Ariya Banomyong, Managing Director, LINE Thailand: Interview

Interview: Ariya Banomyong, Managing Director, LINE Thailand

How do you perceive the development of integrated on-demand services, and what has influenced this change in market strategy?

ARIYA BANOMYONG: The world is entering an era in which internet space is dominated by two or three companies, and power is given to tech companies simply because these businesses have become gateways. Brands have begun to understand that there are only three ways to reach users in Thailand: through Facebook, Google or LINE.

Furthermore, integrated on-demand services have developed from a change in app consumption. While users were previously downloading many apps, the trend has now reversed: people are no longer downloading, but rather deleting them. The average number of installed apps has dropped from 39 in 2016 to 32 in 2017. An average of five are used daily. All three platforms are also branching out by building other services beyond their core ones in order to increase time spent on a single app, where video content, online-to-offline services and e-commerce contribute to growth.

Other new services are just bets; we don’t know what will be popular in the future. Companies have opened up application programming interfaces to allow partnerships in developing new services. There’s only so much we can do ourselves, and partners play an important role in adjusting new services to this market.

How can firms better coordinate with the government to develop a single online payment system?

ARIYA: Thailand has 16 e-wallets, but many will disappear in two to three years because consumers don’t need that many. Tech players are battling to maximise convenience through a wider point-of-sale network. However, we also need to rely on the offline world. E-commerce only represents 3.1% of the retail market; the rest is offline. Leveraging those offline transactions has been the game plan for many tech players.

The other challenge is accurately measuring the e-commerce industry. There is no agency tracking those numbers, and they are hard to track. E-commerce operates in two places: in online spaces, such as Alibaba or Amazon, and in social commerce, which is when online sellers open shops on Facebook or Instagram and discuss sales online, with payments done through mobile banking. This is called fragmentation, and it normally doesn’t work in Western markets, but it does in Thailand. Social commerce has contributed to the growth of domestic mobile banking. Consumers didn’t have a reason to use mobile banking before, but now they use it for online purchases via bank transfers.

The data may be fragmented, but government agencies can ask banks to perform data mining to trace any irregular users who receive money transfers as a business would do. Estimates show that social commerce represents at least half the domestic e-commerce market, but nobody really knows, as those numbers are not tracked. To a certain extent, the lack of data is slowing down the development of the market. If we knew the numbers, many players would jump into that space because traditional e-commerce hasn’t changed in 10 years. Social commerce is the new source of growth.

What government policies would facilitate foreign investment and business development?

ARIYA: There are a couple of measures in which the government can really help, starting with the foreign workforce quota. Welcoming foreign programmers, developers and tech workers would enable the country to catch up faster than relying on sourcing all of our human capital domestically.

Furthermore, many Thai tech companies have incorporated themselves in Singapore to enjoy tax benefits that they would not get at home. It’s a pity, because we want companies to be proud Thai tech start-ups, instead of incorporating themselves in countries that offer more benefits. Ultimately, Thai entrepreneurs need to have the right mindset; we should still push business forward without waiting for changes in policy.