Foreign investors 'considering moving production base to Thailand'

By THE NATION

 

 

Many foreign investors are interested in moving their production base to Thailand, Kriangkrai Thianukul, vice president of the Federation of Thai Industries (FTI), said.

 

He was speaking after a meeting with foreign investors from Japan, the US and Europe, and many have expressed interest to co-invest with Thai entrepreneurs.

 

“The main reason for their interest in Thailand is the Covid-19 pandemic, which caused manufacturing facilities in China to shut down and affected the supply chain of the industrial sector,” he said.

 

“Many companies are planning to move out of China to reduce future risk and are eyeing countries in Southeast Asia. Thailand is among the top choices as we have several seaports to facilitate logistics and the geographical location is at the centre of the region.”

 

“Thailand also has basic infrastructure for high-tech industries, as can be seen from many foreign buyers importing electrical and electronic components from Thailand, which resumed production when suppliers in China were shutting down,” Kriangkrai said.

 

Kriangkrai also added that Japan had recently encouraged its manufacturers to move out of China to avoid future risk similar to Covid-19. “While most of the high-tech industries will return to the home country, many mid-tech manufacturers are aiming to move to Thailand due to cheaper labour,” he said.

 

“The fact that Thailand has handled the Covid-19 situation better than many countries in the region also proves our ability in handling a crisis and helps strengthen investors’ confidence.”

 

Source: https://www.nationthailand.com/news/30388713

 

-- © Copyright The Nation Thailand 2020-05-29

 

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They are probably considering India too but not as much fun as Thailand

2 minutes ago, webfact said:

The fact that Thailand has handled the Covid-19 situation better than many countries in the region

Really ???

 

2 minutes ago, webfact said:

and many have expressed interest to co-invest with Thai entrepreneurs.

Yes you can only own 49%  of the business  unless BOI approved (megabucks)

A company has to weigh all options before making a big investment anywhere in the world.  Thailand may be appealing to some.  But my guess is many will end up else where. 

I'm all for companies moving out of China to countries with much better human rights records and who allow more political freedoms, etc, but Thailand isn't one of them. You can't just say you're a democracy and act like a dictatorship who rules by law. 

 

Developing nations have a great opportunity now to better themselves in terms of human rights and political freedoms to promote themselves as a great place to invest. 

 

 

Edited May 29, 20206 yr by rkidlad

9 minutes ago, Grumpy John said:

A company has to weigh all options before making a big investment anywhere in the world.  Thailand may be appealing to some.  But my guess is many will end up else where. 

Vietnam and Thailand stand to gain the most from this deserved china exodus

10 minutes ago, scubascuba3 said:

They are probably considering India too but not as much fun as Thailand

India would be considered a hardship post, for most foreigners required to live there. Therefore, it would require significant hardship increases in salary for all foreigners working there. That would have to be a factor. Also, the cost of living is not cheap, unless you are eating on the street, which I do not advise. Real estate is extremely expensive. I lived and worked there for one and a half years, many years ago, and my work required me to travel. I took 46 trips in a 55 week period, including 10 trips to Bombay (Mumbai) and I love that city. It is truly the NYC of India. I really got the see the country. I was also there several times previously, and a few times since. India is a remarkable nation, I love most of it's people, and the culture and history are incredible. But, it is a tough place to live. And a tough place to travel. Not at all like Thailand. My guess is that the infrastructure is not as good as Thailand, and at the time I worked there, the government requirements were punishing, immigration was difficult to work with, and it was a very challenging place to do business. I am sure alot of that has improved, as it has been over 20 years since I worked there. 

It could be a happy situation, Thailand have good infra structure and can handle big logistics.

 

But other international compagnies are leaving Thailand, off different reasons, but I think they would not leave if they where happy to stay here.

 

It seems that the country needs an international understanding in trading and manufactoring if they want international compagnies to come and stay here. International compagnies will not change very much to the "thai way", so if they can not run a compagni here in the same way as they use to do, they generally will stay away, i am afraid.

A major stumbling block to my mind will be that international companies will place the availability of an enthusiastic and educated workforce high on their list of priorities. I set up a subsidiary office here for an international company many years back, which we later closed for exactly this reason, we couldn't find the quality of staff that we were looking for and things have not got any better as far as I can see since then.

Having a stable government is also important, which is another reason to steer clear.

There is no doubt that Thailand should be considered and are positioned excellently for global production bases.

 

However, when international companies start doing proper due diligence (one thing we saw that even THAI Airways cannot do this week) they will begin to see lots of things that aren't too positive.

