The Thai economy is caught in a structural growth trap, with continuously weakening growth rates. This clearly reflects that the old growth model, which relies on “quantity,” is no longer sufficient. Thailand needs to transition to “quality growth” driven by productivity and added value sustainably.
Key Takeaways
- Thailand’s growth challenge: The economy is stuck in a structural slowdown, showing that the old growth model based on quantity is no longer sufficient. The country must shift toward quality-driven growth powered by productivity and innovation.
- Weaknesses in innovation system:
- Thailand’s Global Innovation Index ranking has fallen to 45th (2025).
- R&D spending remains below 2% of GDP.
- Research personnel numbers are declining (23 per 10,000 people in 2023).
- Patent applications are very low (13 per million people in 2024).
- Financial system gaps: Businesses developing innovation, especially tech and startups, struggle to access funding due to reliance on physical collateral. Intellectual property (IP) is rarely accepted as loan security (only 0.07% of collateral assets in mid‑2025).
- International lessons: Countries like Singapore, South Korea, and Malaysia use risk-sharing mechanisms between government and financial institutions, covering 50–90% of defaults, alongside standardized IP valuation and joint investment funds.
“Innovation” is a key engine for this transition, but Thailand’s innovation development system still has several weaknesses that need urgent attention in order for the country to move towards quality growth and truly enhance its growth potential.
“Thailand’s innovation system” has not yet been able to truly translate research into commercial use.
- (1) Thailand’s innovation ranking in the Global Innovation Index, which has been declining for three consecutive years to rank 45 out of 139 countries in 2025, sending a clear signal that Thailand is losing its innovation capabilities compared to its competitors in the region.
- (2) The proportion of research and development (R&D) investment in Thailand is still below 2% of GDP, which is the country’s mid-term goal.
- (3) The number of R&D personnel in Thailand is beginning to show signs of slowing down, decreasing to only 23 people per 10,000 people (2023 data), reflecting the continuously weakening fundamental factors in creating new innovations.
- (4) The number of patent applications per 1 million people is at a low level of only 13 (2024 data), and the number of patents currently in effect is at a low level.
These data reflect that the problem with Thai innovation is not a lack of effort, but rather “Thailand’s innovation system” which is not yet conducive to converting research and development potential into real economic value.
The financial system is not yet ready for innovation: The “public-financial risk sharing mechanism” is key.
Businesses that develop innovative solutions, especially technology businesses and startups, have high growth potential but often face difficulties accessing funding due to a lack of tangible asset collateral for loans.
Currently, there are structural gaps in the allocation of funding to Thai innovation businesses, both on the supply and demand sides. On the supply side, financial institutions lack international standards for valuing intellectual property (IP) and continue to primarily rely on physical collateral. This results in risk assessments that do not align with the highly uncertain revenue streams and technological aspects of innovative business models.
On the demand side, there are not many Thai businesses ready to invest in new innovations and capable of commercialization, reflecting an economic structure that is not conducive to creating and expanding innovation-based businesses. This gap is clearly reflected in the use of intellectual property as collateral in Thailand, which, as of June 2025, will only account for 0.07% of all collateralized assets.
Lessons from various countries clearly show that a “risk-sharing mechanism between the public and financial sectors” is key to unlocking funding for innovative businesses. This is especially true when addressing issues on the supply side of capital.
For example, Singapore, South Korea, and Malaysia utilize a joint risk guarantee mechanism where the government guarantees 50-90% of the outstanding balance after a borrower defaults, reducing the risk burden on financial institutions. This is coupled with establishing internationally recognized and credible IP valuation standards and setting up public-private partnership funds. These mechanisms play a crucial role in stimulating the demand side of capital, incentivizing businesses to invest more in commercializing innovation. The risk-sharing mechanism acts as a “bridge” connecting the capital supply and the demand for innovation, enabling them to occur simultaneously.
In the world ahead, economies will increasingly be driven by “intangible assets.” Countries that design “innovative finance systems” that allow capital and innovation to progress hand-in-hand will be able to sustainably enhance their growth potential and competitiveness through innovation.
Thailand needs to design an “innovative finance system” that is part of building an innovation ecosystem.
To truly drive the Thai economy through intellectual property and innovation, it is necessary to design and adapt the financial system to support an innovation-driven economy. This is not simply about allocating additional capital, but about making the financial system “willing to provide funding” and the business sector “willing to invest” at the same time, through the following four pillars:
1. Adjust lending criteria to accommodate intellectual property as collateral , reducing reliance on physical collateral and assessing business potential based on its ability to create future value. This will enable innovative businesses to access funding in line with the innovation and commercialization cycle.
2. Systematically implement a “risk sharing” mechanism between the government and the financial sector, ranging from loan guarantees and support for IP valuation costs to mechanisms for assuming default risk, in order to remove limitations in risk management for financial institutions and increase incentives for lending to innovation.
3. Develop a central database system and practical IP valuation standards to provide the funding side with reliable information and tools to assess the risks of innovative businesses, reduce uncertainty, and facilitate greater capital flow into commercially viable innovative businesses.
4. Create “demand” incentives to encourage continuous investment in innovation development. Without a starting point for the demand for high-quality innovations to create business opportunities, innovation cannot truly be commercialized and create added value for the Thai economy.
These four pillars must be driven simultaneously through key stakeholders such as the Ministry of Finance, the Department of Intellectual Property, the Office of National Science and Technology Development Agency (NSTDA), the Bank of Thailand, and the Thai Bankers’ Association, in collaboration with the internationally recognized organization, the World Intellectual Property Organization (WIPO), which specializes in this area. Only then will the Thai financial system successfully function as a “link” between capital, innovation, and the enhancement of Thailand’s long-term economic growth potential.
