Outline of Study

8/2/2019 Outline of Study

1/15

Thailand Country Report

Page | 1

OUTLINE OF STUDY

This country report has been prepared by researching and analyzing information from

various sources about Thailand in order to learn about the country, its economy, main

industries etc. Another objective of this study was to understand how the economy of

Thailand is dependent on the economy of India and vice versa.

KEY WORDS

GDP

Exports

Tourism

Electronics

ASEAN

Members:

Aarti Sharma ...

Akanksha Dixit

Anu ja Srivastava .

Ashish Srivastava .

Raunak Chandra .

Siddharth Rai


2/15


Page | 2

BACKGROUND

Thailand is a country located in South East Asia and shares its border with Myanmar,

Lao People's Democratic Republic, Cambodia and Malaysia. The capital of Thailand is

Bangkok and it is the only South Eastern Country never to have been taken over by a

European power. A revolution in 1939 led to a constitutional monarchy which is still

followed today. Thailand has a free economy and it is also the worlds fastest growing

economy. 50 years ago Thailand was still a primitive economy whose main output was

agricultural products, particularly rice. But now the role has reversed and agriculture provides

only 12% of the total production. Thailand faced a rapid economic growth recently between

1985 and 1995 with tourism and exports contributing significantly to the economy. 2 years

later Asia faced a financial crisis when a decision was taken to float Baht, the Thai currency

and consequently several countries apart from Thailand such as Indonesia, Korea, China,

Singapore, Taiwan, Vietnam and India suffered. It took Thailand 4 years to recover and todayit is one of the most rapidly growing economies.

PURPOSE OF THE STUDY

The purpose of this study is to find out how the economy of Thailand developed over

the last century and the various ups and downs it has faced. Since the economy is newly

developed, it is more contemporary and easy to relate to, hence it would serve as an

interesting area of study and a lot can be learnt about todays economic conditions not only in

Thailand but in other countries affecting or being affected by Thailands economy.


3/15


Page | 3

COUNTRY PROFILE

Full name: Kingdom of Thailand Capital: Bangkok Area: 513,115 sq km (198,115 sq miles) Currency: Baht

DEMOGRAPHICS:

Population: 68.1 million (UN, 2010) Major language: Thai Major religion: Buddhism Life expectancy: 67 years (men), 73 years (women) (UN) Education: Years compulsory--9. Literacy--94.9% male, 90.5% female

Social Classes: Class system is primarily based on wealth. There is a large middleclass and the income is distributed more equally in the center and south than it is inthe north and northeast.

GOVERNMENT

Type: Constitutional monarchy. Constitution: Thailand adopted its current constitution following an August 19, 2007

referendum. Independence: Never colonized; traditional founding dates 1238. Head of state: King Bhumibol Adulyadej Prime minister-elect: Yingluck Shinawatra Prime minister (outgoing): Abhisit Vejjajiva Political parties: Multi-party system; Communist Party is prohibited.

ECONOMY:

GDP : $317 billion. (Data based on the National Economic and Social DevelopmentBoard)

Annual GDP growth rate: 7.8%. GNI per capita: US $3,760 (World Bank, 2009) Per capita income: $4,716. Unemployment rate: 1.0% of total labor force.


4/15


Page | 4

Natural resources: Tin, rubber, natural gas, tungsten, tantalum, timber, lead, fish,gypsum, lignite, fluorite.

Main exports: Food including rice, seafood and live animals, office equipment,textiles and clothing, rubber

Agriculture (12% of GDP): Products--rice, tapioca, rubber, corn, sugarcane,coconuts, soybeans.

Industry: Types--tourism, textiles, garments, agricultural processing, cement,integrated circuits, jewelry, electronics, petrochemical, and auto assembly.

Trade: Merchandise exports--$188.8 billion. Products--automatic data processing machines and parts, automobiles and parts,

precious stones and jewelry, refined fuels, rubber, electronic integrated circuits,polymers of ethylene and propylene, rice, iron and steel and their products, rubberproducts, chemical products.

Major markets--ASEAN, EU, China, U.S., Japan, and Hong Kong. Merchandiseimports--$175.5 billion.

Products--crude oil, machinery and parts, electrical machinery and parts, chemicals,iron and steel and their products, electrical circuits panels, computers and parts, othermetal ores and metal waste scrap, ships and boats and floating structure, jewelryincluding silver and gold.

