Why Invest in Thailand
THAILAND, with its population of 66.1 million, stands at the heart of the ASEAN Economic Community, a 10-nation Southeast Asian common market of 672.4 million consumers. It has the 2nd largest economy in Southeast Asia. The World Bank data shows that Thailand’s GDP per capita, based on purchasing power parity (PPP), was estimated to be US$20,671.7 in 2022. In addition to its excellent connections with the fast-growing neighboring CLMV (Cambodia, Laos, Myanmar, and Vietnam) countries, the powerhouse economies of nearby China and India are also easily reachable from Thailand by virtue of its world-class infrastructure for air, land, sea, and rail transportation. It also boasts excellent digital connectivity, a highly skilled labor force, and an excellent standard of living, making Thailand an outstanding value when considering its overall cost-effectiveness. These factors, together with the Thai government’s comprehensive policies and investment incentives, make Thailand the preferred investment location in the region.
Thailand is one of the top 4 export bases in ASEAN. The country is the world’s largest supplier of food and agricultural products such as rice and natural rubber. According to the Commerce Ministry, in 2022 Thai exports grew 5.5% to US$287.1 billion, while imports increased by 13.6% to US$303.2 billion. Thailand’s top 5 export categories in 2022 were motor cars, parts and accessories, automatic data processing machines, precious stones and jewelry, rubber products, and ethylene propylene polymers. Thailand’s top 10 major trading partners, in order from largest to smallest, were the USA, China, Japan, Vietnam, Malaysia, Australia, India, Indonesia, Singapore, and Hong Kong.
LOCATION & MARKET ACCESS
Thailand is well-connected to the fast-growing CLMV sub-region by excellent transportation infrastructure, including rail, road, water, and airways. Businesses based in Thailand have access to a domestic market of 66 million people, with 52 million middle-class consumers. Additionally, the CLMV region includes 175.28 million consumers located within 1,000 kilometers, ASEAN provides 672.4 million consumers all within 3,000 kilometers, while all of Asia within 5,000 kilometers includes 4.77 billion consumers. Ongoing national investment in and rapid development of Thailand’s logistics systems are helping to integrate the country’s transportation system with those of other emerging economies. This brings vast opportunities for cross-border trade and investment, making Thailand an ideal investment destination.
Thailand offers the rewards of almost tariff-free trade with 18 different nations, including major global economies such as Australia, China, New Zealand, and South Korea, as well as the ASEAN community. Thailand has signed 14 FTAs. In 2021, Thailand has ratified the Regional Comprehensive Economic Partnership (RCEP) agreement, which officially enters into force on January 1st, 2022, and covers nearly one-third of the world economy and population.
The government of Thailand has been emphasizing its digital development for a number of years through its focus on the Thailand 4.0 economic model, which seeks to move the country past previous economic development models that focused on agriculture (1.0), light industry (2.0) and advanced industry (3.0). It seeks to transform Thailand into a “value-based” digital economy. The four main objectives of Thailand 4.0 are economic prosperity, social well-being, raising human values, and protecting the environment. In the case of digital infrastructure, this has translated into major advances in technology, particularly in support of smartphones and broadband connectivity. Thailand has invested 15 billion Baht to launch a country-wide village broadband network to provide affordable high-speed internet to over 25,000 villages across Thailand.
Another major development project is the Digital Park Thailand, which is located on 284 acres in Chonburi province on the country’s eastern seaboard coast. The park supports economic development by facilitating access to the submarine cable system, landing station, and data center. Additionally, the National Science and Technology Development Agency (NSTDA) has established the Software Park Thailand in Nonthaburi to support and strengthen Thailand’s software entrepreneurs’ competitiveness by promoting technology transfers, providing courses for the training of IT professionals, supporting local and international collaborations, and providing office facilities and rooms for conferences, meeting, and training for software companies.
Moreover, enhanced incentives from the Thailand Board of Investment (BOI) have been established to encourage more investment in research and development (R&D), engage the industry more actively in human resource development (HRD), and attract additional investments in the growing semiconductor and digital industries.
THE EASTERN ECONOMIC CORRIDOR (EEC)
Building on the success of the Eastern Seaboard, the Thai government is presently developing the Eastern Economic Corridor (EEC), a flagship megaproject that aims to become the ASEAN-leading economic zone for industrial, infrastructure, and urban development. Spanning over 13,000 sq. km. across the three provinces of Chonburi, Rayong, and Chachoengsao, the EEC has designated areas, including the Eastern Airport City (EECa), the Eastern Economic Corridor of Innovation (EECi), Digital Park Thailand (EECd), Thammasat Integrated Medical Innovation Center (Pattaya) (EECmd), and additional promoted industrial estates/industrial zones. During the first five years, approximately US$ 50 billion of combined public and private investment projects are expected in the EEC. To further support innovation-led business within the EEC, the investment environment features numerous tax and non-tax incentives.
COMPETITIVE BUSINESS COSTS
Prime office space in Bangkok, Thailand’s capital, is of outstanding value. As compared to other leading cities in the region, Bangkok is nearly half of the cost of Ho Chi Minh City, only 40% of the cost of Seoul and Singapore, and a quarter of the cost of New Delhi, Tokyo and Beijing. Wages are also quite reasonable for such a highly trained and educated workforce. As wages across the ASEAN region rise due to economic growth, the wage inflation rate in Thailand is among the lowest in the ASEAN region.
In addition to capital infrastructure, the Thai government is committed to capacity building in human resource development, especially in Science, Technology, Engineering, and Mathematics (STEM) education, as part of its comprehensive strategy to become a regional leader in ASEAN. Thailand’s Ministry of Education partnered with the Southeast Asian Ministers of Education Organization (SEAMEO) to host the first two SEAMEO regional centers for STEM education and for Sufficiency Economy Philosophy for Sustainability.
The government has also designed a wide range of vocational education programs, including Dual Vocational Education and Training, Cooperative Education, Work-Integrated Learning (WiL), and Talent Mobility (TM), to ensure that the Thai workforce has the right skills and is able to meet the requirements of future jobs, especially in emerging technologies such as robotics, automation, and AI.
THE SECOND HOME OF INTERNATIONAL COMPANIES
As a regional economic center with all its numerous advantages, it should come as no surprise that Thailand has become the second home for numerous global MNEs and a supply chain hub for major industries. These foreign investment activities have been enabled by streamlining government legislation, a growing domestic market, and access to resources such as finance and technical knowledge.