Chapter II: Literature Review

1.1.Introduction

This chapter will provide a background and overview of the research study. First, a general

knowledge about Thailand and its economy will be presented, following by an overview of Thai

economy, demographic data, and policies of the government integration into international trade

and with AEC and another regions, where the research was conducted. Finally, the main objective

of this chapter is to provide the theoretical background knowledge for the present study.

1.2.Thailand overview

2.2.1 Geography

The Kingdom of Thailand is situated

geographically south of China and north of

Australia in a region known as Mainland

Southeast Asia. The country of Thailand is

located in the continent of Asia and placed

almost exactly at the center of the

Indochinese Peninsula.

The easiest way to locate Thailand on a

world map or globe is to pinpoint the

nation which rests at the heart of the

infamous Golden Triangle. This opium-

producing land mass converges between

the regional borders of Myanmar, Thailand, China, and Lao People’s Democratic Republic.

Thailand is reported to be the world’s 51st largest nation. The Kingdom has a coastline measuring

over 2,000 miles and occupies a geographical land mass of approximately 510,000 square

kilometers, which is about the same size as mainland France. Locating the exact position of

Thailand on a simple atlas is best done by finding and discovering the land borders of its

neighboring countries. So where is Thailand located in relation to other SE Asian countries? Laos

sits to the northeast, Myanmar (Burma) to the north and west, Cambodia is situated to the

southeast, and the far south is where the Gulf of Thailand meets Malaysia and the Malay Peninsula.

The Andaman Sea and the Indian Ocean constantly lap against the western shores of mainland

Thailand, whereas the country’s international and nearby maritime boundaries include Cambodia

and Vietnam to the south and south east of the Thai Gulf respectively.

2.2.2. Population

As of 1 January 2016, the population of Thailand was estimated to be 68 098 436 people. This is

an increase of 0.38 % (255 767 people) compared to population of 67 842 669 the year before. In

2015 the natural increase was positive, as the number of births exceeded the number of deaths by

235 414. Due to external migration, the population increased by 20 353. The sex ratio of the

total population was 0.966 (966 miles per 1 000 females) which is lower than global sex ratio.

The global sex ratio in the world was approximately 1 016 males to 1 000 females as of 2015. See

also map of the world by sex ratio of total population.

In absolute figures (estimate):

13 520 263 young people under 15 years old ( 6 919 482 males / 6 600 100 females)

48 300 859 persons between 15 and 64 years old ( 23 893 698 males / 24 407 160 females)

6 277 314 persons above 64 years old ( 2 835 619 males / 3 441 695 females)

2.2.3. Languages

Thailand is dominated by languages of the Southwestern Tai family. Karen languages are spoken

along the border with Burma, Khmer is spoken near Cambodia (and previously throughout central

Thailand), and Malay in the south near Malaysia. The Thai hill tribes speak numerous small

languages, many Chinese retain varieties of Chinese, and there are half a dozen sign languages.

Thailand has 73 living languages.

2.2.4. Religions

Thailand is the world's most heavily Buddhist country. About 93.6 percent of all the people in

Thailand are Buddhists (nearly all of them Theravada Buddhists). You will see Wats (Buddhist

temples) and saffron robed monks everywhere. About 4.6 percent of the population is Muslim.

They are mostly Malays who live in southern Thailand but there are also some in the north and

other parts of Thailand. Many hill tribe members are animists or relatively recent converts to

Christianity. Christians make up 0.9 percent of the population; Hindus, 0.1 percent; and Sikhs,

Baha’i Faith, and others, 0.6 percent.

Most of Thai people are practicing and observing in Buddhism which is Theravada Buddhism, and

it’s the official religion of Thailand, especially tolerance of religious is the both culturally in

Thailand and protection by the constitution. The tolerant philosophy of Buddhism and the

constitutional guarantees of religious freedom have provided a fertile ground for adoption and

admixing new religious beliefs with traditional beliefs. In the Thai eyes, the superstition and

metaphysics in animism, demonology, and Hindus cosmology are not at odds with the Buddhist

cosmology depicted in the Buddhist canon and religious folk tales. These strands of belief systems

maintain peaceful coexistence, and many Thais follow some of these practices to a certain degree

during different parts of their lives.

2.2.5. Climate

As well know that Thailand weather is similar climate of other conutries, such as Vietnam,

Cambodia and Lao, and so on. It is controlling by tropical monsoons and which is weather is

generally hot and humid across most of the country throughout of the year. Thailand’s seasons are

general divide into three seasons such as, hot season, cool season, and rainy season, but reality it’s

relative hot season most of the year. So, there are some parts of Thailand, which weather in central,

northern, and northeastern are determine by three seasons, in the southern, coastal regions of

Thailand feature only two. Therefore, this is the way to understanding and knowing the climate of

Thailand.

2.2.6. Cultures

The cultures and traditions of Thailand are generally know very colorful and civilization. And it

also familiar with cultures of Cambodia, Myanmar, and Laos, with the Gulf of Thailand to its south

because all of these countries are practice and have long relative in Buddhist society and Mekong

delta. Another one to understand and know the cultures of Thailand is mixes up Indian, Chinese

cultures and traditions, and it’s an elements that are uniquely Thai. Which its diverse geography,

friendly people, and stunning scenery for become the land of smiles which is a good view must be

see the destination in South East Asia.

