Economy of Thailand

Thailand enjoys a strategic location right at the heart of Asia, home to what is regarded today as the largest growing economic market. It serves as a gateway to Southeast Asia and the Greater Mekong sub-region, where newly emerging markets offer great business potential.

Economically, the country of 65 million people is characterized by steady growth, reaching an impressive GDP of 6.7% in 2003, second only to China. Abundant natural resources and the availability of skillful workers help sustain economic confidence, resulting in the rapid growth of the country’s industrial production.

With strong economic development and strong support industries, the country’s industrial production has grown and diversified rapidly both in the long established and newly emerging industries. The government has emphasized 5 sectors: automotive, electronics and ICT, fashion, food and value-added services including entertainment, healthcare and tourism.

The current period of development in the Thai economy and politics began in the 1960s. During the time of Field Marshal Sarit Thanarat, Thailand drafted the first National Economic and Social Development Plan, covering a period of six years from 1961 to 1966, promoting the private sector, with particular reference to industry and commerce. The Government would operate only in those areas where the private sector was not equipped, such as the development of infrastructure necessary for the support and facilitation of trade and industries in the private sector.

Thailand has good infrastructure ready for foreign investors. Improved and modernized transportation facilities, as well as upgraded communications and IT networks, ensure optimum business and living conditions. State-of-the-art industrial estates boast sophisticated facilities and superior services.

The country’s well-defined investment policies focus on liberalization and encourage free trade. Foreign investments, especially those that aim to promote skills enhancement, technology and innovation are highly encouraged by the government. A 2004 survey of the UN commission for Trade and Development named Thailand the world’s fourth most attractive nation for foreign direct investment.

Trade
Export growth has traditionally been the major driver of the Thai economy and has contributed to the diversification of the country’s industrial structure. Manufactured exports, in particular, have gained importance – accounting for 80 percent of total exports in the past few years. Thailand is now a major exporter of computers and parts, textiles, gems and jewelry, electronic and automotive products, in addition to agricultural products. Thailand imports used industrial machinery, electric circuit boards, airplanes, passenger cars and trucks, medical science apparatus, crop seeds, chemicals, and crude oil.

Agriculture
Thailand is an agricultural country and the most important crop is rice. Thailand has been the world leader in rice exports. Besides rice, other economic crops are sugar cane, corn, tapioca, and Para rubber, and together with livestock and fishery products, they bring in an annual income of a hundred million baht to the country. From the 1960s onward, many factors have made rice farmers turn to growing other crops. This trend began with sugar cane because the price of sugar in the world market rose sharply. The growing of tapioca as an economic crop for export increased in the 1960s because of its great demand in Europe for animal feed production. Corn production increased as well because of the rising price of corn in the world market.
Apart from these, the area planted in other crops such as soybean, cotton, oil-producing crops, and mung bean increased to 10 million rai. The surge in pineapple growing in the 1970s has made Thailand the second largest canned pineapple exporter in the world. During this time, many areas in the Central region were developed for breeding cattle for meat and milk. The growing of tobacco expanded to the North, and the cultivation of rubber trees on plantations spread throughout the South. In addition, forests of eucalyptus and other fast-growing trees were grown to produce raw materials for paper pulp and fiber factories.

Industry
The Thai industrial sector, often joint-ventures which foreign companies, produces a wide range of goods for the local market as well as for export. Some are high-tech products such as computer parts and electric appliances, while others are products of light industry like the textile business, shoe production, toys, watches, etc. Initially, Thailand started to produce manufactured goods locally to replace imports which resulted in the emergence of various industries such as automobile tire production, the textile industry, petroleum, chemicals, canned food, soap, medicine, steel wire, paper, sheet glass, and car assembly.

Automobile companies first imported parts for assembly in the country, and used only a small proportion of parts produced in Thailand. Later they used parts produced domestically, and then expanded to produce parts for export, until finally an entire car was produced for export. Since 1990, Mitsubishi (Thailand) Company has assembled small trucks for export to North America. Following that, Hino, Ford, Isuzu, and Honda also started producing automobiles in Thailand for export. From 1987 to 1991, the automobile industry grew at the rate of 23 percent per year.

In the 1980s, natural gas was discovered in the Gulf of Thailand, which resulted in the development of the petrochemical industry, which contributed to the development of other realted industries. The Government established the Maptaphut Industrial Estate in Rayong to harvest the natural gas from the Thai Gulf for processing by a petrochemical complex.

Overall, the Thai industrial sector has grown continuously and plays a critical role in increasing the total production of the country.

Tourism
The tourism industry of Thailand has steadily expanded during the past 40 years. In 2000, the number of tourists to Thailand increased to 9.5 million. The tourism sector has continuously brought the highest amount of foreign currency into the country since 1982. Thailand, as a tourism destination, has much to offer; from a fascinating culture and ways of life to the diversity of the natural environment. Ancient cities, now World Heritage sites, world-renowned Thai food, and interesting variations of the culture can be found in different parts of the country.

Thailand is centrally situated and has easy connections to other countries in the region. These factors enabled the tourism industry to grow very quickly. The Government, through the Tourism Authority of Thailand (TAT), has facilitated tourist visits through the revision of immigration rules for greater convenience; the lengthening of tourist visas from 15 days to 30 days, and visa exemptions for 56 countries. These rules have been in place since 1993 to support the tourism promotion policy. Furthermore, there has been an attempt to develop Thailand into the tourism center of the ASEAN region and among the Greater Mekong Subregion countries. In 1995, Thailand became a member of the ASEAN Tourism Association (ASEANTA), which organization promotes tourism co-operation among the ASEAN countries. In 1997 the TAT cooperated in establishing the Agency for Coordinating Mekong Tourism Activities at its office in Bangkok to coordinate tourism in the Greater Mekong Subregion, namely Cambodia, Laos, Myanmar, Vietnam, and southern China, under the authority of the Economic Cooperation in the Greater Mekong Subregion agreement. As a result, tourists visiting Thailand can easily travel to neighboring countries.

TAT has encouraged various local communities to organize events and activities in order to maintain and restore traditions from the past; Elephant Show in Surin and the Loy Krathong and Candle Festival in Sukhothai. New events such as the light and sound show at the River Kwae Bridge in Kanchanaburi, the Road Show in Pattaya, and the Food Fair in Bangkok have also been introduced. These activities have greatly contributed to the promotion of tourism as well as enabling tourists to experience and understand Thai culture better. In the year 2000, the “Amazing Thailand” campaign brought 9.5 million foreign tourists to Thailand, proving, once more that the tourism industry is a powerful tool to assist the economy