Thailand risks losing ground to Vietnam’s rapidly expanding economy as concerns grow that short-term stimulus measures are taking precedence over long-term structural reforms needed to improve competitiveness.

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The issue was highlighted during Vietnamese President To Lam’s visit to Thai Prime Minister Anutin Charnvirakul to mark the 50th anniversary of bilateral relations. While the visit underscored diplomatic ties, it also drew attention to the widening economic gap between the two Southeast Asian neighbours.

Earlier this year, foreign media labelled Thailand the “sick man of Asia”, a characterisation rejected by Anutin, who pledged to achieve GDP growth of more than 3%. Despite this, critics argue that government policies continue to focus on boosting short-term consumption rather than addressing deeper economic challenges.

The government has allocated 175 billion baht for the “Thai Help Thai Plus” programme and 1.62 billion baht to provide AI skills training for five million people. However, concerns remain that these measures lack a long-term strategy to improve productivity and competitiveness.

Thailand’s economy grew by 2.8% in the first quarter of 2026, but analysts note that the figure may not yet reflect the full impact of energy shocks linked to Middle East tensions and inflationary pressures. The National Economic and Social Development Council forecasts GDP growth of between 1.5% and 2.5% this year, with a midpoint of 2%.

Vietnam, by contrast, is projected to achieve GDP growth of 7.2% in 2026. The country has continued to attract foreign investment through lower labour costs, strong manufacturing growth and policies aimed at becoming a high-income economy by 2045.

There are several factors behind the differing economic trajectories. Following the 1997 Asian Financial Crisis, Thailand experienced moderate growth, while Vietnam expanded rapidly. Thailand’s reliance on tourism also exposed vulnerabilities during the Covid-19 pandemic, when its economy contracted by 6.05%, while Vietnam maintained positive growth.

Demographic trends further highlight the contrast. Vietnam’s population exceeds 102 million, with a median age of about 34 years, while Thailand’s population is more than 70 million with a median age of 41, reflecting its transition into an ageing society.

Business leaders stated that investors increasingly favour Vietnam because of its investment environment and younger workforce. Thailand is also seen as facing difficulties competing with Vietnam in labour-intensive industries while lacking the research and innovation ecosystem that has helped Singapore dominate high-value sectors such as artificial intelligence, finance and advanced technology.

Thailand must urgently reform regulations, improve education, attract skilled immigrants and encourage multinational companies to establish regional hubs in the country. Questions are also raised about whether major technology firms would choose Thailand as a base for advanced research and development investment.

The Nation reported that Thailand continues to benefit from geographic advantages, a strong tourism sector, medical services and a competitive food industry. However achieving the government’s aim of high-income status by 2037 and progressing towards OECD (Organisation for Economic Co-operation and Development) membership will depend on deeper reforms in human capital, innovation and economic competitiveness under the government of Prime Minister Anutin.

Picture courtesy of The Nation

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Adapted by ASEAN Now Nation 31 May 2026

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Thailand need reforms, but the past and current Government will never do any reform. Conservatism and controlling every market are killing the economy. Education will never change although they pretend that students have to learn critical thinking, but the Government know as soon that is happening they will loose control of the population. Tourism was easy as due to the Vietnam War a lot of visitors came to Thailand and Thailand became a famous tourist destination. However a lack of investment and views to improve tourism has driven tourists away. There is a lot to do, but again the country is on hold with outdated labour laws, and many other laws that keep progress on a distance. Retirees are discouraged, by (like criminals) 90 day reports, annual begging for extending visa with loads of paperwork, and not allowed to do anything as a workpermit is needed for everything. There are other countries that offer more and better. Same for businesses with the for example outdated law of 51% Thai and 49% foreign... It does not encourage investors, and foreign teachers were chasing away because of too many rules and requirements. Just a few examples. And than there is the airpollution, traffic accidents, and corruption, that is holding the country back. Again as long as the conservatives keep to stay in power and refuse to reform Thailand will be behind for another few decades.

@ikke1959 Spot on!

I am here since 35 years and your analysis corresponds totally to mine. 🙂

I think that Thailand has to start thinking outside of the box!

