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THAILAND 1, Overview: Indicate historical, political, cultural and development background 1.1. Historical Background Early Days: Little is known of Thailand’s earliest inhabitants, but there are archaeological sites in the northeast of the country that contain evidence of rice cultivation a...

THAILAND 1, Overview: Indicate historical, political, cultural and development background 1.1. Historical Background Early Days: Little is known of Thailand’s earliest inhabitants, but there are archaeological sites in the northeast of the country that contain evidence of rice cultivation and bronze casting that date back 5,000 years. In the early days a succession of tribal groups controlled what we now know as Thailand. The Mon and Khmer peoples established powerful kingdoms that included large areas of the country. These kingdoms came into contact with other South Asian peoples and absorbed their religious, political and cultural ideas as well as their institutions and these later influenced the development of Thailand's culture and national identity. The Tai People: The Tai people originally lived in southwest China and migrated into the main part of Southeast Asia over many centuries. The first mention of their existence in the region is a 12th century AD inscription at Angkor Wat, which refers to syam or "dark brown" people as being vassals of the Khmer monarch. This is how Thailand became known as Siam and its people the Siamese. Sukhothai Kingdom (1238-1438): In 1238 a Tai chieftain declared his independence from the Khmer and established a kingdom at Sukhothai in the broad valley of the MaeNam River in the heart of modern day Thailand. Ayutthaya Kingdom (1351-1767): Sukhothai was succeeded in the 14th century by the kingdom of Ayutthaya. The kingdom of Ayutthaya became very powerful in the 14th & 15th centuries, so much so that it was able to defeat the kingdom of Angkor in 1431 thereby causing its decline. Over the centuries there were a number of conflicts with the Burmese which came to a head in 1767 when the Burmese invaded Ayutthaya and totally destroyed it. After a couple of years two national heroes, Taksin and Chakri, soon expelled the invaders and reunified the country under the Chakri Dynasty. In 1782, Chakri established his new capital in Bangkok. He was later given the title of Rama I and was the first king of the Chakri dynasty which has held power to this day. 19th Century: During the nineteenth century it was the European powers, rather than Thailand's traditional enemies, that posed the greatest threat to the kingdom's survival. Thai success in preserving the country's independence (it was the only Southeast Asian country to do so) was in part a result of the desire of Britain and France for a stable buffer state between their dominions in Burma, Malaya and Indochina. More significantly though was the willingness of Thailand's monarchs, Mongkut (Rama IV, 1851-68) and Chulalongkorn (Rama V, 1868-1910), to negotiate openly with the European powers and to adopt European style reforms that modernized the country and won it sovereign status. However Siam, as it was then known, paid a high price for its independence losing control over Cambodia and Laos to France and ceding the northern states of the Malay Peninsula to Britain. 20th Century: As a result of European intervention by 1910 the area of Southeast Asia under Thai's control was a fraction of what it had been a century earlier. In the early decades of the twentieth century, Thailand's political system, armed forces and economy underwent drastic changes. Many wealthy Thais studied overseas and a small, Western educated elite with less traditional ideas emerged. In 1932 a bloodless coup d'etat by military officers and civil servants ended the absolute monarchy and inaugurated Thailand's constitutional era. Thailand changed its name from Siam in 1949. The Modern Era: Since the far reaching changes of 1932 progress toward a stable, democratic political system has been erratic. Politics has been dominated by rival military cliques headed by powerful generals. These cliques have caused frequent coups d'etat and have imposed prolonged periods of martial law on the country. Parliamentary institutions, as defined by the fourteen constitutions written between 1932 and 1987, and competition among civilian politicians have generally been facades for military governments. Today the country has a fledgling democracy, watched over by the military and the new king who has just taken over the reins from H.M. King Bhumibol Adulyadej, the 9th King of the Chakri Dynasty, who was the country’s longest reigning monarch until his death in 2016. 1.2. Political Background Thailand is a parliamentary democracy with a constitutional monarchy. Thailand used to be a kingdom under an absolute monarch for over seven centuries before 1932. After the country went through a peaceful transformation in 1932, sovereign power came to belong to the Thai people, with the King as the Head of State who is above partisan politics and discharges his role in accordance with the country’s Constitution. The administration of the country is carried out by the prime minister – elected through an open vote by members of the House of Representatives – and the cabinet that the prime minister forms. The Kingdom has a bi-cameral legislature and an independent judiciary. Despite periods of political turbulence, Thailand’s political history reflects the country’s unwavering commitment toward becoming a full-fledged, multi-party democracy, with accountability, transparency, good governance, as well as respect for human rights and the rule of law being among its main guiding principles. The Thai people and civil society organizations are increasingly taking part in political activities, enjoying the rights and freedoms guaranteed by the Constitution. With the resiliency and fundamental strengths of Thai society, the country has been able to continue its stride along the path of development, guided by the traditional Thai traits of tolerance, common sense and preference for peaceful solutions to problems. Over the past decades, there has been a remarkable continuity in policy direction, providing a predictable framework for investors and businessmen. Successive Thai governments have always been committed to certain fundamental policy principles: friendly relations with all its neighbors and a responsible and constructive foreign policy, an open-market economy, hospitality toward foreign investors and tourists, sound macroeconomic policies with fiscal and monetary prudence and the improvement of the country’s infrastructure to increase competitiveness and achieve sustainable development. These policies are underpinned, among others, by the vibrant private sector and the strength and continuity of the civil service of the nation, which oversees the implementation of policies and execution of laws throughout the country. 