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The other fastest growing area is the PRC, with a predicted growth rate of 6.5 percent in 2000. The impact of this growth on consumption is perhaps even more important. With some exceptions, such as Hong Kong, Asia has experienced decreasing population growth rates. Much of the additional GDP in Asia is expected to go directly into the ability to spend on new goods and services. China, for instance, has reduced its birth rate from 26 per 1,000 population in 1975 to only 17 in 1996. Indonesia's birth rate has gone from 40 to 23 over the same period. Thailand has been even more successful, reduce
World economic growth
Gglobalization took a step backward in 1998 after many years' progress, world output growth fell sharply from a strong 4.2 percent in 1997 to 2.2 percent. The crisisinduced contraction of many Asian developing economies, the Russian devaluation and default, the fiscal problems and currency instability in Brazil, and the deepening recession in Japan all had an impact on the world economic slowdown. The economic slowdown caused a significant import contraction, while export volumes started to pick up in the second quarter of 1998, pointing the way to an export recovery. This indicates opportunities to expand Thai exports. Regulatory and technological change are the other factors that will vary from country to country and therefore open better opportunities for Thailand in some geographic areas than in others.
Growth in the industrial countries was strong in 1998, with the exception of Japan. The sizes of these markets make growth attractive. The Asian developing economies experienced their slowest growth in a decade (averaging -6.9 percent in Southeast Asia and -1.4 percent in the newly industrialized economies), however, the People's Republic of China (PRC) and most South Asian economies managed substantial growth (Asian Development Outlook 1999).
In developing countries such as Latin America and Southeast Asia, the rising share of exports in gross domestic product (GDP) in 1980-1997 attests to a growing exposure to international trade. Developing countries are indeed exporting more to their industrial counterparts. The growth of trade is firmly buttressed by international institutions such as the World Trade Organization (WTO) to build on the legacy of the General Agreement on Tariffs and Trade (GATT). The successful completion of the Uruguay Round of multilateral trade negotiations and the growing popularity of regional trading arrangements (RTAs) have created considerable momentum for integrating countries further into the global trading system.
Thailand's main export markets will continue to be the more developed countries, but at the same time economic growth in some developing countries opens up prospects for new markets. Based on growth rates alone, it seems like South Asia and the PRC should be major targets for Thai exports. Even though South Asian growth will decline from an annual average rate of 5.7 percent in 1998 to 5.5 percent by the end of 1999, its growth is expected to continue to 5.8 percent in 2000.
In the birth rate from 34 to 18 per 1,000 (Asian Development Bank 1998). With the PRC and South Asian growth rates averaging 6.5 percent and 5.8 percent in 2000, low population growth allows consumption per capita to grow over two percent annually. This, coupled with the tremendous size of the market - China and India's combined population alone is more than two billion, or over one third of the world's total population - can lead to steep increases in purchases of consumer goods.
Growth, of course, is not the only factor that creates economic opportunities for Thailand. These opportunities will be influenced by a variety of factors, including trade liberalization, the impact of regional groupings such as ASEAN, NAFTA and the European Union, the mobility of capital, and the effect of technological developments in telecommunications and computerized production.
Multilateral trade liberalization
In 1995, the creation of the WTO built on the GATT is the latest multilateral step toward creating an environment conducive to the exchange of goods and services. In the past 15 years, mainly due to the environment created by the GATT and the WTO, many developing economies have unilaterally reduced their trade barriers. The trend toward outward-oriented trade policies is not confined to any continent or region, it predates the completion of the Uruguay Round. Nevertheless, a number of other important measures must follow to maintain the momentum for reform. The Millennium trade discussion is scheduled to start in November 1999 under WTO auspices, which will require an agenda for broader trade liberalization. For the developing countries, it is important to be fully engaged and use the technical expertise to achieve at favorable outcomes in areas such as liberalization of agricultural trade and trade in those services of greatest relevance to their future development.
