Bouncing Back

Although the Asian Financial Crisis brought a long term troublesome economy to the Kingdom of Thailand in the mid 1990s, it was able to reverse the economic downturn with the aid of the International Monetary Fund (IMF). Since then it has achieved a developed infrastructure, minimal government ownership of enterprises, and Thaksinomics or policies that encourage trade. In late December of 2004, parts of Thailand were destructed by a monstrous tsunami as was its economy. Despite this negative occurrence, the country is on its path to restoration due to its endowments. Thailand is considered to be one of the most desirable tourist and business destinations in the world. Tourism contributes heavily to Thailand’s GDP and export demands in particularly agriculture and automobile production have performed exceptionally well prompted by trade agreements with a variety of partners. Its capital city, Bangkok is Thailand’s largest transshipment center surrounded by passable waterways. Such physical accessibility to world markets permits inexpensive transportation costs. It is no wonder export levels increased to nearly 17% in the previous year (CIA). Thailand’s economy will restore in no time as it is driven by ever increasing tourism and export demand.

Written by Trisha Le, Research Intern for GLOBAL ID LLC.

Government Regulations of U.S. Business in Thailand

Before companies decide to do business in any country, especially Thailand, they need to be aware of the government regulations. There are three basic laws in Thailand that restrict foreign business. Together, these laws state that business in Thailand is closed to foreigners except in a few industries and unless promoted by the Board of Investment. If a foreign business is promoted, its performance of certain business functions is still restricted by the Alien Business Act.

All U.S. businesses, however, are exempt from these Thai laws due to the Amity and Economic Relations Treaty signed in 1968. All American companies are allowed to maintain a majority shareholding in their investments in Thailand with few restrictions. There are strict limitations on inland communications and transportation, banking, and land ownership for U.S. companies in Thailand. The Amity Treaty provides international law protection for U.S. firms, not allowing Thai government to discriminate against them. U.S. firms in Thailand are protected against Thai expropriation and are allowed to return all profits to the U.S. without delay. These laws are reciprocated for Thai firms in the U.S. The Treaty of Amity has been successful in promoting investment between Thailand and the U.S. by creating a hospitable environment for foreign business.

Written by Carl Phelps, Research Associate for GLOBAL ID, LLC

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The Department of Export Promotion (DEP)

As a creation of the (Thai) Ministry of Commerce, the DEP plays an essential role in the promotion of international trade with Thailand. The DEP seeks to boost exports in an effort to grow the national economy and eventually overcome Thailand's trade deficit. To achieve its goals, the DEP is focused on developing the country's core competencies to add value to locally produced goods and services. Additionally, the application of new approaches to international trade including the DEP's 53 Overseas Trade Promotion Offices, have facilitated the growth of Thailand's international trading network.

What could the DEP's strategy mean for your company?
· Employing superior technology in manufacturing will increase product quality.
· Global sourcing for raw materials, machinery, and other inputs will allow the maintenance of competitive production costs.
· Thai manufacturers will receive assistance from the DEP to raise product quality to international standards.
· The elimination of trade barriers through numerous free trade agreements, streamlining business activities.

These are just few of the benefits arising from trade in Thailand.

Written by Yeukayi Nenjerama - Facilitator of Sales and Marketing in Asian Cultures for Study Aboard Cruises

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