1.3. Cultural Background Values and Beliefs ​ Social Hierarchy: Although Thailand has not been governed by an absolute monarchy for over a hundred years now, there is still a social hierarchy in the country. Thai people pay more respect to certain groups of people, such as the royal family and monks. Also, Thai people are taught to respect those who are older than themselves as well as their benefactors (parents, teachers, etc.). ​ Collectivism: Thailand is often called “the land of smiles” because Thai people always seem to have a smile on their face. While it’s true that Thai people are friendly, visitors will be surprised to find out that a smile does not always equate to happiness. Different smiles can mean anything from pleasure to anger, and most of the time you won’t be aware of any negativity. This is because Thai culture values avoiding conflict and “saving face.” The reason behind this is that Thailand is a collectivist society. Thai people tend to go along with others when doing group activities. This is because Thai people want to be like others and remain as part of the group. As a result, they don’t dare to voice their opinions in front of others and prefer to compromise instead of really solving problems. Philosophies and Religions: In addition to smiles, Thailand is well-known for the Buddhist statues found all over the country. Buddhism is the national religion and over ninety percent of Thai people practice it. It’s common to see Buddhist monks in traditional robes walking just about everywhere you go. Most Thai philosophies are influenced by Buddhism in one way or another. However, modern Thai culture is one of diversity. As Thai people are quite open-minded, they are also influenced by other religions and beliefs to some extent.  Because there are many Thai-Chinese in Thai society, there are many practices influenced by Taoism and Confucianism. One example of this is the Vegetarian Festival, which is celebrated during October each year. This popular food festival is mainly celebrated by the Thai-Chinese, though the rest of the population also gets in on the action. Another Thai-Chinese custom is เชงเมง้ (cheeng-méng), when they pay respect to deceased ancestors. Art Several aspects of Thai culture and heritage feature heavily in artwork, with many of our most popular paintings and sculptures having roots in Buddhism. For example, you can find various paintings of Buddhist stories in the temples and Buddha statues are viewed as an artform as well as a religious symbol. Thailand is also home to several impressive architectural feats, most notably temples. In the past, temples were not only places for practicing religion, but they also served as the royal family’s palace. Because the temples in Thailand reflect this aspect of history, their extreme beauty should come as no surprise. As for literature, Thailand is known for its poetry. There are various types of poems written in the Thai language, many of which focus on storytelling. These poetic ‘stories’ are diverse, covering a range of genres from religion and fantasy to love and food. Food Nowadays, Thailand is well-known for two things: its beautiful travel destinations and its delicious cuisine. Indeed, Thai food and culture go hand in hand. Thai cuisine is known for its use of herbs and deep flavors, as well as its beautiful and colorful presentations. As mentioned earlier, Thai people are quite open-minded. This means you’ll find many Thai food items that have been influenced by foreign cuisines. For example, Thai sweets that use egg as an ingredient are the result of Portuguese influence. 1.4. Development Background Thailand is a development success story, having transformed rapidly from an economy dominated by agriculture to one that is modern, industrialized, and export-led. Thailand’s economy grew at an average annual rate of 7.5 percent in the boom years of 1960–96; with growth slowing to 5 percent a year in 1999–2005, following the Asian Financial Crisis. Income per capita rose from $740 in 1980 to $7,080 in 2019, with a commensurate improvement in living standards, while the national poverty rate fell from 42.5 percent in 2000 to 6.3 percent in 2021. Thailand is a development success story, having transformed rapidly from an economy dominated by agriculture to one that is modern, industrialized, and export-led. Thailand’s economy grew at an average annual rate of 7.5 percent in the boom years of 1960–96; with growth slowing to 5 percent a year in 1999–2005, following the Asian Financial Crisis. Income per capita rose from $740 in 1980 to $7,080 in 2019, with a commensurate improvement in living standards, while the national poverty rate fell from 42.5 percent in 2000 to 6.3 percent in 2021. The subsequent recovery has been relatively slow, with average annual growth of 2 percent between 2021 and 2023. Thailand’s recovery has lagged that of its ASEAN peers, primarily because of significant exposure to underperforming global tourism and trade. The economy is projected to grow 2.4 percent in 2024. Medium-term growth prospects are diminishing as the economy grapples with slower productivity growth, structural constraints to innovation and competitiveness, and an aging population. Thailand aims to be carbon neutral by 2050 and achieve net-zero greenhouse gas emissions by 2065, but reducing emissions and ensuring climate resilience will require substantial investments and policy reforms. The macroeconomic costs of climate change are projected to rise significantly, while Thailand also faces international competitiveness risks if it takes insufficient action to decarbonize. Previous disasters provide an indication of what is at stake: the 2011 floods caused significant loss of life and $46 billion of