COUNTRY BRIEFINGThailand

Greg Wallis, Senior Trade Commissioner

Australian Embassy

Bangkok

June 2013

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Thailand at a glance

› 66 million people

› GDP per capita US$5,848

› 30th largest economy

› 2nd largest in ASEAN

› 17th largest manufacturer

› 10th largest motor vehicle producer

› Growth 2013 – 4.7% (average predicted)

Sources:

National Economic and Social Development Board www.nesdb.go.th

Bank of Thailand www.bot.or.th

Board of Investment www.boi.go.th

Department of Foreign Affairs and Trade www.dfat.gov.au

International Trade Centre www.trademap.org

Selected Thai exports

Product World ranking - export s (2011)

Share of world exports(2011)

Rubber 1 9.9%

Rice 1 29.3%

Sugar 2 7.4%

Meat, fish, seafood 2 16.2%

Hard disk drives 2 N/A

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Thailand and Australia – Commercial Ties

› Australia’s 9th biggest trading partner

› Bilateral trade (2011-2012) worth A$ 17.7 billion

› Bilateral trade (1989-2011) has grown 3.6 times faster than Australia’s global trade

› TAFTA in place since 2005

› And…. an important education relationship› 20,000 student enrolments (6th biggest globally)

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Thailand: Common Views

• Poor and undeveloped

• Good place for a holiday

• Language barrier

• Natural disasters

• Corruption

• Political instability

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Thai Economy: Sophisticated

• 10th biggest car maker (>2m cars)

• Regional hub for auto, electronics, consumer goods, processed food.

• Middle class: 12 million

- Malaysia (12m)

- Indonesia (2.6m)

- Vietnam (1.6m)

• Dynamic retail sector

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Great Place for a Holiday

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Great Place for a Holiday

• 952,000 Australian visitors– one in 25 Australians

• Over 99% have a trouble-free stay

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But I don’t speak Thai ….

• You don’t have to

• Money and English are the languages of business

• English is more widely spoken than before– and its use will continue to spread

• Bilingual professional help easy to find

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Natural Disasters

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Floods

• Floods showed Thailand is critical to supply chains

• Forced Japan to reassess Thailand– Verdict: nowhere better– New Japanese

investment boom

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Corruption

• Corruption risk is mostly in government sector

• Massive private sector is largely corruption-free

Country Ranking

Singapore 5

Brunei 46

Malaysia 54

China 80

Thailand 88

India 94

Philippines 105

Indonesia 118

Vietnam 123

Cambodia 157

Laos 160

Myanmar 172

Source: Transparency International

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Corporate Governance

2007 2010 2012

1. Hong Kong (67) 1. Singapore (67) 1. Singapore (69)

2. Singapore (65) 2. Hong Kong (65) 2. Hong Kong (66)

3. India (56) 3. Japan (57) 3. Thailand (58)

4. Taiwan (54) 4. Thailand (55) 4. Japan (55)

5. Japan (52) 4. Taiwan (55) 4. Malaysia (55)

6. Korea (49) 6. Malaysia (52) 6. Taiwan (53)

6. Malaysia (49) 7. India (49) 7. India (51)

8. Thailand (47) 7. China (49) 8. Korea (49)

9. China (45) 9. Korea (45) 9. China (45)

10. Philippines (41) 10. Indonesia (40) 10. Philippines (41)

11. Indonesia (37) 11. Philippines (37) 11. Indonesia (37)

Source: Asian Corporate Governance Association, September 2012

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Political Instability

2011 Tsunami and floods

2008 GFC

1997-98 Asian Financial Crisis

Source: GDP Data from Thailand’s National Economic and Social Board

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

p

2013

e

Coup

Attempted coup

Major protests

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

%

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Meritocracy, Money and Virtue

• Uneven government, strong administration

• Workplaces are not politicised

• All politicians are pro-market, pro-business

• Virtue in Thailand to be rich or richer

• Thais are pragmatic

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Ease of Doing Business

1. Singapore1. Singapore

12. Malaysia

18. Thailand

79. Brunei

91. China

99. Vietnam

128. Indonesia

132. India

133. Cambodia

138. Philippines

163. Lao PDR

ASEAN + China/India

Source: The World Bank’s Doing Business 2013

2. Hong Kong, China

3. New Zealand

4. United States

5. Denmark

6. Norway

7. United Kingdom

8. Korea, Rep

9. Georgia

10. Australia

11. Finland

12. Malaysia

13. Sweden

14. Iceland

15. Ireland

16. Taiwan, China

17. Canada

18. Thailand

19. Mauritius

20. Germany

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What are these 23 Australian Companies in Thailand Saying?

› “We are here because Australia isn’t big enough.”

› “It is a good business environment; much easier than China, Vietnam, India & Indonesia”.

› “think about your ROE”

› “ Business is good, with strong growth & profitability.”

› “Our engineering and R&D is still done in Australia.”

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What are these 23 Australian Companies in Thailand Saying?

› “There is a shortage of skilled labour.”

› “Thailand is no longer a low cost labour market.”

› “Productivity needs to be improved.”

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Thailand’s Strengths

› Favourable business environment

› Highly sophisticated manufacturing sector

› Low unemployment

› Relatively peaceful labour relations

› Large and growing middle class

› Centre of ASEAN

› Positioned to capitalise on growth of Myanmar

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Thailand’s Weaknesses

› “Middle income trap” – decreasing relative productivity & middling competitiveness

› Perceived political instability

› Poor education standards – including English

› Populist schemes (e.g. rice-pledging) distort market and inflate prices

› Critical shortage of skills for industry (auto sector and others)

› Lack of transparency in government & legal processes

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Thai pragmatism - What colour is this car?

This car is red.

This car is green.

This car is black.

This car is blue-red.

Questions?