Multilateral trade negotiations are not the only means of tilting the political balance to favour trade liberalization. Many industrial and developing countries are signing RTAs with neighboring countries. This regionally based liberalization has increased intra-regional trade and investment flows. Developing countries succeeded in substantially reducing their levels of tariff protection, especially non-tariff barriers (NTB) protection, during the past decade. A number of developing countries, both within and outside Asia, had already reduced their tariffs on imports to below Uruguay Round levels by 1997. Recent trade liberalization has been the greatest in the Southeast Asian countries, however, average tariff rates remain relatively high in these countries (20-30 percent) for two categories of goods: food and miscellaneous other manufactures.
Concluded in 1994, the Uruguay Round of trade negotiations includes the establishment of a new round of negotiations on agriculture and services, starting in January 2000. The Uruguay Round agreement on trade in agricultural products laid the foundation for future liberalization. Countries agreed to convert non-tariff agricultural barriers into tariff barriers and to set their tariffs at or below a certain level at the bound tariff rate. Similar maximums were agreed to for export subsidies and domestic subsidies. The Agreement on Sanitary and Phytosanitary Measures that resulted from the Uruguay Round seeks to strike a balance between protecting the well-being of human health and unnecessary restrictions by ensuring that sanitary and phytosanitary regulations do not deliberately discriminate against foreign suppliers.
In regard to trade in textiles and clothing, the Multi-Fibre Arrangement (MFA) will be phased out over a 10-year period, which commenced in 1995 and which is scheduled to be completed by January 2005. The downside is that each country can choose the order in which it will liberalize particular product lines. Therefore, the greatest improvements in access will not be seen until the end of the phase-in period. Despite the longstanding MFA, Thai firms have achieved growth by diversifying products and markets.
Thailand has experienced more competition from lower wage countries such as China and Vietnam, however, the depreciation of the bath should result in a resurgence of textile and clothing exports. Thai manufacturers still have time to upgrade quality, increase productivity, improve technology and develop market niches, toward ensuring the longevity of domestic production bases. Some Thai firms have invested in neighboring countries to take advantage of lower labour costs and to increase access to quota shares allocated on a national basis under the MFA regime.
In response to the Third WTO Ministerial Conference and the New Round, the Thai government has agreed to participate in new issues as follows:
A trend complementing the unprecedented increase in world trade is the dramatic increase in capital movements. Capital has long flowed between countries, with the direction of flow generally running from the rich to poorer countries.
Official and private flows of capital to developing Asia were roughly equal in magnitude in the mid-1980s, a surge in private capital flows, especially to East and Southeast Asia, since then has resulted in their making up a much larger fraction of total capital flows to the region. Net private capital flows to the PRC and Southeast Asian countries were less than two percent of their GDP in 1985, but they had grown to more than five percent of GDP by 1995. Compared with flows to these economies, the size of capital flows to the East and Southeast Asian economies have made greater strides toward liberalizing capital flows than South Asia. A distinct change has occurred in the composition of private capital flows in recent years. While the majority of private capital flows to the Asian Developing Economies (ADEs) consisted of bank and trade-related lending in the early 1980s, the past decade has seen a significant increase in foreign direct investment (FDI) and portfolio bond and equity flows. Thailand has also been successful in attracting such foreign capital.
The available investment monies are not sufficient to meet demand as numerous countries develop. The result is that many countries and sub-national regions are locked in competition with one another for investment inflows. In terms of investment in the so-called productive sectors, tax holidays and tariff reductions on imported inputs are among the most common incentives available to investors in developing countries. One of the major achievements of the Uruguay Round was the agreement on Trade Related Investment Measures (TRIMs). The TRIMs agreement set the protocol for the eradication of competition over FDI, which generally benefits the investor at the expense of labour and the environment. Nevertheless, the TRIMs agreement has only addressed the use of measures which tie investment promotion to certain performance criteria, specifically, the use of local content requirements (LCRs) and the use of trade balancing requirements.
