VZCZCXRO2042
PP RUEHCN RUEHDT RUEHHM
DE RUEHCHI #0018/01 0551347
ZNR UUUUU ZZH
P 241347Z FEB 10
FM AMCONSUL CHIANG MAI
TO RUEHC/SECSTATE WASHDC PRIORITY 1260
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHCHI/AMCONSUL CHIANG MAI 1352

UNCLAS SECTION 01 OF 03 CHIANG MAI 000018 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, EEB/CIP, EEB/CBA 
STATE PASS TO USTR FOR BWEISEL, BKLEIN, JMCHALE 
STATE PASS TO USTDA 
COMMERCE FOR EAP/MAC/OKSA FOR JKELLY 
TREASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV EINT KIPR PREL TH
SUBJECT: "CREATIVE THAILAND" -- STRENGTHENING THE IT SECTOR AND 
CREATING U.S. BUSINESS OPPORTUNITIES 
 
CHIANG MAI 00000018  001.2 OF 003 
 
 
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Summary 
----------- 
 
¶1. (SBU)  In a February 18 meeting in Chiang Mai, the Ambassador 
gathered executives from U.S. information technology (IT) firms 
and officials from Thai government and public agencies for an 
informal discussion on opportunities and challenges for U.S. IT 
firms in Thailand.  All of the firms clearly expressed interest 
in helping Thailand succeed on its path toward building a 
knowledge-based, creative economy.  On human resources, the 
business leaders praised the breadth of the country's IT talent, 
but urged the RTG to establish a uniform set of IT skill 
standards and a central certification process for applying it. 
They also called for the national education system to more 
closely integrate IT skills with business process management. 
On infrastructure, the U.S. firms appealed for equal access to, 
and fair/transparent pricing for, fixed and mobile telecoms 
assets controlled by various state-owned entities.  On 
intellectual property rights (IPR), the business executives 
called for Thailand to adopt a strong data protection regime. 
On RTG support for SMEs, they appealed for easier access to 
credit and more liberal regulations for hiring foreign talent. 
 
 
¶2. (SBU)  Looking ahead, the participants made the following 
recommendations aimed at strengthening Thailand's IT sector and 
expanding opportunities for U.S. firms to contribute: 
 
--  Thailand should align its IT curricula more closely with 
business process applications and the country's "Creative 
Economy" push. 
 
--  The business, government and academic sectors should 
collaborate more closely in preparing Thai IT students for the 
job market.  (Note:  the Consulate and Embassy are planning a 
follow-on program in Chiang Mai that would introduce key players 
to a U.S. expert on university consortiums in the IT field). 
 
--  Thailand can facilitate its movement to a knowledge-based 
economy by freeing up its fixed and mobile telecom assets via 
fair and transparent pricing . 
 
--  The RTG should participate in APEC's data privacy working 
group as a means to strengthen its draft data protection 
legislation.  End Summary. 
 
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Ambassador Huddles with IT Stakeholders 
--------------------------------------------- ------- 
 
¶3. (SBU)  In a sidebar meeting during the recent 
Consulate-hosted conference on "Northern Thailand's Creative 
Economy:  Opportunities and Challenges in the IT Sector" 
(septel), Ambassador met with a senior Ministry of Commerce 
advisor, the Chairman of the Board of Thailand's Software 
Industry Promotion Agency (SIPA), and the CEO of Thai Telephone 
and Telecommunications (TT&T), a public fixed-line telephone 
company and international internet gateway operator.  The 
meeting also included executives from U.S. IT firms Microsoft, 
IBM, Oracle and SAS Software, as well as three members of the 
American Chamber of Commerce (AMCHAM) Information and 
Communications Technology (ICT) Committee, plus a representative 
of the Business Software Alliance (BSA) Asia office. 
Participants discussed opportunities and challenges for U.S. IT 
businesses in Thailand. 
 
--------------------------------------------- -------------- 
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IT and Human Resources:  Business, Government, Academia Need to 
Collaborate 
--------------------------------------------- -------------- 
-------------- 
 
¶4. (SBU)  The U.S. IT firms and AMCHAM members emphasized the 
importance of greater collaboration among business, government, 
and academia in preparing Thai IT students for the IT job 
market.  They noted that despite Thailand's abundant IT human 
resources talent, the country lacks a uniform set of IT skill 
standards and certification.  The lack of a knowledge 
certification process that complies with international IT 
standards makes it difficult for potential investors to assess 
the qualifications of the available labor pool.  Useful models 
 
CHIANG MAI 00000018  002.2 OF 003 
 
 
already exist in Singapore and Australia, which Thailand should 
emulate.  The Ministry of Information and Communication 
Technology needs to define national IT skill standards, and the 
Ministry of Education needs to apply them - this is important 
for improving the quality and productivity of Thailand's IT 
workforce.  The SIPA Chairman replied that SIPA has signed an 
MOU with the Ministry of Education to support the development of 
applied IT skills, as well as an IT/business skills incubation 
project with the Software Park Thailand agency. 
 
¶5. (SBU)  IBM-Thailand's Business Manager noted her work with 
the Ministry of Education to introduce a business management 
element into computer science curricula, in order to move away 
from Thailand's current "silo approach" to one that integrates 
IT skills with business process management.  She urged Chiang 
Mai's seven universities to collaborate in this regard, and to 
coordinate rather than compete in their development of 
IT-related specialties. 
 
