As countries around the world considered in January whether to revise border controls to account for potential new waves of COVID-19 infections, Thailand made its position of not discriminating against any group of travellers, including Chinese travellers, abundantly clear. In doing so, Thailand has given an early indication of how its foreign policy towards China might shape up in the wake of its next general election, which must take place by early May. This article explores the likely trajectory of Thailand’s foreign relations with China as well as with Western-aligned nations under the next government, and the key opportunity areas for investors to take note of in Thailand amid broader global geopolitical uncertainty.

Elections and dark horses

What was especially significant about Thailand’s announcement in January was that it came from someone who could become the country’s next prime minister by May: Deputy Prime Minister and Public Health Minister Anutin Charnvirakul, also chief of the Bhumjaithai Party (BJT; ruling coalition member). The BJT appears likely to perform well in the upcoming elections and may win more seats than its fellow ruling coalition party, the Palang Pracharath Party (PPRP) helmed by Deputy Prime Minister Prawit Wongsuwan. If so, the BJT would have a fairly decent shot at pushing for Anutin’s appointment as prime minister. Although Prime Minister Prayut Chan-o-cha of the United Thai Nation Party (UTN) remains keen to stay on in his role for another two years, divisions in the pro-military camp in the Senate (upper house of parliament) and conservative politicians could prompt a splitting of votes between former generals Prayut and Prawit when it comes to determining the next prime minister. This scenario would pave the way for a compromise candidate – and with Anutin’s cordial relations with Prayut, Prawit and the palace, there is no more likely person who fits the bill. 

Diplomatic signalling

Anutin’s latest remarks on border controls indicate that he is likely to seek warm ties with China if he is given a chance to lead Thailand. For someone prone to gaffes and occasionally anti-foreign remarks – he once blamed Western tourists for COVID-19 infections in Thailand by alleging that they lacked good hygiene – Anutin’s latest remarks on border controls reflected an unusual degree of diplomatic care. He pointed out that vaccination levels in China and globally were sufficient and that variants in China were similar to those found in Thailand. His ministry initially decided that blanket requirements for proof of vaccination would be imposed on all visitors, as opposed to checks targeted at Chinese travellers, though that measure was swiftly revoked within two days to avoid damaging Thailand’s tourism recovery. Chinese travellers, more than any other group of foreign travellers, will remain a vital source of revenue in the coming years for Thailand as it seeks to reach pre-pandemic tourism levels.

Geopolitical sanctuary

Chinese investors are likely to continue viewing Thailand as a geopolitically safe and friendly place to do business. Chinese investors have been making significant inroads in Thailand, with a notable presence in the Eastern Economic Corridor (EEC) which encompasses the eastern provinces of Rayong, Chon Buri and Chachoengsao. The EEC is the most important special economic zone in Thailand and receives significant political support, which explains the generous investment incentives offered to companies seeking to base their operations there. Chinese companies are similarly making a major play in Thailand’s electric vehicle (EV) sector and providing serious competition for Japanese incumbents in the automotive sector. Media coverage of Thai-Chinese ties often focus on the slow progress of a high-speed rail (HSR) project that will eventually connect the Thai capital Bangkok with Laos and China. Nevertheless, Thailand remains committed to the project.

However, investors from other countries need not be daunted by the influx of Chinese investments as there is still significant room in the domestic market, including in the EEC, for non-Chinese companies. Thailand has shown no indication that it would discriminate against companies based on their country of origin, which suggests limited geopolitical risks for investors as they seek to navigate an increasingly complicated global geopolitical environment. Thailand’s enduring strategic and security ties with the West mean that it is unlikely to target Western businesses for the sake of cosying up to other geopolitical axes of power.

What investors should carefully assess prior to market entry in Thailand are risks specific to prospective partners, including corruption and political connections that could ensnare investors if local disputes arise. They should also consider and seek to mitigate ESG risks stemming from labour supply chains and the environmental and human rights impacts of investments in the EEC. The expansion of industrial activity in the EEC is placing a strain on water resources, prompting authorities to build reservoirs which have in turn triggered activist scrutiny over the impact on wildlife species in the area. Investors should incorporate these ESG factors into their site selection process and determine where their investments are more likely to be environmentally and ecologically sustainable, and in line with Thailand’s broader movement towards incentivising and welcoming ESG-friendly commercial activities.