If you substituted “Bangkok” for “Silicon Valley” and “Thailand” for “America” the article could be about the state of tech startups here–but without the track record of success that Silicon Valley has had.

Silicon Valley’s vitality depends on a constant influx of bright people who challenge its inhabitants to work harder and think smarter.

This exact topic has been something that has been on my mind a great deal over the last few years and something I am passionate about: What can be done to make Thailand a great place to launch a tech startup.

If Thailand wants to create a thriving IT industry, the best way forward is to open up the doors to experienced foreign nationals and startups. It’s a hard sell politically. Explaining the benefits of opening up the economy to foreign IT companies and the benefits that would be hard to spin so a rice farmer would understand it’s to his benefit. But one can hope and dream that there are politicians with the vision, the courage and the political will to do the right thing for Thailand’s future.

“But Thailand already has a large number of educated Thais that know how to program–why bring in foreign developers?” Well, let’s look at the state of the Thai IT industry. There are no Great IT Success Stories here and only a moderate number of reasonable success stories; far fewer than Singapore which is 1/10th the population of Thailand. Results show that there is something systemically wrong with the IT industry in Thailand.

Fifty-two percent of Silicon Valley’s startups from 1995 to 2005 were founded by foreign-born workers. And in 2006, 26% of America’s global patents—including 40% of those filed by the U.S. government, 72% of Qualcomm’s, 65% of Merck & Co.’s, and 64% of General Electric’s—were invented wholly or partly by foreign nationals residing in the U.S.

Bringing in outside talent is a proven way to increase the overall competency of the IT industry. Singapore invests a great deal of money marketing to startups and talented professionals to come to Singapore to start a business or work for a Singaporean company because they know that entrepreneurs and smart people bring in cash that is spent in Singapore and that only strengthens the economy. Want to start a company in Singapore? There is a special visa for that: Singapore Entre Pass

Chile’s strategy of attracting skilled immigrants makes a lot of sense when you consider that it costs practically nothing compared with the billions that regions invest in creating industry clusters. The fact is that smart people, when given the education and means to innovate, make the magic happen.

Think of startups as a source of foreign income–like tourism.

Most startups will be either self-funded (they will bring in cash for their initial startup phase) or they will be generating revenue from clients outside of Thailand. (Foreign-owned startups would not be likely to cannibalize local IT work; they would be crazy to compete with local developers for local projects at local rates.)

If you have 100,000 foreign entrepreneurs each spending (very conservatively) US$ 2,000 a month on rent, food, clothes, utilities, equipment and services, that’s US$ 2.4 BILLION dollars (80 Billion Baht) a year in foreign income. That would increase the size of the Thai economy by 1%; that’s the equivalent of an increase of 15% in the size of the tourism industry or about 50% of the GDP of Laos.

That’s a stupid-simple way, with virtually no cost, to grow the Thai economy–and grow a sector of the economy that is high-value and sustainable.

Meanwhile, countries such as Russia, Singapore, and Chile are doing what they can to build their own Silicon Valleys. Russian President Dmitri Medvedev visited Silicon Valley last month, to let American techies know that they are welcome to move to his new science park. Singapore has long been offering visas and incentives to any skilled worker who moves there. And Chile has launched the most ambitious program of all.

What can Thailand offer startups to encourage them to startup here? Low cost of living, excellent infrastructure and a high quality lifestyle.

For a one-third of the cost of living in Singapore, Russia, China (Beijng, Shanghai) or the US, an entrepreneur can live in comfortably in Bangkok, Chiang Main, Khon Kaen or on a beach on Phuket. If you are working 14 hours a day to launch a company, saving money and enjoying the little free time you have are huge draws.