One of the most important thing to understand and know on Thai culture is has been long relative

to Buddhism. Most of the people of Thailand are stem directly from Buddhist principles and

societies with its traditions and beliefs. Hinduism has also made important influences in

contributions to Thai culture, and very link to both cultures between Thailand and Indian might

see in art, literature, and in many sorts of Thai rituals. The cultures of nearby Laos, Cambodia,

Myanmar, and China have also a very important role in forming the traditions of Thailand, as have

indigenous belief systems such as Animism.

Thai culture is deeply influenced and relative to religion. Which is people of country is believe

95% in Theravada Buddhist, the belief system and values of Buddhism playing a very important

role in daily life. Beside of that kind of culture, the most important values of Thai people holding

are respect, self-awareness, and love kindness and compassionate, good attitude. In general, Thai

people are displays of emotion in public are viewed in a very negative light which is no matter

how frustrated or upset a person might feel will always strive to maintain and feel a positive and

friendly and a smile to them.

1.3.Overview Thai Economy

At present, Thailand is a country know as second tiger of economic in Asean community after

Malaysia, and it’s no longer an agricultural economy. In less than thirty years, Thailand has been

transformed from a subsistence agrarian society into a rapidly industrializing free-market country.

Most important is also one of the great development success stories. Due to smart economic

policies it has become an upper middle income economy and is making progress towards meeting

the Millennium development goals.

Therefore, in this part will be exploring and studying about the Thai economy conditions in 2015

and outlook in 2016. It’s also would to recognize and research on the strategies economics of the

government with making economics developments, international trade and investment, Foreign

Direct investment, and also study on the system of banks and policies of it.

2.3.1 Thai economy conditions in 2015

In 2015, as people of Thailand and government expected that the Thai economy expanded at a

higher rate of 2.8 percent though it continued to face many obstacles and challenges amidst

volatility in the global economic and financial systems and monetary policy divergence of major

economies. Moreover, recovery of major trading partners continued to be fragile while

international trade structure shifted from past norms, causing the value of Thai exports (in US

dollars) to contract by 5.6 percent. Thus, domestic sources of growth became the main engine for

the Thai economy this year. The government expedited disbursement of current and capital

expenditures alongside the introduction of fiscal stimulus measures. Meanwhile, the decline in oil

prices helped lower businesses’ cost of production and improved people’s cost of living. However,

subdued agricultural prices continued to impede private consumption growth. Headline inflation

recorded at negative 0.9 percent, largely owing to the decline in oil prices though deflationary risk

was low. The trade and the current account balances together with the international reserves

remained strong, reflecting a well maintained external stability.

It is expected that the Thai economy would continue to recover. While exports would likely remain

negative, the Thai economy would be supported by continued public expenditure and government

project-related private investment. Moreover, tourism outlook continues to improve. Nonetheless,

the Thai economy would still be subjected to risks from the fragile recovery of major economies

and the slowdown of China which would negatively impact the global economy, the weak outlook

of agricultural prices, and the domestic drought problem that would dampen farm income and

domestic consumption. Furthermore, there remain a number of structural problems that need to be

addressed in order to enhance Thailand’s economic potential in the next periods.

A. The GDP growth in 2015

The Gross Domestic Product (GDP) in Thailand was worth 395.28 billion US dollars in 2015. The

GDP value of Thailand represents 0.64 percent of the world economy. Domestic spending was the

main driver of growth. Well-disbursed government spending throughout the year, coupled with a

series of stimulus measures, helped support economic momentum. Private consumption expanded

following an increase in non-farm income, a continued decline in oil prices, and recovery in

consumer confidence. Nonetheless, high household debt burden and subdued farm income due to

drought and depressed farm prices, particularly rice and rubber prices, remained a drag on private

consumption. Meanwhile, the tourism sector also played a role in supporting growth thanks to the

high growth in Chinese tourists, while the adverse impact of the bombing incident in Bangkok was

short-lived.

Moreover, the other sectors would be increases and established over than last year which is

classified on the ratio of tourist at the department of tourism of Thailand. It’s a figures is very

important to make it developed and more outcome of this sectors. This was recovery of Thai

economy.

B. Major markets and sectors of Thai Economics

Economic recovery was constrained by a continued contraction in exports, both in terms of price

and quantity. Export prices declined in line with a fall in oil prices, while export quantity fall due

to a going down in Thailand’s major trade partners’ economies, particularly China, Asean

community. Consequently, manufacturing production remained at a low level. A robust expansion

in exports and production in certain products, such as automobiles, was due to temporary factors,

in particular the production of new car models and the acceleration of car purchases in late 2015

before vehicle excise tax increases came into effect at the beginning of 2016. A gradual recovery

in domestic demand, weak exports and together with sufficient production capacity led to a

contraction in investment. Although private investment picked up in the last quarter, investment

growth was limited to certain sectors. These included investment in telecommunications to support

network expansion following the auction for 4G licenses, and renewable energy in line with

government support measures.

As the resulted, the number of the manufacturing production index show up and performed was

sustainable and stability.

