Ekniti's high-income status goal for Thailand is a giant leap of faith

Finance Minister Ekniti Nitithanprapas recently unveiled a new economic plan aimed at steering Thailand towards a high-income nation, but experts have flagged obstacles that need immediate attention.

The plan aims to push GDP growth beyond 3 per cent—up from the current 2 per cent—and increase investment to 30 per cent of GDP to ride the next industrial wave.

Ekniti made these statements during a special interview titled “New Horizons of Fiscal Policy: Empowering People, Building Resilience” at an academic seminar hosted by the Fiscal Policy Office on August 7.

Balancing vision with skepticism

Ekniti’s goal to raise economic growth above 3 per cent looks ambitious, but presents an uphill task for the country.

“The government could drive economic growth beyond 3 per cent, but it would be temporary and in the long run it would decelerate anyway,” said Piyasak Manason, head of economic research at InnovestX Securities, the investment arm of SCBX Group.

Piyasak noted that InnovestX forecasts Thailand’s economic growth at 2.5 per cent this year against a potential of 2.7 per cent, warning it could slide to 1.7 per cent by 2040 without economic reform.

He highlighted key demographic headwinds, including the declining national population due to lower birth rates, which threatens domestic market demand, alongside a shrinking workforce and a severe shortage of highly skilled labor.

Ekniti, who is also deputy prime minister, acknowledged that Thailand’s economy had stagnated due to a lack of investment. Public and private investment together currently stands at around 23 per cent of GDP (around 6 per cent public and 16–17 per cent private).

In comparison, at the peak of Thailand’s economic boom between 1990 and 1996, total domestic investment averaged over 40 per cent of GDP.

To raise investment substantially, public sector investment would need to nearly double, Piyasak said. However, major initiatives remain rare, with current government projects limited primarily to roads and small ports.

He added that key proposals face severe hurdles, noting strong opposition to the Landbridge project and the recent cancellation of the high-speed rail line connecting three major airports.

Long-term vision and short-term targets

According to Ekniti, driving the nation forward requires clear targets and a concrete vision—similar to Malaysia, which set goals over a decade ago and is now on the verge of escaping the middle-income trap.

In collaboration with the World Bank and the Asian Development Bank, Thailand has formulated a goal to transition into a high-income country in 12 to 15 years.

The target for average per capita income is set at approximately US$16,000 to $20,000, with the goal of doubling total GDP. Thailand’s GDP per capita was around $8,056 in 2025, according to the World Bank.

The current Thai government, during its four-year term, aims to lay the groundwork by:

● Raising total investment to 30 per cent of GDP, driven by domestic private investment, foreign direct investment, new infrastructure and human capital.

● Improve Thailand’s competitiveness rankings—as measured by the International Institute of Management Development and World Economic Forum—from 26th in the world to the top 20 within four years.

“The goal is to raise Thailand’s economic potential and growth trajectory from the current around 2.8–2.9 per cent up to 3 per cent plus,” said Ekniti.

Riding the next industrial wave

Ekniti added that Thailand must capitalize on “New Horizons” and next-generation industries. Amid global geopolitical conflicts, Thailand holds key strengths: safety, neutrality, strong existing infrastructure and availability of raw material.

This environment mirrors the situation in 1985 following the Plaza Accord, when Japanese manufacturers relocated to Thailand.

Today, global shifts center around new industries: AI, semiconductors, chips, data centers, electric vehicles, robotics and photonic high-speed optical transmission equipment. Leading global companies in these sectors have already established facilities in Thailand, according to Ekniti.

However, Thailand’s gains from global AI investment may be limited. Piyasak pointed out that Asian peers like Taiwan and South Korea dominate upstream AI chip production, making it difficult for Thailand to penetrate.

Currently, Thailand primarily benefits from downstream AI applications.

A key contributor is Delta Electronics (Thailand) Public Company Limited, a subsidiary of Taiwan’s Delta Electronics, Inc. The company is a major manufacturer listed on the Stock Exchange of Thailand, producing power systems for AI servers, hyperscale data centers, telecommunications and EVs.

Workforce development and infrastructure

In his role as chairman of the Board of Investment (BOI), Ekniti revealed that he had overhauled the investment promotion strategy. The BOI now mandates technology transfer, local supply chain integration, local hiring, and collaborative R&D with institutions like Rajamangala University of Technology and Suranaree University of Technology.

Meanwhile, the Thailand Skill Bridge / BOI STEM++ Program aims to develop 100,000 highly skilled workers for advanced industries, Deputy Prime Minister and Minister of Higher Education, Science, Research and Innovation Yodchanan Wongsawat said.

However, Piyasak noted that those industries require roughly 200,000 workers, pointing to a persistent talent shortage.

Regarding infrastructure, Ekniti highlighted plans to support AI data centers through:

● Direct power purchase agreements: Enabling private firms to buy clean power directly

● Mandatory self-generation: Requiring data center operators to invest in their own clean energy plants without relying on state budgets.

● Water management: Engaging private investment to mitigate drought and flood risks.

Fiscal strategy and the 5Ts framework

Amid budget constraints and public debt limits, tax increases could boost revenue, but Piyasak conceded that “For political reasons, raising the value-added tax rate would not be possible.”

Instead, Ekniti emphasized management through 5 key targets — 5Ts:

Target: Allocate limited budgets precisely where they yield maximum effectiveness.

Transition: Support economic and energy transitions to absorb future shocks.

Transform: Invest in people, upskill labor, and upgrade infrastructure.

Transparency: Ensure verifiable, open, and accurate budget management.

Together: Partner with the private sector through public-private partnerships, infrastructure funds, and Joint Public-Private Sector Consultative Committees.

For immediate regional relief, Ekniti highlighted the “People’s Energy” (solar rooftop) initiative. In cooperation with state banks, it provides grant funding of approximately 50,000 baht per household to install solar rooftops, allowing citizens to reduce electricity bills and pay off instalments through monthly energy savings.

The government currently implements a co-payment scheme to assist citizens facing economic hardship, which Ekniti indicated may be extended.

However, critics warn that the administration risks becoming reliant on short-term populist measures at the expense of structural economic reform.

Piyasak cautioned that additional relief packages would further inflate public debt. He urged the government to prioritize infrastructure investments that yield higher long-term economic returns.