Thailand: US-China Trade War Drives Record Investment Surge
Thailand’s investment landscape is projected to reach unprecedented heights in 2025, with applications anticipated to surpass previous records for the second consecutive year. This surge is primarily fueled by a robust inflow of foreign direct investment (FDI), significantly influenced by escalating trade tensions between the United States and China. This analysis comes from Krungthai Compass, a respected research center affiliated with Krungthai Bank.
Kanit Umsakul, an analyst at Krungthai Compass, posits that the value of investment promotion applications submitted to the Board of Investment (BoI) is set to establish a new benchmark in 2025, solidifying the positive trajectory of FDI in Thailand. This optimistic outlook builds upon the remarkable performance in 2024. The National Economic and Social Development Council reported a staggering 3,137 BoI applications in 2024—a substantial 40.4% increase compared to the previous year. These applications represent an impressive investment value of 1.14 trillion baht, a significant leap of 34.5%. Furthermore, actual BoI-approved investments reached 850 billion baht in 2024, showcasing a remarkable 72.5% surge.
Private investment is poised to become a crucial engine for Thailand’s economic growth in 2025. Krungthai Compass forecasts a 3% growth in private investment, a significant rebound from the 1.6% contraction experienced in the previous year. This revitalization is largely attributed to intensifying trade friction between the U. S. and China, prompting numerous companies to strategically relocate their production bases from China and other regions to Thailand. This shift underscores Thailand’s growing appeal as an attractive investment destination.
Thailand enjoys a competitive edge in attracting FDI compared to its regional counterparts. According to 2024 surveys by the Milken Institute and Kearney, Thailand secured the second position, trailing only Malaysia, in terms of FDI attractiveness among the five major Southeast Asian nations. Indonesia, Vietnam, and the Philippines followed, occupying the third, fourth, and fifth positions, respectively.
The primary sources of FDI propelling private investment in Thailand are Singapore, China, and Hong Kong. Krungthai Compass anticipates that China will assume a pivotal role in bolstering Thailand’s private investment, potentially surpassing Japan’s contribution. From 2016 to 2024, China’s investment in Thailand demonstrated consistent growth, while Japan’s investment experienced a decline. Krungthai Compass notes that China’s current investment value is approximately three to four times greater than Japan’s.
This influx of FDI is expected to initially benefit Thailand’s core business sectors: industrial estates, construction, and property development. However, maintaining this momentum requires proactive measures. Recognizing the intense competition for FDI within the region, Mr. Umsakul emphasizes the importance of governmental focus on enhancing infrastructure, upskilling the labor force, and expediting free trade agreements.
Despite these challenges, the positive trend of FDI and the revitalization of private investment are evident in the dynamic landscape of factory openings and closures. In 2024, while 1,234 factories closed, an impressive 2,599 new factories opened in Thailand. The value of the shuttered factories stood at 47.8 billion baht, dwarfed by the substantial 383 billion baht value attributed to the newly established factories. This vibrant activity signifies a promising future for Thailand’s economic growth, driven by strategic investments and a favorable global environment.