In terms of economic and financial stability. Headline inflation posted negative figure due to the

sharp fall in oil prices. However, deflation risk was still low as core inflation remained positive

and inflation expectations were close to the inflation target of monetary policy. Unemployment

rate remained at a low level, comparable to that of the previous year. Nonetheless, sluggish and

uneven economic recovery led to slightly higher vulnerabilities in the household and business

sectors, particularly with regard to their ability to service debt. This was reflected in the declining

loan quality of the private sector. Nevertheless, financial institutions remained sufficiently resilient

to withstand the adverse impact of deterioration in loan quality.

The current account consistently registered a surplus, owing mainly to a substantial fall in imports

amid slumps in global oil prices and slow economic recovery. The capital account was in deficit

due to a net sale of Thai securities by foreign investors in order to reduce their asset holdings in

emerging markets amid high volatility in the global financial market. Thai investors continued to

invest abroad, both in the form of direct investment in pursuit of business opportunities, and

portfolio investment in equity and bond markets in search for yield and for risk diversification

purposes. The Thai baht and regional currencies weakened against the U.S. dollars from last year,

as the U.S. economy showed positive signs of economic recovery and the market began to

anticipate the Fed’s interest rate hike in late 2015. The Nominal Effective Exchange Rate (NEER)

depreciated albeit at a slower pace, because the baht moved in the same direction as the regional

currencies. The overall external stability remained sound. The ratio of international reserves to

short-term external debt remained higher than the international benchmark, while the ratio of

external debt to GDP remained low.

In additional, in 2015, the Monetary Policy Committee (MPC) reduced the policy rate twice in its

March and April meetings, with a view to support Thailand’s economic recovery. The policy rate

stood at 1.50 percent at the end of 2015. Consequently, the private sector’s funding costs declined,

notably in the bond market, prompting large businesses to acquire their funding increasingly

through corporate bond issuances. However, the gradual economic recovery meant that financial

institutions remained cautious in their lending. Private credit growth edged up slightly from the

previous year. While new credit extended to most business sectors remained at low levels, credit

extended to some sectors, such as real estate, renewable energy and food processing, posted solid

growth. On the other hand, SMEs credit accelerated in late 2015 from the government’s soft loan

scheme.

Thailand’s Economic Condition in 2015

2013

2014 2015

Year H1 H2 Year H1 H2 Year (Annual percentage change, unless specified otherwise)

Gross

Domestic

Product 1/

2.7 0.1 1.5 0.8 2.8 2.8 2.8

Demand (expenditure) Private

consumption

expenditure

1.0 -0.9 2.0 0.6 2.1 2.1 2.1

General

government

consumption

expenditure

2.5 2.3 1.9 2.1 0.9 3.5 2.2

Gross fixed

capital

formation

-1.0 -7.6 3.1 -2.4 6.3 3.2 4.7

- Private -1.5 -6.0 4.4 -1.0 0.2 -4.1 -2.0 - Public 0.8 -12.9 -1.3 -7.3 29.4 30.2 29.8 Exports of

goods and

services

2.7 -0.3 0.7 0.2 1.3 -1.0 0.2

Imports of

goods and

services

1.6 -9.9 -0.4 -5.3 1.3 -2.0 -0.4

Supply (production) Agriculture 0.8 2.6 -1.0 0.7 -4.4 -3.3 -3.8 Manufacturing 1.7 -1.2 0.8 -0.2 1.0 0.9 0.9 Construction 0.1 -6.6 -0.4 -3.7 15.8 15.8 15.8 Services and

others 3.5 0.8 2.2 1.5 4.0 4.0 4.0

Domestic stability Headline

Consumer Price

Index

2.18 2.23 1.56 1.89 -0.81 -0.98 -0.90

Core Consumer

Price Index

(excluding raw

food and

energy)

1.00 1.45 1.72 1.59 1.22 0.88 1.05

Unemployment

(percent) 0.7 0.9 0.7 0.8 0.9 0.9 0.9

Public debt

(end of period,

billion baht)

5,45 5,655 5,624 5,624 5,684 6,005 6,005

Share of GDP

(end of period,

percent)

45.7 47.1 46.3 46.3 42.8 44.4 44.4

External Stability (billion U.S. dollars)

Trade balance 6.7 12.2 12.4 24.6 15.3 19.3 34.6 Current account

balance -5.2 5.6 9.9 15.4 14.6 17.0 31.6

Capital account

balance 0.3 0.0 0.1 0.1 0.0 0.0 0.0

Financial

account balance -2.5 -8.6 -7.9 -16.5 -3.8 -14.3 -18.1

Balance of

payments -5.0 -1.1 -0.1 -1.2 7.3 -1.5 5.9

Gross

international

reserves (end of

period)

167.

3

168.2 157.1 157.1 160.3 156.5 156.5

External debt

(end of period) 141.

9

144.9 140.1 140.1 136.5 129.4P 129.4P

International

reserves to

short-term debt

(ratio)

2.7 2.7 2.8 2.8 2.9 3.1P 3.1P

External debt to

GDP (percent) 35.8 36.3 34.4 34.4 33.3 31.8P 31.8P

External debt to

export value

(percent)

51.9 52.7 50.1 50.1 48.6 46.4P 46.4P

Short-term debt

to external debt

(percent)

43.6 43.2 40.0 40.0 40.2 39.6P 39.6P

Monetary statistics (end of period) (billion baht)

Monetary base 1,581.3 1,508.1 1,668.1 1,668.1 1,549.9 1,710.1 1,710.1 Annual percentage

change 5.6 8.8 5.5 5.5 2.8 2.6 2.6

Narrow money 1,661.3 1,585.2 1,682.6 1,682.6 1,619.8 1,781.7 1,781.7

Anual percentage

change 3.9 4.3 1.3 1.3 2.2 5.9 5.9

Broad miney 16,062.2 16,119.

