The new investment policies encourage foreign investors for sustaining economic growth. The new framework comprises of a blend of merit and non-tax incentives, elimination of zoning limitations applicable to foreign investors, and other benefits. The application of these new investment policies will have a positive result over investment choices for Foreigners. All of these new policies intended to promote investment opportunities for restructuring the Thai economy. It is believed that the investment policy will enable the following investment opportunities in Thailand for Foreigners.
Opening a business in Thailand is the best way to earn professional respect and enjoy the premium business lifestyle in the Kingdom. Thailand has abundant agricultural and natural resources, like rice, timber, and precious and semi-precious stones. Industrial, jewelry, textile, and processed foods production are also some of the growing business segments which make a significant contribution to GDP. To learn more, please check out our article on Top 10 Reasons to start a business in Thailand
Investments in Property
Most of the Foreigners visiting Thailand, staying in the country for some time develop an interest in owning a home, be it a condominium, an apartment, or a landed house. Furthermore, since owning a home is common in these countries, Foreigners coming from countries like the United States, UK, and Europe wish to buy landed home in Thailand. Hence, investing in property markets or real estate is considered a wise decision. There are many reasons to invest in real estate in Thailand:
- The property prices are very attractive, and the property owners can anticipate higher rental incomes as compared to most of the other countries.
- There is no tax on property and no tax on inheritance. Further, the country does not have any confiscatory taxes on assets.
- An investor can expect a minimum return on investment of 6 percent to 8 percent and capital appreciation of 5 percent to 10 percent a year.
- Thailand offers hassle-free and straightforward procedures for buying a property.
Foreign residents are not eligible to own land in the country, however, owning a freehold flat by a foreign national is permitted. Also, a foreign national is allowed to invest in a leasehold property and usually, the tenure is for 30 years and is renewable.
Read More: What is the Real Estate Scenario in Thailand
Investing in Financial Market
Over the last decade, Thailand’s stock market has been performing reasonably well. Thailand is now an export hub with substantial growth and dynamic market conditions.
Blue Chip Thai stocks perform well with stability and growth. Most of the decent picks on the SET (Stock Exchange of Thailand) come from infrastructure, healthcare, and industrial sectors. Thai stocks and bonds have been good investment options, inspire of their comparative below-average performance in the past. The reason behind this theory is that the Thai stocks and bonds have real growth potential.
Investing in various Industries
There are several opportunities for doing business in Thailand. It encompasses different areas depending on which area you prefer. Here are a few major industries and their trends.
ELECTRONIC (Export value in 2019: 32 billion USD)
During the last 20 years, Thailand has manufactured 40% of the world’s hard disk drives, and it continues to be 2nd largest exporter of air conditioners and washing machines. Among the other major export products include integrated circuits, broadcasting equipment, telephones, computers, and many other kinds of electrical appliances and equipment. Around 70% of all output in this sector is bound for export. There are approximately 400 manufacturers in this sector. Notable brands are amongst Seagate, Panasonic, Mitsubishi, Samsung, Sony, Toshiba, and LG.
Growth of 3-5% per year by volume is expected and this expansion will be built on both growing domestic demand as well as export.
AUTOMOTIVE (Export value in 2019: 27.8 billion USD)
Since the mid-1990’s Thailand has belonged to among the top-10 car manufacturers in the world. In the lightweight commercial vehicle sector, Thailand is the 2nd largest in the world (after the USA). The automotive sector contributes nearly 12% of Thailand’s economic growth, employs around 500,000 people. In 2019 Thailand produced more than 2 million units annually with over 80% of all parts made locally. All leading car brands from Japan, USA, Europe, and India, including Toyota, Isuzu, Honda, Mercedes, Mitsubishi, Nissan, BMW, Ford have their major manufacturing facilities in Thailand.
Being one of the car manufacturing hubs in the world, Thailand aims to be also among the leading countries in the electric vehicle (EV) manufacturing sector as well. Most of the major brands are already assembling hybrid models here, and are planning to do the same for full EVs.
In 2020-2022, production is forecast to increase by up to 2% YoY. Some of those who bought cars under the very popular First Car Buyer Scheme 10 years ago (with heavy tax incentives) are expected to replace their vehicles and this is expected to add 300,000-400,000 units to demand (over normal 1 million cars bought domestically). The export volume is expected to stay a little over 1 million cars annually. The upcoming Thai EV regulation, and heavy investment incentives, will also spark new investment in the lithium-ion battery life cycle as well as R&D in EV.
GEM & JEWELRY (Export value in 2019: 16 billion USD)
The gem and jewelry industry has third-highest export value among all manufacturing sectors and employs nearly 1 million workers. Thailand is one of the world’s major centers of colored stone manufacturing and trading, and it’s known for its high-level skills in gemstone enhancement “Heat Treatment” and gemstone cutting.
