Thailand’s $5 Billion Investment Expectations from Tech Giants, Tesla, Google And Microsoft; How Thailand Is Emerging As The New Manufacturing Hot Spot For Global Giants

Thailand’s Prime Minister, Srettha Thavisin, has announced that the country is anticipating investments totalling at least $5 billion from Tesla, Google, and Microsoft. 

However, the Prime Minister did not specify whether this $5 billion would be a collective investment or individual contributions from each company, although he disclosed that Tesla is exploring the possibility of establishing an electric vehicle manufacturing facility, while Microsoft and Google are considering data center projects. 

The announcement was made during a press conference in Bangkok after Srettha Thavisin attended the U.N. General Assembly in New York, during which he is said to have had discussions with executives from these companies. 

Thailand’s economy has faced significant challenges and a lower growth projection of 2.8% for the year due to weakened exports, and the anticipated foreign investment is expected to provide a much-needed boost to the economy.

Reportedly, The Prime Minister had also recently engaged in a conversation with Tesla’s CEO, Elon Musk, specifically regarding the electric vehicle sector. 

Thailand is Asia’s fourth-largest automobile assembly hub and has been actively encouraging electric vehicle and battery manufacturers through incentives and tax reductions for local electric vehicle buyers, aiming to maintain its status as a prominent automotive center in the region.

Asia In The SpotLight

Amidst a global economic slowdown, emerging markets in Asia continue to shine as attractive investment destinations; countries like China, India, Indonesia, the Philippines, Thailand, and Vietnam have consistently outperformed other emerging markets over the past two decades and are expected to sustain higher GDP growth compared to advanced economies in the coming years.

However, analysts acknowledge that while these countries present significant investment prospects, they also come with inherent risks; still, in recent years, emerging Asian markets have demonstrated robust economic performance. 

For instance, Vietnam achieved an average annual economic growth rate of 7% in the five years leading up to the pandemic; during the same period, China, India, and the Philippines saw average GDP growth rates of 6.9%, 6.7%, and 6.5%, respectively.

Thus, despite the pandemic-induced contractions, these economies rebounded strongly in 2021, with India achieving 8.9% GDP growth, China at 8.1%, and the Philippines at 5.7%; thus, as a whole, emerging Asia posted an impressive GDP growth rate of 7.3% in 2021.

The International Monetary Fund (IMF) predicts continued solid growth for emerging and developing Asia, forecasting annual GDP growth of 4.6% in 2022, increasing to 5% in 2023. 

In contrast, the United States and the Euro Area are expected to experience comparatively lower growth rates of 2.3% and 1% in 2022 and 2.6% and 1.2% in 2023, respectively.

The fact that several companies seeking to establish manufacturing operations in Asia are increasingly exploring alternatives to China, and the emerging options are Thailand, India, and Malaysia.

There are several factors contributing to this shift, which include rising labour costs in China, increasing complexity due to environmental regulations and labour laws, concerns about intellectual property protection, and geopolitical tensions with neighbouring countries. 

Nexdigm, a management consultancy firm, conducted an analysis that indicates Thailand, India, and Malaysia are the most attractive destinations for such investments; these countries offer favourable business environments, streamlined regulations, and a commitment to attracting international investment.

Factors like the following nations have made notable improvements in various aspects of business setup, including ease of doing business, efficient utility services, a skilled workforce, and competitive tax rates. 

Thailand and South Korea are recognized for their swift business setup processes, taking fewer than ten days. At the same time, costs for power and energy are relatively consistent across most countries; the Philippines stands out for having substantially higher costs, while Malaysia offers the lowest.

All selected countries have been investing in enhancing labour quality and education systems. South Korea tends to have higher labour costs, while India and Vietnam offer lower labour costs. 

Thailand, India, and Malaysia rank highest in Nexdigm’s comparative analysis, demonstrating balanced performance across these critical areas.

Thailand Is Leading The Way

Thailand, in particular, has introduced a comprehensive set of incentives to promote investment and upgrade its economy. These measures, initiated by Thailand’s Board of Investment (BOI) in November 2022, include tax exemptions, the establishment of newly promoted industry categories, and the creation of special investment zones. 

