The manufacturing sector in Thailand is highly competitive due to several factors, such as the abundance of raw materials, low-cost labor, and innovative technologies. The manufacturing industry is one of the main drivers of the Thai economy. Although the manufacturing sector’s contribution to Thailand’s gross domestic product (GDP) in the past decade has been fluctuating, it contributed to approximately 4.4 trillion Thai baht in 2021. Compared to other important economic sectors, the manufacturing sector makes a greater impact on the Thai economy. It accounts for the majority of Thailand’s total exports and generates a large volume of jobs, amounting to almost six million workers in 2021. As of the fourth quarter of 2021, the share of the manufacturing sector in the Thai economic contribution was 34 percent, preceding other major industries like service and trade.
Performance of the manufacturing sector
During the COVID-19 pandemic in 2020, several industries in Thailand were significantly impacted, including the manufacturing sector. Thailand’s exports were stagnant due to severe deflation, lower demand from worldwide buyers, and less manufacturing output in general. This was seen in contractions of the manufacturing production index (MPI), with the lowest index points in the third quarter of 2020. However, public initiatives to promote the manufacturing sector have been introduced to tackle the situation. These include encouraging the cooperation between public and private sectors, funding the manufacturing industry, and supporting knowledge development and new technologies. Earlier in 2022, there were signs of improvement in the manufacturing industry in Thailand, as seen in the purchasing manager index (PMI), which was above 50 index points since January 2022.
Leading segments in the manufacturing sector
Since 1958, the Thai government promoted the private sector to engage in manufacturing. This led to the expansion of several manufacturing segments, such as electrical and electronic appliances, automobile parts, machines and accessories, food and beverages, and chemical products. Recently, electronics and vehicles were the main manufactured goods exported from Thailand. As of February 2022, food products had the highest manufacturing production index (MPI), amounting to 125.09 index points. Interestingly, tobacco products had the lowest MPI despite being one of the most manufactured and exported products in Thailand.