8

16,811.9 16,811.9 17,101.3 17,560.2 17,560.2

Annual percentage

change 7.3 4.4 4.7 4.7 6.1 4.5 4.5

Financial

institutions’

deposits including

bill of exchange 2/

15,764.2 15,788.

5

16,433.4 16,433.4 16,776.1 17,274.4 17,274.4

Annual percentage

change 7.6 3.8 4.2 4.2 6.3 5.3 5.3

Financial

institutions’ private

credits 2/

14,688.9 14,892.

7

15,343.4 15,343.4 15,651.2 16,159.5 16,159.5

Annual percentage

change 10.0 6.5 4.5 4.5 5.3 5.6 5.6

Interest rates (end of period) (percent per annum) - Repurchase rate,

one-day 2.25 2.00 2.00 2.00 1.50 1.50 1.50

- Overnight

interbank rates

(mode)

2.15 1.90 1.90 1.90 1.40 1.40 1.40

- Time deposit rate,

one year 3/

2.23 1.73 1.73 1.73 1.50 1.40 1.40

- Prime rate (MLR) 3/

6.84 6.75 6.75 6.75 6.51 6.51 6.51

Exchange rate (end

of period) (baht per

US. dollar)

32.86 32.45 32.90 32.90 33.77 36.00 36.00

Nominal Effective

Exchange Rate

(end of period

(2012 = 100)

102.12 102.46 109.08 109.08 108.84 106.07 106.07

C. Conclusion

In 2015, Thai economics has improve and established in many aspects and sectors. So, as the

resulted that the economic management for the remaining of 2015 and in 2016 should emphasize

on it. Firstly, implementing key public infrastructure investment projects, especially mega projects

which can begin the bidding process within 2015-2016, the water resource management plan, the

urgent phase of the road transportation development plan under the second economic stimulus

package, as well as the border special economic zone development. Secondly, supporting the

recovery of private investment by publicly promoting investors to fully enjoy investment

privileges under programs approved by the Cabinet in order to expedite their investment projects,

adopting proactive measures to incentivize investors to invest in the targeted industries and

services, and addressing the problems faced by SMEs. Thirdly, disbursing government budget to

meet the intended target. Fourthly, supporting income for farmers and low-income people by

accelerating budget disbursement under the approved programs. Fifthly, its solving problem in

agricultural sector by monitoring, preventing and alleviating drought impacts, reducing the costs

of agricultural inputs, supporting the farmer group establishment and combining farm lands of

small farmers, as well as promoting renting cost to move in line with product prices. Sixthly,

bolstering export to grow no less than 3.0 percent by providing incentives for the private sector in

order to enhance export value, maintaining the exchange rate to be in suitable range, coordinating

among public and private agencies to increase the volume of key export items, maintaining the

prices of imported raw material and inputs to be in line with the global market prices and the

currency depreciation of key import markets, reducing the delay and limitation created by the

bureaucracy, continuing to work on the illegal workforce and illegal fishing issues in order to

prevent the export and production in the fishery sector from being affected.

2.3.2. Thai Economy in 2016

As the people of Thailand and government are expected that in 2016 Thai economics and other

aspects of Thai economic will be developed and increases over than economic at 2015. It’s a factor

very important to push economics and investment up and especially that it is a good opportunity

for Thai economic and trade to integration with other countries and regions as NAFTA, ASEAN,

and TPP and so on.

So, Thai economy in the first quarter in 2016 expanding to 3.2%, comparison with a 2.8% growth

in previous quarter. The expenditure side was supported by high growth in government spending

and investment, and export of services, as well as the growth in private consumption and private

investment. The production side grew in most sectors, especially hotel and restaurants, and

construction which showed high growth. Transportation and wholesale and retail trade grew

reasonably well. Meanwhile, agriculture

and manufacturing falling. After time of

adjustment, the Thai economy in the first

quarter expanded to 0.9% from the fourth

quarter in 2015.

2.3.2.1. Expenditure side

Private consumption continuously

increased due to an expansion of

consumption expenditure on non-durable goods. In the first quarter of 2016, private consumption

rose by 2.3%, comparing with 2.6% expand in last quarter. Sales of benzene (and gasohol) and

diesel increased by 8.8 and 5.8 percent which decelerated from a 12.7 and 6.0 percent expansion,

respectively in previous quarter. Meanwhile, electricity consumption and VAT of hotel and

restaurant index at 2010 price grew by 11.0 and 11.5 percent, respectively, which improved from

8.2 and 4.0 percent expansion, respectively in last quarter. Sales of passenger cars and motorcycles

decreased by 26.6 and 7.7 percent, respectively. Such fall was due to the acceleration of car

demand in last quarter before the adjustment of excise tax rated applied from the first of January

2016. As the consumer Confidence Index linking to the overall economic situation stand at 63.5,

compared with 63.6 in the previous quarter.

