Economic Data
(1998, in $US)
Total GDP: Purchasing power parity=$369 billion
GDP Growth: -8.5%
Per Capita GDP: $6,100
Inflation Rate: 4.3%
Trade Balance: $12 billion (surplus)
Trade with R.I.: Thailand is Rhode Island’s 25th largest trading partner, with $4.9 million in exports in 1998 ($10.2 million in 1994).
Exports: $53 billion; textiles and footwear, fishery products, computers and parts, jewelry, rice, tapioca, integrated circuits, Export trading partners: U.S., Japan, Singapore, Hong Kong and E.U.
Imports: $41 billion; machinery and parts, petroleum, iron and steel, chemicals, vehicles and parts, jewelry, fish preparations, electrical appliances, fertilizers and pesticides. Import trading partners: Japan, U.S., Singapore, Taiwan, Germany, and South Korea.
Best Prospects for Exports: Computers and peripherals, telecommunications equipment, franchising, pollution control, educational, medical equipment, laboratory scientific instruments, computer software, automotive parts and service equipment, electrical power systems, defense industry equipment, architectural/construction/engineering services, food processing equipment, packaging equipment, electronic industry production/testing equipment, textile mill products.
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Kingdom of Thailand
Location: Southeastern Asia, bordering the Andaman Sea and the Gulf of Thailand. Burma, Cambodia, Laos and Malaysia border Thailand.
Geographic Area: 514,000 square km, slightly more than twice the size of Wyoming.
Climate: Tropical; rainy, warm, cloudy southwest monsoon (mid-May to September), dry, cool northeast monsoon (November to mid-March).
Major Cities: Bangkok (capital, population: 9 million), Nakon Ratchasima, Hat Yai, and Chiang Mai.
Population: 61 million (July 1999).
Ethnic Groups: Thai (75%), Chinese (14%), other (11%).
Languages: Thai is the main language. English is spoken by the elite and by business people.
Workweek: Monday through Friday, 8:00 a.m. to 5:00 p.m. Office hours vary in Bangkok to accommodate flextime travel in the heavily congested city.
Type of Government: Constitutional monarchy. Only members of the bicameral House of Representatives (Senate: Wuthisapha and House: Sapha Phuthaen Ratsadon) are elected. The Prime Minister is designated from House members.
Head of State: King Phumiphon Adunyadet (since June 1946), Prime Minister Chuan Likphai (since November 1997)
Currency: 1 baht (B) = 100 satang
Exchange Rate: U.S.$1 = 36.6 in January 1999, compared to 41.4 in 1998 and 25.3 in 1996.
Current Economic and Political Conditions: Thailand fell into an economic crisis in 1997, with a near disintegration of the financial sector and devaluation of the Thai Baht to less than half its previous value. The Thai economy registered negative growth during the next two years. Prompted by strong government action, adhering to recommended International Monetary Fund policies, the economy began to show signs of recovery in 1999. The Baht has stabilized, imports have recovered, and industrial production has grown steadily. The Thai legislature has approved a series of key economic and business reforms that especially will promote reform of the banking and corporate sectors. Recovery depends partly on the economic health of Thailand’s Asian trading partners, especially Japan, and strong export demand for Thai manufactured exports. Banks have been recapitalized or merged with stronger institutions, but the high percentage (47%) of non-performing loans dampens interest in new commercial lending.
Tarriffs, Trade,Taxes, Trademarks
Trade Regulations and Tariffs: Thailand continued to lower tariffs during the late-1990s, to bring them to a level consonant with their ASEAN Free Trade Area (AFTA) and World Trade Organization (WTO) requirements. In 1999, the effective tariff rate was 3.81%, compared to 3.28% in 1998. The simple average tariff for 5,846 dutiable items reported by the Office of the U.S. Trade Representative (OTR) was 16.97%. The tariff structure has been simplified, reducing the total number of tariff bands from 39 to 6. Zero tariff rates apply to medical equipment and fertilizer; 1% tariffs for raw materials and electronic components; 5% for machinery, tools and computers; 10% for intermediate goods; 20% for instant print film and certain finished products; and 30% for goods that require protection. These include fabrics, clothing, refrigerators and air conditioners. The tariffs on certain luxury items were raised to 30%, for perfume and cosmetics, leather, crystal, jewelry, cameras, watches and clocks, at the height of the financial crisis in 1997. Automobiles were levied an 80% tariff.
Taxation: Other imports considered as luxury items are subject to an excise tax in addition to tariffs, based on the CIF price plus import duty. These items include: petroleum products, soft drinks, fruit juices, lamp shades, perfume, air conditioners, crystal, passenger cars, and yachts.
Non-Tariff Barriers: Businesses operating in Thailand have long been concerned with the sometimes arbitrary customs requirements and procedures. In January 2000, the Thai House of Representatives passed legislation to implement the WTO Customs Valuation Agreement. If fully implemented, the agreement will increase the transparency and consistency.
Foreign Investment: Thailand is open to foreign investment from any country, and tries to avoid dependence on any particular country. Official policy supports an open, market economy that encourages foreign investment as a method of economic development, employment and technology transfer. Working since 1997 with the International Monetary Fund (IMF), the government has implemented an economic reform program that will, among other goals, foster a more competitive environment for investment. The new Foreign Investment Law will open new sectors to foreign investment, as well as increase the maximum foreign ownership above the former 49% limit. The U.S.-Thai Treaty of Amity and Economic Relations of 1996 allows U.S. majority-owned businesses to operate on the same basis as Thai companies. U.S. investments are restricted only in communications, transport, fiduciary functions, banking involving depository activities, exploitation of land or natural resources, and domestic trade in agricultural products.
