Raising Thailand’s productivity through regulatory reform

Reading Time: 3 minutes

Thailand has made considerable economic advances over recent decades, but progress has slowed over the past several years, notably in productivity growth.

By Philip Hemmings, Jens Arnold, Charles Dennery and Isabella Medina, OECD Economics Department

Sustained gains in labour productivity are essential for lifting output per capita and improving living standards. Yet Thailand has seen a marked slowdown in recent years. From 2015 to 2023, labour productivity grew by only 2.1% on average, a sharp decline from 3.7% between 1990 and 2010 and 4.8% between 2010 and 2015. Many countries have faced weaker labour productivity growth, but Thailand’s drop has been especially pronounced (Figure 1). Total factor productivity has also stagnated over 2015–2023, which points to missed opportunities to adopt new technologies and strengthen innovation—both crucial for boosting long‑term economic performance.

Figure 1. Productivity growth has slowed

One way for governments to lift productivity is by updating rules and regulations to promote stronger competition. When firms face real competitive pressure, they are driven to innovate, improve efficiency, and deliver better outcomes.

However, OECD product market regulation (PMR) indicators (Box 1) show that Thailand’s regulatory environment remains one of the least supportive of competition (Figure 2). The data place Thailand among the most restrictive economies, with an aggregate PMR score of 2.4 — the 4th highest out of 47 countries assessed.

Like many emerging market economies, Thailand’s score is well above those of most OECD members, where the average stands at 1.3. This gap highlights significant room for Thailand to streamline regulations, open markets, and create a more dynamic environment for businesses to grow and innovate.

Figure 2. Thailand has considerable scope to make regulation more competition-friendly

The latest OECD Economic Survey of Thailand highlights several policy areas through which strong, targeted regulatory reform could help unlock the country’s productivity potential. One of these is regulation that impedes foreign investment and trade. While Thailand offers incentives such as tax breaks and special visas for high‑skilled foreign workers, some rules still reduce its appeal. In particular, foreign ownership limits in some sectors and relatively high import–export processing fees continue to discourage investment and trade.

Another area with scope for improvement relates to market competition. Oversight of State‑owned Enterprises could be improved, especially regarding anti‑competitive conduct. Thailand’s competition law would also benefit from technical enhancements, including greater public disclosure about investigations into anti‑competitive behaviour.

Thailand could also step up its efforts to continue reducing red tape. Ongoing work to streamline administrative procedures—such as those for starting a business — is welcome, but the PMR indicators suggest that more can be done. Keeping regulatory simplification high on the agenda will help reduce costs, delays, and barriers for firms.

Finally, further progress in anti‑corruption measures could improve business perceptions about economic governance. Thailand still ranks poorly in Transparency International’s Corruption Perceptions Index, standing 116th out of 182 countries in 2025. Stronger action should include full alignment with the OECD Anti‑Bribery Convention and systems that promote transparent, responsible interactions between parliamentarians and lobbyists.

The systematic benchmarking that the OECD PMR indicators allow across a range of policy areas point to specific areas where reforms could foster stronger alignment with international best practice. Such reforms would help Thailand make progress towards its strong ambitions for the future, including becoming a high-income country by 2037.

For more information, please visit the Thailand Economic Snapshot page.

References:

OECD (2025), OECD Economic Surveys: Thailand 2025, OECD Publishing, Paris, https://doi.org/10.1787/426b9bc0-en.