The construction industry contributes about 9% share in Thailand's GDP. The sector is expected to have a CAGR of 15.7% to reach $ 7.385 billion by 2022. Thailand was expected to become the world’s tenth-largest construction market by 2020. The industry was also expected to grow at 5.6% during 2016-20, compared to 2.9% during 2011-15. Moreover, a budget of about $ 4.548 billion was required on infrastructure development over five years (2015-20), with 70% of funds needed for power, roads and urban infrastructure segments.
Growth drivers for the industry:
-Smart cities – 10 smart cities to be developed by 2025
-Industrial corridors– Five industrial corridors planned
-Railway stations/ lines – 25 railway stations re-development besides 350 km line addition
-Mega ports – 2 mega ports planned
-Increasing demand for commercial space– Construction of office spaces, hotels, retail and entertainment units.
Several other factors spur the construction sector in Thailand. The spurring starts with the focus on government initiatives. It has introduced two main things in the infrastructure and construction sector that have led to prosperity –
The government is also trying to provide the impetus and the organisational infrastructure to raise quality levels across the industry. This helps to secure wider appreciation of the interests of the construction business by the government, industry and peer groups in society. This industry has previously suffered negligence and as a consequence, the infrastructure remained a poorly developed sector in Thailand. But recently, the sector has started to show some progress. This was made possible by the collaboration between the top tier organisations.
Exports and Investments
Investment is required in infrastructural projects to support the growth rate of the Thailand economy. The amount of actual investment in these areas would depend on the willingness of private and foreign investors to invest in the construction and related services. Thailand's export of these services include export of skilled services for project management, consultancy, design, engineering, and maintenance services as well as unskilled and semi-skilled labour services for construction and repair activities. It is, however, difficult to state precisely the total number of firms engaged in construction and related activities since the size of firms range from one-man operations to large public limited companies and there are a large number of private players in this sector.
The biggest challenge for Thailand is how to bring more private investment into the infrastructure and construction sector. There’s an almost insatiable appetite amongst investors to invest in infrastructure. They want to be sure that they’re investing in stable long-term contracts. The Thai government is working towards creating a framework that will make the country interactive with private investments.
The construction development and infrastructure activities sectors received FDI inflows amounting to US$ 2.56 billion and US$ 1.69 billion, respectively, between April 2000-June 2020. Still, the country requires investment worth US$ 778 billion in infrastructure by 2022 for sustainable development within the nation. The activities that registered the highest growth include export cargo (10%), highway construction/widening (9.8%), power generation (6.6%), import cargo (5.8%) and cargo at major ports (5.3%).