BOI pushes high-tech investment deeper into Thai supply chains

Thailand’s Board of Investment (BOI) is stepping up efforts to turn investment applications into actual projects while directing more capital towards high-technology industries that can deepen domestic supply chains and strengthen the country’s long-term competitiveness.

Sudhasinee Smitra, deputy secretary-general of the BOI, told the KT Dialogue: New Horizon – Thailand Investment Play roundtable organised by Bangkokbiznews that Thailand’s recent investment momentum was not the result of the BOI working alone.

Progress has depended on coordination among government agencies, the capital market and the Thai Bankers’ Association, combining investment incentives with financial and fiscal measures while removing obstacles that could delay projects from moving into actual investment.

Realised investment rises 27%

Sudhasinee noted that significant investment has flowed into the electronics industry over the past two to three years, particularly electronic design, printed circuit boards (PCBs) and printed circuit board assemblies (PCBAs).

These activities form an important foundation for Thailand to move further into the semiconductor industry and more advanced electronics over the longer term.

A central BOI objective is to deepen Thailand’s integration into global value chains by moving beyond downstream activities towards more upstream operations that rely on advanced technology and specialised knowledge.

Such investment, she explained, would help strengthen Thailand’s production base and improve its competitiveness over the long term.

Investment incentives alone, however, are not enough. The wider business environment also needs to allow projects to proceed efficiently, because delays involving permits or government procedures can postpone actual investment.

The BOI has therefore made ease of doing business a key part of its strategy, tracking licensing problems and other procedural obstacles and working to resolve them so promoted projects can proceed according to plan.

Its Thailand FastPass mechanism brings together eight agencies to accelerate processes involving environmental impact assessments, industrial works, customs, utilities and electricity.

According to Sudhasinee, these efforts have helped Thailand convert more applications for investment promotion into projects that are actually implemented.

Realised investment has increased by 27% from a previous level of about THB500 billion. Meanwhile, the contribution of BOI-promoted investment to economic activity has risen from around 10–15% in the past to approximately 20% this year.

The BOI aims to maintain that growth in actual investment, she added.

Two quick wins target skills and transformation

The BOI is also focusing on two Quick Win measures designed to accelerate investment: workforce skills development and industrial transformation. Both are intended to help Thai businesses absorb the advanced technology and knowledge brought in through new investment.

On workforce development, the BOI is working with the Thai Bankers’ Association to support businesses seeking to upgrade employees’ skills in line with the needs of new-generation industries.

The industrial transformation measure focuses on sustainability and digital development. Participating businesses can receive support equivalent to 50% of actual investment in industrial efficiency improvements.

The programme is also linked to financing from state financial institutions (SFIs) under measures introduced by the Finance Ministry.

Combining investment promotion with financial and fiscal support is intended to help turn approved investment applications into actual investment and generate a greater impact on the Thai economy.

BOI looks beyond investment value

Sudhasinee also addressed concerns that investment has become concentrated in particular industries, stressing that the BOI assesses not only the amount of capital committed but also the quality of the investment.

The large share of investment going into electronics partly reflects the capital-intensive nature of the industry, which requires expensive machinery and equipment, she explained.

Knowledge-intensive activities such as software development, by contrast, can generate high added value despite requiring less capital per project than manufacturing.

Automation and automated machinery are another priority, with the BOI supporting both demand and supply.

On the demand side, existing manufacturers seeking to improve productivity through automation can receive incentives worth 50% of actual investment. On the supply side, the BOI is supporting system integrators (SIs), whose work requires advanced engineering design skills and specialised technical knowledge.

The agency has placed greater emphasis on developing system integrators since 2017, while the Thai Automation and Robotics Association (TARA) has become an important mechanism for supporting the industry.

Helping system integrators gain access to markets and connect directly with users should, in turn, strengthen Thailand’s domestic machinery and equipment industry, she noted.

Linking Thai suppliers with new investors

The BOI is also working to connect buyers and suppliers through Subcon Thailand, an initiative that has operated for around 17–18 years and serves as a bridge between established Thai businesses and new investors setting up production bases in the country.

Addressing concerns that newer electric-vehicle manufacturers may initially make limited use of locally produced parts, Sudhasinee explained that new manufacturers need time to inspect materials and components and complete the qualifying process before approving them for production.

Once carmakers that have established factories in Thailand move into the expansion phase after around two to three years, the share of locally sourced materials and components rises to about 50–60%, regardless of the manufacturer’s nationality, although the proportion varies by product.

“The transition may take time,” she noted, adding that the BOI is working to create systematic links between new investors and domestic suppliers.

Thai businesses seeking to move into more technologically advanced components and products can also access measures designed to support that transition.

The BOI is additionally working with the Ministry of Higher Education, Science, Research and Innovation to strengthen the capabilities of Thai businesses and help them secure stronger, more sustainable positions in global supply chains.

Thailand’s investment strategy is therefore moving beyond headline investment figures towards attracting higher-quality projects that connect with local businesses, transfer technology, develop workforce skills and deepen domestic supply chains.

The broader aim is to use foreign investment to build a stronger production base and enhance Thailand’s long-term competitiveness.