Covid-19: A Threat or an Opportunity for Thailand Industrial Market
As the effects of COVID-19 are felt around the world, different real estate sectors are being impacted in various ways. However, amidst the pandemic, parts of the industrial sector have seen a lesser impact from the COVID-19 situation in Thailand compared to other sectors.
The outbreak, together with the ongoing US-China trade war, has increased the interest to relocate of China-based companies which is also a result of refocusing of companies in global supply chains to lower their manufacturing risk by not being too reliant on a single country.
Thailand’s geographic location gives it an important competitive advantage as an industrial hub for ASEAN. The expansion and success of the Eastern Economic Corridor (EEC) and its infrastructure developments will be the keys in securing Thailand’s place in the lead and winning the competitive game.
Connectivity is also key to logistics. The Thai government has progressed with its various major infrastructure projects to secure a strong foundation for future growth, including the double-track rail and the high-speed rail to link three airports projects, and by increasing airport logistics capacity.
COVID-19 is set to accelerate the broader adoption of new technology to overcome skilled labour shortages in the country, like robotics and automation in many factories as well as 5G technology in the manufacturing sector in the near future.
It has also opened a new door for Thailand to advance in medical device manufacturing, such as single-use devices, durable medical devices, and reagents and test kits. For years, Thailand has been the top exporter of medical devices among the ASEAN countries.
As there has been a sudden increase in the global demand for medical equipment, the Thai government is seizing the opportunity to captivate foreign investors seeking to expand their manufacturing base in this up-and-coming industry by offering many privileges which goes in hand with the EECmd – one of EEC’s development plans devoted to advancing the medical industry by enhancing research and development in the medical sector.
Areas of the logistics sector, on the other hand, have seen unprecedented demand. During this time, Thais are adapting more to digital economy and online shopping with COVID-19 acting as the catalyst. In the first quarter of 2020, Modern Logistics Property supply in Bangkok grew by 6.8% Y-o-Y, followed by 6.7% Y-o-Y growth in demand, as supported by resilient e-commerce demand and a surge in last-mile delivery. Moreover, many developers have received more inquiries for food and cold storage and data centre, reflecting a change in consumer behaviour.
While travel restrictions imposed by the government have hindered inspections and contract signings, CBRE believes investment activities should gradually recover when the travel restrictions are eased, permitting foreign investors to enter Thailand. The growth of e-commerce and logistics sector in Thailand will continue to grow even after the pandemic has been contained as locals have become familiar with online platforms, following the global trend.
An article written by Chonthida Asavahame, an Analyst at Research and Consulting, CBRE Thailand for Bangkok Post dated 9 July 2020.