Vietnam’s sudden rise as a regional export powerhouse is rewriting the Southeast Asia growth script, and Thailand now faces a reality check about its long-held status as the premier value creator in the region. In a world where global demand has swung between booms and slowdowns, Vietnam has shown resilience by expanding exports, posting healthy current account surpluses, and courting far-reaching investment in electronics and higher-value manufacturing. For Thai readers, the implications are practical: supply chains, jobs, and public policy may tilt toward a more multipolar regional economy where Vietnam’s gains are hard to ignore, even as Thai leaders seek ways to sustain growth through diversification.
The story begins with a stark contrast in export trajectories. Thailand rode a decades-long export boom, sustaining large current account surpluses through the late 2010s, anchored by a broad mix of agricultural goods, manufactured products, and services. But the winds shifted after the COVID-19 shock and the ensuing global demand lull. In recent years, Thailand’s current account surplus has narrowed, and exports have faced a slower recovery as global demand remains uneven. By comparison, Vietnam has been able to accelerate export growth even amid tighter global conditions, helped by a sharp pivot toward higher-value products and a cost structure that remains highly competitive for manufacturing abroad. In 2023, Vietnam’s total exports surpassed those of Thailand, signaling a meaningful shift in regional trade dynamics. Vietnam posted a total export figure that topped $400 billion, while Thailand recorded about $345 billion in the same period. In 2024, Vietnam also carried a robust current account surplus, a sign of sustained external competitiveness and strength in the country’s balance of payments.
What sits at the heart of Vietnam’s ascent is a deliberate shift in export composition and production strategy. A large portion of Vietnam’s export growth now comes from electronics and high-tech goods, including integrated circuits and consumer electronics, which together accounted for a substantial share of total exports in 2023. This transformation mirrors a broader push toward more sophisticated manufacturing, backed by foreign direct investment from major electronics players and proximity to large regional markets. Vietnam’s electronics export surge—significant in absolute terms—translated into a higher share of total shipments, underscoring a move away from lower-value-added sectors and into technologies that command higher margins and more sustained demand. By contrast, Thailand’s export mix remains broad but tends to be more evenly distributed across electronics, machinery, agriculture, tourism, and vehicles. The result is a different risk profile: a diversified portfolio can shelter a nation from any single sector downturn, but it can also dilute the benefits of concentrated, high-value manufacturing when external demand ebbs.
Beyond the factory floor, the regional tourism picture also reflects shifting dynamics. Vietnam is approaching new tourism records, with inbound arrivals climbing toward previously unthinkable highs as travel resumes post-pandemic. A sizable portion of Vietnam’s inbound tourists come from neighboring and nearby markets, notably China and South Korea, highlighting a fast-growing service export dimension that complements its goods-driven growth. Thailand, for its part, remains a tourism leader in absolute numbers, yet its inbound arrivals have not fully rebounded to pre-pandemic peaks, and the country faces a more precarious balance between tourism-led revenue and other growth engines. The divergent tourism trajectories reinforce a broader narrative: while Vietnam capitalizes on manufacturing-led growth to sustain economic momentum, Thailand is also retooling to ensure tourism remains a strong, stable contributor alongside higher-value industries.
Analysts offer multiple lenses to interpret Vietnam’s ascent and its implications for Thailand. A growing consensus emphasizes the resilience of export-led industrialization in Vietnam, aided by lower production costs, a business-friendly investment climate, and strategic location close to major Asian markets. In this view, Vietnam’s ability to attract electronics ecosystems—suppliers, assemblers, and service networks—has created a virtuous circle: more investment, more exports, and more jobs, which in turn reinforces domestic consumption and growth. For Thailand, the message is not a defeat but a call to adapt. To maintain competitiveness, Thai policymakers and businesses may need to push up the value and sophistication of Thai manufacturing, deepen regional supply chains that include Vietnam, and invest more aggressively in human capital, digital transformation, and advanced services. Thai economists also caution that an overreliance on any single sector—be it tourism or externally driven manufacturing—can leave the economy vulnerable to external shocks, whether from geopolitical tensions, exchange rate volatility, or shifts in global demand. In short, the region’s new balance sheet invites both caution and opportunity.
Thai-specific implications are tangible. First, supply chains that once drew heavily on a single country for manufacturing inputs may increasingly fracture into regional webs. Integrating Thai production with Vietnamese high-value electronics ecosystems could offer resilience and cost advantages, but it requires coordinated policy support, streamlined cross-border logistics, and robust intellectual property protections. Second, the Thai economy’s diversification strategy must accelerate. Competitiveness now hinges not only on lower costs but also on productivity gains, workforce skills, and the ability to translate research into market-ready products. This means heavier investments in science, technology, engineering, and mathematics education, stronger links between universities and industry, and incentives for domestic firms to move up the value chain. Third, tourism policy needs to be reframed as part of a broader economic strategy. Rather than relying on volume alone, Thailand could focus on higher-spending segments, sustainable travel models, and experiences that leverage local culture and heritage, all while maintaining the region’s safety and hospitality standards, a hallmark valued by Thai families and Buddhist communities alike.
