Thailand’s Role in ASEAN Supply Chains: Reshoring, Realignment, and Risk Mitigation

As global supply chains continue to restructure due to the aftershocks of the COVID-19 pandemic, geopolitical tensions, and rising production costs in China, Thailand has emerged as a strategic node in ASEAN’s push for supply chain resilience. Its geographic location, developed infrastructure, and business‑friendly policies make Thailand an ideal hub for reshoring, nearshoring, and regional diversification.

In 2024, foreign direct investment (FDI) into Thailand surged to 1.13 trillion baht (US$33 billion), a 35 percent increase from 2023, underscoring investor confidence in the country’s strategic trajectory.

Thailand’s infrastructure and economic foundations for supply chain leadership

Thailand’s logistics capabilities continue to evolve, anchored by its strategic location and world-class infrastructure. Its primary port, Laem Chabang, handled 9.46 million TEUs in FY 2024, up from 8.67 million in 2023, increasingly acting as a regional hub for maritime trade. Port capacity is further reinforced by Map Ta Phut, Sattahip, and the future Land Bridge megaproject, designed to connect the Andaman Sea with the Gulf of Thailand and bypass the maritime bottlenecks of the Strait of Malacca.

The Eastern Economic Corridor (EEC) — spanning Rayong, Chachoengsao, and Chonburi provinces—is now Thailand’s centerpiece of industrial growth. With 1.35 trillion baht (US$36.99 billion) in investment, the EEC features high-speed rail links to Bangkok, integrated customs-cleared warehouses, and the U-Tapao airport expansion, which targets 60 million passengers annually by 2030.

Across the economy, digital transformation is accelerating. Through the “Digital Thailand” initiative, the country has rolled out 5G, expanded broadband, and introduced digital logistics platforms for real-time customs processing and cargo tracking. Thailand now ranks fourth in ASEAN for digital competitiveness, and hyperscale data centers backed by AWS, Tencent Cloud, and ST Telemedia are enhancing regional digital infrastructure.

Economic fundamentals remain supportive. A labor force of 38 million, including 17 million in industry and manufacturing, is gradually transitioning toward higher-value activity. With more than 400 technical institutes, Thailand is bolstering workforce readiness for robotics, AI, and digital production. The wage-cost advantage remains attractive compared to China, and productivity is increasingly competitive.

Thai exports — driven by automotive, electronics, food processing, textiles, and newer sectors like EV components, medical devices, and aerospace parts — make it a trade engine. Exports comprised about 65 percent of GDP in 2023. Early 2025 GDP growth stands at 3.1 percent in Q1 (quarter-on-quarter), though full-year growth is projected between 1.3 and 2.3 percent (median 1.8 percent) due to export headwinds and U.S. tariff threats. The Bank of Thailand has maintained its key policy rate at 1.75 percent, citing a weak inflation environment (0.5 to 0.8 percent) while retaining flexibility to ease further if needed.

To reinforce supply-chain resilience, in early 2025 the government unveiled a 115 billion baht (US$3.5 billion) infrastructure stimulus package, covering upgrades to roads, logistics hubs, and digital networks, designed to buffer against global trade headwinds and support export competitiveness.

Sectoral drivers of Thailand’s supply chain realignment

Automotive manufacturing and the EV transition

Thailand’s automotive industry continues to anchor the economy, contributing around 10 percent of GDP and employing more than 800,000 workers. In 2024, the sector produced 1.47 million vehicles, reinforcing its status as ASEAN’s top automotive producer and exporter. However, early 2025 data indicates a 12 percent year-on-year decline in production during the first five months, underscoring the impact of ongoing global supply chain disruptions and weakening external demand.

Despite these short-term challenges, the transition to electric vehicles (EVs) is injecting new momentum into the industry. While domestic EV sales slowed in late 2024, the market rebounded in 2025, with registrations rising by more than 70 percent in May alone. Battery EVs now represent 23 percent of all new vehicle registrations in Thailand — a sign of growing consumer confidence, expanding model availability, and improved charging infrastructure nationwide.

