The current trends in Thailand's industrial sector and production cycles are facing significant challenges. According to data from the overall factory closure statistics, the gap between the number of factories opening and closing has averaged less than 100 factories per month. However, when looking at the scale of factories, there is an increase in the number of large factories opening. In the first seven months of 2024, the number of industrial factories starting operations increased by 25.9% compared to the same period last year. These signals are encouraging all stakeholders to collaborate in learning from experiences and setting the direction for the industrial sector to continue to thrive.


Government Policy: A Fundamental Variable for the Potential of Thai Factories

Amid a continuously challenging economic environment, one of Thailand's key industrial areas proving the country's potential as a base for global entrepreneurs is the Free Zone, or duty-free zone, which supports import-export businesses.

The Free Zone is overseen by the Customs Department and was established for customs benefits in industrial operations or other activities that benefit the country's economy. Those wishing to operate in the Free Zone must apply for a license.

Currently, the leading provider of Free Zone projects in the country is Prospek Development (PD), a subsidiary of M.K. Real Estate Public Company Limited, which leads in warehouse and factory rental projects under the Bangkok Free Trade Zone (BFTZ). Despite the economic situation not yet recovering well, the proportion of tenants in factory buildings specifically within the Free Zone across all projects exceeds 70%, while the remaining 30% are tenants of warehouses and services. The demand for rental space has never decreased, as the Free Zone is an industrial area that can comprehensively support businesses in production, transportation, storage, and distribution.

Ms. Ratchanee Mahatdechkul, Managing Director of Prospek Development Co., Ltd., which develops and manages the 'Bangkok Free Trade Zone' project, stated, "The overall economic recovery is slow due to the effects of Long COVID on businesses. Therefore, entrepreneurs should closely assess situations that may impact their businesses. This has led many businesses to consider reducing the number of factories under their management. However, for factories that benefit from tax exemptions from the government due to their location in the Free Zone, we find that there is still continuous business expansion in Thailand. This reflects that government policy support is one of the key factors reinforcing Thailand's potential as a base for business owners from around the world in the long term."

Entrepreneur Networks: A Stepping Stone to Enhance Factory Capabilities in Thailand

Since not every business is suitable for establishment in a Free Zone, in the past, entrepreneurs, especially foreign investors, overlooked the Free Zone due to a lack of understanding of the benefits of setting up factories in such areas. This raises an important question: How can the Free Zone meet the needs of entrepreneurs looking to establish factories in Thailand comprehensively?

With the goal of leaving no one behind, the development model of the BFTZ project has been adjusted to include a General Zone to accommodate various types of businesses and all sizes. Prospek Development has spent over 15 years promoting Thailand's strategic industrial areas while building understanding. Currently, both domestic and foreign entrepreneurs have confidence in establishing factories in the Free Zone and are planning to expand their businesses in Thailand continuously.

“The benefits that the government provides to import-export businesses using the Free Zone are key to the decision to establish factories in Thailand. However, equally important is considering how we can further enhance the potential of the area to support other businesses that may not yet qualify to use the Free Zone. What we can do is attract entrepreneurs from around the world to show interest in setting up factories in Thailand first, and in the future, they may expand into the Free Zone as well,” Ms. Ratchanee Mahatdechkul stated.

The development concept of Prospek Development's factory and warehouse rental areas reflects a perspective of jointly promoting Thailand's strengths by emphasizing government policy support while also utilizing deep understanding of both Thai and foreign entrepreneurs to enhance services that meet the needs of the overall factory industry.

“For the future of Thai factories, we must create new opportunities by strengthening the ecosystem, promoting investment from the government, enhancing workforce skills, and elevating cooperation among entrepreneurs in the industrial sector. The potential of the Free Zone is another way to support businesses engaged in long-term import-export production bases. Moreover, as a provider of factory space, we must be ready to elevate our role beyond just providing rental space to help entrepreneurs start their businesses quickly, smoothly, and sustainably grow together,” said the executive of Prospek Development Co., Ltd., which develops and manages the 'Bangkok Free Trade Zone' project.

