The current growth period in Asia, has many drivers fueling its growth. The drivers can be divided into major economies like China and India to more regional economies like Singapore and Malaysia. The Thai economy is one of these regional economies. Thailand is an emerging economy and considered as a newly industrialized country. After enjoying the world’s highest growth rate from 1985 to 1996 – averaging 12.4% annually, Thailand’s economy contracted by 1.9% during the Asian financial crises. However, the economy has come a long way since then. Does this mean it’s a good idea to do business in Thailand?
Recent economic growth affects business in Thailand
For example, the Thai economy had a growth rate of 7.8% in 2010, great even by developing country standards. Thailand’s economy functions as an anchor economy for the neighboring developing economies of Laos, Burma, and Cambodia and it ranks high among the world’s automotive export industries along with manufacturing of electronic goods. Tourism revenues are on the rise and contributing to about 6% of GDP. The GDP growth of Thailand was 8.0% in 2010, higher than previous highs of 5-7% under the previous civilian administration. Thailand enjoys high foreign investment and consumer confidence. Unemployment is at 1.2% as year 2010, with estimations of falling to 1% by the year 2012 therefore Thailand has one of the lowest unemployment rates in the world. Decades of economic growth reduced poverty in Thailand. Thailand enjoys one of the lowest poverty rates in Asia. In 2010, Thailand, along with Japan, South Korea, Taiwan, Brunei and Malaysia were the only countries in Asia with less than 2% of the country’s total population living under $1.25 per day.
According to Development Progress.org, Thailand’s Agriculture based economy has been experiencing a transition from labour intensive and transitional methods into a more industrialized and competitive sector. Rice is the country’s most important crop; Thailand is the biggest exporter in the world rice market. Other agricultural commodities produced in significant amounts include fish and fishery products, tapioca, rubber, grain, and sugar. However, Agriculture is just one part of Thailand’s booming economy.
Manufacturing business in Thailand
Thailand’s increasingly diversified manufacturing sector made the largest contribution to growth during the economic boom. Industries registering rapid increases in production included computers and electronics, garments and footwear, furniture, wood products, canned food, toys, plastic products, gems, and jewelry. High-technology products such as integrated circuits and parts, electrical appliances, and vehicles are now leading Thailand’s strong growth in exports. According to the Library of Congress, in 2007 the services sector, which ranges from tourism to banking and finance, contributed 44.7% of gross domestic product and employed 37% of the workforce.
According to the Thailand Tourism Authority, tourism is a major economic factor in the Kingdom of Thailand, contributing an estimated 6.7% to Thailand’s GDP in 2007. According to the Bangkok Post, International tourist arrivals are expected to surpass the previous 16.5 million target. According to research by the Fiscal Policy Office of the Finance Ministry, 19.5 million visitors are expected by the end of this year. The numbers of tourists in 2011 might grow 22% from last year. The ambitious new target may be possible to reach if the political situation in the Kingdom remains stable. Which was called increasingly into question after 2006, when the Thai military engaged in a coup to overthrow the Prime Minister Thaksin Shinawatra. There was a short period of political crises from 2008-2010 as various factions in the government and society sought to return the country back to parliamentary democracy. The crises seems to have been largely resolved when in July 2011, the oppositional Pheu Thai Party led by Yingluck Shinawatra (the youngest sister of Thaksin Shinawatra) won the general election by a landslide.
Overall the economy of Thailand offers a good deal of potential for investment and trade. While the economic cost of the floods has been damaging to Thailand, with some economic estimates saying that it could shave 1.7% off the growth rate; in the long run the Thai economy will likely bounce back. But not without some significant development costs, with the Bangkok posts saying that government is planning to obtain overseas loans of up to 500 billion baht (approximately $16 billion) to finance flood prevention projects. But Thailand’s relatively favorable business climate should make it easy for the Thai economy to attract the needed investment to secure a recovery. With the World Bank ranking Thailand as the 16th easiest place to do business in, as well as raking it as the 13th best country in 2011 that protects investor assets. The Royal Thai Government welcomes foreign investment, and investors who are willing to meet certain requirements can apply for special investment privileges through the Board of Investment. To attract additional foreign investment, the government has modified its investment regulations. You can visit Thailand’s Board of Investment website at this URL (http://www.boi.go.th/index.php?page=index&language=en) to find out more about investing in Thailand.