Direct Investment Abroad

Thai companies and individuals are allowed to transfer funds to establish or invest in overseas businesses entities with a shareholding of 10 percent or more without any amount limit.

Notice of the Competent Officer on Rules and Practices regarding Currency Exchange

  • Importance of Direct Investment Abroad

Direct investment abroad is important to the national development strategy in several key areas:

1. Facilitating economic restructuring to enhance the country’s competitiveness and growth within a globalized economy.

2. Promoting a more balanced capital flow, which helps enhance the stability of exchange rates and the country’s financial system, thereby supporting long-term sustainable growth.

3. Other benefits include expanded trade opportunities and contributions to the development of the country's financial markets.

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ความสำคัญของการลงทุนโดยตรงในต่างประเทศ

In an increasingly globalized world economy and growing constraints on domestic economic expansion, Thai businesses and the country's economic structure must adapt to enhance productivity, enabling the economy to grow and remain competitive – in terms of

Seeking new markets or maintaining existing market share in countries with large or high-growth potential markets (Market Seeking)

As many large-scale businesses have reached their full growth potential within the domestic market, coupled with Thailand's economic growth lagging behind other regional economies in recent years and a limited working-age population with high purchasing power, numerous businesses are compelled to expand operations overseas. This expansion seeks to access larger markets with significant purchasing power, such as China, India, and Indonesia, to ensure sustained business growth (Market Seeking).

Seeking natural resources and gaining access to more cost-effective raw materials and labor in foreign markets (Resource and Labor Seeking)

Many businesses are pursuing direct investments in countries abundant in natural resources to gain access to cost-effective raw materials, thereby enhancing their competitiveness. Compared to other ASEAN countries, several nations possess more abundant production resources than Thailand. For instance, Myanmar and Vietnam have access to electricity and natural gas, Indonesia has crude oil reserves, while Laos and Cambodia have significant agricultural resources. Similarly, certain developed countries, such as Australia, also boast richer natural resources than Thailand. Additionally, labor costs are a key factor driving Thai businesses to invest abroad, as Thailand’s wages are relatively high compared to other Asian countries, including Cambodia, Vietnam, Indonesia, and China. This trend is expected to continue due to policies increasing the minimum wage to 300 baht. Coupled with a tight labor market in Thailand, labor-intensive industries, such as textiles, are increasingly relocating production bases to neighboring countries with lower wages and investment incentives.

Enhancing production efficiency and seeking new technologies (Efficiency Seeking)

Overseas investment also benefits the country by facilitating access to advanced technologies and enhancing production efficiency. This may take the form of joint ventures with foreign enterprises operating high-potential businesses to create greater value for their operations, or investments in countries with specialized production capabilities. For example, the gemstone production sector not only seeks markets and raw materials but also enhances efficiency by expanding production bases to countries with advanced manufacturing capabilities, such as Germany, Vietnam, and Indonesia. Similarly, the canned food and frozen seafood industries have invested in the United States to gain access to more advanced production technologies than those available domestically.

Supporting business risk diversification

Direct investment abroad also helps diversify business risks, including production sources, raw materials, labor, and market distribution. This reduces dependence on domestic resources and markets.

In addition to the strategic benefits for national development outlined in the two points above, direct investment abroad offers further advantages.

It creates investment opportunities for businesses amidst global disruptions,

particularly financial crises in Europe and the United States. Thai investors can capitalize on the economic slowdown in these regions and the reduced readiness of Western competitors by expanding operations through cost-effective mergers and acquisitions. This approach is simpler and less risky than establishing new ventures abroad. Consequently, the government should provide support to enable the private sector to seize these investment opportunities arising from such crises. Moreover, the substantial liquidity within Thailand’s commercial banking system serves as a critical factor in supporting private sector access to funding for overseas investments, without crowding out the domestic economy.

In certain cases, overseas investment helps circumvent trade barriers or leverage benefits from preferential tariff systems, such as the Generalised System of Preferences (GSP), by establishing production in specific countries. This contributes to:

1. Increasing export revenues for those countries, 2. Promoting industrial development in developing nations, and 3. Enhancing economic growth rates in developing countries.

Moreover, it helps develop domestic financial market

The growth of direct investment abroad is accompanied by increasing demand for capital mobilization, financial services, foreign exchange transactions, and risk management instruments. The increasing demand for higher volume and more diverse transactions contribute to the development of Thailand’s financial market in both depth and breadth.

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