Thailand Halts Solar Panel and Steel Investment Incentives Due to Oversupply Worries

Thailand’s Board of Investment (BOI) has taken decisive action to safeguard the nation’s economic stability and ensure its businesses remain competitive in the face of changing global trade policies. The BOI’s new policy measures, announced on Monday by Secretary General Narit Therdsteerasukdi, reflect an effort to both enhance Thailand’s industrial landscape and mitigate risks stemming from potential oversupply and trade barriers.

One of the most significant changes is the removal of investment incentives for industries that have been identified as vulnerable due to global oversupply or trade-related challenges. These include solar cell and panel manufacturing, lead-acid battery production, automotive components, metal cutting, and non-recyclable waste sorting. Additionally, downstream steel manufacturing incentives will be withdrawn, including long-form steel, hot-rolled and thick steel sheets, and various steel tubing. The move is part of the BOI’s strategy to reduce Thailand’s exposure to volatile global market fluctuations, particularly those influenced by US trade policies.

The BOI has also introduced a series of measures designed to bolster the competitiveness of Thai small and medium-sized enterprises (SMEs). A new incentive scheme encourages SMEs to invest in advanced machinery, automation, and digital technologies, aligning their operations with global sustainability standards. Notably, tax exemptions for operational efficiency improvements have been significantly enhanced, with incentives now extending for five years and covering up to 100% of investment costs. This is an increase from the previous three-year period that covered only 50% of the costs.

In addition to these changes, industries exposed to US trade restrictions, such as automotive parts, electrical appliances, electronics, metal products, and light industries, will now be subject to stricter production criteria. These industries must demonstrate substantial raw material transformation through changes in customs classification at the four-digit level, ensuring that exports provide measurable benefits for Thailand.

Foreign investment rules have also been revised, with companies employing more than 100 workers required to maintain a workforce that is at least 70% Thai. The new policy sets a minimum salary requirement for foreign executives and specialists—150,000 baht per month for executives and 50,000 baht per month for specialists. These measures are aimed at attracting high-value foreign expertise while ensuring that domestic workers benefit from knowledge transfer.

Looking to the future, the BOI has commissioned a comprehensive study in collaboration with the Federation of Thai Industries (FTI) and the Thailand Development Research Institute (TDRI). The study will focus on creating strategies to increase domestic value creation and improve integration with global supply chains. It is expected to offer actionable recommendations on how Thai businesses can strengthen their position in critical global markets, fostering greater international collaboration.

These measures come at a critical time for Thailand’s economy, as it navigates global trade uncertainties. By re-aligning its industrial policies and focusing on innovation and efficiency, Thailand aims to enhance its long-term economic prospects while maintaining stability in the face of global challenges.  

Source: The Nation