Thailand: Investing in Thailand
Foreign direct investment is an important element of Thailand's economic development, and the country is one of the major FDI destinations in its region. According to UNCTAD's World Investment Report 2023, FDI inflows stood at USD 10 billion in 2022, down by 31.5% compared to the USD 14.6 billion recorded one year earlier but still above the three-year average before COVID. In the same period, the stock of FDI reached USD 306.1 billion, around 57.1% of the country’s GDP. As per the Thailand Board of Investment (BOI) figures, applications for investment promotion in 2023 reached a five-year high of USD 24 billion in combined value, an increase of 43% from the previous year's number. In 2023, foreign investors submitted 1,394 applications for investment promotion, marking a 38% increase from the prior year, with combined investment reaching USD 18.9 billion, a 72% surge driven by numerous large-scale projects. Notably, investment applications from China led the FDI sources by value, comprising 430 projects totalling USD 7.4 billion, mainly in electronics and automotive, including EVs. Singapore followed closely with 194 projects amounting to USD 3.5 billion, driven by major initiatives in solar cells and electronics. U.S. investments ranked third with 40 projects totalling USD 2.3 billion, while Japan secured fourth place with 264 projects valued at USD 2.2 billion, reflecting a 60% rise from the preceding year. The BOI's new strategy focused on five priority sectors: BCG (Bio-Circular-Green), electric vehicles (EV), smart electronics, digital, and creative. These sectors collectively garnered 759 applications, amounting to a total investment of USD 14 billion, representing 58% of the overall investment pledges. The Eastern Economic Corridor (EEC), Thailand's premier industrial hub spanning Chonburi, Rayong, and Chachoengsao provinces, remained at the forefront of regional investment, securing USD 13.1 billion, representing 54% of total commitments. Following closely, the central region drew approximately USD 7.4 billion, constituting 31% of the overall investment. Thailand has been a consistent recipient of Chinese investment for some time, and its geostrategic position as the heart of the ASEAN free trade bloc, with free trade access also to China and India, has made it a hub for many Chinese investors. This has manifested itself primarily in the drive to digital economies and is building Thailand up both as a connectivity hub and as a key node for Asia in new tech. Plenty of money is being both raised and made via Chinese investments into various Thai-based initiatives in crypto, fintech, blockchain, and AI, as well as health care, including medical tourism. This, coupled with extensive infrastructure connectivity plans uniting Thailand to ASEAN, other export markets, and the development of numerous free trade zones on outlying islands is seeing the country take on a highly competitive global role for foreign investment into the South Asian region (ASEAN Briefing, 2023).
Thailand's strategic location in Southeast Asia, coupled with its relatively well-developed infrastructure and skilled workforce, makes it an appealing destination for FDI. The country offers various incentives through the Board of Investment (BOI) to attract investment, including tax breaks and streamlined bureaucratic procedures. However, political instability, bureaucratic red tape, corruption, labour issues, and infrastructure constraints pose challenges for investors. Several Thai statutes impose limitations on foreign ownership in specific sectors, notably in industries such as banking, insurance, and telecommunications. The Foreign Business Act (FBA) delineates the specific business activities reserved for Thai nationals, stipulating that foreign investment in these sectors must not exceed 50% of share capital, except under special permissions or exemptions. Thailand ranks 43rd among the 132 economies on the Global Innovation Index 2023 and 87th out of 184 countries on the 2023 Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | -4,951 | 14,641 | 10,034 |
FDI Stock (million USD) | 304,351 | 296,270 | 306,163 |
Number of Greenfield Investments* | 72 | 79 | 91 |
Value of Greenfield Investments (million USD) | 2,022 | 3,926 | 8,292 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Thailand | East Asia & Pacific | United States | Germany |
Index of Transaction Transparency* | 10.0 | 5.9 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 7.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 9.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Advantages for FDI:
Weaknesses in the Thai economy:
Other incentives also include:
Other incentives are available for expenditure in these sectors: R&D in technology and innovation, intellectual property acquisition/licensing fees for commercialising technology developed in Thailand, advanced technology training, development of local suppliers with Thai shareholder(s) holding at least 51% of the total shares, product and packaging designs in Thailand, both in-house and outsourced.
Additional area-based incentives for corporate income tax exemptions are provided to qualified investors in the specific areas that fall under the following categories:
In support of its “Thailand 4.0” strategy, the government offers incentives for investments in twelve targeted industries: next-generation automotive; intelligent electronics; advanced agriculture and biotechnology; food processing; tourism; advanced robotics and automation; digital technology; integrated aviation; medical hub and total healthcare services; biofuels/biochemical; defense manufacturing; and human resource development.
The Thai government in 2019 passed new laws and regulations on cybersecurity and personal data protection that have raised concerns given to Thai authorities regarding confidential and sensitive information, introducing new uncertainties in the technology sector.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: November 2024