The developed countries, led by the United States, have increasingly pressured the developing countries to open their finance and banking sectors to foreign investment. In the case of Thailand, the increased number of Bangkok International Banking Facilities (BIBFs) resulted in a dramatic increase in debt held by Thai firms, including short-term dollar denominated debt for longer-term projects. Also, a number of non-competitive projects were able to secure financing for project start-up; this was particularly true in the real estate sector. The bursting of the speculative bubble in the property market, accompanied by the downward slide of the Stock Exchange of Thailand (SET) and the depreciation of the bath, has caused ripple effects throughout the productive sectors. The Thai lesson is not that financial liberalization in itself is inadvisable, rather, financial liberalization requires the concomitant development of a strengthened set of rules governing the banking and finance sector, accompanied by an effective monitoring system which is open and free from political interference.
The global information super highway
A factor affecting the speed and mobility of capital flow is the rapidly increasing speed and volume of information flows. The so-called "information super highway" will have a significant impact on Thailand's ability to attract investment and trading partners in the future. The most efficient companies have learned to lower their overhead expenses by producing exactly those goods that world markets demand, at the right time, in the correct quantities, and in the exact styles needed. This type of decision-making requires an enormous flow of information at very fast rates through multi-point systems.
The world information technology market - whose products include personal computers and workstations, multi-user computer systems, data communications equipment and packaged software - grew by about 12.2 percent a year in real terms between 1985 and 1995, almost five times faster than world GDP. The production of information technology remains highly concentrated - with more than 90 percent in the Organization for Economic Co-operation and Development (OECD) countries. However, the use of modern communications media is expanding rapidly in other countries. Meanwhile, the Internet has become the best known and most widely used medium for the collection of information technology applications. Demand for services available through the Internet continues to increase and as the market available through the Internet expands, new services are being created.
The year 2000 (Y2K) problem arises from the common practice in older computer programs of designating years by the last two digits only. It is expected to affect systems in many different sectors, including communications, banking, public utilities, health care, and defense. It has the potential to seriously disrupt public and private sector operations at all levels. The precise dimensions of the Y2K problem are not known, but the global cost of fixing it is often estimated in the hundreds of billions of dollars. Although the first and necessary step in addressing the Y2K problem is to be aware of it, its solution will require resources, financial as well as human and technical.
These developments are equally important for Thai companies investing outside of Thailand. To remain competitive as they internationalize, Thai companies will have to develop the capability to manage information flows to and from their overseas investments. Thailand's public and private sector leaders will need to follow the development of the telecommunications industry closely to both understand the available resources in other participation in the world information system. At the same time, they will need to understand how to use the new tools offered by advancing information technology, such as the world
wide web, teleconferencing, video conferencing, electronic data interchange and so on.
Overview of Thailand's economic relations with the major countries and regions of the world
Thailand's overall trade activity has accelerated since the mid-1980s when the country's policy makers made a conscious decision to move from import-substitution policies to exported growth. Thailand has registered a trade deficit every year since 1987, however, the bulk of its imports have been used in
Thailand's growing exports
Thailand has been extremely successful in expanding its exports, with growth rates between 14 percent and 28 percent per year from 1990 until 1998. Compared to the structure of exports in the 1970s or even the 1980s, the structure of Thailand's exports in the 1990s has clearly diversified into a wide variety of products.
