Thailand has had a remarkable economic development trajectory over the past 60 years and foreign direct investment (FDI) has been pivotal in this success. A pioneer in building its development strategy around FDI and integration in global value chains, Thailand is now a net outward investor, with rapidly growing presence in neighbouring countries. Its success in investment attraction was enabled by a combination of its early liberalisation of inward FDI for the manufacturing sector, on the one hand, and proactive investment promotion and facilitation policies under a strong Board of Investment, on the other.

This OECD Investment Policy Review of Thailand uses the OECD Policy Framework for Investment to present an assessment of the investment climate in Thailand and to discuss reform opportunities that support Thailand’s development ambitions and contribute to the Sustainable Development Goals (SDGs). After describing Thailand’s development path and future development strategies, the Review provides a snapshot on Thailand’s competitive edge to identify where challenges may lie and policy efforts are needed. It further studies trends and qualities of FDI and discusses how investment contributes to Thailand’s inclusive and sustainable development. The Review examines a broad range of policy areas including investment promotion and facilitation, the domestic and international legal framework for investment, policies to promote and enable responsible business conduct and green growth, and efforts to promote outward foreign direct investment. While the global COVID-19 crisis could slow the speed of progress towards Thailand’s ambitions, policy recommendations provided in this Review should be considered as possible investment climate reform priorities for an inclusive and sustainable recovery.

Thailand has had an impressive economic development trajectory over the past decades. Foreign direct investment (FDI) and integration in global value chains (GVCs) have been important enablers of this success. Inward FDI’s share in GDP has increased to above 50% today. The emerging global economic crisis related to the COVID-19 pandemic is expected to bring this long period of growth to a sudden halt. According to the OECD, the economy is predicted to contract by approximately 7% in 2020, where exports and FDI are likely to slow even more. Thailand’s past experience of severe floods in 2011, which also resulted in a sudden – but only temporary – interruption of GVC networks, provides some hope that Thailand’s GVC integration is quite resilient.

The Investment Policy Review provides an overview of Thailand’s development path and future development strategies, a snapshot of the current competitive edge and an assessment of trends and qualities of foreign direct investment. It provides recommendations on investment promotion and facilitation policies (including inward and outward investment), the domestic and international legal framework for investment and on the promotion of responsible business conduct and investment for green growth. This chapter summarises the main findings and recommendations of the Investment Policy Review.

The chapter provides an historical background of Thailand’s development path and related strategies over the past decades. It makes special reference to the role of foreign direct investment (FDI), the integration in the global trading system and rising social and environmental pressures. The chapter describes Thailand’s ambitious strategy for the future and how investment promotion and related policies are contributing to its implementation. The chapter also describes how the emerging global economic crisis related to the COVID-19 pandemic could affect Thailand’s development trajectory and what support measures the government has introduced.

This chapter provides a snapshot of Thailand’s competitive edge, with a focus on the four pillars targeted under the Thailand 4.0 vision: productivity, innovation, human resources and area-based development. It focuses particularly on competitiveness in targeted manufacturing activities and services, and related regional disparities. It further examines Thailand’s innovation readiness and skills development. The assessment helps identify where development challenges may lie and policy efforts are needed.

This chapter examines the performance of Thailand in attracting FDI compared to Asian and OECD peers. It examines the sectoral and geographical composition of both greenfield FDI and cross-border merger and acquisitions. The chapter also analyses how FDI contributes to selected aspects of sustainable development, notably productivity, R&D intensity, skills, wages, gender equality and carbon footprint.

This chapter analyses investment promotion and facilitation policies in Thailand, examines the institutional framework for investment promotion and facilitation, with a focus on the role and activities of the BOI, highlights key reforms and measures implemented by the government to attract investment and improve the business environment, identifies remaining challenges and proposes recommendations to address them. The chapter also describes the key characteristics of promoted firms and explores their impact on building a knowledge-based economy. It focuses on the four pillars of the 2015-21 investment promotion strategy: productivity enhancement, technology and innovation, human capital and foreign talent, and the development of specific regions.

This chapter focuses on barriers to entry and operation of foreign investors in Thailand. It explains why reducing barriers and facilitating operations for investors from abroad matter in a world of global value chains and in which Thailand aspires to move into higher value added activities in manufacturing and, particularly, in services. The chapter describes Thailand’s regime of FDI regulatory restrictions. It also points to exemption schemes and legal loopholes in the Foreign Business Act, generating uncertainty for investors and potentially affecting Thailand’s FDI attractiveness. The chapter identifies a number of policy options for consideration by the authorities.

This chapter provides an overview of Thailand’s domestic legal framework for investment protection and dispute settlement. It takes stock of the regulatory framework for investment in force today and examines the level of protection granted to investments made by both domestic and foreign investors. The chapter focuses on two main domestic laws in this regard – the Investment Promotion Act 1977 and the Foreign Business Act 1999, as amended – but also considers other laws, especially those affecting non-promoted investors. It addresses the domestic regimes for non-discrimination, expropriation of property, protection for intellectual property, land tenure and administration, cybersecurity, contract enforcement in the domestic court system, alternative dispute resolution and competition policy.

This chapter addresses Thailand’s policies with respect to investment treaties. It provides an overview of the status of Thailand’s investment treaties, and the historical development of the government’s policy towards investment treaties, with a particular focus on the design of substantive investment protections and investor-state dispute resolution (ISDS) provisions in these treaties. It then identifies a range of considerations for possible investment treaty reform that may assist Thailand in refining its investment treaty policy in the future.

This chapter reflects Thailand’s achievements in promoting and enabling responsible business conduct and includes recommendations on how promoting RBC is a strategic choice for upgrading in global supply chains and encouraging the private sector contribution to the SDGs. This chapter is part of a broader project on Responsible Supply Chains in Asia funded by the European Union.

This chapter describes Thailand’s policy framework to support investment for green growth, providing an overview of the state of play and progress made in supporting green investment. It is structured around the questions on green growth and investment raised in the updated OECD Policy Framework for Investment and the OECD Policy Guidance for Investment in Clean Energy Infrastructure. It also builds on the discussions on policy choices to support the transition to a low-emissions, climate-resilient economy in OECD (2017) Investing in Climate, Investing in Growth. The chapter reviews the current policy framework in place to promote green growth and climate change, including policies that help to improve the environmental quality of investments in general, and examines existing efforts to engage the private sector to scale up investment in renewable energy. It also highlights issues related to financing green projects in the country.

Outward foreign direct investment (OFDI) from Thailand has increased rapidly in recent years. This chapter presents recent trends, drivers and impacts of Thai investments abroad. It analyses how OFDI can contribute to Thailand’s economic growth, competitiveness and access to technology. The chapter also examines Thailand’s OFDI policies and presents policy directions on further facilitating and promoting OFDI.