Much of this shift is being driven by proactive government policy. Under the EV 3.5 package, the Thai government has pledged over 102 billion baht (US$2.8 billion) in incentives to support local production of 725,000 EVs and 675,000 electric motorcycles annually by 2030. These incentives include tax breaks, subsidies, and infrastructure support, and they have played a critical role in attracting foreign investment.

Leading global automakers have responded swiftly. BYD’s US$500 million EV plant in Rayong began operations in 2024, with an annual production capacity of 150,000 units and a workforce of 10,000. Mazda has invested 5 billion baht (US$150 million) in compact EV manufacturing, while Toyota and Isuzu are preparing to roll out electric pickups for regional export by late 2025. Chinese brands such as Hozon, GAC Aion, Great Wall Motor, and Changan have also expanded their CKD assembly operations in Thailand, capitalizing on the country’s strategic location and Board of Investment (BOI) incentives.

Electronics and semiconductor production

Thailand is rapidly establishing itself as a core player in the regional electronics and semiconductor value chain. In 2024, the country’s electronics exports surpassed US$75 billion, with semiconductors contributing more than US$9.6 billion. Now ranked 6th globally for semiconductor device exports, Thailand accounts for roughly 4 percent of global integrated circuit output — a share expected to rise in the coming years.

Investor activity in this space continues to accelerate. The Board of Investment (BOI) approved more than US$243 billion in tech-related projects in 2024, focused on semiconductors, smart devices, and cloud infrastructure. Notably, Western Digital expanded its operations with a US$693 million investment to upgrade its hard drive facilities in Thailand, which already produce 80 percent of the world’s HDDs and employ 28,000 workers.

Further reinforcing Thailand’s integration into global supply chains, the country imported 869 billion baht (US$24 billion) worth of integrated circuits in 2024, marking a 27 percent increase year-on-year. While imports of diodes and transistors declined slightly, the country’s specialization in assembly and high-value testing, especially for components destined for Japan, the EU, and the United States, continues to grow.

Since 2023, more than 40 global printed circuit board (PCB) manufacturers have established or expanded operations in Thailand. The packaging and testing segment alone is forecast to reach a market value of US$4.5 billion by 2031, indicating long-term growth potential.

Thailand’s comparative advantages — including proximity to major chip-producing countries such as Vietnam, Malaysia, and Taiwan, as well as the availability of modern industrial parks and digitally connected factory infrastructure — continue to draw high-tech investors. To future-proof its competitiveness, the government is also investing in human capital: 280,000 workers will be trained in advanced technologies by 2029, including 80,000 specifically for the semiconductor sector.

Food processing and agricultural exports

Thailand’s agro-industrial sector remains one of the most resilient pillars of its export economy. In 2024, the country’s combined exports of agricultural and processed agro-industrial products reached approximately US$52.19 billion — a 6 percent increase from the previous year. This performance highlights Thailand’s continued leadership in high-demand categories such as rice, canned tuna, processed chicken, and tropical fruits.

The rice sector remains a cornerstone of Thailand’s food export strategy. In 2024, the country exported 9.2 million metric tons of rice, generating US$6.82 billion and solidifying its position as a top global supplier. Thailand also retained its leadership in canned tuna exports, which rose by 20.1 percent to US$2.49 billion, capturing more than 25 percent of the global market. Processed chicken exports reached US$2.94 billion, while canned pineapple exports grew to US$325.6 million, giving Thailand over 30 percent of the global market in that segment.

Durian exports remain a standout growth story. Valued at US$3.82 billion in 2024, they accounted for more than half of global durian trade, driven by strong demand from China and ASEAN neighbors. Meanwhile, natural rubber exports surged by 37.3 percent to US$4.97 billion, maintaining Thailand’s lead with over 31 percent of global market share.

