CEO, Kreston GSiA Thailand
With over 20 years of professional experience in international business and organizational development in France and Thailand, Manuel possesses strong skills in business implementation and has managed operational management as part of an International Transfer Program with one of the world’s largest companies in Thailand and SEA. Additionally, he has experience working with international clients, giving recommendations, and supporting foreign investors in doing business in Thailand. Manuel is an expert in the logistics industry and is qualified in administrative communication, business implementation, business optimization, and safety and security.
Investing in Thailand
April 17, 2023
Thailand is the 8th largest economy in Asia and the 2nd largest economy in Southeast Asia, according to the World Bank, with a population of 66.1 million, stands at the heart of the ASEAN Economic Community, a 10-nation Southeast Asian common market of 663.9 million consumers.
Thanks to its strategic position in Southeast Asia, Thailand serves as a gateway to other destinations. In addition to its excellent connections with the fast-growing neighbouring CLMV (Cambodia, Laos, Myanmar and Vietnam) countries, the powerhouse economies of nearby China and India are also within easy reach.
Excellent digital connectivity, a highly skilled labour force and an excellent standard of living, plus the Thai government’s, comprehensive policies and investment incentives, including the Foreign Business Act of Thailand make Thailand an attractive prospect for foreign investment.
We spoke to Manuel Olliver, CEO at Kreston GSiA Thailand to learn more about doing business in Thailand.
Why invest in Thailand?
Thailand has become a hub for Chinese investors due to its geostrategic position in the ASEAN free trade bloc, offering access to China and India. Chinese investments in digital economies, crypto, fintech, blockchain, AI, and healthcare have brought significant funding to Thailand. Moreover, Thailand’s extensive infrastructure connectivity plans, including free trade zones and ASEAN integration, have made it an attractive destination for foreign investment. China’s investments in Thailand offer valuable insights into new opportunities for foreign investors looking to invest in the country.
How has the Thailand economy changed in the last 12 months?
The economy of Thailand is dependent on exports, which in 2019 accounted for about 60% of the country’s GDP. In 2022, the economy was projected to expand by 3.4% vs 3.6% only in 2023, reflecting a faster-than-expected decline in global demand.
But the tourism sector recovery, and private consumption, will remain the major drivers of growth. The recent reopening of China to international travel in January 2023 should give a big boost to the recovery of tourism after very few visitors in 2021 and 2022 at less than 30% of the pre-pandemic figures.
For 2023, Thailand now expects between 25 and 30 million foreign visitors, meaning about 70% of the pre-pandemic figures.
What advice are you giving investors to secure growth in the next 12 months?
Thailand has been a consistent recipient of Chinese investment for some time, and its geostrategic position as the heart of the ASEAN free trade bloc, with free trade access also to China and India, has made it a hub for many Chinese investors.
This has manifested itself primarily in the drive to digital economies and is building Thailand up both as a connectivity hub, and as a key node for Asia in new tech. Plenty of money is being both raised and made via Chinese investments into various Thai-based initiatives in crypto, fintech, blockchain, and AI, as well as health care including medical tourism.
This, coupled with extensive infrastructure connectivity plans uniting Thailand to ASEAN, and other export markets, and the development of numerous free trade zones (FTZ) is seeing the country take on a highly competitive global role for foreign investment.
So, following where China has been spending and investing its capital can provide foreign investment clues and reveal new opportunities in recipient countries.
What tax or funding incentives have been attracting new business into the country?
Thailand’s Board of Investment (BOI) is the main government agency responsible for promoting foreign investment in the country, offering incentives, ranging from corporate income tax exemption to import duty exemptions on raw materials on businesses that are 100 per cent foreign-owned.
Key investment areas covered by the BOI;
• Agriculture and agricultural products;
• Chemicals, paper, and plastics;
• Services and public utilities;
• Light industry;
• Technology and development;
• Metal products, machinery, and transport equipment; and
• Mining, ceramics, and basic metals.
Also, the government’s recent approval of a capital gains tax waiver for startup investors is expected to drive funding for local startups up to 320 billion baht over four years and create more than 400,000 jobs, says the Digital Council of Thailand (DCT).
By 2026, the measure is expected to increase the funding for startups to reach 320 billion baht and create more than 400,000 jobs either through direct or indirect employment, which would help strengthen the country’s economic system.
Local and foreign corporate venture capital (CVC) funds and foreign private equity trusts (PE trusts) will see income tax waived for profits derived from the sale of shares in local startups. Investors will see income tax waived for profits from the sale of shares in Thai CVC funds and Thai PE trusts, both of which invest in local startups. Startups linked with targeted industries must be certified by designated organizations, such as the National Innovation Agency and National Science and Technology Development Agency.
The income tax waiver incentive lasts until June 2032.
What investment trends do you predict for the future?
Thailand aspires to graduate from an upper middle-income to a high-income country by 2037, along with improved security and inclusive and sustainable development, as outlined in the 20-year national strategy (2018-2037). With its recently introduced Thailand 4.0 vision, the government would like to achieve its 20-year strategy through economic upgrading toward a value-based, innovation-driven economy away from the production of commodities and low value-added manufacturing.
Thailand’s vision will not be achievable without progress towards environmental sustainability and socially inclusive growth benefiting all parts of society and regions.
The Thailand 4.0 plan focuses on ten target industries, which can be divided into two groups. The first group focuses on five existing industrial sectors with the aim to add value through advanced technologies: agriculture and biotechnology; smart electronics; affluent medical and wellness tourism; next-generation automotive; and food for the future. The second group includes five additional growth engines: biofuels and biochemical; digital economy; medical and healthcare; automation and robotics; and aviation and logistics.
Which sectors are doing well and have seen growth?
The industrial and service sectors are the main ones in the Thai gross domestic product, with the former accounting for 39.2% of GDP. Thailand’s agricultural sector produces 8.4% of GDP, lower than the trade and logistics, and communications sectors, which account for 13.4% and 9.8% of GDP respectively. At Kreston GSiA Thailand, we also noted that our clients in the manufacturing and logistics sectors are recovering fast in this post-pandemic period.
Thailand’s global investment market
As a regional economic centre, with all its numerous advantages, it should come as no surprise that Thailand has become the second home for numerous global MNEs, and a supply chain hub for major industries. These foreign investment activities have been enabled by streamlining government legislation, a growing domestic market, and access to resources such as finance and technical knowledge.
Finding a Kreston Global firm in Thailand
Please visit our “Doing Business in Thailand” for general advice on setting up a company in Thailand.
If you would like to find out more about setting up a business in Thailand, please get in touch or fill out the enquiry form below and one of the team will contact you.