Embassy of IndiaBangkok

BAN/COM/201/2 /2013 18thSeptember,2013

ECONOMIC & COMMERCIAL REPORT FOR THE MONTH OF JULY, 2013

EXECUTIVE SUMMARY

In July 2013, Thai economy continued to moderate following a decline in private consumption from car and other durable purchases and subdued exports as global demand remained fragile and domestic supply constraints persisted.

Thailand’s total trade during the period January - July, 2013 was US Dollars 282.79 billion. Exports worth USD 132.37 billion and Imports worth USD 150.42 billion.

Thailand’s total trade with India during the period January - July, 2013 was US Dollars 5.28 billion [Import from India USD 2.19 billion, Export to India USD 3.09 billion].

During the month of July 2013, Headline inflation moderated to 2 percent (yoy) as contribution from fresh food prices and core inflation eased. Unemployment remained low.

During the period January-July, 2013, thirteen (13) applications for investments, worth 840 million baht, were received from India, while ten (10) applications worth 1344 million baht were approved.

Thai GDP in the second quarter of 2013 increased by 2.8%, compared to a 5.4% rise in the previous quarter.

27th Meeting of the India-Thailand trade negotiating committee (ITTNC) was held during 10-12 th July, 2013 at Bangkok.

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Embassy of India

Bangkok

BAN/COM/201/2 /2013 18thSeptember,2013

Economic & Commercial Report for the month of July, 2013

1. Business Sentiment

In July 2013, the Thai economy continued to moderate following a decline in private consumption from car and other durable purchases and subdued exports as global demand remained fragile and domestic supply constraints persisted. Flagging demand weighed down manufacturing production and private investment, but the tourism sector continued to expand robustly.Inflation eased and the unemployment rate stayed low. The current account recorded a deficit due mainly to gold imports and the repatriation of profits and dividends. At the same time, the capital account posted a deficit from short-term loan repayment by financial institutions, and the overall balance of payments was in deficit.Merchandise exports declined with softened global demand and on-going supply constraints, especially from shrimp disease. The merchandise export value stood at 18,804 million US dollars. Merchandise imports totalled 18,546 million US dollars, declining by 0.2 percent (yoy). Excluding gold, the import value stood at 17,137 million US dollars, down by 4.1 percent (yoy). The tourism sector expanded robustly, with 2.2 million foreign tourist arrivals or a growth of 22.5 percent (yoy), thanks to more tourists from China, Malaysia and Russia.

2. GDP

GDP in the second quarter of 2013 increased by 2.8%, compared to a 5.4% rise in the previous quarter. This was a result of slowdowns in both agricultural and non-agricultural sectors. On domestic expenditure, household consumption and investment grew slower by 2.4% and 4.5%, respectively. Similarly, inventories had built up but by smaller amount than the previous quarter. Meanwhile, government consumption went up by 5.8%. External demand contracted by 3.9%. After seasonal adjustment, GDP on the quarter-by-quarter basis declined by 0.3%. GDP in the first half of 2013 grew by 4.1%. Agricultural sector expanded by 0.1%, as the unresolved EMS disease in shrimp led to a 7.9% decline in fishery. Agriculture, hunting and forestry grew by 1.5% as rubber, oil palm, cassava, and fruits increased. However, production of paddy and maize fell. Livestock production remained stable from the previous quarter. Non-agricultural sector grew by 3.0%, decelerating from the previous quarter. Manufacturing sector decreased by 1.0% as external demand has not recovered while domestic demand slowed down. Other sectors e.g. electricity, gas and water supply, construction, transport and communication and wholesale and retail trade grew at slower rates. On the other hand, services sectors such as hotels and restaurants, financial intermediation and other services continued to show a favorable growth.

3. INFLATION

During the month of July, 2013, Headline inflation moderated to 2 percent (yoy) as contribution from fresh food prices and core inflation eased. Unemployment remained low.

4. TOTAL THAILAND TRADE DURING JANUARY TO JUNE 2013 COMPARED WITH SAME PERIOD IN THE PREVIOUS YEAR AND BALANCE OF TRADE DURING THE PREVIOUS YEAR:

Trade during JAN.-JULY 2013

Trade during JAN.- JULY2013

Rate of growth compared to

same period in 2012

Total imports during 2012

Total exports during 2012

Balance of trade during

2012

(Amount in billion US$)

282.79

Total Tr. 282.79

Export: 132.37

Import: 150.42

2.30% 247.59 229.52 (-)18.07

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Tr. Bal: (-)18.05

Source: Ministry of Commerce, Govt. of Thailand

5. TOTAL TRADE IN US$ AND ITS GROWTH TO 20 COUNTRIES DURING THE PERIOD JAN. – JULY2013 (Amount in billion US$):

Sl. No. Country Thai imports Thai exports Total trade

1. Japan 25.24 13.15 38.39

2. China 21.92 15.03 36.95

3. USA 9.10 13.19 22.29

4. Malaysia 7.76 7.47 15.23

5. United Arab Emirates 9.87 1.78 11.65

6. Indonesia 5.07 7.00 12.07

7. Singapore 4.94 6.62 11.56

8. Australia 3.36 6.25 9.61

9. South Korea 5.66 2.86 8.52

10. Hong Kong 0.48 7.42 7.90

11. Taiwan 4.61 1.92 6.53

12. Switzerland 6.35 -- 6.35

13. Germany 3.68 2.25 5.93

14. Vietnam 1.93 3.90 5.83

15. India 2.19 3.09 5.28

16. Saudi Arabia 4.38 -- 4.38

17. Myanmar 2.25 2.19 4.08

18. United Kingdom 1.98 2.10 4.08

19. Philippines -- 2.76 2.76

20. The Netherlands -- 2.61 2.61

Source: Ministry of Commerce, Govt. of Thailand

6. TOTAL TRADE WITH INDIA(Amount in billion US$)

Description 2008 2009 2010 2011 2012 JAN. – JULY2013

Total Trade 5.97 4.95 6.64 8.19 8.68 5.28

Export 3.34 3.22 4.39 5.18 5.48 3.09

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Import 2.63 1.73 2.25 3.01 3.20 2.19

