China Takes Interest in Thailand, Invests $1.2b in Industrial Zone

[Jacob Maslow]

Workers install roof sheeting for factory on December 9, 2013 in Siam Eastern Industrial Estate Rayong Thailand.

China’s investment in Thailand continues to grow, with $1.2b now invested in the Rayong Industrial Zone. A third of the industrial zone was completed in 2013, which is now home to over 60 manufacturers.

China invests $1.2b in Thai-Chinese Rayong Industrial Zone. China hopes to take advantage of a growing market and gain access to other markets globally

The majority of manufacturers in the industrial park are in industries such as vehicle parts, motorcycles, electronics and renewable energy. Since opening, the zone has employed 1,000 Chinese workers and 10,000 Thai workers.

For Chinese companies, investing in Thailand is a strategic decision. Not only is Thailand the second-biggest economy in Southeast Asia, but investments could also spur China’s exportation of products to Asean and other markets.

While China’s investments in the country are promising, there are challenges that must be overcome. One Chinese investor noted that Thailand’s government services must become more efficient at processing visas and work permits for foreign entities. Steps must also be taken to help lower production costs. These two hindrances may prevent some Chinese companies from investing in the country. Faster processing of work permits and visas would make it much easier for

Chinese companies to set up operations in Thailand.

Production costs may be higher in Thailand, but Chinese companies are still taking interest for several other reasons. Production in Thailand would allow for diversity in products’ country of origin and allow companies to take advantage of Thai’s resources, like rubber. The Thai market could also help Chinese companies expand their reach.

China has also invested in the government’s railway project, which will link Laos to China and Bangkok to Saraburi. The new railway project will be beneficial for both countries economically, politically and culturally.

Just last year, China invested Bt$38 billion and has now become Thailand’s top importer of its products and number one trading partner. This year, 2015, marks the 40^th anniversary of diplomatic relations between Thailand and China. China’s investment in Thailand is expected to accelerate as interest in the region grows.

-- 2015-02-16

[rickirs]

The Chinese government as well as other foreign governments seems more interested in investing in Thailand than the Thai government. Of course China's investment helps China's GDP growth and does nothing for Thailand's GDP growth.

The Thai government's investment in Thailand would require it to issue treasury bonds which are debt instruments. From that perspective the government refuses such an approach to investment because Prayuth says he does not want to create debt during his tenure as PM. His viewpoint is reinforced by his NCPO advisor Somkid Jatusripitak who believes that "gross domestic product should grow on its fundamentals, not from an injection of capital."

Some might call their viewpoint "kitchen economics." While that is sufficient for one's personal economy, it is completely inappropriate for a nation's economy.

[Tomtomtom69]

1000 Chinese workers are working there? Wow. Even though they are within the limits imposed by Thai labour law, which allows for up to 1 foreign worker per 4 Thai workers, I have never heard of 1000 farang workers in any industrial zone in Thailand, even if that would be allowed. Probably there are only like 20 farang workers in any given industrial zone. I wonder why their numbers are so low? Why does there need to be so many Chinese workers then as they are foreigners too? Wouldn't like 50 be enough and the rest are Thais and if necessary, labourers from Myanmar, Cambodia or Laos?