Saudi Arabia, Thailand Strengthen Economic Ties with New Investment Office in Riyadh

Saudi Arabia and Thailand have significantly strengthened their economic ties with the inauguration of Thailand’s first Board of Investment (BOI) office in Riyadh, marking a pivotal moment in their relationship. This milestone underscores a renewed commitment to enhance bilateral cooperation across sectors such as agriculture, renewable energy, healthcare, and automotive, aiming to leverage mutual strengths and achieve sustainable economic development.

By Giulia Interesse

Saudi Arabia and Thailand have taken a significant step in strengthening their economic ties with the inauguration of Thailand’s first Board of Investment (BOI) office in Riyadh. Announced during a business forum in the Saudi capital, this development marks a pivotal moment in the relationship between the two nations.

Minister of Investment Khalid Al-Falih highlighted the importance of this office, emphasizing its role in fostering stronger bonds and unlocking new investment opportunities. This milestone comes amid a backdrop of flourishing trade relations, with bilateral business activities reaching US$8.8 billion in 2023, reflecting a nearly 22 percent increase from the previous year. The opening of the BOI office signals a new era of cooperation and growth, poised to benefit both countries significantly.

Background: Saudi Arabia-Thailand relations

The Kingdom of Thailand and the Kingdom of Saudi Arabia have a rich history of warm and cordial relations, with their formal diplomatic ties established on October 1, 1957. Initially represented by resident representatives in their respective capitals, the relationship was elevated to ambassadorial level in 1966. This foundation of mutual respect and cooperation was further solidified by a significant visit to Saudi Arabia in January 1984 by a Thai delegation led by Deputy Foreign Minister Prapas Limpabhandhu, which included senior officials from various ministries and representatives from the Thai Parliament and private sector.

However, the relationship took a severe hit with the Blue Diamond Affair in 1989. A Thai janitor stole a 50-carat blue diamond and other valuable jewelry from the Saudi royal palace, leading to a series of tragic events, including the murders of three Saudi diplomats in Bangkok and the disappearance of a Saudi businessman investigating the theft. These incidents led to a significant diplomatic rift, with Saudi Arabia reducing its diplomatic presence in Thailand, halting visas for Thai workers, and limiting the annual pilgrimage for Thai Muslims to Mecca.

Recent developments

Efforts to mend relations between Thailand and Saudi Arabia have been ongoing for decades, but significant progress was made with the rise of Crown Prince Mohammed bin Salman in Saudi Arabia. Known for his progressive vision and efforts to diversify the economy, the Crown Prince played a pivotal role in restoring diplomatic ties with various nations, including Thailand.

In January 2022, Thai Prime Minister Prayut Chan-o-cha made a historic visit to Saudi Arabia at the invitation of Crown Prince Mohammed bin Salman. This meeting marked the highest-level interaction between the two countries since the Blue Diamond Affair. Both leaders agreed to normalize relations, appoint ambassadors, and establish consultative mechanisms, while also discussing enhanced cooperation in tourism, energy, and petrochemicals.

In October 2023, Thailand’s Prime Minister Srettha Thavisin further solidified economic ties during his official visit to Saudi Arabia. At the ASEAN-Gulf Cooperation Council (GCC) Summit in Riyadh, Prime Minister Srettha expressed gratitude for the Saudi leadership’s vision in normalizing diplomatic relations. Discussions focused on increasing bilateral trade through memorandums of understanding and agreements, with a particular emphasis on a free trade agreement within the GCC framework.

Saudi Arabia also expressed readiness to expand investment in Thailand through its Public Investment Fund (PIF). The first Saudi-Thai Coordination Council (STCC) convened in Thailand at the beginning of 2024, co-chaired by the Ministers of Foreign Affairs from both countries, aimed at translating high-level decisions into concrete actions.

Prime Minister Srettha also engaged with CEOs of major Saudi private sector companies to explore cooperation in agriculture, livestock, food, clean energy, petroleum, and fertilizer. These discussions underscored the significant potential for increased trade and investment between the two countries, highlighting the mutual benefits of their strengthened relationship.

Key areas of cooperation

The normalization of diplomatic relations between Thailand and Saudi Arabia has sparked a new era of cooperation and opportunity. Since restoring ties in 2022, significant strides have been made to strengthen their relationship.

A pivotal labor cooperation agreement aims to rejuvenate the once-vibrant presence of Thai workers in Saudi Arabia. In the 1980s, over 300,000 Thai nationals lived and worked there, but today the number has dwindled to less than 1,400. To reverse this trend, the Thai Overseas Manpower Association plans to send an initial group of workers within two months. Their successful integration will pave the way for additional groups, revitalizing economic ties that were disrupted for decades.