Searching and trying to attract new markets to lure more tourists is not the only strategy to improve the economy. (Besides, it has also a seasonal fluctuation.)

Thailand has other great, yes very lucrative winning cards!

As correctly mentioned:
"Retirees are discouraged, by (like criminals) 90 day reports, annual begging for extending visa with loads of paperwork, and not allowed to do anything as a working permit is needed for everything."

However,
the Retirement-Market has a great potential and Thailand is neglecting it completely!

Thailand has immense advantages with a top notch infrastructure, climate and much more to offer!

• Most beautiful Country and climate

• Oversupply of housing and apartments (turning a loss into profit)

• State of the art medical & hospital infrastructure

• Maybe worldwide the best Services - Human Resources

• Still affordable costs of living

• and many more

Most Retired People in Western Countries are struggling to survive since the Pensions are much too low compared to the cost of living in their Country!

The Pension in the European Countries varies from 4'000 to 1'200 Euros per month.

The average of the majority is around 1'600 Euro = +/- 60'000 Bt. monthly.

So, why not take advantage of this opportunity?

The advantages are obvious:

• Long term rental and Real Estate increase

• Good utilization in the healthcare sector

• More jobs - such as domestic help, care, etc.

• Active support of the local economy all year long!

• No troublemakers Guests! (They enjoy peace and calm, happy retirement)

• No seasonal fluctuation!

• And many more...

This is, in my humble opinion, a totally neglected factor that would cause a considerable economic boost all year long!

So why not make Thailand THE trendy Retirement Hub?

Articles like this one have appeared regularly for decades, yet Thailand has done essentially nothing about the challenge from Vietnam other than wring its hands 🤷

Thailand doesn't risk falling behind Vietnam, it is already well into the process of falling behind. The results just aren't very visible yet, as Thailand had an enormous head start. But it is happening. Fast.

On its current trajectory Thailand is at risk of falling behind Bangladesh!

I recently drove from Ubon to Bangkok, what a disgrace to see that there was barely a kilometer of flat road while crossing about half the country.

Road works are everywhere, but the workers are missing. Where in China thousands of workers would expedite the work in a few months, here a handful of workers will take 5 years or more to do the job while the parts not under construction now will degrade so much that new construction will be needed, and the cycle will go on.

That's just an example.

The railroads from the early 20th century cross the country at the astonishing average speed of 50 km/h.

The electricity network from the late 19th century crashes down every time it rains, or there is wind, or even when the weather is fine.

The public school system from the 18th century is run by teachers who care more about the uniform and the haircut of their students than on the little they are able to teach them, when they are not drunk or beating up a reluctant student.

The public hospitals look like markets with attending family members lying on the floor while the nurses are busy doing paperwork instead of taking care of the patients.

Paperwork! And stamps! Man, do they love them.

Any formality requires a stack of documents bearing multiple signatures and countless stamps.

The digital revolution clearly hasn't reached the Thai shores.

The country is at best at standstill, when it is not regressing...

Thailand is losing massively to Vietnam and still can’t figure out why. Ignorance is no excuse and they will continue their decline.

Thailand is already well behind Vietnam. The only thing that Vietnam lacks is the speed of processing passports in Saigon, then tourism will out pace Thailand.

That's good news, on the other hand, they won’t learn from it, because it’s never their fault.

On 5/31/2026 at 11:27 AM, Pesche said:

@ikke1959 Spot on!

I am here since 35 years and your analysis corresponds totally to mine. 🙂

I think that Thailand has to start thinking outside of the box!

Searching and trying to attract new markets to lure more tourists is not the only strategy to improve the economy. (Besides, it has also a seasonal fluctuation.)

Thailand has other great, yes very lucrative winning cards!

As correctly mentioned:
"Retirees are discouraged, by (like criminals) 90 day reports, annual begging for extending visa with loads of paperwork, and not allowed to do anything as a working permit is needed for everything."

However,
the Retirement-Market has a great potential and Thailand is neglecting it completely!

Thailand has immense advantages with a top notch infrastructure, climate and much more to offer!

• Most beautiful Country and climate

• Oversupply of housing and apartments (turning a loss into profit)

• State of the art medical & hospital infrastructure

• Maybe worldwide the best Services - Human Resources

• Still affordable costs of living

• and many more

Most Retired People in Western Countries are struggling to survive since the Pensions are much too low compared to the cost of living in their Country!

