The Report: Thailand 2016
The second-largest economy in ASEAN after Indonesia, Thailand has developed a positive international reputation on the back of its pro-investment policies and well-developed infrastructure, standing as one of the most liberalised and business-friendly markets in the region.
Country Profile
Thailand is the 20th most populous nation in the world, with a 2015 estimate of 67,959,000 inhabitants, making it the third most populous in ASEAN, after Indonesia and Vietnam. Following a period of economic decline in 2013 and 2014, estimated growth in 2015 was back at around 2.5%, with the Thai private sector driving the economy forward despite challenging conditions. Thailand is currently ruled by the National Council for Peace and Order (NCPO), whose stated goals are to restore stability and to enact reforms. In February 2016 the council thus announced that it was in the process of drafting a new constitution, with elections scheduled for 2017. This chapter contains viewpoints from His Majesty Bhumbiol Adulyadej, King of Thailand; and Prime Minister Prayuth Chan-ocha.
Explore chapterTrade & Investment
Trade and investment have witnessed robust growth in Thailand over the past 30 years, as rapid industrial development led manufacturing to overtake agriculture as a primary economic engine. This has had a dramatic impact on exports, with the country rising to become a major regional exporter of electronics, automotive parts and food products. Trade relations have also expanded in recent years on the back of improved bilateral relations with China and the US: Thailand is poised to enter into a major global free trade agreement with each – respectively, the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP). Despite uncertainty regarding the country’s political future, as well as rising concern about falling regional competitiveness, particularly in light of the ongoing process of AEC integration, cautious optimism prevails in Thailand. This chapter contains viewpoints from Julie Bishop, Australian Minister for Foreign Affairs; and Dmitry Medveded, Prime Minister of Russia; and interviews with Cecelia Malmstrom, European Commissioner for Trade; and Thongsing Thammavong, Prime Minister of Laos and 2016 ASEAN Chair.
Explore chapterEconomy
Although buoyed by decades of steady expansion, Thailand – South-east Asia’s second-largest economy – saw growth falter in recent years in the wake of political unrest and challenging external conditions. However, falling global oil prices combined with stimulus packages benefited the economy and spurred a moderate recovery in 2015. The government is set to launch 20 infrastructure projects before 2018, covering rail, roads, air transport and ports, as part of an investment plan running until 2020. Public-private partnerships are expected to comprise 20% of the plan’s budget. Concerns about China and depressed commodities prices will continue to weigh on economic growth, although Thailand remains well positioned to manage these challenges, with robust international reserves and rising government spending expected to support and sustain recovery into 2017. This chapter contains a viewpoint from Veerathai Santipraphob, Governor, Bank of Thailand.
Explore chapterSustainability
In what became known as a foundation speech for the idea of the sufficiency economy, in December 1997, the king said that what was important was not being a “tiger” but having “a sufficient economy” to take care of the whole population. The sufficiency economy places sustainability at the very core of its thinking, advancing a different approach from that of short-term, shareholder value-centred ideas of economic development. The take-up of this philosophy has also placed the country at the forefront of studies in sustainability, while also providing the world with some remarkable blueprints and success stories. This chapter contains a viewpoint from Kasem Watanachai, Privy Counsellor.
Explore chapterBanking
Thailand’s banking sector remained resilient in 2015 despite challenging macroeconomic conditions, including slowing demand in China and high levels of consumer debt. Loan growth continued, despite moderating from the double-digit highs of previous years, and loan capital improved even as the non-performing loan (NPL) ratio rose. Operating profits of banks simultaneously grew, although net profits declined due to increased provisioning. As of December 2015 there were 19 commercial banks, 12 full branch foreign banks, two finance companies and three credit foncier companies registered in Thailand. An increase in cross-border transactions has raised the potential for regional expansion of domestic banks, and a number of Thai financial institutions have announced plans to expand operations. This chapter contains interviews with Chartsiri Sophonpanich, President, Bangkok Bank; Teeranun Srihong, President, Kasikorn Bank; and Darren Buckley, Country Head, Citibank.