Exports continued to be the main factor preventing the Thai economy from contracting. In 1998, export volume grew by 8.1 percent during the first half of the year. Exports which showed substantial volume increase were manufacturing exports using high technology, including electronics and automobile products, and agricultural exports, such as rice and canned fish. Nevertheless, total export value decreased by 6.8 percent, resulting from the slowdown of the world economy and financial crises in Asian countries. The value decline was caused mainly by the 13.8 percent reduction in export prices following intense price competition among Thailand's major competitors, whose currencies also depreciated substantially, while the export volume increased at a lower rate than in the previous year
Some investors in Thailand will be tempted away by investment incentives and cheap labour in neighboring countries such as China, Vietnam and Indonesia, which will lead to further stagnation of Thai exports. Skilled, but relatively low cost, labour gave impetus to exports such as garments, footwear, jewelry, integrated circuit boards and other electronic products, including hard disk drives and keyboards. These industrial sectors have received rapid increases in foreign direct investment and domestic capital accumulation. It is unclear which of these industries will remain competitive into the future as new competitors have emerged. These countries, with their large domestic markets, are receptive to foreign investors.
There are reasons to be optimistic about Thailand's export outlook. The private sector is forward looking and a number of firms are already in the process of upgrading. Thailand's natural resource advantages will ensure the longevity of the jewelry industry and agricultural sector. The downstream move into the processing industries for freezing and canning has led to a rise in exports of processed foods such as canned tuna fish and chilled or frozen shrimp. And some firms in the computer industry are using cutting-edge production processes. These are only examples of the dynamism of Thailand's private sector.
Looking at Thailand's major export markets, the NAFTA countries, especially the US, are the largest export market with the export share rising from 19.4 percent in 1997 to 22.3 percent in 1998. This is partly due to the bath's depreciation and Thailand's ability to retain market share. The second largest market is the European Union with the export share rising to 17.8 percent. Japan remains Thailand's largest single market. Meanwhile, the export value to the Asia Pacific (comprising ASEAN, GMS, China, Taiwan, Hong Kong, and South Korea) declined by 18.6 percent.
Generally, imports are examined by looking at the economic purpose and the major import products. In terms of purpose of imported goods, it is clear that more than three-quarters of Thai imports are capital goods, and intermediate products and raw materials. These types of goods and materials are used in expanding industrial capacity and supply inputs into many of Thailand's export industries.
The value of imports in 1998 was 1,774.1 billion bath, an eight percent decline from the previous year when the financial crises hit Thailand. Nearly one-quarters of Thai imports originated in Japan. This reflects Japan's high level of investment in Thailand. The NAFTA, the ASEAN and EU member countries are other major source countries.
Investment patterns: foreign direct investment inflows and Thailand's investment outflows
Although inward foreign direct investment has been one of the growth factors of Thailand's economy, another factor has been the outward flow of investment funds from Thailand to the rest of the world. Since the 1990s, the amount of outward investment funds from Thailand has played significant role.
Foreign direct investment
Two government agencies track foreign direct investment data in Thailand, the Board of Investment (BOI) and the Bank of Thailand (BOT). The BOT's net foreign direct investment figures account for both the inflows and related outflows of foreign investments, while the BOI tracks inward investment on a project-by-project basis. In the sections for each geographic region that follow, BOT foreign direct investment and Thai outflow statistics will be considered along with the BOI figures for those regions that have substantial investment activity in Thailand
By way of an overview, Figure 4.6 plots the level of foreign direct investment into Thailand each year. These flows reached a high point in 1990 (during the period of 1985-1996), however, inflows in 1997 and 1998 have rapidly increased again after the financial crises. As opposed to thinking of such inflows on an annual basis, such inflows should be considered as contributing to the stock of FDI, with depreciation of this stock occurring on an ongoing basis. Recent annual inflows have maintained and increased the total stock of foreign direct investment in Thailand.
The main sources of Thailand's inward foreign direct investment have historically been Japan, the US, and Hong Kong, which account for over half of the total foreign direct investment Thailand has received over the period 1970-1998. Other major sources of investment capital include Taiwan, the United Kingdom, Germany, and Switzerland.
The sectors receiving high levels of foreign direct investment in recent years include financial institutions, manufacturing industries (such as machinery and transport equipment, and electrical appliances), and trade.