damage (more than 12 percent of Thailand’s GDP). The risks from floods, drought and heat stress are increasing as the climate changes. Reducing emissions and adapting to climate change are therefore critical to Thailand’s continued growth and development, and its ability to meet its objective of becoming a high-income country by 2037. Area-based strategies can spur the shift to sustainable urban development, enhanced connectivity, and climate resilience 2, Analyze Thailand economy 2.1. Analyse basic economic indicators (GDP, Trade, FDI, growth...) and economic structure (industries) 2.1.1. GDP Thailand's GDP has experienced significant fluctuations over the past five years, reflecting both the impact of the COVID-19 pandemic and underlying structural challenges. In 2020, GDP contracted sharply by 8% compared to 2019, dropping to $500.46 billion, primarily due to the economic disruptions caused by the pandemic. A modest recovery followed in 2021, with GDP growing by 1.16% to $506.26 billion. However, the recovery proved uneven as GDP declined again by 2.1% in 2022, falling to $495.65 billion, before rebounding with a 3.89% increase in 2023, bringing the figure to $514.94 billion. Despite this recent growth, Thailand's GDP recovery has lagged behind its regional peers, with annual post-pandemic growth rates of 1.6% in 2021, 2.5% in 2022, and 1.9% in 2023, significantly lower than its pre-pandemic potential growth rate of 3-3.5%. The contraction in 2020 created lasting economic challenges, particularly in key sectors like tourism and exports, and post-pandemic recovery efforts have struggled to sustain stable growth. Projections for 2024 estimate GDP growth at 2.6%, signaling continued recovery, but the progress remains fragile without addressing structural vulnerabilities and implementing reforms to unlock Thailand's full economic potential. Fig. 1. Thailand’s GDP in the period from 2019 to 2023. Source: By the authors using data from the World Bank. 2.1.2. Trade Thailand's trade dynamics over recent years highlight a mix of growth opportunities and persistent challenges. From 2019 to 2023, exports grew from $233.67 billion to $284.56 billion, while imports rose from $216.81 billion to $289.75 billion. The trade balance shifted from a surplus in 2019 and 2020 to consistent deficits starting in 2021, reflecting increasing reliance on imported goods and changing trade patterns. By November 2024, exports reached $275.76 billion, while imports totaled $282.90 billion, resulting in a cumulative trade deficit of $6.27 billion for the first 11 months and are projected to hit a record $300 billion in 2024, up 5.2% year-on-year. This growth is fueled by strong performances in technology-related goods, particularly computers, equipment, and components, underscoring the country's alignment with global digital trends. Agricultural and agro-industrial exports also contributed significantly, with consistent growth throughout the year. Industrial products showed the strongest momentum, achieving eight consecutive months of growth by November 2024, further supported by rising global demand. Regional export performance has been uneven. While key markets such as the United States, China, the European Union, and neighboring countries like Cambodia, Laos, Myanmar, and Vietnam showed improvement, exports to Japan and some ASEAN countries declined, reflecting shifts in regional trade demands. Imports, meanwhile, have grown steadily, with a modest increase of 0.9% year-on-year in November 2024, highlighting the rising cost of inputs needed to support export-oriented industries. Despite these positive trends, challenges persist. The trade deficit, driven by higher import growth, underscores structural vulnerabilities in the balance of trade. Geopolitical tensions, slowing economic activity in key markets like the European Union, and rising production costs further compound these issues. Addressing these challenges will require Thai exporters to focus on reducing costs and diversifying markets to sustain growth and competitiveness. Fig. 2. Thailand’s Trade in the period from 2019 to 2024. Source: By the authors using data from the World Bank. 2.1.3. Investment The Thailand Board of Investment (BOI) reported a record-high investment inflow in the first nine months of 2024, marking the largest in the past decade. From January to September, 2,195 projects were approved, representing a 46% increase compared to the same period in 2023. These projects brought a total investment value of 722.53 billion baht, up 42% from 500 billion baht in the previous year. The surge in investment demonstrates the effectiveness of Thailand’s policies in fostering a favorable investment environment, as highlighted by Prime Minister Paetongtarn Shinawatra. The largest investments during this period were concentrated in five key industries. Electronics and electrical equipment led with 183.44 billion baht, followed by digital technology (94.20 billion baht), automotive and parts manufacturing (67.85 billion baht), agriculture and food processing (52.99 billion baht), and oil and chemicals (34.34 billion baht). Additionally, data center projects attracted significant interest, with eight projects totaling 92.76 billion baht, primarily funded by companies from the United States, China, Australia, Hong Kong, and India. Foreign Direct Investment (FDI) reached 1,449 projects during the first nine months of 2024, a 66% increase compared to the same period in 2023. The total value of FDI stood at 540 billion baht, up 38% year-on-year. Singapore emerged as the largest investor, contributing 180.84 billion baht, followed by China (114.07 billion baht), Hong Kong (68.20 billion baht), Taiwan (44.59 billion baht), and Japan (35.47 billion baht). This influx of FDI underscores Thailand’s appeal as a strategic investment destination in the region. High-value sectors have seen remarkable growth in 2024, with notable developments in advanced electronics manufacturing, including semiconductor design, assembly, and testing. There were 15 projects in semiconductor-related industries, totaling 19.86 billion baht. Smart electronics manufacturing attracted 13 projects worth 38.97 billion baht, while renewable energy investments accounted for 351 projects with a total value of 85.37 billion baht. These investments highlight Thailand’s strategic pivot toward technology-driven and sustainable industries. The BOI estimates that the investments approved in 2024 will create approximately 170,000 new jobs and boost the use of local materials and components. This increased industrial activity is expected to raise Thailand’s export value by over 2 trillion baht annually, contributing significantly to the country’s economic growth in the short and long term. Thailand continues to strengthen its investment ecosystem through policy support and infrastructure development. The BOI has been actively assisting existing investors in adapting to changes in the global investment landscape, while the government has committed to fostering a competitive and resilient business environment. As global production relocations intensify, Thailand aims to position itself as a preferred destination for sustainable and long-term investments. 