Thailand is the manufacturing star of Southeast Asia, particularly when it comes to automotive and food-and-beverage manufacturing. At its peak, the country’s machinery production revenue was growing 15.8 percent year over year, reaching $3.1 billion in 2016. The market is expected to achieve 9.9 percent year-over-year growth this year, exceeding $3.8 billion in 2018. That momentum is predicted to continue at a compound annual growth rate (CAGR) of 8.1 percent, from 2017 through 2022.
Thailand’s military junta is also staking its legacy on a plan to direct more than $45 billion in investments into three eastern-seaboard provinces. The project includes several wide-scale improvements in infrastructure, including a new international airport, updated port facilities, and new roads and railway links. This initiative will be accompanied by tax and regulatory breaks to lure private investors. Due largely to this investment plan, materials handling machinery production numbers for Thailand are expected to grow by double digits, with revenues forecast to exceed $500 million in 2022.
The automotive sector is the key indicator of where the nation’s machinery production growth prowess lies. Thailand is Southeast Asia’s second-largest market, after Indonesia, for passenger vehicles and light commercial vehicles. The country is forecast to account for 27.5 percent of Association of Southeast Asian Nations (ASEAN) light-vehicle sales in 2018. Machine tool production has already directly benefited from this growth, with revenues rising by 10.9 percent in 2016 and 6.5 percent in 2017. The country has proven to be the perfect automotive manufacturing and export hub for Southeast Asia as it sits strategically in major trading routes offering solid infrastructure and a highly skilled labor market. Over the two years from 2018 to 2019, single-digit growth is still projected, with big investments from Toyota and Ford.
Food processing machinery production will also experience growth, as Thailand’s large agricultural produce sector goes hand in hand with its well-developed food-processing sector. This development will allow monetization of the country’s natural productivity, expanding the downstream value chain from field to market. The country has one of the most advanced food processing industries in Southeast Asia, which enables it to export value-added products to Europe, Japan, China, the United States and other international markets. The food industry is the country’s third largest, contributing over approximately 20 percent to the Thailand’s Gross Domestic Product (GDP).
Thailand’s food processing industry has developed rapidly and is one of the most developed in Southeast Asia with more than 10,000 food-and-beverage processing factories. Most food processors are small-to-medium sized companies, and they predominantly serve the domestic market. However, there are medium-to-large food processors that produce higher-value products for domestic and export markets. Food and beverage machinery production is forecasted to grow at a CAGR of 11.8 percent from 2017 through 2022.