Vietnam, not Thailand, preferred by European investors in ASEAN
European firms favor Vietnam over Thailand due to trade deals and stability, while Thailand remains competitive but needs political certainty to attract investment.
European companies are increasingly favouring Vietnam over Thailand for future investments in Southeast Asia, according to Chris Humphrey, Executive Director of the EU-ASEAN Business Council.
Business sentiment surveys conducted by the council show Vietnam has ranked as the top destination for European investment.
Humphrey said Vietnam’s extensive network of trade agreements has given it a clear advantage.
“Thailand is diversifying its supply chains, but Vietnam has signed numerous trade agreements, making it easier for companies to manufacture there and export globally,” he said.
While Thailand reached a five-year high in foreign direct investment of 10.4 billion dollars, Vietnam attracted 38.42 billion dollars in 2025.
Despite this, Thailand remains in close competition with regional peers, including Malaysia, Indonesia, the Philippines and Vietnam, according to Humphrey, stressing that political stability will be crucial in advancing regulatory and economic reforms.
Thailand has seen three prime ministers in the past two years, underscoring concerns over political uncertainty and policy continuity.
Vietnam’s edge is further reinforced by its free trade agreement with the European Union. While Vietnam signed the deal in 2019, Thailand is still negotiating its own agreement with the bloc.
Humphrey noted that Maroš Šefčovič has set a target to conclude the EU–Thailand free trade agreement by the end of 2026. Following the seventh round of negotiations in Bangkok last month, discussions are seen as progressing toward that goal.
“Both sides need to reach compromises, particularly on quotas and market access for financial services. Clear policy direction from the new government will be key to advancing the negotiations,” he said.
Amid geopolitical tensions in the Middle East, Humphrey said global supply chain shifts are opening up opportunities across Southeast Asia.
He added that Thailand remains strategically well-positioned to benefit from supply chain diversification due to its geographic location and industrial base.
However, sustained political stability and consistent economic policies under the government led by Anutin Charnvirakul will be critical to strengthening investor confidence.
Humphrey also noted that European firms are increasingly investing in Southeast Asia not only as an export base, but to tap into the region’s expanding domestic markets, driven by a rapidly growing middle class.