Thailand's outward investment flows
Prior to 1993, Thai outward flows were lower than US$200 million. Thailand's outward investment began to surge from that time and reached a peak in 1996. Even in 1996, the outward flows started to increase slightly. In 1997, Thai outward investment dropped suddenly, primarily due to the drastic slowdown in economic activity and liquidity problems faced by the private sector.
Major destinations for outward investment include the ASEAN countries, the GMS, and the PRC. These investments were channeled mostly into the manufacturing industry and services sector. In 1996, Thailand's Prime Minister formed a special committee to examine the country's outward investment flows and to find ways to support the investing activities of Thais abroad. This committee has the task of prescribing measures that could increase those flows. The committee decided in July 1996 to target the countries of the GMS, ASEAN, South Asia, Mexico, Eastern Europe, North Africa, and the PRC. The industries and services targeted for special promotion include: agro-industries, fisheries and livestock, textile and garments, jewelry and ornaments, electrical appliances, construction, construction materials, hotels and tourism, transport and telecommunications, as well as natural resources development projects that would include petroleum, mining, electricity, and petrochemical projects.
The data available from the BOT does not fully measure outward investment. Transactions financed through borrowing from overseas banks, or through reinvesting profits from one subsidiary to another, would not be measured. Despite these limitations, the BOT data clearly demonstrates the trend toward Thai's investing abroad.
Thailand's economic relations with North America
In terms of both exports and imports, Thailand's trade with North America, or the NAFTA countries, is dominated by its trade with the United States. The US has been Thailand's number one export market for several decades, and the US has been the number two supplier of imports to Thailand (after Japan). Thailand has maintained a trade surplus with the NAFTA countries since the mid-1980s, and the gap has broadened in recent years. The Thai-registered surplus was 271,554.5 million bath in 1998, soaring from 24,046.3 million bath and 92,849.5 million bath in 1996 and 1997, respectively.
In terms of exports, data processing machines surpassed garments as the export of largest value since 1996. Other exports to NAFTA include (in order of value): garments, canned fish, electronic integrated circuits, shellfish, radios and televisions, precious stones and jewelry, footwear, rubber products, and travel goods.
Trade with the United States
Exports to the US accounted for 22 percent of total Thai exports in 1998. With a population of 270 million people and GDP per head of US$31,487 (The Global Competitiveness Report 1999, World Economic Forum), the US is still the largest market in the world. Relatively strong economic growth in the US - at approximately three percent in 1998 (the growth was generally robust, compared to the negative tone of the world markets) - has helped keep the US market strong. At the same time, inflation has remained under control at about 1.6 percent.
Leading Thai exports to the US include high-technology products, agricultural products, and textiles. Imports supplied to Thailand include industrial inputs and raw materials, as well as high-technology products that are not produced locally.
US exports to Thailand are particularly important since Thailand has consistently shown a trade surplus against that country. Meanwhile, imports from the US have recently dropped in the wake of the Thai financial crises beginning in mid-1997. The development of NAFTA has had an impact on Thai trade patterns with the US. While Thailand has access to a larger market (US, Canada, and Mexico), it also faces increased price competition from Mexico in some product lines.
Another issue affecting Thai exports is the use of anti-dumping measures and counter-veiling duties on Thai products, as initiated by US producers and carried out by the US government. Anti-circumvention measures could become a highly potent instrument of protection. Given the high degree of global integration and multinationals operating simultaneously, determining the origin of goods is often difficult.
The dispute over the protection of intellectual property rights (IPR) has also affected US-Thai trade relations. US efforts to control the piracy of intellectual property throughout the world have resulted in the loss of General System of Preferences (GSP) privileges for several countries, including Thailand, and trade tensions have endured for a decade. The passage of a copyright protection law and efforts by Thai officials to clamp down on intellectual property rights violations represent significant progress in this area.