Other agro-industrial products also performed well. Exports of tapioca products reached US$944.5 million, and frozen seafood — particularly shrimp and crayfish — increased by 18.4 percent to US$49.5 million. This broad portfolio reflects Thailand’s strength in both upstream agriculture and downstream processing.

Halal food is another area of rising importance. Thailand’s halal food exports to OIC countries reached US$7.13 billion in 2024, up 6.3 percent year-on-year. Globally, the country now ranks among the top 10 halal food exporters and holds eighth place across halal-certified product categories. These gains are underpinned by the government’s support for Halal certification infrastructure, logistics readiness, and export facilitation under the “Kitchen of the World” initiative.

Thailand is also adapting to rising ESG expectations in international markets. The country is actively modernizing its cold chain logistics, food traceability systems, and product certifications. Blockchain-based tracking and carbon labeling pilots are being rolled out for key export products destined for high-standard markets such as the European Union and Japan.

Looking ahead, the country stands to gain from external supply shocks and shifting global consumption patterns. The 2024 bird flu outbreak in Brazil — a major poultry exporter —created a supply gap of up to 400,000 metric tons. Thai exporters are poised to fill much of this demand, with potential added revenue of US$1.7 billion in 2025. Additionally, falling global feed prices and strong brand positioning have made major Thai agribusinesses — such as CP Foods, Betagro, and GFPT — more competitive both on price and sustainability metrics

Medical tourism

Thailand’s medical tourism industry continues to be a key contributor to its services sector and a major source of foreign exchange. As of 2024, the sector generated approximately US$433.8 million, driven by more than 3 million foreign patients seeking affordable, high-quality care across a range of medical and wellness services. The appeal lies in a combination of competitive pricing, internationally accredited hospitals, short waiting times, and Thailand’s reputation as a hospitality-driven destination.

The sector benefits from the presence of top-tier hospital networks like Bangkok Dusit Medical Services (BDMS) and Bumrungrad International Hospital. Bumrungrad alone has treated patients from over 190 countries, and consistently ranks among the world’s leading hospitals for international patients. BDMS operates over 50 hospitals, many of which are Joint Commission International (JCI)-accredited, providing services in specialties such as oncology, orthopedics, cardiology, fertility treatment, and cosmetic surgery, driven by regional and global patients from the Middle East, South Asia, Europe, and increasingly from China.

Medical tourists often bundle their treatments with wellness retreats and post-operative recovery in resort-style settings — a model supported by Thailand’s integration of health services with tourism infrastructure.

In response to rising demand, Thailand’s government has identified medical tourism as a high-potential service export. The Ministry of Public Health and the Tourism Authority of Thailand have launched initiatives under the “Thailand: World-Class Health Care Hub” strategy, aiming to attract 4 million international patients by 2027. Investment incentives from the BOI support the development of specialized hospitals and medical R&D centers, including those focused on regenerative medicine, robotic surgery, and digital diagnostics.

To ensure global competitiveness, the sector is leveraging telemedicine platforms, multilingual service teams, and digitized patient records for international continuity of care. Many facilities now offer concierge-style international patient services, including visa assistance, airport transfers, and personalized treatment coordinators.

Textiles, apparel, and technical materials

The country’s textile industry is undergoing a strategic shift from basic garment manufacturing to high-value, innovation-driven textile production. In 2024, the country exported US$.08 billion worth of fabrics, with USD 612 million shipped in the first seven months alone — largely to Vietnam and Cambodia. Thailand now ranks among the world’s top 20 textile exporters, with textiles accounting for roughly 4 percent of total merchandise exports.

The technical textiles segment, which includes automotive upholstery, medical-grade PPE, filtration materials, and performance wear, is valued at approximately US$178 million in 2024. Though it experienced a mild year-on-year contraction of 3 percent, niche areas such as textile flock exports grew by 13 percent, reaching US$57 million. These trends reflect Thailand’s rising specialization in non-woven, functional, and ESG-compliant textile materials.