Thai gems and jewelry are still best known for their superior craftsmanship and design quality. Thailand’s gem and jeweler exports are forecasted to grow by as much as 5-10% in 2020, as the market is focused on the high-end and mid-market segments. According to the Thai Gem Trader association, exports could fetch more than 10% growth every year if local manufacturers upgrade innovation, marketing, and branding, as import tariffs on most raw materials are near zero.
RUBBER (Export value in 2019: 11.5 billion USD)
The rubber industry of Thailand covers all upstream, midstream, and downstream industries in the supply chain. Almost all upstream production in Thailand is consumed as inputs into domestic midstream industries by converting materials into semi-finished products, such as ribbed smoked sheets, technically specified rubber, concentrated latex, compound rubber, and skim rubber. Downstream players are manufacturers of items such as automobile tires, latex gloves, condoms, elastics, and rubber shoes, etc. Thailand was the world’s biggest supplier of concentrated latex and RSS in 2017, producing 71.2% and 66.9% of global exports, respectively. Thailand was also the source of 24.1% of exports of TSR (2nd world ranking) and 6.7% of exports of compound rubber (5th world ranking).
Output by the Thai rubber sector is forecast to slide through the period 2019-2021 as producers confront the problem of declining demand in export markets, especially as regards exports to China of sheet rubber and technically specified rubber. The market is expected to face the twin challenges of a persistent oversupply of products and subsequent high levels of stockholding, and pressure from additional supply coming on stream from new competitors in the CLMV region, where Chinese investors have been establishing new rubber plantations over the past few years. Despite this generally negative
PLASTIC (Export value in 2019: 9.4 billion USD)
The emphasis in the Thai Plastic industry is in value-added and environment-friendly products. Driven by domestic demand, the plastic industry in Thailand has been consistently growing. Bioplastics are now widely regarded as the potential solution to address environmental problems. By far the packaging and food sector is the major consumer of plastic in Thailand. The country is a leading producer of the raw materials needed for bioplastic synthesis and is well equipped with advanced technology and technical expertise through all phases of the supply chain.
As an example, Indorama Ventures from Thailand, which produces 20% of all PET resins in the world, is also a leading company developing environmentally friendly recycling methods.
Thailand has just officially banned the use of single-use plastic bags at the beginning of 2020. Packaging and printing industries are shifting to produce bio-flexible packaging products in line with the government’s policy to ban plastic packaging in the future. Food and beverage remain the key factor in driving the demand for plastic uses.
Under the Thailand 4.0 – Innovation-driven economy, Thailand is heavily promoting new investments to
- Next-generation automotive
- Robotics and automation
- Smart electronics
- Advanced agriculture and biotechnology
- Biofuels and biochemical
- Aviation and logistics
Thai Government is presently aiming to transform Government operations into digital platforms such as Single Window for Visa and Work Permit, e-Government, and living solutions, primarily to serve the consumer side of demand. No wonder, in the recent World Bank’s annual ‘Ease of Doing Business’ rankings, Thailand rose to 21st position out of over 190 surveyed countries and looking to climb up the ladder in the years to come.
Thailand As World’s New Medical Destination
The Thai economy boasts a flourishing, dynamic medical industry that leads Southeast Asia and is also well-known globally. Apart from leading medical tourism, emerging sectors include medical devices, academic research, pharmaceuticals, and implants. The country’s medical industry sector offers an abundance of opportunities for entrepreneurs and investors looking at large-scale growth opportunities in the medical field.
Relative to its neighbors and global leaders, Thailand has a huge healthcare sector which is a strategic priority for the Thai Government. The country tops the list in the ASEAN Region on expenditure for public healthcare, with 14 percent of the country’s budget allotted to healthcare. Although western countries outperform all the countries in this region (the United States at 17 percent, the United Kingdom at 9 percent), Thailand heads the Asian countries in its commitment to healthcare.
As said, the medical and biotechnology sectors are the main priorities for BOI, which offers significant incentives for encouraging business partnerships and foreign investment. Biotechnology R&D and specific medical devices could be exempted from the corporate income tax bucket for a period of up to 8 years, and other medical devices could be exempted for 3-5 years. Furthermore, firms in the medical or biotechnology fields are qualified for the exemption for duties to be paid on imported components and raw materials.
Over and above the BOI promotion, the Thai government has various active programs for encouraging R&D of innovative pharmaceuticals, devices, and several medical products and services. The NSTDA offers channels of communication between the private sector and Thai research institutions. The government of Thailand has also created Thailand Science Park and Thailand Centre of Excellence for Life Sciences for promoting research and development. The Thai National Innovation Agency funds up to 90 percent of research and development expenses by supported Thai companies and offers interest-free loans to start-ups.
Startup in Thailand has compiled a market research report for each industry that they have worked with which may be a useful read before doing investment in Thailand. Click here to read more about the Industries in Thailand
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