Free Trade Zones: The Thai government has established a number of Free Trade Zones (FTZs) and export processing zones (EPZs), in which companies may import raw materials and export processed goods duty-free. Within these zones, foreign investors are allowed to own land and employ foreign technicians and experts. Because these zones are commonly located in an industrial estate, companies have access to well-developed infrastructure and transportation. Factories may also apply to establish a bonded warehouse within the factory to import duty-free raw materials to be used for export production.
Trade Finance and Payment Methods: Credit has not been readily available since the start of the financial crisis in 1997. Government economic recovery policies have focused considerable attention on restructuring and refinancing the financial sector. The level of non-performing loans still on the books has made financial institutions hesitant to extend new loans, despite adequate liquidity. The Thai government, the Asian Development Bank and the U.S. Export-Import (Exim) offer trade finance facilities.
Most U.S. companies export on a documentary basis, using letters of credit, bank drafts and wire transfers. The U.S. Foreign and Commercial Service suggests that new-to-market exporters require confirmed, irrevocable letters of credit when establishing a relationship with an importer or distributor. When the relationship and a steady payment record are established, the exporters should extend more lenient terms. Exporters to Thailand frequently offer “draft discounting,” where they reduce the face amount of the transaction by the interest that the importer would pay to their local bank. International factoring has become more common.
Marketing and Selling Factors: U.S. exporters use two channels for distribution. First, exporters work with established trading companies with strong financial resources and significant involvement in many industrial sectors. If the movement of goods is substantial, the trading companies may contract to form marketing or production joint ventures. Specialized smaller importers with networks and market knowledge offer a second channel of import distribution. The U.S. Commercial Service recommends appointing a single representative for the entire market, someone who not only sells the products, but also gives training and aftermarket services which Thai end-users expect. They suggest building a long-term relationship with Thai businesses now, since these contacts will grow into good partnerships as the economy improves.
Advertising and promotional campaigns are key marketing tools. Companies advertise in the two main English-language newspapers, The Bangkok Post and The Nation, as well as Thai-language newspapers. All product literature and technical specifications should be translated into Thai. Direct marketing has become popular, especially with the expanding availability of individual credit cards. Home shopping television was successfully introduced last year. Product price is most important in purchasing decisions, where less than half of the Thai consumers buy based on brand label recognition.
Product Labeling and Marking: Food labels must be approved by the Thai Food and Drug Administration, printed in Thai, and attached to food packaging. ISO 9000 certification has become important to Thai businesses. By June 1999, more than 1,000 companies were ISO 9000 certified, an increase of 74% from the prior year. Almost 130 companies had received ISO 14000 environmental management certification, an increase of 135% from 1998.
Electronic Commerce: E-Commerce is a rapidly growing sector. E-commerce sales were $2.3 million in 1999, forecast to grow to $19 million by 2003.
Patents/Trademarks/Copyrights: Intellectual property rights remain a leading issue in trade relations between the U.S. and Thailand. Thailand has been on the 301 “watch list” since 1994. An Intellectual Property and International Trade Court was established in 1997, and the Thai Department of Intellectual Property maintains good working relationships with foreign companies. Enforcement continues to be a problem: substantial quantities of pirated goods are sold in the retail sector and irregularities in policing enforcements remain. The U.S. Foreign and Commercial Service recommends that companies include intellectual property protection early in their process of market entry and development strategy.
The 1995 copyright law brings Thailand closer to the TRIPS Agreement and the Bern Convention. Thai police have increased their raids on pirates, but the problem is still growing. Software piracy is especially acute.
Key Contacts
John H. Chafee Center for International Business and World Trade Center, Bryant College
Raymond W. Fogarty, Director
Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416 E-Mail: postoffice@itdn.net
Website: http://www.rieac.org
Rhode Island Economic Development Corp. (RIEDC)
Maureen Mezei, International Trade Director
Telephone: 222-2601, ext. 123
E-Mail: mmezei@riedc.com
U.S. Export Assistance Center, Depart. of Commerce
Keith M. Yatsuhashi, International Trade Specialist
Telephone: (401) 528-5104
E-Mail: kyatsuha@mail.doc.gov
U.S. Small Business Administration
Marilyn Bogue, International Trade Officer
Telephone: 528-4585
E-Mail: marilyn.bogue@sba.gov
U.S. Embassy in Thailand
120 Wireless Road
Bangkok, Thailand 10330
Telephone: 662-205-4000
Royal Thai Embassy
1024 Wisconsin Avenue, NW, Suite 401
Washington, DC 20007
Telephone: (202) 944-3600
Fax: (202) 944-3611
U.S. and Foreign Commercial Service
U.S. Embassy, Bangkok
93/1 Wireless Road
Bangkok, Thailand 10330
Telephone: 662-255-4365/7
Fax: 662-255-2915
E-mail: obangkok@doc.gov
American Chamber of Commerce in Thailand
Executive Director, Thomas A. Seale
7th Floor, Kian Gwan Building
140 Wireless Road
Bangkok, Thailand 10330
Telephone: 662-251-9266/7, 651-4473
Fax: 662-651-4472, 651-4474
English Language Publications
Bangkok Post www.bangkokpost.net
The Nation www.nation.nationgroup.com
E-Thailand Express www.ethailand.com/express
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