In private investment expanded in both investments in construction and machinery and equipment.

In the first quarter of 2016, private investment increased to 2.1%, slowly accelerating from 1.9%

expansion last quarters. The investment in machine and equipment rose to 0.9%, decelerating from

2.7 percent growth last quarter which was consistence with the deceleration of flow up value of

financial, products and domestic sales of promotes car, which increased to 1.3% and 3.8%,

comparing with 3.2% and 17.4% expansion in the last quarters. The investing of construction

increased to 7.0%, well improved from a 1.3 percent contraction last quarter. It was due to the rise

of condominium and residential construction around mass transit area located in both Bangkok

(and vicinity) and industrial construction in other areas. Likewise, the value of projects applied for

the investment promotion made to Board of Investment (BOI) in this quarter was recorded at ninety

billion baht, representative an increasing of 211.6%. It greatly bounced the consecutive contraction

in the last 3 quarters. The value of projects approved by BOI was recorded at 109 billion baht,

reducing by 49.9 percent compared with 52.2 percent contraction last quarters. The BSI stand at

49.4, comparing with the level of 49.7 in the previous quarter.

Another, also expected that exports in US dollar term contracted due to the fall in export prices

and the economic deceleration in key trading partners. However, exports in Thai baht term grew

in line with Thai baht depreciation. Value of export in the first quarter of 2016 was recording at

US$52.3 billion, representing a 1.4% in the contracted, comparing with a decline of 7.9% in

previous quarter. The export quantity increased by 1.1 percent, whereas export price contracted by

2.4 percent. Such decline was a consequence of unfavorable economic conditions of key trading

partners, especially China, Japan, and the US; and the refused in prices of export which fall with

price of crude or simple oil and agricultures prices in the regions and international market,

particularly fuel price refuse or decline to 15.5%, with 1.9% share of total export, chemises

products (by 6.2%, with 2.6% share), rubber to 22.7%, with 1.9% share, rice (by 16.6%, with 2.3%

share, and sugar is to 12.2%, with 1.3% share. Value of export is excluding unwrought gold,

contract to 5.1%, compare with a fall of 8.5% in previous quarter. In term of bath, the export value

was record at 1,862Bth billion, increasing to 7.7 %, compare with a growth of 0.9% in last quarters.

Export agricultural commodity fall to 7.8%, compare with a decline in 14.6% in last quarters.

There is a 1.6% increase in the quantity of export in agricultural products, especially is rice,

rubbers, and sugars, compare with a 6.7% decline in last quarter. Meanwhile, prices of export is

key products, such as rice, rubbers, sugars are continued to decreasing. In the result, prices of

export in agricultural products are decrease to 9.3%, which was close to the 8.4 percent fall in

previous quarter. The major agricultural products in exports includes rice whose value of export is

increased to 11.8% due to a 34.1% increase in quantity of export mainly to China, Indonesia, and

Côte d’Ivoire, whereas export price declined by 16.6 percent. The value export of tapioca fall to

17.1%, contributed by an 11.8 percent decrease in export price and a 5.3% decline in export

quantity. While the value export of rubber fall to 22.2 % as its export price fall to 22.7%.

Meanwhile, export quantity increased by 0.7 percent. Value of export of the sugar increased to

30.9 %, as export quantity increased by 48.0 percent mainly due to the export to ASEAN market,

while its export price fell by 12.2 percent. Export value of manufacture production declined to 2.7

%, compare with a 7.9% contracted in last quarters, the time slow recovery of the global needed,

as well as the going down in prices of export which fall with the simple oil price. The quantity of

export declined to 1.0%, if compare with 5.8% fall in last quarter. At that time, the prices of export

continuing to decline to 1.8%. The export value of key manufacturing products such as chemicals,

petrol products and petro chemical products continuing to contracted to14.9, 5.8, and 42.7%, such

as the export prices remain low into the decline of crude oil. On the other hand, export of passenger

car expanded by 74.8% due to the growth in export to Australia, the Philippines and Middle-East.

The export value of fishery products increasing for the first quarter in 5 quarters to 3.3%. The

factor of products whose value exports increased include cuttlefish, squid, and so on. Output of

other products increased to 193.5% as a result of the 230.7% increase in the export of not monetary

gold due to the increase of gold price in the global market.

Markets of exports is export to way of markets such as US, EU (15), China, and CLMV declined,

while exports to ASEAN (5) and Australia expanded. Exports to the US, EU (15), China in this

quarter contracted by 3.2, 0.6 and 6.4% in respectively. Such decline is in line with the economic

deceleration of the US and China. Meanwhile, Exports to Australia increased by 7.2 percent,

whereas export to ASEAN (9) as a result increase to 3.9% to a 9.1% increase in export to ASEAN

(5), especially Singapore, Indonesia and Philippines as well. For trading to CLMV, however,

contracted for first time in the 26 quarters to 4.0%, mainly time the fall in fuel export to Cambodia.

At that time, the export to Hong Kong would increasing by 0.6 %, whereas export to the Middle

East contracted by 11.3%.

