Foreign direct investment is an important element of Thailand’s economic development, and the country is one of the major FDI destinations in the region. Japan and Singapore are by far the largest investors in the country and account for slightly more than half of FDI inflows. Hong Kong, the Netherlands, Germany, Mauritius and the United Kingdom are among other major investors. Manufacturing and financial and insurance activities attract nearly 70% of all FDI inflows. Investments in real estate, commerce and information and communication are also significant.
In addition to Thailand 4.0 initiatives, the Thailand government has announced amendments of the Foreign Business Act – the main law that regulates foreign business activities in Thailand – to simplify the process for obtaining visas and work permits for foreign investors. They have also setup an investment and steering committee to help facilitate large investments through a ‘one-stop service’ and to develop special investment zones for companies from individual countries, namely South Korea, Japan, China, and the US.
In July 2020, the Thailand Board of Investment (BOI) unveiled a new campaign, titled “Think Resilience, Think Thailand”, to showcase the country’s strengths and status as a prime investment destination. The campaign comes as Thailand receives international praise for its efficient control of the Covid19 outbreak, showing the country’s ability to cope with crisis and emerge even stronger – as it did during the Asian and global financial shocks of 1997 and 2008.
Attracting FDI is directly linked to foreign policies and FTAs.
As per EIU predictions for 2021-25, Thailand is expected to resume the EU-Thailand free-trade agreement (FTA), as well as the quick ratification of the Regional Comprehensive Economic Partnership (RCEP) trade agreement in 2021 with ASEAN neighbours. Agreements with Japan is also expected to be a key focus given the Japanese government’s concern that its economic influence in Thailand (and South-east Asia more generally) may be overtaken amid rising Chinese investment.
China has lined up key investment under two flagship initiatives: Thailand 4.0 and the Eastern Economic Corridor (EEC), a large special economic zone (SEZ) south-east of the Thai capital, Bangkok. However, delays are expected.
Sumit Dutta is the Founder and Chief Executive Officer of ASEAN Business Partners. Prior to this, Sumit spent 26 years working for HSBC, one of the biggest banks in the world, in countries including Indonesia, Vietnam, USA, Hongkong and India.
Stay up to update with our latest news.