Transcript Investment – Plusses - British Chamber of Commerce Thailand

“Opportunities and Challenges Facing Businesses
Investing or Trading in Thailand”
Asia House
May 1, 2008
“Opportunities and Challenges Facing Businesses
Investing or Trading in Thailand”
Rodney Bain, Chairman,
British Chamber of Commerce Thailand
Rodney Bain
23 years in Thailand
8 years with Esso, Dunlop, UN/ESCAP
Founded Market-Edge Asia Ltd. 1993
Marketing database company – Automotive,
Insurance, Hospitality, Property, Services
British Chamber of Commerce Thailand
8 years on BCCT Board
2006 Vice Chairman
2007- Chairman
Investment Scorecard
Thailand 2008
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Political Situation
Economy
Investment
Doing Business
Conclusion
Politics
• Return to democratically elected government
• 480 seats - PPP 233; 5 Coalition Partners 83;
• Opposition Democrats 164
• PM Samak Sundaravej – Survivor, loyal to
monarch & military, Bangkok support,
outspoken, extensive experience
• PPP reincarnation of TRT - populist policies;
village investment funds, health care, farm
debt suspension, low cost housing (40 bn
Baht pumped into rural economy)
• Invest In Thailand Year 2008/9
Politics - Plusses
• New pro-business, investor friendly government
• International acceptance
• Willing to listen and consult
• Receptive to recommendations from foreign
business community
• Stated goal to be the most investor friendly
country in the region
Politics – Minuses
• Coalition; return of the old guard and/or their
relatives
• Democrats failure to convert the rural majority
• Upcountry elects governments, and Bangkok
unseats them
• 3 coalition parties facing possible dissolution
• Early election ?
Economy
“The main problem facing the economy
actually is the feeling that politics will remain
an obstacle to growth.”
H.E. Dr. Surapong Suebwonglee, Deputy PM
and Minister of Finance, April 2008
Economy – Plusses
• Projected growth 6% (2008); 4.8% (2007)
• Only country in region with higher growth in 2008
• Key Drivers
• Infrastructure mega projects programme - 770 bn
baht Bangkok Transport
• Fiscal stimulus package to stimulate domestic
consumption
• Increased consumer confidence (index last 5 months)
• Lifting capital controls and talk of easing List 3
• GDP 5.1% (2006); 4.8% (2007); 6-6.5% ? (2008)
• Relatively insulated from direct sub-prime fall-out
• Exports somewhat protected by market diversification
• Vehicle exports grew nearly 35% in Q1 2008 (£2bn)
Economy – Minuses
• Confidence
• Inflation 4.7% (2006); 2.3% (2007); 5% (2008)
• Externals
• High energy prices (Thailand net importer)
• Thai baht appreciation (good & bad) 6.7% in 2007
• US economic recession (Major export market)
• Labour, skilled/unskilled shortages
• Current account surplus to fall 6% (2007); 3% (2008)
Investment
• Target 3 trillion Baht (₤48 bn) 2008 -2011
• Key areas
• Automotive
• Electronics
• Tourism
• Software
• Food
• Health
"We are opening up for more foreign investment,”
PM Samak Sundaravej, April 28, 2008
Investment – Plusses
• Goal - Be the most investor friendly country in the region
• More promising outlook – investment growth:10.6
(2005), 3.8% (2006); 1.4% (2007); 6.7% (2008)
• Private investment growth 0.5% (2007) projected 7%
(2008) – public investment also to recover
• Increased consumer confidence
• Shelving or amending anti-foreign investment legislation
• Eliminate red-tape & streamline licensing procedures
• Open investment environment, e.g. BOI One-Stop-Shop
• Overhaul of tax structure
• Ease regulations to promote Thailand’s competitiveness
as an investment destination.
Investment – Minuses
• Not a level playing field, e.g. FTA’s, Treaty of
Amity, minority ownership
• Archaic restrictive legislation, e.g. FBA
• Bureaucracy - visas AND work permits
• Regional competition
• BOI primarily focussed on manufacturing amd
selected sectors
• Land and property (max 30 year lease) for
non-BOI companies
Doing Business - Plusses
• BOI maintained transparent consistent policies
• Right to own land
• Majority or 100% foreign shareholding
• Duty exemptions and reductions
• Income tax exemptions and reductions
• One Stop Shop
• Well-developed physical infrastructure
• Excellent reliability & distribution of power/water
• Communications availability at reasonable cost
Doing Business - Minuses
• Minor annoyances – bureaucracy and
unnecessary red-tape, visas, workpermits
• Non BOI companies – land and property (max
30 year lease)
• Customs Department – non transparent duty
classification; failure to issue receipts
• VAT refunds
Conclusion
• 2007–The Lost Year – competitive disadvantage
• Regaining the momentum
•Talk is cheap but very encouraging Government
initiatives in first 3 months
• Consultation with foreign business community
• Difference between appointed/elected govts
• Major concern on externals
• Business runs the country not the government
• Thailand has been & remains a very good place
to invest