Foreign Direct Investment (FDI) is a category of cross-border investments where an investor from one country establishes a lasting interest in and retains significant influence over an enterprise in another country. This type of investment involves capital flows from one country to another, granting foreign investors extensive ownership stakes in domestic companies and assets. Foreign investment denotes that foreigners have an active role in management as a part of their investment or an equity stake large enough to enable the foreign investor to influence business strategies.

Thailand is considered a ‘newly industrialised country’ with a GDP of $1.517 trillion at the end of 2023, making it the 9th largest economy in Asia.¹ Thailand has been and continues to be one of the most successful countries in the region in attracting FDI due to its investor-friendly environment.² Since its establishment in 1966, the Office of the Board of Investment (BOI) has been crucial in promoting domestic and international investment in Thailand.

Beyond inward investment, Thailand has become one of the largest outward investors in the Association of Southeast Asian Nations (ASEAN), particularly in countries like Cambodia, Laos, Myanmar, and Vietnam, and investing in energy-related projects such as hydropower projects.

Law and Regulations

The Foreign Business Act (FBA) B.E. 2542 (1999) governs most investment activities by non-Thai nationals. On September 14, 2021, Thailand’s Cabinet passed a resolution introducing immigration, tax, and land ownership incentives aimed at attracting foreign investors, wealthy pensioners, professionals who can work remotely from Thailand and highly skilled professionals. However, the Foreign Business Act prescribes a wide range of businesses that may not be conducted by foreigners without additional licences or exemptions. These include banking, insurance, and telecommunications, which are reserved for Thai nationals, limiting foreign ownership to less than 50% of total investment.

Other key laws governing foreign investment are the Foreign/Alien Employment Act B.E. 2551 (2008) and the Investment Promotion Act (1977). If you are a foreigner intending to work in Thailand, you must comply with the Working of Alien Act B.E. 2551 (2008), which mandates obtaining a work permit from the Department of Employment, Ministry of Labor, unless an exception applies under the Act. Under the Investment Promotion Act B.E. 2520 (1977), the BOI implements investment promotion policies, aimed at attracting and supporting foreign investment, which include both tax and non-tax incentives. Tax incentives feature corporate income tax holidays for specified periods and exemptions from import duties on machinery and raw materials during initial business stages. Non-tax incentives encompass assistance with work permits for expatriate employees, potential permission for foreign ownership of land (typically restricted to Thai nationals), and the opportunity for full foreign ownership in various sectors promoted by the BOI. 

The Industrial Estate Authority of Thailand (IEAT), a state enterprise under the Ministry of Industry, is responsible for developing and establishing industrial estates according to the government’s industrial development policies. It provides accommodation and facilities to assist entrepreneurs and grants special incentives and privileges to industrial operators. IEAT’s one-stop service provides a complete service solution for various needs, including land purchase and lease, factory location recommendations, and the issuance of factory permits.

Main Investors

For every year between 2015 and 2022, Japan was the top investor in Thailand. China was the leading foreign investor in Thailand in 2023, with Singapore in second place and the United States ranked third with 40 projects valued at $2.3 billion. Japan was in fourth place, followed by Taiwan. 2023 also saw a record number of applications for investment recorded by BOI, demonstrating a recovery from the slowdown in investments during the height of the COVID-19 pandemic.

The Public Relations Department of Thailand (PRD), reported that a total of 317 foreign companies received approval to invest in Thailand during the first five months of 2024. For this period Japan was again the top investor with 84 approved projects valuing 40,214 million baht. Singapore, the United States of America (USA), China, and Hong Kong completed the top 5 investors for this period.³

Investment Industries and Sectors

Thailand has seen the benefits of tensions between China and the USA, with China increasingly shifting parts of its supply chain to the country, particularly in the electronics, chemicals, and automotive sectors. This is reflected in the aims of the Thai government which plans to evolve into a base for electric vehicle (EV) production in the region. It has seen investment and plans for investment from car manufacturers such as Germany’s Mercedes and China’s Great Wall Motor.⁴

The Thai government currently prioritises the following industries for investment: bio-circular-green industries, electric vehicles, smart electronics, digital industries, and the creative industries. Thailand has also prioritised investment in these industries within the Eastern Economic Corridor (EEC). The EEC is an investment zone spanning Thailand’s three eastern seaboard provinces – Chachoengsao, Chonburi, and Rayong. Incentives for investing in this region include, tax breaks, regulatory concessions and the offer of high-end infrastructure.

Of the 317 foreign companies recorded as receiving approval for investment in Thailand up to June 2024, 99 of these registered interest in investing in the EEC. 

2023 saw a change in the manner in which BOI recorded investments into the different industries of sectors. Previously investments had been recorded in the following categories: 

• Agriculture and agriculture projects
• Minerals, ceramics and basic metals
• Light industry
• Metal products, machinery and transportation equipment
• Electrical appliances and electronics
• Chemicals, plastics and paper
• Services and utilities
• Technology and Innovation Development

Whilst in the official data for foreign investment in Thailand released for 2023 the industries and sectors are now allocated in the following categories:

• Agriculture, food and Biotechnology
• Medical
• Machinery and vehicles
• Electrical appliances and Electronics
• Metal and materials industry
• Chemicals and petrochemicals
• Utilities
• Digital
• Creative industries
• High value services

Special Economic Zones

Thailand’s Special Economic Zones (SEZs) are regions recently designated by the Special Economic Zone Development Board of the Thai Government. The establishment of SEZs along the border regions of Thailand was an idea introduced by the Asian Development Bank in 1998, as a strategy of promoting the use of transboundary economic corridors. This led to Thailand formulating Border Economic Development Action Plans to transform existing transportation corridors in the region into genuine economic corridors.

In 2013, the Royal Thai Cabinet commissioned a study to investigate the feasibility of establishing SEZs in Thailand, followed by an announcement by the National Council for Peace and Order of a new Policy on Special Economic Development Zones to link border cities to other cities in the ASEAN community. As such, 10 SEZs were announced to be developed across two phases.

One such SEZ, the Eastern Economic Corridor SEZ (also known as the Eastern Special Development Zone), located in eastern Thailand across three provinces, was established on the 17th January 2017 with a budget of 1.5 trillion baht (US$43 billion) over its first five years. This was followed by a further 1.35 trillion baht ($44 billion) plan to develop the Eastern Economic Corridor into a regional financial hub and a world-class smart city by 2037 in December 2022.

A new high-speed rail line is planned to serve the Eastern Economic Corridor with the planned Don Mueang–Suvarnabhumi–U-Tapao high-speed railway designed to connect Don Mueang International Airport, Suvarnabhumi Airport and U-Tapao International Airport. This line is planned to be opened in 2029 and will be operated by the Asia Era One Company Limited, a vehicle for a consortium of companies – Charoen Pokphand Group Company, Limited and partners Ch. Karnchang PLC., Bangkok Expressway and Metro PLC., Italian-Thai Development PLC. and China Railway Construction Corporation Limited who beat Bangkok Expressway and Metro to the contract.

 

Map of SEZs in Thailand. Map created by  Open Development Mekong

Related to this page

• Foreign Investment in Cambodia
• Foreign Direct Investment in Laos
• Foreign Direct Investment in Myanmar
• Foreign Direct Investment in Vietnam
• Infrastructure Financiers
• Special Economic Zones