Trade Balance 0.71 1.49 2.14 2.17 2.28 0.90

Growth Rate % 26.34 -17.13 34.23 23.29 5.77 6.22

Source: Ministry of Commerce, Govt. of Thailand

7. TRADE FIGURES OF TOP 10 COMMODITIES WITH INDIA:

7 (a) Imports from India during JAN. – JULY2013

Sl No Commodity Import value(Value: billion US$)

1 Jewellery including silver bars and gold 0.390

2 Iron Steel and products 0.300

3 Vegetables & vegetable products 0.285

4 Machinery & parts 0.202

5 Chemicals 0.172

6 Parts & accessories of vehicles 0.138

7 Medicinal and pharmaceutical products 0.081

8 Yarn & fibers 0.064

9 Other metal ores, metal waste scrap and products 0.063

10 Finished Oil 0.046

Source: Ministry of Commerce, Govt. of Thailand

7 (b) Exports to India during JAN. – JULY2013

Sl No Commodity Export value(Value: billion US$)

1 Polymers of ethylene, propylene, etc. in primary forms 0.292

2 Chemical Products 0.273

3 Iron & steel and their products 0.252

4 Precious Stones and jewellery 0.238

5 Spark ignition reciprocating internal combustion piston engines & parts thereof

0.201

6 Motor cars, parts & accessories 0.163

7 Machinery and parts thereof 0.157

8 Air-conditioning machines and parts thereof 0.148

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9 Rubber 0.110

10 Automatic data processing machines and parts thereof 0.097

Source: Ministry of Commerce, Govt. of Thailand

8. MAJOR INVESTMENTS IN THAILAND

8 (a) According to latest data available, the Board of Investment, Thailand approved 1271 projects during the period Jan.-July, 2013 with a total investment of 490.2 billion baht. Out of 1271 projects, 512 were 100% foreign investment, 333 JVs and 426 were 100% Thai investment.

INVESTMENT STRUCTURE

Year No. of Projects Investment (billion US$)

100% Thai

100% Foreign

JVs Total 100% Thai

100% Foreign

JVs Total

2010 629 558 379 1566 4.90 5.74 4.72 15.36*

2011 672 608 372 1652 4.90 5.66 4.41 14.97**

2012 813 886 563 2262 7.96 9.41 14.31 31.88***

Jan- July, 2013

426 512 333 1271 5.23 4.66 6.43 16.32^^

*US$ 1 = Baht 32 (Average for 2010)

**US$ 1 = Baht 30 (Average: 2011)

***US$ 1 = Baht 31.06 (Average: 2012)

^^ US $1= Baht 30.03 (Average rate for Jan. – July, 2013)

8 (b) INVESTMENT FROM INDIA TO THAILAND

Several Indian companies are operating in Thailand. Indian FDI into Thailand is around US$2 billion since 1970s. 13 new investment proposals/projects from India were approved with a total investment of 1740 million baht (US$ 56 million) in 2010. In 2011, 15 projects with a total value of 1693 million baht (US$ 56 million) were approved. In 2012, twenty seven (27) applications worth 18415 million baht were received, while twenty five (25) applications worth 6100 million baht were approved.

During the period January-July, 2013, thirteen (13) applications worth 840 million baht were received, while ten (10) applications worth 1344 million baht were approved.

Major investments were seen in the following sectors: (1) Agricultural products (2) Minerals & Ceramics (3) Light Industry (4) Metal Processing (5) Electronics & Electrical (6) Chemical, Plastic & Paper (7) Service & Infrastructure.

8 (c)INVESTMENTS FROM THAILAND TO INDIA

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Actual inflow of FDI from Thailand into India from April, 2000 to June, 2013 (for the period data are available) is registered as US $114.06 million. Thai investments are mainly in infrastructure, real estate, food processing sectors and recently in hotel and hospitality sector. [Source : DIPP, MOC, GOI]

8(d) INVESTMENT NEWS

According to Thai Board of Investment, during the period Jan-July, 2013, Foreign Direct Investment also showed a similar positive trend with 783 applications with investment value of 275.991 billion Baht were approved which showed increase in applications by 10.44 percent ( from 709 applications during Jan –July, 2012) and in value by 24.60 percent ( from 221.514 billion Baht during Jan- July, 2012). Out of total 783 approved applications, 512 are 100% foreign investment.

Japan remained largest foreign investor in Thailand with investment of 134.371 billion Baht and the second was Hong Kong with 33.995 billion baht. The Netherlands was third with 26.368 billion Baht.

9. INDIA’S INVESTMENT INTERESTS

With the signing of the India-ASEAN free trade agreement and the ASEAN free trade agreement (AFTA), Thailand is expected to become an attractive destination for Indian investment, particularly in software development, textile & garment, automobile, infrastructure development, railway construction etc. Since 2005, Indian investments were seen primarily in Agricultural Products, Minerals and Ceramics, Light Industries/Textiles, Metal Products and Machinery, Electric and Electrical Products, Chemicals and Paper and Services.

10. THE TOP FIVE PRINCIPAL IMPORT SOURCES & INDIA DURING THE PERIOD JANUARY - JULY, 2013:

Sl. No. Country Import value (Billion US$)

1 Japan 25.24

2 China 21.92

3 United Arab Emirates 9.87

4 USA 9.10

5 Malaysia 7.76

14. India 2.19

Source: Ministry of Commerce, Govt. of Thailand

11. THE TOP FIVE PRINCIPAL EXPORT DESTINATIONS & INDIA DURING THE PERIOD JANUARY - JULY, 2013:

Sl No Country Export value (billion US$)

1 China 15.03

2 Japan 13.15

3 USA 13.19

4 Malaysia 7.47

5 Hong Kong 7.42

10. India 3.09

Source: Ministry of Commerce, Govt. of Thailand

12. THE TOP FIVE PRINCIPAL IMPORT ITEMS OF THAILAND DURING THE PERIOD JANUARY - JULY, 2013:

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Sl No Commodity Import Value (billion US$)

India’s share (billion US$)

