Rethinking supply chains

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The disruption caused by global economic concerns, ongoing geopolitical tensions and strict COVID-19 policies in China has prompted many businesses to prioritize relocating their supply chains. The Southeast Asia region is seen as an attractive destination to diversify supply chain risk in the long term due to geographic, regulatory, and economic advantages.

Thailand, as the second-largest economy in ASEAN after Indonesia, recorded a nominal GDP of USD 495.2 billion and 2.6% annual growth in 2022(1). It boasts a well-developed transport infrastructure, significant cross-border trade, and supportive governmental policies, which have led many companies, including MNCs to shift their supply chains, especially those in the electronics, chemicals, and automotive industries, to the country.

• Thailand has benefited from the realignment of global supply chains, which have shifted towards Southeast Asia due to the global economic slowdown, geo-political tensions and COVID-19 regulations in China.
• With nominal GDP of USD 495.2 billion in 2022, Thailand is the second largest economy in ASEAN and has a highly developed infrastructure, enabling production to meet demand.

• Thailand is the 5th largest parts manufacturer for Internal Combustion Engine (ICE) vehicles in Asia and the 11th largest in the world.
• The Electric Vehicles (EVs) are seeing increased awareness as well as investment in Thailand as a part of New S-Curve development and the nation has a goal to become the EV hub for ASEAN by 2025.
• The Thai government has laid out plans to strengthen the country’s EVs manufacturing capability with the establishment of the National Electric Vehicle Policy Committee (NEVPC). Production goals have been set to 1 million EVs by 2025, 50% of total production by 2030, and 18 million EVs by 2035.
• The private sector is also investing in the EV infrastructure, with a goal of increasing the number of EV fast charging stations nationwide to 12,000 by 2030.

• Supported by rich natural resources and a skilled workforce, Thailand is popularly known as the “kitchen of the world” because it is among the world’s largest exporters of food and beverages.
• The Thai government has prioritized smart farming to revolutionize the agricultural sector by implementing the Young Smart Farmer program, which equips participants with advanced technologies such as Internet of Things (IoT) and precision farming.
• To accelerate the development of the food and beverage industry, the public and private sectors are also collaborating to develop Pathum Thani as a “food valley”, that is, an ecosystem for the food industry facilitating knowledge sharing and R&D, and centralizing an entire value chain.

• Electronics products accounted for approximately USD 42 billion of Thailand's exports in 2022, representing approximately 14% of Thailand’s total export value.
• In 2010, Thailand’s main electronics exports were computer components and integrated circuits (IC). However, to support Thailand 4.0 policies (see details below), the industry is being pushed to adopt 5G technology.
• The Thai government has set a goal of expanding 5G networks to cover 98% of the population by 2027.
• The government is also pushing the electronics manufacturing industry to develop smart appliances, microelectronics, IoT, and embedded systems as a part of New S-Curve development.

The Thai government is promoting Thailand 4.0, an economic model that aims to create a value-based economy driven by innovation, technology, and creativity. This is viewed as a key strategy to accelerate the Thai manufacturing industry by shifting from traditional to smart manufacturing supply chains through increased automation and digitalization with a greater focus on knowledge workers and highly skilled labor.