Thailand, with a population of 69.8 million, is in the process of recovering from the impact of Covid-19, through a steadily growing economy and policies that encourage investment. The government is focused on improving the business environment and attracting foreign investment to support this recovery.
Steady macro indicators
Projected to stay between 1% and 3%, headline inflation aligns with the Bank of Thailand's 2023 target. On 2 August 2023, the policy interest rate was elevated to 2.25%. Significantly, Thailand's tourism sector, vital for many traditional businesses, has shown a robust post-pandemic recovery. In 2022 over 40 million tourists visited, more than twice the 2021 figure, solidifying Thailand's appeal to global retail and luxury brands.
Foreign Direct Investment uptick
In recent years, the Thai government has introduced various modifications to its investment landscape with the aim of easing access for foreign investors. These adjustments include tax incentives, land concessions, and clear avenues for securing government contracts. The surge in investment is evident in the Board of Investment's (BOI) data for FY 2022 and Q1-2023 Foreign Direct Investment (FDI), prominently fuelled by heightened interest from China, which has now ascended to the top position among the investor countries. The BOI also unveiled its updated incentive schemes for 2023, focusing on stimulating inward investment in key areas, alongside a pivot towards electric vehicle supply chain, renewable energy, and digital business.
Entering the digital age
Multinational corporations' operation of digital platforms has been streamlined through the implementation of regulatory measures that establish transparent guidelines. Thailand's Personal Data Protection Act BE 2562 and the Royal Decree on Digital Platforms in August 2023 are now governing digital platform operators, including online marketplaces, social commerce, food delivery, room sharing, and ride-sharing services. This legislation mandates providers to adhere to specific criteria, encompassing the provision of clear user information regarding rights and responsibilities, along with safeguarding the processing, collection, and storage of users' personal data.
Push towards renewables
Thailand benefits from abundant solar radiation, with an annual average of 1,700 kWh/m2 due to its equatorial proximity. During 2022, the BOI greenlit 19 solar ventures with an aggregate investment sum of US$1.3bn, followed by wind power at US$540m. This growing interest in renewable energy has attracted both foreign and domestic investors, supported by the government's Feed-In-Tariff (FiT) initiative, which shields investors from potential price fluctuations, and the BOI's tax incentives for energy projects. At present, renewable sources contribute 16% to Thailand's total energy consumption, while the government aims to achieve a 30% share by 2037 and pursue carbon neutrality by 2050.
Starting a business in Thailand is easier than ever
Starting in February 2023, the Ministry of Commerce has revised the prerequisites for a Thai Limited Company, reducing the mandatory number of shareholders from three to two. This significant alteration offers prospective entrepreneurs a simplified avenue for establishing their ventures in Thailand. Foreign investors also can attain full ownership (100%) in unrestricted sectors, including export-oriented and certain types of retail businesses. Further pathways to achieve full foreign ownership involve registration via bilateral agreements, the application of an alien business licence, or seeking promotion through the BOI. Remarkably, more than 300 business activities are accessible for non-Thai ownership under the Board of Investment Announcement No. 9/2565.
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