02 Machinery & Parts 13.91 0.20203 Jewelry including Silver bars & gold 12.69 0.390

04 Iron, Steel & products 9.57 0.300

05 Electrical machinery and parts 9.03 0.046

Source: Ministry of Commerce, Govt. of Thailand

13. THE TOP FIVE PRINCIPAL EXPORT ITEMS OF THAILAND DURING THE PERIOD JAN.- JULY2013:

Sl. No. Commodity Export Value (billion US$) India’s share (billion US$)

01 Motor cars, parts & accessories 13.95 0.163

02 Automatic data processing machines and parts thereof

10.17 0.097

03 Refine fuels 6.67 0.008

04 Chemical products 5.47 0.273

05 Polymers of ethylene, propylene etc. in primary forms

5.29 0.292

Source: Ministry of Commerce, Govt. of Thailand

14. BILATERAL NEWS/NEWS ON INDIA

Private forum for Thai-Indian trade urged

The Board of Investment of Thailand is encouraging six Thai businesses to pave the way for more trade and investment with India via the establishment of the Thai-Indian business forum. The forum would serve as an intermediary with the state to turn obstacles into opportunities. Delta Electronics plans to invite local suppliers to invest in making car parts for the growing auto industry in India. Some major Thai corporations already active in India are Chareon Pokphand Plc in agriculture and food, Srithai Superware Plc in kitchen ware and Dusit Thani Plc in hotels. Mr. Udom Wongviwatchai, secretary-general of the BoI, said that there were six sectors of interest for Thai investors - agriculture goods, automobile parts, electric appliances and parts, construction, real estate and hotels, and power generation, especially in northeastern India, such as Assam, which is an abundant source of oil and natural gas. The BOI is ready to assist Thai investors with trade and investment information, sourcing potential Indian business partners or negotiating with the Indian government on reducing trade and investment obstacles. Some hurdles are tax duplication, a tax system that varies from one state to another, frequent tax structure changes, shortage of skilled workers and obtaining work permits. India, with the world's second largest population, offers a huge market with growth potential for various industries, especially in the northeast.

Mr. Udom Wongviwatchai, Secretary-General of the Board of Investment (BoI), said India’s No. 1 big bike manufacturer is looking to set up a factory in Thailand, which will result in the BoI receiving requests for investment promotions worth one trillion Baht. He said Indian businesses have increased their investments in Thailand continuously. In 2013, the total Indian investment is 600 million US dollar, which is due to their confidence that Thailand will become an investment hub once ASEAN Economic Community (AEC) starts in 2015.The BoI has opened an investment economic office in Mumbai to provide services to Thai and Indian businessmen. The board is trying to reach a conclusion for the Thailand Business Forum for Thai and Indian businessmen within this year in order to expand channels among investors and stimulate investments between Thailand and India.

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27th Meeting of the India-Thailand trade negotiating committee (ITTNC) was held during 10-12 th July, 2013 at Bangkok. Mr. Siddharth, Joint Secretary, Ministry of Commerce, Government of India was the leader from Indian side and Mrs. Piramol Charoenpao, Director General, Department of Trade Negotiations, Ministry of Commerce, Kingdom of Thailand was the leader

from Thai side. The discussions of working groups on Goods, Services, Investment, Sanitary and Phyto-Sanitary (SPS) measures and Technical Barriers to Trade (TBT) were held to explore the possibilities to conclude the bilateral agreement on these sectors.

Porn Prom Metal Plc (PPM), a leading metal manufacturer and distributor of Thailand, announced that it has joined hands with an Indian company Ashok Leyland, a major truck and bus assembling company of India. Chamnarm Pornpilailuck, the managing director of PPM, said that his firm has signed a contract to market the trucks, weighting around 12 – 15 tons, in Thailand. It expects that this partnership will touch two billion Baht, as it targeted.

15. ECONOMIC/INDUSTRY NEWS FROM THAILAND

As per media reports, Thai government has given in to pressure from farmers by maintaining the Bt15,000 per tonne pledging price for the second rice crop in the 2012/13 harvest year. But it has left the price for the next harvest year open for a cut. Deputy Premier and Finance Minister Kittiratt Na-Ranong said that the decision was based on the finance available, as well as the well-supported stockpile release plan by new Commerce Minister Niwatthamrong oonsongpaisal. The price for next year would be reset, taking the global market and forex rate moves into consideration. The price would be announced some time ahead of the next harvest year, so farmers can make a decision if they want to grow more rice or switch to other crops that could generate more cash.

Capsule manufacturer ACG Worldwide is investing 1.5 billion Baht in Thailand. Mr. Nitin Desai, senior vice president for trade at ACG Worldwide, the world’s second largest pharmaceutical manufacturer, said the company is preparing to set up a drug capsule factory in Thailand in October with an investment budget of 50 million US dollars, or 1.5 billion Baht. This will be its first factory in ASEAN, following its factories in India, Croatia and Brazil. The factory in Thailand will be base to produce exports to other ASEAN countries, the US and Europe. The production will begin in May 2014 and the target is to increase worldwide production from 65 billion to 75 billion capsules.

The Industry Ministry approved nine licenses for industrial plants with a total value of more than Bt4.525 billion, including six power plants. The approvals are in line with the country’s economic development, which has led to rising electricity demand every year. Of the six power plants, five are solar power plants and one is a biomass plant. The five solar plants are Solar Power (Sakon Nakorn 2), with a capacity of 7.5 megawatts and investment of Bt560 million; Siam Solar Generation, with 6 megawatts and an investment of Bt735 million; ESPP (Project 1), with 6 megawatts and an investment of Bt590 million; ESPP (Project 2), with 6 megawatts and an investment of Bt588 million; and ESPP (Project 3), with a 4-megawatt capacity and investment of Bt590 million.

Thaioil Plc (TOP), Thailand's largest refinery, will co-invest with one of the world's leading trade and investment groups ,Japan's Mitsui & Co., to build a US$300-million midstream petrochemical factory.As per media reports, the government decided to go ahead with the enactment of the Bt2-trillion loan bill, rejecting a legal-reform panel's claim that the bill is unconstitutional. Deputy Prime Minister Phongthep Thepkanjana said the bill does not violate Article 169 of the Constitution as claimed by the Law Reform Commission of Thailand (LRCT) headed by former attorney-general Kanit na Nakorn. The bill would empower the Finance Ministry to borrow Bt2 trillion, which would be off the budget, to implement transport infrastructure projects.