 

My business knowledge is zero, but even I would be able to list some of the issues such as an overly high THB, an economy very reliant on exports and tourism, a government that literally change their mind at any time, poor level of English speaking citizens, strict visa rules and ridiculous approaches such as the TM30, rife corruption and a xenophobic outlook, a workforce with a deeply ingrained attitude of 'Kreng jai' or 'Mai bpen rai' that needs completely eradicating, shocking health and safety standards, etc. 

37 minutes ago, finnsk said:

It could be a happy situation, Thailand have good infra structure and can handle big logistics.

 

 

 

There are not enough young people, and the population is aging.

 

And of course it is Thailand. A military dictatorship with English teachers who do not speak English.

 

 

 

Edited May 29, 20206 yr by dimitriv

58 minutes ago, webfact said:

He was speaking after a meeting with foreign investors from Japan, the US and Europe, and many have expressed interest to co-invest with Thai entrepreneurs.

Alas, it's unknown how these enigmatic foreign investors reacted after learning what "co-investing with Thai entrepreneurs" actually entails: The foreigners bring in 100% of the funds and know-how and unconditionally shoulder all financial risks, while the Thai side pockets 70% of net profits for their "proactive involvement" of agreeing to be "co-investing partners".   

13 minutes ago, BobbyL said:

strict visa rules

The business visa is a major impediment to Thailand adoption. In China, I have 10 year multi-entry visa that is easy to get and fairly cheap. Last business visa I got in Thailand was single entry only. They also limit your time in country and transits in and out. That is a non-starter. 

 

For electronic manufacturing, you need the ability to jet over to Taiwan or China for a week, then back and forth. If there is a problem, multiple trips. 

 

This is the number one issue to get foreign manufacturing investment here in Thailand (my opinion). All the other issues are found (more or less) in the other countries.

 

Make it easy to come to Thailand and spend your money, not to mention all the jobs for locals.

35 minutes ago, darksidedog said:

A major stumbling block to my mind will be that international companies will place the availability of an enthusiastic and educated workforce high on their list of priorities. I set up a subsidiary office here for an international company many years back, which we later closed for exactly this reason, we couldn't find the quality of staff that we were looking for and things have not got any better as far as I can see since then.

Having a stable government is also important, which is another reason to steer clear.

I did exactly the same back in 2013, paper work nightmare to open/built a factory/create company, wasted huge amount of money and decided to stop the process, at that time my opinion (based on their attitude) was that Thailand did need investors/money

Some of the basic infrastructure ready to greet investors????

 

Well investors in Thailand can have many happy endings on Soi Honey....Thats all thats really important... 

10 minutes ago, sammieuk1 said:

Some of the basic infrastructure ready to greet investors????

 

Messy?  That looks quite orderly to me! ????

1 hour ago, webfact said:

Kriangkrai Thianukul, vice president of the Federation of Thai Industries

That'll be the day when  half the world doesn't want to move their  businesses  here, again like asking the army to investigate themselves.

1 hour ago, johng said:

Really ???

 

Yes you can only own 49%  of the business  unless BOI approved (megabucks)

You can get BOI approval from an investment of one million Baht or more, dependent on your business and the industrial sector you are investing in. BOI also gives more opportunities for full foreign ownership and tax exemption for up to 15 years which is very attractive. 

1 hour ago, johng said:

Really ???

Yes really. Thailand has handled the COVID-19 outbreak exceptionally well.

 

1 hour ago, johng said:

Really ???

 

Yes you can only own 49%  of the business  unless BOI approved (megabucks)

BOI approval is rudimentary to American investment here. No your motorbike rental shop is not as easy to convince them of supporting, but majority foreign ownership in LOS is not impossible or unfathomable. 

3 minutes ago, Mr Meeseeks said:

Yes really. Thailand has handled the COVID-19 outbreak exceptionally well.

 

It needs a bit more to attract foreign investors moving their production facilities to Thailand. Handling of covid 19 is only one aspect.

 

Wishful thinking in my opinion to spread optimism and a pro military view.

I really doubt that Thailand is a good production base considering

 

1. the low level of English proficiency,

2. endless paper documentation for visas

3. 90-day report

4. over-protection of many jobs for Thai people only

5. restrictions in owning land for foreigners who want to invest in factories

 

I think Vietnam, Philippines and Malaysia would be better choices in these factors.

Edited May 29, 20206 yr by EricTh

2 hours ago, webfact said:

Many foreign investors are interested in moving their production base to Thailand,

Let's hope they don't worry too much about staff shooting each other when being told not to smoke then

2 hours ago, webfact said:

companies are planning to move out of China to reduce future risk and are eyeing countries in Southeast Asia. Thailand is among the top choices as we have several seaports to facilitate logistics and the geographical location is at the centre of the region.”