All in all there is the decline in value of import in raw materials and intermediate goods, capital

goods, and other products. During that time, the imports of consumer goods expanding. The value

of import of the raw materials and intermediate goods declined to 19.1% due to a 13.1% and 6.9

% decline in import prices and import quantities in respectively. For who supply, import value

decreases include simple oil, chemical products, computer electronics and the accessories, and

integrated circuits parts. The value of import of capital goods fall to 0.5%. The import whose

values fell include computer, other machinery and mechanical appliances & parts. On the other

hand, the key goods with an increase in import value included telecommunication equipment,

which grew due to the investment in the 4G network, and transformers, generators, motors, and

accumulators which increased because of the investment in renewable energy industry. The value

of import of consumer goods growth to 2.7% due to a 4.0% increasing in import quantities, while

import price declined by 1.2%. The import items with an increase in value included house holding

electricity appliances and jewelry. The value of other imports falling to 15.0 %, and especially that

the products import of non-finances gold which fall by 51.3%.

In the last, term in trade improvement that from last quarters as export prices decrease to 2.4%,

while import price decreased by 7.7%. So, this is improved slightly from 115.4% in last quarters

to 117.9% in the first quarter of 2016, compared with 111.5 in the same quarter of last year.

Balance of Trade recorded a surplus. The balance of trade, first quarter in 2016 recorded a surplus

of US$13,301 million if compared with a surplus of US$9,637 million in the last quarter and a

surplus of US$7,480 million in the same period last year.

2.3.2.2. Production Side

The production side is largest side and aspects of Thai economic development. It is also

consequence factor to push up Thai products, goods and materials are develop and increases into

other regions and countries. Such as in the first quarter of 2016, agricultural sector dropping to

1.5% if compared with a 2.1% contraction of the fourth quarter in 2015, making it the sixth

consecutive quarter of decline. This is in association with 1.9% decrease of agricultural product

index, attributed by a decrease in paddy production caused by drought and insufficient water

supply, a decrease in cassava production, caused by drought and a long due of dry spell, which led

to ruined and substandard quality of products; a decrease in maize production, caused by drought;

and a decrease in oil palm production, caused by drought, especially in major planting areas in

Southern Thailand. However, other agricultural productions expanded, namely rubber products,

fruit, livestock, and fishery. Agricultural Price Index decreased by 5.2 percent due to a lower paddy

price following a marketing mechanism which caused by drought, and a lower rubber price

following lower import demand from China as well as oversupply in global market; and a lower

cassava price following its substandard quality of products delivered in market; and a lower white

shrimp price following its higher production volume in market. Nevertheless, fruit and livestock

price increased following a lower volume of products delivered in market which led to insufficient

supply for manufacturers. The decreases of major agricultural products and prices led to lower

farmers’ income which dropped by 7.0 percent.

Therefore, this is agricultures sectors are contracting to follow the decline in the production of

majority agricultures product and it caused by drought and unfavorable prices.

Moreover, industrial sector decreased by 0.3 percent, compared with a 0.8 percent growth in the

fourth quarter of 2015. This was in line with a 1.1 percent contraction in Manufacturing Production

Index (MPI). In details, the production with unfavorable growth included car production which

fell by 3.3 percent, following continuously high orders from domestic market prior to an increase

of excise tax effective from January 1st 2016 clothing and textiles production dropped by 25.4 and

9.6 percent, respectively, following a stagnation in domestic and global demand and radio and

television parts production with a 4.1 percent decrease, following production base relocation into

ASEAN countries, as well as a global demand contraction in personal and notebook computer.

The Capacity Utilization Rate (CAPU) stood at 67.3 percent.

Industries with positive growth included furniture (16.5%), machinery and parts (8.2 percent),

electronic appliances (6.7%), rubber and plastic products (3.2%), chemical products (3.0 %), food

and beverages (2.3%) and non-metal products

(1.2%). Industries which experienced

contraction included petroleum products (-0.9

percent), electronic tube (-2.9 percent), vehicles

(-3.3 percent), radio and television parts (-4.1

percent), transportation device (-5.9 percent),

textiles (-9.6 percent), leather products (-11.1

percent), hard disk drive (-18.5 percent), tobacco

(-20.6 percent), and clothing (-25.4 percent).

Therefore, it is mean industrial sector was

dropped owing to a contraction of production in vehicle, clothing, textile, as well as radio and

television parts.

According to the construction and estimate sectors are increases and expanded more in 2016.

Construction sectors expanded to 11.2% which slightly contracted from 23.9% growth in the last

quarters. Broadly the public construction rose to 14.9%, (government project rose by 15.3%, and

state enterprises increase to 13.9 % in respectively) decelerating from a 54.1% grow up in last

quarters as well. So, at the time the private construction rose to 7.0%, accelerating from 1.3%

contraction in the previous quarter which was in line with the contraction of key indicators,

including an expansion of condominium project along Bangkok Mass Transit System routes in

Bangkok and vicinities, as well as factory construction projects. Price of construction materials

continued to contract by 5.1 percent, especially steel and metal products price which remained

lowest owing to an exceed supply in global market.

As the real estate of the sectors expand to 3.0% is decelerating from a 5.4% expansion in last

quarters. On other side, houses right transfer in Bangkok and vicinities areas and personal housing

credit expanded by 20.6 and 9.3% in respectively. On supply side, completed registered housing

within Bangkok and vicinities areas and real estate development credit increased by 53.2 and 3.0

percent, respectively. Meanwhile, new housing projects1 dropped by 14.2 percent. Regard to the

prices is overall prices increasing, and it’s particularly for the place, condominium, and town with

land, which increase to 12.7, 4.7% and 3.1% in respectively.

