Thailand back in top 25 of FDI index

Thailand has re-entered the top 25 of A.T. Kearney’s foreign direct investment (FDI) confidence index after a two-year absence.

The country ranks 21st in the 2016 FDI index, according to Chua Soon Ghee, partner and head of Southeast Asia at A.T. Kearney, a global management consultancy.

The index is a forward-looking analysis of how political, economic and regulatory changes will affect FDI inflows in the coming years.

Since it began in 1998, the study has reliably pointed to firms’ top choices globally for FDI, with countries ranked in the index reliably tracking destinations of actual global FDI flows.

The index is constructed using primary data from a proprietary survey conducted among senior executives of the world’s leading corporations, Mr Chua said.

In this year’s survey, 22% of respondents said they were more optimistic about Thailand’s economic outlook over the next three years, up from 16% a year ago.

“Thailand has been one of the success stories of Southeast Asia,” Mr Chua said. “It has moved from a low-income country to an upper-income country in less than a generation, creating an attractive pool of potential consumers with higher disposable incomes. That has been a pull factor for companies looking to enter Thailand.”

Thailand has also emerged as a manufacturing hub, he said. Many companies have set up facilities in the country and export goods to other parts of the region.

Its membership of Asean adds further allure for companies looking to tap the 10-nation bloc’s growth potential.

In particular, strong growth in Myanmar, Vietnam and other countries in the Greater Mekong Subregion have made Thailand a natural hub for entering those countries, Mr Chua added.

The results of the index also show that domestic market size, labour costs, regulatory transparency and lack of corruption are among the top factors that executives look at when making decisions about investing in a country.

Five Asian countries feature in the top 10 of this year’s FDI index, highlighting global business confidence in the region.

China ranked second for the fourth year in a row. Japan continues to rise in the rankings, up one spot this year to sixth place, while Australia jumped three spots to seventh.

India jumped two places to the ninth spot, and Singapore enjoyed the largest gain in the ranks, rising five places to 10th.

The US topped the index for the fourth year in a row.