Industry focus – thailand’s new food hub is on the rise



As a nation with an abundance of food, a competent workforce and a global reputation for delicious cuisine, Thailand’s reputation as “The Kitchen of the World” is well deserved.


Thailand is ranked as the world’s 14th top food exporter based on the previous year’s export value which reached THB 950 billion (USD 28 billion). The food industry is the country’s third largest industry, contributing 23% to GDP. Having established a strong pillar in agricultural products, including top-quality rice, tropical fruits, and fresh seafood, Thailand is now recognized as the world’s top exporter for cassava products, canned tuna, canned pineapple, rice, and sugar.


Nonetheless, Thailand has also grown beyond just food ingredients. High value, innovative food products are also being produced in Thailand. This includes highly-processed ready meals, halal foods, food seasoning, dietary supplements and medical foods. These developments have been the key drivers that are pushing Thailand’s competitiveness and allowing the country to maintain its strong foothold in the global food arena. Adopting advanced technologies in food production is also in-line with Thailand 4.0, by increasing efficiency and value-added in the supply chain.


Growth in the food industry skyrockets

The ample market opportunities in Thailand’s food industry are readily apparent not only from its dominant presence in the global market, but also in terms of domestic demand and growth. Local demand for ready meals alone reached over THB 9,200 million (USD 270 million) in 2016, powered by double-digit growth at a CAGR of 13% from 2012. Over 9,000 processed food companies are operating in Thailand, including many of the world’s heavyweights such as CPF, Dole, Thai Union, Unilever, and Kingfisher. Food products produced in Thailand range from frozen seafood, chicken, shrimp, canned tuna, canned pineapple, ready meals, halal foods, and much more.


Apart from the food processing sector, Thailand is also the prime market and production base for food seasoning in Southeast Asia. With a total of 550 manufacturers, well-known companies, including Ajinomoto, McCormick, Nestle, and Knorr, have invested in their facilities to produce such products to feed the global market. In the preceding year, the export value reached THB 21,000 million (USD 616 million), accounting for 5.4 percent of the world market. Growth in food seasoning was robust at 7.7 percent over the past five years. Key export seasonings range from chili sauce, fish sauce, curry paste, soy sauce, artificial sweeteners and monosodium glutamate.


Government’s commitment to Thailand 4.0

Firmly committed to advancing towards Thailand 4.0, the Thai government aims to elevate the food industry to world standards through the development of high-level innovations. The goal is to become one of the top five food exporters in the world according to the 20-year National Strategy. To ensure this significant milestone is achieved within the stated timeframe, both “Food Innopolis” and “World Food Valley Thailand” were strategically introduced.


Food Innopolis, established in 2016, is located in the middle of Thailand Science Park. With the objective of serving as a global food innovation hub, its focus is on research, development and innovation (RD&I) for Thailand’s renowned food industry. So far, almost 40 prominent companies have already set up their laboratories in which approximately 30 percent are leading international companies, including Haydale Technologies, Taisei Kogyo, Thai Otsuka, and Austrianova.


Situated in Ang-thong with an area over 2,000 rai, World Food Valley Thailand will operate as an eco-industrial estate for the food industry. Expected to be completed in 2020, World Food Valley Thailand will provide a fully integrated one-stop service for the whole food value chain. Up to this point, more than a hundred investors, notably Japanese investors, have shown considerable interest in investing in this significant project.


Source: Modern Manufacturing Thailand


Moving forward in the global arena

Given its huge contributions to Thailand’s economy, the Board of Investment (BOI) has prioritized the food industry by providing considerable investment incentives and privileges, both tax and non-tax, to investors.


Tax-based incentives include a three to eight-year exemption of corporate tax income, with a five-year additional 50% tax reduction, together with an import duty exemption on machinery. To completely support the development of cutting-edge innovation, the deduction on R&D expenses was increased from 200% to 300%. In addition, non-tax privileges including the permission to own land for foreigners and facilitation on visas and work permits.


The Thai government and the BOI have underscored their full commitment to strongly promote Thailand’s food industry through innovation in a period when the country and the food industry are undergoing important transformations. By incorporating Thailand’s core strengths, promising growth prospects, together with the government and the BOI’s emphasis on food, there is now an important window of opportunity for investment in what promises to be a bright future.


PDF Download