FDI in figures

Foreign direct investment has been an important element of Thailand's economic development process.  The immense foreign currency influx after Thailand's financial liberalization in 1990, helped to increase the country's competitiveness.  In the context of the recession and relatively slow recovery after the 1997 crisis, the FDI's role became even more crucial in helping re-capitalize failing industries, bring in new technologies, generate or save jobs, assist with policy reforms and play a role in addressing the poverty and social inequalities challenges. Thailand  was ranked  amongst the first destinations for FDI and was the second ASEAN (Association of the Nations of the Southeast Asia) country, after Singapore in 2007, with regard to foreign investment attractiveness. However in 2008, according to the United Nations World Investment Report, foreign direct investment (FDI) influx suffered a 10% decline linked to the US financial turmoil and the slowing of the global economy. This deterioration worsened in 2009, reinforced by the global crisis and political uncertainties surrounding the country.

Why you should choose to invest in Thailand

Strong points

The country's main strong points are:
- A skilled work force in a number of sectors;
- A strategic location at the heart of Asia: the country is an entryway to Southeast Asia and the Upper Mekong Basin region where the emerging markets have great economic potential;
- A governement policy which promotes investment and promoting free-trade: According to the World Bank, Thailand is the 4th Asian country and the 20th in the world where it is easy to do business;
- The existance of a number of government agencies to help investors;
- An investment regime in total harmony with WTO regulations: no restrictions in the manufacturing sector, no local requirements nor export conditions.

Weak points

Other than economic factors, structural factors like the lack of infrastructure or sufficient skilled labor, could influence the level of investments and economic growth. A World Bank report, published in 2009, stresses on a key variable for recovery: political stability. Political uncertainty in Thailand was seen by companies as the main drawback to investment. The lack of improvement in the infrastructures and the shortage of skilled workers (linked to the quality of the education) have also limited investments.

Government measures to motivate or restrict FDI

The Thai Boad of Investment (BOI) offered a series of incentives in six industrial sectors in 2008-2009, namely eight years of tax exemptions for companies and 50% tax reduction for companies for 5 years, double transport, electricity and re-supply deductions as well as 25% deduction on net profits for establishment and construction costs. The 6 sectors are:
- Agriculture and food;
- Renewable and alternative energies;
- Automobile;
- Electronics, information and communication technologies (ICT);
- Fashion;
- High added value services (including  leisure, health and tourism).

 

The BOI will also implement measure aimed at contributing to the increase of company liquidity. Additionally, it can offer import tax exemption on raw materials required for production aimed at export.

Finding assistance for further information

Investment aid agency

The Board of Investment