The Pension in the European Countries varies from 4'000 to 1'200 Euros per month.

The average of the majority is around 1'600 Euro = +/- 60'000 Bt. monthly.

So, why not take advantage of this opportunity?

The advantages are obvious:

• Long term rental and Real Estate increase

• Good utilization in the healthcare sector

• More jobs - such as domestic help, care, etc.

• Active support of the local economy all year long!

• No troublemakers Guests! (They enjoy peace and calm, happy retirement)

• No seasonal fluctuation!

• And many more...

This is, in my humble opinion, a totally neglected factor that would cause a considerable economic boost all year long!

So why not make Thailand THE trendy Retirement Hub?

Maybe they would prefer to keep their culture and not have it ruined by economic refugees. Perhaps they have looked at what a major intake of economic refugees has done to many European countries. In some cities the local culture and way of life has been changed forever. Can't blame them for not wanting that.

Not surprised. Vietnamese are a tough bunch with a genuine fighting spirit (i think they proved it well in the past, what, 80 years? AND they are very hard working. Thais are none of that.

29 minutes ago, Jedimaster said:

On its current trajectory Thailand is at risk of falling behind Bangladesh!

I recently drove from Ubon to Bangkok, what a disgrace to see that there was barely a kilometer of flat road while crossing about half the country.

Road works are everywhere, but the workers are missing. Where in China thousands of workers would expedite the work in a few months, here a handful of workers will take 5 years or more to do the job while the parts not under construction now will degrade so much that new construction will be needed, and the cycle will go on.

That's just an example.

The railroads from the early 20th century cross the country at the astonishing average speed of 50 km/h.

The electricity network from the late 19th century crashes down every time it rains, or there is wind, or even when the weather is fine.

The public school system from the 18th century is run by teachers who care more about the uniform and the haircut of their students than on the little they are able to teach them, when they are not drunk or beating up a reluctant student.

The public hospitals look like markets with attending family members lying on the floor while the nurses are busy doing paperwork instead of taking care of the patients.

Paperwork! And stamps! Man, do they love them.

Any formality requires a stack of documents bearing multiple signatures and countless stamps.

The digital revolution clearly hasn't reached the Thai shores.

The country is at best at standstill, when it is not regressing...

So why are you still here?

On 5/31/2026 at 3:39 AM, Georgealbert said:

Thailand must urgently reform regulations, improve education, attract skilled immigrants and encourage multinational companies to

Well, education is for me the most essential obstacle.

To maintain power the powerful in Thailand won't want to have better or high education.

Simply speaking it's easier to rule stupid but educated.

Education is a danger for the whole system/quasi democracy.

Dare not to go further.

On 5/30/2026 at 7:29 PM, ikke1959 said:

Conservatism and controlling every market are killing the economy. Education will never change although they pretend that students have to learn critical thinking, but the Government know as soon that is happening they will loose control of the population.

Awesome. I could never understand why they keep doing things over and over and get the same bad result. This is the most helpful comment I’ve read on here. The part about the critical thinking and gov loosing control. I never looked at that way, but 100 percent gov. Thank you.

The crux of the matter is that 'long-term' structural reforms are not permitted in Thailand, as they threaten the interests of those who are really running the country. Any individual who campaigns on this is eventually demonized by the establishment, barred from politics, and their party dissolved in lawfare orchestrated from the top. Everybody knows this, including the authors of these pointless articles. The mandate of those allowed to govern is to maintain the failing statue quo, enrich themselves and above all to not rock the boat. Endless, short-term stimulus measures are one of the only options. Couple this with unimaginative, untalented politicians who are only in the job because of their connections and status, and you are on the road to nowhere for the overwhelming majority of the population.

Pesch, the govt pensions paid to retirees living overseas by the British and Australian govts (as examples) are BELOW the monthly threshold for a retirement extension in Thailand.

