FDI in Thailand: not just increasingly Chinese, but digital as much as manufacturing

Traditionally, Japan was Thailand’s biggest foreign investor. Automakers such as Toyota and electronics companies like Panasonic and Sony were notable for having long-standing supply-chain linkages between their Thai and Japanese facilities.

As our chart shows, however, Chinese FDI is increasingly supplanting its Japanese equivalent, with the phenomenon starting in 2019 and truly taking off after the pandemic. (We’ve grouped Mainland China with Hong Kong as well as Singapore in different shades of red; Chinese investment to Thailand is often routed through Singaporean intermediaries.)

While we have explored this phenomenon before, especially as it applies to Chinese investment in electric vehicles, a new twist involves data centers. Our second chart highlights China’s digital investments in red.

A high-profile, USD 2 billion investment in Thailand last year came from China’s Galaxy Data Center (GDC).

Analysts cite Thailand’s ample land, reliable electricity, government support, engineering expertise and a robust local digital economy for the AI-driven data center boom. From China’s perspective, volatility in global chip supplies, geopolitical issues and US export controls are reasons to diversify its geographic footprint in this sector.