As it takes on the mantle of chair of the ASEAN in 2019, the Kingdom of Thailand has maintained an extremely favourable business environment.
The IMD World Competitiveness Centre (a Swiss think tank) ranks Thailand at 25th position in its 2019 index (consisting of 63 countries) – only Singapore and Malaysia are placed ahead of it within the ASEAN. Thailand is also among the pioneering countries in the ASEAN to have a dedicated economic plan for the adoption of fourth-generation technology. Moreover, the government of Thailand has operated favourable policy towards foreign investors – providing them with incentives to ramp up the country’s industrial base. As a result, the Economist Intelligence Unit estimates that the stock of FDI stood at the equivalent of 50% of GDP at end-2018—one of the highest levels in ASEAN. All this puts the kingdom in an excellent position to foster inclusive technology-driven development across the entire country.
Concurrently, 2019 will also be marked as the “Thailand Investment Year” – especially aimed at encouraging the private sector to invest in targeted industries the country is keen to develop over the long term. The particular focus this year will be on activities that will concentrate on the use of advanced technology and the development of the knowledge-based industry. These will propel new economic growth through the transformation of “comparative advantage” into “competitive advantage” in providing the continued support to the economy’s competitiveness globally. Alongside existing incentives, “Thailand Investment Year” will provide a 50% reduction of corporate income tax for three years on top of the basic package for large investment projects (≥Bt1bn) in targeted industries. This special measure will also complement the country’s long term strategic focus on the use of fourth generation technology in propelling growth and development across the region.
Propelling growth through 4.0 technology and connectivity
Thailand 4.0″ is a visionary scheme that aims to transform the country into a valued-based and innovation-driven economy. The Eastern Economic Corridor (EEC) – the centre of Thailand’s growth in technology and innovation located across the Chachoengsao, Chonburi and Rayong provinces – will spearhead the Thailand 4.0 strategy and serve as the base for this technological transformation. Within the EEC, the government expects to develop high-tech industries over the next decade namely next-generation automotive, smart electronics, biofuel and biochemical, food for the future, the digital economy, medical hub, automation and robotics, aerospace, agricultural and biotechnology, and affluent medical and wellness tourism.
Private sector firms looking to invest in the EEC are provided with a wide-range and attractive package of incentives. In particular, firms that commit to investment within the targeted industries located in the designated areas in the EEC will enjoy a maximum of up to 13 years of corporate income tax (CIT) exemption. Investment projects applying for incentives under the EEC scheme are required to establish close cooperation with educational and research institutions. This means investors in the targeted industries located in the EEC are being encouraged to form collaborations with educational institutes to develop human resource and thereby ensure sustainable, long term progress and the success of “Thailand 4.0”.
Infrastructure development, particularly in the transportation network and business ecosystems such as Digital Park Thailand (EECd), Eastern Economic Corridor of Innovation (EECi) and Eastern Airport City (EECa), forms a cornerstone for the EEC. Progress on this front has been significant. The ongoing expansion of U-Tapao Airport, predominantly servicing the cities of Rayong and Pattaya, will offer major airlines a new and convenient destination within the EEC, as well as Bangkok and its vicinities. Other connections to the EEC will be through the Map Ta Phut Industrial Port (with a phase III expansion plan in the pipeline); the Laem Chabang Deep Sea Port (with a phase III expansion plan in place to better equip it to handle international cargos), and the development of a high-speed rail linking three international airports. All these projects are in the final stages of being awarded and are slated to be completed in 2021-25. These will not only enhance Thailand’s internal connectivity but will also complement its strategic location as the hub and gateway for ASEAN.
Geography and industry – Thailand’s competitive advantage
Located at the centre of the so-called ASEAN “mainland”, Thailand strategically straddles access to the region’s road networks as well as air and maritime routes. The kingdom’s geographic centrality contributes to its importance as a business hub and gateway for the ASEAN member countries. But Thailand cannot rely solely on its geographical advantage must position itself on key strategies to become one of Asia’s business centres by integrating with ASEAN member countries and connecting Thailand to the Global Community. Thailand continues to build seamless connectivity, with special emphasis on integrated infrastructure and logistics. Thailand’s goal, over the medium to long term is to deepen linkages with neighbouring Cambodia, Laos, Myanmar and Vietnam – thereby fostering growth across the greater Mekong Sub-region. Thailand is not only the ideal gateway to ASEAN but also the springboard to Asian economic powerhouses such as China and India – both of which are closely located to the kingdom to invest into the economic growth of the ASEAN member countries.
In the decades to come, Asia’s economies are poised to take huge strides and have more prominent roles in the world. The ASEAN member countries will continue to offer up rapid economic growth. Global, economic, political, social, and ecological changes will foregather both challenges and opportunities for Thailand and other members of the ASEAN. Distinguished by its abundant resources, its strategic location, and its visionary development strategy, Thailand will offer attractive opportunities for cutting edge business and under the Thailand 4.0 initiatives thereby becomes constituent in unleashing the region development potential by creating a value-based economy in an inclusive and sustainable fashion.