This forces them to use the expensive and corrupt Agent system, hardly conducive to a relaxed retirement

On 5/31/2026 at 6:29 AM, ikke1959 said:

Thailand need reforms, but the past and current Government will never do any reform. Conservatism and controlling every market are killing the economy. Education will never change although they pretend that students have to learn critical thinking, but the Government know as soon that is happening they will loose control of the population. Tourism was easy as due to the Vietnam War a lot of visitors came to Thailand and Thailand became a famous tourist destination. However a lack of investment and views to improve tourism has driven tourists away. There is a lot to do, but again the country is on hold with outdated labour laws, and many other laws that keep progress on a distance. Retirees are discouraged, by (like criminals) 90 day reports, annual begging for extending visa with loads of paperwork, and not allowed to do anything as a workpermit is needed for everything. There are other countries that offer more and better. Same for businesses with the for example outdated law of 51% Thai and 49% foreign... It does not encourage investors, and foreign teachers were chasing away because of too many rules and requirements. Just a few examples. And than there is the airpollution, traffic accidents, and corruption, that is holding the country back. Again as long as the conservatives keep to stay in power and refuse to reform Thailand will be behind for another few decades.

I heard some retirees talking the other day and one of them was saying that Thailand is the only country he knows where you have to report to Immigration every 90 days to say that nothing has changed in your circumstances.

(Note re paperwork: My first change to a Marriage extension involved EIGHT visits to Immigration, and 147 photocopies, most of which had to be repeated the following year - ridiculous!)

1 hour ago, biggles45 said:

Pesch, the govt pensions paid to retirees living overseas by the British and Australian govts (as examples) are BELOW the monthly threshold for a retirement extension in Thailand.

This forces them to use the expensive and corrupt Agent system, hardly conducive to a relaxed retirement

Nobody is forcing anyone to do anything. If your pension is too low perhaps you should not be in Thailand, or have planned your finances a little better. Cambodia may suit your financial position.

Some people seem to think the sole purpose of Thailand is to provide a suitable lifestyle for pensioners.

It is not.

Thailand makes access for financially viable retirees quite easy. Underfunded retirees ,not so much, and who can blame them?

3 hours ago, emptypockets said:

Maybe they would prefer to keep their culture and not have it ruined by economic refugees. Perhaps they have looked at what a major intake of economic refugees has done to many European countries. In some cities the local culture and way of life has been changed forever. Can't blame them for not wanting that.

I appreciate what you say in terms of not wanting their culture changed. But take a look around Phuket, Samui and Pattaya now. It’s hardly authentic Thailand. In fact, nothing like authentic Thailand.

So if losing their culture was a concern, they burned that boat a long time ago.

3 hours ago, biggles45 said:

Pesch, the govt pensions paid to retirees living overseas by the British and Australian govts (as examples) are BELOW the monthly threshold for a retirement extension in Thailand.

This forces them to use the expensive and corrupt Agent system, hardly conducive to a relaxed retirement

Or have 800k in your Thai account.

If you don't have 800k and/or your pension in below 65k , maybe Thailand is not for you ?

4 hours ago, emptypockets said:

Maybe they would prefer to keep their culture and not have it ruined by economic refugees. Perhaps they have looked at what a major intake of economic refugees has done to many European countries. In some cities the local culture and way of life has been changed forever. Can't blame them for not wanting that.

So very true emptypockets, just look at the UK importing thousands of uneducated illegal migrants that are flooding the welfare system. Now in Thailand the Russians are establishing themselves into many aspects of Thai society buying up real estate and starting illegal business that take away jobs from the Thai citizens. The mongers that come to Thailand and live on the Dark Side or on low budget, low class Soi Bukow encourage poor Issan women to proselytize themselves. No respectable foreign business wants to set up a new business in Thailand with its reputation as a sex haven for low life, low class mongers. Vietnam offers a much more healthy environment for new business without the sex expats and pensioners.

On 5/31/2026 at 8:27 AM, Pesche said:

Thailand has to start thinking outside of the box!

Like no military coups and military-controlled government when not in direct control.

Two big problems. Innovation, anything new, anything bold, is frowned upon. When a new idea somehow gets proposed, it eventually dies a long, slow death as it goes thru committee after committee after committee. If it somehow survives all the committees, it's then killed when this small group or that small group opposes it, for whatever reason. I arrived in 2010 and I can't think of a single big government initiative that went thru since then. A few infrastructure projects here and there and that's about it.