Major suppliers--Japan, ASEAN, China, the Middle East, EU, and U.S.The Thai economy is export-dependent, with exports of goods and services comprising

nearly 70% of GDP in 2010. Thailand's increasingly diversified manufacturing sector is thelargest contributor to growth. Industries having rapid increases in production have includedcomputers and electronics, furniture, wood products, canned food, toys, plastic products,gems, and jewelry. High-technology products such as integrated circuits and parts, hard disc

drives, electrical appliances, vehicles, and vehicle parts are now leading Thailand's growth inexports.

With stronger exports and a rise in inflationary pressure, the Bank of Thailand startedto tighten its monetary policy in mid-July 2010 after having followed a low interest ratepolicy since April 2009.

Machinery and parts, vehicles, electronic integrated circuits, chemicals, crude oil andfuels, and iron and steel are among Thailand's principal imports.

Through 2010, the major single-country export market of Thailand was Japan,

followed by China and the US. Other growing export markets include China, Hong Kong,Australia, the Middle East, South Africa, and India


5/15


Page | 5

TOURISM INDUSTRY OF THAILAND

Tourism in Thailand has been increasing rapidly since 1960s due to stable political

atmosphere, development of Bangkok as a crossroad of international air transportation and

the entrance of US soldiers who arrived for rest and recuperation during the Vietnam War

period. Other factors responsible for this rapid increase are rising standard of living andadvancements in technology making it possible for tourists to travel further, faster and

cheaper.

Since 1960s number of tourists has grown from 350,000 foreign visitors to over 15

million in 2010 with an average duration of stay of 10 days. This huge number of tourists hasgenerated an estimated 578,724 million Thai Baht which is approximately 11 billion Euro.

According to the Tourism Authority of Thailand, 55% of the tourists come from the

Asia Pacific region, Japanese and Malaysians. The largest groups of Western tourists come

from the United Kingdom, Australia, Germany, the United States and Scandinavia. The

number of tourists arriving from the Middle East and Russia is on the rise. Around 55% of

Thailand's tourists are return visitors. The peak period is during the Christmas and New Year

holidays when Western tourists flee the cold conditions.

Apart from this, domestic tourism has also seen a significant growth in the pastdecade. Revenues from domestic tourism have gone from 187,898 million Baht in 1998 to

410,329 million Baht in 2010.

Studies have shown that purpose of visit for many tourists are different. Asian touristsprimarily visit Thailand for its capital, Bangkok and the historical, natural and cultural sites inits vicinity while western tourists not only prefer to visit Bangkok and its vicinity but also

like to travel down to the Southern beaches and islands. The North region of Thailand is

popular for trekking and adventure travel. To facilitate visitors in the country, the Thai

government has established a separate tourism police with offices in major tourist areas withits own emergency contact number.

Although the tourism industry is growing, it has been receiving competition primarily

from Laos, Cambodia and Vietnam. To counter this, it is actively targeting markets such as

golf holidays, or holidays combined with medical treatment. According to Lonely Planet,

Thailand ranks second of best- value destinations for 2010 after Iceland.
http://en.wikipedia.org/wiki/Ministry_of_Tourism_and_Sports_(Thailand)#State_Enterpriseshttp://en.wikipedia.org/wiki/Japanese_peoplehttp://en.wikipedia.org/wiki/Icelandhttp://en.wikipedia.org/wiki/Icelandhttp://en.wikipedia.org/wiki/Japanese_peoplehttp://en.wikipedia.org/wiki/Ministry_of_Tourism_and_Sports_(Thailand)#State_Enterprises


6/15


Page | 6

Below is a list of 20 most visited nationalities in Thailand

Rank Country amount (people) percent

ASEAN9 countries 4,534,235 28.45

1 Malaysia 2,058,956 12.92

2 China 1,122,219 7.04

3 Japan 993,674 6.24

4 United Kingdom 810,727 5.09

5 South Korea 805,445 5.05

6 India 760,371 4.77

7 Laos 715,345 4.49

8 Australia 698,046 4.38

9 Russia 644,678 4.05

10 United States 611,792 3.8411 Germany 606,874 3.81

12 Singapore 603,538 3.79

13 France 461,670 2.90

14 Vietnam 380,368 2.39

15 Taiwan 369,220 2.32

16 Sweden 355,214 2.23

17 Hong Kong 316,476 1.99

18 Indonesia 286,072 1.80

19 Philippines 246,430 1.55

20 Netherlands 196,994 1.24

THE ELECTRONIC INDUSTRY OF THAILAND
http://en.wikipedia.org/wiki/ASEANhttp://en.wikipedia.org/wiki/Malaysiahttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/South_Koreahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Laoshttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Vietnamhttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Swedenhttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Philippineshttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Philippineshttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Swedenhttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Vietnamhttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Laoshttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/South_Koreahttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Malaysiahttp://en.wikipedia.org/wiki/ASEAN


