BANGKOK — Japanese companies operating in Thailand are increasingly focusing on upgrading existing production facilities rather than simply expanding capacity, with plans centered on replacing machinery, improving efficiency, adopting digital and automation technologies, and reducing energy consumption, according to the Thai government.

The development could create new opportunities for Thai businesses to move up the supply chain and become suppliers of higher-value products, technologies and services.

Lalida Periswivattana, Deputy Spokesperson for the Prime Minister’s Office, said discussions between Thailand’s Board of Investment (BOI), the Japan External Trade Organization (JETRO) and the Japanese Chamber of Commerce, Bangkok (JCC) on August 13 showed that Japanese businesses in Thailand are entering a new phase of industrial upgrading.

From 2021 through the first half of 2026, Japanese companies submitted 1,380 applications for investment promotion in Thailand, with a combined value of more than 396 billion baht. The figure represents cumulative investment-promotion applications over roughly five and a half years, rather than a single new investment package.

Machinery replacement leads Japanese investment plans

A survey of Japanese companies in Thailand for the first half of 2026, covering 504 companies, found that 432 companies provided details about their investment plans for the year.

Of those respondents:

- 59% (256 companies) plan to replace existing machinery with new equipment.
- 31% (132 companies) plan to improve production efficiency.
- 22% (96 companies) plan to invest in digital transformation.

Lalida said the figures do not mean Japanese companies have stopped making new investments or expanding their operations. Instead, they show that the most common priority is upgrading existing production facilities.

“The focus of industry is shifting from simply increasing production capacity toward higher efficiency, greater use of technology, energy savings and long-term competitiveness,” she said.

The trend is also consistent with the BOI’s Smart and Sustainable Industry investment-promotion measures.

From 2023 through the first half of 2026, Japanese-owned companies submitted more than 400 applications under the measures, representing investments worth more than 55 billion baht.

The projects cover machinery upgrades, energy efficiency, environmental improvements, digital technologies, automation and industrial robotics.

Opportunities for Thai suppliers

The shift toward upgrading existing factories could benefit Thai businesses beyond traditional manufacturing, according to the government.

Replacing machinery creates demand for replacement parts, control systems, automation equipment, industrial software, maintenance services, energy-saving technologies and related services.

“When Japanese factories in Thailand enter a new cycle of machinery replacement and increasingly adopt automation, digital systems and energy-saving technologies, this is an opportunity for Thai businesses to move from being general component manufacturers to suppliers of higher-value products, technologies and services,” Lalida said.

To take advantage of the opportunity, Thai companies will need to improve quality, meet international standards, deliver on time and develop the ability to integrate their products and services into Japanese customers’ production systems.

The BOI will work closely with JETRO, the JCC and Japanese businesses to support the upgrading of existing operations toward higher-value activities.

The government also plans to focus on workforce development, access to clean energy and creating a business environment that supports investment.

The goal is not only to attract Japanese investment into Thailand, but also to ensure that Japanese companies help transfer technology and create opportunities for Thai businesses to play a larger role in higher-value global supply chains.