TDRI warns Thailand at risk of falling off global radar

Thailand’s global competitiveness ranking falls sharply

Thailand’s competitiveness has dropped significantly over the past year, according to the latest rankings by the International Institute for Management Development (IMD). The country slipped from 25th to 30th place out of 69 global economies, with the decline driven by weaker scores in key economic indicators.

The main reasons for the drop include declines in several dimensions: government efficiency, which fell from 24th to 32nd; infrastructure, from 43rd to 47th; and business efficiency, which has been on a continuous downward trend. Reuters also noted that Thailand faces ongoing challenges with transparency, bureaucratic complexity, and adapting to the global digital economy.

The United States’ recent decision to impose a 19% reciprocal tariff may also weigh heavily on small and medium-sized enterprises (SMEs) in Thailand. In response, the government has allocated funding through its Competitiveness Enhancement Fund and prepared soft loan schemes to help businesses mitigate the impact and adjust to the new trade environment.

Somkiat Tangkitvanich, president of the Thailand Development Research Institute (TDRI), said Thailand’s competitiveness has clearly and steadily eroded in multiple areas, adding that the country has “fallen off the radar” in the eyes of the international community.

“Thailand is no longer seen as significant globally,” he said. “Institutional investors and major banks show little interest in Thai bonds or corporate bonds from companies based here. The economy is no longer growing as fast as it once did, and world leaders from major powers no longer prioritise visits to Thailand.”

TDRI chief says global leaders are ignoring Thailand

“Just look at today’s world leaders, whether it’s President Trump or President Xi Jinping , they have not visited Thailand,” said Somkiat. “Even Japan’s prime minister, a key investment ally of Thailand, can hardly be remembered for visiting Thailand, while they have made multiple visits to our neighbours and ASEAN competitors.”

He added that Thailand is no longer at the centre of global attention. “We have dropped from the top league to a lower tier, and we must consider how to climb back,” he said.

Somkiat noted that Thailand’s competitiveness has been in steady decline for several years. He stressed the need for a clear plan to address the problem, as the index already identifies where the country’s performance is falling short and which scores are dragging down competitiveness.

“These are issues that the National Economic and Social Development Council (NESDC) has already pointed out,” he said. “But political leaders must get directly involved to tackle the obstacles that are hindering the country’s ability to compete.”

TDRI urges government to boost national competitiveness

The NESDC is the key coordinating agency but must work closely with relevant ministries and agencies to ensure government directives are implemented effectively. He noted that restrictive regulations remain a major obstacle to enhancing competitiveness.

Call for data-driven policymaking

Somkiat stressed that improving Thailand’s ability to compete must be grounded in evidence-based policymaking.

“Every country that has successfully advanced has relied on scientific data to address problems accurately and guide national development. The government must invest in these systems as essential infrastructure, even if it takes considerable time to establish,” he said.

He added that such investments would pay off in the long term, enabling policymakers to plan effectively using big data. For example, in considering the development of an entertainment complex, the state must have sufficient information on potential customers and optimal locations to attract investment.

This approach should apply across all sectors, ensuring policy decisions are well-informed and professionally managed to address issues and improve competitiveness.

Maximising benefits from investment incentives

On the use of funds from the Competitiveness Enhancement Fund to attract new industries, Somkiat said Thailand must ensure that investments generate tangible benefits. “In the past, factories have been set up here, but have not made sufficient use of Thai-made components or local suppliers. This limits the economic benefits,” he explained.

He emphasised that future strategies should focus on increasing employment for Thais, sourcing raw materials domestically, and engaging local suppliers to ensure investments truly strengthen the national economy.

BOI outlines plan for competitiveness enhancement fund

Narit Therdsteerasukdi, secretary-general of the Board of Investment (BOI), said the government has allocated an additional 10 billion baht to the Competitiveness Enhancement Fund. The budget will be used to address three key priorities:

Supporting Thai businesses affected by US tariffs – Assistance will be provided to help domestic entrepreneurs improve their competitiveness in response to the impact of the United States’ trade measures.

Assisting key companies facing dual tax pressures – Support will target businesses affected by both the OECD’s Global Minimum Tax and the US tariff measures.

Attracting investment in target industries – The focus will be on sectors that can enhance Thailand’s competitiveness, create added value within the country, transfer technology, and develop Thai human resources.

Narut said priority industries eligible for support from the fund include semiconductors and advanced electronics, upstream battery production at the cell level, advanced digital technology and AI development, medical technology, and biotechnology.

Thailand needs new economic policies

Visit Limlurcha, vice-chairman of the Thai Chamber of Commerce and president of the Future Food Trade Association, said Thailand ranked 30th out of 69 economies worldwide in the IMD World Competitiveness Ranking 2025, down from 25th in 2024.

Within Southeast Asia, Thailand placed third, behind Singapore and Indonesia, reflecting the challenges the country faces in the global competitive arena.

However, he noted that Thailand still has opportunities to improve through new economic policies, such as advancing the electric vehicle (EV) and semiconductor industries, promoting the digital economy with investments in AI and cybersecurity, and expanding special economic zones.

These include the Eastern Economic Corridor (EEC) and the Southern Economic Corridor (SEC), aimed at building new value chains and capitalising on US-China trade tensions to attract investment.

For policy recommendations, he urged the government to reform the public sector for greater transparency and efficiency, develop digital and transport infrastructure, build workforce skills to meet the demands of the new economy, and promote fair, open competition in the business sector.

Call for major economic overhaul

Visit said the government must urgently reform outdated laws and regulations to facilitate investment, innovation, and free competition—particularly in technology and the digital economy. He urged accelerated development of nationwide transport, logistics, and digital infrastructure in line with global economic trends.

He stressed the need to improve education quality and workforce skills to meet the demands of future industries such as EVs, AI, the green economy, and smart farming.

Bureaucratic processes must be streamlined, with greater transparency and the use of digital tools to deliver faster, more reliable, and cost-efficient services for both domestic and foreign investors and addressing corruption was also key. 

He said, the private sector should step up investment in innovation and research and development (R&D), especially in target industries such as future foods, healthcare, clean energy, and digital technology. The goal should be to produce more differentiated products and reduce reliance on price competition.

He also called for improving labour standards and product quality to compete in the global market by meeting ESG requirements, enhancing traceability, and complying with international standards.

SMEs and start-ups should be empowered through partnerships and the adoption of new technologies such as AI, blockchain, and e-commerce. Businesses should also take part in shaping economic policy through public forums, the Chamber of Commerce, the Federation of Thai Industries, and constructive policy proposals.

“Thailand’s competitiveness is still at a mid-range level globally, but with swift structural reforms and the ability to seize global economic opportunities effectively, the country has the potential to become a regional economic leader in the long term,” Visit said.