With the US and China wrestling for tech supremacy, smaller nations like Thailand risk losing their digital sovereignty

Bangkok Post Graphics

Thais are among the most tech-savvy, social-media-obsessed people on the planet, as seen by how they are constantly on their phones for hours, sharing their lives on apps like Facebook, Line and Instagram.

But all this personal data is not staying in Thailand. Instead it goes to data servers in foreign countries such as Singapore and the US, where most social media companies store information from Thailand.

This potential problem is only exacerbated by a "tech war" between China and the US, in which both superpowers compete for influence over how the future digital world will operate.

While this is not an apparent problem for everyday people, some are concerned that Thailand is losing its "digital sovereignty", or control over its own data and regulations regarding the internet. This could have dire implications for privacy protection and cybersecurity.

The problem does not extend solely to social media. Vital tech infrastructure such as data centres and 5G telecom networks are being built with technology from Chinese companies with dubious track records when it comes to illegally sharing data with the Chinese government.

This poses a big question: how can a relatively small nation like Thailand take back control of its digital sovereignty while being surrounded by behemoths like the US and China?

A LOST CAUSE?

Thailand ranked 19th out of 24 leading IT economies in 2017, compared with a ranking of 21st in 2016, indicating an improvement in the legal and regulatory environment for cloud computing in spite of significant existing gaps, according to the Software Alliance.

But efforts to assert digital sovereignty in Thailand may be too little too late, said Prinya Hom-anek, chairman and founder of the cybersecurity firm ACIS Professional Center Co.

"Digital sovereignty is not just a problem for Thailand, but the whole world," Mr Prinya said. "But at this point, the government can do nothing to stop it. Even if they wanted to they do not have the technology and the law is not on their side."

Even private companies are about 10 years too late in developing a platform like Line or Facebook, he said.

Simply put, it is extremely difficult to start a fledgling social media or messaging app when your competitors have over 40 million users domestically and billions worldwide.

"We are living in the Matrix, a world that is not our own," Mr Prinya said, referring to the 1999 film in which humans are living in a false reality created by machines. "They know everything about us, where we search, where we go, what we buy."

If Thais do want to take back a little of their digital sovereignty, Mr Prinya suggests using home-grown digital services like Wongnai, a food review site that can substitute for Yelp or TripAdvisor.

A more pressing matter is whether your data is really safe and secure.

Mr Prinya expects the upcoming cybersecurity law to make businesses in the country follow stricter guidelines to secure data and protect digital infrastructure.

Despite activist concerns surrounding the government's potential abuse of power and violation of citizens' rights, the law probably will not affect individuals too much, Mr Prinya said, but most companies will have to change to meet the new regulations.

"In terms of data stored on the cloud, companies should change their mindset from being secured to being ready," he said. "They will eventually be hacked. Major companies have data breaches all the time, but they should ensure that the hackers cannot be able to open and understand the data after the hack."

CHINESE TECH: GIFT OR CURSE?

Another threat to Thailand's digital sovereignty is China. Many Western governments have accused China of using its technology to spy abroad, with some cutting off development deals or banning Chinese tech products.

Australia and New Zealand recently rejected investment by Huawei, China's leading mobile phone maker, in developing their 5G telecom infrastructure.

The US has also banned sales of Huawei phones over fears they could enable the Chinese government to spy on US citizens. Meanwhile, a Huawei executive is currently incarcerated in Canada, awaiting extradition to the US over accusations that Huawei violated sanctions against Iran.

On the other hand, Thai companies have partnered closely with Huawei to develop the country's tech infrastructure.

Huawei invested 700 million baht in data centres around Thailand in 2018, and the company is working with AIS, Thailand's largest mobile operator, to run the first testing on a 5G network.

"We don't have any solid proof yet that Huawei is using its technology to spy on people outside China, but companies and the government should do their own risk assessments to see if it is worth using Chinese technology," Mr Prinya said. "They could always use more expensive products from Scandinavia, depending on how much they fear being spied on. The government, however, should look at the matter from a national security perspective."

The future itself is at stake, especially when concerning 5G, which will facilitate a massive flow of information not just between computers but through everyday objects, cars and the electrical grid via the Internet of Things. The developers of this infrastructure, whether the government or private telecoms, must weigh the risks and benefits of using Huawei technology.

Thailand's most popular e-commerce platform, Lazada, is owned by Chinese e-commerce giant Alibaba, which has close ties to the Chinese government.

