What makes Thailand an exciting place to invest?

◊ Thailand 4.0 is the nationwide drive to escape the middle income trap through technological innovation. This means mobilising the private sector through investment in science and technology – and emphasising human capital, creative thinking, and innovation.

◊ In line with Thailand 4.0, and Thailand’s focus on strategic industries, there are a range of corporate tax breaks available. These include eight years exemption for microelectronics design, cloud services, and telecoms, while the E-Commerce and printing industries receive total exemption.

◊ Thailand is a founding member of the ASEAN (Association of Southeast Asian Nations) group which led to the establishment of the AEC (ASEAN Economic Community) in 2015. This community looks to  offers opportunities in the form of greater trade and economic integration, and a market of US$2.6 trillion and over 622 million people. Within this, Thailand has a strategic position at the centre of the Indochinese peninsula, bordering Myanmar to the West and North, Laos to the North-East, Cambodia to the east and Malaysia to the south. Thailand’s border trade value was estimated to be worth $44 billion in 2016, and is expected to grow by a further 3% in 2017.

◊ Infrastructure is a focus across Thailand, but one of the areas that will benefit most from improved infrastructure is the Eastern Economic Corridor (EEC). The government expects $43 billion for the realization of the EEC over the next five years. The government hopes to complete the EEC by 2021, turning these provinces into a hub for technological manufacturing and services with strong connectivity to its ASEAN neighbors by land, sea and air.

Tourism

From the urban bustle of Bangkok to the authentic spirit of Chiang Mai, the beaches of Pattaya to the Phra Nakhon temple: Thailand is one of the world’s favourite tourist destinations, welcoming tens of millions of visitors each year.

Economically, tourism forms a key pillar, directly contributing 9.2% of GDP ($36.7bn in 2016) and 20.6% indirectly ($82.5bn). The industry is showing dynamism: record number of tourists is expected in 2017, 34 million is 7 percent more than in 2016 with both direct and indirect GDP contributions set to rise by an average of 6.6% between 2017 and 2027. Thailand has the infrastructure in place to maintain this trend –  more flights go to Thailand than to neighboring countries like Vietnam, while Qatar Airways and Emirates both fly to Bangkok five times per day with direct flights to Phuket. And hotel numbers are set to keep pace with this demand, as in  Thailand saw the third highest level of hotel investment in Asia-Pacific, and the highest in ASEAN with a transaction volume of $335 million

Key to government strategy in the coming years will be on sustainable, quality tourism with a greater spend per traveller – with medical tourism one key high spend area – the million visitors who visit Thailand currently for medical procedures will only be buoyed by the increased quality of facilities and services under Thailand 4.0.

Education

Education will be foundational to achieving the government’s goal and transforming Thailand into a value based economy – it will be necessary to upgrade workforce skills to fulfil projects such as the $45 billion Eastern Economic Corridor project, aiming to attract major export-oriented tech brands.

Today, Thailand ranks poorly by many international measures, but this is a clear focus for the government with 20% of the government budget allocated to education, and a government target to increase R&D expenditure to 2% of GDP by 2021. Private sector initiatives too are being mobilised to close this skills gap, by those companies who have seen potential in Thailand: projects such as “Better Science for Better Life” launched by the German pharmaceutical and life sciences multinational Bayer. By its very nature, this process will take years to come to fruition, but the seeds are being sown with Mahidol University heeding calls to modernise the syllabus and encourage creative thinking, joining Chulalongkorn University in the top 60 of the QS Asia University Rankings. Crucial now in creating broad based economic growth will be to ensure that such developments are unlocked for all Thais, not merely the urban metropolitan elite.

Manufacturing

The drive towards Thailand 4.0 is a drive up the value chain, and nowhere can this be seen more than in the manufacturing industry. Technical manufactured products such as automobiles, electronics, and even processed food are made in Thailand for export, due to its favourable geographical location, tax-based benefits for manufacturing sectors and reduced tariffs within the ASEAN community.

Electrical appliances account for 20% of total exports, largely driven by the manufacture of computer components, especially hard disks, with global giants Seagate and Western Digital establishing major operations, as well as Fujitsu, LG Electronics, Sony and Samsung.

Automotive manufacturing too, provides great dynamism to the Thai economy, producing 1.9 million cars annually of which 60% are for export, and is the twelfth largest car automotive manufacturer thanks to brands such as BMW, Ford, Honda, Toyota, Nissan, Volkswagen, Mercedes-Benz and Mazda. This makes for a key sector, accounting for 12% of GDP, but is equally driven towards value addition through automation and robotics (one of the 10 targeted industries for Thailand 4.0). Thailand’s shipments industrial robots are estimated to increase by 133% between 2013 and 2018 from 2,131 to 7,500 units, and according to the board of investment 50% of manufacturers are planning to adopt automation systems within the next 1-3 years, again increasing the competitiveness and efficiency of Thai manufacturing.

ICT

Central to prosperity going forward will be the ICT sector, not merely as a standalone industry, but through its increasing prevalence throughout all walks of life and industry. Thailand is arguably already the ASEAN leader in ICT, with a large percentage of the regional traffic and the most active smartphone users, with speeds on broadband and mobile second only to Singapore.

Institutional support is forthcoming: 2016 both saw a $570 million venture fund to nurture Thailand’s startup ecosystem and True Corporation, one of country’s biggest mobile operators unveiling a $500 million digital hub project.

The environment is clearly burgeoning with total funds raised for tech investments up 100-fold over the last four years and the he National Innovation Agency and CAT Telecom are collaborating on the “IoT City Innovation Centre” to incubate startups – with startups like Pomelo and Omise each recently receiving over $10 million in funding.

The long term goal of all this is the establishment of Thailand as an ‘Intelligent Country’, making extensive use of AI, big data analytics, and the Internet of Things to improve productivity and profitability, elevating the economy as a whole. Take for example sensors monitoring farmland which can use analysed data to automate irrigation, temperature and application of pesticides, enabling more work to be done with less and improving the competitive advantage of Thai agriculture. Or even further into the future, the possibility of a driverless lorry which can go overnight to improve logistics and profit for a mining company. The possibilities of integrated ICT have almost limitless applications, and with them, almost limited economic benefits.18