Explore chapterCapital Markets
The Thai market consistently outperforms many of its neighbours in terms of trading volumes. In January 2016 over $23bn of shares changed hands on the Stock Exchange of Thailand, compared to some $9bn on Bursa Malaysia, over $4bn on the Indonesia Stock Exchange and $16bn on the Singapore Exchange. Thailand is transforming from a large but secondary player in the region to a market of focus. The high level of turnover and the steady corporate activity are generating considerable interest and the right conditions for rapid development. The country has already become the market of choice for issuers in the Mekong region, and is starting to get noticed by the international investment community as being more than just a small local market. If reforms continue, and if the new government is able to keep the markets open and fair, Thailand may well find itself playing a new and significant role in the development of the ASEAN region’s capital markets. This chapter contains interviews with Kesara Manchsree, President and CEO, the Stock Exchange of Thailand; and Rapee Sucharitakul, Secretary-General, Securities and Exchange Commission; and a viewpoint from Chaipatr Srivisarvacha, CEO, KT ZIMCO Securities Company.
Explore chapterInsurance
After a short-lived slowdown related to political uncertainty, economic weakness and the ending of a first-time car-buyer scheme, the insurance sector in Thailand is beginning to grow again at a healthy pace. Given the relatively low penetration rate, the increasing incomes in the country and the ageing population, it is expected that the sector will soon expand again at or near its historically fast rate. Regulatory changes are helping to improve the safety and soundness of the sector, and slowly allowing for more foreign participation. However, high household debt remains a concern and could stand in the way of a rapid recovery, while consolidation remains a work in progress. Some regulatory fixes and additional liberalisations are needed if the number of insurers is to be reduced. This chapter contains an interview with David Korunic, CEO, Krungthai-AXA Life Insurance.
Explore chapterEnergy
Providing the fuel for Thailand’s economic growth engine, the energy sector continues to expand to meet the growing demands of the country. Domestic primary energy consumption is weighted heavily towards fossil fuels, which accounted for 98% of primary energy consumption in 2014. Natural gas has become the fulcrum upon which energy development is now focused in both the hydrocarbons and electricity segments, with the fuel representing 44% of total primary energy usage. In the electricity segment, the concerted strategic shift away from imported fossil fuels towards energy diversification and independence should lead to ample growth in non-hydropower renewable energy and clean coal-fired generation, along with a more limited ongoing expansion in gas-fired power plants. This chapter contains an interview with Veerasak Pungrassamee, Director-General, Department of Mineral Fuels.
Explore chapterIndustry & Retail
Having already established itself as a manufacturing hub within South-east Asia, Thailand’s industrial sector is looking to further differentiate itself from other countries by moving up the value chain and expand its capabilities to produce greater value-added products in a variety of modern industries. This strategy seeks to spur industries to progress up the technology ladder from established industries already operating in Thailand. Solid economic growth averaging roughly 4% annually since 2000 along with the country’s solid industrial and export base has fuelled a steady rise in domestic income across all income levels over the past decade and a half, leading directly to a rise in consumer spending power. Assuming a stable political environment going forward, Thailand’s retail sector as a whole is expected to continue its upward trajectory, which was interrupted briefly by unforeseen events in 2014 and 2015, with the EIU forecasting annual sales volume growth for the sector of 3.6%, 3.4% and 4.3%, respectively for 2015-18. This chapter contains interviews with Mark Kaufman, President, Ford ASEAN; Chadatip Chutrakul, CEO, Siam Piwat and Siam Paragon Development; and Supaluck Umpujh, Vice-Chairwoman, The Mall Group.
Explore chapterConstruction & Real Estate
In 2015 the construction sector grew by 15.8%, a significant improvement over 0.1% in 2013 and 3.7% in 2014, and the industry contributed 2.8% to GDP. Residential projects accounted for 66% of total construction area permitted in 2015, while industrial projects made up 16% of the total. Continued economic expansion, rising demand for housing and, most importantly, renewed government investment levels in public infrastructure are projected to be the main drivers of growth. In addition, the government’s tax incentives intended to attract investment from foreign companies in agriculture, renewable and alternative energies, IT and tourism should also augment construction works. Continued economic growth and Bangkok’s attractiveness to foreign businesses and individuals should sustain property demand going forward, even with new stock across all subsectors set to hit the market in the coming years. This chapter contains interviews with Kan Trakulhoon, Chairman of the Management Advisory Committee and Former President, Siam Group; and Polpat Karnasuta, President, Nawarat Patanakarn.
Explore chapterTelecoms & IT
The Thai telecom market is changing quickly. 4G has been introduced and a new player may now be competing, bringing the total number of major operators to four. In the short term, telecoms must pay for their spectrum, and going out they will be developing their networks and building their customer bases. This is sure to be a challenge in terms of fund-raising and profitability, and it seems that creative solutions in terms of infrastructure sharing and financing are on the cards. A convergence of factors, including the rollout of 4G nationwide, government support and better user understanding of the offerings is resulting in improved IT and telecoms infrastructure and increased demand.