2.2. Strengths and comparative advantage; weakness 2.2.1. Strengths and comparative advantage a, Strengths ​ Regional Hub and Connectivity to Fast-Growing Asian Markets -​ Proximity to Emerging Markets: Thailand's location in the heart of Southeast Asia offers logistical advantages for trade with China, Vietnam, and Malaysia—countries experiencing robust economic growth. -​ Infrastructure Supporting Trade: The country is a member of the Regional Comprehensive Economic Partnership (RCEP), granting access to the world's largest trading bloc. Export corridors like the Eastern Economic Corridor  (EEC) link Thailand to these dynamic markets through improved transport and logistics facilities, including Laem Chabang Port and Suvarnabhumi Airport. -​ Growing Digital Economy: Thailand's rising e-commerce sector complements trade connectivity with fast-growing digital markets such as Indonesia and the Philippines. Partnerships with Chinese platforms like Alibaba’s Lazada facilitate cross-border trade. ​ Rich Agricultural Resources -​ Global Leadership: Thailand is the world’s largest exporter of natural rubber and among the top three exporters of rice. High global demand ensures steady export revenues. Thailand holds a strong position in agriculture, being one of the world’s largest exporters of rice and rubber. In 2023, Thailand's food and agricultural exports amounted to approximately 49 billion US dollars. Thailand's rice exports even rose 21.97% in the first seven months of 2024 compared to a year earlier, driven by rising global demand. The country’s expertise in agro-processing further strengthens its competitive advantage by adding value to primary agricultural products. -​ Supply Chain Integration: Agro-industries benefit from robust supply chains. For example, Thailand has positioned itself as a major sugar exporter to Japan and the Middle East. Furthermore, the country leads in innovation in processed agri-foods, bolstering value-added exports. ​ Diversified Exports -​ Tourism: Tourism in Thailand have shown gradual increase, amounting to over 139 billion Thai baht in December 2023. Tourism is a vital sector for Thailand, contributing around 20% to the country’s GDP before the pandemic. Thailand receipts from foreign visitors in Thailand have shown gradual increase, amounting to over 139 billion Thai baht in December 2023. Tourism has also brought opportunities for employment and major business expansions for Thai companies in the tourism sector. In 2024, Thailand attracted over 35 million international tourists. -​ Automotive Hub: Thailand is a significant production base for Japanese carmakers like Toyota and Honda. In 2023, Thailand produced over 2 million vehicles, half of which were exported to markets in ASEAN and beyond. -​ Electronics: Exports of electronic components (e.g., semiconductors) are essential for supply chains linked to consumer electronics manufacturing in Taiwan and South Korea. In 2022, this sector amounting to over 34 billion U.S. dollars in value. ​ Robust Banking Sector -​ Financial Stability: Commercial banks maintain strong capital adequacy ratios and high loan-loss provisions (averaging 171% of non-performing loans in 2022). This ensures resilience against economic shocks.  -​ Digitalization: Innovations like mobile banking and fintech integration are driving financial inclusion, enabling businesses to secure financing efficiently. b, Comparative advantage (more specifically revealed comparative advantage - comparative advantage index) To better understand RCA, comparative advantage (RCA) is used for calculating a country’s relative advantage or disadvantage in a certain industry as evidenced by its trade flows. For example, Thailand has a RCA in an industry if it exports relatively more in that industry compared to the rest of the world. RCA is calculated for a total of almost 100 sub-sectors in ten broad manufacturing sectors. This, combined with the strengths listed above, shows that Thailand has a comparative advantage in the food sector. Thailand has a RCA in 10 out of 17 sub-sectors in the food industry of which 2 sub-sectors are emerging; namely production, processing and preserving of meat and meat products; and soft drinks and production of mineral waters. The chemicals and transport equipment sectors have also been improving comparative advantage over recent years, although from a lower base: chemicals had a RCA in 3 out of 9 sub-sectors over 2005-10 and gained a competitive edge in basic chemicals over 2011-16. Transport equipment had a comparative advantage in 2 sub-sectors in the late 2010s, and was losing RCA in one sector (bicycles) more recently while gaining competitiveness in 2 other sub-sectors (parts and accessories for motor vehicles; and motor vehicles). The ICT, electronics and medical device sector traditionally had a comparative advantage in 7 of 15 sub-sectors but has been losing ground in 2 sectors (watches and clocks; optical instruments). All non-targeted sectors have lower numbers of RCA sub-sectors, with mostly stagnating or falling trends. c, Reasons why Thailand can have comparative advantages and strengths in these aspects ​ Abundance of Natural Resources: Thailand is endowed with abundant natural resources that form the backbone of its economy. The country’s fertile plains and tropical climate make it ideal for rice cultivation, allowing Thailand to consistently rank among the world’s top exporters of rice. The country also has abundant natural resources