Thailand is on course to escape the middle-income trap by changing from an export-reliant country to a self-reliant one whose economy is supported by domestic consumption, says the Japan External Trade Organization (Jetro).
But to achieve the goal, Thailand needs more stimulus measures and a decentralisation of economic activity to local areas.
The newly appointed president of Jetro, Hiroki Mitsumata, said the group would continue to play a supporting role in Thailand to strengthen its industrial competitiveness, stimulate the local economy and enter new markets overseas.
Mr Mitsumata says Japanese firms are upbeat on the economy in the second half.
Mr Mitsumata referred to a survey by the Japanese Chamber of Commerce, Bangkok of Japanese businesses that predicted an improved Thai economy in the second half of the year after a lacklustre first half.
To stimulate the economy and attract more investment in the second half, Mr Mitsumata said the government would have to adjust methods to support investment amid a changing environment.
"For instance, Japanese investment in Thailand has changed from manufacturing industries in the past to the service sector," he said. "So the government's supporting policy should also be changed to match the current situation."
The Jetro president said Thailand should also pay attention to the Trans-Pacific Partnership (TPP) trade bloc led by the US.
"The TPP is one of the changes making some Japanese investors choose to invest in Vietnam instead of Thailand," Mr Mitsumata said, adding that Singapore, Malaysia and Brunei are also TPP members.
Jetro respects the sovereignty and decision-making of the Thai government and the Thai people, he said. But the group is willing to provide more information about TPP to the government if needed, since Japan is also a member of the bloc.
As it stands, Thailand remains a key country for long-term Japanese investment, Mr Mitsumata said.
He said the country should keep its edge as the centre of the Asean region and remain an attractive place for all investors.