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Thailand drives forward with confidence

Market Insights | May 31, 2023

Thailand celebrated its first post-pandemic Songkran festival in April this year, and the internationally famous water-splashing Thai New Year Festival drew in large numbers of international visitors.  After a challenging few years for the economy (not least the tourism industry), it was a clear and welcome sign that life is moving forward again.

It’s not just tourists that are flocking there though – foreign manufacturers are increasingly seeing Thailand, Southeast Asia’s second-largest economy, as a “destination of choice”.  One high-profile example: in mid-April Nikkei reported that Apple is in talks with suppliers to make MacBooks in Thailand, as the company looks to diversify its supply chain outside of mainland China.  Apple has already been making the Apple Watch in Thailand for more than a year, it claimed. Sony is looking to scale up production there too, adding 70% to its chip facility north of Bangkok by FY 2024.  Thailand has been one of the top FDI destinations for Taiwan-based PCB makers in recent years, on the back of strong incentives from Bangkok, and this sector of the economy appears to have much potential for growth.

Automotive – present and future

Thailand’s automotive sector is a real success story too, with giants such as Toyota, Mitsubishi, Isuzu, BMW and Ford all manufacturing there for many years (Toyota recently celebrated 60 years of operations in Thailand, and now employs around 275,000 people there). There are clear signs that the next generation of electric vehicle production is heading Thailand’s way too, with China’s market leader BYD breaking new ground on a production plant in Rayong province in March, and Toyota president Akio Toyoda declaring “The future for Toyota and Thailand is very bright” as he introduced the company’s first electric pickup truck for emerging markets, also to be produced there.  Most European countries can only dream of such investment.

The S&P Global Thailand Manufacturing PMI stood at 53.1 in March 2023 – the fifteenth consecutive month in which the Thai manufacturing sector has been in expansion, and at a very healthy rate too.  Business confidence is at a post-pandemic high, and continued to improve in March, according to Thailand’s own Business Sentiment Index, with up-ticks in performance, total orders, investment, employment and production.

A great place to do business

When the World Bank last produced its Ease of Doing Business rankings in 2019, Thailand had moved up considerably, to 21st place overall – a great achievement, and one place higher than Germany.  It had been ranked 46th just 2 years earlier.   Thailand’s logistics infrastructure and services were ranked 2nd in ASEAN after Singapore, and 7th in Asia overall, according the World Bank’s Logistics Performance Index (2018).  And as a member of AFTA and RECP, it’s a great hub for operations in the Asia Pacific region.

Rayong province on the eastern seaboard, where BYD are making that massive new plant investment for the production of electric vehicles, along with its neighbours Chonburi and Chachoengsao, are together the beneficiaries of Thailand’s Eastern Economic Corridor (EEC) flagship project, described by Reuters as “arguably the most ambitious connectivity project in mainland southeast Asia”, with special incentives to promote FDI, digitalisation, infrastructure renewal, and social uplift.  If things keep on in this direction, it’s not hard to imagine the impact spreading out beyond the EEC, and the whole country benefitting, before too long.

Melchers in Thailand

Melchers Thailand has been coordinating the company’s trading activities in Thailand since 1983, from its offices in Bangkok.  With strong engineering and materials divisions, Melchers Thailand delivers full technical sales and aftersales service on behalf of a wide range of international industrial equipment manufacturers and producers, including many in the automotive and oil & gas sectors.

Established in 1806, and with more than 150 years of experience in East Asia, Melchers is trusted by many international brands and producers to be their “feet on the ground” in this region’s diverse markets, drawing on deep local networks and knowledge, and combining them with dynamic business services and trade infrastructure, to create powerful synergies that deliver results for your business.

#asiarevisited #Thailand #ASEAN #Manufacturing #EEC #EV

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