Mr. Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development (UNCTAD) has recommended that Thailand develop 10 areas to become a real hub of Asean and bring more trade and investment into the region. He also said that Thailand should promote more value-addition in various industries such as automobile, medical and retail sectors, which can add value to all ASEAN countries. He added that economic corridors of the Greater mekong Subregion will significantly contribute to making Thailand a hub of Asean. The only obstacle now is the software side, such as regulations, which require every country in the sub-region to rectify and amend their own law accordingly. He also said that Thailand should promote a Regional Comprehensive Economic Partnership, an Asean-centred proposal for a regional free trade area. Thailand should set up a fund for labour development.He further added that an economic partnership between Asean and its six dialogue partners should be the ultimate goal in the quest for the region to become a global powerhouse amid the decline of European nations.

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As per media reports, after Japan, China and Taiwan are also likely be the next countries to relax visa rules to woo foreign tourists, especially Thais. Visa facilitation has become a new marketing tool for the tourism industry. Mr. Sansern Ngaorungsi, the deputy governor for international marketing in Asia and the South Pacific at the Tourism Authority of Thailand (TAT) said

that Beijing is expected to offer multiple-entry visas or triple the period of stay to 90 days for Thai tourists. Thailand currently ranks ninth in tourist numbers for Japan, but the visa exemption for Thai visitors will put them among the top five.

The Expressway Authority of Thailand (EXAT) will build a new expressway project, the Daokanong-Western Outer Ring route, costing more than Bt20 billion, following the Transport Ministry's decision to abandon the Third-Stage Expressway System – North Sections (N1-N3). Governor Aiyanat Tinapai said EXAT would revise its construction plans for the expressway system to ensure that traffic problems are properly resolved and to serve particular needs of expressway users. The next expressway project we'll work on is construction of the 8.8-kilometre long Daokanong-Western Outer Ring route.

The Tourism Authority of Thailand (TAT) projected that the number of foreign tourists and the revenue earned will increase in year 2014. Foreign arrivals is expected to hit 28 million, an increase of 7 per cent from the 2013 projection of 24.5 million. Tourism revenue, in 2014, is projected at Bt1.32 trillion, up 13 per cent from 2013 estimate of Bt1.14 trillion.According to the Tourism Authority of Thailand (TAT), China, Russia and India would be the fastest-growing markets for Thai tourism in 2014. For the Indian market, TAT projects the number of visitors from India will reach 1.3 million, in the year 2013. The spending per head of Indian tourists is estimated around 5,281 baht per day, compared to 4,389 baht per day for general tourists.

The Joint Standing Committee on Commerce, Industry and Banking expected that the Financial Action Task Force on Money Laundering (FATF) to remove Thailand from its official grey list in 2015. Mr. Pongsak Assakul, Senior Chairman of the Thai Chamber of Commerce (TCC), said that after the FATF removed Thailand from its Public Statement on Money Laundering/Financing of Terrorism, the private sector will urge the government quickly to consider organic laws of the Anti-Money Laundering Act in time for the FATF's consideration in the next two years. He also said that the upgrade to the grey list from the blacklist would help restore the confidence of investors and reduce the cost of Thai companies that have trade activities in the global market.

The Commerce Ministry in collaboration with the Health Ministry's Science Service Department and the Food and Drug Administration (FDA) to launch an action plan for checking the quality of rice in warehouses and wholesale and retail shops, as well as modern traders. The aim is the urgent rehabilitation of the reputation of Thai rice after reports of some contamination in packed produce. Recent reports of contamination have encouraged the ministry to inspect rice quality stringently to ensure consumer health both domestically and overseas.

President of Thai Shrimp Association said that Shrimp exports from Thailand may slump 50% in 2013 because of a disease called Early Mortality Syndrome, which is one of the industry's worst crises. The Food and Agricultural Organisation (FAO) has detailed the disease, known as Shrimp Early Mortality Syndrome (EMS) or Acute Hepatopancreatic Necrosis Syndrome (AHPNS). It poses no risk to human health, the FAO stressed. But it ravages two popular species of shrimp - the giant tiger prawn and whiteleg shrimp. According to the Thai Frozen Foods Association, Thai companies are considering importing prawns and related products including frozen ones from Ecuador, India and Vietnam to help meet local demand.

The Board of Trade of Thailand and the Thai Chamber of Commerce - two of the leading private-sector organisations – requested the government to urgently conduct clearer feasibility studies and public hearings so that the Bt2-trillion infrastructure-development projects can proceed. Many businesses have expressed extreme concern about the stalled projects, which they believe will not only cut logistics costs, but also increase Thailand's efficiency so that it can become a regional logistics hub. The projects would also help promote a sustainable economy. The two groups said the government should set up an organisation to monitor the huge budget for the projects, as the various agencies involved could not ensure that the projects advance because those agencies have many other tasks under their responsibility. The most desirable projects to traders are the laying of dual railway tracks, as they could greatly help reduce logistics costs, followed by the development of coastal shipping. Road transport has hidden costs such as motor-vehicle accidents and pollution. The railway projects would reduce those problems as well as the cost of transport. According to a study by the chamber, the cost of road

The State Railway of Thailand (SRT) plans to open bidding for dual-tracking of the Chachoengsao-Klong 19-Kaeng Khoi route with construction to begin in 2013. The SRT is considering drafts of documents relating to bidding for the 106-kilometre dual-tracking project. The dual tracking will be a single route in accordance with SRT's priority operations plan, which is not under the Bt2-trillion Borrowing Bill, as the Cabinet had approved this project earlier. Hence the SRT can proceed immediately without having to wait for that bill to be passed by Parliament. Construction can begin right after the bidding process is completed. The dual-tracking project has passed its environmental impact assessment. Once the tender documents are completed, the bidding process can begin. The Finance Ministry will help the SRT secure funds for the project. There are five

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other routes prioritised by the SRT for dual tracking. They are Map Kabao-Jira Junction (132km); Nakhon Pathom-Nong Pladuk-Hua Hin (165km); Lop Buri-Pak Nampo (118km); Nakhon Ratchasima-Khon Kaen (185km); and Prachuap Khiri Khan-Chumphon (167km). All those routes come under the Bt2-trillion Borrowing Bill. The SRT believes bidding for those five routes

and construction can begin next year. Of these five routes, Map Kabao-Jira is the most ready for commencement, as four EIAs have been completed. The EIAs for the other four should be completed next year.

