Thailand overhauls factory output index as electronics gain weight

Thai economic agencies are overhauling the country’s Manufacturing Production Index (MPI) to better reflect actual factory output, with greater weight expected for electronics and data from newly established factories added to the calculation.

The move comes as outdated production data has drawn scrutiny amid a US Section 301 investigation into structural excess capacity in Thailand’s manufacturing sector.

The Office of the US Trade Representative (USTR) launched the investigation in March under Section 301 of the Trade Act of 1974, covering Thailand and 15 other economies. For Thailand, concerns cited by Thai economic authorities include trade surpluses in automobiles and auto parts, machinery and components, and rubber products, alongside manufacturing capacity utilisation of below 60% for two consecutive years.

Only about one-third of Thai industries have returned to pre-Covid-19 production levels, while the three sectors have recorded significant trade surpluses in global markets, according to the information reviewed by Thai agencies.

Officials have become increasingly concerned that the existing MPI, compiled by the Ministry of Industry, no longer provides an accurate picture of Thailand’s changing manufacturing structure because it relies partly on an ageing sample of factories.

Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas has instructed economic agencies to work together to improve the accuracy of the data. 

Five relevant agencies have agreed to move factory data reporting from a voluntary arrangement towards compulsory reporting. Factories that fail to submit required information could face action involving their factory operating licences, known as Ror Ngor 4, to ensure the government has sufficiently comprehensive data for economic analysis.

MPI base year to move to 2024

Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), said that in the short term the MPI base year would be updated from 2021 to 2024.

The Office of Industrial Economics (OIE) will take the lead in explaining the revised MPI methodology before submitting the updated information to the NESDC for use in gross domestic product calculations.

Thailand also plans to move towards Chain Volume Measures (CVM), a chain-linked volume methodology widely used internationally, including in Malaysia and Singapore, to make economic data more comprehensive, current and consistent with international standards.

New factories missing from economic picture

Danucha said Thailand’s industrial structure had changed significantly over the past four to five years, particularly with growing investment in new industries such as electronics and electric vehicles (EVs).

Officials began noticing anomalies in economic data in 2024, when export values were rising strongly but neither the MPI nor the capacity utilisation rate increased in line with exports.

The discrepancy also contributed to overseas concerns that Thailand might be serving as a transshipment route for goods rather than producing them domestically, with the value involved estimated at hundreds of billions of baht.

A comparison between the Customs Department’s exporter database and the Department of Industrial Works’ factory database subsequently identified a major gap: many large factories were not included in the OIE sample used to calculate the MPI.

Officials said this had prevented the index from fully reflecting actual production and had also contributed to unusually high inventory figures being reported for an extended period.

Electronics to gain greater representation

Supakit Boonsiri, director-general of the Office of Industrial Economics, told Krungthep Turakij that the latest MPI revision is expected to be completed within September 2026. His title is confirmed by the OIE.

The overhaul will focus particularly on electronics because the sector has undergone rapid changes in products and technology and plays an increasingly important role in Thai exports and investment.

The revision will cover two main areas.

First, three to four new product categories will be added to the index to reflect products that have emerged from recent changes in the electronics industry.

Second, data from newly established factories will be incorporated into the database used to compile the index.

The revised structure cannot yet be formally adopted, however, because it must first be considered and approved by the relevant committees.

The OIE is due to convene a working-group meeting to examine the changes in detail before submitting the proposal to the MPI committee for approval.

The MPI is a key monthly economic indicator compiled by the OIE to measure production across different manufacturing categories. It is used by government agencies, businesses and economic analysts to assess trends in the manufacturing sector and support policy and investment decisions.

Previous overhaul added 13 products

The Ministry of Industry said the OIE last made a significant structural revision to the MPI in 2017.

That revision added 13 products considered increasingly important to the economy: coconut milk, coffee, table condiments, tea beverages, ceramic tableware, metal cans, electronic components, printed circuit boards (PCBs), white spirits, blended spirits, electric motors, blood-transfusion and intravenous-fluid sets, syringes, and medical instruments and equipment.

Four older product categories were removed: kiln-dried timber; sawn, planed and sliced wood; televisions; and artificial flowers.

The changes were designed to make the index reflect industrial conditions at the time, but continued shifts in Thailand’s manufacturing base have prompted another overhaul.

Factory sample no longer reflects production structure

A Finance Ministry report said the Fiscal Policy Office (FPO) had also joined discussions on revising the MPI after finding that manufacturing information drawn from a sample of around 2,000 companies had failed to capture major changes in production over the past three years.

The FPO found that the existing data did not sufficiently include factories producing for export in several fast-growing industries.

These include EV plants, printed circuit board factories, semiconductor production and battery manufacturing, as well as factories producing important components for the artificial intelligence supply chain, including optical data transmission and reception equipment.

Some of these factories produce and export goods worth more than THB100 billion annually, according to the report.

Economic agencies also believe the weight assigned to individual industries in the MPI should be revised.

The automotive sector has historically carried a relatively high weighting, but changes in vehicle production mean the existing structure may no longer accurately represent Thailand’s current manufacturing base.

Giving greater representation to electronics and incorporating factories that were previously missing from the sample are therefore expected to change both the structure and direction of the MPI.

The revision comes while Thailand remains among the economies under a US Section 301 investigation into alleged structural excess capacity and production. USTR has said such investigations examine whether policies or practices contribute to persistent trade surpluses, overproduction or underused manufacturing capacity and whether they burden or restrict US commerce.

Source: Krungthep Turakij