As the second-largest economy in ASEAN behind Indonesia, Thailand presents ample investment opportunities for foreign businesses. The country has experienced growing domestic consumption over the decades coupled with robust export-oriented manufacturing, resulting in the country gaining the status of an upper-middle income nation in 2011.
Further, Thailand is also benefitting from Sino-US trade tensions with several Chinese-based firms relocating part of their supply chain to Thailand, especially for electronics, chemicals, and automotive. The Board of Investment (BOI) announced in February 2022 that the combined value of foreign and local investment applications in 2021 totaled 643 billion baht (US$19.4 billion), an increase of 59 percent from the previous year.
Electricals and electronics topped the list of targeted sectors, attracting 104.5 billion baht (US$2.8 billion) followed by the medical sector (62.2 billion baht (US$1.6 billion)), petrochemicals (48.4 billion baht (US$1.3 billion)), agriculture (47.7 billion baht (US$1.3 billion)), and automotive and parts (24.6 billion baht (US$672 million)).
Despite the shift from an agrarian to an industrial economy, the bulk of the workforce remains in low-scale and low-productivity activities. Failure to upgrade to higher-value industries and improve competitiveness in services may constrain Thailand’s long-term growth potential.
Thailand’s economy is dependent on exports, which accounted for some 60 percent of GDP before the pandemic. As such, the country’s manufacturing sector plays an important role, contributing 27 percent of GDP in 2021; the sector’s success or failure often dictates the overall health of the economy.
Over the last fifty years, Thailand has built up a robust manufacturing sector. It is now keen to attract investments for mid/high-tech manufacturing, especially as regional rivals like Vietnam and Cambodia become new centers for low-cost production in the region.