Thailand's investment applications are expected to reach a record high in 2025 for the second year in a row, fuelled by strong foreign direct investment (FDI) amid escalating US-China trade tensions, according to Krungthai Compass, a research centre under Krungthai Bank.
Kanit Umsakul, an analyst at Krungthai Compass, said this year the value of investment promotion applications from the Board of Investment (BoI) is expected to set a new record, continuing a positive trend of FDI in Thailand.
On Monday, the National Economic and Social Development Council reported a record number of BoI applications, totalling 3,137 projects in 2024, up 40.4% from the previous year, with an investment value of 1.14 trillion baht, a gain of 34.5%.
Actual BoI-approved investment tallied 850 billion baht last year, marking a 72.5% increase.
Mr Kanit said private investment would be a key driver of economic growth in 2025.
Krungthai Compass forecasts private investment growth of 3% this year, up from a 1.6% contraction last year.
Given escalating trade tensions between the US and China, many companies are likely to relocate their production bases from China and other regions to Thailand.
Thailand is competitive in attracting FDI compared with its regional peers, he said.
According to 2024 surveys by the international research centres of the Milken Institute and Kearney, Thailand ranked second behind Malaysia in terms of FDI attractiveness among the five major Southeast Asian nations. Indonesia, Vietnam and the Philippines ranked third, fourth and fifth, respectively.
FDI from Singapore, China and Hong Kong are the primary source markets for private investment in Thailand.
Krungthai Compass anticipates China will play a pivotal role in supporting Thailand's private investment, potentially surpassing Japan, said Mr Kanit. From 2016 to 2024, China's investment in Thailand steadily rose while Japan's investment declined. China's investment value is about 3-4 times higher than Japan's, noted the centre.
"With the positive FDI trend in Thailand, the country's three core business sectors of industrial estates, construction and property are expected to benefit in the initial stages," he said.
However, given the strong competition for FDI in the region, the government must focus on improving infrastructure, enhancing labour skills and expediting free trade agreements, said Mr Kanit.
Despite these challenges, he said the influx of FDI and improving private investment are contributing to new factory openings. Last year 1,234 factories closed and 2,599 new factories opened in the country. The shuttered factories were valued at 47.8 billion baht, compared with 383 billion baht for the new factories.