Foreign investors ranging from global giants to fast-growing start-ups are focusing on Thailand as it races to transform itself into Thailand 4.0, the region’s innovation and knowledge-based digital hub.
Foreign companies specializing in such advanced technologies as aerospace, artificial intelligence, biosciences, electric vehicles, fintech, robotics and production of sophisticated medical devices are taking advantage of a highly-skilled workforce, rapidly-improving infrastructure and lavish government incentives to move their operations to Thailand.
In an early indicator of this trend, the latest annual ranking of the world’s most competitive economies published in May 2019 by a Switzerland-based IMD Business School shows Thailand has leapt five places to number 25 globally, due in large part to a boost in foreign direct investment and productivity.
ASEAN’s 660 million consumers
A key factor in Thailand’s attraction to investors is its extraordinarily strategic location. With a population of 69 million, it is the heart of the ASEAN Economic Community, a 10-nation Southeast Asian common market of 660 million consumers.
Equally importantly, Thailand forms a natural trade route between ASEAN countries, China and the Indian subcontinent. Now, new high-speed rail lines and roads under construction across Thailand are making the Kingdom the crossroads of a region of 3.4 billion inhabitants – or half the world’s population.
In Thailand’s capital, Bangkok, the government and private investors plan to spend more than $45 billion developing environmentally sustainable smart cities, futuristic digital technology parks, fast rail links, three sea ports and other facilities.
One of the jewels in the EEC’s crown will be U-Tapao international airport, which will be expanded and linked by high-speed train to Bangkok’s two international airports, reinforcing Thailand’s status as an aviation and aerospace hub.
The ambitious push into the digital economy is known by Thais as Thailand 4.0 because it is their fourth industrial revolution.
Rapid industrialization in the country lifted living standards markedly. Gross domestic product per capita has more than tripled since 2000, according to the World Bank. But to avoid the so-called middle-income trap and achieve developed nation status within 20 years, the Thai government in 2015 set about reinventing the economy yet again under the banner of Thailand 4.0.
Its aims to help grow industries of the future. The government seeks to sharply increase research and development expenditure.
Already, it has achieved notable success, with R&D spending doubling to 1 per cent of GDP in the five years to 2017, according to Office of the National Higher Education, Science, Research and Innovation Policy Council. Now, Thailand is targeting a further increase to 1.5 per cent by 2021.
Tax breaks and smart visas
To attract the most innovative companies, Thailand, via its Board of Investment, is offering an array of incentives, including tax breaks of up to 13 years and renewable smart visas of up to four years for international talent, investors and their families.
Simultaneously, Thailand aims to boost its domestic talent pool by raising education standards across the spectrum, from top research institutions to vocational schools. In total, some 475,000 new jobs are expected to be created in the EEC over the next four years, with just under half of them requiring a bachelor’s degree or higher and the rest needing vocational skills.
Through Thailand 4.0, the country not only hopes to transform itself into a developed nation, but also reduce income disparities by lifting living standards in rural areas. One such initiative: using the digital economy to create 20,000 so-called “smart farmers”.
The Thailand 4.0 targets have set a formidably high bar. But when announcing an investment by China-based, New York-listed e-commerce giant last year, the company’s founder stated that he believed Thailand could achieve its goals.