Thailand Remains an Attractive Investment Destination
Over the last four decades, Thailand has made remarkable progress in social and economic development, moving from a low-income country to an upper-income country in less than a generation. As such, Thailand has been one of the widely cited development success stories, with sustained strong growth and impressive poverty reduction, particularly in the 1980s. However, average growth has slowed to 3.5 percent over 2005-2015. The government has embarked on an ambitious reform program to raise Thailand’s long-term growth path and achieve high-income status.
Referred to as the “6-6-4 plan,” the 20-year national strategic plan consists of six areas, six primary strategies, and four supporting strategies. The six areas include (1) security, (2) competitiveness enhancement, (3) human resource development, (4) social equality, (5) green growth, and (6) rebalancing and public sector development.
The six primary strategies seek to enhance and develop the potential of human capital; ensure justice and reduce social disparities; strengthen the economy and enhance competitiveness on a sustainable basis; promote green growth for sustainable development; bring about national stability for national development toward prosperity and sustainability; and enhance the efficiency of public sector management and promote good governance.
As for the four supporting strategies for efficient national development, they involve infrastructure development and the logistics system; science and technology, research, and innovation; urban, regional, and economic zone development; and international cooperation for development.
Thailand’s economy grew at an average annual rate of 7.5 percent in the boom years of 1960 to 1996 and 5 percent following the Asian crisis during 1999-2005, creating millions of jobs that helped pull millions of people out of poverty. Gains along multiple dimensions of welfare have been impressive: more children are now getting more years of education, and virtually everyone is now covered by health insurance while other forms of social security have expanded.
Poverty has declined substantially over the last 30 years from 67% in 1986 to 7.2% in 2015 during periods of high growth and rising agricultural prices. However, poverty and inequality continue to pose significant challenges, with vulnerabilities as a result of faltering economic growth, falling agricultural prices, and ongoing droughts. Poverty in Thailand is primarily a rural phenomenon. As of 2014, over 80 percent of the country’s 7.1 million poor live in rural areas. Moreover, an additional 6.7 million were living within 20 percent above the national poverty line and remained vulnerable to falling back into poverty. Although inequality has declined over the past 30 years, the distribution in Thailand remains unequal compared with many countries in East Asia. Significant and growing disparities in household income and consumption can be seen across and within regions of Thailand, with pockets of poverty remaining in the Northeast, North, and Deep South.
Historically, economic growth has been the key driver of poverty reduction in Thailand. However, GDP grew by less than 2.5 percent a year in 2014 and 2016. Looking ahead, the World Bank forecasts growth to pick-up 3.2 percent for 2017 and continue higher.
Strategically located at the heart of Asia, Thailand aptly serves investors as a dynamic gateway to a fast growing economic market. Our growing economy, world-class infrastructure, competitive human capital and strong government support, are responsible for our key position as one of the most attractive investment destinations for foreign investors.
Thailand has demonstrated remarkable economic progress experiencing foreign direct investment (FDI) inflows’ growth of 21% over the past 6 years, compared to the global percentage of 0.7%. Occupying the 4th rank in Asia’s top prospective host economies, Thailand has gained a solid reputation as a second home for various global multinational enterprises (MNEs).
The establishment of the ASEAN Economic Community (AEC) in 2015 has set up ASEAN as a single market that facilitates free flows of goods; and freer flows of services, investment, capital and skilled labor within the region. With further progress and expansion, we will become the center of a new economic engine of ASEAN.
Thailand has more than 465,000 kilometers of roads and a vast highway network connecting each region nationwide. We are also continuously upgrading and constructing new international road networks. Our goal is to increase regional cooperation with numerous fast-growing countries such as China, India, Viet Nam, Malaysia and Singapore and become a major hub of regional road connectivity.
More than 4,000 kilometers of railway lines connect the various regions of Thailand. Plans are in the works to build both double-track railways and high speed trains, enabling a better connection with neighboring countries. A new mass transit system in Bangkok is also under construction. A total of more than 175 new stops are expected in the Bangkok Metropolitan Mass Transit system as well as in the rail connection between the Suvarnabhumi and Don Mueang airports.
For years, Thailand has been among the most successful countries in Asia for attracting Foreign Direct Investment (FDI). In the ever-competitive investment environment that characterizes the 21st century, Thailand has continued to remain attractive to foreign investors.
For more than three decades, successive Thai governments have recognized that the private sector in Thailand has been the main facilitator of growth and the government has actively played a promoting and supporting role. The Thai government has taken a consistently favorable stance towards foreign investors, recognizing their importance to Thailand’s economic and technological development.
In fact, government approval to invest in Thailand is not even needed unless the special incentives offered by the Board of Investment are being applied for, and most sectors of the Thai economy are open to foreign investors.
The combination of factors and the continued efforts of government agencies to reduce ‘red-tape’ and facilitate investors has led to Thailand being among the highest-ranked countries for FDI by independent observers, as well as by foreign investors.
A few quick facts about Thailand:
The combination of factors and the continued efforts of government agencies to reduce ‘red-tape’ and facilitate investors have led to Thailand being among the highest-ranked countries for FDI by independent observers, as well as by foreign investors.
Thailand has the world’s:
22ndbiggest economies by purchasing power
16th largest manufacturing output
34th largest services output
11stlargest agriculture output
25th largest industrial output
Source: Pocket World in Figures 2016 edition
In addition, in 2014, Thailand was:
World’s #1 rice exporter (by quantity)
World’s #2 pineapple exporter
World’s #2 sugar exporter
World’s #1 cassava exporter
World’s #1 rubber exporter in
World’s #6 rubber tires exports (by value)
World’s #7 computer device exports (by value)
World’s #9 computer accessories exports (by value)
World’s #7 motorcycle exports (by value)
World’s #5 truck exports (by value)
World’s largest producer of HDDs
Source: http://www.worldstopexports.com, https://atlas.media.mit.edu/en/profile/hs/0714/, THE THAI RUBBER ASSOCIATION
Now, let’s see how Thailand ranks with the rest of the world.
Highly Ranked by International Organizations
Every year, the World Bank conducts a study of the ease of doing business in countries around the world. It produces an annual report that looks at domestic and medium-sized enterprises and quantitatively measures regulations affecting them, covering nine indicators for 189 economies. Ease of Doing Business 2016 ranked Thailand #49 in the world, and #2 among emerging economies in East Asia.
You can find more information about Ease of Doing Business 2016 at http://www.doingbusiness.org/reports/global-reports/doing-business-2016.
In addition, in its 2014 World Investment Report, the United Nations Conference on Trade and Development (UNCTAD) ranked Thailand the 8th best FDI host economy in the world for 2014-2016
More information about UNCTAD rankings and publications can be found at http://unctad.org/en/PublicationsLibrary/webdiaeia2015d4_en.pdf
When the internationally-respected Bloomberg News asked Multinational Companies (MNCs) to select the most-promising emerging nations in which to invest in 2015, Thailand ranked as the 11th most promising emerging market for 2014-2016.
The full report can be downloaded from http://www.bloomberg.com/news/articles/2015-02-11/gulf-nations-defy-oil-rout-to-top-list-of-best-emerging-markets