By Martina Kao    Photo：CANVA

As global supply chains are reorganized, more and more companies are beginning to explore alternative production bases outside of China, and Southeast Asian countries are gradually rising in this context. The concept of Alternative Asia (Altasia) came into being, and this region is becoming a competitive emerging supply chain region. Thailand is one of the key players in this transformation with its unique advantages. This article will explore Thailand's position in alternative Asian supply chains and analyze its advantages and challenges in manufacturing and logistics infrastructure.

1. Background of the rise of alternative Asia
Changes in global trade patterns and geopolitical turmoil have prompted governments and companies to rethink the layout of supply chains. With the escalation of Sino-US trade friction, many multinational companies are facing increased production costs and trade barriers. These factors have begun to shake China's manufacturing advantages. At the same time, as labor costs in China increase, companies are seeking other production bases with more competitive costs. Altasia is a concept that emerged under this background. The region it covers includes Southeast Asian countries such as Vietnam, Thailand, Indonesia, and Malaysia. These countries not only have lower labor costs, but also have rapidly growing markets, attracting more and more corporate investment.

2. Thailand’s position in alternative Asia
Thailand is located at the heart of Southeast Asia and is geographically connected to other Southeast Asian countries. This advantage makes Thailand one of the ideal alternatives to Asian supply chains. In addition, the Thai government’s support for attracting foreign investment into the manufacturing industry cannot be ignored. Thailand's "Board of Investment" (BOI) has launched many preferential policies, including tax exemptions, land use rights, financial support, etc. These policies have attracted many companies to choose to set up manufacturing bases in Thailand. According to BOI data, Thailand attracted record foreign investment inflows in 2022, especially in industries such as automobiles, electronics and agricultural product processing.

Thailand’s infrastructure is also one of the reasons why it occupies an important position in alternative Asian supply chains. Thailand has relatively complete infrastructure in Southeast Asia, including international ports, roads, railways and airports, which facilitates global trade. In addition, the Thai government is actively promoting the Eastern Economic Corridor (EEC) project to enhance the economic competitiveness of the eastern coastal region. The project aims to build a modern industrial cluster and attract more foreign capital and technology investment to support the development of manufacturing and high-tech industries.

3. Advantages of Thailand’s manufacturing industry: industrial agglomeration and policy support
Thailand’s position in alternative Asian supply chains also benefits from the industrial agglomeration effect and policy support of its manufacturing industry. Thailand's manufacturing industry covers a number of key industries, including automobile manufacturing, electronic equipment, chemicals and agricultural product processing. Take the automobile industry as an example. Thailand is known as the "Detroit of Southeast Asia". The automobile manufacturing industry is highly concentrated. It not only has local companies, but also attracts investment from many international brands. In the fields of electronics and chemicals, Thailand also has strong competitiveness. Especially with the growth of global demand for electronic products, Thailand's production capacity in this field has grown rapidly.

Thailand’s “Board of Investment” (BOI) has launched a number of preferential policies, such as tax exemptions and land rental subsidies, to encourage foreign investment. BOI pays special attention to attracting high value-added industries, such as electronic product manufacturing, machinery and equipment, and new energy technologies. In addition, BOI has also simplified the entry procedures for foreign investment and created a relatively friendly investment environment for enterprises. These policies not only attracted a large amount of foreign investment, but also promoted the transformation and upgrading of Thailand's manufacturing industry.

Thailand’s Eastern Economic Corridor (EEC) project is also a key part of the country’s manufacturing advantage. EEC covers three major coastal provinces - Chonburi, Ranong and Bangsaen. These areas have a relatively strong industrial base and strategic geographical location. EEC aims to attract more foreign capital and technology investment through infrastructure construction and industrial policy support, and build eastern Thailand into a cluster of high-tech and innovative industries.

4. Thailand’s logistics and infrastructure construction
As an important link in alternative Asian supply chains, Thailand's logistics infrastructure has developed significantly over the past few decades. Thailand has relatively modern port facilities in Southeast Asia, such as Laem Chabang Port, whose annual throughput can reach millions of TEUs. The port is located within Thailand's Eastern Economic Corridor, which not only facilitates foreign trade, but also serves as an important hub connecting other markets in Asia.

In addition to ports, Thailand's highway and railway networks also provide stable support to the logistics industry. The Thai government is also planning to build high-speed railways to connect neighboring Southeast Asian countries such as Cambodia and Vietnam. These infrastructure projects will further strengthen Thailand’s logistics advantages in the region, making it a core logistics hub in alternative Asian supply chains.

5. The impact of alternative Asian supply chains on Thailand: opportunities and challenges
Against the backdrop of the rise of alternative Asian supply chains, Thailand will face new opportunities and challenges. As more companies shift their supply chains to Thailand, the country's potential to attract foreign investment is further enhanced and a large number of job opportunities are created. This inflow of foreign capital not only has a positive impact on Thailand's manufacturing industry, but also promotes the development of the local economy.

However, Thailand also faces some challenges along the way. For example, as supply chains become increasingly complex and the demand for training in technical and labor skills continues to grow, Thailand needs to invest more resources in improving the skill level of local labor. At the same time, international companies' requirements for environmental protection are gradually increasing. Thailand needs to ensure that while promoting the development of the manufacturing industry, it abides by environmental protection policies to maintain sustainable development. In addition, Thailand will also face competition from other Southeast Asian countries, such as Vietnam and Indonesia, in attracting foreign investment.

6. Outlook: How Thailand can consolidate its position in alternative Asia
In order to consolidate its position in alternative Asian supply chains, the Thai government needs to further strengthen policy support and infrastructure development. By continuing to improve the competitiveness of its manufacturing industry, Thailand can attract more foreign investment and gradually transform into higher value-added industries. The Thai government should strengthen education and vocational training and promote technological innovation to enhance the skills and productivity of the local workforce. In addition, Thailand should also strengthen cooperation with other Southeast Asian countries to promote the convenience of cross-border logistics and trade through regional trade agreements and infrastructure projects.

The investment of international brands and the integration plan of the industrial chain indicate that Thailand's position in the global supply chain will become increasingly important. As Thailand continues to strengthen policy support and infrastructure construction, the country is expected to become an important player in alternative Asian supply chains and become an Asian status in the future.

In summary, Thailand plays an increasingly important role in alternative Asian supply chains. Thanks to its geographical advantages, manufacturing strength and policy support, Thailand has gradually become an ideal choice for companies to transfer their supply chains. As the center of gravity of global supply chains shifts, Thailand's advantages in manufacturing and logistics make it an important pillar to replace Asian supply chains in the future.
 

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