7/15


Page | 7

The electronics industry has played a significant role in export revenue of Thailand which isone-third of export revenue of Thailand from past 5 year. Thailand has become the largestproduction base for the electrical appliance industry in ASEA in past few years. They arefacing competition from country like Singapore; Japan, and China etc than 3, 70,000 peopleare employed in the industry. Since mid 90s Thailand enter into what is known as cluster

phase of development because as the domestic capabilities improved, assemblers began tosource parts and components locally. The government is more focus on promoting theindustry because it is the biggest earner taking baht 1.3 trillion last year and 7.8 trillion thisyear.

Export:

The export is depends on the demand of global market. 80% of the electronic item are madeto export which play vital role in there economy which is 20% of country total exportelectronic component includes all the computer parts, hard disk and semi conductor, etc.Major export market are USA , Netherland, Taiwan, Japan, Singapore and India with signingof bilateral free trade area agreement the market is open up Considerably the government willneed to establish some standards to deal with rising import.

Market Trends in Thailand:

Market trend of any country follows global economic trends this means if the price of oilwill increase than that will slow down the exports. The economic slowdown globally affectsthe Thai electronic market too. The electronic component industry in 2006 will tends slowfrom 2005 during 2007-2008 demand for IT goods that has dropped in larger market like US,due to many negative factors including volatile oil price. The government rules and

regulation

Future challenges:

Long term and medium term development in electronic industry that could cause some risk,volatility in currency value, change in production and technology and competition fromoverseas as the electronic industry is important to the country economy. It is necessary thatthe authorities initiate solutions to problems that could impact the industry in the long run. Asthe electronic industry is one of the important part of Thailand industry and as they areplaying important part in GDP of Thailand. It is necessary that authority should pay attention

to problem and solution to the problem that could impact the industry in long run.

Opportunities:

It is interesting market for the company seeking to set up operation .as Thailand provide lowcost labor, good infrastructure and lot of investment and privileges offer by the board ofinvestment (BOI).The recent cut in import tariffs on raw material and parts used forproducing electronic items.


8/15


Page | 8

INDIA-THAILAND RELATIONSHIP

Comparison between India-Thailand:

Basis Thailand India

GDP 7.8% 8.5%

Population 66,720,153 1,210,193,422

Currency Baht() Indian Rupee( )

Language Thai Hindi, English

Religion Theravada Buddhism Multi Religion Country

National Sports Thai Boxing Hockey

Government Monarchy Democratic

First president Rak Panyaranchu Dr. Rajendra Prasad

Legislature National Assembly Parliament Of India


9/15


Page | 9

This graph shows that the India has rapidly grown in terms of GDP from 2007 to 2011.Although it has been less as compare to last few years.

This graphs shows that Thailand is an upcoming economy its GDP growth rate is not constant

it has gone in negative in few years and now its been enhancing as a total new economy witha good and stable growth of GDP.

As we know India GDP growth rate is 8.5%, and Thailand GDP growth rate is 7.8%.

The main sector of India is services which comprise 55.6% of overall GDP and the main

sector of Thailand is industrywhich comprises 44.5% of overall GDP.

The major exports from India to Thailand are gemstones, metal ores, chemicals, steeland products, vegetables and pharmaceutical products and the major imports from Thailand


10/15


Page | 10

to India are electric and electrical goods, crude oil and products, television receivers, air-

conditioning machinery and parts, and plastic products.

We can see that all the expensive items are transferred from India to Thailand which

leads to more revenue generation from Thailand and all the product imports from Thailand to

India are not as expensive as the items imports by Thailand. India is negotiating on Free

Trade Agreement with Thailand from more than 6 years with Association of South East

Asian Nations.

