IFC urges Thailand to turn data centre investment into jobs

Thailand must use data-centre investment to create jobs and help local businesses raise productivity through wider adoption of artificial intelligence (AI), rather than treat capital inflows as an end in themselves, according to Arnaud Dupoizat, director for East Asia at the International Finance Corporation (IFC).

In an exclusive interview with Krungthep Turakij, Dupoizat outlined how investment in new industries could help Thailand move towards a higher-value economy, provided the benefits extend to domestic businesses. IFC is the World Bank Group’s private-sector development arm.

He cited figures indicating that only around 12% of Thai companies use AI and estimated that the country lacks approximately 80,000 AI professionals. Thailand needs to develop or attract that talent to capture the opportunities offered by the technology, he said.

“Securing investment in data centres is not an objective in itself. These investments need to be used to create jobs for Thai people and generate benefits for Thai companies.”

Dupoizat sees strong potential in Thailand’s strategy of attracting investment in data centres, semiconductors and electric vehicles (EVs). The country can build on robust digital infrastructure and its position as one of the region’s leading automotive manufacturing hubs.

AI adoption beyond the largest companies

Dupoizat identified AI as an opportunity Thailand may be underestimating, particularly its potential to upgrade EV production and higher-value manufacturing. Using the technology would help Thai industry remain connected to global markets and value chains as technology reshapes competition.

“We need more companies to use this technology, and we need a comprehensive strategy to enable the private sector, including manufacturing, to adopt AI in ways that genuinely improve production.”

Thailand is already one of the largest vehicle producers in the Association of Southeast Asian Nations (ASEAN), with EVs accounting for around 10% of domestic vehicle production. Its next industrial priority should be to move up manufacturing value chains and global supply chains, rather than simply preserve the existing production base, he said.

He also sees wider AI adoption as a means of encouraging innovation and the emergence of new, dynamic companies, giving Thailand additional sources of growth beyond a small number of large businesses.

Financing the transition is not simply a question of attracting more capital. Thailand’s deep financial sector and capital markets are strengths, Dupoizat argued, but existing savings and capital need to be directed towards the most productive activities. They have not always been put to their most productive use.

Growth has remained concentrated geographically, particularly in Bangkok, and among a limited number of highly productive companies.

Micro-enterprises and small and medium-sized enterprises (SMEs) have not shared fully in that growth. They have lower productivity and do not enjoy the same access to finance as leading companies, he said.

“If growth is to be inclusive, the benefits cannot accrue only to the top 1–2% of companies.”

Wider use of AI by Thai businesses must therefore be accompanied by stronger connections between SMEs, multinational companies and global supply chains, Dupoizat said. Otherwise, the gains from the transition risk remaining concentrated among a few large or leading firms.

Infrastructure, skills and reform for 2037

The World Bank Group supports Thailand’s ambition to become a high-income country by 2037. With little more than a decade to achieve that goal, Dupoizat said the country needed to accelerate progress on infrastructure, human capital and economic reform.

Although Thailand has grown more slowly than several neighbouring economies in recent years, he does not attribute that performance to weak foundations.

“Thailand does not have weak fundamentals. In fact, it starts from a position of strength, with physical infrastructure, a strong manufacturing base and a high-quality workforce.”

Instead, both public and private investment have slowed, alongside weaker productivity growth. That is a particular concern for an economy with such a substantial manufacturing base.

Demographics have also shifted from supporting growth to weighing on it, with an ageing population and a very low birth rate, Dupoizat pointed out.

The first priority is sustained investment in energy and physical infrastructure that enables private businesses to expand. The second is greater investment in human capital, especially new skills and education suited to the changing global economy.

Third, Thailand must maintain the momentum of economic and regulatory reform to create a more competitive business environment in which new, dynamic companies can emerge and grow, Dupoizat said.

With foreign capital flowing into Thailand, Dupoizat stressed that foreign direct investment (FDI) does not automatically generate employment or productivity gains. To capture those benefits, Thailand needs infrastructure that improves economic efficiency, fewer logistics bottlenecks and an electricity system capable of supporting more efficient manufacturing.

A business environment that helps Thai companies connect with global value chains is also necessary. The objective is to ensure that foreign investment reaches further into the domestic economy, rather than leaving its benefits concentrated in particular companies or locations.

Slower global growth and the jobs gap

Thailand’s investment decisions are taking place as AI, supply-chain restructuring and capital flows into emerging industries reshape the global economy. Dupoizat argued that the country’s task was to use its existing capital, technology and industrial base to generate a new round of growth.

The immediate international outlook is less favourable. He cited World Bank Group forecasts for global growth of around 2.5% in 2026, with higher commodity prices and geopolitical tensions weighing on activity.

Global inflation is projected to rise to 4%, reflecting energy-price pressures and the risk of higher food prices stemming from a fertiliser crisis and rising fertiliser costs.

Developing economies are expected to grow by around 3.5%, their weakest rate since the Covid-19 pandemic.

Beyond those short-term pressures, Dupoizat identified an emerging jobs crisis as a greater long-term concern. Around 1.2 billion young people are expected to enter labour markets in developing countries over the next decade, but only about 400 million new jobs are projected to be created.

“That gap is enormous, and this is one of the biggest challenges we see having to address over the long term, beyond the short-term problem of slower growth.”

Job creation is consequently central to the World Bank Group’s strategy. Dupoizat linked employment not only to incomes, but also to human dignity, maintaining growth momentum and ensuring that prosperity is shared more widely.

The group’s approach combines investment in transport, energy, roads and urban infrastructure with spending on education, skills and healthcare. It also includes policy and regulatory changes that allow private businesses to grow, alongside efforts to mobilise private capital.

It identifies five areas with potential to generate growth and employment: infrastructure and energy, agriculture and agribusiness, healthcare, tourism and higher-value manufacturing.

Climate and energy vulnerabilities

Dupoizat identified climate resilience and energy as two major risk areas for Thailand.

Economic activity equivalent to around two-thirds of gross domestic product (GDP) is concentrated in the Chao Phraya River basin, he said, leaving the economy exposed to flooding. The severe floods of 2011 demonstrated the scale of the potential economic damage.

Protecting infrastructure and economic assets is therefore only part of the response. Thailand also needs to disperse more economic activity to secondary cities, he said.

Energy dependence presents a separate vulnerability. Dupoizat noted that Thailand imports most of its fuel, while solar power accounts for only around 5% of electricity generation. Diversifying both energy sources and the electricity-generation mix would strengthen resilience to future risks.

He does not view geopolitical tensions solely as a threat to Thailand. He also sees opportunities that can help the country benefit from foreign investment across economic cycles, and pointed to ASEAN’s stronger shared growth and prosperity compared with many other regions.

“Geopolitical risk, therefore, is not necessarily the area we should be most concerned about for Thailand. What we really need to focus on is how to make growth inclusive and sustainable.”

Dupoizat sees that the test extends beyond the rate of GDP growth to the kind of growth Thailand achieves.

“What matters is the quality of growth and the breadth of that growth — how widely the benefits of growth can be shared.”

Source: Bangkokbiznews