4 months ago
Prinn Panitchpakdi is passionate about driving the grassroots Thai economy, with a special focus on digital and blockchain-based business models. This is part one 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.
Coming from a background as a businessman in the private sector, what is it like to be part of the government? Please talk about the differences.
Well I guess in the private sector – I was a CEO in the banking sector – people may often be able to get things done quicker because it’s more hierarchical. You’re the CEO and you can execute and implement the things you envision. But in the public sector, there are more stakeholders, so as a result it takes more time and there are political aspects you have to work around. You need to understand all the stakeholders’ interests. In the private sector there are differences of opinion, but at the end of the day, you as a CEO bear the ultimate responsibility. So quite often, you can thump the table and move ahead quite quickly.
In the public sector, you have to care for the other politicians, the ministers, population – sometimes farmers. Even in digital disruption and blockchain, you want to implement technology faster, but you have to be mindful of different regulations and laws that need to be adjusted. So it’s about being more mindful and more sensitive to different issues, because even though some new technology may have a positive impact on the country or on the population, it may infringe on regulations – old ones that are still there and need to be adjusted.
Does it get frustrating sometimes?
I’ve only been a politician for the past three or four months, so I’m not fed up with anything yet. To be fair, as you may be aware, my father was in public service, in government, so I’ve seen these activities all my life and had certain expectations about what it would be like to work in government. So far it hasn’t surprised me!
You have talked about the importance of boosting Thailand’s economy on the rural and grassroots level to add drive to the country’s overall economy. How would you describe the potential of blockchain to support this process?
I think blockchain can play a big role, but you need to understand that at the grassroots level, most people don’t understand the blockchain system. People in urban areas may know blockchain, but there’s little knowledge of blockchain in rural areas. However, that doesn’t mean it can’t be used. For example, in the agricultural sector, where we have fewer and fewer farmers because most of the children don’t want to become farmers like their parents and grandparents. They want urban jobs, different jobs. They have different expectations. So the number of farmers is being reduced and some fields may be empty. So it’s about how you can use new technology to increase the number of young, smart farmers who are technologically savvy and able to generate higher revenue per head.
Most farmers in Thailand are still relatively poor, indebted and facing many challenges. So how do you use new technology like blockchain to help them get out of this poverty cycle, where you see fewer farm workers, volatility in the climate and in raw material prices? How do you use blockchain to help them do premium-grade agriculture like organic farming where traceability of the products is so important? Information needs to be recorded, stored safely and verified. You still need reputable organizations to come certify your crops and land as organic, but at least that information can be certified and stored and checked on by consumers in an efficient fashion.
So that’s one area where I think blockchain can help. I also think blockchain will bring about a more equitable society because SMEs and startups in agricultural or up-country areas, one of their main issues is that they can’t get access to fair and cheap capital. With blockchain, as you know, there could be a technology that would increase the chances for peer-to-peer lending, so they don’t need to rely on the big banks or consumer finance companies that lend at a quite expensive rate or even loan sharks that charge an even more expensive rate. So the farmers, SMEs and startups in the countryside – whatever chance they get to access cheaper capital to kick-start their business, I hope, will lessen the inequality between rural and urban areas.
And blockchain can play a big role in this because there are already a couple of companies in Thailand that are exploring blockchain technology to come up with a peer-to-peer lending platform. You may be aware of a company like Jaymart, which launched a peer-to-peer lending platform three years ago, and also some of the telecom companies are testing their back-office system for potential as a peer-to-peer lending platform using the alternative credit scoring system.
So, from the potential, besides being able to verify and check out where products come from and certify and store information in a safe manner, blockchain can also bring equitable financing to help businesses. Also in corruption, because Thailand is a country where the rural areas and countryside can develop more sustainably if they have less corruption. Data reliability is very important. If government procurement data can be stored efficiently and cannot be tampered with, this way the budget can be spent more efficiently up country. You know there’s a lot of budget that goes to education up country, that goes to social welfare, that goes to public healthcare, sports and rural development. But some of these budgets are spent in a really non-transparent fashion. I think blockchain can bring that much-needed transparency in the allocation of government spending, in government procurement processes and enable us to ensure fair pricing by using blockchain to compare prices of distributors and government agencies buying and selling stuff with their private-sector counterparts. For me, that would bring about much-needed transparency and efficiency in the process of developing the rural areas of Thailand, and that would lessen inequality.
After banning the buying and selling of bitcoins in 2013, Thailand published a statement in early 2018 saying the bitcoin was a tradable asset. How would you describe the country’s attitude toward cryptocurrencies and other blockchain-based technologies?
I think it’s still divisive, meaning that the older generations are still not comfortable with the bitcoin or digital assets because most of them think many of them are scams like Ponzi schemes. You know, Thailand is a country where people are sometimes very speculative. When they invest in the stock market, they have a punting approach – a short-term trading mentality – so understandably, there is plenty of room for skepticism among the older establishment who think the bitcoin or digital asset are means to speculate, launder money or avoid taxation and have privacy. So they view it with skepticism, but I think it’s incrementally changing at the margins.
As you say correctly, a law came out trying to legalize trading in bitcoins and various digital currencies as well as legalizing ICOs and whatnot. But that legalization brings about a much longer, detailed and more complex process to do an ICO. So it had a counterproductive impact – instead of having more ICOs, STOs or whatever, there has been no money raised by ICOs since the law came out. The market has been dead. And most of the good companies and startups have gone abroad. They’ve gone to Singapore, to places where the law is less strict, is low-tax. The law comes with tax, so you’re getting charged 27% tax – 20% corporate tax and 7% VAT. In Singapore you don’t get charged that much. There’s no digital asset law, so people don’t get taxed. You get taxed on other things, but that’s why Thai startups go to Singapore to raise capital if they want to do digital assets. It’s a shame that we’re losing the best startups because our laws are too strict. Sometimes the law doesn’t favor the startup ecosystem, which is a big issue we’re trying to change.
Read part two of this three-part interview!
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