In further, the whole sale and retails trading sectors expanding follow an increase of domestic

expenditure and tourist numbers. At first quarter in 2016, whole sale and retails trade sectors are

expanded to 5.1 % accelerating from 5.5% in the fourth quarter in 2015. For wholesale trade,

wholesale index improved in durable goods, intermediate goods and non-durable goods (food,

beverage, tobacco, pharmaceutical and medical goods, incense, and cosmetic products). In the

Trade of retail is the retail trade index grow, including department shops and retailing shop, food

and beverage, as well as other durable goods. However, the indices of car trading, vehicle

maintenance service, and fuel decreased.

Employment grew following an increase in no agricultures employ, while it contracted and

unemployment are remain low. At first quarter in 2016, employment rose to 0.2 % following 1.5%

growth in non-agricultural employment, especially in construction, wholesale and retail trade;

repair of motor vehicles and motorcycles service, as well as accommodation and food service

activities sectors, which grew by 5.8, 2.9, and 2.9 percent, respectively. Meanwhile, industrial

employment contracted by 2.2 percent.

However, agricultural employment

contracted by 2.7 percent, following

drought effect which led to labor

mobilized to service sector.

Unemployment in the quarter is at

369,890 persons, and rise of 1.0

percent.

Then, this is how the employment grow up and increases in non- agricultures sectors instead of

agriculture’s employment. Its mean the economics are development and more estimates of the

products and expenditures of Thailand.

2.3.3. Doing Business in Thailand

Thailand is a country faster develop and increasing in any aspects of economic developments,

technologies, banks operation systems and the policies of integration is stable for investments,

doing business and foreign policies as well. It’s a factor very important to doing business and push

Thailand up developed country which is higher classy of technology and stability. It’s also a good

start for any company invest in there and integration markets into AEC.

Moreover, a majority of economies in East Asia and the Pacific are undertaking reforms to further

improve the regulatory environment for small and medium size enterprises. Last time it was 52%

of the region's 25 economies1 implemented 27 reforms to make it development and easy to do

business in it. If they comparison with others countries or sectors in the regions, and global markets

Thailand is ranking 49 among 189 economies in 2015, if comparing in 46 in 2014.

Source: (Wikipedia+ Doing business in Thailand.)

If looking back to all of the group economic, it would be carried out to reform for their economic

platform to ranking such with Vietnam , Hong Kong SAR, China, and Indonesia. In Indonesia, for

far away it would be an online system is introducing for paying social security contributions,

facilitating tax payments. Reforms in Vietnam including to guarantee borrower right to inspect the

credit data and the new system to establish credit bureau expanding in borrower coverage. Thus,

it is the system to reforms the economics in the country as well in term of social security. Tax

payment and payment process in stable.

The highest number of reforms recorded in the past year was in the area of Starting a Business.

Myanmar made the most improvement globally by eliminating the minimum capital requirement

for local companies and by streamlining incorporation procedures, helping small enterprises save

valuable time and resources. In Brunei Darussalam, which also reformed the incorporation process,

the average time for starting a business fell to 14 days, compared to 104 days last year, as a result

of improved online procedures, and simplified registration and post registration requirements.

Therefore, at this year doing business was report completes that two years effort to expand

benchmarks that to measuring the quality of laws as well as efficiency of the business regulation

framework in term of order to better grasping ground reality. On the other hand, there are the five

indicators showed that is seeing a changes in this country and regions as well.

2.3.3.1. Transportation

Yet, as the geography of Thailand is a central of regions and very logical in each corner of the

nations, that is mean it linking and connecting to each of it. Such as it has communication networks

in Thailand are still development, through linkages of many transport method or modes and

especially that the communication networks in both domestic and international is very important

to make transport systems more efficiency or easier and traffic routes more convenient, with the

purpose of pushing Thailand up to the central of transportation in the region.

In fact, the rapidly developing system of transportation is another factor to moving the Thai

economy influence and development in the regions, such as both Thai people and foreign tourists

find that both their will have day by day with movements and cross-country travels are becoming

more manageable, and easily while the system of transportation is being able to accommodate and

attractive more sectors of businesses and investments into Thai as well as foreign entrepreneurs.

2.3.3.2. Suggested Strategy to work with Thai People in Thailand

In order to manage business and everyday work with Thais, one should be aware of the business

etiquette what applies to most of the Thai people. For a Western eye, the laid-back oriented way

of working might seem waste of time or inefficiency, one needs to accept that part of the culture.

Respect of older and higher ranked people in working community is also a way to prosperity.

Remember, that family is very important - arrange official meetings or important work-related

things well in advance, to no interrupt with the valued family life. (davidcliveprice.com, 2016)

After some time, your literacy of a Thai behavior gets better and you are able to recognize when

they are telling you, for instance, that they understood what you said and will operate accordingly.

However, you can see that this is not the case. Then you can double check and use another words

to make sure your message was delivered effectively and this time you really were understood.

