Taiwan and Thailand have a special longstanding relationship not the least of which is a close linkage between their economies. Over the years a significant number of investors have found Thailand to be an excellent location on which to focus their business interest in terms of both sales and production.
Piyawat Niyomrerks, the Executive Director of the Thailand Trade and Economic Office, indicated that even though Taiwan's government tries to limit business from going to china, many big businesses are going to China despite the restrictions. Of course, for small and medium-size enterprises, which are Thailand's main target to attract investments from, it'll be very competitive between China and Thailand. However, I believe businesses which grab a sufficient share in Chinese markets will return to Southeast Asia and Thailand.
Investment from Taiwan has been an important ingredient in the development of Thailand. Over the past 10 years the Board of Investment of Thailand has received from Taiwanese investors over 900 investment applications with a cumulative value of 368 billion baht. Over the past 5 years the economic sector of highest interest to Taiwanese investor has been electric and electronic products. For the past 2 years Taiwan has been among the top three countries in terms of net applications received by the BOI.
Because of the long and fruitful nature of the Thai-Chinese business and social relationships, Thailand is an ideal choice for a Taiwanese investor. It is widely understood that historically a significant portion of the large corporations in Thailand are owned Thai-Chinese families. Because of this there is a deep rooted common understanding between the two cultures about the way business is conducted.
In addition to its unique location in the heart of Southeast Asia, Thailand offers to the investor an abundant highly skilled and well educated workforce, access to a broad range of sophisticated technology and a stable environment within which to own and operate a business. The cost-effective local inputs in the Thai industrial sector are very attractive to manufacturers, local and foreign, and are widely understood to contribute to the global competitiveness of their products.
When the Thailand and China markets are compared, Mr. Niyomrerks stressed that if you look at investments in dollar terms, investing in China may be less expensive with cheap land and costs there. But in terms of the investment environment and living conditions, Thailand offers a very high standard of living and a comfortable life for investors and their family member. "Thailand's laws are very transparent and it's a very democratic society in which social conflicts rarely occur due to religious beliefs," said Mr. Niyomrerks.
A Bright Economic Outlook
Thailand is no longer in a crisis mode with regards to the recovery of its economy. The strength of the recovery of the Thai economy has surprised a number of experts. In 2002, real GDP growth hit 5.3%, and in the first half of this year its performance was an even better 6.2%. This represents one of the best economic performances in Asia.
The Thai government's think tank, the National Economic and Social Development Board (NESDB), reports that strength in private sector investment, as well as a healthy demand for exports, are key factors supporting the growth. Private investment rose by 17.5% in the first half of 2003, primarily in the areas of private residential and non-residential construction.
Exports of goods rose by 19% in the first half of this year, which helped offset the SARS-related slump in demand for services. Manufactured goods make up about 85% of the country's exports, and the top five manufactured product categories include: computer-related exports, electrical equipment which includes integrated circuits and telecommunications products, electrical appliances such as air conditioners and TVs, textile and garment products, and finally vehicles and automotive parts.
The economic news on other fronts is also positive. Inflation remains low and unemployment continues to be relatively small. Interest rates remain low and the rebound in corporate profit growth has been a magnet for investment flows into publicly listed companies on the Stock Exchange of Thailand. Currently the SET is the fastest growing stock exchange in Asia and is now at its highest level since 1997.
The strength of the Thai economy, in particular the external sector, has enabled Thailand to repay this year its IMF loans taken out in the aftermath of the 1997 financial crisis. The repayment was two years ahead of schedule. In 2002 the GDP is estimated to have reached US$120 billion.
Foreign exchange reserves currently stand at US$40 billion. With all the vital signs healthy, it is now widely believed that Thailand has entered a new economic cycle of sustainable growth and development.
As a result, this strong growth is expected to continue. Just last month Thai Prime Minister Thaksin Shinawatra expressed confidence that GDP would grow by 8% next year and 10% in 2005.
Foreign Direct Investment Surpasses Targets
The Board of Investment plays a key role in supporting the implementation of the external leg of the Prime Minister's Dual Track policy. In 2003, due to concerns about external events, such as international terrorism, the threat of war in Iraq and the slow pace of global economic recovery, BOI set its sites conservatively with a 2003 target of 200 billion baht.
For the first nine months of the year, BOI had already received 722 new investment applications worth 264.4 billion baht with 219.7 billion baht of that total having foreign participation, either through wholly foreign-owned projects or in the form of a joint venture. Of those, 53 applications included Taiwanese equity in part or whole. These foreign investment statistics are almost double those received during the first nine months of last year, so it is clear that international investors continue to find Thailand a good place to do business. The outlook for 2004 is for a ten percent increase in investment flows.
The bulk of new Taiwanese investment so far in 2003 has been in two sectors: metal products and machinery, and agricultural products. Other areas attracting investors are electrical and electronic products, chemicals and paper, automotive parts, and textiles. Backed by a longstanding satisfaction with their investments in Thailand, Taiwanese investors continue to find Thailand a good place to do business.
It is important to note that not all foreign investments were large-scale. Last year BOI approved a number of foreign projects with investments of less than US$2 million. Many of these projects are involved in the manufacture of parts and components for Thailand's vibrant electronics and automotive industries.
The Thai government has always welcomed Taiwanese investors and values the fundamental contributions made by the Taiwanese business community in terms of product technology, management skills and competitiveness to name but a few. The BOI is ready, willing and able to make your entry into Thailand an easy and fruitful one.
"We have forecast an economic growth rate of 4.5 to 5.5 percent this year. And we'd like to see the comeback of tourists by the year's end, which will create enough revenues to support the 5.5 percent of GDP. The government has targeted a 6 percent and 7 percent economic growth rate for this year and next, respectively," said Mr. Niyomrerks.
For additional information about investing in Thailand, please visit the Website of the Board of Investment at www.boi.go.th or contact the Thailand Trade and Economic Office in Taipei: Tel: (8862) 2712-1882 x32; Fax: (8862) 2713-0042.
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