Thai foreign direct investment surges by 143 percent

Building on their impressive domestic success, direct foreign investment by Thai businesses surged in 2015, totaling nearly $200 million from January through September, a year-on-year increase of 143 percent as Thai funds helped fuel growth in Indonesia, Myanmar, Vet Nam, Cambodia and several European countries.

Many of the Thai investments were used for business acquisitions or to set up factories. Indonesia attracted the most investment as Thai businesses displayed their eagerness to establish footholds in the largest market in the 10-member Association of Southeast Asian Nations (ASEAN). Indonesia has a population of nearly 260 million and has been registering impressive economic growth in recent years. It is also a source of a wealth of raw materials sought after by Thai businesses.

Thai foreign direct investment in the region should continue to climb now that barriers to investment are falling with the recent launch of the ASEAN Economic Community, a free trade and investment zone with a total population of over 620 million. Thailand has long been a significant investor in its immediate neighboring countries, and that trend should also strengthen under the AEC.

Not all of Thailand’s foreign direct investment was confined, however, to the region. Several large firms have also been entering the European market, such as Singha Corporation and Minor International, both of which recently purchased European hotel chains.

The trend of rising Thai foreign direct investment is a testament to the financial strength and business acumen of the Thai corporate sector. Nearly two decades after the 1997 financial crisis savaged many firms and forced them to close or sell off non-core assets, many Thai companies have rebuilt their war chests and are in an expansionary mode. Coupled with muted growth at home during the past three years, the stage has been set for Thai investments to move beyond the borders of the Kingdom.

“Thailand can’t rely on exports alone. We need to invest to bring in revenue from aboard as well,” said Ministry of Commerce spokesperson Pimchanok Wornkorporn.

In fact, Ministry of Commerce officials have said that increased investments in neighboring countries is one factor causing a lower volume of Thai exports, as some Thai companies are now manufacturing across the border and shipping from there.

Cambodia was the second most popular destination for Thai foreign direct investment, and Myanmar, Laos and Viet Nam also garnered significant shares. With Thailand firmly among the ranks of middle-income countries, some investors have been attracted to neighboring lands by their cheap labor.

Indirectly, Thai foreign direct investments in neighboring countries should eventually have some effect on lessening the problem of human trafficking, as many of the victims come from neighboring countries to Thailand in search of jobs and better pay.

Photo: thinkasiainvestthailand.com