Observing China’s contribution and investment in the Belt and Road Initiative (BRI), business prospects are further calling for Chinese Investors. Around 1.49 billion dollars worth of foreign direct investments were sent from China to Thailand in 2021. China is a constant contributor to the FDI and GDP of Thailand, creating new opportunities for other nations as well. This article intends to explain the ongoing and upcoming business opportunities in Thailand for Chinese Investors. Read to identify the best business in Thailand in 2023!
Why Thailand is the Hub for Chinese Investors?
For a long, China is consistently investing in Thailand. Due to this reason, Thailand has become a hub for many Chinese investors. However, a major reason is the strategic location of Thailand. The kingdom lies at the center of the ASEAN free trade area with access to both China and India.
In the push for digital economies, Thailand is growing as a significant hub for connectivity and new technology in Asia. Chinese investments are already in numerous Thai ventures. Investments in cryptocurrencies, fintech, blockchain, and AI are raising and making a lot of money. Additionally, ventures in healthcare, particularly medical tourism, assure great profit in Thailand.
The country is now playing a highly competitive global role in foreign investment into the South Asian region. All was possible due to the substantial infrastructure connectivity plans connecting Thailand to ASEAN. Additionally, Thailand connects well with other export markets and the construction of multiple free trade zones on outlying islands.
Thailand is a member of both ASEAN and RCEP. Therefore, this illustrates that its development with free trade as a manufacturing hub will allow it to become a China investment alternative. Additionally, this will be beneficial for foreign investors wishing to reduce their China reliance. China is investing in both light manufacturing zones and a nationwide digitization program. All this is in conjunction with the China-ASEAN Free Trade Agreement and the recent RCEP agreement.
Foreign Direct Investment (FDI) Background from China
The COVID-19 pandemic, according to the Bank of Thailand, caused a sharp fall in foreign investment (FDI) in Thailand. FDI declined from US$13.2 to US$4.8 billion between 2018 and 2019. It decreased to -$4.8 billion in 2020. China’s investments in Thailand, Southeast Asia’s second-largest economy, continuously expanded throughout the epidemic period, while others were withdrawing.
Notably, China’s investment requests in 2019 far outpaced Japan’s for the first time, with an investment value of US$8.7 billion under 203 approved projects, far outpacing Japan’s $2.4 billion (277 projects) and third-ranked Hong Kong’s $1.2 billion (64 projects).
FDI in the Thai Trade Industry from China
For nine years running, China has been Thailand’s top trading partner. Data from China’s General Administration of Customs show that bilateral trade volume increased 33% annually to US$131.18 billion in 2021. However, import-export or trading has always been a great industry and hence can be a cradle for the best business in Thailand in 2023 for Chinese investors.
FDI in Infrastructure Industry from China
High-speed rail between Don Mueang, Suvarnabhumi, and U-Tapao is a contract for the construction of a US$7.4 billion high-speed railway linking three airports. The contract came to force in October 2019 after approval from the State Railway of Thailand and a consortium that included China Railway Construction Corporation (CRCC).
There is a second high-speed rail line project in Thailand. This is to connect the Don Mueang International Airport, Suvarnabhumi Airport, and U-Tapao International Airport. It is scheduled to open in 2026 and is officially called the High-Speed Rail Linking Three Airports Project.
Project to Create a Railway Between China, Thailand, and Laos
In December 2021, the government established a working panel, as suggested by the Transport Ministry, to better coordinate with Laos’s transport authorities on plans to build a railway connecting the two nations. This is a piece of a high-speed rail project connecting Thailand’s rail network with the Kunming-Vientiane-Kunming Railway (Laos). The project in Thailand comes in three phases:
- 253 km Bangkok-Nakhon Ratchasima segment,
- 356 km Nakhon Ratchasima-Nong Khai part, and,
- 16 km section from Nong Khai to Vientiane.
Eastern Economic Corridor
The Eastern Economic Corridor, or China/EEC, is a hub for new investment that focuses on technology, innovation, SMART manufacturing, and tourism. It is around 90 km southeast of Bangkok. In the specifically designated Thai SEZs, such as EEC and the four SEZs near the Thai borders, Chinese businesses have so far developed manufacturing facilities, research hubs, or operational hubs.
