Each region of Thailand has unique advantages that are suitable depending on the type of business operations being established. For example, are you looking for a business HQ, a manufacturing operation, an office close to logistics and infrastructure, or a regional management office? In this guide, we focus on the locations of Thailand that are most suitable for business operations and investment, and we encourage foreign investors and regional business operators to avoid the habit of choosing Bangkok based on Bangkok’s business environment.
Bangkok and the Greater Bangkok Area
There are multiple reasons for businesses to select Bangkok as an HQ for their financing and operations, or as the location of the largest sales and service operations. There are the best transport and supplier networks, and business and government customers are located the closest. The access to business and government customers comes at a cost, since Bangkok is the most expensive location. For most businesses, the benefits of Bangkok outweigh the cost.
Eastern Economic Corridor
Thailand’s Eastern Economic Corridor is a best option for manufacturing, industrial supply chains, and logistics operations. The Corridor is surrounded by industrial and logistics infrastructure including ports and developed industrial estates with great connectivity to serve exports. The location is ideal for production-linked investments. Organizations should consider Eastern Economic Corridor as their first choice to establish manufacturing in Thailand, because a higher concentration of Thailand’s industrial estates exists in the Corridor, in comparison to Bangkok.
Chiang Mai
Chiang Mai is highly preferred location for tech and knowledge work businesses, especially those that recruit remotely. Chiang Mai also offers a good talent base for involved work. There is a good pool of local graduates, but also a growing community of relocated knowledge workers. A relocation to Chiang Mai from Bangkok will substantially reduce a firm’s operational costs, including employee salaries, rents, and daily operational costs. For firms that do not need close interaction with their Bangkok based clients and, or regulatory requirements, Chiang Mai is a cost effective location that still offers a good talent pool.
Phuket and Samui
Phuket and Samui focus on tourism and hospitality related businesses. Here these locations are optimal for services focused on expatriates and tourists such as hospitality management as well as wellness and lifestyle businesses. In these cases, the proximity to the tourism economy is the primary driver and other businesses without a direct interest in tourism or expatriates lifestyle have little justification to locate in these areas. These businesses will be better suited to the bigger economic hubs in the country.
Northern and Northeastern Regions
These provinces are excellent for businesses focused on agriculture and light manufacturing with distributed operations. They are a lower cost option for these businesses as they are not located in the large metropolitan areas. These regions can be cost effective for such functions, but businesses looking at this option need to consider the availability of labor, the logistics and the infrastructure gaps against the cost savings, for what looks attractive on a simple cost comparison can end up being a more complicated exercise in practice especially when transport and supply chain are taken into consideration.
Analyzing Location Costs
The disparity between Bangkok and the rest of Thailand can be seen in the cost of office space. Regular office space in Bangkok’s central business district (CBD) runs around 700 THB per square meter. Grade A office space in the CBD costs about 1,025 THB, due to the quality of the buildings and the demand in the core districts of Bangkok. When calculating office space costs, utilities also need to be considered. Electric costs range from 5 to 6 THB per kilowatt hour. Given the hot and humid climate in Thailand, the cost of air conditioning is an additional 40 to 50 THB per square meter, per month, added to the base rent. It stands to reason that Bangkok is used as the standard for location costs throughout the country, as all of the other cities and regions are at a lower cost, with the magnitude of the cost difference often influencing business location decisions.
Choosing a Location
When determining where to locate your business, the starting point should be where the functions of the business operate best, rather than where you think is best, based on familiarity. From there, you need to understand the trade-offs between the availability of labor, the quality of logistics, office costs, and access to clients. These trade-offs account for the different functions of the business. Design a scorecard that includes cost, availability of talent, infrastructure, incentives, and potential for growth. A scorecard of that nature will be more effective than a structured comparison and will highlight the better option for your business, especially if the functions you are considering putting in one location would be better served in multiple locations.
General Questions
Is Bangkok the best business location in Thailand? For business functions that are finance-based and enterprise-facing, yes. Generally, Bangkok is the best business location because of its travel, supplier, and client access; however, the cost would not be justified for purely technical functions.
Which Thai city is best for a startup? Chiang Mai. Chiang Mai has a strong tech and creative workforce, and operating costs are lower than in Bangkok.
Where should manufacturers locate? Invest in the Eastern Economic Corridor. That region has focused investment in production with industrial areas and infrastructure designed for export and trade.
Which location has the best cost-performance balance? It depends on what you’re looking for. For knowledge work and technical teams, Chiang Mai is the best location. The best cost-performance balance for manufacturing and logistics-heavy operations is in the Eastern Economic Corridor.