Thailand's strategic position takes center stage: seizing opportunities in global supply chain realignment

KPMG explores Thailand’s position and strategic advantages as a key player in supply chain diversification and realignment for global businesses.

KPMG explores Thailand's advantages in global supply chain diversification and realignment

3 min read

EN | TH

Bangkok, 19 June 2023 – KPMG in Thailand, a leading professional services firm, highlights Thailand’s potential as a preferred destination for businesses seeking to realign their supply chains amidst global economic concerns and geopolitical tensions. The country’s strategic advantages, robust infrastructure, competitive labor market, and favorable business environment make it an attractive choice for companies looking to diversify their supply chain risk in the long term.

Thailand, as the second-largest economy in ASEAN, recorded a nominal GDP of USD 495.2 billion with a 2.6% annual growth in 2022. Its well-developed transport infrastructure, significant cross-border trade, and supportive governmental policies have prompted many multinational corporations (MNCs) to shift their supply chains, particularly in the electronics, chemicals, and automotive industries, to the country.

Thailand’s strategic location, coupled with its high growth potential, offers businesses an advantageous position within Southeast Asia. As global businesses navigate the complexities of today’s supply chain landscape, Thailand emerges as a compelling destination. Its well-developed infrastructure offers companies looking to shift their supply chains access to a high-growth market and efficient production capabilities to meet evolving demands.

Sukit Vongthavaravat
Partner, Head of Advisory
KPMG in Thailand

Furthermore, Thailand’s robust infrastructure development plays a crucial role in supporting supply chain operations. The completion of the first phase of the high-speed rail project, connecting Bangkok to strategic locations within Thailand and the Malaysian border by 2026, will enhance connectivity and facilitate trade both domestically and regionally. Additionally, the implementation of the Thailand 4.0 model, which promotes the adoption of 5G networks and the advancement of digital infrastructure, creates opportunities for increased automation and digitalization within supply chains.

Thailand’s availability of good quality labor at a competitive cost is a key advantage for businesses. With a daily minimum wage that aligns with its Southeast Asian peer group, companies can access a cost-efficient workforce with diverse skill sets. However, it is essential to consider rising minimum wages in the coming years due to the increasing cost of living and domestic demand.

Ian Thornhill
Partner, Head of Deal Advisory
KPMG in Thailand

Moreover, Thailand’s investor-friendly climate and government support further reinforce its attractiveness for supply chain relocation. The development of the Eastern Economic Corridor (EEC) aims to establish Thailand as the leading economic zone in ASEAN, providing businesses with numerous investment opportunities. Thailand has signed 13 Free Trade Agreements (FTAs) and ratified the Regional Comprehensive Economic Partnership (RCEP) agreement, eliminating trade barriers and facilitating international trade.

Thailand’s key sectors in the supply chain, including automotive, food and beverages, and smart electronics, offer significant growth opportunities. The electric vehicles (EV) industry is experiencing increased investment with the country’s aim to become the hub for electric vehicles in ASEAN by 2025. The food and beverage industry is advancing through smart farming and the establishment of industry ecosystems. Moreover, various government agencies are planning to support the smart electronics sector through an action plan spanning 2023-2027. There are measures which aim to enhance competitiveness, promote the development of smart electronic systems, stimulate demand, and establish an ecosystem for the smart electronics industry, thereby attracting potential new investments from China.

Malika Bhumivarn
Partner, Trade and Customs Services
KPMG in Thailand

Looking ahead, the “Thailand 4.0” economic model serves as a driving force for the country’s transformation into a value-based economy. By embracing innovation, technology, and creativity, Thailand aims to accelerate the manufacturing industry’s growth through smart manufacturing supply chains, increased automation, digitalization, and a focus on knowledge workers and highly skilled labor. The development of New S-Curve industries, including next-generation automotive, smart electronics, medical tourism, agriculture and biotechnology, and digital services, presents exciting opportunities for businesses in Thailand.

We are pleased to see Thailand’s strategic position gaining significant attention as businesses worldwide recognize the opportunities it presents in the global supply chain realignment. With its favorable location, robust infrastructure, and supportive government policies, Thailand is poised to become a key player in this transformative shift, and we at KPMG are committed to assisting our clients seize and maximize these opportunities.

Charoen Phosamritlert
Chief Executive Officer
KPMG in Thailand, Myanmar and Laos

Read KPMG in Thailand’s full publication: Rethinking supply chains: Thailand’s opportunity in the global supply chain realignment.

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About KPMG in Thailand

KPMG in Thailand, with more than 2,000 professionals offering Audit and Assurance, Legal, Tax, and Advisory services, is a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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