including minerals, forests, arable land, and fish. Additionally, the extensive rubber plantations supply the global market with a significant portion of natural rubber. Thailand’s energy sector also benefits from natural gas reserves in the Gulf of Thailand, which support its domestic energy needs and the development of the petrochemical industry. ​ Rich Biodiversity and Tourism Assets: Thailand’s rich biodiversity and natural beauty are key drivers of its thriving tourism industry. The country is home to pristine beaches, coral reefs, and lush forests, attracting millions of  international visitors every year. National parks and UNESCO World Heritage Sites further enhance its eco-tourism appeal, while cultural festivals and culinary experiences add depth to the tourism offerings. This sector continues to play a vital role in Thailand’s GDP. ​ Strategic Geographical Location: Thailand’s central position in Southeast Asia gives it a strategic advantage as a logistics and trade hub. It serves as a natural gateway to ASEAN markets, connecting key economies such as China, Vietnam, and India. The country’s advanced infrastructure, including international airports and modern seaports, facilitates efficient trade and transportation, bolstering its role as a regional economic center. ​ Favorable Climate for Agriculture: The tropical monsoon climate in Thailand is highly conducive to agriculture, enabling the country to produce a variety of crops throughout the year. This climate supports the cultivation of rice, sugarcane, rubber, and tropical fruits, with multiple harvests possible annually. These conditions underpin Thailand’s strength in agro-industries, which contribute significantly to its export revenues. ​ Skilled Workforce in Key Sectors: Thailand benefits from a skilled and relatively young workforce that drives productivity in critical industries. In agriculture and agro-processing, traditional skills passed down through generations enhance efficiency and quality. The automotive and electronics sectors also rely on a well-trained labor force, helping Thailand remain competitive in these global markets. Similarly, the tourism industry thrives due to the hospitality and expertise of its workforce. ​ Cultural Richness and Heritage: Thailand’s cultural heritage adds a unique dimension to its comparative advantages. Thai cuisine, renowned globally, boosts the country’s soft power and supports food exports. Traditional crafts, textiles, and festivals not only attract tourists but also foster the export of creative products. This cultural richness strengthens Thailand’s global brand and enhances its international appeal. ​ Access to Renewable Energy Potential: Thailand’s geographic and climatic conditions provide significant opportunities for renewable energy development. Ample sunlight throughout the year makes solar energy a viable and growing sector. Biomass and bioenergy resources, particularly from agricultural by-products, further diversify Thailand’s energy portfolio, supporting its transition to sustainable energy. ​ Foreign Direct Investment (FDI): Thailand has become an attractive destination for foreign direct investment (FDI), with investment pledges reaching a 10-year high in 2024. The country’s competitive potential is supported by favorable policies, such as tax incentives, which encourage global companies to set up manufacturing and service operations.  ​ Renewable Energy and Green Economy: Thailand is increasingly focusing on renewable energy sources such as solar, wind, and biomass. The country aims to enhance its energy security and sustainability by generating 15% of its energy from renewables. Additionally, Thailand is investing in electric vehicle infrastructure, positioning itself as a regional leader in green technologies. ​ Geographical and Trade Advantages: Thailand’s strategic location in Southeast Asia gives it a unique advantage as a regional logistics and trade hub. The country’s advanced infrastructure, including modern highways, airports, and seaports, facilitates efficient trade across ASEAN and with global markets, boosting its comparative advantage in international trade. 2.2.2. Weakness ​ Inadequate Infrastructure -​ Challenges in Connectivity: While the Eastern Economic Corridor has seen investment, rural infrastructure (roads, railways) lags behind, limiting access to remote areas and increasing logistical costs. -​ Energy Constraints: The high cost of electricity and dependence on imported energy create vulnerabilities for industries reliant on stable supply. ​ Aging Population and Shortage of Skilled Labor -​ Demographic Shift: By 2030, over 25% of Thailand's population will be aged 60 or older. This demographic trend strains public health and pension systems. -​ Labor Shortage: The automotive and electronics sectors face skill gaps, compelling companies to relocate to countries like Vietnam where labor is cheaper and more abundant. -​ Government Initiatives: Programs like the "Thailand 4.0" strategy aim to reskill workers, but progress remains slow due to funding constraints. ​ Political Instability -​ Rural-Urban Divide: Urban centers (e.g., Bangkok) drive GDP growth, while rural provinces remain underdeveloped, fueling political tension. -​ Investor Concerns: Foreign direct investment (FDI) has fluctuated, as frequent changes in government lead to inconsistent policies and regulatory uncertainty. For example, delays in infrastructure projects due to political turnover erode investor confidence. ​ Corruption and Informal Economy -​ Perception Issues: Thailand ranks poorly on the Corruption Perceptions Index (ranked 101st globally in 2022). This undermines trust in institutions and deters foreign investors. -​ Informal Sector Dominance: An estimated 50% of workers are in the informal sector, limiting tax revenues and social security contributions. Industries like agriculture and retail are particularly affected.  ​ High Household Debt -​ Debt Levels: Household debt exceeded 85% of GDP in 2024, one of the highest in Asia. This restricts consumer spending and makes the economy vulnerable to financial shocks. -​ Impact on Growth: Rising interest rates have increased loan repayment burdens, particularly for low-income households, stifling domestic consumption. 