Thailand urged to prioritise job creation and decentralisation to attract FDI
Thailand should focus on job creation, decentralising power, and promoting unified investment strategies to boost competitiveness and attract FDI.
- Thailand is urged to focus on job creation and knowledge transfer by clearly defining target industries, such as specific segments of the electric vehicle sector, to build a more skilled workforce.
- The country must decentralise power and industries to regional areas, empowering local governments to manage resources and create ecosystems that support the value chains of target industries.
- To compete with other ASEAN nations like Vietnam, Thailand should shift its strategy from offering simple incentives to actively building entire value chains and ecosystems tailored to investors' needs.
- A unified investment strategy among promotion agencies is recommended to attract businesses that align with and strengthen the value chains of these target industries.
Thailand must focus on job creation, knowledge transfer for target industries, and decentralising power to local governments to enhance competitiveness and attract foreign direct investment (FDI), according to the Senate’s committee on economic, monetary, and fiscal affairs.
The committee’s report also stresses the importance of promoting unified investment strategies to improve capital market competitiveness and boost FDI inflows.
Thailand faces challenges in boosting its competitiveness in capital markets and attracting FDI due to a shortage of skilled labour, complex regulations, and unappealing incentives.
Regarding the labour shortage, the country lacks a clear focus on targeted industries. For example, in the electric vehicle (EV) sector, Thailand should clarify whether it will focus on batteries or components. It should also specify industry segments and diversify labour distribution to other regions to increase the skilled workforce.
Although Thailand is working on legal reforms, the country has failed to decentralise industries to regional areas. It is essential to empower provincial and economic hub regions to manage local resources and human capital effectively.
Despite the "Thailand Plus One" initiative aimed at escaping the middle-income trap, investment has shifted from China to ASEAN, with Vietnam surprisingly attracting more investment than Thailand.
This success is credited to Vietnam’s approach of engaging with industry leaders and building ecosystems tailored to investors’ needs. On the other hand, Thailand’s focus has been mainly on incentives, without paying enough attention to the value chain.
The Senate’s committee on economic, monetary, and fiscal affairs has outlined the following recommendations:
- Prioritise job creation and knowledge transfer in target industries.
- Decentralise resource management to local authorities, with local development plans focused on creating ecosystems that support the value chains of target industries.
- Investment promotion agencies should work in unison to attract businesses aligned with the value chains of target industries.
Experts urge Thailand to boost competitiveness
At the seminar “Impact of Global Supply Chain Changes on ASEAN and Thailand,” Yuthasak Supasorn, Chairman of the Industrial Estate Authority of Thailand (IEAT), highlighted that trade tensions, particularly US reciprocal tariffs and reshoring, have significantly impacted businesses, urging caution in investment decisions.
He also pointed out that FDI inflows to Thailand have declined from 2020 to 2024, losing out to other ASEAN countries.
Citing the World Investment Report 2025, he noted that Thailand's average FDI inflows were US$6.86 billion, compared to Indonesia's US$22.19 billion, Malaysia's US$10.43 billion, the Philippines' US$7.97 billion, Singapore's US$129.13 billion, and Vietnam's US$17.60 billion.
“When FDI doesn’t come, investment in both the manufacturing and services sectors declines,” he said, adding that many businesses may close, causing further economic shock.
While Thailand has great potential, he emphasised the need to focus on brand image, and collaborate with the government for key development. To attract investment, he stressed that good governance and transparency are essential.
Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries (FTI), noted that Thailand is facing a decline in competitiveness, as evidenced by a 2% GDP drop.
He pointed out that aside from global challenges, technological disruption in the industrial sector, the US-China trade war, and geopolitical tensions have also negatively affected the Thai economy.
Thailand is trapped by an ageing society, with 14 million elderly people in a population of 64 million, and is facing the middle-income trap.
He called for urgent reforms, particularly in restructuring outdated laws that obstruct trade. He added that Thailand’s more than 10,000 laws pose significant obstacles and challenges.
“The world is shifting faster than us,” he said, noting that Vietnam adapted quickly because it has seen slow-paced development in Thailand.
