Investors urged to use more Thai raw materials in production

Finance Minister Pichai Chunhavajira wants to persuade businesses to increase their use of domestic raw materials and promote Thai ownership in supply chain companies, in exchange for privileges provided by the Board of Investment (BoI).
In his capacity as chairman of the BoI, Pichai noted that his policy aims to have industries investing in Thailand utilise more locally-produced parts, or “local content”.
Those who apply for BoI investment promotion incentives are already required to use a certain amount of local content, but Mr Pichai said he wants this measure to be strengthened, particularly in downstream industries.
According to Mr Pichai, in parts of downstream industries where large companies purchase domestic raw materials for local production, he would like to see Thai ownership in these downstream companies, too. The BoI is working to incorporate this condition in exchange for the benefits that these companies receive, he said.
Earlier, Mr Pichai said that the US-China trade war had led to an influx of foreign investors choosing Thailand as a base for investment, resulting in an increase in BoI applications last year.
According to the BoI’s data, Thailand’s overall investment applications rose 43% in 2023 to a five-year high of 848 billion baht, with China being the biggest foreign investor.
Chinese investment applications worth 159 billion baht accounted for nearly a quarter of the total value and were mainly in the electronics, automotive and electric vehicle sectors.
After China, the biggest investors were Singapore, the US and Japan.
However, Mr Pichai said that once investors apply for BoI support, it was essential to increase the local content in production to classify these products as domestically made.
“This approach requires us to promptly make improvements, ensuring products manufactured in Thailand contain a high proportion of local content. When this is achieved, ownership structures should also be Thai-owned, rather than merely assembling imported parts within the country,” he noted.
Nevertheless, the BoI itself has been working to find ways for foreign EV manufacturers to establish production bases in Thailand to increase their use of locally-produced parts. The local content ratio currently stands at around 40%, and the goal is to raise it to over 60%.
On Nov 7, the BoI partnered with GAC AION, a major Chinese EV manufacturer, to accelerate the integration of Thai parts manufacturers into the EV supply chain via business negotiations during “AION Sourcing Day”.
This effort aims to elevate Thailand as a comprehensive EV production hub in Asean, covering domestic parts sourcing, production subcontracting, technology transfer, and joint ventures with foreign companies, providing mutual benefits for all parties.