2.3. Thailand's economic development policy (Over the last 10 years) Two most important policies are 4.0 Initiative and EEC 2.3.1. Thailand 4.0 Initiative​ The Thailand 4.0 program is a national strategy aimed at transitioning from an industry-based economy to an innovation-driven economy. The Thai government has invested heavily in high-tech industries such as robotics, artificial intelligence (AI), biotechnology, and the Internet of Things (IoT). For example, in 2020, the National Robotics and AI Center was established to drive research and the application of advanced technologies. As a result, by 2023, the technology sector contributed approximately 6% to the national GDP, or around $36 billion, and is expected to reach approximately 11 percent of GDP in 2027. 2.3.2. Development of the Eastern Economic Corridor (EEC)​ The Eastern Economic Corridor has been designed to position Thailand as a regional trade and investment hub. Key infrastructure projects in this area include the high-speed railway connecting three airports (Suvarnabhumi, Don Mueang, and U-Tapao), the expansion of Laem Chabang and Map Ta Phut seaports, and the establishment of industrial zones for aviation and biotechnology industries. Since launched, the EEC Development Plan (2023-2027) has attracted 500 billion baht in real investment over five years, or 100 billion per year 2.3.3. Other Policies: ​ Infrastructure Development​ The Thai government has undertaken significant investments in upgrading infrastructure to improve connectivity and economic efficiency. Notable projects include the expansion of the urban rail transit system in Bangkok, the construction of the Bang Pa-in–Nakhon Ratchasima high-speed railway, and the enhancement of major highways linking Thailand to neighboring ASEAN countries. These efforts have reduced logistics costs and improved Thailand’s ranking in the World Bank’s Logistics Performance Index, rising to 34th globally in 2023.  ​ Tourism and Service Sector Growth​ Tourism remains a cornerstone of Thailand's economy, with diversification and sustainability being key strategies. The government launched the "Amazing Thailand Go Local" campaign to promote tourism in secondary cities and implemented strict regulations to protect natural resources. By 2023, tourism accounted for around 1.2 trillion baht, and Thailand recorded a peak of 40 million international visitors before the COVID-19 pandemic. ​ Social and Economic Inclusion​ To reduce inequality and improve living standards, Thailand implemented programs such as the Village Fund, which provides microloans to support community-based businesses, and expanded universal healthcare coverage. These initiatives significantly improved Thailand’s Human Development Index (HDI), ranking it “very high” with 0.803 index. ​ Sustainable Development and Green Economy​ Thailand has committed to a green growth agenda to address climate change and environmental protection. Renewable energy projects, such as solar farms and investments in electric vehicle production, have been actively promoted. The government also pledged to achieve carbon neutrality by 2050. By 2023, renewable energy accounted for about one-sixth of the country’s total energy production. ​ Trade and Regional Integration​ Thailand has actively engaged in trade agreements to strengthen its global economic position. Participation in the Regional Comprehensive Economic Partnership (RCEP) and expanded trade relations with ASEAN countries have driven steady export growth. 3, Application for Vietnam 3.1. Possibilities of cooperation with Vietnam ​ Current situation and achievements of cooperation between Thailand and Vietnam Overview: After 49 years since the establishment of diplomatic relations (1976 - 2025), the Vietnam-Thailand relationship has developed well in all fields, becoming a "strategic partner" with friendly and comprehensive cooperation. Vietnam and Thailand are two countries with close diplomatic relations, both members of the Association of Southeast Asian Nations (ASEAN) and other regional organizations such as the United Nations, the Asia-Pacific Economic Cooperation (APEC), and the East-West Economic Corridor (EWEC)… In terms of politics and diplomacy, high-level and all-level contacts, as well as bilateral cooperation mechanisms such as the Joint Trade Committee, Defense Policy Dialogue, Political Consultation, etc., have been effectively maintained. This has contributed to strengthening trust and promoting cooperation between the two sides at all levels and channels. Relations between the legislative bodies of the two countries have also been promoted and developed well in recent times. The two sides have maintained many exchanges of delegations at the leadership, committee and parliamentary levels, making positive contributions to the friendship and cooperation between Vietnam and Thailand. The leaders of the two countries' parliaments also regularly meet on the sidelines of multilateral parliamentary conferences. In terms of trade, Thailand is one of the partners with a large import and export turnover, with the total value of trade exchanges consistently ranking among the top 10 countries with the largest trade relations with Vietnam. Vietnam's trade volume with Thailand increased sevenfold, from 2.31 billion USD in 2004 to 18.72 billion USD in 2023, with an average growth rate of over 11% per year. But in this trade relationship, Vietnam is in a state of trade deficit with Thailand. The group of goods that Vietnam mainly exports to the Thai market includes phones, machinery, equipment, tools and spare parts, various types of steel, computers, electronic products, and components... Conversely, Vietnamese enterprises mainly import items from Thailand, such as machinery, equipment, tools and spare parts, raw materials, household appliances, and components. Regarding investment, Thailand's investment rate in Vietnam has always been the highest in the Southeast Asia region and currently ranks 9th out of 144 countries and territories investing in Vietnam, with 715 active projects and a total registered capital of 13.7 billion USD. Thailand invests in Vietnam mainly in the fields of manufacturing, wholesale, and retail.... Among them, the Southern Petrochemical Project of the SCG Group in Ba Ria-Vung Tau Province is nearing completion and is set to be inaugurated in 2024. This is one of the key projects of Thai investors in Vietnam. On the other