Thailand raised its target for non-fossil fuel energy sources to 13.9 gigawatts from 9.2GW under the revised Alternative Energy Development Plan (2012-21) and finally announced incentives for solar rooftop producers. The National Energy Policy Council endorsed the revised targets of wind power to 1GW from 1GW, solar power to 3GW from 2GW, biomass to 4.8GW from 3.6GW, garbage to 400 megawatts from 160MW, biogas to 3.6GW from 600MW and hydropower to 324MW from 1.6GW. Biogas was raised by 3GW from Napier grass, while hydropower was cut drastically. The council also approved the Energy Ministry's proposal to offer a 25-year feed-in tariff (FIT) to sellers of solar rooftop power until next year.

The board overseeing the government’s One Tablet PC per child project has decided to hold on the bidding process in one of the four zones (Zone 3) in the wake of alleged irregularities. The e-auctions for this project took place on June 28, 2013. The government has earmarked Baht 4.6 billion for procuring tablets this year. Education Minister Mr. Chaturon Chaisang said that they received some complaints that hint at the possibility of bidding collusion. He also said that Office of Basic Education Commission (OBEC) has been instructed to set up a panel to develop standard content for tablets.

Industry Minister Mr. Prasert Boonchaisuk announced that the Office of Small and Medium Enterprises Promotion (OSMEP) will grant short-term, low- interest loans to local small and medium-size enterprises (SMEs), which have been impacted by the Baht 300 minimum wage hike. Under the financial scheme, a one-year loan with 3 percent interest would be granted to SMEs to use for short-term capital flow and to improve their liquidity. A maximum of Baht 1 million will be granted for each loan. The project would give local SMEs a year to adjust and change their cost structure.

Under the Commerce Ministry’s SMEs Proactive project, at least 160 small and medium-sized enterprises have been supported, ensuring that they will have more liquidity to promote business growth. The International Trade Promotion Department approved a budget of Bt24 million to help SMEs. This was in line with the government's recognition that SMEs account for more than 98 per cent of the country's enterprises. In the first year of the project, the department aims to help about 600 SMEs with a budget of Bt100 million. A budget of Bt200 million has been earmarked for its second and third years. Various industries received support included jewellery and ornaments, furniture and parts, home decoration items, gifts and premium goods, stationery, handicrafts, kitchenware, canned corn, safety products, toys, livestock farming equipment, herbs, cosmetics, and garments. Markets that were penetrated included Japan, Turkey, Hong Kong, South Korea, the United Arab Emirates, Indonesia, Italy, India, France, Singapore, the United States, Bahrain and Myanmar. Under the project's conditions, SMEs must export goods for at least one year and have had annual export value of less than Bt200 million during the past three years.

Thai Trade Centre for the United States has warned Thai shrimp exporters about the US attempts to stringently enforce a ban on imports of shrimp with EMS (Early Mortality Syndrome). The proposed changes by US Senate could hurt Thai shrimp farmers and exporters. It is also mentioned that since the US is the largest export market for Thai shrimp and if the US passes this bill, the Thai shrimp industry would be directly effected as some areas in Thailand have not yet been able to clear up the EMS problem. A number of countries, including the Philippines and Mexico, have banned shrimp imports from countries where EMS has been found. Louisiana state also wants to protect its domestic industry from growing annual imports of foreign shrimp. Louisiana has relied heavily on shrimp imports from Thailand, China, Malaysia, Vietnam, India, and Ecuador. According to data from the International Trade Promotion Department, the US imported 77.4 tonnes of Thai frozen shrimp, worth US$665 million (Bt20.63 billion) in 2012, accounting for 20 per cent of total US shrimp imports. India has become the largest shrimp supplier to the US, as EMS has not affected farmers there.

Thai gem and jewellery shipments may grow by up to 3% in the year 2013, an improvement from a 5% contraction in an earlier forecast due to the economic recovery in the US and Japan and the weaker baht. President of the Thai Gem and Jewelry Traders Association, said that relatively stable gold prices will also help Thai exporters. Shipments are projected to increase by US$260-390 million from 13 billion in 2012. The Internal Trade Promotion Department has forecasted that exports would rise by 5% to $3.7 billion by year-end. For the first five months of 2013, Thailand shipped $3.33 billion worth of gems and jewellery, down by 27% year-on-year. Prime Minister Yingluck Shinawatra had approved a tax waiver for traders at the Bangkok Gems & Jewelry Fair, to be held at Impact Muang Thong Thani from Sept 6-10, 2013, with a 30-day grace period. Thailand normally charges a 20% import tariff on such products. Hong Kong, Malaysia and Singapore have already cut their tariffs to zero, while China and India have reduced theirs to 7%. To develop the local industry, the government may upgrade Chanthaburi town to a "City of Gems" and turn the eastern province into a preferential trade zone for gems and jewellery, with links to global high-quality raw materials suppliers such as Mozambique, Tanzania and Madagascar.

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According to National Economic and Social Development Board (NESDB), the viability of the capital-intensive Dawei port and industrial estate will depend on the will of the Myanmar government, Myanmar's financial liberalisation and the labour force's preparedness. Secretary-general of the NESDB said that Japan is still baulking at the project, saying it needs

time to study the investment first. The invitation to Japan came at the latest meeting of the Joint High-Level Committee on the project and related areas in Thailand. SG also said that banking and financial issues are another area of concern because it affects the confidence of foreign investors. It is still unknown whether and when foreign banks will be allowed to open branches in Myanmar. Another sticking point is the ongoing dispute with local communities within a radius of 204 square metres of the Dawei development zone, as they remain adamant they are staying put. The Thai cabinet already approved a 96-kilometre motorway linking Bang Yai to Kanchanaburi, while a highway connecting Kanchanaburi with the Myanmar border is being studied.

