Long a darling of the industrial investment community, Thailand offers an attractive pairing of investment incentives and world-class industrial infrastructure. Its industrial development strategy has, over the last two decades, attracted more than US$124.5 billion of Foreign Direct Investment (FDI) compared to just US$104.6 billion in Cambodia, Laos, Myanmar and Vietnam combined. Special Economic Zones have developed across the country to accommodate the influx of industry and as the country has climbed the production value chain, prices have risen in tandem.
In Tractus’ annual Cost of Doing Business (CODB) study of 10 countries in Asia, Thailand comes in as the 4th most expensive place to manufacture, less costly than only Singapore, Malaysia and China.
Responding to rising costs of production, investors have begun to look further afield at up-and-coming industrial investment destinations such as Myanmar, Vietnam and Cambodia. Among the lowest cost manufacturing destinations in Asia, Vietnam, Myanmar and Cambodia come in as the 1st, 2nd and 5th lowest cost production centers in Tractus’ CODB study. Vietnam, the lowest cost manufacturing destination was estimated at just 61% of that of Thailand. Sharing borders with Thailand, Myanmar and Cambodia present attractive sources of low-cost labor and natural and agricultural resources.
Since 2014, Special Economic Zones have sprung up along the Cambodia and Myanmar borders in response to the opportunity, varying dramatically in size from the 50 km2 Trat Special Economic Zone along the Thai-Cambodia border to massive 1,419 km2 Tak Special Economic Zone on the Thai-Myanmar border 545 km east of Myanmar’s commercial capital of Yangon by road. Three more are planned for 2016. Already, nearly 60 direct investments have been approved or started operations in existing zones with a heavy focus on commodity processing of agricultural goods imported from Cambodia and Myanmar and labor intensive garment manufacturing.
Special Economic Zones along Cambodia and Myanmar’s border benefit from abundant access to low-cost migrant labor without forfeiting the advantage of Thailand’s high quality infrastructure. While supply chain, skilled labor availability and many more issues need to be considered, Thailand’s border zones can offer attractive industrial location opportunities for certain industries and certain companies.
Founded in Thailand in 1995, Tractus has been advising on industrial investment decisions in the country and across developing Asia for nearly two decades and today operates from offices in China, India, Thailand, Vietnam, Myanmar and Indonesia. A wealth of practical experience, data collection and rigorous analysis underpins Tractus’ leadership as a resource for companies making investment decisions in the region. Having advised on more than 700 projects and US$5 billion of FDI decisions, Tractus is an expert resource for companies seeking data-backed site selection analysis to make the right decision about how and where to invest in Asia.