Seven opportunities: Sino-Thai investments
Taking off to new heights and bridging the gap between Thai investment opportunities and Chinese investors
During the last few years, China increased its political and economic influence in the ASEAN region. Thailand, as Southeast Asia’s investment hub, is getting more interesting for Chinese investors from Mainland China, Hong Kong, Singapore and Taiwan.
China is for many years ASEAN’s largest trading partner. The ASEAN-China Free Trade Agreement (ACFTA 2002) has been amended and refreshed by the ACFTA Upgrading Protocol 2019 by simplified rules for the trade of goods and services, new investment options and an advanced multilateral economic and technical cooperation.
Chinese and Hong Kong investments in Thailand’s mutual funds are going to be fast-tracked. The financial authorities like the Thai SEC will amend their regulations to ease cross-border mutual fund investments. This relates, above all, to infrastructure megaproject investments like the Eastern Economic Corridor, the high-speed railway linking three international airports, the development of U-Tapao airport and the expansion of Laem Chabang and Map Ta Phut seaports.
In 2019, China became Thailand’s top source of foreign investment for the first time
China’s “Go Out” policy encourages Chinese companies to expand their production bases to Thailand and other ASEAN member countries because of higher production costs at home. These are seven investment opportunities in Thailand for Chinese companies:
#1 High-speed tracks: The vast majority of Chinese investment agreed upon last year was linked to the THB 224 billion high-speed rail project connecting the airports at Suvarnabhumi, Don Muang and U-tapao. Contracts for the project were signed in October 2019 between the Thai government and a consortium whose members include the Chinese state-owned China Railway Construction Corporation. Thailand streamlined its legislation on public-private partnerships and Chinese companies are welcome to participate in governmental infrastructure transactions. This offers Chinese companies attractive conditions to participate in Thailand’s desire to catch up to Singapore, Japan, and Korea.
#2. EEC: The Eastern Economic Corridor is Thailand’s THB 1.7-trillion mega flagship investment zone, covering all three provinces Rayong, Chonburi, and Chachoengsao with a combined area of 13,285 square kilometers. Hungry for foreign investments, the EEC arena should be the first target for Chinese companies looking for a production base in Southeast Asia.
The Thai Riviera or Royal Coast is the new infrastructure development at the Western Seaboard. Focussing on high-end tourism gives Chinese companies the opportunity to invest in infrastructure and hospitality.
#3. Thailand 4.0: Chinese enterprises are attracted by the ten promoted target industries automotive and auto parts, petrochemicals, smart electronics, agriculture and biotechnology, tourism, medical, digital, robotics, aviation, and textiles in whole Thailand. The Thai government offers an investment promotion package that is unbeatable in the region. China has sought to invest in a number of sectors promoted by the Thai government – such as cars, smart electronics, biotechnology, logistics, and aviation – attracted by tax rebates and deductions, preferential visa policies and “a lot of deregulation”, as reported by South China Morning Post.
#4. Solar: With respect to solar energy, Thailand has it all: A foreigner-friendly legal and regulatory framework, an energy-hungry economy and high radiation values which enable ground-based solar farms and rooftop photovoltaic as a highly attractive source of renewable energy. Chinese developer, EPC companies and suppliers of solar panels can benefit from Thailand’s second gold rush.
#5. OBOR: China’s One Belt, One Road initiative, also known as the Belt and Road Initiative, consists of the Silk Road Economic Belt and the Maritime Silk Road. OBOR will further boost Sino-Thai business relationship. For obvious reasons, Chinese companies will be the preferred builder of the Silk Road.
#6. IBC: Thailand is not only an attractive investment destination. It also provides convenient market access into whole Southeast Asia. Therefore, it makes sense to locate Chinese-owned regional headquarters in Bangkok by utilizing the benefits provided under the scheme of an International Business Center.
#7. Real estate: Thailand is a highly attractive location for Chinese buyers of villas, condominiums, resorts and undeveloped land. However, Thailand’s foreigner restrictions have to be carefully taken into consideration.
Professional services for Chinese investors in English and Mandarin
PUGNATORIUS Ltd. is a Bangkok-based specialist provider of bespoke transactional legal and tax advice in the corporate and property legal and taxation industry sectors. The international law firm
- provides Chinese enterprises and law firms with easy access to the legal know-how to invest in Thailand’s industries and real estate developments,
- informs about current governmental investment projects in Thailand’s infrastructure, energy, and agriculture,
- supports and assists in the acquisition of Thai real estate, including the financing of property acquisitions from China,
- acts as a legal advisor, coordinator, and representative for Chinese investments in Thailand, and
- offers innovative solutions for Chinese investors to finance investments abroad, taking into account the foreign exchange restrictions in China.