According to Secretary General of Board of Investment of Thailand, the total value of applications for investment privileges in 2013 would meet the target of Bt1 trillion, though the number in the second half might not be as high as in the first half of 2013. He noted that the latter half of the year would face five main risks that could discourage investment. These are slowing economies across the globe, especially China's; the shortage of local labour and rising wages; rising interest rates overseas prompting capital outflows; declining consumption in Thailand; and the declining demand for some products in global markets, such as computer components, for which Thailand is a major production base. According to Industry Minister Prasert Boonchaisuk, the BOI witnessed Bt632 billion worth of investment in the first six months, with 1,055 projects requesting support from the board. The number of requests rose 5.8 per cent compared with the same period last year, with the value of all projects accounting for a 47-per-cent increase year on year. Most projects were in the service and public-utility industries. These included air transport, natural-gas production, biomass power generation, and product distribution.Thailand also witnessed foreign direct investment in the first half for 619 projects worth Bt279 billion, of which 333 belonged to Japanese investors worth Bt184.153 billion, followed by Malaysian investors at 18 projects worth Bt17.341 billion, Hong Kong 19 projects worth Bt15.381 billion, Singapore 44 projects worth Bt11.599 billion, and the Netherlands 12 projects worth Bt9.360 billion.

According to a survey conducted by Dhurakit Bundit University (DBU), about 80,000 SMEs across the country would be shut down in 2013 due to effect of minimum wage hike. Director of Research Centre of DBU said that in the first half of this year, about 50,000-70,000 shops have already been closed. He added that most of them are small manufacturers and operate small retail businesses that hire fewer than 50 workers. They have witnessed the 20 per cent increase in average operating cost.

The Commerce Ministry’s Foreign Trade Department plans to auction a total of 400,000 tonnes of different types of rice twice a month to reduce the huge stockpile of pledged grain.

The Bank of Thailand (BoT) supported the government's Bt2-trillion mega-infrastructure project to enhance the country's economic potential, but wants it to be implemented with transparency and keep public debt at a manageable level. Governor of BoT Mr. Prasarn Trairatvorakul said that public investment could promote the economy with more stability and sustainability. However, if such a large project is worth the investment, but has no transparency, it could cause a capacity loss. State on- and off-budget investment could push public debt up to 60 per cent of gross domestic product from the current level of 44 per cent of GDP. He also added that now the country's revenue collection capability is low compared to the economy's size.

Thai Rice Exporters Association maintained its 2013 rice-export target for the private sector at 6.5 million tonnes worth Bt145 billion, down by 6.4 per cent from last year, stating that there are many negative factors offsetting the short- to medium-term positive factors. However, the Commerce Ministry's forecast for the year is 8.5 million tonnes worth Bt171 million. The US Agriculture Department forecasted the global rice trade in 2013 at 37.58 million tonnes, a contraction of 4.01 per cent year on year. Stockpiles in India and Vietnam are estimated to be 104 million tonnes and 27.3 million tonnes, respectively. This means supply is high while demand is modest due to the global economic slowdown. As far as price is concerned, Thai rice remains relatively expensive. Thai paddy rice was quoted at US$482 (Bt15,100) per tonne, Vietnamese rice at $260 per tonne and Indian rice at $237 per tonne as on 29th July, 2013.

Inflation slowed for a seventh straight month in July due to an erosion of consumer purchasing power, prompting worries over clearer signs of a faltering economy. Inflation in July 2013 rose only 2% when compared July, 2012, making it the lowest monthly rate in 44 months. On a month-to-month basis, prices rose by 0.1% from June.

16. ECONOMIC AND BUSINESS NEWS RELATED TO OTHER COUNTRIES:

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According to the Board of Investment (BOI), Thai investment in Asean is lagging well behind that of Singapore and Malaysia and more regional business was needed to ensure strong economic integration into the Asean Economic Community (AEC), when it commences in 2015. Deputy Secretary-general of BOI Chokedee Kaewsang said that despite a sharp increase in

Thai investment to ASEAN in 2012, the trend was not constant. The BOI also said that in the decade to 2012 Thai entrepreneurs invested US$5 billion in the ASEAN region. In 2012, Thai investors are also ranked as Myanmar's second largest foreign investors after China, spending about Bt10 billion.

Thai Shrimp organisations asked the European Union to extend tax privileges for Thai shrimp imports after disease halved the local production in 2012. The associations urged the EU to extend tax privileges granted to Thailand under the Generalised System of Preferences (GSP). They argued that Early Mortality Syndrome (EMS) has devastated the Thai shrimp industry. To aid in the recovery of the Thai shrimp industry, they need for stability in the EU market. While the Thai-EU FTA is under negotiation, Thai processed shrimp is scheduled to graduate from the GSP next January 1, 2014, when the import duty rises from 7 per cent to 12 per cent. Thai processed shrimp and its GSP breaks are most vital to the survival of the country's shrimp industry. Not only will the extension of GSP support farmers and their families, it will also benefit EU retailers, food makers and consumers.

According to the reports of Ministry of Commerce, Thailand imposed anti-dumping duties on 14 products from 17 countries during the first half of the year, 2013. Meanwhile, Thailand faces 57 non-tariff barriers imposed by 15 countries - the most by India. Bangjongjitt Angsusingh, deputy director-general of the Foreign Trade Department, said that the government had imposed some non-tariff barriers to protect Thai industries during the first half of 2013. China has faced the highest number of such measures. Thailand is also investigating the possibility of imposing anti-dumping duties on three more products to protect local manufacturers. Most duties of this nature are imposed on steel products, mainly exports from China.

Small and medium-sized enterprises (SMEs) have been encouraged to trade more online, as this channel has high potential to take their businesses international, given the rising popularity of e-commerce. The Department of International Trade Promotion (DITP) is supporting the SMEs trading online via Thaitrade.com and three well-known websites in China, India and South Korea. Director-General of DITP, Srirat Rastapana, said that it had cooperated with three famous websites - Alibaba.com, Tradeindia.com and Tradekorea.com - to offer Thai products. Tradeindia.com will promote Thaitrade.com to Indian entrepreneurs. It also plans to organize business matching between Thai SMEs and Indian entrepreneurs during Thailand Week, to be held from August 22-24, 2013. Currently, Thaitrade.com has more than 1.2 million sellers and buyers from more than 200 countries. The department will continue to support Thaitrade.com as it strives to increase its membership to 10,000.