hand, the number of projects and the capital of Vietnamese investments in Thailand are still limited. In 2019, Vietnam had 10 investment projects in Thailand with a total new and increased investment capital of 25.79 million USD, ranking 22nd out of 55 countries and territories investing in Thailand. The two economies still have great potential to enhance cooperation further. On that basis, Thailand will join hands with Vietnam to step up efforts in implementing the "Three Connects Strategy," which connects supply chains, local economies, and sustainable growth strategies between the two countries. This effort will contribute to achieving the bilateral trade target of 25 billion USD that both sides have set. Regarding tourism, cooperation between the two countries in this field is also being promoted to harness the potential and strengths of both sides. Thanks to the visa exemption policy within the framework of ASEAN, convenient air routes with many attractive incentives, close geographical proximity, and special promotional programs, Thailand and Vietnam are among the top 12 markets sending tourists to each other. Regarding cooperation in education and training, in 2004, the two countries signed a Memorandum of Understanding on educational cooperation between Vietnam and Thailand. Accordingly, educational cooperation activities have been increasingly promoted. In addition, the two countries have also cooperated to organize the Youth Exchange Program alternately in Thailand and Vietnam since 2009. The Ministries of Education and Training of both countries agreed to open training courses on Vietnamese teaching methods for Thai teachers and vice versa. In order to support and meet the demand for learning Thai among Vietnamese students and pupils to serve the labor needs of Thai enterprises, the Thai government is currently providing support for teaching Thai at five universities in Vietnam. Along with that, the Thai government and educational institutions also offer short-term scholarships, undergraduate, and postgraduate training for Vietnamese students and learners. ​ Possibilities for Vietnam-Thailand cooperation With the results achieved since the establishment of diplomatic relations 49 years ago, in the coming years, the Vietnam-Thailand relationship will continue to develop in many fields, contributing to the increasingly deep and effective "strategic partnership." In terms of politics and diplomacy, the two countries continue to increase visits and meetings, exchanges at high and all levels; maintain bilateral cooperation mechanisms in signed fields; at the same time, support each other in international forums. Continue to cooperate closely in sub-regional cooperation frameworks such as GMS, build AC, promote ratification and implementation of the Regional Comprehensive Economic Partnership Agreement (RCEP)... In terms of trade, the two countries cooperate to promote complementary economic advantages; promote bilateral trade turnover to soon reach the target of 25 billion USD in a balanced direction. The Vietnamese Government encourages and creates favorable conditions for Thai enterprises to invest and do business in Vietnam. Vietnam can gradually overcome the trade deficit with Thailand by further promoting the export of key products such as phones and machinery components. Both Vietnam and Thailand will facilitate market access for each other’s products, such as an increase in the import quota of livestock and mutual recognition arrangements for local products, under Thailand’s One Tambon One Product (OTOP) and Vietnam’s One Commune, One Product (OCOP) schemes. Regarding investment, with the convenience of signed cooperation mechanisms, Thai enterprises will increase investment in Vietnam, especially in the Central region of Vietnam, to take advantage of commitments within the GMS framework to develop the northeastern provinces of Thailand bordering Laos. In return, Vietnam will also further promote investment in Thailand in potential sectors such as agriculture, real estate, and resort tourism. Regarding tourism, Thailand will join hands with Vietnam to explore more flight connections between the two countries and further explore seamless tourism in the region with the “Six Countries, One Destination” initiative. To bring our future generations closer, Thailand will continue to promote the teaching of Thai language in Vietnam and Vietnamese language in Thailand. Regarding cultural and educational cooperation, the Ministry of Culture, Sports and Tourism of Vietnam and the Ministry of Culture of Thailand signed a Memorandum of Understanding on cultural exchange for the period 2021 - 2026. On that basis, cultural exchange relations between the two countries continue to be strengthened and developed. In order to promote increased investment and labor export, Thai language teaching will be expanded in many forms, especially in the Central region of Vietnam. In the opposite direction, Vietnamese language classes for Thai managers will also be expanded and developed. => Conclusion: In the long run, to deal with an unprecedented and volatile global economy, Thailand will continue to work closely with Vietnam to build shared prosperity and sustainable development by jointly implementing the policy of Industry 4.0, digital economy and green growth transformation. 3.2. Lessons for Vietnam One of Southeast Asia's most developed nations, Thailand is well-known for its thriving tourism sector as well as its expansion in the digital economy and agriculture. Thailand has established a standard for sustainable development and global competitiveness through a variety of policies and effective efforts. Several important lessons that are applicable to Vietnam can be learned from examining Thai reports and papers. These lessons provide important guidance on how to promote social welfare, boost economic growth, and upgrade infrastructure.  