Expert interviews

Expert interviews

Advisor to Thai Commerce Ministry: Blockchain can drive sustainable growth

by Blocks99

4 months ago

Prinn Panitchpakdi talks about the need for financial and technological education, blockchain adoption and healthy economic growth in Thailand. This is part three of a three-part interview.

Blocks99 had the honor of speaking with Prinn Panitchpakdi – Advisor to Thailand Minister of Commerce – about blockchain in Thailand and other topics in October 2019. When Thailand formed a new government following this year’s election, Panitchpakdi of the minority Democrat Party was appointed Head of the Economic Team, an excellent fit considering his background in business and economics. A graduate of the prestigious London School of Economics (LSE) with a BSc in Economics, Panitchpakdi began his career in the corporate finance department of ABN Amro in London. During this period, he was also appointed Vice Chairman of the Asean-UK Business Forum.

Panitchpakdi has held several leadership positions in finance, including Country Head, Thailand, with the Hong Kong-based investment and brokerage firm CLSA. He is also a Managing Director of the Four Seasons Restaurant Group, one of the world’s largest Chinese restaurant chains. He is a sought-after speaker at startup and new economy conferences.

Blocks99

In 2017, the Bank of Thailand set up a “sandbox” with special regulatory liberties for FinTechs, many of which use blockchain technology. By comparison, Singapore’s sandbox excluded blockchain companies. Almost two years on, what do you see happening in this space?

Prinn Panitchpakdi

Unfortunately, it hasn’t gone far. The reason is that to get that license, approval for the sandbox, is very difficult for startups. So it’s become counterproductive. Only a few companies have been successful at getting in. To me, unfortunately, it hasn’t been such a success. And often even granting licenses, like for a crowdfunding platform – only one private-sector company, Phoenix, has been successful at getting a legal crowdfunding platform. Even ICO portals – there is no legal ICO portal getting a license at the moment. It’s taking such a long time for the digital asset industry to take off, so to me, It’s become counterproductive to have too tough regulations in the sandbox. I think you should allow entrepreneurs to try themselves without strict sandbox regulations.

Blocks99

In 2018, the Thai Securities and Exchange Commission issued regulations for digital assets, both in terms of issuance and related business. Earlier this year, the SEC amended the regulations to pave the way for easier digital asset securities trading. What are your views on the regulatory framework and developments?

Prinn Panitchpakdi

I think perhaps some of the difficulty may lie with the SEC itself. I think a lot of people are worried about uncertainty in the tax regulations for trading digital assets. People are uncertain about what exact amount of tax they would be due to pay and if it would be linked to personal income tax as well. This is a sensitive issue, obviously, but I think it’s a gray area, and sometimes there are people who want to find a loophole to avoid tax or people who want to fall on the right side of the law and pay the right tax, but they don’t know if they’re paying the right amount. So I think there are a lot of uncertainties and the Ministry of Finance and the Revenue Department need to be clearer, along with the SEC, about the tax regulations that impact digital assets. I would also think that some of the regulations need to be looked at, and not just on a standalone Thailand basis, but on a regional basis – what the regional and global markets are doing. Because, as you know the digital economy and technology have no national boundaries. If we become less competitive on the regulatory front, most of the good stuff in Thailand will get sucked out and go abroad, like it is at the moment as we’ve been discussing. So for me, the regulators need to open their eyes and ears, learn from abroad and implement things that are competitive in comparison to regulations from abroad. They can’t just say it’s a Thailand-only problem if they want innovations in Thailand to prosper, if they want SMEs to survive, they have to be more flexible, more vibrant in looking at regulations.

There is also the issue of reserves. I think the SEC has been quite conservative about the amount of reserves digital asset companies need to put up. I hope it’s not going to be as strict in the future.

Blocks99

The SEC has approved four new cryptocurrency players to operate in the country. In addition to licensing a new crypto exchange, the government has officially approved the country’s first three digital token portals. More recently, Huobi has been licensed to operate a digital asset exchange. Please fill us in on where this is going.

Prinn Panitchpakdi

I think the SEC has seen numerous applications from abroad, from Thailand and in partnership wanting to operate a digital asset exchange, so they’ve been busy. I’m sure there will be a potential approval in the near future. But you know the application and approval are part of the process, but I would like to see a more forward-looking approach to how the SEC would help nurture and build the ecosystem of the blockchain and digital asset industry in Thailand. I want to see the regulators – and not just the SEC, but the Ministry of Finance, the Bank of Thailand – become more constructive on this issue, because at the moment the Bank of Thailand still bans or politely asks commercial banks to stop investing or doing business in anything related to digital assets, even though the Ministry of Finance and SEC are already legalizing digital asset trading.

