OBG Report Launch Praises Thailand’s Ability to Prosper Thailand and its people have a proven ability to overcome and prosper. Such was the praise given at the launch of “The Report: Thailand 2012,” a comprehensive assessment updating the country’s business environment. A valuable source of information for investors, the report was launched by its publisher, the global consultancy firm Oxford Business Group (OBG), on 24 August at a ceremony in Bangkok’s Okura Prestige Hotel. “The remarkable thing is that no matter what life throws at Thailand, the Thais rise up again,” Peter Grimsditch, OBG editorial director, said in his opening comments. “The Thai smile wins. It is unstoppable, this country, as we have found in great detail by studying it.” The 2012 edition marks the third year that the London-based OBG has teamed up with the Thailand Board of Investment (BOI) to produce the report. Assistance was also provided by Thanachart Securities, the accountancy company BDO and the law firm Tilleke & Gibbins.
An OBG team of six researchers was on the ground in Thailand for nearly a year to produce the 268-page volume. “There is no substitute for going around the country and talking to the business community firsthand,” said Grimsditch.
The report provides in-depth evaluation of Thailand, a place that Grimsditch describes as “one of Southeast Asia’s most dynamic and investment-friendly economies.” Its sections probe the country’s economy, industry, politics, capital markets, information technology, real estate, tourism, transportation, agriculture, R&D, education, retail, media and legislation. Also featured are interviews with Thailand’s prominent business and social leaders. Such contributors of insightful commentary include His Majesty the King of Thailand Bhumibol Adulyadej, Prime Minister Yingluck Shinawatra, Deputy Prime Minister and Minister of Finance Kittiratt Na-Ranong, Industry Minister Pongsvas Svasti, BOI Secretary General Atchaka Sibunruang, Bank of Thailand Governor Prasarn Trairatvorakul and Saha Pathanapibul Group Chairman Boonchai Chokwatana, among many others. Views on the country’s economic development are also offered by international personalities such as UK Secretary of State for Foreign and Commonwealth Affairs William Hague, former UK Prime Minister Tony Blair and ASEAN Secretary General Surin Pitsuwan.
Robust and Recovered Experts are lined up in their praise of Thailand’s vibrancy, with investor confidence quickly invigorated after setbacks from the historic flood of 2011. “The supply chain disruption caused by the flood last year has been largely resolved and I am pleased to say that manufacturing is now mostly back to preflood levels,” the BOI’s Atchaka told the book launch audience of more than 200 VIPs and journalists. In an interview printed in the 2012 report, Prime Minister Yingluck emphasized that the government has given high priority to measures that will prevent such flooding in the future. As the UK’s Blair put it in his OBG interview, “Thailand is open for business and can be confident of its future, and the world should be confident as well.” Besides insight and analysis, the report is also loaded with a wealth of statistics for a deep portrayal of each sector. It shows that manufacturing accounts for 40% of Thailand’s gross domestic product (GDP) with the services sector, including tourism, finance, education and health care, making up 33%. Exports represent about 65% of the country’s GDP. The largest contributors to the vigorous exports sector are electronics and electrical appliances (23% of total shipments in 2011), automotive (10%) and chemicals (9%). Machinery and computer parts are also top exports.
In his keynote address at the launch, Industry Minister Pongsvas noted that Thailand is “blessed” as an investment site. The country is an excellent business location with its highly skilled but affordable workforce, state-of-the-art industrial estates, vast network of component suppliers, lively domestic economy, proinvestment government policies, and strategic location at the heart of Asia, as well as the rich land and beautiful nature. But the country cannot rest on its proven successes, Pongsvas stressed. He said Thailand is at an important juncture in making the transformation to a valueadded economy. Progress in this direction is already being achieved, as the report cited advancement in areas such as alternative energy, capital markets, the insurance sector and the digital, telecom and information technology industries. “Reforms are laying a stronger foundation for expansion,” it concluded.
Top Investment Location With such a bright investment environment, Thailand continues to attract entrepreneurs. During the first eight months of 2012, the BOI received 1,410 applications for investment privileges worth 690.9 billion baht, spirited growth compared with 1,132 applications worth 322 billion baht in the same period last year. From January to August, the industries with over 100 billion baht investment value were services and infrastructure, chemicals for paper and plastic, machinery and transport equipment, and electronics and electrical appliances.
Atchaka sees the country’s investor appeal strengthening. In the new OBG report, she said, “My vision of the future is that both tax and non-tax privileges will go hand in hand as a package and will be more effective in attracting investment and enhancing industrial development.” As the OBG recognized, “The country’s decades-long incentives-based policy for attracting foreign direct investment (FDI) has been one of the great successes.” Thailand is indeed a very business-friendly location. The World Bank ranks the country as one of the top- 20 easiest places to do business globally. The United Nations Conference on Trade and Development also lists Thailand as one of the world’s top-10 most attractive countries for FDI. Paulius Kuncinas, an OBG regional editor, further indicated in his presentation at the event that Thailand “enjoys advantages in transparency and corporate governance.” Noting that transport infrastructure and logistics are high on the government’s agenda, the report examines major projects by Thailand, including construction of new port facilities, airport expansions, and a high-speed railway that would reach to southern China. The OBG also looks at Thailand’s preparations for the ASEAN Economic Community (AEC). In 2015, the 10 member countries of ASEAN, or the Association of Southeast Asian Nations, are to drop trade tariffs among them and liberalize investment sectors, enabling the free flow of goods, services, capital and people across the 600-consumer AEC regional bloc. Atchaka emphasized that Thailand must be ready to compete in the more open regional market: “The birth of the AEC is timely as the region experiences a
soaring middle class with greater purchasing power for everything from televisions to automotive products.” Leading to the AEC, the proposed Dawei deep-sea port at the country’s border with Myanmar is another ambitious connectivity project. “Thailand is uniquely positioned to take full advantage over the opening of Myanmar to the outside world,” Kuncinas said, calling this a historic opportunity.
Meeting the Challenges Although the economy and investment in Thailand are whirring along, there are hurdles to overcome for continued strong growth. “The challenge for our country will be to grasp new opportunities by increasing our labor productivity through education while embracing innovation and technology,” Pongsvas said. Kuncinas added to that. “The main issue is how to create new sources of growth in the modern manufacturing, knowledge and service-oriented sectors,” he said. As manufacturing currently dominates economic activity in Thailand, he encouraged modernization especially in the agro-business sector. Opportunities were also seen in further expansion of services, finance, logistics, tourism and the added-value segment. Understanding this, Grimsditch encouraged investors to “look to Thailand.” “The Report: Thailand 2012” is available in print or online. The OBG publishes economic and political intelligence on nearly 30 countries across Asia, the Middle East, Eastern Europe,
and North and South Africa. Its country publications have a diverse readership, including international policymakers, donor organizations, journalists, embassies, multinational companies and business leaders.