‘Thailand needs to shift to high-tech industries’ as FDI lowest in ASEAN
Thailand secured only US$2.96 billion in foreign direct investment (FDI) in 2023, the lowest among ASEAN members, the National Economic and Social Development Council (NESDC) said, as it urged the government to facilitate the country’s migration to high-tech industries to attract investors.
In the economic outlook report for the first quarter of 2024 published this week, the national economic planning agency revealed that Thailand’s gross domestic product grew by 1.5% in the first quarter, the lowest rate among ASEAN members.
The growth was driven by a 6.9% increase in private consumption and the service sector, while exports rose by 2.5% and private investment by 4.6% in the same period.
Despite this growth, the NESDC has lowered its annual GDP growth projection from 2.2%-3.2% to 2-3%, citing risks from the ongoing US-China trade war and geopolitical conflicts.
The council also noted that Thailand was in last place on the list of 2023 FDI flows to ASEAN, with total foreign investment of $2.96 billion.
Indonesia topped the list with FDI of $21.7 billion, followed by Malaysia $18.5 billion and Vietnam $8.25 billion.
The NESDC said that Thailand’s FDI had shown a downward trend throughout 2023, with significant drops in traditional industries such as petroleum for the first time in three years.
“The industries that have been driving the Thai economy in the past have started to play a diminishing role in Thailand's manufacturing and export sectors,” said the NESDC. “The declining FDI also affected Thailand’s exports, which contracted 1% in the first quarter of 2024, and the Manufacturing Production Index also went down by 3.7%, contracting for six consecutive quarters.”
The NESDC advised the government to offer incentives and promote manufacturers to upgrade production technology towards innovative and advanced technology products. Priority should be placed on industries related to raw material production and intermediate goods within the country, as well as train skilled labour to meet the needs of targeted industries.
The NESDC’s report on underwhelming economic growth has prompted Prime Minister Srettha Thavisin to schedule a meeting with Cabinet members in the economic sector on Monday to tackle this issue. This will be the first such Cabinet meeting of this government and will be held every Monday from now on, the PM said.