¶6. (SBU)  Oracle-Thailand's Business Development Director noted 
his company's academic initiative, which includes working with a 
cluster of five universities in northern Thailand.  He cited two 
key problems associated with the need to develop an IT 
certification process: 
 
--  Database.  Thailand lacks a central mechanism to collate 
data for sharing with potential investors on who is certified in 
what IT skills. 
 
--  Budget.  Individuals often lack the several hundred dollars 
needed to take a certification exam. 
 
¶7. (U)  The participants concluded that the need is urgent for 
Thailand to align its IT curricula more closely with the 
business world and the country's "Creative Economy" push. 
Universities and IT firms should work to develop more work 
cooperative programs for students.  In northern Thailand, the 
public and private sectors should make an effort to work 
collaboratively with Chiang Mai's seven universities as group 
(rather than individually) on the issues of applied learning and 
knowledge certification. 
 
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Infrastructure:  Unlock the Door to Fixed and Mobile Assets 
--------------------------------------------- -------------- 
------------- 
 
¶8. (SBU)  AMCHAM members stressed that for Thailand to broaden 
its agriculture and manufacturing base into a more 
knowledge-based economy, it must improve its telecommunications 
infrastructure.  This includes not only breaking the stalemate 
in the rollout of third generation (3G) telecommunications 
services (see Bangkok 248), but also unlocking the door to 
mobile and fixed assets, including land lines as well as 
underutilized fiber optic cables controlled by various 
state-owned entities.  AMCHAM called for equal access to such 
assets for private and foreign companies of all sizes through 
fair and transparent pricing.  This would increase international 
broadband penetration rates, boost access and speed as well as 
reduce prices, which in turn would facilitate Thailand's 
movement to a knowledge-based economy.  The CEO of TT&T, one of 
seven international internet gateway operators in Thailand and 
the operator of the country's provincial fixed-line telephone 
network, expressed support for AMCHAM's push, saying it was time 
for Thai authorities to stop their in-fighting on these issues 
and get them solved. 
 
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IPR:  Concern Over Open Source Software and Data Protection 
--------------------------------------------- -------------- 
----------------- 
 
¶9. (SBU)  Microsoft-Thailand's Corporate Affairs Director 
identified software copyrights as a big issue.  On the one hand, 
he praised the Thai government (RTG) for strengthening its IPR 
enforcement and education efforts, and said Microsoft was "very 
pleased" that Thailand's software piracy rate has decreased by 
two percent a year since 2006.  On the other hand, he expressed 
concern over the RTG's Creative Economy policy of promoting the 
"open source" software model over the "commercial source" model 
as a means to curb piracy.  (Note:  this is an issue for IT 
 
CHIANG MAI 00000018  003.2 OF 003 
 
 
companies worldwide, and not unique to Thailand). 
 
¶10. (SBU)  The Business Software Alliance (BSA) Director for 
Software Policy-Asia also urged the RTG not to favor open source 
over commercial source.  He argued that (1) the open source 
model has been shown to have an insignificant impact on reducing 
software piracy; and (2) by focusing on an open source policy, 
the RTG signals the market to stunt the development of 
commercial source software, which in turn undermines Thailand's 
ability to fully service market needs. 
 
¶11. (SBU)  The BSA rep also emphasized the importance of having 
a strong data protection regime that is aligned with the 
international regime.  He said Thailand's current low global 
ranking in legal/regulatory environment is a disincentive to 
foreign investors.  Passage of a date protection law would 
improve the country's standing.  While recent efforts to 
introduce such a bill in Parliament are encouraging, the current 
draft needs improvement.  The BSA rep recommended the RTG 
participate in APEC's data privacy working group in order to 
learn more about international best practices and develop its 
draft legislation accordingly - a path the Philippines recently 
followed with good results. 
 
----------------------------------- 
IT SMEs Need More Support 
----------------------------------- 
 
¶12. (SBU)  AMCHAM members noted the role of small and medium 
enterprises (SMEs) as important drivers in knowledge-based 
economies.  In Thailand, they argued, SMEs do not get enough 
support from the government.  They cited two problem areas: 
 
--  Access to credit.  Thai banks may accept only hard assets as 
loan collateral, and do not allow contracts with recognized 
multinational companies to be used as collateral.  This emphasis 
on land ownership and other hard assets works against IT-sector 
investors who often do not bring hard infrastructure with them. 
 
--  Free flow of human capital.  Thai labor and immigration laws 
make it difficult to hire foreign talent.  For this, work permit 
and visa regulations favor big companies with big investments 
and large hard assets such as heavy equipment.  This works 
against SMEs in the IT services sector.  AMCHAM argued that 
liberalizing the laws to ease hiring of foreign IT talent would 
serve as a magnet to attract follow-on foreign investment, as 
well as an expert workforce to support a knowledge-based 
economy. 
 
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Unlimited Liability Is Barrier to Government Service Contracts 
--------------------------------------------- -------------- 
----------------- 
 
¶13. (SBU)  IBM-Thailand, which scheduled the grand opening of 
its new Chiang Mai office (its first outside of Bangkok) to 
coincide with the eve of the Consulate's Creative Economy IT 
Conference, expressed concern over obstacles for multinational 
companies in securing government contracts for IT services.  The 
problem is that RTG practice is for the service-provider 
contractor to bear unlimited liability.  This long-standing 
issue is a deal-breaker for most IT service providers, thus 
limiting their dealings with RTG entities to hardware and 
software procurements.  But Thailand's Creative Economy campaign 
will require development of services and not just sales if it is 
to succeed.  SIPA's Chairman noted that smaller Thai IT firms 
voice the same concern, and he agreed on the need to open the 
government's IT services process to foreign firms as well as 
local ones. 
 
MORROW