FDI drives Thailand investments to $12 billion, growth in electronics, medical

12, Aug. 2021

Prime Minister Prayut Chan-o-cha, who began his eighth year in office on July 16, is steering Thailand through its worst economic crisis and a COVID-19 resurgence that threatens the reopening of the country to tourism in October. (Photo: Thailand BOI)
Prime Minister Prayut Chan-o-cha, who began his eighth year in office on July 16, is steering Thailand through its worst economic crisis and a COVID-19 resurgence that threatens the reopening of the country to tourism in October. (Photo: Thailand BOI)

THAILAND, NNA - Thailand's investment climate has improved remarkably so far this year with the combined value of projects soaring to $12 billion, led by Japanese firms.

In the first six months of 2021, Thailand received 14 percent more investment applications with a total value increasing by 158 percent from a year ago.

The surge was led by rising foreign direct investment (FDI) applications, sustained growth in target industries such as the electronics and medical sectors, as well as in power generation, reported Thailand Board of Investment (BOI) on August 9.

From January to June, local and foreign investors filed a total of 801 applications worth a combined value of 386.2 billion baht ($12 billion), up from 704 projects worth 149.8 billion baht in the first half of 2020.

BOI secretary general Duangjai Asawachintachit, said, “We feel encouraged by the fact that so many foreign investors, including many new ones chose to invest in Thailand at a time when the global investment environment remains challenging due to the continued impact of the Covid-19 pandemic.”

She added, “That demonstrates investors’ confidence in Thailand’s strengths in key industries, such as electronics, medical supplies and biotech.”

While the number of FDI project applications dropped 6 percent to 403 projects, their total value almost quadrupled to 278.7 billion baht, compared to 430 projects worth 71.9 billion baht a year ago.

Japanese firms led by 87 projects worth 42.8 billion baht, followed by investments from the U.S. with 18 costing 24.1 billion baht.

The third biggest group of investors came from China with 63 projects valued at 18.6 billion baht.

FDI applications accounted for half the number of investment projects and 72 percent of total investment value.

The electrical appliances and electronics industry once again attracted the most interest among target sectors with 77 projects worth 61 billion baht, 136 percent higher than a year earlier.

The medical sector is the second best performing with 47 projects costing 43 billion baht, more than triple that of the same period last year.

The petrochemicals and chemicals sector came in third with 43 projects worth 28.2 billion baht, up six-fold from a year ago.

The agriculture and food processing sector saw 97 applications worth 23.2 billion baht, up 78 percent on year.

The biotechnology sector garnered 10 projects worth 20.7 billion baht, up nine times, driven a large bioplastics investment application from the U.S.

Thailand's 12 target sectors received a total of 431 applications, with a total value of 206.9 billion baht, over two and a half times more.

The power generation sector saw a total of 198 applications, including some large projects, with a combined investment value of 120.8 billion baht.

Duangjai said, “The continued buildup of the power generation infrastructure, mostly based on the use of renewable energy and clean natural gas, is an important supporting factor for investment, ensuring stable power supply for the other sectors."

The booming Eastern Economic Corridor, which covers the provinces of Chonburi, Rayong and Chachoengsao, attracted 232 projects with a combined value of 126.6 billion baht, a 54 percent increase on year.

The first half of the year also saw a total of 83 applications for the promotion incentives offered by the BOI under a productivity improvement scheme.

The projects, worth a total of 12.3 billion baht, focused mainly on energy savings, the use of renewable energy and other environmental protection measures, as well as on machinery upgrades, and research and development.

In June, the Board of Investment approved measures to encourage more investment in research and development (R&D).

It also offered better incentives to attract investment in the growing semiconductor, digital and packaging industries.

The Thai economy is expected to grow 0.7 percent in 2021, and 3.7 percent in 2022, according to the country's central bank.

The projections are lower than previous estimates, adjusted due to the sharper decline in private consumption and foreign tourist figures expected to be significantly lower next year, said the Bank of Thailand (BOT) on August 4.

The country's hopes of reopening to foreign tourists in October have been threatened by a resurgence in the spread of COVID-19 virus and a slow vaccination drive.

While the labor market would be more fragile, particularly the services sector and the self-employed, the economy would be supported by higher public expenditure, said the monetary policy committee of BOT in a statement.

It said, "Downside risks to the economic outlook remained significant from the possibility of the outbreak situation in Thailand and other countries becoming more severe. The committee would closely monitor these risks which would affect private consumption as well as income and employment in addition to impacts on foreign tourist figures."

The most pressing need for the country now is to do its utmost to contain the spread of the COVID-19 infections and the distribution of vaccines to "restore confidence and support the recovery in economic activities and income," said the committee.

It added, "Fiscal and financial measures must be expedited to assist affected groups in a more targeted and timely manner in line with the current situation."