Economic Overview
Thailand's economy has transformed from being primarily agri-based to one of the more diverse in the region. More recently, Thailand has done little more than tread water economically. Good regional and global growth, prior to October 2008, saw the export sector single-handedly drive economic growth for two straight years during which period Thailand faced political instability - four governments in total (Sorayud, Samak, Somchai, and current Abhisit Government).
Despite a downward spiralling global crisis since October 2008, Thailand’s banking and corporate sectors escaped financially unscathed, being run conservatively after their own 1997 Asian Financial Crisis. The brunt of impact now takes the form of a cyclical economic downturn as orders, demand, tourists and commodity prices fall off sharply.
To date, the economic downturn has resulted in a number of layoffs in the manufacturing sectors (vehicle and electronics), big cuts to factory production schedules/shifts, financial distress in the national flag carrier Thai Airways, postponement of planned investments, poor hotel occupancy levels, and a stalled hi-end property market. The growth engine is also facing problems; December exports were down 15% over the same month in 2007.
Staring at prospects of 0-2% economic growth in 2009, the Abhisit Vejjajiva Government’s first month in office was spent on finalising a Bt116 bn (£ 2.3 bn) economic stimulus package. The strategy raises the budget to 3.5% of GDP, an aggressive move for a country where budget deficits rarely stray much beyond 1.5%. The package assists low-wage earners, farmers, and small companies with effort mostly on boosting the economy through consumer spending. The rollout will take place quickly in 2Q and if all goes well, might achieve 2% growth in 2009.
Opportunities
Thailand takes a welcoming approach to UK companies. British goods enjoy an excellent reputation in Thailand, though they must generally be cost-competitive and have good after-sales support.
There are generally opportunities across the board for UK companies but it is felt that the government’s recent stimulus package aimed mostly at consumers offers potential opportunities to UK companies along the following lines:
- Better prospects for sale of consumer goods
- Some prospects for sale of medical/health products for the old
- Prospects for opportunities in the field of education (as a greater number of the population will get schooling)
- Prospects for conducting skills training classes/courses
- Some scope for sale of light-infrastructure goods/services:
Thailand is well placed as a gateway to both the ASEAN and Asia Pacific markets particularly the Indo China region.
In 2008 bilateral trade in goods exceeded £3billion. In 2008 Thailand was the UK's 41st largest market in terms of goods exports (£713million) and the 29th largest source of imports (£2.3billion) - a 19% and 14% increase respectively over the previous year. Two-way trade in services in 2007 amounted to £304million (UK exports) and £691million (UK imports).
Top ten UK exports to Thailand
1. Electrical machinery £42,531
2. Power generating machinery and equipment £33,753
3. Beverages £26,512
4. Specialised industrial machinery £23,848
5. Medicinal and pharmaceutical products £20,025
6. General industrial machinery £17,551
7. Miscellaneous manufactured articles £16,935
8. Office machines and ADP equipment £14,977
9. Road vehicles £13,934
10. Iron and steel £10,626
Top ten UK imports from Thailand
1. Road vehicles £159,513
2. Miscellaneous manufactured articles £98,442
3. Office machines and ADP equipment £95,425
4. Electrical machinery £94,349
5. Clothing £84,414
6. Meat and meat preparations £60,268
7. Telecommunications and sound recording equipment £54,944
8. Furniture and parts thereof £44,736
9. Vegetables and fruit £26,234
10. Fish, crustaceans, molluscs £23,814
Export partner: US 16.1%, Japan 14%, China 7.4%, Singapore 7.3%, Malaysia 5.5%, Hong Kong 5.1%
Import partner: Japan 23.7%, China 8.7%, US 7.7%, Malaysia 5.9%, Singapore 4.4%, Taiwan 4.1%
UK relations and investment
The UK has maintained good diplomatic relations with Thailand since 1875, when Thailand was then known as Siam. The UK is a well known and respected country amongst the Thailand population and the two share countries share common interests and have close educational ties. The UK is seen by Thailand as a European figure head as it is Thailand’s largest export market. The two countries are also partners in establishing the Asia-Europe Meeting. The two countries and the European Commission are co-partnering an ASEM project to combat money laundering in Asia. These joint challenges help to strengthen the bilateral relations between the two countries. The British Embassy in Bangkok has a large staff including 35 UK-based diplomats; they’re engaged in political, economic, commercial and visa issues. The current British Ambassador to the Kingdom of Thailand is His Excellency Mr David Fall, and the current Thai Ambassador to the UK is His Excellency Mr Vikrom Koompirochana.
The UK has long established companies doing business in Thailand, Shell, BP, Standard Charter, HSBC, who have been joined by Tesco, Boots, and Grampian Foods. These companies’ investments have amounted to £2 billion in recent years. UK Trade & Investments work with the Embassy to help to enhance the experience of trade between the UK and Thailand, and the competitiveness of UK companies overseas.
