Emerging Markets: Thailand

China may be the dominant player in Asia’s economy, but it isn’t the only destination for businesses looking to expand into that region of the world.  Thailand has become another player in that area of the world, given its business-friendly initiatives and beloved stature with expats.

Already, Thailand is Southeast Asia’s second-largest economy – behind Indonesia – with further growth fueled by a major economic development effort, the Eastern Economic Corridor, which aims to elevate Thailand’s status as a premiere destination for foreign businesses.

What is the Eastern Economic Corridor (EEC)?

The EEC is a special economic zone that encompasses three provinces in eastern Thailand, established by the Thai parliament in 2017. The goal of the EEC is to drive economic and social improvements to the region through a variety of initiatives, such as infrastructure improvements, tax breaks, relaxed visa requirements and expedited investment approval. In its first year, the EEC received $9.3 billion of promised investments.

The Thai government hopes to transform the region into a tech and manufacturing hub by bringing in businesses and investments that will meet the needs of the global economy in the coming decades, particularly those businesses located in China, the United States, Japan and South Korea. It hopes to complete the EEC by 2021.

What industries is the EEC targeting?

The EEC is targeting 12 specific industries seen as high-growth markets. These include next-generation automotive, smart electronics, medical tourism, agricultural and biotechnology, robotics and automation, aviation and logistics, biofuels and biochemicals, digital, food and beverage, defense, comprehensive healthcare, human resources and education development.

Businesses in these industries can apply for various incentive packages with the Thailand Board of Investment (BOI). Many see these incentives as a way to counter Thailand’s reputation as being overly bureaucratic for companies seeking to do business in the country.

Points of concern

While the design and initial progress of the EEC is promising, recent reports highlight a few concerns regarding Thailand’s economy. Both exports and investments slowed last year, causing Thailand’s economy to grow only 2.4%, its weakest growth in the past five years, according to Reuters. The World Bank recently downgraded its growth outlook for 2020 to 2.7%.

Also, some experts fear a continued downward trend due the coronavirus’ impact on the country. While the full impact of the coronavirus crisis is yet to be determined, Thailand’s geographic and economic proximity to China is fueling concerns about its stability.

Adjusting to life in Thailand

There is no shortage of expat blogs and resources extolling the virtues of life in Thailand. Many point to its low cost of living, hospitable culture and beautiful landscape as the most notable benefits for those relocating to the country, but there still are considerations businesses need to account for to help assignees have a smooth relocation.

Cheaper cost of living

Like life in other developing countries, most Americans are surprised by how far the dollar – or rather, the baht, Thailand’s currency, goes. It varies based on a person’s lifestyle, but it’s entirely possible to live on less than $2,000 a month in major cities like Bangkok and significantly less in other parts of the country. Thailand also allows foreign workers to buy property, which is appealing to those who hope to build equity via their residence while in the country. As is the case with any country on the rise, home and apartment prices have been increasing recently. While still cheap compared to U.S. standards, it isn’t as affordable as it once was for expats.

Language and cultural training

Learning a foreign language often is a challenge – and the Thai language is no exception. The tone in which words are expressed dictates their meaning, and the script is different altogether than the English alphabet. Employees on assignment in Thailand will need extensive language training to at least get the basics. Fortunately, most Thai citizens are accommodating to those who make some attempt to speak their language.

Interpersonal and organizational dynamics in Thailand mirror those common across Southeast Asia. Rarely are Thais direct, and they generally will avoid public confrontations – rather, seeking a compromise to avoid “losing face” among their peers. This can pose a challenge for many assignees, who also will need multicultural training for how to navigate these dynamics to have a fruitful and positive experience while on assignment.

Visa process

As noted above, companies in those industries targeted for the EEC have relaxed visa requirements for foreign workers, but those businesses that aren’t in those EEC industries will need to fulfill certain obligations like having a 4:1 ratio of Thai to foreign employees. Again, Thailand has a reputation for being bureaucratic. You’ll want to walk your assignees through the process as much as possible to avoid any missteps or frustrations.

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There are exceptional benefits for both businesses and individuals alike when it comes to Thailand. A growing economic development region presents many opportunities for companies, particularly those in “next-gen” industries. At the same time, workers can enjoy a destination that is rich in natural beauty and boasts an accommodating culture and low cost of living. Like any country, there are potential issues that should be monitored, most notably the coronavirus for 2020, but barring any major unexpected crises, Thailand remains a positive emerging market for foreign business operations.

If your company is expanding its operations in Thailand and you have questions about the relocation process, don’t hesitate to contact us.


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