Thailand might want to cut some of its bondage to CCP if they are hoping to entice investors who are vacating China .. especially when the 2 of them seem quite luvved up at the moment .. Would be a bit like dumping your bird for another to then find you'd copped for her half sister with the same family traits .. 

1 minute ago, MangoPineappleBanana said:

BOI approval is rudimentary to American investment here. No your motorbike rental shop is not as easy to convince them of supporting, but majority foreign ownership in LOS is not impossible or unfathomable. 

There are only a few categories of businesses that will be considered for BOI and they change all the time.

 

Usually these will be in industrial sectors where Thailand lacks expertise or skills and often associated with mega-projects and infrastructure expansion. 

 

A promise of investment of a certain amount is required within a specified timeframe (usually twelve months).

 

Having done it (twice) it certainly is not impossible but you have to be in an industry and business that the Thais see as adding value to the country's economy.

 

Bar owners need not apply.

4 minutes ago, EricTh said:

I really doubt that Thailand is a good production base considering

 

1. the low level of English proficiency,

2. endless paper documentation for visas

3. 90-day report

4. over-protection of many jobs for Thai people only

5. restrictions in owning land for foreigners who want to invest in factories

 

I think Philippines and Malaysia would be better choices in these factors.

The tax breaks are far better in Thailand than those places.

 

Workforce is higher skilled.

 

They have a clear vision and plan for the future especially the EEC and the proposed investments.

 

Those are some of the reasons everyone comes here and not other places, e.g. Toyota, Honda, Mitsu, Triumph, BMW, MB, Harley Davidson etc, and those are just vehicle manufacturers.

 

Look at Malaysia, they still drive Protons and Peroduas. Lol.

7 minutes ago, Mr Meeseeks said:

The tax breaks are far better in Thailand than those places.

 

Workforce is higher skilled.

 

They have a clear vision and plan for the future especially the EEC and the proposed investments.

 

Those are some of the reasons everyone comes here and not other places, e.g. Toyota, Honda, Mitsu, Triumph, BMW, MB, Harley Davidson etc, and those are just vehicle manufacturers.

 

Look at Malaysia, they still drive Protons and Peroduas. Lol.

Malaysia has more Toyota and Honda vehicles than Proton.

 

Their English skill is 50 times better than Thai. 

 

Business visa, work permit is much easier to obtain in Malaysia for foreigners. Foreigners buying land for factories and houses is allowed unlike Thailand. None of this nonsensical 90-day reporting etc.

 

The only problem is that some countries are islamophobic.

 

Edited May 29, 20206 yr by EricTh

7 minutes ago, EricTh said:

I really doubt that Thailand is a good production base considering

 

1. the low level of English proficiency,

2. endless paper documentation for visas

3. 90-day report

4. over-protection of many jobs for Thai people only

5. restrictions in owning land for foreigners who want to invest in factories

 

I think Philippines and Malaysia would be better choices in these factors.

These are fairly big enterprises we are talking about here so I doubt they will have any issues, but to clarify:

 

1. That is still a problem but if you have Top Management that encourage line managers and supervisors to learn Thai less so. Careful recruitment and competency management the key here.

2. All done by human resource department and agents. These will be skilled Thai nationals that know immigration processes and they get it done very efficiently. All I do for my WP is sign a few papers and turn up once a year to the one stop shop place in Lumphini Tower. All takes 20 minutes then back to Chonburi.

3. Again, HR staff will usually perform this function for all foreign nationals at the company, or at least assist in the process.

4. You cannot import a work-force so you will have to skills-transfer to Thais. This is understood by all major and successful companies here. Foreigners occupy only managerial and supervisory positions needed to facilitate the company to function as intended and where Thais do not have the required skills.

5. Land ownership not a problem for any companies investing in factories.

 

 

1 minute ago, EricTh said:

Malaysia has more Toyota and Honda vehicles than Proton.

 

Their English skill is 50 times better than Thai. 

 

Business visa, work permit is much easier to obtain in Malaysia for foreigners. Foreigners buying land for factories and houses is allowed unlike Thailand. None of this nonsensical 90-day reporting etc.

 

The only problem is that some countries are islamophobic.

 

I disagree and that's why we set up here in Thailand over Malaysia. As did the multinationals I mentioned in my last post and a plethora of others.

 

IMO the only industries that Malaysia may be more attractive in would be petrochemical or computer hardware manufacture, but then again I have had reasonable success in Thailand in the oil and gas sector too. 

 

The drawbacks you describe may apply to Bob Smith from Southend who met Nok on holiday in Pattaya, and is trying to live the dream on a shoestring budget, but they simply are not a real reflection of doing business in Thailand especially if you are a corporate enterprise relocating manufacturing facilities from China as described in the OP.