Global supply chains continue to undergo restructuring due to the prolonged effects of the COVID-19 pandemic, geopolitical tensions, and rising production costs in China.

In this context, Thailand has assumed a strategic role in ASEAN's efforts to strengthen supply chain resilience, supported by its geographical location, infrastructure, and investment policies.

Foreign direct investment (FDI) in Thailand reached THB 1.13 trillion (US$ 33 billion) in 2024, marking a 35% increase compared to 2023.

Labour and economic conditions

Thailand has a labour force of approximately 38 million, of whom 17 million are employed in industry and manufacturing. More than 400 technical institutes contribute to training in areas such as robotics, artificial intelligence, and digital production. Labour costs remain lower than in China, and productivity levels are improving.

Exports - comprising sectors such as automotive, electronics, food processing, textiles, and newer industries like electric vehicle (EV) components, medical devices, and aerospace - accounted for 65% of GDP in 2023.

In the first quarter of 2025, GDP recorded a quarter-on-quarter increase of 3.1%. However, full-year growth is forecast to range between 1.3% and 2.3%. The Bank of Thailand has maintained its policy rate at 1.75%, with inflation recorded between 0.5% and 0.8%.

In early 2025, the government introduced a THB 115 billion infrastructure stimulus package, intended to improve road networks, logistics hubs, and digital systems, thereby supporting export performance amid challenging global trade conditions.

Sectoral developments

Automotive and electric vehicles (EVs)

In 2024, the automotive sector contributed around 10% of GDP and employed over 800,000 individuals.

In terms of vehicle production Thailand's leading position in ASEAN was maintained, although a 12% year-on-year decline was observed during the first five months of 2025.

Registrations of EVs rose by over 70% in May 2025, with battery electric vehicles (BEVs) accounting for 23% of new registrations. The EV 3.5 incentive package allocates THB 102 billion to support the production of EVs and electric motorcycles per year by 2030.

Significant investments include BYD's US$ 500 million plant in Rayong with an annual capacity of 150,000 vehicles; Mazda's THB 5 billion project for compact EVs; and forthcoming electric pickup models from Toyota and Isuzu.

Chinese manufacturers such as Hozon, GAC Aion, Great Wall Motor, and Changan have expanded their CKD assembly operations in Thailand, benefitting from Board of Investment (BOI) incentives.

Electronics and semiconductors

In 2024, Thailand's electronics exports exceeded US$ 75 billion, including US$ 9.6 billion in semiconductors, positioning the country as the sixth-largest global exporter of semiconductor devices and accounting for approximately 4% of global integrated circuit output.

The BOI approved more than US$ 243 billion in technology projects in 2024. Notable investments include Western Digital's US$ 693 million for hard drive production upgrades.

More than 40 printed circuit board (PCB) manufacturers have established or expanded operations. Integrated circuit imports totalled THB 869 billion, representing a 27% increase, while domestic assembly and testing activities - especially for exports to Japan, the European Union, and the United States - continued to expand.

Policy framework and industrial strategy

The Thailand 4.0 strategy is focused on transforming the economy from one based on manufacturing to one driven by innovation, advanced technology, and high-value services.

In 2024, the BOI approved 3,137 investment projects - an increase of 40% compared to 2023 - with total pledged investment of THB 832 billion. Technology-intensive sectors attracted US$ 243 billion, including projects in semiconductors, data centres, and smart manufacturing.

The EV 3.5 initiative aims for zero-emission vehicles to comprise 30% of total vehicle output by 2030. To support this, 280,000 workers are to be trained by 2029, including 80,000 in semiconductors and 150,000 in EV technologies. Companies investing in workforce upskilling are eligible for tax deductions of up to 250%.

Thailand's integration into regional frameworks such as the ASEAN Economic Community (AEC) and the Regional Comprehensive Economic Partnership (RCEP) facilitates cross-border trade, streamlines rules of origin, and provides legal protections for manufacturers.

Summary

Thailand is strengthening its position as a regional manufacturing hub through increased FDI, targeted incentives from the BOI, and participation in ASEAN-wide trade frameworks. The country's infrastructure, labour force development, and policy initiatives support its role as a key platform for supply chain resilience in Southeast Asia.