Chinese investment in Thailand has picked up pace this year despite an economic slowdown in the Asian giant, a welcome boost for Prime Minister Srettha Thavisin who flew into Beijing this week to bolster ties with its largest trading partner.
A stuttering recovery in the world’s second-biggest economy has spooked financial markets in 2023 as investors fretted about the impact on global growth, although Thailand has managed to retain its attraction as a vital investment hub including for China’s growth-hungry firms.
Between January and August, Thailand received foreign investment applications worth 365.2 billion baht (US$10.1 billion) – 73% higher than the same period last year – led by Chinese firms that committed 90.3 billion baht, up nearly three times year-on-year, according to the Thailand Board of Investment (BOI).
Investment pledges from second-placed Singapore, totalling 76.4 billion baht, were also largely from companies originally from China, said BOI secretary-general Narit Therdsteerasukdi.
“And if you look at the month-by-month statistics, Chinese investments are still increasing,” he told Reuters. “So I see that in the next two or three years, Chinese investments will still increase drastically in Thailand.”
This wave of investments into Thailand comes at a time of growing concerns over an economic slowdown in China and is a shot in the arm for Prime Minister and Finance Minister Srettha, who pledged to turn around Southeast Asia’s second largest economy when he took over the reins in August.
Prime Minister Srettha Thavisin tries on a new high-tech eyewear at a technology fair in Bangkok on Oct 4, 2023. (Photo: Chanat Katanyu)
The Bank of Thailand (BoT) expects 2024 economic growth to pick up to 4.4%, from a forecast 2.8% this year.
Mr Srettha told reporters before flying out on Monday that his three-day visit to Beijing, centred around a forum on China’s Belt and Road Initiative, would include discussion on electric vehicles (EVs).
He will also meet with Chinese business executives, according to Thailand’s Ministry of Foreign Affairs.
Chinese EV manufacturers – including BYD and Great Wall Motor – have investment commitments of at least $1.44 billion in new facilities in Thailand, turning the country into a regional hub for EV production.
Thailand is already Southeast Asia’s largest production centre for combustion engine vehicles, hosting major facilities of Japanese carmakers including Toyota Motor and Isuzu Motors.
But a large proportion of the 228 Chinese investments proposals this year have come in the electronics sector, according to the BOI.
“We have good relationships with all countries,” Mr Narit said. “We are a conflict-free zone.”
WHA Group, Thailand’s largest industrial estate developer, said it is seeing no slowdown in business with Chinese companies, which will help it reach a second straight year of record land sales.
“They come every week,” CEO Jareeporn Jarukornsakul told Reuters. “There really are a lot of them.”
WHA is in talks with several major firms in the autos, technology and electronics sectors on large land sales, she said, after clinching a deal with China’s Changan Automobile , whose 8.86 billion baht EV project received BOI approval last week.
Chinese investments will likely continue for the next two years, Ms Jareeporn said.