The share of US investment in Thailand is second only to Japanese investment in Thailand. Many Thai export industries have benefited from foreign direct investment by US companies, in particular the computer and telecommunications industries. US investment has brought in significant technology transfer, particularly in such industries as computers and parts, computer software, gas and oil development, refineries, petrochemicals and a variety of service industries such as banking and insurance.
The US has been trying to secure greater market access in regard to services. It faced a great deal of resistance in the General Agreement on Trade in Services (GATS) talks. The GATS issue is at the top of the US's trade agenda. Increased openness is desirable as it will improve service provision to the individual and it will strengthen the private sector. In Thailand, there is a great deal of vested interest in maintaining the status quo in some sectors, for instance, telecommunications, and there is nationalistic resistance in regard to others, for instance, banking and finance. For these reasons, progress on the liberalization of service industries will not come easily. In regard to Internet services, customers located in Thailand can by-pass inefficient, over-priced Thai Internet access providers (IAPs) and obtain service directly from US-based firms. The fact that IAPs are over-priced in Thailand can be at least partially attributed to the oligopoly functioning upstream. The decreased competitiveness of downstream telecommunications services should provide an impetus for liberalization of the industry.
Investment between Thailand and the US has been reciprocal. The US receives the large portion of overseas Thai investment funds. Thai business people have invested over 100 million US$ in the US in 1997. This is equivalent to approximately 18 percent of total Thai overseas direct investments.
Preview of the main regional groupings that have an impact on Thailand's business prospects
In addition to long-term trade barrier reduction under the WTO, several areas have implemented, or at least initiated, regional arrangements to reduce tariffs and other barriers to trade. Regional trade arrangements, such as the Common Market of the South (MERCOSUR), the European Union (EU), the North American Free Trade Agreement (NAFTA), have substantial trade diversion effects that have a world-wide impact.
Countries outside of these groupings must face the reality of trade diversion. Under trade diversion, imports, which were formally purchased from countries outside of the regional bloc, are presently substituted with goods from other countries within the bloc since the price has become more appealing due to lowered trade barriers. Trade diversion is a fact that Thai exporters and investors should consider as they decide on points of market entry. Regional trade arrangements in Asia are limited. The Asia-Pacific Economic Co-operation Forum, as the most important regional institution in Asia, has a strict principle of nondiscrimination in trade policy. The two institutions in Asia that appear in the WTO register of regional trade agreements are the Association of Southeast Asian Nations (ASEAN) Free Trade Area and the South Asian Preferential Trade Area. Nevertheless, neither of these institutions has promoted significant preferential trade policy.
The ASEAN Free Trade Area (AFTA) was formally launched in 1992, with the goal of integrating production structures toward improving ASEAN's export outlook in the world market. The chief tool used is the Common Effective Preferential Tariff (CEPT) scheme, which initially targets the removal of tariff barriers. By 2003, the tariffs on manufactured goods will be reduced to the 0-5 percent range. In order to qualify for the CEPT rate, the member country must have a tariff rate not higher than 20 percent on that product and an ASEAN content of 40 percent.
Members of the AFTA have generally opted for liberalizing trade on a multilateral basis, so that any tariff reductions they undertake as a part of their obligations are extended to nonmembers as well.
Strategic options for improved economic performance in the world market
Looking forward to developing a strategy for improving Thailand's economic performance in the world market, both in terms of exports and in terms of investment activity, there are several factors to be considered: diversification and growth in Thailand's top markets; activities of Thai private sector companies and associations to foster trade with new markets; the value of the Thai bath; and lastly, government-led efforts to improve trade regulations and to promote specific industries. Although government-led activities are important to the fortunes of Thai companies abroad, and the impressions that foreign investors have of Thailand, it is equally important to remember that Thailand's economic performance depends on the decision-making and activities of Thai companies.
