Thailand: The “In” Place to Manufacture
By Paul Gambles, MBMG Group
Over the last few months, it’s become clear that Thailand has become the place for manufacturers. When you think of Thailand, you may have hot weather, beautiful beaches, and extremely spicy food in mind. But it also serves as a base for some of the world’s largest manufacturers.
Many of the big auto firms produce here, including BMW, Ford, and General Motors. It is the world’s fifteenth-largest exporter of cars, with a 70% rise since 2014 alone. It’s also the twenty-third-largest exporting economy for all products combined. In a recent study, we found that many industrial estates in the country are currently close to full occupancy.
However, Thailand isn’t a particularly low corporate-tax regime and, compared with some southeast Asian countries and China, it has little readily available cheap labour. In fact, it has such a labour shortage that the government has facilitated applications for work permits from neighbouring countries.
Much of Thailand’s popularity is down to incentives and assistance from the Board of Investment (BOI). Even if a factory is built outside a free-zone industrial estate, BOI registration can still give many of these benefits.
Whilst many governments offer incentives, Thailand stands apart in the region because it is relatively easy to do business here. The baht has been stable since 1997 and an e-customs system prevents the corruption that reportedly affects importers in other parts of Asia.
Thailand’s political travails may have made the global news over the last few years, but this has never severely impeded foreign investors, capital flows, or international trade.
A recent surge in Thailand’s popularity is down to the trade spat between China and the US. With businesses concerned about the cost of exporting from China, many have begun, or increased, production from factories in Thailand.
Time will tell whether those firms will shift production permanently to Thailand. Given its reliability and vastly improving infrastructure, I wouldn’t be surprised.
Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG Group cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Group. Views and opinions expressed herein may change with market conditions and should not be used in isolation.
Paul GamblesGGI member firm
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MBMG Group was founded in Asia in 1996 and has since grown steadily. It offers services ranging from investment advisory, corporate advisory, tax advisory, family office, accounting and audit, legal, insurance, estate planning, and property solutions.
Paul Gambles is co-founder and Managing Partner. He is licensed by the Thai SEC as both a securities fundamental investment analyst and an investment planner. Paul is also well-known as an expert commentator, appearing regularly on Bloomberg TV, CNBC, and Channel News Asia. He also writes the weekly newsletter MBMG Markets Flash, regular updates, and articles.
Published: Real Estate Newsletter, No. 10, Autumn 2019 l Photo: WS Films - stock.adobe.com