In addition to the incentives that Chile has been offering established tech companies, it took my advice and announced an ambitious new program for bootstrappers, called Startup Chile. In return for hanging out in one of the most beautiful places on this planet, Chile will provide fledgling entrepreneurs with a grant of $40,000 to help them cover expenses for six months ($40,000 goes a long way in South America, by the way). As well, they’ll provide the entrepreneurs free temporary office space; connect them with mentors, VCs, and angels; and help them settle in. They are also pumping money into local VC funds to ensure that the capital is there for the most promising companies.

Other countries offer financial incentives to draw in startups; Thailand already has a low cost of living and that in itself could be enough of an financial incentive.

Let’s face it: the agrarian economy is limited by the number of rai of land that is arable; Thailand can only grow so much rice and ship so many mangoes. The industrial economy creates jobs, but the bulk of those jobs are for non-skilled workers and the pay is poor. The real potential for economic growth is in the skilled labor market; that will provide the best opportunity for Thai people to increase their standard of living in the years to come. The upside, is unlimited; there are no constraints due to natural resources and the capital requirements are almost zero compared to agriculture and manufacturing. It also is ecologically friendly; it consumes very little natural resources and produces little ecological damage.

Seems too good to be true, doesn’t it? No obligation to stay; no equity ownership in return for the money; no onerous contracts that promise a pound of flesh—as VCs typically demand. Why would Chile do this? Because they’re betting that if they get enough smart, talented people there, three things will happen: first, many of the entrepreneurs going there will fall in love with the country and decide to stay; second, they will enrich the local ecosystem by teaching local entrepreneurs about global markets; and third, their tech community will develop stronger links to the world. Who knows, a couple of startups may also hit home runs. After all, isn’t this how Silicon Valley left tech centers like Boston in the dust and became the world’s tech leader?

Not only does encouraging startups have a great trickle-down economic impact, the trickle-down effects of knowledge are even more important.

Knowledge is not a limited resource. Smart people learn and grow my sharing their knowledge. Businesses grow by scaling their pool of knowledgable, competent, professional workers with world-class tech skills. Opening the IT industry up and encouraging an influx of world-class developers to start their businesses in Thailand could do more for the building the IT industry here than any government training program. Developers become great by working with other great developers–not from books or working alone.

What Thailand needs to do to encourage tech startup growth:

1. Recognize that they are competing in a global IT marketplace. IT people can work anywhere and serve clients anywhere via the Internet; protectionism is an archaic concept that does not even work well for the agrarian / industrial economies that implement it.
2. Remove requirements for 51% Thai ownership of companies. Companies that work on the Internet can be located anywhere in the world; forcing entrepreneurs to dilute their equity by over 50% from the start drives companies away.
3. Acknowledge that technical skills are a precious resource and that importing talented people to work does not cause the loss of jobs for Thai people, but rather increases their opportunity to work for startups and increases the level of IT knowledge and professionalism for Thai developers.
4. Lower the barriers to business setup; streamline the process of company setup to almost zero time and cost.
5. Make it easy and painless for foreign entrepreneurs and talented employees to get visas and work permits.
6. Eliminate 4:1 quotas for Thai employees on startups.
7. Provide incentives for startups to hire and train Thai employees and develop their skills to world-class levels instead of mandatory hiring quotas.
8. Reduce or eliminate taxes for a period of time (1-3 years) so that startups can reinvest capital in growth.
9. Streamline business / tax reporting so startups can spend time of developing product, not shuffling paper.
10. Stop censoring the Internet. IT developers need access to information and solid Internet connections to work. Firewalls, especially clumsily implemented ones, limit IT workers ability to do their job.
11. Liberalize and modernize free speech laws–especially as they pertain to the Internet. Companies will not set up business in jurisdiction where anything they say–or their users post–can be grounds for imprisonment.

Half-measures will not do; the list above would have to be implemented in it’s entirety to really make the startup scene in Thailand gain traction. Implement the first 10 and omit the 11th–and you still don’t have an attractive package for startups.

There are so many more ideas I have on this topic, but I just wanted to get the basic precepts out there and hope, hope, hope, somebody with vision is listening.