Newsletter: Thailand - A Strategic Hub for Expansion into Southeast Asia

Introduction

Thailand is increasingly becoming a preferred destination for businesses eyeing expansion into Southeast Asia. With its strengthening digital economy, strategic geographical position, business-friendly policies, and commitment to technological advancement, it offers various opportunities for growth. Let’s break down why Thailand could be the ideal hub for your business, with insights from recent reports and projections.

Strategic Location and Market Access

Thailand sits right at the heart of Southeast Asia, giving it direct access to key markets like Cambodia, Laos, Myanmar, Vietnam, and Malaysia. This central positioning allows businesses to reach over 600 million consumers across the ASEAN region. Infrastructure investments, such as the Eastern Economic Corridor (EEC) project, are enhancing connectivity, further cementing Thailand's role as a gateway for trade and investment.

Expanding Digital Economy

Thailand’s digital economy is not just growing; it is transforming how businesses operate. In 2022, its digital economy was valued at THB 1.28 trillion (USD 35 billion) and is projected to reach USD 53 billion by 2025, potentially growing to USD 100-165 billion by 2030 according to Nation Thailand’s reports. This growth is driven primarily by e-commerce, digital financial services, and online travel.

In 2023, the e-commerce sector played a significant role in Thailand's digital economy, contributing to 61% of its total Gross Merchandise Value (GMV). This sector saw a 10% increase compared to the previous year, reaching a value of USD 22 billion. Looking ahead, the growth trend is expected to continue, with the sector projected to reach USD 30 billion by 2025.

Tourism's gradual recovery has positively impacted the online travel sector, which reported an 85% year-on-year increase in 2023, resulting in a total GMV of USD 5 billion. While the numbers have yet to return to pre-pandemic levels, government initiatives like visa waivers for Chinese visitors are in place to attract more tourists. These efforts aim to facilitate a full recovery of the tourism industry by 2024.

The digital financial services sector is among the fastest-growing areas in Southeast Asia. In Thailand, digital lending expanded significantly in 2023, growing by 65% to reach a loan book value of USD 12 billion. This rapid growth underscores the increasing demand for digital financial solutions within the country.

Business-Friendly Environment

Thailand’s government has been proactive in creating an environment conducive to business. The Board of Investment (BOI) offers tax incentives, import duty exemptions, and streamlined processes for company registration, helping businesses set up more efficiently. Despite some challenges, such as a high household debt ratio reaching 90.9% of GDP in the third quarter of 2023, the country is showing signs of economic recovery. The Bank of Thailand projects GDP growth of 3.2% in 2024, potentially reaching 3.8% if new digital initiatives are successful.

High Internet Penetration and Social Media Engagement

Thailand’s online community continues to grow in both size and impact. By early 2024, 88% of the population had internet access, providing businesses with a broad and actively engaged consumer base.

One of the key social media platforms has an advertising reach that covers 68.3% of the country's total population, highlighting its vast influence. Another major platform engages 44.2 million users, accounting for 61.5% of Thailand's population. Additionally, short-form video content remains popular, reaching 75.8% of adults aged 18 and above.

This extensive use of social media provides companies with valuable opportunities to engage with a diverse online audience, making Thailand an attractive market for e-commerce and digital services.

Skilled Workforce and Focus on Technology

Thailand is actively developing a workforce to meet the changing demands of the digital economy. Through a strong focus on education and vocational training in technology and digital literacy, both the government and private sector have helped create a pool of skilled professionals capable of supporting new and diverse business ventures.

AI and other emerging technologies are being increasingly integrated into various sectors across the country. Many businesses are utilizing AI to streamline operations, boost productivity, and drive innovation in their processes. This shift in technology presents new opportunities for companies looking to invest and grow within Thailand's evolving market.

Tourism and Export Sector Recovery

Tourism, a significant part of Thailand’s economy, is gradually recovering. Although it has yet to reach pre-pandemic levels, government initiatives, including visa waivers for tourists, are expected to boost numbers to full recovery by 2024. Exports have also shown signs of improvement. The electronics sector, in particular, grew 8% year-on-year in October 2023, indicating a positive trend.

Conclusion

Thailand is presenting itself as an increasingly attractive base for businesses looking to expand into Southeast Asia. The country's digital economy is flourishing, supported by strategic policies and infrastructure investments. With a vast, engaged online population, supportive business environment, skilled workforce, and a growing technological landscape, Thailand provides the ideal setting for businesses aiming for sustainable growth in the region.

Thank you,

Asli Sari

Corporate & Legal Services, Atlascorp BV

CIO, +90 Ventures

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Sources

DataReportal for social media and internet statistics

Nation Thailand for insights on the digital economy's growth and projections

Deloitte for economic outlook and technological trends

The Story Thailand for market drivers and developments in key sectors