Culturally, the shifting landscape resonates with long-standing Thai norms around community cohesion, family decision-making, and the careful stewardship of resources. The sufficiency economy philosophy—the idea of living within one’s means, using resources wisely, and building resilience against shocks—offers a familiar frame for understanding how Thai households and businesses might navigate a more dual-track economy: rising regional competition in manufacturing and a robust, yet more complex tourism sector. In Thai villages, cities, and temples alike, there is a shared emphasis on prudent planning, intergenerational responsibility, and the belief that prosperity should be sustainable and inclusive. As Vietnam asserts itself as a more prominent player in electronics and industrial output, Thai communities may increasingly rely on regional cooperation to secure stable employment for family members, whether at home, in Bangkok’s factories, or in regional supply hubs that connect Thai and Vietnamese firms.
Looking ahead, the potential trajectories for Thailand and Vietnam are intertwined with broader regional and global forces. If Vietnam maintains its trajectory—continuing to attract high-value manufacturing, expand electronics exports, and diversify its economy—Thailand may find itself recalibrating its role in Southeast Asia’s industrial map. A more integrated regional production network could be a boon for both economies if policy supports mobility of labor, ease of doing business, and investment in critical infrastructure. Conversely, persistent global headwinds or heightened trade frictions could slow both countries, potentially widening disparities between export-led growth models and domestic consumption-driven recovery strategies. In either scenario, the region’s growth story looks less like a single horsepower and more like a coalition of engines, each contributing to a dynamic, shared trajectory.
For policymakers and businesses in Thailand, practical steps emerge from this evolving landscape. First, reinforce higher-value manufacturing capabilities and move up the value chain in electronics, automotive components, and precision machinery. This requires targeted investment in advanced training, design capabilities, and digitalization across factories, not just in metropolitan hubs but throughout regional hubs where Thai firms operate closely with Vietnamese suppliers and customers. Second, fortify regional supply chains through streamlined customs procedures, shared standards, and cross-border collaboration in research and development. By coordinating with Vietnamese counterparts, Thailand can deepen its status as a regional logistics and manufacturing hub, even as it preserves a vibrant services sector. Third, expand human capital strategies to ensure a skilled workforce capable of thriving in a more sophisticated manufacturing landscape. This includes upgrading vocational training, expanding STEM education at all levels, and aligning curricula with the real-world needs of modern industry, while also supporting lifelong learning for mid-career workers who must adapt to new technologies. Fourth, maintain a resilient, sustainable tourism strategy that blends cultural and ecological appeal with modern infrastructure and safety standards. This balanced approach can help Thailand weather downturns in one sector by relying on another, a strategy that aligns with family-centered decision-making and shared community values.
In Thailand’s political and cultural context, leadership at national and local levels can leverage social trust in authorities and the long-standing tradition of consensus-building to advance these reforms. Transparent policy-making, clear communication about investment opportunities, and consistent rule-of-law protections can help sustain investor confidence even when regional competition intensifies. The Thai public, guided by reverence for institutions and elders, expects policymakers to balance ambition with prudence—an approach that resonates with the country’s Buddhist heritage and its emphasis on moderation, patience, and collective welfare.
Ultimately, the rise of Vietnam as a regional growth engine offers a compelling mirror for Thailand: a reminder that economic modernization is a moving target, not a fixed destination. The Thai response should be rooted in practical, people-centered policy that builds on strengths—historically robust manufacturing, a sophisticated service sector, and the country’s strong consumer base—while embracing regional cooperation that enables both nations to thrive. The quest is not to replicate another country’s path but to adapt and innovate in ways that reflect Thailand’s unique social fabric, its commitment to education and healthcare, and its enduring values of family and community. In a region where trusts and networks matter as much as balance sheets, the future belongs to those who combine prudence with bold, well-informed experimentation.
Thai readers can take away a clear set of considerations. Watch for how regional industrial policy evolves and how Thai firms integrate with Vietnam’s high-value manufacturing ecosystems. Expect shifts in job opportunities—from traditional manufacturing to design, electronics, and advanced services. Children entering middle and high schools may see a growing emphasis on STEM, digital literacy, and international collaboration as schools align with regional demand. And households planning budgets should consider not only income but the long-term stability of the local economy, as well as opportunities to participate in regional growth through upskilling and new business ventures. The regional economy is changing shape, but Thai culture—grounded in family values, community care, and a steady, cautious approach to risk—provides a sturdy compass for navigating this new chapter.
If there is a takeaway for the broader Thai public, it is this: the Southeast Asian growth story is increasingly multi-faceted, with Vietnam emerging as a formidable partner and competitor in the same neighborhood. Thailand’s policymakers and business leaders have a choice to either compete aggressively for higher-value segments or risk being left with a more modest share of a rapidly evolving regional economy. The path forward will require clarity, collaboration, and a shared sense of purpose that matches the region’s challenges with its opportunities. In a country that values harmony, patience, and collective progress, the strategy should be to invest in people and partnerships that create sustainable growth for Thai families today and for the next generation tomorrow.