Indias exports to Thailand, implemented in September 2004, have grown from

$901.4 million in 2004-05 to $1.8 billion in 2007-08. But Thailands exports to India climbed

from $865 million to $2.3 billion in the same period which tripled the value while Indias

exports only doubled. However, the initial program only covered about 82 items such as fresh

mangoes, apple, grapes, crabs, semiprecious stones, jeweler, chromium ores, refrigerators,

certain machinery items and TV tubes, etc.

Main sectors of India are industry and services, agriculture, banking and finance,

energy and power whereas Thailand main sectors are agriculture, forestry and fishing,

industry and manufacturing, energy, services, tourism, banking and finances.

ARTICLE REVIEW: Effect of Thailands flood crisis on its Economy

Thailands flood is not going to stop this year, as World Bank has announced 2%decrease in the GDP of Thailand. Thailands worst flood in half a century has killed nearly400 people since July. The economists, central bank and government have slashed theireconomic growth forecasts for the year. The Thai Chamber Of Commerce has estimated thedamages cost around 200 billion baht ($6.56 billion). Rebuilding could take months for somemanufacturing operations to be up and running again.

IMPACT ON GDP


11/15


Page | 11

Kirida Bhaopichitr, World Bank senior economists for Thailand said that flood hasshrieked the countrys gross domestic product by two percent in the fourth quarter from theprevious three months. He also said that World Bank might review the forecast again inDecember. But Thai economy in next year is likely to expand quicker than the World Banks

projection at 4.2 percent indicates because of Thailands after flood rehabilitation projects

will now be considered, which will boost economy as well as GDP.

IMPACT ON INFLATION

Inflation rose to 4.19 percent in October and below the 4.5 percent forecast byeconomists but food prices were almost 10 percent higher than a year before.

IMPACT ON PRODUCTION FACTORIES

Many big industrial estates have been closed because of the flood. But foreigninvestors will not shift their factories or other production bases elsewhere because Thailandsbasic infrastructure and government regulatory facilitate foreign investment. In long term

their investment decisions depend upon governments post flood measures and newstandards.

MONETARY POLICY RESPONSE

The Bank of Thailand (BOT) decided to leave its policy rate unchanged at 3.50percent on October 19, pausing after more than a year of tightening. Bank is ready to offerfinancial assistance to Thailand for rehabilitation of the damages.

Central Bank is working with Bank of Japan (BOJ) to lend baht funds to Japanesecompanies affected by flood.

CONCLUSION

Though the economy of Thailand is suffering from the flood crisis yet foreigninvestors are not planning to relocate their production bases because of countrys strongfundamentals. But government must have money in circulation for the private sector to use inreformation. This damage is likely to be rehabilitated in the first quarter of the next year andcountry will be able to achieve 4.2% GDP growth in 2012.

CONCLUSION

When we talked about Thailand, it has free economy and is the fastest growing economy. Its

total production has only 12% from agriculture today but 50 years ago, the picture was

different. Agriculture was the main source of output. So the main reason to study the

Thailand economy was to understand how it has developed over the last century and what ups

and downs it has faced.

We have seen the demographics, governments and economy of Thailand and have found that

its annual GDP growth rate is 7.8% which is considered to be good and has the


12/15


Page | 12

unemployment rate of just 1.0% of the total labor force. It is an export dependent economy

where exports comprised 70% of GDP in 2010.

Thailand has experienced a rapid economic growth since 1960s due to stable political

atmosphere and rising standard of living.

When we talk about relationship between India and Thailand, India is one of the exporters of

Thailand which exports gemstones, metal ores, chemicals, steel and products, vegetables and

pharmaceutical products and the major imports from Thailand to India are electric and

electrical goods, crude oil and products, television receivers, air-conditioning machinery and

parts, and plastic products.

Main sectors of India are industry and services, agriculture, banking and finance, energy and

power whereas Thailand main sectors are agriculture, forestry and fishing, industry and

manufacturing, energy, services, tourism, banking and finances.

When we look at all the sectors of the economy of Thailand, electronic industry has played a

significant role in the growth of the Thailand economy where more than 3, 70,000 people are

employed in this sector. The export of this industry ranked first and accounts for about 20%

of the total export of the country. Thailand electronic industry relied mainly on foreign

investment which accounts to 80% of the registered capital in this industry belonged to

foreigners especially Japan.

Growth in the electronic industry depends upon the trends in the global market as a whole.For example: Electronic component in 2006 tend to slow down from 2005 as a result of the

economic slowdown and some uncertainty in the market due to various negative factors

including volatile oil price that are hovering at high level and changes in the production

technologies that depends on electronic devices.