The incentives align with Thailand’s Five-Year Investment Promotion Strategy for 2023 to 2027, which focuses on stimulating investment in innovative, high-tech, and environmentally friendly industries.

The incentives include various aspects, 

1. Investor Retention and Expansion Program: Long-standing investors who have been granted benefits for at least three projects over the last 15 years, with a combined investment value of at least THB 10 billion (US$265 million) and are seeking approval for new or expansion projects worth THB 500 million or more, can receive special incentives such as corporate income tax (CIT) exemptions or reductions.
2. Relocation Program: Companies relocating activities to Thailand, such as regional headquarters, research and development centers, and manufacturing facilities, can benefit from CIT exemptions on revenue from relocated manufacturing activities.
3. New Promoted Industry Categories: Additional industries, particularly focusing on environmentally sustainable sectors like hydrogen vehicles, electric vehicle battery swapping stations, novel food, organic food, hydrogen production, and power generation from hydrogen, will be considered as “promoted industry sectors” eligible for investment promotion policies.
4. Premium Incentives for Advanced Technology: Investments in high-tech industries involving innovation and technology transfer, classified as “A1+” investments, can receive premium incentives, including CIT exemptions for up to 10 to 13 years, depending on the activity.
5. New Special Investment Zones: Four regions in Thailand will be designated as special investment zones, offering various incentives to attract investment, building upon the success of the Eastern Economic Corridor.
6. Ease of Doing Business: A sub-committee will be established to enhance the ease of doing business in Thailand by addressing challenges flagged by investors.

The Last Bit, Thailand’s ambitious plan to attract substantial investments from Tesla, Google, and Microsoft, represents a significant step towards its economic rejuvenation and transformation. 

These investments not only promise to bolster the nation’s economy but also position it as a hub for innovative and sustainable technologies; with carefully crafted incentives but the government, Thailand is emerging as the top destination for investments among the emerging markets. 

Deciding between obtaining Thai citizenship and moving to Thailand as a foreign resident involves considering various factors. Both options have their pros and cons, and the choice depends on your personal circumstances, goals, and preferences. Here are some key considerations for each option:

Obtaining Thai Citizenship:

Pros:

1. Permanent Residency:
   • Thai citizenship provides a more stable and permanent residency status, eliminating the need for visa renewals.
2. Cultural Integration:
   • Thai citizenship allows for deeper cultural integration and a sense of belonging within the local community.
3. Rights and Privileges:
   • As a Thai citizen, you may have certain rights and privileges that are not available to non-citizens, such as the ability to own land without restrictions.
4. Access to Social Services:
   • Thai citizens may have access to a wider range of social services and benefits.

Cons:

1. Strict Criteria:
   • The process for obtaining Thai citizenship can be challenging, and there are strict criteria, including residency requirements, language proficiency, and other conditions.
2. Dual Citizenship Restrictions:
   • Thailand generally does not allow dual citizenship, so acquiring Thai citizenship may require renouncing your current citizenship.

Moving to Thailand as a Foreign Resident:

Pros:

1. Flexibility:
   • Living in Thailand as a foreign resident provides flexibility, especially if you are not ready to commit to the more stringent requirements of obtaining Thai citizenship.
2. Visa Options:
   • Thailand offers various visa options, including retirement visas, work visas, and others, catering to different needs and circumstances.
3. Investment Opportunities:
   • As a foreign resident, you can still invest in property and businesses in Thailand.
4. Retirement Destination:
   • Thailand is a popular retirement destination for expatriates due to its pleasant climate, cost of living, and cultural attractions.

Cons:

1. Visa Renewals:
   • As a foreign resident, you may need to regularly renew your visa, which can involve paperwork and periodic visits to immigration offices.
2. Limited Rights:
   • Foreign residents may not have the same rights and privileges as Thai citizens, such as land ownership restrictions.
3. Cultural Differences:
   • Integration into the local culture might be more limited compared to being a citizen.

Ultimately, the choice between obtaining Thai citizenship and moving as a foreign resident depends on your long-term goals, willingness to meet citizenship criteria, and the level of commitment you want to make to the country. Consulting with legal experts and considering your personal priorities can help you make an informed decision.