Nestled in the heart of Southeast Asia, Thailand has been for many years the starting point for international companies looking for a dynamic Asian market from which to springboard into the region, as well as the world.
Thailand's domestic market comprises over 62 million people, but more significant are the regional and sub-regional economic linkages that can expand a company's market potential upwards to 500 million people.
As the economic commitments under the ASEAN Free Trade Area (AFTA) and the other sub-regional economic cooperation arrangements are fulfilled, goods, investment and services will flow more freely within Southeast Asia. And as Thailand borders more states in Southeast Asia than any other, it forms a natural hub for regional and sub-regional economic activities.
Thailand offers a large, adaptable, trainable labor force that is increasingly more capable of handling sophisticated technology. The potential workforce is over 34 million people and the literacy rate is 93 percent. As a result, Thailand has vast potential for expanding into high tech sectors. Thai society displays a high degree of stability and tolerance, and the country has strong traditions of individual and economic freedom, which provide businesses with a stable, peaceful, and tolerant environment. As one Thai minister recently said, "Thailand is a peaceful country where there is no legacy of terrorism."
Future prospects for the kingdom look good. Exports in particular have been robust, increasing by 8.1 percent in August, exceeding the US$6 billion level for the first time in 21 months. In fact, this was the fifth month in a row that exports showed a year-on-year increase.
GDP growth has also been very strong (+3.9 percent in Ql and +5.1 in Q2). Full-year GDP growth forecasts have been raised to between 4 and 4.5 percent. Based on exports and a series of other macroeconomic indicators, the Thai economy in 2003 could very well continue at this level. These positive indicators are backed up by the October results of the Thai Board of Investment's sixth annual Foreign Investor Confidence Survey. Among 1,200 foreign survey participants, including many Taiwanese firms, 60 percent of respondents found the investment environment in Thailand had improved since 2001.
The survey also revealed that 74 percent of foreign operations here would increase their investment within two years to three years. Fifty-eight percent of foreign companies said they would increase investment in Thailand this year.
The Board of Investment set a target for 2002 of US$4.5 billion in investment, which, in the first nine months of 2002, has already been reached. This success is underscored by a United Nations' report that lists Thailand as one of the world's 10 most attractive developing countries among foreign investors, ranking fifth in Asia after China, Hong Kong, Singapore and, of course, Taiwan.
Success stories
Taiwan is a major player in Thailand. Given the long and fruitful nature of Thai-Chinese business and social relationships, this is not surprising. After all, the two nations share a common culture, heritage, and perhaps more importantly, an understanding of the way business is conducted. Indeed, Chinese-Thai families control many of Thailand's largest companies.
Taiwan is Thailand's fifth largest investor after Japan, the EU, Singapore, and the US. In fact, Taiwanese firms have had over US$50 million in projects approved from January to September of this year. Moreover, project applications submitted by Taiwanese companies over the same period are valued over US$120 million, a 27 percent year-on-year increase.
Fortunately for Thailand, investment from Taiwan is not only bounteous this year, but also diverse. Tatung Thailand invested about US$10 million to produce LCD monitors. Li Tai Alloy is producing aluminum alloy wheels on a US$7 million investment. Other recently approved multi-million dollar projects are in knitting fabric, rice crackers, life vests and stamping parts for electronic products.
Due to concerns about concentrating production in one location, one of Thailand's biggest Taiwanese investors, Delta Electronics, decided to shift production of certain components for Sony's PlayStation and Microsoft's X-Box from China to Thailand in 2003.
Board of Investment
The Thailand Board of Investment has played a significant role in making sure that Taiwanese investors start up successful ventures in Thailand. It is the government agency responsible for providing incentives and services for investors in order to stimulate investment in this country.
Board of Investment of Thailand Secretary General Somphong Wanapha on a visit to Taiwan on November this year held a "Thailand of Investment" seminar said, "It is gratifying to see the continued high level of interest from our friends in Taiwan."
Wanapha said, companies planning to expand investment see Thailand as a high potential site that offers real opportunities to improve global competitiveness of their manufactured products. We continue to have no export requirements, no local content requirements, nor foreign equity restrictions in the manufacturing sector.
One of Wanapha's priorities at the BOI was to remove impediments to investing. It removed the location requirement for all but a handful of environmentally-sensitive activities. Second priority involved proactive targeting of investors, both by sector and by region. Wanapha said, "We identified five industries: agro-industry, fashion, ICT, including electronics, and high-value added services. We also established three target regions, including Asia. Within Asia, Taiwan is one of our prime targets and we will continue to host seminars and increase the frequency of visits from our Mobile Unit -- the unit travels to key countries such as Taiwan and conducts one-on-one meetings with investors that have expressed interest in investing in Thailand. Third priority is to improve the way we market Thailand -- seeking cooperative agreements with public and private sector organizations, including other investment agencies, banks, and provincial governments.
Our next objective is to improve overall Thai competitiveness, especially at the SME level -- help them become more productive, expose them to the "industry-best" practices and technologies and the importance of skills training and technology transfer, he added.
Of particular interest to Taiwanese manufacturers, the BOI continues to promote the development of industrial linkages. The BOI Unit for Industrial Linkage Development (BUILD) encourages growth in supporting industries in Thailand by providing information on subcontracting opportunities and offering support to firms seeking to develop sourcing networks in Thailand. BUILD also helps small and medium-sized enterprises in Thailand to achieve the standards required to enter into productive subcontracting arrangements.
The BOI, with the Investment Promotion Agencies of ASEAN member countries, is also managing the ASEAN Supporting Industry Database (ASID). The goal of ASID is to expand the scope of ASEAN's supporting industries by serving as the region's industrial yellow pages.
The ASID home page, which is located at www.asidnet.org, contains a wide range of information on more than 19,000 supporting industry companies throughout ASEAN, and provides communication links to facilitate electronic commerce between ASEAN suppliers and foreign purchasers. In addition to ASID, The BOI has a wealth of information and services available on line. The most comprehensive website is BOI's award-winning site at www.boigo.th, which includes information on the Thai investment scene, news, economic statistics and a full listing of all promoted companies. Key information on the BOI website has been translated into Chinese, Japanese, French and German, in addition to Thai and English.
The Thai government has always welcomed foreign investors and valued the fundamental contributions made by the foreign business community to our economy - in terms of finance, technology, management skills, and more. The Board of Investment is ready to make your entry into Thailand an easy and fruitful one. For additional information about investing in Thailand, visit the website of the Board of Investment in Thailand at www.boi.go.th, or email at head@boi.go.th
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