Thailand must redefine FDI for future

Thailand’s economic future looks increasingly uncertain. Once a rising star among emerging markets, the country now faces persistent stagnation. A key reason lies in how we have treated foreign direct investment (FDI) — notas a strategic lever for national economic development but as a short-term fix driven by rent-seeking behaviour, bureaucratic collusion, and a failure to safeguard the nation’s long-term economic interests and its goals for equitable development.

- Peerasit Kamnuansilpa

To be clear, FDI can be a powerful engine for growth. Across many developing and emerging economies, it has brought in new capital, created jobs, improved productivity, and served as a channel for technological progress. For countries with strong governance systems, quality infrastructure, and educated workforces, the benefits are often substantial. In Thailand's case, FDI played a vital role in our manufacturing boom during the 1990s and early 2000s, helping to transform export capacity and stimulate GDP growth.

But today, that model is fraying. The benefits of FDI are no longer broadly shared. Instead, they are increasingly captured by a small circle of elites who invoke the language of development to justify deals that primarily serve their own interests.

Licences for major foreign investment projects — especially in oil, natural gas, mining, industrial estates, and location-based economic development zones such as the Eastern Economic Corridor (EEC) — are frequently approved by senior bureaucrats in close coordination with powerful politicians.

These approvals are criticised for not being based on national priorities or development merit, but on mutual benefits with foreign investors. As a result, opportunities for joint ventures that could build local capacity, transfer technological know-how, and retain value within the country are routinely sidelined. This is perhaps most visible in the automobile sector. While Thailand boasts the title Detroit of Asia, it still does not manufacture a nationally owned car brand — unlike South Korea (Hyundai and Kia), Malaysia (Proton), India (Tata), or Vietnam (VinFast).