On November 3, 2023, the Marketing Department of China National Textile and Apparel Council (CNTAC), and the Sub-Council of Textile Industry, China Council for the Promotion of International Trade (CCPIT TEX) jointly released the Outbound Investment and Cooperation Guide by Country for the Textile Industry (2023) at the 6th Belt and Road Textile Conference. This report introduces and analyzes the investment environment of 20 countries around the world. It provides information and guidance for textile enterprises to engage in “Belt and Road” cooperation.

South Asia - Thailand

Geography:

The Kingdom of Thailand, commonly known as Thailand, is situated in the central part of the Indochinese Peninsula. It shares borders with the Gulf of Thailand in the Pacific Ocean to the southeast and the Andaman Sea in the Indian Ocean to the southwest. The western and northwestern border is with Myanmar, the northeastern border is with Laos, east of Cambodia, and south of Malaysia. Thailand has a land area of 513,000 square kilometers, ranking third in Southeast Asia after Indonesia and Myanmar. The country consists of over 50% plains and lowlands and has a tropical monsoon climate.

Natural Resources:

Thailand’s natural resources consist of potash, tin, tungsten, antimony, lead, iron, zinc, copper, molybdenum, nickel, chromium, and uranium. Additionally, the country has reserves of barite, gemstones, petroleum, and natural gas, boasting the world’s largest potash reserves.

Infrastructure:

Thailand has a well-developed road transportation industry, with road networks covering both urban and rural areas of the country, while the railroad system is relatively underdeveloped. The aviation industry is well-developed, with 74 airports across the country and 89 international routes connecting to over 40 cities in Europe, America, Asia, and Oceania. The Mekong and Chao Phraya Rivers are Thailand’s two main inland waterway transportation routes. The country has a total of 47 ports, comprising 26 gulf ports and 21 international ports. These ports connect Thailand to various destinations such as China, Japan, the United States, Europe, and Singapore. Thailand’s current power generation capacity is generally sufficient to meet domestic demand. Typically, when setting up new factories, there is no need to provide their power generation equipment. However, as the economy grows, the disparity between electricity supply and demand is becoming more apparent.

Macroeconomy:

Thailand is one of the most industrialized and open countries in ASEAN, with a GDP of US$ 495.2 billion in 2022, the second highest among ASEAN countries. Agriculture is Thailand’s traditional main industry, and agricultural exports continue to be a significant source of foreign exchange earnings. The industrial sector has experienced rapid growth, focusing on export-driven manufacturing, particularly in industries such as food processing, electronics, textiles, and petrochemicals. The service sector in Thailand is relatively advanced compared to other ASEAN countries, with tourism being a key component of the service industry. Foreign trade is a significant factor in Thailand’s national economy. In 2022, the total trade in goods reached US$ 545.7 billion, with exports amounting to US$ 265.3 billion and imports totaling US$ 280.4 billion. Industrial products are the primary exports, with China, Japan, ASEAN, the United States, and the European Union being key trading partners. In the World Bank’s Doing Business 2020 report, Thailand ranked 21st out of all 190 economies, showcasing an overall improved business environment. The United Nations World Investment Report 2023 indicates that Thailand is expected to receive foreign investment of US$ 10.03 billion in 2022, with a total investment stock of US$ 306.16 billion.

Status of Textile Industry:

The textile industry is Thailand’s largest manufacturing sector and a pillar industry. Historically, there has been a strong industrial foundation in processing natural fibers like silk and cotton. The textile industry covers the complete production process from fibers to apparel production. Approximately 80% of the raw materials and intermediate products, such as fabrics and yarns, in the industry chain can be locally sourced. Data from Thailand’s Ministry of Industry indicates that there were about 4,830 textile and garment enterprises in Thailand in 2019. In 2020, 2,613 new businesses were set up with an investment of 3.66 billion baht, representing 16.2% of the total investment in Thailand’s light industry. Furthermore, a total of 53 projects were invested in the textile industry in 2020, covering different sectors including medical textiles, nonwovens, functional fibers, regenerated fibers, printing and dyeing, apparel, and home textiles. Nike, Adidas, GAP, and many other well-known international brands are manufactured and processed in Thailand. And Thailand is also home to High-Tech Apparel, ICC, Hong Seng Knitting, Nan Yang Textile, and other major garment manufacturing companies.

International Trade

The data from the Thai Customs Department indicates that in 2022, Thailand exported a total of US$ 6.89 billion worth of textiles and apparel. This amount is divided into US$ 4.46 billion for textile exports and US$ 2.43 billion for apparel exports. The main export destinations for these products are the United States, Japan, Vietnam, China, and Indonesia. The main exported products include apparel (35%), chemical fiber and chemical fiber yarn, fabrics (30%), and other items. During the same period, Thailand imported textiles and apparel worth US$ 5.77 billion. China is Thailand’s primary source for textile and apparel imports, representing 44.9% of the total, followed by Vietnam, Japan, Taiwan of China, the United States, and Australia. The main imported products include chemical fiber filaments and fabrics (17%), cotton, cotton yarn, and cotton woven fabrics (16%), woven garments and accessories (13%), coated fabrics, and technical fabrics (10%), among others.

Summary and Suggestion for Investment

(1) Thailand is situated in the heart of ASEAN, benefiting from its strategic location and playing a significant role in influencing the region.

(2) The infrastructure is relatively well-developed, with adequate water and electricity supply. Efforts are actively underway to promote the construction of high-speed rail and harbor facilities. It has a certain advantage in human resources, the majority of the labor force is under 35 years old.

(3) The investment environment is typically stable, characterized by a high level of policy transparency, trade liberalization, and an open and inclusive business environment. The business environment is relatively open and inclusive. Several free trade agreements have been signed, and the Regional Comprehensive Economic Partnership (RCEP) has officially come into effect, bringing new energy to investment in Thailand.

(4) Thailand generally offers a more favorable investment environment compared to other ASEAN countries, despite having higher costs than those with less developed economies. Companies looking to invest and collaborate in Thailand need to take into account political risks. Large projects often require extensive approval processes, intricate procedures, and significant initial investments. Therefore, it is crucial to be well-prepared for the relevant circumstances.

Source: CHINA TEXTILE LEADER Express