Thailand’s Political Protests: Implications for Foreign Investors

Posted by Written by Ayman Falak Medina Reading Time: 3 minutes

Thailand is once again facing a wave of political unrest. On June 28 and 29, thousands of demonstrators took to the streets of Bangkok, demanding Prime Minister Paetongtarn Shinawatra’s resignation. The protests were triggered by a leaked phone call in which the Prime Minister criticized Thailand’s military leadership and appeared overly deferential to Cambodia’s former leader, Hun Sen.

This sparked outrage among conservative and pro-monarchy groups.

The protests coincide with mounting pressure on Paetongtarn’s coalition government. The Bhumjaithai Party’s withdrawal from the coalition has left the administration with a precarious parliamentary majority.

With court petitions in motion and speculation of a no-confidence vote, Thailand risks sliding back into a familiar cycle of political instability and stalled reforms.

Political uncertainty reshapes economic expectations

The unrest comes at a time when Thailand’s economic recovery remains fragile. Investor confidence has taken a hit, with the Thai baht weakening to around 32.8 against the U.S. dollar. Meanwhile, the Stock Exchange of Thailand (SET) Index has fallen by nearly 24 percent year-to-date, reaching its lowest point in over three years.

In response to the turmoil, foreign investors have pulled more than US$2.3 billion from the Thai equity market this year, as concerns over political risk and declining regional competitiveness deepen. This volatility is not without precedent.

Thailand has a history of recurring political disruptions, including multiple military coups and court-led government dissolutions over the past two decades. These past episodes have conditioned many institutional investors to treat Thai assets with caution during times of political uncertainty.

Sectors react unevenly to investor uncertainty

The impact of the crisis is being felt unevenly across sectors. Tourism and healthcare, once seen as drivers of post-pandemic recovery, are now under pressure from falling consumer confidence and reduced inbound travel, resulting in over 15 percent share price declines so far this year.

Find Business Support
Our consultants at Dezan Shira & Associates help foreign investors manage risk, identify emerging opportunities, and ensure compliance amid changing policy conditions. Contact us to position your business strategically in Thailand’s evolving investment climate.

In contrast, banks and retail companies with strong domestic operations have held up relatively well. Financial institutions that are less exposed to foreign market sentiment have proven more stable. However, with investor caution on the rise, capital is gravitating toward defensive sectors with lower volatility and more predictable cash flows.

Policy responses seek to contain the fallout

As sector pressures mount, the Thai government has launched a series of initiatives aimed at restoring confidence. A 110-billion-baht fiscal stimulus package and digital wallet distributions are being rolled out to support household spending. Additionally, plans to issue virtual banking licenses are intended to attract investment and boost digital inclusion.

While the government has unveiled these measures to stimulate growth, political instability threatens to stall broader reform efforts, including proposed amendments to the Foreign Business Act that aim to ease foreign ownership restrictions. At the same time, officials continue to reassure investors that trade negotiations with the United States remain unaffected.

Navigating the risks and opportunities ahead

For foreign investors, the path forward in Thailand is complex. In the near term, currency fluctuations, equity market volatility, and unpredictable political developments pose clear risks. Investment decisions are likely to be delayed until there is clarity on whether the current government will survive mounting legal and political challenges.

Despite these headwinds, Thailand’s long-term investment appeal remains intact. Strategic projects under the Eastern Economic Corridor (EEC) continue to attract interest, with over 17.5 billion baht in new investment approved in early 2025. The country’s ongoing digital transformation, its integration into regional trade frameworks, and its strengths in electronics and food exports are factors that could support a rebound once political stability returns.

Patience and strategy are essential for foreign investors

Foreign investors should carefully monitor key political developments in the coming months, including any shifts in coalition dynamics, court rulings, and the possible scheduling of snap elections. As the situation evolves, selective positioning in resilient sectors, such as infrastructure, fintech, and consumer staples, will be crucial.

Those investing in Thailand should also adopt prudent currency hedging strategies and stay attuned to regulatory shifts, particularly around foreign ownership and market access. While volatility may persist in the short term, Thailand’s position in regional supply chains and its digital economy ambitions offer compelling opportunities for long-term capital.

About Us

ASEAN Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Jakarta, Indonesia; Singapore; Hanoi, Ho Chi Minh City, and Da Nang in Vietnam; besides our practices in China, Hong Kong SAR, India, Italy, Germany, and USA. We also have partner firms in Malaysia, Bangladesh, the Philippines, Thailand, and Australia.

Please contact us at asean@dezshira.com or visit our website at www.dezshira.com and for a complimentary subscription to ASEAN Briefing’s content products, please click here.