Lower export prices and constraints on export financing contributed the major impact on decreases in export earnings in dollar terms, however, export volumes grew steadily in 1998. The bath depreciation should help promote the growth of exports. The decline in imports was far more dramatic (a decline of 32.3 percent in 1998), as a result, the current account balance registered a surplus of US$13.5 billion (11.5 percent of GDP), showing a large turnaround from a deficit equivalent to two percent of GDP in 1997.
Recently, while Thailand has shown signs of moderate recovery in private consumption and manufacturing production, the decline in private investment has continued and the performance of the external sector has remained weak. The immediate challenge is to promote growth. When the government adopted the stabilization program in consultation with the International Monetary Fund (IMF) in August 1997, it involved eliminating the current account deficit and stabilizing the exchange rate, but at the cost of a severe recession. Moreover, the unsettled conditions in the region have also reduced expected export demand and delayed the recovery in private capital flows.
The government has adjusted its macro-economic policy stance appropriately since early 1998 in response to the recession. Fiscal policy has been relaxed to allow larger public sector deficits, which should help to stimulate the economy. Meanwhile, the government has also adjusted its monetary policy to reduce interest rates. To restore growth sufficiently, other factors in addition to the fiscal and monetary policies include the success of financial sector restructuring and the progress made in recapitalising financial institutions, restoring investor confidence, resuming liquidity flow to the real sector, and improving the external economic environment.
Thailand's trade and investment activities are largely conducted with the US, Japan, the EU, and increasingly, ASEAN, the NIEs of Northeast Asia and the PRC. Economic growth in the US is on track and the world's largest market will continue to provide opportunities for Thailand's exports. Similarly, economic growth in the EU provides a positive sign for Thai exporters to that market.
Even with the widespread regional contraction in 1998, a number of Asian countries are in the process of recovering from the economic downturn. Taiwan, Hong Kong, the PRC, Singapore, and South Asian countries were able to avoid the impact of the regional slowdown on their trade. Therefore, the Asian market will eventually become active and provide opportunities again.
In addition to maintaining and/or increasing economic activity in Thailand's more traditional export markets, Thai companies are exploring new market niches and developing new business relations. In addition to trade, bi-lateral investment flows between Thailand and ASEAN countries have increased.
Trade with countries in South Asia, the Middle East, East Asia, Africa, and Australia and Oceania also continued to grow, however, sometimes resulting in an increased trade deficit for Thailand. Still, this is in keeping with the broader trend toward globalization. Efficient information flows are crucial to successful economic performance, where both accuracy and speed are crucial. More and more countries recognize that investors and traders need sufficient information about economic trends and opportunities before executive decisions can be made. The Thai government has made strides in information dissemination as it has gone on-line. Information flows between Thai embassies and consulates abroad and Thai nationals can be facilitated through the heightened exchange of information via the Internet. This is already occurring, but could be improved through closer contacts and more frequent exchanges.
Government-led efforts to improve the trade and investment environment
Although the private sector is the engine of growth in Thailand, government efforts can also provide support and assistance. Ministry of Foreign Affairs diplomatic posts can assist Thai companies and foreign investors and traders through their information gathering and sharing activities, as well as helping to familiarize Thai companies with the changing rules of the world market. The WTO, AFTA, and other regional institutions, groupings, and agreements will have an important impact on the rules that govern international economic activity. Ministry of Foreign Affairs diplomatic posts can make a significant contribution if they can explain and inform Thai businesses about these changing rules and new mechanisms. The promotional activities of the Board of Investment have been instrumental in encouraging foreign investment. Despite the economic slowdown, Thai investment activities abroad are
also encouraged through government-led efforts to support Thai economic activity abroad. Since investments and trade usually go hand-in-hand, the efforts to increase outward investment would likely lead to an increase in export trade as well.
Ultimately, whether Thai companies invest abroad or engage in trade activities will depend on those companies and the managers that make executive decisions. Government-led programmers and activities can certainly provide support and information - the key ingredients in any executive decision.
Source: Ministry of Foreign Affairs