The major challenges could be due to the medium and long term development that could

cause some risk such as volatility in currency value, changes in the currency value, changes

in the production technology, competition from overseas.

A lot of opportunities could be found in Thailands economy for different countries because itprovides cheap labor, good infrastructure and that makes it a good market for companies to

set up operations. And in this contest outsourcing represents a business opportunity in the

short run.

In short, we found that Thailands economy has developed a lot with a number of ups and

downs faced by their economy and later considered as the fastest growing economy in the

world with GDP as 7.8% due to various opportunities found in the economy that led the

companies to invest ignoring various challenges faced by them.


13/15


Page | 13

BIBLIOGRAPHY

Websites:

www.wikipedia.com www.nationsonline.org www.indexmundi.com

Books:

Global investment center, Thailandcountry report study. Washington DC, 2008 Oxford business school, The reportThailand 2009. London, 2009

Annexure 1: Recent article on Thailand
http://www.wikipedia.com/http://www.nationsonline.org/http://www.indexmundi.com/http://www.indexmundi.com/http://www.nationsonline.org/http://www.wikipedia.com/


14/15


Page | 14

Thai flood damage likely to cost Bt100-200 bln, to shrink GDP by 2%: World Bank

oBANGKOK, Oct 20 - Thai floods damage is likely to cost at least Bt100 billion and perhapseven amount to more than Bt200 billion and to shrink the countrys gross domestic product(GDP) by two per cent, Kirida Bhaopichitr, World Bank senior economist for Thailand saidon Thursday.

Thai economic growth in the fourth quarter is projected to be negative. However, the WorldBank must continue monitoring the situation for further assessments as the flood crisis hasnot ended yet.

Thai economic growth will be revised downward about December, from earlier projectedgrowth of 3.7 per cent.

But the Thai economy in 2012 is likely to expand more quickly than the World Banks projection at 4.2 per cent indicates due to Thailands post-flood rehabilitation projects nowbeing considered, which will boost economic activities in the country as well as GDP growth,Ms Kirida said.

In the short term, foreign investors will not relocate their production bases elsewhere asThailands basic infrastructure and regulations facilitate investment. Currently Thailand

ranked 17th having moved upward from its 19th ranking among 183 countries in the WorldBank Doing Business Report on measures of whether regulations make doing business easieror harder.

For the medium- and long-term, foreign investor decisions depend on the governments post-flood measures and new standards to protect industrial estates from flooding in the future.The World Bank believes it is time for Thailand to have and apply effective watermanagement because from 2014-2015, China will start operations of five or six dams whichwill affect water conditions further downstream in the Mekong River and in Thailand.

The governments plan to seek loans for the necessary rehabilitation work can be done asThailands public debt is still low. The Bt 400 billion loan, accounting for four per cent of


15/15


Page | 15

GDP, will not cause problems with the countrys fiscal position as rehabilitation projects willhelp stimulate the economy. The Bank of Thailand (BoT) decision to keep the interest rateunchanged at 3.5 per cent is deemed appropriate. However, post-flood inflationary pressuremust be closely monitored.

The bank will send specialists to jointly assess damage incurred from flooding withThailands Finance Ministry. It is ready to offer financial assistance to Thailand forrehabilitation, the bank economist said.

BoT Board Chairman Jatumongkol Sonakul said the Thai economy will be able to revivefrom flooding within one to two months and the impact is not likely to prolong to the firstquarter of next year provided that repairs to damaged production machinery will take a shorttime to complete. Moreover, purchase orders have not been disrupted.

Foreign investors are still confident in Thailand and will not relocate their production baseselsewhere thanks to the countrys strong fundamentals. However, the government must have

money in circulation for the private sector to use in rehabilitation and must be prepared torespond to the changing water situation in the future.

Meanwhile, BoT Governor Prasarn Trairatvorakul said the flood crisis is likely to send GDPin the fourth quarter into the negative and the 2011 GDP to drop more than one per cent fromearlier the projected growth of 4.1 per cent as the production sector was initially affected withdamage of about Bt100 billion with the shutdown of six industrial estates. Moreover, thecountry is likely to be impacted by the fragile global economy.

GDP growth in 2112 will be maintained at 4.2 per cent if the current flood crisis is overwithin the next few months. (MCOT online news)

Documents

Outline of Study