The Commerce Ministry has signed a government-to-government contract with Iran to sell it 250,000 tonnes of rice in 2013, as the ministry continues to pursue opportunities to reduce its rice stocks piled up under the pledging scheme. This is the first G2G rice deal between Thailand and Iran since 2007.

The Department of Industrial Promotion (DIP) is set to promote Thai ceramic industry by looking for new exporting markets including the Middle East, China, and India. Deputy Director-General of the DIP, said that the department has adjusted strategies of developing Thai ceramic industry by focusing on promoting the industry to be able to expand foreign markets by stimulating operators to have roadshows and look for new partners in foreign countries, especially in ASEAN. He added that the department will look for new markets for Thai operators. Potential markets are the United of Arab Emirates, China, and India where the total number of population is larger than one billion.

PTT Global Chemical Plc (PTTGC), Thailand's largest petrochemical producer, formed a partnership with Sinochem Group, one of China's giant state-owned oil companies, to explore joint investments in China and overseas. Under the memorandum of understanding (MoU), PTTGC and Sinochem would jointly explore opportunities for collaboration in sales and marketing as well as potential investments in specialty chemicals and petrochemical projects. The venture aims to harness the advantages both firms bring along the value chain, covering other strategic locations beyond China.

17. DETAILS OF EXHIBITIONS & FAIRS TO BE HELD IN BANGKOK DURING 2013 ARE ATTACHED AS ANNEXURE-A.

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21. SELECT WEBSITES

ORGANIZATION WEB ADDRESS

Ministry of Commerce (Govt. of Thailand) www.moc.go.th

ASEAN Secretariat

Embassy of India, Bangkok

www.aseansec.org

www.indianembassy.in.th

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Royal Thai Embassy, New Delhi www.thaiemb.org.in

India-Thai Chamber of Commerce(ITCC) www.itcc.or.th

The Thai Chamber of Commerce & Board of Trade of Thailand www.thaiechamber.com

The Federation of Thai Industries (FTI) www.fti.or.th

Department of Export Promotion(DEP) www.depthai.go.th

Department of Business Development(DBD) www.dbd.go.th

Board of Investment (BOI) www.boi.go.th

Bank of Thailand(BOT) www.bot.or.th

Bangkok Post (Newspaper)(BP) www.bangkokpost.com

The Nation (Newspaper)(TN) www.nationmultimedia.com

The National Economic & Social Development Board (NESDB) www.nesdb.go.th

(Saikat Sen Sharma)First Secretary (Economic &Commerce)

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List of Fairs & Exhibitions in Thailand During the Calendar Year 2013

SNo. From Date To Date Event(s) Venue

1. 4-Sep-13 6-Sep-13 Oil & Gas Thailand 2013 and Petrochemical Asia 2013 Hall 105, BITEC

The 3rd edition of Thailand's Largest Oil & Gas and Petrochemical Exhibition

2. 4-Sep-13 7-Sep-13 Food & Hotel Thailand 2013 BITEC

The 21st International Exhibition of Food & Drink, Hotel, Bekery Restaurant & Foodservice Equipment, Supplies & Services

3. 4-Sep-13 7-Sep-13 Coffee & Tea Culture 2013 BITEC

The 2nd International Exhibition for Coffee & Tea

4. 4-Sep-13 7-Sep-13 Hospitality & Retail Technology Asia 2013 BITEC

The 12th International Exhibition for Hospitality & Retail Technology

5. 4-Sep-13 7-Sep-13 Spa & Lifestyle 2013 BITEC

The 2nd International Exhibition for Spa & Lifestyle

6. 4-Sep-13 7-Sep-13 Wine & Spirits Thailand 2013 BITEC

The International Exhibition for Wine & Spirits

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ANNEXURE-A

ASEAN’s biggest and most comprehensive logistics-related trade fair

8. 4-Sep-13 7-Sep-13 THE 10TH THAILAND INTERNATIONAL LOGISTICS FAIR 2013 (TILOG 2013) BITEC

ASEAN’s biggest and most comprehensive logistics-related trade fair

9. 4-Sep-13 7-Sep-13 Food & HotelThailand (FHT) 2013 BITEC

The 21st International Exhibition of Food & Drink, Hotel, Bekery Restaurant & Foodservice Equipment, Supplies

10. 5-Sep-13 8-Sep-13 Thai Teaw Thai 2013 QSNCC.

The Thailand's biggest travel fair features a comprehensive array of tourism service provider.

11. 5-Sep-13 9-Sep-13 The 52nd Bangkok Gems & Jewelery Fair 2013 IMPACT

The premier exhibition that showcases exquisite gems and jewelry

12. 11-Sep-13 13-Sep-13 ASEAN Ceramics 2013 BITEC

Southeast Asia’s international exhibition of machinery, technology and materials for manufacturing white-ware, heavy clay and advanced ceramics.

13. 11-Sep-13 13-Sep-13 Food Ingredients Asia 2013 BITEC

The Primary Event for Food Ingredients Industry in the ASEAN Region

14. 11-Sep-13 13-Sep-13 FOOD PROCESSING AND PACKAGE ASIA 2013 BITEC

Asia's Leading Food Processing and Packaging Exhibition and Conference

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ANNEXURE-A

The leading coatings event in South East Asia and the Pacific Rim for raw materials suppliers and equipment manufacturers for the coatings industry.

16. 12-Sep-13 14-Sep-13 Medical Fair Thailand 2013 QSNCC

An international exhibition featuring hospital, pharmaceutical, medical and rehabilitation equipment and supplies with special focus on the diagnostic, pharmaceutical and rehabilitation sectors.

17. 12-Sep-13 14-Sep-13 Medical Fair Thailand 2013 QSNCC

An international exhibition featuring hospital, pharmaceutical, medical and rehabilitation equipment and supplies with special focus on the diagnostic, pharmaceutical and rehabilitation sectors.

