The government is being urged to revise its 2026 budget strategy by trimming around 200 billion baht of “non-essential” spending to accommodate the incoming wave of foreign investment flowing out of China as a result of pressure from US President Donald Trump’s policies.
According to former deputy finance minister Pisit Lee-atham, the new finance minister under the Anutin Charnvirakul administration should review the 2026 budget, which was recently passed by parliament, to determine what is truly useful.
The global economy is at a turning point, with World Trade Organization and International Monetary Fund rules being discarded in favour of a system shaped by Trump’s policies, said Mr Pisit. Any country that can gain access to Trump will receive favours from the US, he said.
Multinational investors that established production bases in China are considering relocating to other nations, said Mr Pisit. Even Chinese investors are seeking to move operations elsewhere to escape Trump’s protectionist measures, he said.
This situation resembles 1985, when the US pressured Japan to adjust its exchange rate, forcing Japanese firms to relocate factories abroad, particularly to Thailand, in the automotive and electronics sectors, fuelling rapid Thai economic growth, said Mr Pisit.
A similar pattern may now emerge, with investors in Europe, Japan, the US and China potentially relocating to Thailand, he said.
Thailand and much of Southeast Asia benefits from a US tariff rate of around 19%, lower than many others such as Brazil, which faces a 50% rate. This presents a golden opportunity for the region, with Thailand as a key production base, said Mr Pisit.
“Investors are looking to relocate from China and are considering Thailand. We must put our house in order to welcome them, such as improving product standard compliance overseen by the Industrial Promotion Department. These efforts were neglected by the previous government, which instead prioritised populist cash handout schemes,” he said.
“As a result, the department’s budget was cut to 100 million baht, down from the 500 million baht it requested.”
The government should focus the 2026 budget on these priorities, particularly by strengthening small and medium-sized enterprises (SMEs) in technology and worker skills to capture opportunities arising from global disruptions and investment in Thailand, said Mr Pisit.
This would enable Thai SMEs to serve as second-tier or third-tier suppliers to industries relocating from China.
If Thailand is not prepared to accommodate them, the country will miss out on the benefits of production relocation, as Chinese investors may bring along their own second-tier or third-tier suppliers, he said.
With just over 10 days remaining in the 2025 budget cycle, government agencies typically rush to exhaust their budgets, which can lead to inefficient spending, said Mr Pisit. The incoming finance minister should curb such practices because those funds ultimately come from taxpayers.
“If it isn’t necessary, don’t spend it because this will only increase the fiscal burden,” he said.
The US requirement for regional value content, which may be set at 40%, should be leveraged to Thailand’s advantage by compelling foreign investors to source second-tier and third-tier suppliers locally, said Mr Pisit. However, this means Thailand must build the capacity to meet the needs of foreign capital.
He said the 2026 budget still contains at least 100-200 billion baht in non-essential or “fat” spending that can be cut and redirected to align with government policies.
In addition, Mr Pisit urged the new government to improve bureaucratic efficiency and speed, as investors are frustrated with delays. Applications for permits pass through numerous desks, and in some cases take years before approval is granted, he said.
“If this government wants to truly boost investment flows, it must issue an order that if a private-sector application sits on any official’s desk for more than three days, it must be reported to the National Anti-Corruption Commission,” said Mr Pisit.
“Businesses are fed up with red tape — if there’s no lubricant, nothing moves.”
For the long term, he proposed tax incentives to encourage more childbirths, especially among Gen Y and Gen Z.
Mr Pisit suggested increasing the tax deduction per child up to 500,000 baht per year, compared with the current 30,000 baht. Without such measures, Thailand’s population will steadily decline, reducing the labour force and eventually undermining the government’s tax revenues.
The incoming finance minister has a brief tenure of about four months, potentially extended another 2-3 months under a minority government.
Introducing new legislation during this period would be risky, as bills could easily be rejected in parliament, he said.
As a consequence, the new minister is likely to operate according to the powers granted by the cabinet, making the passage of new laws challenging, said Mr Pisit.
