Chinese investors top BOI investments applications

The Board of Investment (BOI) reports receiving a steady influx of investment applications, particularly in the fields of Electric Vehicles (EV), electronics, and digital industries. Over the past six years, China has submitted more than 900 investment projects with a value of more than 526 billion baht.

Thailand is benefiting from the wave of Chinese investors, both from Chinese businesses and foreign investors based in China. With China's economy, the world's second-largest, experiencing a slowdown and a slower recovery than previously estimated, investors are exploring avenues to expand their investments in the Asean region, which offers robust economic growth and measures to attract foreign investments. Thailand, in particular, has caught the attention of Chinese investors.

According to the BOI's Secretary General, Narit Therdsteerasukdi, the trend of Chinese investors relocating their base from China to Thailand has become increasingly evident. This is partly because Thailand is recognised as a standout player in the EV industry in the region, thanks to clear promotion measures introduced by the government. The country aims to become a center for EV production in the region.

Notably, several Chinese investors and businesses have already made substantial investments in the Thai EV industry, among them MG, Great Wall Motors, BYD, and Neta. Two other companies, Chang An Automotive and GAC Ion, have also announced plans to invest in the sector. Moreover, investing in Thailand goes beyond just car production, as it involves bringing related industries along, such as battery production and other crucial components for EVs.

In the electronics industry, there has been a continuous flow of investments from China, driven by the trade war between China and the United States and other geopolitical tensions. These have impacted electronic manufacturers, leading them to seek production bases outside of China to mitigate future business risks. As a result, many investors have turned their attention to the Asean region, including Thailand, which stands out due to its well-established supply chain readiness in the electronics component sector and positive relationships with various countries.

Recent developments have shown a clear increase in Chinese electronics companies investing in Thailand. Some Taiwanese companies, who have invested in China previously, have also expressed interest in exploring investment opportunities in Thailand, particularly in the production of printed circuit boards (PCBs) with clear plans to use Thailand as a production hub in Asean. Furthermore, there are digital industry investments coming from China to Thailand, such as Huawei, Alibaba, and companies expanding their cloud and digital-related businesses.

Direct foreign investment statistics for 2022 show 1,070 investment projects with a total value of 433.97 billion baht, indicating a 42% increase in the number of projects and a 36% increase in the total investment value compared to the previous year. China accounted for the highest investment value at 77.38 billion baht, representing 18% of the total foreign investment value for 158 projects. Taiwan and Hong Kong were among the top six investors.

From January-June 2023, direct foreign investment statistics reveal 507 investment projects with a total value of 304.04 billion baht, indicating a 33% increase in the number of projects and a significant 141% increase in the total investment value compared to 2022. During this period, China also led with 132 projects, accounting for 26% of all foreign investment projects. China also had the highest investment value at 61.53 billion baht, representing 20% of the total foreign investment value.

As of June 30 this year, the value of total investments by foreign corporations reached 9.63 trillion baht, comprising 118,364 projects. Among these, the Chinese invested a total of 304.96 billion baht through 23,043 business entities, according to the Commerce Ministry's data on foreign investments in Thai firms.

The top five business sectors to which Chinese investors have contributed the most are:

1. Production of tyres and rubber products, with 15 projects and a total investment value of 16.56 billion baht.

2. Manufacturing of miscellaneous parts and accessories for motor vehicles, not classified elsewhere, with 101 projects and a total investment value of 13.57 billion baht.

3. Basic iron and steel manufacturing, not classified elsewhere, with 46 projects and a total investment value of 12.04 billion baht.

4. Buying and selling real estate owned by the investors themselves, not used as residential accommodation, with 1,940 projects and a total investment value of 11.48 billion baht.

5.Electricity generation and distribution, with 67 projects and a total investment value of 11.17 billion baht.

China is also investing in aviation maintenance. Aviation Industry Corporation of China (AVIC) has partnered with Chiang Rai investors to establish Chiang Rai Aviation Holdings, which is to lease space near Chiang Rai Airport and is expected to commence operations around July 2024. The investment for this venture is estimated to be around 722 million baht.