Local manufacturers are investing in closed-loop recycling, low-impact dyeing, and water-efficient production techniques to meet the growing demand for sustainable sourcing among global buyers. R&D partnerships led by the Thailand Textile Institute are accelerating development in next-generation materials such as fire-retardant fabrics, antimicrobial linings, and smart wearable textiles.

How government policy shapes Thailand’s supply chain ambitions

Thailand’s industrial repositioning is being driven by the Thailand 4.0 digital-economy blueprint, which seeks to shift the country from a manufacturing-based economy to one driven by innovation, technology, and high-value services. This vision is being actively supported by the Board of Investment (BOI), whose interventions have played a critical role in reshaping the country’s industrial landscape.

In 2024 alone, the BOI approved 3,137 projects — a 40 percent increase over 2023 — with total investment pledges reaching 832 billion baht (US$22.8 billion), up 25 percent year-on-year. Notably, tech-intensive sectors are dominating this investment trend, with US$243 billion allocated to initiatives in data centers, semiconductors, and smart manufacturing.

As previously mentioned, a central pillar of this transformation is the EV 3.5 incentive package (2024–2027), which aims to make zero-emission vehicles account for 30 percent of Thailand’s total auto production by 2030. This translates to 725,000 EVs and 675,000 electric motorcycles annually.

Complementing these efforts, Thailand is prioritizing workforce development to meet the needs of high-tech industries. The government has committed to training 280,000 workers in advanced fields by 2029, including 80,000 in semiconductors and 150,000 in EV technologies. Companies that invest in employee upskilling are eligible for tax deductions of up to 250 percent. These efforts are reinforced by national campaigns to promote digital adoption among SMEs, helping them embrace smart factory technologies and Industry 4.0 processes.

At the regional level, Thailand’s active participation in frameworks such as the ASEAN Economic Community (AEC) and the Regional Comprehensive Economic Partnership (RCEP) further enhances its attractiveness. These agreements facilitate cross-border trade, simplify rules of origin, and provide legal protections, enabling manufacturers in Thailand to integrate seamlessly into regional and global value chains.

Lessons from multinationals and regional integration successes

Thailand’s ability to attract multinational investors has been particularly evident in the electric vehicle and electronics sectors. In 2024, a wave of large-scale EV investments reaffirmed the country’s competitiveness as a regional manufacturing base. Leading the trend is BYD, which launched operations at its US$500 million facility in Rayong. With a capacity of 150,000 units per year, the plant will not only serve Thailand’s growing EV market but also export to Indonesia, the Philippines, India, and the EU.

GAC Aion and Hozon are using Thailand as a CKD hub, shipping components from China and Southeast Asia for assembly in Thailand, then re-exporting to Malaysia and Vietnam. These decisions were driven by BOI incentives, regional access, and regulatory clarity.

In electronics, Western Digital invested US$693 million to upgrade its hard drive operations in Thailand, where it now produces 80 percent of global HDDs. The Thai plants are part of a multi-country value chain involving suppliers in Malaysia and testing in Vietnam. The operation employs 28,000 workers and benefits from BOI support for smart manufacturing.

These multinationals exemplify ASEAN-integrated production strategies: sourcing inputs from Vietnam or southern China, assembling in Malaysia, and completing high-value stages in Thailand. This model benefits from RCEP’s cumulative rules of origin and minimizes tariffs while enhancing agility.

Key reasons these firms choose Thailand include:

• Regulatory stability and clear BOI processes
• Full foreign ownership in promoted sectors
• World-class logistics via Laem Chabang and the EEC
• A skilled, trainable workforce

This combination has made Thailand the region’s preferred final-assembly and export platform for firms managing geopolitical and operational risks.

Strengthening Thailand’s supply chain position

Thailand is solidifying its role as a regional supply chain leader, driven by strong FDI, BOI-backed incentives, and integration into ASEAN-wide trade frameworks. As companies seek resilient, well-connected hubs in Southeast Asia, Thailand offers both stability and strategic advantage.

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