So why do we have this gray area where commercial banks and asset manager in Thailand invest in digital assets? If you want the ecosystem of the blockchain and digital asset industry to prosper, you can’t just go halfway. You need the full setup, from upstream to downstream, and you need investor education, financial literacy. It all has to come together hand-in-hand. This is a job of the private sector as much as the public sector and the government agencies I mentioned, the Stock Exchange of Thailand, the SEC and regulator, the Bank of Thailand and Ministry of Finance – to help startups and digital asset players to prosper. It will take time, but I’m hoping to see more of those collaborations.

Blocks99

The multinational energy group PTT, which is based in Thailand, and energy nonprofit Energy Web Foundation (EWF) have announced plans to jointly build a blockchain-based renewables platform. What are your thoughts on this project?

Prinn Panitchpakdi

It’s an internal project called Sertis. They’re testing it in-house, and using blockchain to see how that could bring about more efficiency on the energy-trading platform. So let’s see how the project goes, but at least it shows willingness of one of the biggest state-owned enterprises to try blockchain technology. Another listed company called Bankchat CPT, a famous renewables company that used to be majority-owned by PTT, they’re also trying digital assets and blockchain technology. They partner with a property company called SC Asset to see how renewables can be used in a village, how an SC Asset-constructed house can be used to trade energy among the same village and housing areas. That’s also a project they’re trying with a property company.

There are various listed firms in the private sector trying out this whole digital asset concept in the property sector as well as the retail sector. So let’s see. I’m at least hopeful that the direction is on the right side. The pace of change may be not as fast as one would like, but I think the direction is the correct one.

Blocks99

According to media reports earlier this year, Thailand’s National Electronics and Computer Technology Center, a unit of the Ministry of Science and Technology, developed a system for blockchain-based voting. What do you think about potential utilization of blockchain technology for government functions?

Prinn Panitchpakdi

The government hasn’t quite started the voting system on the blockchain yet. The Democrat Party, my political party, we used the blockchain in our last voting for the election of our party leader back in November last year. Abhisit, the ex-prime minister, became our party leader in an internal contest using blockchain. And Poramin Insom, the owner of Satang Pro, he helped the process as well. It went well, except for a small hiccup because we set the time wrong, to London time, but apart from that it ran smoothly.

As for the Thai government, they haven’t used blockchain for a national election yet. I think they’re worried that some people would not understand digital voting platforms, and there are people who still want to use the paper format. So you’d need to do both digital and paper, which would become quite costly. So they’re still undecided about using digital voting in the next election, but for internal purposes, our Democrat Party is already using it.

Blocks99

In your capacity as the Democrat Party’s Deputy Leader and Head of Economic Team, you are in a position to encourage entrepreneurs and give them direction. You have talked about how the New Economy Team offers expert support in areas like blockchain. Please describe these activities in detail. Could you give some interesting examples?

Prinn Panitchpakdi

We call it the New Economy Team because it’s about the digital disruption that has already come. In my team there are ten experts, and they don’t have to be politicians – some of them are gurus in their own professions. We have two guys, for example, from the blockchain world. One is a famous coach and trainer and the other is a programmer and a coder. We use both of them for training in the coding context for some of the younger population in Thailand jointly with the Ministry of Education, because the ministry has a policy that coding should become a third language. The Deputy Minister of Education comes from the Democrat Party, and she – Khunying Kalaya – has been very supportive of the coding projects around the country, to push for elementary schools to have coding knowledge.

We’re trying to follow through with some of the work on the grassroots economy, and see how we can help to create more coders and blockchain programmers in Thailand. These are long-term projects. In the shorter term, we also help organize some interesting events in Thailand – you may have heard we’re doing the Blockchain Thailand Genesis 2019 on November 30, which will be supported by some of our Economic Team.

We want to work with various stakeholders. There’s also an institution in Thailand called the Thai Professional Qualification Institute that grants standard certifications for as many as 600 different professions in Thailand, and some of those professions don’t have their own associations. So to me, we should bring up the standards of blockchain in Thailand – the programmers, the blockchain coders, the digital asset experts – and we’re talking with the institute about how blockchain could be implemented as one of the professions that they would train in and improve the skillsets of the labor force as a whole. Once we have standards for a certified profession – blockchain programmer or software writer – then in the longer term we can improve the availability of skilled labor in the blockchain and coding space in Thailand.

Blocks99

Is there anything you wish to add?

Prinn Panitchpakdi

Another thing I could mention is the UN Sustainable Development goals, because I think blockchain could bring about more sustainability in terms of growth and transparency for growth, in terms of allowing us to achieve longer-term sustainability goals in line with the UN goals for sustainable development. I think blockchain can play an important role for us as a country to achieve that. It’s a matter of people having the right mindset, being brave enough to try new technology and for government agencies to move forward on it.

Blocks99

Thank you very much for taking the time to speak with us!

This is the final installment of a three-part interview. Read part one here and part two here.

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