Tourism is another promising area set for growth. The Tourism Authority of Thailand (TAT) is launching a campaign to attract Saudi tourists, focusing on medical and shopping tourism. Thailand saw 33,517 Saudi visitors in 2017, but numbers dropped significantly due to the COVID-19 pandemic. With resumed flights and new direct routes between Bangkok and Riyadh, TAT aims to welcome 200,000 Saudi tourists in 2022, targeting THB 20 billion (US$556 million) in revenue through tailored services and targeted marketing efforts.

The restoration of diplomatic relations also opens doors for increased trade and investment. Saudi Arabia’s Vision 2030, aimed at diversifying its economy away from oil, presents significant collaboration opportunities. Thailand can contribute expertise and partnerships in sectors like education, health, and tourism to support Saudi Arabia’s economic transformation.

In the energy sector, both nations are exploring joint ventures in renewable energy and petrochemicals. Thailand’s robust agricultural and food processing industries can also help meet Saudi Arabia’s food demands, enhancing food security for both countries.

Other promising areas for development also include educational exchanges and cultural diplomacy.

Strategic significance of Thailand’s BOI office in Riyadh

The establishment of the Thailand BOI office in Riyadh is Thailand’s first such office in the Middle East.

The Riyadh office is part of Thailand BOI’s broader strategy to extend its presence across the Middle East, covering 13 countries including Bahrain, Qatar, Kuwait, Turkiye, and the UAE. Plans are underway to further expand with offices in China and Singapore, underscoring Thailand’s ambition to position itself as a gateway for Middle Eastern investors looking to access ASEAN markets.

Narit Therdsteerasukdi, secretary-general of Thailand BOI, articulated Thailand’s appeal as an investment base within ASEAN, leveraging its strategic location and membership in the RCEP agreement. He highlighted opportunities for collaboration in key sectors such as agriculture, processed food, renewable energy, healthcare, and automotive, particularly electric vehicles.

Saudi Minister Al-Falih expressed optimism about Thailand’s economic trajectory, praising its significant GDP growth and evolving export structure. He emphasized the mutual benefits of aligning Thailand’s National Strategy 2037 with Saudi Arabia’s Vision 2030, particularly in energy diversification and downstream sectors like biofuels and renewables.

The establishment of the Thailand BOI office in Riyadh not only strengthens bilateral economic relations but also sets the stage for deeper cooperation across various industries, as it serves as a pivotal platform for Thai and Saudi businesses to explore joint ventures and capitalize on emerging opportunities in both markets. Specific sectors include:

• Agriculture and processed food: Saudi Arabia’s increasing demand for agricultural and food processing products presents a significant opportunity. With a projected demand exceeding US$130 billion by 2030 and a compound annual growth rate of 7.5 percent, there is ample room for collaboration. Thailand’s robust agricultural sector, which saw exports totaling US$38.8 billion in 2022, can meet Saudi Arabia’s needs while enhancing food security for both nations.
• Renewable energy: Both countries are exploring opportunities in renewable energy, aligning with Saudi Arabia’s Vision 2030 and Thailand’s goals in sustainable development. Joint ventures in renewable energy projects, including biofuels, biochemicals, carbon capture utilization and storage (CCUS), hydrogen, and other renewables, hold promise for mutual benefit and innovation.
• Healthcare: Healthcare and medical services present avenues for cooperation, leveraging Thailand’s expertise in medical tourism and Saudi Arabia’s initiatives to enhance its healthcare infrastructure. Collaboration in healthcare could include training programs, medical research partnerships, and the exchange of best practices in healthcare delivery.
• Automotive industry, especially electric vehicles: The automotive sector, particularly electric vehicles (EVs), is a focal point for future collaboration. Thailand, a major automotive hub in ASEAN, can contribute manufacturing expertise and supply chain capabilities to support Saudi Arabia’s ambitions in sustainable transportation under Vision 2030. Joint efforts in EV production, battery technology, and infrastructure development could drive innovation and market growth.

The identified sectors highlight the potential for substantial economic cooperation between Saudi Arabia and Thailand. By aligning their strategic goals, both countries can capitalize on their respective strengths to achieve sustainable development, economic diversification, and mutual prosperity.

• Previous Article UAE E-Commerce Regulation and Licensing Requirements
• Next Article Egypt’s Tourism and Real Estate Prospects: Recent Trends and Outlook