Investors are perceiving Thailand and the larger Southeast Asian region in general as a compelling alternative to China, which is currently experiencing supply uncertainties and increased political risk. As investors grow increasingly hesitant to expand in China, many are considering another market in the region: Thailand. With a population of around 70 million, Thailand will also be connected with China thanks to a high-speed rail link opening in 2028. The Thai economy is expected to grow by 3.6% in 2023, up from 2.6% in 2022.
According to the World Bank, this growth is due to a speedy recovery in the tourism industry and demand following China’s reopening. Thailand’s Board of Investment (BOI) is offering incentives for inward investment in key industries and has launched several special economic zones. Some of the most important initiatives include the Bio-Circular-Green Economic Model, a strategic plan launched in 2021 that aims to enhance the following four industries: agriculture and food; medical and wellness; bioenergy, biomaterial, and biochemical; and the tourism and the creative sector. The model includes significant tax incentives for investors expanding to Thailand. The medical and health tourism segment is also predicted to register strong growth over the next years. Thus, Thailand is well positioned within Southeast Asia to act as a manufacturing and distribution hub for companies relocating from China, as seen by how special economic zones on the country’s eastern seaboard attracted significant investment.
American investors and companies also enjoy preferential treatment in Thailand thanks to the 1996 Treaty of Amity and Economic Relations Between the Kingdom of Thailand and the US, which allows US citizens and businesses to maintain a majority shareholding or to wholly own a company in Thailand and engage in business on the same basis as would a Thai person.
(Source: Global Finance Magazine)
