Raising Thailand’s Productivity Through Regulatory Reform

Why It Matters

Weak productivity hampers Thailand’s growth prospects, while regulatory reform can unlock higher output and attract investment, crucial for its high‑income ambition.

Key Takeaways

• Productivity growth fell to 2.1% (2015‑2023).
• Thailand’s PMR score 2.4, fourth most restrictive.
• Foreign ownership limits deter investment.
• State‑owned enterprises lack robust competition oversight.
• Corruption perception rank 116/182, hindering business confidence.

Pulse Analysis

Thailand’s slowdown in labour productivity signals deeper structural challenges. While the nation once posted robust gains, the post‑2015 period shows a sharp deceleration, reflecting limited technology adoption and stagnant total factor productivity. This trend mirrors broader concerns in emerging markets where growth is increasingly tied to efficiency gains rather than sheer capital accumulation.

Regulatory barriers are a primary drag on Thailand’s competitiveness. The OECD’s product‑market regulation index places the country near the top of restrictive economies, indicating that firms face high compliance costs, limited market entry, and constrained foreign ownership. Streamlining procedures for business start‑ups, reducing import‑export processing fees, and enhancing competition law transparency would lower entry barriers, stimulate domestic innovation, and make Thailand more attractive to multinational investors.

Beyond market rules, governance reforms are essential for sustainable productivity gains. Thailand’s poor standing on the Corruption Perceptions Index undermines investor confidence and inflates transaction costs. Aligning fully with the OECD Anti‑Bribery Convention and instituting transparent lobbying registers can improve the business climate. Combined, these regulatory and anti‑corruption measures create a virtuous cycle: better competition drives efficiency, which fuels higher output per worker, moving Thailand closer to its 2037 high‑income target.