5. Challenges and obstacles to Thai outward FDI
Thai enterprises face a number of challenges and
obstacles when going abroad. The main challenges are capacity
constraints and complacency on the part of Thai firms. The major
issues facing Thai enterprises’ overseas investment include the
following:14
• Difficulties in understanding complex policies and
regulations in host countries,
• A lack of market information. Many Thai investors lack indepth
information on host country markets, which results
in reluctance and delay in decision-making on outward FDI.
• A lack of coherent institutional support and government
guidance also plays a role. Although the Government of
Thailand has provided several measures to promote outward
FDI, unclear policies and programmes and the lack of
coordination among the various implementing agencies have
confused Thai enterprises.
• Few significant Thai government incentives encouraging
Thai firms to invest overseas. Other countries offer various
incentives such as grants, subsidized loans or tax breaks to
encourage their enterprises to go abroad.
• Limited access to finance has restricted Thai firms,
especially SMEs, to venture abroad. The difficulties in
raising funds from Thai financial institutions – as assets
overseas cannot often be used as collateral – have restricted
Thai enterprises’ ability to raise finance.
• The absence of skilled human resources, especially in middle
management, has constrained Thai outward FDI. The lack
of language skills and the reluctance of qualified Thai
managers to work abroad have also limited Thai enterprise
capacity to internationalize.
• Aside from the above home country factors, host countries’
constraints have also contributed to restricting Thai outward
FDI. These include strict foreign exchange controls,restricted market access, inadequate infrastructure facilities,
limits to the hiring of Thai expatriates, higher transaction
costs and difficulty in finding suitable local joint venture
partners. In some cases, the absence of bilateral investment
agreements to protect investments contributes to insecurity
and uncertainty about overseas investments by Thai
enterprises.