And we can already see the problems Vietnam are experiencing. Fights on the streets space moped accidents, overcrowding and for the poor old backpacker not so cheap anymore...where's the next place worth retiring???.. Malaysia???

3 hours ago, Screaming said:

So very true emptypockets, just look at the UK importing thousands of uneducated illegal migrants that are flooding the welfare system. Now in Thailand the Russians are establishing themselves into many aspects of Thai society buying up real estate and starting illegal business that take away jobs from the Thai citizens. The mongers that come to Thailand and live on the Dark Side or on low budget, low class Soi Bukow encourage poor Issan women to proselytize themselves. No respectable foreign business wants to set up a new business in Thailand with its reputation as a sex haven for low life, low class mongers. Vietnam offers a much more healthy environment for new business without the sex expats and pensioners.

Are you joking .. Vietnam has become almost as bigger craphole as Thailand because of tourists...

8 hours ago, Jedimaster said:

On its current trajectory Thailand is at risk of falling behind Bangladesh!

I recently drove from Ubon to Bangkok, what a disgrace to see that there was barely a kilometer of flat road while crossing about half the country.

Road works are everywhere, but the workers are missing. Where in China thousands of workers would expedite the work in a few months, here a handful of workers will take 5 years or more to do the job while the parts not under construction now will degrade so much that new construction will be needed, and the cycle will go on.

That's just an example.

The railroads from the early 20th century cross the country at the astonishing average speed of 50 km/h.

The electricity network from the late 19th century crashes down every time it rains, or there is wind, or even when the weather is fine.

The public school system from the 18th century is run by teachers who care more about the uniform and the haircut of their students than on the little they are able to teach them, when they are not drunk or beating up a reluctant student.

The public hospitals look like markets with attending family members lying on the floor while the nurses are busy doing paperwork instead of taking care of the patients.

Paperwork! And stamps! Man, do they love them.

Any formality requires a stack of documents bearing multiple signatures and countless stamps.

The digital revolution clearly hasn't reached the Thai shores.

The country is at best at standstill, when it is not regressing...

I had a great chuckle when I read, "Paperwork! And stamps! Man, do they love them" A simple transaction at a Sydney bank is normally completed in a few minutes through a computer but, here in Thailand it involves me signing about four forms and the bank clerk rubber stamping numerous forms etc. Same at immigration, they love their rubber stamps and they have a larger selection than the bank.

1. Over focus on tourism, when more attention should be given to industry and diversification of income sources.

2. Monopolization of many industries/sectors. This needs to be broken to incentivize others to enter the market. But difficult to do as the oligarchs have too much power.

3. Remove the power of the military from politics/government.

4. Decentralize industry by moving to other areas of the country to help provide work opportunities to the countryside.

5. Etc., etc.

Back in the mid 60's Thailand was at the same economic level as South Korea, but look at the difference now. SK focused on industrialization and infrastructure, buit Thailand just farted in the wind, one coup after another. Also, in 1988 the military was removed from power in South Korea and a true democracy arose. While the Thai government is supposedly democratic, the military still holds the true power. This needs to change so the country can move forward. It is sad to see other countries overtaking Thailand such as Vietnam, but if nothing is done to change the current system, then no real improvement can be expected.

11 hours ago, khunjeff said:

Articles like this one have appeared regularly for decades, yet Thailand has done essentially nothing about the challenge from Vietnam other than wring its hands 🤷

Fair comment- the writing has been on the wall for a long time- but the government seems to have failed to really do much to widen Thailand's appeal

Vietnam can see the errors made here and will no doubt try to avoid repeating them- whilst offering a cheaper alternative!

If you take a Western perspective, then you'll blame Vietnam for being more competitive than Thailand. Like China outcompeting the US. When you can no longer compete, then you threaten to go to war. So I guess Thailand can threaten Vietnam with war - or - find ways to work with Vietnam to become more competitive in the Asean markets.

The only upside might be Viet tourism growth will force Thailand to shift it's reliance away from it.

And if the economy gets bad enough the political tide turns and the autocrats are defeated at elections, but I'm not holding out much hope for that 🙁