Experts urge Thailand to derive more value from rising investment

Experts at a Bangkokbiznews roundtable have urged Thailand to ensure that the latest wave of investment creates deeper links with domestic supply chains, transfers technology and supports higher-value industries as the country faces sharper regional competition.

Speakers at “KT Dialogue: New Horizon – Thailand Investment Play” on Thursday (August 27) argued that attracting capital alone would no longer be enough. Thailand, they noted, must turn investment into stronger local capabilities, skilled employment and technologies that can compete globally.

From cost efficiency to security-first investment

Nopparuj Chindasombatcharoen, an industrial policy scholar at the Thailand Development Research Institute (TDRI), described the industrial landscape as being in a genuine transition, with the internal-combustion automotive industry and other established supply chains facing pressure to adapt.

Thailand has continued to attract newer industries, including electric vehicles (EVs) and advanced printed circuit boards that can support AI-related applications. However, Nopparuj argued that the conditions surrounding today’s investment differ sharply from those during the period when Japanese manufacturers expanded in Thailand.

Investment relocation is now driven more by “security first” than “efficiency first”, particularly for Chinese companies.

“When Japanese companies relocated production to Thailand, our costs were genuinely lower than those in Japan. But today, manufacturing in China is actually still cheaper than manufacturing in Thailand,” he explained.

Although Thailand has numerous free trade agreements, parts can still be imported rather than sourced locally. As a result, new foreign investment may not automatically create the extensive domestic supplier networks that developed during the growth of Thailand’s internal-combustion automotive industry.

Nopparuj urged policymakers to set clearer goals for connecting incoming investment with Thai supply chains while developing workers for technology industries and supporting home-grown technology capable of competing overseas.

“To become a high-income country, I think one important condition is that we must have technological products of our own that can compete in global markets,” he said.

He identified medical devices as one potential transition industry. Thailand imports nearly THB100 billion worth of medical products a year, while manufacturers in automotive parts, plastics, textiles and rubber may have capabilities that could be adapted to the sector.

The challenge, he argued, is to give existing producers enough confidence that investment in new capabilities will be matched by a viable market.

Thailand must compete on value, not cost

Steve Yang, automotive industry client group leader at PwC Thailand, noted that the investment case had changed substantially over the 14 years he had spent in the country.

Previously, foreign investors were attracted by cost efficiency, competitiveness and established supply chains. Chinese investors also used Thailand as an export base when some products faced US anti-dumping measures.

Today, Yang estimated that manufacturing costs in Thailand are roughly 15-20% higher than in China, while investors are increasingly concerned about shortages of skilled labour, particularly in the Eastern Economic Corridor.

Regional rivals have also sharpened their strategies. Indonesia has used natural resources to attract EV and battery investment, Malaysia has developed a semiconductor strategy, and Vietnam benefits from its location and trade agreement with the European Union (EU).

“That’s why they are becoming very competitive and gaining a competitive advantage over Thailand, particularly from a cost perspective,” he said.

Yang also highlighted Thailand’s shortage of skilled workers, particularly in IT engineering and automation, noting that Thailand has significantly fewer IT graduates than Vietnam.

He argued that Thailand should reposition itself as a higher-value manufacturing centre and move from being the “Detroit of Asia” towards becoming an EV innovation hub.

The government’s EV 3.0 and EV 3.5 policies have attracted Chinese manufacturers and assembly plants, but he argued that local value remains limited compared with the supplier networks built around Japanese carmakers decades ago.

“I don’t think Thailand wants to be just a showroom for Chinese cars. We want to be the innovation hub for EVs,” Yang noted, calling for incentives that reward high-value components, technology transfer and research and development.

He also urged a nationality-neutral approach in which investors bringing greater value to Thailand receive greater benefits.

Stability, investment and an economic captain

Narongchai Akrasanee, a former commerce minister and chairman of the board and independent director of MFC Asset Management, drew on Thailand’s economic history to argue that major periods of reform and investment had depended on clear economic leadership and policy continuity.

For 2026, Narongchai argued that Thailand must maintain economic stability, accelerate private investment and ensure public investment is efficient. He also called for strategic projects, greater use of public-private partnerships and government assets, and clearer action against corruption.

Security, he added, has become a more important investment consideration than efficiency.

“The point is very simple. If we want investment, there must be a reasonable degree of stability because capital, particularly asset capital, is committed for the long term,” he said.

Narongchai added that Thailand could use negotiations involving the EU and the Organisation for Economic Co-operation and Development as opportunities to reform regulations, public procurement and services while strengthening its position in international supply chains.

Investment rises, but domestic value remains crucial

Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), reported that investment in Thailand had continued to expand and had reached its highest level in four years.

Private investment was expanding beyond data centres into upstream electronics, printed circuit boards and design-related industries that could support the next wave of AI technology and electronics exports.

Danucha stressed that data-centre investment should generate follow-on businesses in cloud services and AI, rather than consume large amounts of public resources, particularly energy, without creating sufficient value for the domestic economy.

“We must try to develop Thai entrepreneurs capable of building their own cloud or AI businesses so that they create added value and genuinely contribute to the economy. Otherwise, incoming investment will not deliver the maximum long-term benefit to the country,” he said.

He also called for Thailand to attract semiconductor manufacturing to produce components and equipment for global demand, which would help strengthen export capacity and generate more income for the country.

Thailand’s second-quarter GDP growth of 1.9% was likely to mark the year’s low point, he noted, exceeding an earlier expectation of 1.5%. Stronger exports and investment contributed to the full-year growth forecast midpoint being raised to about 2.2% from 2.0%.

Actual investment since the start of the year had reached about THB500 billion, with further expansion expected even if momentum slows.

“For the second half of the year, if there are no unexpected shocks — such as a leader of a certain country waking up and posting something on social media that unsettles markets — Thailand should be able to continue growing in line with its target,” he said.

Danucha identified human-capital development as central to the next industrial transition. The NESDC is preparing discussions with the Board of Investment on conditions requiring major global investors that establish operations in Thailand to transfer specialist expertise and knowledge to Thai workers.

With technology advancing rapidly from AI towards quantum technologies, he argued that Thailand must build the skills required for the next phase while continuing to develop its current AI capabilities.

“Accelerating the development of a skilled workforce must begin urgently alongside the country’s ongoing development of AI capabilities, so that Thailand can keep pace with technological change and maintain its competitiveness in the global market,” he concluded.