Thai and mighty! Thailand leapfrogs Malaysia in global rankings
Thailand may have outpaced Malaysia in a key global competitiveness ranking for the first time in a decade but experts warn the shine may not last as structural issues, budget cuts, and a lack of long-term vision continue to hold the kingdom back.
Thailand has climbed to second place in Southeast Asia in the IMD World Competitiveness Centre’s global rankings, overtaking Malaysia for the first time in ten years. The kingdom now trails only Singapore, which retained both the regional crown and the title of the world’s most competitive economy.
But despite the bragging rights, economic experts are sounding alarm bells over Thailand’s long-standing structural weaknesses, warning that the country risks slipping backwards without a sharper focus and smarter spending.
According to a report by the National Economic and Social Development Council (NESDC), Thailand’s high-tech export performance still lags behind Vietnam, a red flag in an increasingly digital, innovation-driven world.
While these issues have been on the radar for years, actual investment to address them has dwindled. The portion of the national budget allocated to boosting competitiveness has plunged from 16.1% in 2018 to just 9.7% in 2025.
Meanwhile, funding for social equity programmes, including universal healthcare and education, has soared from 11.4% to 24.7% over the same period. The state’s operational and debt-related costs are also rising, now consuming 18.5% of the 2025 budget, reported Bangkok Post.
Dr Nonarit Bisonyabut, a senior research fellow at the Thailand Development Research Institute, said that nearly 70% of the national budget is tied up in salaries, debt servicing and welfare, leaving a paltry 30% for development and investment.
“Without budget restructuring, Thailand may face long-term fiscal instability.”
Dr Nonarit also urged the government to adopt a zero-based budgeting system, a model where each expense must be justified from scratch each year.
However, he warned that such a system could disrupt ongoing programmes and instead recommended a balanced approach: continue key projects while carving out room for new, high-impact initiatives to drive future growth.
Nonarit also called for laser-focused policy direction, criticising Thailand’s scattergun approach to economic development. He pointed to Malaysia’s concentration on the semiconductor sector and Vietnam’s integration into South Korea’s supply chain as examples of strategic specialisation.
“Thailand must move away from blanket policies and instead invest in ‘special focus areas’ that may be costly upfront but deliver significant returns.”
Competitive nations
The IMD World Competitiveness Ranking evaluates nations based on four criteria: economic performance, government efficiency, business efficiency, and infrastructure.
In 2024, Singapore topped the global list, with Thailand emerging as Southeast Asia’s second most competitive nation, followed by Indonesia, Malaysia, and the Philippines.
But the NESDC warned that unless Thailand ramps up efforts in emerging industries, agricultural tech, and domestic value chain management, this victory could be short-lived.
The report also highlighted looming threats including an ageing population, skills mismatches, lagging innovation, and sluggish public sector reform.
With Thailand’s place in the global pecking order finally on the rise, the real question now is: can it stay there?
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