Thailand beats India to woo companies looking to escape death in US-China trade war

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Published: September 12, 2019 4:24:37 PM

To facilitate foreign investments, particularly from China, Japan, Taiwan, and South Korea, Thailand has rolled out a relocation package to attract countries to quickly switch their new businesses from China to Thailand.

trade war, US-China, relocation package, thailand, vietnam, India, global companies, recessionGovernment policies are poised to play an important role to make the global companies feel comfortable about setting up businesses in a new country.

India expected global companies to choose it as an alternative to setting up shop in China, but countries like Thailand and Vietnam have rolled out a slew of measures that might eat India’s share of the pie. To facilitate foreign investments, particularly from China, Japan, Taiwan, and South Korea, Thailand has rolled out a relocation package to attract countries to quickly switch their new businesses from China to Thailand. The country’s economic ministers have endorsed a package of measures, called ‘Thailand Plus’ aimed at attracting more foreign investment, especially to expedite investments from companies seeking to relocate as a result of the ongoing trade war. 

The new package covers comprehensive measures that will enhance Thailand’s attractiveness as an investment location, including investment acceleration incentives, tax incentives, special economic zones, fiscal measures, manpower development, and deregulation. The Indian government has also rolled out measures to attract the companies, which are searching for a new base to set up their businesses. FDI norms in the country have now been eased to provide greater flexibility and ease of operation for single-brand retail and contract manufacturing. However, FDI in India comes primarily in services and telecommunication, not in manufacturing. 

“India has yet not missed the bus. A small portion of the companies have moved out of China and a long list is still awaiting to follow the path. The investment will go where the environment will be more conducive,” D K Joshi, Chief Economist, Crisil, told Financial Express Online. Vietnam has comparatively taken the highest advantage. The Indian government has taken some steps but a few more measures are needed to be taken, he added.

However, speedy decision making may hold the key here. “In seeking to attract investors affected by the trade war, we have to understand that they are escaping death, so the speed is important,” said Nattapol Rangsitpol, a director-general in an Industry Ministry office, told Reuters.

Government policies are poised to play an important role to make the global companies feel comfortable about setting up businesses in a new country. “South-East Asia is considered one of the areas along with India that should benefit in the medium term for diversification out of the crosshairs of tariffs between the US and China, but this structural trend has to be supported by policies,” Trinh Nguyen, Senior Economist, Emerging Asia, Natixis, told Bloomberg TV in a recent interview.

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