The EEC project is one of the most important components of the government’s economic development agenda, Thailand 4.0. Strategically located along the eastern seaboard, the EEC is set to become the country’s primary investment attraction, with stakeholders moving to build on existing infrastructure, and in doing so, promote the development of 10 priority industries as highlighted in the national agenda.

EEC development is expected to accelerate in 2018, helping to attract new foreign direct investment (FDI) after several years of slumping inflows. Public spending on the project is forecast to surge, with plans to upgrade infrastructure in preparation for a spate of new projects in the area. The private sector will also play a critical role in EEC development, with several major infrastructure projects planned in partnership with local and international companies. The EEC is already impacting FDI inflows, which surged in early 2017 on the back of new aviation projects, although some stakeholders argue that a recent package of investor incentives introduced in early 2018 could offset the project’s anticipated investment benefits.

Building Up

Following a series of failed plans to launch new special economic zones (SEZ) along the country’s border, the EEC policy was rolled out in June 2016 with the objective of promoting 10 high-tech cluster industries within a 4800-ha development area spanning the three eastern coastal provinces of Chachoengsao, Chonburi and Rayong.

Already housing the eastern seaboard, an industrial project developed during the late 1970s after the discovery of offshore natural gas, the EEC will benefit from existing infrastructure, including deep-sea ports at Laem Chabang in Chonburi and Map Ta Phut in Rayong, as well as built-up highways, railways, and well-developed electricity and sewage networks. In addition, the development area is already home to automobile manufacturers Toyota, Honda and Ford, as well as petrochemicals and electronics companies.

The EEC will also benefit from the proximity to the U-Tapao International Airport (UTIA) in eastern Rayong, which has already become a bustling regional centre, with passenger volumes rising from 700,000 in 2016 to hit 1m in 2017, and forecast to hit 2m in 2018.

S-Curve Industries

EEC development is part of the Thailand 4.0 strategy, which builds on the previous Thailand 1.0 to 3.0 plans that oversaw the country transform from a low-income agrarian economy into a middle-income nation dominated by heavy industry and advanced manufacturing.

Thailand 4.0 emphasises creativity, innovation and technological adoption, identifying 10 industries as having the potential to promote development. Five of these are so-called First S-Curve industries, identified as sectors that already have a solid base, including next-generation automotive manufacturing, smart electronics, affluent medical and wellness tourism, agriculture and biotechnology, and food for the future.

Automation and robotics, aviation and logistics, biofuels and biochemicals, medical hub, and digital economy have been highlighted as New S-Curve industries and alternative growth drivers. The goal is to create a regional hub for innovation and high-tech industries as rising labour costs and an ageing population puts further strain on the workforce.

Ulrich Zachau, former director for Thailand at the World Bank, told international media that the EEC policy holds high potential for success because it will concentrate economic development around well-functioning clusters using good infrastructure.

In January 2018 the EEC committee submitted a proposal to have defence added to the original 10 S-Curve industries, as part of an effort to support local manufacturing and research and development activities. As of June 2018, the proposal has yet to be enacted by Prime Minister Prayut Chan-o-cha.


Under the current economic development plans, public and private sector investment in the project is forecast to reach BT1.9trn ($43.4bn), as the area’s transport networks, including UTIA, are being upgraded to meet rising demand. In September 2017 international media reported that the EEC plan calls for $6bn of spending on the UTIA upgrade, $6.7bn for railway investment, $12bn for new cities and hospitals, and $15bn for industry, with 80% of the funds to be sourced from the private sector. Road and rail links will be improved to better facilitate connections to Bangkok, and international press reported that scheduled upgrades to transport systems linking the EEC to South Asia and China will also benefit from China’s Belt and Road Initiative (BRI). “There are natural synergies between the EEC and BRI,” Pimchanok Vonkorpon, director-general of the Trade Policy and Strategy Office at the Ministry of Commerce, told OBG. “The Chinese may not have linked BRI projects to the EEC specifically, but both countries want to improve their rail and road connections, and therefore the two projects complement each other.”

According to the Thai Development Research Institute (TDRI), the BT50bn ($1.4bn) UTIA expansion project is considered a cornerstone of the EEC, and is expected to boost capacity to 15m passengers annually, directly benefitting the EEC’s tourism, aviation and logistics sectors. It is also expected to offer new opportunities for private investment, with Airbus and Thai Airways International signing a joint venture on June 22, 2018 for a new maintenance, repair and overhaul (MRO) centre at UTIA (see Transport chapter). In May 2018 AirAsia confirmed plans to established a BT4.8bn ($138.9m) MRO facility at UTIA, with the facility expected to begin operating by the middle of 2019.

Investment Impact

These investment projects have had a positive impact on FDI inflows, which, generally speaking, have been on a downward trend. According to the UN Conference on Trade and Development ( UNCTAD), recent FDI in Thailand has been low compared to its 2005-07 annual average of $8.5bn. In 2014 FDI inflows dropped to $4.8bn in 2014 and rose slightly to $5.7bn in 2015, before sinking considerably to $2.1bn in 2016; however, in 2017 it recovered to reach $7.6bn.

In January 2018 the Board of Investment (BOI) reported that the EEC received BT297bn ($8.6bn) of investment commitments in 2017, or 46% of total investment commitments, with investment applications rising by 22% on 2016 figures to hit BT642bn ($18.6bn), surpassing the BOI’s original target of BT600bn ($17.4bn). Moreover, 61% of investment commitments made in 2017 fell within the state’s 10 targeted industries.

Investment in the EEC is expected to maintain momentum in 2018, and in January Thailand’s largest petrochemicals company, PTT Global Chemical, announced plans to build a $598m olefins plant. According to international media, industrial estate developer Amata Corporation is partnering with Swedish car manufacturer Saab to develop an aerospace city in the EEC. Additionally, in April 2018 Jack Ma, CEO of Chinese e-commerce giant Alibaba, announced plans to invest BT11bn ($318.4m) in a smart digital centre that includes a fully automated warehouse. The new facilities will enable Alibaba to ship Thai produce to China within 24 hours (see ICT chapter).

Investor Incentives

EEC investment could also benefit from new legislation establishing attractive investor incentives, although the net benefits of these have been called into question by some stakeholders. In February 2018 the Parliament approved the EEC Act, which is aimed at attracting more investment in the project. The new law establishes tax breaks for investors, as well as a new provision enabling foreign investors to rent land for up to 99 years.

The new measures also include relaxed visa procedures for foreign professionals employed by EEC investors, as well as expedited investment approval. Tax incentives include corporate tax waivers of up to 13 years, as well as a lower personal income tax rate, at 17%, for foreign experts working on projects that fall under the 10 prioritised industries.

These incentives offer Thailand a competitive advantage over countries such as the Philippines, which is currently moving to reduce investor incentives in its economic zones as part of the government’s push for multiphase tax reforms. In April 2018 the Philippines Economic Zone Authority reported that investment in free zone projects fell by 21.7% year-on-year during the first two months of 2018, attributing the decline to ongoing tax reforms that are expected to reduce free zone investor incentives.

However, Korn Chatikavanij, leader of Thailand’s Democrat Party and former minister of finance, told local press that EEC incentives could bring about a significant loss in tax revenues. Nonetheless, with 15 investor field visits scheduled to the EEC in 2018, the BOI expects that it will continue to play a critical role in attracting targeted investment, creating significant opportunities for private sector players and supporting the country’s overall investment target of BT720bn ($20.8bn) for 2018, to which developments in the EEC are expected to contribute around BT300bn ($8.7bn).