The Thai-Chinese Rayong Industrial Park, in Thailand’s EEC, was the creation of the Chinese Holley Group and the Thai industrial estate developer Amata. Over 100 Chinese manufacturers have invested over US$2.5 billion in this SEZ (alone), which presently employs over 20,000 Thai employees and over 3,000 Chinese expatriates.
FDI in E-commerce Industry from China
For a combined investment of up to US$500 million, Provident Capital and Thailand’s largest retail conglomerate Central Group joined up with JD.com (JD Finance) in September 2017 to launch two Thailand-based joint ventures (JVs) in e-commerce and fintech. A financial services app, Dolfin became active in September 2019 in support of JD.com and Central Group, a Thai company with interests in shopping, real estate, and merchandise. The new service will offer digital loans, insurance, and wealth management options in addition to an e-wallet feature.
Best Business in Thailand in 2023: Opportunities for Chinese Investors in Thailand
Thailand is growing to be a Digital Hub. This transformation will never be possible without the intervention of technical upliftment. China, being one of the leaders in the field of Digital Transformation, automatically makes its investors eligible for this shift. Therefore, venture in the Digital Economy is going to be the best business in Thailand in 2023 for Chinese Investors.
Next comes the Bio-Circular-Green (BCG) Economy. The Board of Investment (BOI) of Thailand is prioritizing investments in the field. Additionally, it is granting privileges for investors in starting ventures pertaining to innovation and creativity in the segment. Furthermore, BOI Thailand is also providing reductions and privileges for relocation and development of already undergoing business in Thailand.
The following two projects are iconic examples to establish the fact that the Thai Market has always been a great avenue of business for Chinese Investors:
First 5G Smart Hospital in ASEAN
The “first and largest” 5G smart hospital project in Southeast Asia. According to Siriraj Hospital and Huawei, the project started in December 2021. The Siriraj 5G Smart Hospital is a pilot program that will eventually expand to other ASEAN hospitals.
The Siriraj World Class 5G Smart Hospital project consists of nine sub-projects. This includes intelligent emergency rooms and emergency medical services, a pathological diagnosis system with 5G and AI. Notably, the AI platform is for noncommunicable diseases and intelligent inventory management. Additionally, it has a permission-based blockchain for personal health records. Furthermore, intelligent logistics with 5G self-driving cars, multi-access edge computing, and hybrid cloud system are part of its digital infrastructure.
ASCEND – First Fintech Unicorn of Thailand
A valuation of US$1.5 billion after a new investment round in September 2021 marks the incorporation of Ascend Money. This business is sponsored by Ant Group and Charoen Pokphand Group and became Thailand’s first fintech unicorn. Please note that Ant first contributed to the 2016 round. The business plans to utilize the additional funding to enhance TrueMoney Wallet, a mobile payments app. Additionally, it aims to broaden digital financial services in South-East Asia. The firm also operates in Indonesia, the Philippines, Vietnam, Myanmar, and Cambodia. In Thailand, TrueMoney now has a 53% market share, making it the most popular app.
These two examples prove that the healthcare and fintech industries can also generate options for the best business in Thailand in 2023 for Chinese investors.
The Bottomline
The Thai government has slightly altered its estimate of the country’s economic growth in 2022 from a range of 2.5 to 3.5% growth to 2.7% to 3.2% growth, citing increasing consumption and exports as well as a recovery in the key tourist industry. Early in August 2022, Thai Prime Minister Prayuth Chan-Ocha informed his cabinet that the economy would increase by 4.2% in 2023, the fastest rate in the previous five years.
Thailand is classified as an upper middle-income country by the World Bank, with a gross national product per capita of US$7,159.
So, 2023 is going to be the best time for Chinese Investors to start ventures in different industries. Specifically, when the country is spearheading the fields of Digitalization and Industry 4.0, technical advancements will be given priority. If you are from China and want to start your venture in Thailand, feel free to write to us at officer@konradlegal.com.
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