Chinese investment to continue into 2024 due to Thai incentives
A Chinese media outlet is reporting that since December of last year, at least 14 major Chinese firms have announced branch establishments, new factory setups, expansions of existing facilities, or increased investments in Thailand amid a rapid influx of Chinese investments
ZYNP Corporation, a manufacturer of combustion engine components from Hunan province in central China, have announced that it is investing 210 million yuan (around 1 billion baht) to establish a production base in Thailand.
Meanwhile, Circuit Fabology Microelectronics Equipment in Anhui province of eastern China, have announced a 100 million yuan (486 million baht) investment plan to purchase land and build a branch plant factory in Thailand.
Xu Geng Lou, the vice-president of Amata Corporation Plc, said that Chinese businesses have demonstrated an unprecedented interest in investing in Thailand. Representatives from various business groups have visited Amata industrial estates.
Analysts, both Chinese and Thai, shared with Global Times that the increased Chinese investment is driven by incentives from the Thai government to encourage the new energy vehicle (NEV) industry as well as the electronics industry. Meanwhile, the momentum is being propelled by the fact that the global economic landscape is facing a counter-globalisation trend.
The analysts anticipate that with the increasingly close relationship between China and Thailand, and the period of continuing growth in China-ASEAN trade and investment, investments in Thailand by Chinese companies would continue to rise.
Lei Xiaohua, an ASEAN expert from the Guangxi Institute of Social Sciences in southern China’s Guangxi Zhuang Autonomous Region, said that the Thai government’s goal of prioritising economic development ranks is viewed in China as one of the kingdom’s most crucial tools to attract investment.
Moreover, Chinese investors appreciate Thailand’s relatively complete supply chain and low labour costs, along with the benefits and conveniences from the Regional Comprehensive Economic Partnership (RCEP) implemented on March 1, 2022.
Huang Bin, head of the China division at Kasikorn Research Centre, noted that nearly all Chinese EV brands had invested in Thailand in the past year due to the incentives provided by the Thai government, such as EV 3.5, which subsidises EV purchases and aims to promote Thailand as an EV hub in the region. Additionally, foreign government investors have policies exempting import taxes on machinery.
Huang also noted that the restructuring of the global semiconductor supply chain had led to a substantial number of electronics companies investing in Thailand. He expects that the visa exemption policy between the two countries will continue to promote bilateral trade and investment, albeit gradually.
As China remained Thailand’s largest source of investment last year, analysts predict this trend will persist in 2024.
According to data from Thailand’s Board of Investment (BOI), China saw a 24% surge in direct foreign investment (FDI) applications, the largest among all countries, accounting for 97.4 billion baht in 264 projects in the first nine months of 2023.
Looking forward to 2024, Lei said that China’s foreign investments would heavily focus on Thailand, Vietnam, and Indonesia.
