Thailand’s Data Centre Rush: From First-Mover Advantage to Sustained Development?

Thailand has been successful in attracting large-scale data centre investments as part of a broader push to capture a first-mover advantage in the rapidly expanding digital and AI economy. Yet the absence of a development-oriented regulatory framework could mean a missed opportunity for economic upgrading.

For decades, Thailand’s investment booms in automobiles and electronics in the 1980s powered the country’s economy. Today, Thailand is again attracting record levels of investment. Much of this has come from digital infrastructure, including data centres. Between 2024 and March 2026, Thailand’s Board of Investment (BOI) received applications for investment promotion for data centre projects worth nearly 10 per cent of the country’s GDP. The question is whether this new wave of investment can not only drive growth but also help build stronger domestic capabilities than earlier investment booms did.

So far, the signs are mixed at best. Many studies indicate that data centres’ economic contributions can be limited once the construction phase is over. The jobs created are relatively few and tend to be concentrated in facility operations, maintenance and technical support. In the context of developing countries like Thailand, specialised and high-skilled roles may go to foreign experts. The larger economic gains therefore depend on what develops around the data centres. Without sound policies and sufficient industrial capacity, the domestic spillover from data centre investment may be limited. As such, there is a constructive role for government to play here. It can ensure that operators bear the environmental and other costs that data centres create. The government can also help local firms meet procurement requirements to supply products such as electrical equipment, cooling systems, and engineering and maintenance services. In addition, it can support training for Thai workers to take on technical roles.

Yet, amid slowing growth, the Thai government has prioritised attracting more data centre investment with little consideration of how that investment could best serve Thailand’s economic interests. Thailand’s current approach to attracting investors relies mainly on BOI tax exemptions and expedited approval under Thailand FastPass, launched in June 2026 to coordinate government agencies and reduce approval times.

This investment-first approach has driven rapid expansion and, arguably, an undesirable concentration of data centres across several dimensions. Geographically, most projects are clustered in Bangkok and the Eastern Economic Corridor. Investment sources, too, are concentrated. Whether invested directly or routed through Singapore and Hong Kong, Chinese capital dominates. TikTok’s projects alone account for more than half of all data centre investment applications filed between 2024 and March 2026. Above all, the benefits are concentrated. Among the key domestic beneficiaries are large and established Thai business groups that control strategically located land and critical energy infrastructure, from industrial estate developers such as WHA Group and Amata to power producers such as Gulf.

Attracting investment first and regulating later may have won Thailand a rare opportunity to stake its claim in the AI economy. But if past experience offers any lessons, investment alone will not deliver lasting economic upgrading.

The government is now playing regulatory catch-up, only after the surge in data centres generated public concern over safety and pressure on electricity and water supplies. In August 2026, the government established a “superboard”, namely the Data Centre Business Policy Committee, to set standards for approving data centres and assessing their impacts. A draft bill, which would require data-centre operators to obtain licenses and meet environmental standards, has also been introduced in Parliament.

While intended as safeguards, these measures give additional veto points to bureaucrats and politicians who do not necessarily have the expertise or incentives to assess data-centre investments from the perspective of Thailand’s broader economic interests. The resulting regulatory uncertainty and delays could even push investment to better-prepared regional competitors, particularly Malaysia, as well as emerging hubs such as Batam in Indonesia, without yielding a framework capable of supporting Thailand’s developmental goals.

To weigh data centres’ costs and benefits, policymakers need context-specific metrics that look beyond investment size. These should assess operational efficiency, including energy and water use; environmental costs, such as carbon emissions; and wider benefits to the economy and local communities, from linkages with local firms and universities to employment, skills development and technology transfer. While the superboard has acknowledged this need in principle, it is unclear whether or when it will turn this into objective criteria. Without them, approval decisions risk being based on top-down assumptions or, worse, on the discretion of bureaucrats and politicians acting in the interests of well-placed business groups.

Ultimately, however, to truly turn data centre investment into higher-quality foreign direct investment (FDI) that generates stronger domestic linkages, there is no avoiding a more deliberate industrial strategy that runs in parallel.

Such a strategy should prioritise industries in which Thailand already has a competitive advantage and that form part of data centre supply chains. One example is the semiconductor industry, where Thailand has built capabilities in back-end activities such as testing and packaging and is seeking to move into higher-value chip design and fabrication. To raise domestic capability, the government could support local production of power semiconductors. Made from silicon carbide (SiC) and gallium nitride (GaN), these chips control and convert electricity. They can reduce energy losses and cooling requirements in data-centre power supplies. Thailand’s planned FT1 silicon carbide water-fabrication project illustrates a possible route to economic upgrading. Developing such capabilities would allow firms in Thailand to undertake more sophisticated manufacturing and engineering activities, with growing data-centre demand providing a potential market. Achieving this would require close engagement with private firms, not just coordination among government agencies or deliberations within a board that includes no private-sector representatives.

Attracting investment first and regulating later may have won Thailand a rare opportunity to stake its claim in the AI economy. But if past experience offers any lessons, investment alone will not deliver lasting economic upgrading. The electronics and hard disk drive booms of the 1980s and 1990s turned Thailand into a major production hub, yet left it struggling to move beyond lower-value manufacturing. Data centres are unlikely to be different.

Thailand should work more closely with firms in the country’s established electronics and electrical-equipment industries to identify opportunities to supply the data-centre sector. Helping these firms meet technical standards and acquire new skills and technology could enable them to move into more sophisticated manufacturing activities. Without these efforts, Thailand risks capturing only a fraction of data centres’ economic benefits while paying a steep environmental price. The real test, then, is whether the government has learned from earlier booms, and whether it has the political will to forgo the quick wins of aggregate investment figures for the slower, harder work of building domestic capabilities from the bottom up.

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