AI Won’t Transform Thailand’s Economy

The current AI boom has triggered a wave of investment flowing into developing economies across Southeast Asia, including Thailand. According to Thailand’s Board of Investment (BOI), investment applications in the first quarter of 2026 exceeded THB 1 trillion across more than 600 projects, led by the digital and electronics industries to support AI-related growth.

The five sectors attracting the highest investment were:

1. Digital industries: THB 873.7 billion (48 projects)
2. Electronics and electrical appliances: THB 40.5 billion (80 projects)
3. Energy and public utilities: THB 17.1 billion (108 projects)
4. Agriculture and food: THB 17.0 billion (61 projects)
5. Logistics and high-value services: THB 14.5 billion (68 projects)

Most of the investment is concentrated in data centers and cloud services, which together account for approximately THB 874 billion, or 86% of total investment.

This raises an important question: Will investment in AI and data centers actually lead to broad-based and sustainable economic development for Thailand? Given the enormous demand these projects place on electricity and water resources, are the benefits to Thai society proportional to the costs?

AI Is Good News, But It Won’t Reshape Thailand’s Economy

In an exclusive interview with Bangkok Biz News, Dr. Supavudh Saicheua, Chairman of Thailand’s National Economic and Social Development Council (NESDC), argued that while it is positive that Thailand has managed to position itself within the global AI supply chain, the country currently occupies only the “back-end” of the industry.

Thailand’s opportunity lies in areas such as energy infrastructure and data centers, particularly as Singapore and Malaysia have become more reluctant to host additional large-scale data center projects.

“The opportunity has shifted to Thailand,” he said. “But will this transform the Thai economy? The answer is “NO”

His assessment is consistent with the Bank of Thailand’s latest Monetary Policy Forum 2/2026, which highlights the highly concentrated nature of AI-driven growth. Exports in the electronics and technology sector are expected to expand by 43.8% this year, while all other manufacturing sectors combined are projected to grow by only 2.5% (Figure 1).

Analysis also shows that among electronics exporters, just 1% of firms account for 85% of total electronics exports. Of approximately 105 major exporters, 87 are foreign-owned companies operating production facilities in Thailand. This suggests that much of the economic gains ultimately flow back to foreign companies rather than benefiting Thai businesses.

At the same time, Thailand’s dependence on imported intermediate goods has increased significantly. In the past, imported content accounted for 45% of production, but today that figure has risen to 70%, leaving local content at only 30% (Figure 2). This trend is reinforced by recent trade data showing that while Thailand’s exports have increased by 14%, imports have grown even faster at more than 20%.

Food Remains Thailand’s Greatest Strength

These figures suggest that the AI boom has had only limited impact on the broader Thai economy or on the incomes of Thai people.

“BOI announced over one trillion baht worth of investment applications. Thailand’s GDP is around 20 trillion baht, so that’s around five per cent of GDP. But people don’t feel any difference,” Supavudh said.

“Compare that with government stimulus programmes worth just over one hundred billion baht. People actually felt the impact because the money reached them directly. So the government needs to carefully assess whether giving up Thailand’s land, water and electricity resources is ultimately worthwhile.”

According to Supavudh, Thailand has consistently followed global economic trends from promoting itself as the Detroit of Asia, to tourism, and now AI, without seriously asking what the country’s real comparative advantage is.

For him, that answer remains clear: “FOOD”.

“I recently saw that the Prime Minister established a new economic reform committee, but food wasn’t even on the agenda,” he said.

“We have always talked about becoming the ‘Kitchen of the World.’ Thailand has been a net food exporter since the Bowring Treaty. Our next step should be moving from exporting raw agricultural commodities toward processed food products.”

However, one major obstacle is the high cost of imported feed ingredients due to import tariffs.

Thailand produces around 5–6 million tonnes of corn annually but still imports another 4 million tonnes. Soybeans are almost entirely imported.

“If agricultural imports were liberalised, production costs would fall significantly, making Thai food producers much more competitive.”

Rail Reform and Government Spending Matter More Than AI

Beyond agriculture, Supavudh believes the second major reform priority is logistics, particularly expanding rail transport to reduce dependence on oil while improving Thailand’s connectivity with Singapore, Malaysia and southern China. The goal is to position Thailand as a regional logistics hub.

“The problem is that Thailand’s railway system remains a state-owned enterprise that consistently runs losses,” he explained.

“A new railway law has finally allowed private operators to use the rail network. We should accelerate private participation.”

Because the State Railway of Thailand carries debts approaching THB 800–900 billion, every investment requires government approval and budget allocations, making expansion slow and bureaucratic.

“Allowing private investment would solve much of the financing problem.”

Thailand’s Fiscal Challenge

Another structural challenge is Thailand’s rapidly ageing population. Supavudh argues that ageing will place increasing pressure on government finances, particularly through mandatory spending on civil servants.

For fiscal year 2027, committed expenditures are expected to reach THB 1.43 trillion, accounting for 37.9% of the total government budget.

“Think about this,” he said. “There are around 3 million civil servants. Including family members who receive benefits, that’s roughly 5 million people. Healthcare benefits for this group cost more than THB 90 billion. Meanwhile, around 50 million Thais rely on the Universal Healthcare Scheme, which receives only around THB 100 billion. There are more than ten times as many people, but the budget is only slightly larger”.

Three Reforms Matter More Than AI

Supavudh argues that Thailand’s long-term economic transformation depends far more on three structural reforms than on the AI boom itself:

• Liberalising agricultural trade to strengthen Thailand’s food industry.
• Reforming logistics through private participation in rail infrastructure.
• Addressing the growing fiscal burden created by an ageing society and rising civil service expenditures.

These reforms, he says, are far more urgent than chasing the latest technological trend. If Thailand is to continue attracting AI investment, however, the country’s biggest priority should be energy reform.

Following the government’s announcement of a THB 200 billion energy transition plan under the THB 400 billion emergency borrowing programme, Supavudh argues that Thailand needs a much clearer roadmap. This should include separating electricity transmission from power generation, allowing competitive electricity trading, and investing seriously in a nationwide smart grid, rather than focusing primarily on rooftop solar installations.

He concluded by expressing concern over Thailand’s fiscal constraints and persistently low growth. To stabilise public finances and reduce public debt, the government needs to raise nominal GDP growth, including inflation, to around 5% per year, a target he believes will be extremely challenging under current fiscal and monetary conditions.