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In this page: FDI in Figures | Why You Should Choose to Invest in Thailand | Investment Opportunities

 

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 is an important FDI destination. In terms of investment, the country offers an attractive and modern legal framework and its economy benefits from the regional dynamism. According to the UNCTAD World Investment Report 2013, Thailand was among the 8 priority destinations for foreign investment for the period 2013-2015, gaining 4 places on the previous year. It is the 7th largest FDI recipient in East and South-East Asia. After having slowed down in 2009, FDI flows remained significant despite natural disasters and the revealed weaknesses of the management and supply systems. In 2013, FDI increased only slightly compared to 2012, but still exceeded official forecasts - a further proof of investor confidence.

 

Country Comparison For the Protection of Investors

  Thailand East Asia & Pacific United States Germany
Index of Transaction Transparency* 10.0 5.0 7.0 5.0
Index of Manager’s Responsibility** 7.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 7.7 5.4 8.3 5.0

Source: Doing Business - Last 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. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 3,71010,70512,946
FDI Stock (million USD) 159,343185,689185,463
Performance Index*, Ranking on 181 Economies 48--
Potential Index**, Ranking on 177 Economies 20--
Number of Greenfield Investments*** 140129145
FDI Inwards (in % of GFCF****) 3.99.811.8
FDI Stock (in % of GDP) 43.748.147.9

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field 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. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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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 government 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 existence 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 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. Piracy and counterfeiting are big problems.
Government Measures to Motivate or Restrict FDI
The Thai Board of Investment (BOI) offers a series of incentives in six industrial sectors, 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.

On December 2014, the Thailand Board of Investment (BOI) approved the “Seven-Year Investment Promotion Strategy” (2015-2021) that will come into effect and apply to all applications submitted as from 1 January 2015. The new investment strategy focuses on giving priority to investments that will contribute to, and have a positive effect on, society and the environment. The investment strategy gives priority to high-tech and creative industries, service industries that support the development of the digital economy and activities that develop and utilize local resources.

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Investment Opportunities

Investment Aid Agency
The Board of Investment
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Thailand
Asian Development Bank, Procurement Plans in Asia
DgMarket, Tenders Worldwide
 
 

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Last Updates: December 2014