Explore chapterTourism
Endless white sandy beaches, inexpensive accommodation, tasty cuisine, exotic jungle treks and friendly locals have all propelled Thailand to its reputation as a quintessential tropical tourism destination, not only within the region but across the globe. Marketing campaigns headed by the Thai government and private sector have helped cement the industy’s position as the fourth-biggest contributor to GDP. Well-developed transport and communication infrastructure and a generous offering of luxury accommodation, gourmet restaurants and modern retail centres attract clients from the meetings, incentives, convention and exhibition, and shopping tourism segments, while an assortment of unique ecosystems ranging from tropical forests to coral reefs continues to draw in adventure and eco-minded tourists. All this is complemented by the rich cultural and religious attractions that can be found throughout the country. Thailand’s wide range of offerings has provided the travel and tourism industry with a leg up on its competitors at a crucial developmental point, when the growing number of tourists in the region display increasingly varied holiday interests and preferences. This chapter contains interviews with Nopparat Maythaveekulchai, President, Thailand Convention & Exhibition Bureau; and Patrick Basset, Chief Operating Officer, AccorHotels Upper Southeast & Northeast Asia.
Explore chapterEducation & Health
The government of Thailand is highly focused on reforming education and has made some decisive moves to achieve this end. The administration is also starting to lay the foundations for the long term, pushing initiatives that will help education move into the future. It is, for example, working to increase research and development spending, from 0.46% of GDP in 2015 to 1.0% in 2016. This is central to making the universities more sustainable, competitive and relevant in an international context. Ultimately, the country may find that education can become a driver for economic growth. Health care is growing and is seen as a source of significant opportunity and growth. Not only is it strong on the domestic side, with more than 99% of the population receiving free health care, but it is also a highly competitive destination for medical tourism. Heavy investment continues in the sector. Hospital groups are raising funds and expanding, mergers are being undertaken and the sector is venturing overseas. This chapter contains an interview with Arthit Purairat, President, Rangsit University.
Explore chapterAgriculture
The naturally fertile land central to Thailand’s Chao Phraya river basin, combined with increasingly well-developed infrastructure, serves as a strong foundation for what is a robust agricultural base. These advantages have propelled both small-scale farmers and larger agriculture companies from Thailand into the forefront of global agri-business, with the country ranking among the world’s leaders in the exportation of rice, seafood, rubber and sugar, as well as serving as a home base for some of the region’s largest food production companies. In 2014 the agricultural sector contributed $20bn to GDP, up slightly from $19.9bn recorded the previous year. In terms of value added, this was equivalent to 10.5% of the country’s GDP for the year. This chapter contains interviews with Krisda Monthienvichienchai, CEO and President, Mitr Phol; and Luck Wajananawat, President, Bank for Agriculture and Agricultural Cooperatives.
Explore chapterTax
This chapter summarizes the Thai tax system, focusing on corporate tax rates, rules and regulations, incentives for investors and other key areas. It also contains a viewpoint from Andrew Jackomos and Paul Ashburn, Senior Partners, BDO Advisory.
Explore chapterLegal Framework
This chapter examines the Thai legal code, focusing primarily on plans to attract investment, special economic zones, types of businesses that can be set up, and other key topics. It also contains a viewpoint from Yuthana Promsin, Partner and Co-founder of Jus Laws & Consult.
Explore chapterTransport
Thailand is quickly transforming from a country with transportation challenges to one that is becoming a leader in the region, and a possible logistics centre for ASEAN. The country’s air regulators are focusing on regaining the country’s top-grade assessments and have been working to remove weaker discount carriers. Thai Airways is also restructuring, and airports are being upgraded, enlarged and improved. Most importantly, the country’s leaders are calling for significant investments into infrastructure, much of it fast-tracked so that real, tangible results may be achieved within a few years. This chapter contains interviews with Prajin Juntong, Deputy Prime Minister, and Sutthinan Hutthawong, Director-General, Port Authority of Thailand; and a dialogue with Charamporn Jotikasthira, President, Thai Airways International and Puttipong Prasarttong-Osoth, President, Bangkok Airways.
Explore chapterThe Guide
This chapter contains hotel listings for business and leisure visitors, phone numbers for foreign missions and local services as well as some useful cultural tips for first-time arrivals.
Explore chapterTable of Contents
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