Empowering Factory Entrepreneurs: Continuous Development, Seizing the Right Opportunities, and Building Long-Term Partnerships

Currently, Prospek Development supports rental spaces for entrepreneurs from over 238 companies across various countries, with the top five being Thailand, China, Japan, the United States, and Europe. The factory and warehouse spaces include Ready Built buildings, Built-to-Suit buildings, and Ready Built-to-Suit, which involve developing existing standard buildings to meet the specific needs of each industry.

An example of a factory entrepreneur that remains confident in establishing in Thailand and continues to expand its business is Thai Hazo Co., Ltd., a Japanese company that has been operating since 2012, establishing a factory to produce and export wet and dry cleaning sheets, disposable underwear, and absorbent pads for health and hygiene for infants, individuals, and hospitals, with major clients including American P&G, American Frida Baby, Wacoal, and some Japanese and Southeast Asian clients.

Mr. Ho Sing, Director and Factory Manager of Thai Hazo Co., Ltd., shared his perspective on utilizing the Free Zone, stating, "Establishing a production base in Thailand for over 12 years, the company has navigated various significant situations while maintaining business strength. Initially renting a factory in the BFTZ 1 Bangna-Trad Km. 23 area of approximately 6,000 square meters, we have now expanded to 20,000 square meters and plan to further expand our factory in the Free Zone in Thailand's strategic location. Since our business primarily involves production and export, we can utilize the related benefits in the Free Zone and expedite various operational processes. Although Thai Hazo's products are in high demand, we do not remain stagnant; we continuously develop ourselves to keep pace with the changing world, understand the market, and delve into customer insights to develop quality products that meet target groups, aiming for annual sales of approximately 30 million USD."

Mr. Siang Ling, Factory Manager of Thai Hazo Co., Ltd., added, "Our production factory is semi-automated, employing over 470 people in production lines and offices, with 99% of employees being Thai. Given the competitive landscape with many market players, the company's main focus is on expanding capabilities in various areas, such as enhancing workforce skills, collaboration between companies and stakeholders in the industry, and continuously improving product quality through a budget allocation for R&D of up to 10% of sales. Additionally, our approach to managing transportation cost reductions has allowed us to capture a larger market share of household cleaning products. In 2025, we plan to expand our product types and add food packaging products, with all company products requiring patent registration to ensure innovation."

Meanwhile, Fanucchi Dairy Co., Ltd., which produces dairy products, is a leader in high-quality cheese production from Italy, originating from the 'Fanucchi' family with over a century of experience in the industry, combining knowledge and techniques passed down to the fourth generation with a commitment to delivering high-quality cheese to Thai consumers. Their main products include fresh mozzarella cheese, mozzarella for pizza, mozzarella cheese sticks, and crispy cheese snacks under the YUMMY BITES brand.

Mr. Nicola Fanucchi, Director of Fanucchi Dairy Co., Ltd., stated, "We chose to operate and establish a factory in Thailand due to its geographical advantages as a hub connecting various countries in Southeast Asia. Additionally, the company sees opportunities from economic expansion in the region, with few cheese producers in the country. When deciding on a project to rent a factory, we prioritize the benefits of the Free Zone, as Fanucchi Dairy's business primarily involves importing raw materials from abroad to produce and sell cheese in Thailand, with some exports to Cambodia and Vietnam, focusing on B2B customers. Gaining benefits in this area helps reduce costs and enhances competitive advantages, and the location of the BFTZ 1 project in Bangna-Trad is not far from Bangkok and important ports."

Although we may face challenges in the near future, including intensified competition from new producers and geopolitical conflicts affecting raw material prices, Thailand remains a significant market of opportunities with growth potential, especially in the cheese market, reflected by the trend of modern consumers who are increasingly open and often include cheese in their cooking.

“With the excellent services and support from the project owner's team, we have smoothly accessed Thai government promotions. The process of installing equipment alongside obtaining permits has been swift. We rent a Stand Alone building or a factory with a secure perimeter, suitable for food business operations. From the perspective of foreigners doing business in Thailand, having a partner who understands, provides advice, and offers comprehensive care allows us to move forward in creating growth and developing new products effectively,” Mr. Nicola concluded.

Enhancing potential, adapting to every change, and partnering with strong allies are pathways to drive forward and face every resistance with confidence. This concept reflects the developmental journey of factory entrepreneurs in the Free Zone towards building a strong future for Thailand's industrial sector in the long term.