18. 17-Sep-13 19-Sep-13 wire Southeast Asia 2013 BITEC

A comprehensive exhibition on wire manufacturing and finishing machinery, process technology tools, measuring and control technology, test engineering, spring making machinery, fastener technology and materials, special wires and cables.

19. 17-Sep-13 19-Sep-13 Tube Southeast Asia 2013 BITEC

An international exhibition on raw materials, tubes and accessories including manufacturing machinery and technology on the tube and pipe industry and much more.

20. 18-Sep-13 21-Sep-13 World Spa & Well-being Convention 2013 Hall 2, IMPACT

Professional Platform for Spa & Well-Being industry, comprising of Education Section, Industry Standards Section, Commercial Section and Innovation Section.

21. 19-Sep-13 21-Sep-13 Chemspec asia 2013 Hall 101, BITEC

The event, held for the first time in Thailand, will take place at the Bangkok International Trade & Exhibition Centre (BITEC) on the 19-21 September 2013. It is expected that the event will attract 5,000 attendees to Bangkok for this key industry event.

22. 19-Sep-13 21-Sep-13 Pool&SpaTech Asia 2013 Hall 3, IMPACT

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ANNEXURE-A

South East Asia’s only dedicated Trade Exhibition & Conference for the Pool, Spa and Landscape

Market. Pool&SpaTech Asia is the gateway to South East Asia’s highly lucrative pool, spa and landscape market, to showcase of technologies, products and services, educate and network, one to one with industry professionals.

23. 19-Sep-13 21-Sep-13 BMAM Expo Asia 2013 Hall 6, IMPACT

The 6th Edition of International Exhibition and Conference on Facility Management, Building and Plant Maintenance held in Thailand for the Asia Market co-located with Green Building & Retrofits Expo Asia 2013.

24. 19-Sep-13 21-Sep-13 Green Building & Retrofits Expo Asia 2013 (GBR Expo Asia 2013) Hall 6, IMPACT

The 3rd International Exhibition and Conference on Green Building and Retrofits held in Thailand for the Asia Market co-located with BMAM Expo Asia 2013.

25. 19-Sep-13 21-Sep-13Thailand International Construction Machinery, Equipment and Technology Exhibition 2013 (CONSTECH 2013) Hall 7-8, IMPACT

The International Exhibition and Conference on Construction Machinery, Equipment and Technology in Thailand. The annual gathering and market place for suppliers to showcase their latest machinery, equipment, tools and methods to targeted key decision makers from the construction industry.

26. 19-Sep-13 21-Sep-13 Chemspec Asia 2013 BITEC

The fine & speciality chemicals connection

27. 2-Oct-13 4-Oct-13 Power-Gen Asia IMPACT

the region's premier event for the power generation and T&D industries

28. 2-Oct-13 4-Oct-13 Renewable Energy World Asia IMPACT

the region's premier event for the renewable and alternative energy industry

29. 3-Oct-13 6-Oct-13 Thailand Mobile Expo 2013 QSNCC.

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ANNEXURE-A

30. 9-Oct-13 11-Oct-13 Worlddidac Asia 2013 QSNCC

Worlddidac Asia, a part of the world-renowned Worlddidac series of event in Europe, is where the education community will come together and witness the progress of educational evolution before their eyes.

31. 9-Oct-13 11-Oct-13 Worlddidac Asia 2013 QSNCC

ASEAN's Largest Trade Exhibition on Educational & Training Materials, Media, Technologies, and Services - 5th Edition

32. 16-Oct-13 28-Oct-13 Book Expo Thailand 2013 QSNCC

The book fair will feature a arrey of premuim quality local and internation books from leading publishing houses.

33. 17-Oct-13 20-Oct-13 Kids of the World 2013Hall 1 - 2, IMPACT

The biggest happiness festival of the year for family to discover with many new innovations for your kids, for example, toys, stationeries, education intermediaries, food & beverages, nutrition, clothes & accessories, including insurance companies, hospitals, institutions & schools.

34. 17-Oct-13 20-Oct-13 SmartHeart Presents: Pet Variety - Super Amazing Exotic Pets Hall 3-4, IMPACT

The outstanding brand-new pet exhibition with health & care goods from over 200 pet exhibit booths covering 10,000 sq.m.

35. 29-Oct-13 31-Oct-13 in-cosmetics Asia 2013 BITEC, Bangkok

The Leading Exhibition and Conference in Asia for Personal Care Ingredients

36. 29-Oct-13 31-Oct-13 Flood Control Asia 2013 Hall 104, BITEC

Asia's Only Flood Protection Technology Exhibition

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ANNEXURE-A

World's leading platform for the global ICT community to connect, debate, network and share knowledge

38. 4-Nov-13 7-Nov-13 DEFENSE & SECURITY 2013 IMPACT

Tri-Services Asian Defence & Security Exhibition

39. 7-Nov-13 10-Nov-13 Commart Comtech Thailand 2013 QSNCC.

The grand-scale gadget and IT trade fair embraces myriad products, special promotions and fabulous prizes.

40. 13-Nov-13 15-Nov-13 EcoLightTech Asia 2013 QSNCC

Thailand's Premier International Tradeshow for Green Technologies and Innovations in Lighting

41. 14-Nov-13 17-Nov-13 Thailand Engineering Expo 2013Challenger 3,

IMPACT

Thailand’s key engineering exhibition and conference platform covering across 9 engineering disciplines

42. 20-Nov-13 23-Nov-13 METALEX 2013 BITEC

ASEAN's Largest International Machine Tool and Metalworking Technology Trade Exhibition and Conference - 27th Edition

43. 28-Nov-13 2-Dec-13 Turkish Products Exhibition 2013 QSNCC.

Companies from all sectors of the Turkish economy will be presented at Turkey Exhibition, from manufacturers of filling machines to cosmetics ingredients to HVAC equipment.

44. 29-Nov-13 10-Dec-13 The 30th Thailand International Motor Expo 2013Challenger 1-3

IMPACT

BEST AUTO SHOW IN THAILAND AND SOUTHEAST ASIA

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ANNEXURE-A

45. 12-Dec-13 22-Dec-13 Thailand Bestbuy 2013 QSNCC.

Thailand's biggest annual gift fair features quality gifts, souvenirs and home decorative items.

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ANNEXURE-A

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