Thailand Sees Foreign Investment Boom as Trade War Escalates
Thailand Sees Foreign Investment Boom as Trade War Escalates
(Bloomberg) -- Foreign investment into Thailand surged in the first quarter, further evidence that Southeast Asian nations are benefiting as businesses seek new locations in the region to avoid an escalating U.S.-China trade war.
Applications for foreign direct investment climbed to 84.1 billion baht ($2.7 billion) in the first quarter, up 253% from the same period last year, according to Pisit Puapan, executive director of the Ministry of Finance’s Macroeconomic Policy Bureau, citing official data from the nation’s Board of Investment.
Thailand joins countries like Malaysia and Vietnam that are reporting soaring investment as global supply chains shift. Approved FDI into Malaysia’s manufacturing rose 127% in the first quarter from a year ago, and the central bank governor recently said the positive spinoff from the trade war could add 10 basis points to economic growth.
The jump in FDI in Thailand comes at a time of weakening export demand, which is weighing on the economy. The Finance Ministry in April downgraded its growth outlook for this year to 3.8%, based on a 3.4% export rise. Prime Minister Prayuth Chan-Ocha also said at a Bloomberg summit on Friday that the U.S.-China trade war creates more uncertainty for global businesses and is a concern to Thailand.
In an interview in Bangkok on Thursday, Pisit said exports may show some improvement in the second half of this year and solid growth in tourism helping to underpin the Southeast Asian economy. The expected gains in shipments in the six months through December are mainly due to base effects given the “dramatic change” in the goods export picture in the same period last year when global growth deteriorated, he said.
Longer-term, the ministry still sees reasons to be upbeat about exports. More Chinese investors are coming to Thailand as they spread out across Southeast Asia -- potentially a result of both tariff strains at home as well as rising labor and production costs in China.
On the services side, Pisit sees Thailand continuing to benefit from solid growth in tourism. The nation is on track to achieve 40 million visitors this year, bolstered by a rise in Indian, Japanese and Malaysian tourists even as arrivals from China continue to slide.
To contact the reporters on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net;Michelle Jamrisko in Singapore at mjamrisko@bloomberg.net
To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Jiyeun Lee
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