International relations
The ASEAN works to unite the countries of Southeast Asia and helps to strengthen and develop ties between the members of the association. As Thailand is one of the founding members it plays and an integral role in the association’s success and has made increased efforts to construct strong ties with its neighbours India and China. Thailand has experienced difficulties establishing a good relationship with, its neighbouring and bordering country, Burma. The border that stretches between the two countries has been the main cause of tension as drugs, illegal immigrants and refugees pass over from Burma to Thailand. Thailand has made further efforts to attempt to reconcile the disruption between the two countries. Thailand plays an active and key role in maintaining international relations, making great efforts to establish a united international community. Thai armed forces have been sent to various countries, which are disruption by war and civil unrest, to aid with peacekeeping duties. Thailand has also maintained good relations with the US and was granted by them the status of Major Non-NATO Ally in 2004.
Human Rights
Thailand is a country striving for improvement, in not just international trade relations and economy but for civilian society also. These efforts are shown through Thailand’s generally successful human rights record. Thailand’s 1997 Constitution has made a considerable contribution to the protection of human rights. It has made it possible for independent agencies designed to prevent corruption and the abuse of government power to act and be successful. Although widely successful the Constitution is weak in some areas and some incidents do occur throughout the country. The media is a relatively free device in comparison to other countries in the region and street protests have also been allowed to take place in peace. But some campaigns cause concern that human rights have been breached. For example, the governments ‘Campaign against Drugs’ recorded 2,600 deaths that have been rarely and inadequately investigated.
Assistance
The UK does offer Thailand a small amount of aid to fund a variety of programmes. Larger assistance is not as readily available as there is no official aid programme set up by the Department for International Development (DFID). The smaller scale aid comes from the Foreign and Commonwealth Office programme via the British Embassy in Bangkok. The programmes help to combat child exploitation, promote Thailand’s unique biodiversity and HIV/AIDS awareness.
Political History
The only South East Asian Country never to have been colonised or occupied by a Western power, Thailand has a varied and colourful history. Officially known as Siam until 1939, the word 'Thailand' literally translates as 'Free Land.' Since Thailand switched from absolute to constitutional monarchy in 1932, a Prime Minister, Cabinet and Legislature have conducted government.
Unfortunately Thailand has still not escaped the vicious circle of weak and unstable democratic government, followed by more authoritarian military- backed regimes. The September 2006 coup was a shock to many people after 15 years without a coup. Since the elections of December 2007 there have been three coalition governments with the latest headed by the Democrat Party and Abhisit Vejjajiva as Prime Minister coming to power in December 2008.
The King of Thailand, King Bhumibol Adulyadej (Rama IX), is the world's longest serving monarch. He celebrated his 60th Anniversary of accession to the Throne in 2006 and remains a well loved and influential Head of State, providing stability and continuity.
Timeline
1782 The country is known as Siam and a new capital of Bangkok is founded. The Chakri dynasty begins their rule under King Rama I, the dynasty rules to this present day.
1868-1910 Reign of King Chulalongkorn. The Railway network is established and western advisers are employed to help modernise Siam’s administration.
1917 Siam and Great Britain become allies during World War I
1932 A bloodless coup against absolute monarch King Prajadhipok sees the establishment of a constitutional monarchy with a parliamentary government.
1939 Siam changes its name to Thailand
1941 After Japanese forces land, Thailand, allows them to advance towards British controlled Malay Penisula, Singapore and Burma.
1942 Thailand declares war on Britain and US
1945 End of World War II. Thailand is compelled to return territory it had invaded from Laos, Cambodia and Malaya. King Ananda returns from exile.
1946 King Ananda assassinated
1947 There is a military coup lead by Phibun Songkhram and the military retain power until 1973.
1973 Riots in Bangkok bring about a short civilian rule as the military government is overturned, but the resulting government produced from the free elections is unstable.
1976 Military takes over again
1980 General Prem Tinsulanonda assumes power
1983 Prem gives up his military leadership role and becomes the head of a new civilian government, he is re-elected in 1986
1988 General Chatichai Choonhaven replaces Prem
1991 Another military coup sees a civilian, Anand Panyarachun, is chosen as prime minister
1992 Anand is replaced with General Suchinda Krapayoon, but demonstrations force him to resign. Elections in September result in Chuan Leekpai, leader of the Democratic Party, being chosen as prime minister
1995 In the wake of the government collapsing, Banharn Silpa-archa leader of the Thai Nation party is elected as prime minister.
1996 Banharn’s government is forced to resign over allegations of corruption. Chavalit Yongchaiyudh of the New Aspiration party wins elections.
1997 Asian financial crisis causes the baht to fall dramatically against the dollar and this leads to bankruptcies and numbers of unemployment rise. Chuan Leekpai becomes prime minister
1998 migrant workers are sent back are sent back to countries of origin due to economic problems caused by the financial crisis. Chuan involves the opposition in order to introduce economic reforms quickly.
1999 Thai economy begins to improve and the media highlights the high costs for AIDS and HIV’s drug treatments; this causes pressure on companies who make the drugs to make them cheaper
2001 Thaksin Shinawatra leader of the new Thai Love Thai Party wins elections; there is however allegations of vote-buying that forces a partial re-run of poll.
2004 Thousands of people are killed as the Tsunami disaster hits the western coast of southern Thailand.
2005 Thaksin Shinawatra begins his second term as his party wins a landslide victory in February elections
2005 The government doubles efforts to fight bird flu after fresh outbreaks
2006 A sudden election ordered by the PM after protests against him is boycotted by the opposition and is annulled, so there is a political vacuum as PM takes a 7 week break from politics.