Alibaba announced last year that it would invest 10 billion baht in Thailand for a "digital hub" in the Eastern Economic Corridor, connecting Thai agricultural products to Chinese and global markets.

In the US-China stand-off, the future is at stake. (Photo by Seksan Rojjanametakun, Post Today photo)

Lazada and Singapore-owned Shopee's domination of Thai e-commerce means money spent on those platforms is flowing out of the country.

Acknowledging this, the Thai government appears to be addressing the issue with an e-commerce tax bill, but it seems more concerned with local third-party sellers on the platform than the foreign companies running it.

"It is definitely 'buyer beware' for any development project by China in any country," said Steven Cochrane, chief Asia-Pacific economist at Moody's Analytics. "Every country needs to look at individual proposals to see if it is in their best interest."

COLD SHOULDER

The tech industries in China and the US have practically frozen relations as a result of the nearly year-long trade dispute. Chinese acquisitions of US tech companies dropped nearly 95% in 2018.

While this may hinder global technological progress in the short term, it may lead China or the US to invest more in other regions like Southeast Asia.

This means Thailand is caught in the middle of a "tech war" between the two superpowers vying to assert their own image of the digital future. But this disruption to the global supply chain is unlikely to affect Thailand as much as other countries in the region.

"Thailand is much less exposed to global supply chain disruption to produce intermediate goods for tech products," Mr Cochrane said. "In one sense, that's a negative. American companies won't look to Thailand first to replace China. They would look to Malaysia or Vietnam, but this does provide an opportunity to provide greater linkages to develop trade linkages in the tech sector."

As a result of the US-China trade war, the economic cooperation between China and Asean countries has increased, and Thailand could stand to benefit in the long run, said Jirayut Srupsrisopa, chief executive of Bitkub Group.

The tariff barriers on Chinese imports imposed by the US will result in investment re-diversification that may open opportunities for Thailand to attract a new wave of Chinese investors and strengthen Thai exports, Mr Jirayut said.

"However, Thailand should take strict measures to guard against falsification of product origin, as Chinese manufacturers could avoid US tariffs legally by setting up manufacturing facilities in Thailand and falsifying Chinese-made products with Thai origins," he said. "This illegal practice may lead to the loss of Thai exports' competitive edge in the market."

The Thai government is heavily promoting the development of a local tech industry through its Thailand 4.0 scheme, and perhaps now is an opportune time to assert digital sovereignty through investments in the sector.

And while a smaller country like Thailand is more or less at the mercy of the US-China controlled internet, the EU has pushed back, especially against US companies like Facebook, in a bid for sovereignty by forcing websites to follow different rules when handling the data of EU users.

In May 2018, the EU applied the General Data Protection Regulation, addressing the export of personal data outside the EU and European Economic Area.

The EU is effectively large enough to collectively force these changes because the market is just too large for tech companies to ignore.

If Thailand ever hopes to assert its own values upon an almost entirely foreign-owned internet, it probably cannot act alone.

EXTREME STEP

The government or the private sector needs to build its "own national digital platform" if it wants to assert any kind of digital sovereignty, said Niltita Loetruangsuphakun, chief executive and co-founder of enterprise software firm Skymind Thailand.

To do so, those in charge will have to take a hard line on internet control and regulation.

Ms Niltita suggests the government take the extreme step of banning these applications, as done by some other governments like China, which blocked foreign platforms and encouraged home-grown versions of Facebook and other applications.

"Facebook, YouTube and other applications have revenues which are flowing out of Thailand," Ms Niltita said. "These companies don't pay taxes and don't contribute to the Thai economy."

She said the private sector has to take the lead, as it's important for Thailand to have more control of personal data. State support is also crucial because the government will ultimately benefit from taxes from Thai tech platforms.

The government should allocate budget for R&D of a national technology platform, Ms Niltita said.

For Thailand, the government has been pushing a series of draft bills on the digital economy as soft infrastructure, especially the cybersecurity draft bill now being vetted by a commission of the National Legislative Assembly. That draft bill is expected to go into effect in February.

"The cybersecurity law is critically needed for [Thailand's] digital economy roadmap," said Digital Economy and Society Minister Pichet Durongkaveroj. "The government has drafted it with careful consideration based on both local and international context."

After the enforcement of the cybersecurity law takes effect, a civil procedural law or ministerial regulation will have to be enacted to cover important sectors of the economy such as finance, transport, energy, public service and healthcare.