“Thailand is literally a gold mine for new opportunities,” Jayden Kang, executive director of Line’s startup investment program ScaleUp, told The Korea Herald during a recent interview in Bangkok.

Line has a huge presence in the country – Thailand is the messenger service’s No. 2 market after Japan – and it is looking to expand its services to create a “smart platform” consisting of a plethora of mobile contents including payment, games and more. Line ScaleUp plans to invest up to $20 million (Bt630 million) in Thai startups by the end of this year with Line Ventures.

Line Ventures is the corporate VC under Line Corp. that operates funds worth 15 billion yen (Bt69 billion).

“This is a unique market that requires a lot of localisation. At the same time, it’s unsaturated in many ways and at a stage where investments in the right places could really hit the right spot,” said Kang.

At the moment, it’s fair to say Thailand lags behind Vietnam and Indonesia in terms of entrepreneurship. The latter two have already given birth to several unicorn startups worth over $1 billion.

Due to factors such as a low unemployment rate and an absence of proper venture capitalists, the country is far from advanced when it comes to startups and VCs, there are virtually no fund of funds, and on top of all this, there is an overwhelming lack of awareness, also political instability.

The country also suffers from chronic problems such as superfast aging, a lack of high quality jobs and heavy dependence on tourism, on top of political instability.

“Our goal is to create a new engine for driving the Thai economy,” said Pariwat Wongsamran, director of Startup Thailand run by the state-run National Innovation Agency.

Thailand’s startup scene is only about three years old, and the VC sector about five.

“In the past, we knew and learned about new technology and products, but we didn’t know about business models,” said Wongsamran. “And now, we have some startups that are ready to go global.”

One example is QUEQ, a startup cited as the top unicorn candidate in Thailand. QUEQ is a simple but revolutionary app that allows people to virtually stand in line. It became a hit because it was the first such business in Thailand. The company has raised $2.8 million from two rounds of funding.

To incubate more ideas that can be monetised and globalised, the NIA works together with other government agencies, and also academia, media and global partners. About 1,000 universities are collaborating with Startup Thailand Center.

NIA also provides monetary grants to fledgling entrepreneurs and free office space, while serving as a liaison to attract foreign investments. From South Korea, unicorn startup Yello Mobile has already got investments, and conglomerate Lotte is looking for opportunities.

The NIA’s role is significant because Thai laws only allow funding to be given in the form of grants.

“Hence, the term ‘grant-trepreneurs,’” said Chinawut Chinaprayoon, director of the Digital Startup Promotion Institute at the Digital Economy Promotion Agency, another government arm solicited with promoting the startup sector.

The DEPA was born two years ago, and part of its mission is to span the digital divide in Thailand, because let’s face it, economic growth hinges on technological prowess and a balanced distribution.

This is why similar to Korea’s so-called “fourth industrial revolution” mission, Thailand has proclaimed it as an economic initiative.

In addition to helping incubate startups, providing them with office space and funding, DEPA is also responsible for educating the public and existing SMEs on the importance of going digital.

“It’s about how we can engage with people, get them to understand the disruptions (startups) bring, and to get communities across Thailand digital-ready,” said Chinaprayoon.

Due to the unconventional aspects of its duties, the institute has been given more discretion in its operations compared to other government agencies.

“The government can’t invest in startups, but we can. We have convertible grants to invest in startups,” said the director.

The institute’s portfolio has just under 50 startups in various stages of investment rounds, but the list is likely to grow.

DEPA also runs the Digital Transformation Fund, which is used to finance the digital transformation of SMEs and factories in traditional businesses.

Another area DEPA is trying to tackle is connecting academia with the business world, which is how some of the world’s best ideas got commercialised.

“Our real problem is bridging the research with industries. This is something that is quite a challenge for us,” said Chinaprayoon, adding that DEPA is hoping to remedy the situation.

“The Thailand startup scene is still quite young, and we lack the right personnel and don’t have enough experience. But we are seeing a lot of positive signs about the future.”

Meanwhile, Bank of Thailand’s assistant governor for corporate strategy and group relations, Chantavarn Sucharitakul said that overall, the trade war is having a net negative impact on the global economy and financial markets. This is because it will affect economic activities in three areas.

First, the slowdown of world trade will affect local economies that depend on external economies for growth such as that of Thailand, which depends on a combination of trade, foreign investment and tourism for growth.

Second, Thai products will be negatively affected by trade diversion as various Thai goods are in the supply chain that is being affected by the US tariffs on China. However, Thailand may stand to benefit from replacing some Chinese goods in the US market.

 Third, as a result of investment diversion there may be a relocation of production bases from China to Thailand and the Asean region as manufacturers in China aim to avoid the new rounds of US tariffs.

Overall, the trade war has made the global trade and investment environment uncertain. Therefore, the BOT will continue to evaluate the impact of the trade war on the Thai economy, Chantavarn said.

In just days, the US-China trade war has escalated after seemingly little progress was made on the trade negotiations between the two countries.

Last Friday, the US launched a new round of tariffs on Chinese imports, raising them from the previous 0-10 per cent to 25 per cent on US$250 billion worth of goods and products. These massive payments go directly to the Treasury of the US.

Meanwhile, on Monday, China retaliated by announcing its plan to increase duties on US imports valued at a total of some US$60 billion (Bt1.89 trillion), to begin in June.

To cap it off, the US administration yesterday morning released its plans to further increase tariffs on up to $300 billion worth of Chinese goods.

“The escalation of the trade war will have a significant impact on the Thai economy,” Aat told a press conference yesterday. “If China follows through and hikes their tariff on US goods in June, Thai exports may only grow by 0.5 per cent in 2019, down from our original forecast of 3.2 to 4.6 per cent growth.”

This marks a massive deceleration of exports growth compared to last year’s 6.7 per cent, which was already considered low compared to the Commerce Ministry’s year-on-year target of 8 per cent growth. Growth of 0.5 per cent would be the lowest level of export growth the Kingdom has seen since 2016, according to the director.

Thailand is negatively impacted by the superpower trade tensions because it is part of the supply chain affected by the US tariffs on China. The US tariffs target technological goods such as machinery parts, electrical circuits and auto parts that are manufactured in Thailand. These goods are then shipped to China, from where they are exported to the US after value addition.

Key exports to China which will face negative impacts from the trade tensions include rubber, chemicals, and automotive and parts. Meanwhile, exports to the US which are expected to reduce include fabric, and machinery and parts.

Furthermore, Aat predicted the Chinese Yuan would depreciate by up to 20 to 25 per cent to absorb the negative impacts of the US tariffs. “This will mean that Chinese goods will flood the global market, especially the Asean market, due to their cheaper price,” he explained.

“To cope with these negative impacts, Thailand must gear up its efforts to negotiate more free trade agreements (FTAs) with other countries. One such agreement is the Regional Comprehensive Economic Partnership (RCEP), which may help absorb these negative impacts to some extent,” Aat suggested.

Furthermore, Thailand should start targeting newer markets to diversify its export destinations. Aat pointed specifically to the export potential of the BRICS nations – Brazil, Russia, India and South Africa.

In the year’s first quarter, Thai exports were valued at US$61 billion, a 1.64-per-cent contraction compared to the same period last year.