As election campaigning gathers pace, economic restructuring has become a central theme across Thailand’s political spectrum, seen as vital to reviving sluggish growth. Foreign direct investment (FDI) is a key tool, yet progress remains slow. Caretaker finance minister Ekniti Nitithanprapas said major projects worth over 480 billion baht are stalled by regulatory and licensing hurdles.
Thailand faces mounting pressure as regional rivals advance. To lift growth back to its potential 4–5% rate — after expanding only about 1.5% last year — foreign investment would need to rise to 40% of GDP from around 23%.
Vietnam’s rapid rise highlights Thailand’s challenges. Vietnam posted GDP growth of 8% last year and saw tourist arrivals jump 20% to 21 million, while Thailand’s visitor numbers fell. Vietnam also surpassed Thailand in attracting Chinese tourists.
Analysts say Thailand is losing competitiveness due to weaker labour skills, policy inconsistency and an ageing workforce. Vietnam produces more STEM graduates and has pursued steady, long-term development policies since its Doi Moi reforms. It is now moving into advanced industries, hosting projects such as Nvidia’s AI research centre, while Thailand focuses more on data centres and digital services.
Vietnam also benefits from lower labour and energy costs, broader trade agreements — including with the EU — and proximity to China, making it attractive for manufacturers relocating supply chains. Energy market competition in Vietnam further reduces electricity costs.
Political uncertainty is another drag on Thailand’s appeal. Frequent leadership changes, a strong baht, and regulatory red tape have made investors cautious. Although Board of Investment applications surged in value last year, many potential investors remain hesitant. Thailand has far fewer exporters than Vietnam, and businesses complain of outdated laws and slow reforms.
Business leaders say Thailand must clearly define its target industries, such as electric vehicles, and urgently upgrade workforce skills. Diversifying export markets and reducing energy import dependence are also priorities.
Opportunities remain in emerging sectors. The food-tech and functional food industries are seen as promising areas for FDI, particularly where foreign firms can add value to Thai agricultural raw materials.
Tourism, once a major strength, is also losing momentum. Industry leaders warn Thailand relies too heavily on its traditional attractions, while competitors invest in new landmarks and experiences. They urge the government to develop large-scale projects that create fresh appeal while ensuring local communities benefit.
Overall, experts agree Thailand needs clearer long-term vision, consistent policies and structural reforms to regain its edge as regional competition intensifies.