There's plenty of optimism about Thailand due to its tourism potential, but political headwinds could still be a game-changer, says Kelvin Tay from UBS Global Wealth Management.
While Thailand stands to be a "big beneficiary" of China's reopening and an expected tourism boost, so far, outbound tourism from China has been "pretty meager," Tay told CNBC "Squawk Box Asia" Thursday.
China's employment numbers need to go up first, he added.
Thailand also needs to reinvest in infrastructure and rebuild at a faster rate, said Tay. The country had plans to build up infrastructure on its eastern seaboard side via new ports and airports, but "that hasn't really happened at this point," according to Tay.
This is largely due to politics, which Thailand has to "get … right," he said.
Thai politics could be 'game-changer'
With 99% of the votes counted, preliminary results showed that Thailand's opposition parties, Move Forward and Pheu Thai, secured the most seats during the general election on May 14, Reuters reported.
But for the leading Move Forward party to form a new coalition government, it will need to gain the support of junta-appointed Senate members who get to vote for the next prime minister, Reuters said.
The Election Commission has 60 days to certify the election results, after which the prime minister will be selected.
Thailand's elections are a "potential game changer," said Tay.
Following the votes that showed pro-democracy parties winning a strong majority, the Thai baht on Monday shot to its strongest level since February this year.
While the benchmark SET index initially rose when the results came through, but eventually gave up those early gains.
In fact, Thai stocks are the worst performers in Southeast Asia this year, but Tay says Thailand is his "top pick" in the region.
Thailand's SET index is down 9.22% this year, the biggest laggard in the broader Asia Pacific region. In comparison, Malaysia is about 4.5% lower and Indonesia's Jakarta Stock Index has fallen 2.2% in the same period, according to FactSet data.
Another concern is that monarchy-linked companies could be set back by a change in government, Tay added.
The Move Forward party has called for reforms to the monarchy, including changing its defamation law.
Labor challenges
Thailand must also look to its workforce to drive growth, said Tay. The country's fertility ratio and aging population are "one of the worst globally," he said, but workers from neighboring Cambodia and Laos can be brought in to try to boost the labor force. The cultural and linguistic similarities between those countries make it "easy" for Thailand to do so, he added.
However, Thailand may have to first change its immigration policy. Even after foreign workers have been in Thailand for many years, they are "still considered as migrants and not … part of the local population," he explained.
Thailand should consider providing migrants with a clear path to residency, he added.
Correction: This article has been updated to accurately reflect that preliminary results show Move Forward and Pheu Thai parties won the most seats after 99% of the votes were counted. An earlier version misstated that.