Investing in ASEAN: Thailand

Investing in ASEAN: Thailand

Investing in ASEAN: Thailand


“Did you notice that during Thailand’s military coup, all the markets did was yawn?” says Peter Kohli, CEO of DMS Funds. “Thailand is a solid developing-market play, though at a different point in its advancement compared with other Asian countries,” he says, adding that, “even before the coup, Thailand had challenges. How it resolves them will dictate its future course and its suitability for increased investment”.


Thailand’s economy has a long record of ignoring coups: the army has staged at least 11 of them since 1932, and AD Asia Group was here for two of them: in September 2006, when general Sonthi Boonyaratglin overthrew Thaksin Shinawatra, and in May 2014, when General Prayuth Chan-ocha ousted Niwatthamrong Boonsongpaisan, who was serving as Acting Prime Minister after Thaksin’s sister Yingluck was removed from office by the Constitutional Court.

“Thailand, known as the ‘Land of Smiles’, has not had a lot to smile about in the past few years. In 2011 there was the ‘Hundred Year Flood’ that devastated much of the country. In 2010 it was the violent political protests in Bangkok. Yet through it all, the resiliency of the Thai people and the economy has persisted,” says PwC Thailand in a report entitled South East Asia – Investment Opportunities, Tax & Other Incentives.


Thailand is the only country in South East Asia that was never colonised or ruled by a foreign power, a fact that the Thais take great pride in. The country’s politics have long been volatile: the occupation of downtown Bangkok by the ‘Red Shirts’ in the spring of 2010 was unprecedented however, and two years earlier their rivals, the ‘Yellow Shirts’ closed both of Bangkok’s international airports for a week. But despite their differences, both sides have always agreed on the importance of continuing economic growth and attracting foreign investment.

Doing Business

Thailand’s infrastructure is considered one of the best in South East Asia after Singapore and Malaysia. The country has a well-developed highway network, a number of state-of- the-art seaports and efficient telecommunications and internet. The new international airport in Bangkok (Suvarnabhumi) is only eight years old.

The government is committed to increasing infrastructure development and a five-year spending plan for it of more than USD 700 million has been approved. The projects include new inter-city road links, urban mass transit systems, port expansion, a new high-speed rail network between Thailand and China and expansion of Suvarnabhumi airport.

“The floods of late 2011 had a dramatic effect on the Thai economy, closing down hundreds of plants” says PwC. The human cost was equally catastrophic, with over 1 million Thais having their homes destroyed by the floods. Though it is acknowledged that this was truly a ‘hundred year’ flood, the government is committed to significant flood prevention measures both short- and long-term. In the short term, all major industrial estates will have new and higher flood walls surrounding them. In the longer term, new dams, reservoirs and drainage canals will be built”.

In order to increase the country’s competitiveness, the government reduced the corporate income tax rate from the historical 30% to 23% in 2012 and 20% in 2014/15, which is expected to become permanent. This gives Thailand the second lowest corporate tax rate in ASEAN, just slightly above Singapore’s.

The Economy

Thailand has long been a manufacturing and export hub and major manufacturing industries include automobiles (“Thailand has been called the ‘Detroit of the East’,” notes PwC), auto components, electronics, and textiles. Other major exports include agricultural commodities and seafood, and tourism and related services are also significant components of the economy.

While export manufacturing will remain the largest component of the economy for the immediate future, the shift to a more consumer-driven economy has been underway for a number of years and is accelerating, driven by a continuously growing middle class that is in turn driven by recent government populist measures like the first-time home-buyer scheme,  first-time car-buyer scheme, and minimum wage rise.

“The two favourite pastimes of Thais are: first, eating, and second, shopping,” says PwC. “Thai people love anything Western, from fast food to clothing and luxury products. Expanded consumer credit via credit cards and personal loans are increasing Thais’ purchasing power. The retail sector is growing significantly with a new high-end mall seemingly opening every six months in Bangkok”.

The most prized possession of most Thai teens and young adults is their smartphone, and Bangkok is reported to have the most Facebook account holders of any metropolitan area in the world. These consumers of the future are increasingly sophisticated and embracing e-commerce with a vengeance.

Though still significant, the agricultural sector has been a shrinking portion of the overall economy, with more modern farming techniques freeing many young Thais to seek higher wages in the industrial and service sectors. Although the unemployment rate has been very low for a number of years, new factories have been able to lure workers from the agricultural sector, a trend that is expected to continue.


The Thai government actively encourages both domestic and foreign investments, which are considered important and beneficial to the economic and social development of the country – particularly activities that involve production for export or strengthen the country’s industrial and technological capabilities. Particular emphasis is placed on ‘green’ initiatives, R&D and new technologies. Simply increasing employment is no longer a critical factor because of the low unemployment rate.

“To support and encourage investment, the government offers investors privileges in various forms including exemptions from or reductions in taxes and duties, permissions, guarantees and protection measures,” says PwC. “The main laws governing the promotion of investment are the Investment Promotion Act of 1977 and the Industrial Estate Authority of Thailand Act of 1979. The government agencies responsible for administering these laws are the Board of Investment and the Industrial Estate Authority of Thailand”.

Under the Investment Promotion Act, the Board of Investment is empowered to designate business activities eligible for promotion and to grant incentives to qualified investments. To be entitled to investment incentives from the BOI, the investor must be a limited company, foundation or cooperative organised under Thai law.

Investors may also receive incentives from the Industrial Estate Authority of Thailand if the investment projects are located in certain estates. Industrial estates in Thailand are classified into three categories: those solely owned and managed by IEAT or jointly managed between IEAT and private developers are eligible for IEAT incentives, while projects in those wholly owned and managed by private developers are not.

Property Investment

Despite the ups and downs and occasional turbulence of the past 15 years that AD Asia Group and AD Asia Consulting have been operating in Thailand, the country’s economy continued to grow by an average of 5% annually from 1999 to 2007, and property demand has been soaring: the value of land and building transactions surged by 16.5% in 2013 to USD 30.6 billion according to the Land Department, which reported that residential building licenses also rose by 12.8% to 84,023 units, while condominium registrations jumped 25.1% to 102,200 units, and new homes in Bangkok increased by 5.6% to 131,954 units – and all this while the streets were jammed with demonstrators.


Throughout it all, we’ve been applying our wealth of local knowledge and connections to help investors navigate Thailand’s unique investment landscape and provide them with tailor-made A-to-Z turnkey solutions.


In Bangkok, AD ASIA Property is one of the region’s premier property companies and provides top-quality real estate development and property management services. Our award-winning portfolio of investment-grade projects, including three exciting current developments, attests that we don’t just talk the talk – we walk the walk.


AD ASIA Construction is the latest addition to the group and provides project support for a multitude of projects in Thailand. Our teams bring many years of hands-on experience to their respective areas of expertise, and has amassed an impressive portfolio of professional services in construction management, CPM scheduling, program management, cost estimating, construction claims, technology and training.


Talk to us if you’re considering breaking into Thailand’s property market.


Categories: ASEAN, Investment, Thailand

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