Developments, International Market Insight, 07/27/99, STAT-USA/ Internet

Kogod School of Business American University Other Country Reports

Sources:

¹Sriswasdi Rachaneekorn, " Intel Software Park Project," International Market Insight, Bangkok, Thailand, 1998

²Sriswasdi Rachaneekorn, " Intel Software Park Project," International Market Insight, Bangkok, Thailand, 1998