A DOUBLE-EDGED SWORD?
Thailand is trying to reposition itself at a time when supply chains are shifting. Companies are reducing overdependence on China, reacting to geopolitical tension and looking for more resilient production bases in Southeast Asia, according to experts.
Thailand used to be one of Southeast Asia’s great manufacturing success stories.
From the 1980s through the 2000s, it turned itself from a largely agricultural economy into an export leader, with a strong auto industry complemented by food processing, petrochemicals and consumer goods.
But growth has slowed sharply. Thailand’s GDP growth was 2.4 per cent based on National Economic and Social Development Council (NESDC) figures in 2025 and forecast to be just 1.7 per cent in 2026, according to the World Bank.
Its old model has struggled to keep up with new dynamics and been stymied by “stringency of regulations”, said Vibeke Lyssand Leirvåg, the chairperson of the Joint Foreign Chamber of Commerce Thailand (JFCCT).
Still, Leirvåg remains optimistic about the OECD push, saying the efforts are welcomed by foreign investors, both existing and new.
“Thailand is ready to compete. We are not in a manufacturing age from 40 years ago, 50 years ago,” she said.
“It will force change, because if they want to join OECD, they will have to do reforms, they will have to change regulations, they will have to do some cleanup in areas like anti-corruption and on the rule of law in general.”
Alongside the OECD bid, the Thai government is also in negotiations with the European Union on a free trade agreement that covers many of the same issues. This month, it also agreed to strengthen trade and economic cooperation with the United Kingdom.
Archanun said Thailand could use the OECD process to show investors it is serious about improving the business environment.
Those signals are important, he said, because Thailand has struggled for years with weak perceptions on corruption, and in 2024 ranked below Indonesia in Transparency International’s 2024 Corruption Perceptions Index.
OECD accession could strengthen confidence that reform is genuine, but it also raises the stakes, he said.
“If the government fails to follow through, the backlash could be equally severe – a double-edged sword.”
Joining the OECD could make Thailand more competitive, attract higher-quality investment and reassure companies looking for predictable rules, said Sineenat Sermcheep, director of the ASEAN Studies Center at Chulalongkorn University.
But the reforms could be politically difficult, costly for some businesses and slow to translate into benefits for ordinary people, she warned.
“In the short term, changes may feel gradual, but over time people are likely to experience benefits,” she said.
Collectively, she said, these changes are expected to improve quality of life through better education opportunities, improved living conditions and rising income supported by faster and more sustainable economic growth.
However, the transition may create adjustment pressures and compliance costs for small and medium-sized enterprises (SMEs), and pose challenges for workers in the informal sector.
Rujikorn said Thailand’s large informal economy is one of the country’s structural weaknesses.
She estimated it at around 48 per cent of GDP, compared with about 18 per cent in Indonesia, and said that when workers and businesses remain outside the formal system, it becomes harder for the state to tax them, protect them and address rising debt problems.
Thailand’s high household debt levels are one of several symptoms of deeper structural weaknesses that policymakers hope OECD-style reforms can help address.
Thailand’s household debt now stands at nearly 90 per cent of GDP, among the highest in Asia, according to the International Monetary Fund.
“With such high household debt, combined with domestic political instability, Thailand risks standing at the back of the line when it comes to regional attractiveness,” said Pavida Pananond, a professor of international business at Bangkok’s Thammasat University.
OECD accession is also likely to increase pressure for greater formalisation of Thailand’s economy, bringing in more businesses and workers into regulatory, tax and social-protection systems.
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