First, developing a tourist brand: The "Amazing Thailand" campaign demonstrates how Thailand has effectively established and preserved a robust national tourism brand. Additionally, this campaign helped foreign tourists form a positive perception of Thailand. According to the Thai Ministry of Tourism and Sports, Thailand welcomed over 35 million international visitors in 2024, generating 1.8 trillion Baht. Vietnam can learn from Thailand in building a tourism brand and enhancing promotional campaigns to attract international tourists while developing typical forms of tourism such as eco-tourism, cultural tourism, and island tourism. Second, implementing flexible tourism policies: Thailand’s government has implemented a series of strategic measures to attract international visitors. During the "Tourism Master Plan," Thailand has changed its visa policies, offering easier access for tourists from Europe and other key markets. Especially, at the busiest time of year, Thailand has temporarily relaxed visa requirements for tourists from key markets including China, Russia, Kazakhstan, India, and Taiwan. This policy not only increased international arrivals but also boosted tourism revenue. Additionally, Thailand approved nearly 3,000 events nationwide in 2024 and extended operating hours for nighttime entertainment venues in major cities like Bangkok, Phuket, Chiang Mai, and Chonburi to 4 a.m. Vietnam should consider and adjust visa policies to reduce barriers and attract more international tourists. The flexibility of this policy can create favorable conditions for tourists and enhance the country's image. Third, developing digital infrastructure: Thailand has made significant investments in digital infrastructure, including high-speed internet networks and data centers, to establish a solid foundation for the digital economy such as "Smart Cities" and "Digital Economy Promotion Agency (DEPA)", these programs not only support businesses in digital transformation but also create opportunities to develop products and online services. According to the Ministry of Digital Economy and Society of Thailand, Thailand has engaged in widespread 5G networks in 2020, making Thailand one of the first Southeast Asian nations to adopt this technology. Vietnam should accelerate its investments in digital infrastructure, particularly in 5G networks and data centers, to foster the digital economy and enhance its competitiveness in the global market. Fourth, supporting small and medium-sized enterprises (SMEs) in digital transformation: Thailand has introduced policies to support SMEs in their digital transformation journey, enabling them to access technology and improve operational efficiency. Thailand’s government has provided financial support packages and technical consultations to accelerate the digital transformation process. Vietnamese’s government should adopt policies to assist SMEs in accessing technology and digital transformation to enhance their competitiveness and contribute to the growth of the national digital economy. Fifth, creating favorable conditions to attract FDI into agricultural development. Upgrading rural infrastructure is an important factor in attracting FDI. Thailand has developed an extensive air transport system with a wide network of commercial airports. To encourage investors, FDI projects are often granted tax exemptions for a certain period. Vietnam should create a favorable environment for foreign investors, improve infrastructure, and support FDI attraction to develop high-quality agricultural products and boost exports. Sixth, providing financial support for farmers: Thailand has set up an agricultural product insurance fund for all farmers. The insurance covers staple crops, oilseed crops, horticultural plants, and commercial crops, with compensation ranging from 60% to 90% of the average yield. Thailand’s government has significantly funded the expansion of agricultural insurance. For agricultural products, Thailand’s government supports competitiveness through initiatives like agricultural trade fairs and marketing campaigns. Vietnam needs to strengthen financial support mechanisms and create conditions for farmers to improve their livelihoods. Seventh, developing and implementing a comprehensive water management policy: Thailand has enacted the National Water Resources Act, creating a legal framework for managing, protecting, and sustainably using water resources. This encourages communities to actively participate in the protection of water resources while also clearly defining the duties of management authorities. Thailand also applies interagency coordination mechanisms to guarantee consistency in policy implementation. Vietnam should set up a comprehensive legal system and water management mechanism, especially in promoting close coordination between relevant authorities and enhancing the role of the community in protecting water resources. Eighth, investing in water infrastructure and management technology: Thailand has made significant investments in irrigation infrastructure and applied modern technologies such as automatic monitoring systems, weather forecasting, and data management to enhance water usage efficiency. These improvements not only help reduce waste but also improve the ability to respond to natural disasters and climate change. Vietnam should focus on investing in modern irrigation infrastructure and applying advanced technologies, such as monitoring and early warning systems, to ensure water security and sustainable resource use.  Finally, developing and implementing a comprehensive social welfare policy: Thailand has implemented effective social welfare policies, including regular pensions for the elderly, the State Welfare Card (SWC) program for the poor, and emergency relief packages during the COVID-19 pandemic. These policies not only help to reduce poverty and stabilize society but also encourage consumption and economic growth. Vietnam should improve the legal framework, increase social subsidies, develop and enhance programs supporting the elderly and the poor, and promote international cooperation to mobilize resources for building a sustainable social welfare system. In conclusion, Vietnam can learn a lot from Thailand's approaches to tourism, digital infrastructure, agricultural growth, water management, and social welfare. Vietnam may increase competitiveness and ensure sustainable growth by following these measures, especially in areas like improving infrastructure, enacting flexible policies, and supporting vulnerable populations. When successfully implemented, these lessons can support Vietnam in creating a stronger economy and society, which will enable Vietnam to successfully integrate into the global economy and enhance the general standard of living for the Vietnamese.