Thai industry must automate to retain Chinese investor confidence: business chiefs
Thai private sector chiefs have warned that Thailand must accelerate automation and digitalisation of industry to maintain the confidence of Chinese investors and trade.
China has been Thailand's top trading partner for the past 11 years. Last year, Thailand exported goods worth 1.19 trillion baht to China, led by fruits, rubber products, and plastic pellets. Thai imports from China were worth 2.49 trillion baht last year, led by electrical machinery, chemicals, and motorcycles. Although Thailand’s trade deficit was approximately 1.3 trillion baht, it primarily consisted of capital goods – such as electrical machinery, motorcycles, and technology – which contribute to Thai domestic trade and industrial development.
China is also the top recipient of Thai investment promotion privileges, with total investment value of 7.7 billion baht between 2018 to 2022.
China is the second-largest investor in Thailand's Eastern Economic Corridor (EEC) project for advanced industry since 2018.
But Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), said Thailand faces numerous challenges, including digital transformation, a crucial factor in changing the manufacturing sector. He noted that previously strong industries have been disrupted by digitalisation, the US-China trade war, Covid-19 pandemic, and the Russia-Ukraine war, which have led to increased energy prices and higher raw material costs. These factors have resulted in currency depreciation and the need for higher interest rates to control inflation, among other headwinds.
Thailand faces two challenges: the ageing society and the middle-income trap, requiring the industrial sector to transform its production processes to enhance competitiveness, he said. The FTI has identified S-Curve (high-tech) and climate change-related industries as sectors of growth.
Narit Therdsteerasukdi, secretary-general of the Board of Investment (BOI), said Thailand is accommodating for Chinese investors due to strengths such as its central location in the Asean region and status as a transport hub boasting the region’s most developed infrastructure including airports, seaports, roads, and industrial estates with comprehensive supply chains. Moreover, Thailand excels in key industries such as electronics, automobiles, and petrochemicals, with qualified professionals including engineers and technicians, he said.
Narit identified security and resiliency as the main concerns for Chinese investors globally, adding that Thailand has maintained good international and trade relations with the world. Neither does Thailand suffer especially from natural disasters or ethnic conflicts.
As a result, Chinese companies that conduct business in Thailand have achieved a success rate of 99%, Narit said. Chinese companies have established production bases in Thailand not only to sell products within Thailand but also for global distribution.
Thailand currently has 14 free trade agreements (FTAs) covering 18 countries and aims to have 20 FTAs covering 53 countries. These agreements will be crucial in utilising Thailand as a production base for exporting goods worldwide, the business chiefs said.
