Market watchers are predicting a slowdown in Thailand’s economy. However, there are several indicators that prove that not all is doom and gloom for one of Southeast Asia’s most promising economies. Amidst the growing concerns, there is a silver lining that bodes promising opportunities on the horizon. We take a closer look at the state of the Thai economy and find out what is really going on.
Foreign Direct Investments on the Rise
While there may be a slowdown of exports coming out of Thailand, there appears to be a surge in foreign direct investments (FDI) coming in. In the first 9 months of 2019, Thailand’s Board of Investment reported a 69% increase in FDI applications from the same period in 2018. That’s a total of 203.4 billion baht dedicated to projects in the government’s target industries. There are a couple of reasons to explain this phenomenon.
Firstly, growing global tensions between 2 of the world’s largest economies, the US and China, have caused widespread market uncertainty. This has led businesses to relocate their operations to circumvent trade tariffs, with Southeast Asia as the primary destination. One prime example is the CEO of Capstone International, Larry Sloven, who saw Thailand as an ideal location to relocate his manufacturing operations thanks to the Kingdom’s positive relations with both the US and China.
Besides the neutrality that Thailand offers, companies are also interested in the attractive relocation packages offered by the Thai government. Thailand’s Board of Investment (BOI) is offering companies tax incentives, creating special investment zones and changing in business regulations that would facilitate foreign investment, particularly from China, Japan, Taiwan and South Korea. This influx of investment will continue to grow as the government steps up privileges and incentives to attract more investment in the country’s Eastern Economic Corridor (EEC).
Growing Expat Community
As more companies set up their operations in Thailand, we can expect an increase in job creation and employment, with several roles taken up by expatriates from the native countries of these companies, resulting in a vibrant workforce and upskilling of local employees.
Not only will companies enjoy incentives and privileges for bringing their businesses into Thailand, investors also stand to benefit on a personal level thanks to the Thai Elite Visa. This programme grants a multiple entry visa, permits for business activity, long-term stays as well as access to world-class luxury services to investors who have contributed at least 500,000 baht. In the first quarter of 2019, there has been a 60% increase in take-up rates of the Thai Elite Visa.
If you’re interested in establishing a home in Thailand, be sure to check out our free International Buyers Guide.
Additionally, Thailand’s tourism is stronger than ever, reaching a record of 39 million tourist arrivals in 2019. The Tourism Authority of Thailand (TAT) projects that tourism will continue to boom with an estimated 40.8 million arrivals in 2020. The country’s reputation as a cosmopolitan melting pot for global communities will remain unchallenged in the foreseeable future. Be sure to check out our Discover Thailand platform if you’re planning a trip to the kingdom.
Infrastructure Continues to Develop
On top of the growing international interest in Thailand as a destination for business and leisure, the Kingdom is also rapidly developing its infrastructure. Collectively known as the Eastern Economic Corridor (EEC), Thailand’s infrastructure projects generated over 100 billion baht in foreign investments last year.
The plan for 2020 is to push for the launch of six EEC projects by the end of the year. These projects are:
- Completion of Bangkok’s third international airport - U-tapao airport
- The high-speed train route linking Suvarnabhumi, Don Mueang and U-Tapao airports
- A centre to handle the maintenance, repair and overhaul of planes
- The third phase of Map Ta Phut port
- The third phase of Laem Chabang port
- The development of Digital Park Thailand (EECd)
An additional development not outlined in the 6-point push is the overall development of Thailand’s e-commerce ecosystem. The Thai government has already started forging alliances with top Chinese e-commerce players and large Thai retailers with extensive distribution networks. Coupled with the rise of e-commerce logistics enablers and a proactive push for digital payments across the country, Thailand is set to supercharge its digital economic infrastructure for the coming years.
Overall, there are definitely several markers that indicate an economic slump for the country in 2020. However, if we take a closer look at the plans put in place, and cast it on an international backdrop, Thailand’s future looks brighter than what appears on the surface.
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