Following the 2008 global financial crisis, the Thai economy showed resilience by posting satisfactory growth, while many other larger economies around the world slipped into a recession. In 2011, the coutnry's gross domestic product (GDP) grew by 0.1 percent, lower than the previous projection of 3.5 - 4.0 per cent as the result of flood crisis. Total investment increased by 3.3 per cent, while exports increased by 16.4 per cent. The country's international reserves stood at USD 175.4 billion in July 2012. While many countries are experiencing difficulties dealing with high public debt level, Thailand's public debt-to-GDP stands at a modest 41.4 per cent. In 2012, Thailand is expected to rebound from the flood crisis, with projected GDP growth between 5.5 - 6.0 per cent, given the Government's 2P2R's strategy focusing on four areas, namely, protection, preparation, response and recovery following the floods. In fact, the Government has one of the largest investment plans in the region which include major infrastructure development, from flood prevention projects to high-speed trains totalling up to USD 100 billion.
In order to alleviate the current flood situation, the Government approved a flood relief and recovery plan totalling over USD 10 billion which includes USD 8.3 billion in soft loans being planned for SMEs, entrepreneurs and industrial estate developments and USD 1.42 billion for reconstructing the economy and society and which will be offered to both the industrial and agricultural sectors.
Thailand offers unrivalled trade and investment opportunities. With strong economic fundamentals, extensive infrastructure, a strategic central location in the heart of Southeast Asia, progressive foreign investment policies and unmatched hospitality of the Thai people, Thailand ranked 2nd in Southeast Asia and 17th in the world on the World Bank's Ease of Doing Business Index 2012. The Thai Government is fully committed to promoting and enhancing trade and investment opportunities, improving the country's business environment and offering added value to investors. Moreover, the improved political climate in Thailand, following the general elections in July 2011, will only improve business sentiment.
Thailand's overall GDP for 2012 is expected to grow between 5.5 - 6.0 per cent.
Information about Thailand’s economic performance and outlook can also be found on the websites of the National Economic and Social Development Board (www.nesdb.go.th), the Ministry of Finance’s Fiscal Policy Office (http://www.fpo.go.th/FPO/index2.php), and the Bank of Thailand (http://www.bot.or.th/English/Pages/BOTDefault.aspx).
Following the 1997 financial crisis, Thailand restructured its financial system. The resulting strong economic fundamentals helped minimise the far-reaching impact of the global financial meltdown in 2008. In fact, the International Monetary Fund issued a report in June 2009 that noted the strength of Thai financial institutions and the nation’s macroeconomic policy.
Looking ahead, the Thai Government is committed to preparing the country for the challenges and uncertainties that lie ahead for the world economy. A series of macroeconomic and microeconomic policies will be implemented to strengthen the country’s financial standing and improve the quality of life of the Thai people. For example, an increase in the national minimum wage will greatly enhance the lives of the low-income population and generate spending and in turn help stimulate growth. In addition, the Government is directing its attention to improving transportation infrastructure both in Bangkok, with expanded public transportation rail lines, and throughout the country, including an extensive railway and highway systems and further development of Laem Chabang Deep Seaport.
The Government is also focusing on the further enhancement of Thailand’s competitiveness through enlarging the pool of skilled labour by equipping them with advanced knowledge. Small and medium enterprises will be encouraged via incentives to focus on greater use of technology.
With a supportive public sector as well as solid economic fundamentals, a free-market economy, a vibrant industrial sector, strong financial institutions and expanding regional partnerships, the Thai economy will continue to prosper.
The Government’s Response to the Floods
In order to alleviate the current flood situations, the Government approved a flood relief and recovery plan totalling over 10 billion US dollars which includes 8.3 billion US dollars in soft loans being planned for SMEs, entrepreneurs and industrial estate developments and 1.42 billion US dollars for reconstructing the economy and society to be offered to both the industrial and agricultural sectors. This relief and recovery plan will be implemented as follows:
1. Immediate Phase:Immediate measures focusing on ensuring people’s safety and diminishing damage to businesses; helping people and businesses adjust to the current flood situations within 1 - 2 months, which are:
- Database for infrastructure rehabilitation;
- Integration of activities in temporary shelters;
- Social rehabilitation activities;
Main economic measures consisting of (1) Measures for the industrial sector; (2) Providing assistance to labourers through skill-development programs; (3) Restoring and repairing roads and infrastructure; (4) Measures on water management; and (5) Approaches to monitoring, rationing, and regulating prices of goods and services
2. Short-term Phase: Measures focusing on reconstructing the economy and society in a comprehensive manner consisting of:
- Measures concerning loans for people and business operators affected by the floods;
- Individual loans provided by Special Financial Institutions comprising loans for individual groups, housing mortgage and loans for affected farmers;
- Individual loans provided by Social Security Program comprising individual loans for affected business enterprises for reconstruction and individual loans for affected self-insured for reparation of residence;
- Soft loans from business operators provided by the Government Savings Bank in cooperation with commercial banks;
- Loans provided by the Japan Bank for International Cooperation (JBIC);
- Loans for development of flood-protection systems for industrial estates and manufacturers;
- Loans for SMEs provided by the Small Business Credit Guarantee Corporation;
- Credit guarantees for SMEs provided by the Small Business Credit Guarantee Corporation
Investment incentives and other measures, such as:
- Consideration by the Board of Investment of Thailand (BOI) on the extension of the incentive period and the investment benefits for affected investors;
- Facilitation of visa application and employment licensing procedures
- A plan of action for dewatering and reconstruction of industrial estates with the aim of resuming business operations within 45 days after the flood has receded.
3. Long-term Phase: Comprehensive reconstruction of the water management system for flood prevention in 2012, and management that can effectively resolve flood problems in the long run by identifying nation-wide rehabilitation in the post-crisis period as a national agenda consisting of:
- Development of the water management system;
- Acceleration of the construction of a permanent flood-prevention system to ensure industrial confidence;
- Designation of the development areas in compliance with the appropriateness of each area and implementation of comprehensive urban planning;
- Design, construction and restoration of infrastructure to ensure water flow and better risk management in case of flood;
- Ensure adoption of appropriate agricultural production practices of farmers;
Improvement of the warning system for efficient flood emergency management;
- Review and revision of laws and regulations on water resource management;
- Enhance the people’s participation in national water and water resource management.
Thailand is strategically located as the gateway to mainland Southeast Asia and Southern China. Its social atmosphere, our dynamic economy, solid infrastructure, FDI policies, government support and incentives, long-established and newly emerging industries, our friendly and rich culture, and our education and healthcare services are second to none in the region.
A good source of information on investment in Thailand is the Board of Investment’s (BOI) website located at http://www.boi.go.th/. Their FAQ section at http://www.boi.go.th/english/faq.asp is also very informative.
To facilitate investment, on 23 November 2009, the BOI opened the One Start One Stop Investment Centre (OSOS) at Chamchuri Square in Bangkok’s Central Business District (CBD).
The establishment of the OSOS is a direct result of the Royal Thai Government’s efforts to further promote an investment-friendly environment and its commitment to work with investors to solve problems that crucial to them. For further details, please refer to the OSOS website at http://osos.boi.go.th/.
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