Also, never lose your nerves or show your angriness and shout at someone else. In addition to

these aspects, there is some other Do's and Don'ts in the culture - be aware of these. It is considered

important to be present or have a representative available to discuss and negotiate about further

progress - discussing over phone or by video conference is probably not going to be enough. This

enables you to build a trusted relationship, which is appreciated. (davidcliveprice.com, 2016).

2.3.4. The Policies of Government integration into AEC, Global economies

2.3.4.1. Government of Thailand

At the present time, as all know that Thai government structure is under controlling of the military

government after the junta was take over the power from the Yingluckshisawatra government. But

the fundamental Thai government is has undergone gradually revolution in responding to the

change situation. Although the reservation and preserve of the kingdom monarchy system was

establishes over 700 years ago, it has become one most power of monarchical system and one of

Asia powerful and strongly democracies in a relation short of time. It also has a very good balance

system similar that with any Western democracies countries, with is a prime minister as the head

of the state or government.

At the 1946, it has a direction of elections which finally hold in the people of Thailand vote for

members of the senate and House of Representatives to be preside over by the prime minister to

representative in all executive branch. In the system of the government also include a Supreme

Court, acts independently of the legally office and the legislation, and it also is not until the 1996

constitution that more effects to checks and balances are institution.

Currently, Thailand is seem an country has unstable and insecurity at all, and it also has over the

implications of that coup and the subsequent legislative shake up cause by spring mess protection

to against and favor of the Yinglucshiwatra as former Prime Minister. Another is people of

Thailand are very active in politically and see the value of freedom in themselves even their

tenuous democracy.

2.3.4.2. Foreign relations of Thailand

Thailand is a country has strongly relationship with the regions and foreign countries as well. It

also is a faster of nations that are not real development countries. Such as it has related and friendly

with in term of trade and investment by India and Brazil in the early 2000s, it also has including

with China, Indonesia, Thailand, South Africa, and so. All of this countries are have many clout

in global markets because they have largest of the people and users populations and are largest of

central manufactures and they would be pushing they up with weight around and ensure that their

will interesting are address in the international economy or business.

According to the statement of the foreign policies the Thai government is has strongly support for

the Association of Southeast Asian Nations (ASEAN) in the interested of regions in security and

stability and It also would be emphasis on a close relations and tight up to each other, especially

that is their has long standing security and stability relationship with the America. During 1990s,

Thailand has taking an increasing active function and a role play on the international stage. While

East Timor achievement to get independence from Indonesia. As part of its effort to improve

international relationship, Thailand has sign to be observer image in such region organization as

the OAS and the OSCE. There is preaching international condemnation of the September 19, 2006,

military leading coup in Thailand. However, Thailand still has relations with its partnership had

not serious affected.

2.3.4.3. Foreign Aid and Development

As researcher mentioned as above that Thailand has a good relationship and good foreign policies

with other countries. So, in this case the foreign aid and development are very active and growing

up with their business. Then, at the time that the non-profitable organizations and volunteering

organizations are active in the north of Thailand for doing business and thing on whatever they

like building house or condominium and fixing up host, construction schools, being wells, teaching

bee keeping and set up basic public toilets and other sanitation facilities.

As the central of Asean community and bordering with many countries in Southeast Asia,

Thailand is regarding as father and a donor nation to poorest countries such as Cambodia,

Myanmar and Laos and so on. So, nn any case, Thailand is think its role of being donor nation

rather than a receive one. It also has done many things that like provide loans to another countries

in Southeast Asian neighbors. Then, these countries would be improvement and development their

communication systems and providing the generic antiviral addiction and drugs that treat the

cancers and heavy sick as the HIV and AIDs.

So, according to the project of World Bank in 2005. Thailand is funding eight development

projects in the regions and Southeast Asia. As these projects has showed that the areas of social

investment (300 million US dollars), education (225 million US dollars), land titling (118 million

US dollars), technical assistance (30 million US dollars), and so on. Although, there is still has

some problems or affected from the nature disaster, such as the devastating tsunami of 12/26, 2004,

make the Thai government announcing that it do not need any international financial assistance

and sponsor in response.

2.3.4.4. Legal system of Thailand

Legal system of Thailand is following and studies from the pattern of civil law countries of

conventional Europe union and America. For example that while a problems challenges between

people and people is bring before the judge, the court will decide a case judge on an interpretation

and evidence of the statutory provided. The court judge is not as large and huge a court in a

common law country and unlike a common law court, it should be decision and judge on the

exactly cases and it will not develop a body of law. Despite if it judges and trial by the highest

courts become precedent under the doctrine of laws of the state.

Legal system of Thailand or the law of Thailand are divided into two major sources, firstly, the

legislative and executive offices in central and local governments. Secondly is the judgment

decisions are not laws because they apply on an individual cases, even if the fact that the court will

generally inherent to precedent for crucial cases with the same environment and situation in order

to attain stability and justice.

Then, there are some executive branches and office of the Thailand laws and the legal system of

Thailand as follow name:

Constitutional Law

Acts

Royal Decree

Emergency Degree

Codes and Administrative Agency orders

Cabinet Resolutions

Municipal Ordinances

Before to understanding well about the Thai laws and legal system of Thailand, the researcher

strongly recommendation and notice that, if any companies and investors are doing business and

investments in Thailand should be avoid and not involving to royal family or monarchy system on

whatever attach to embarrassment and not respectively. Therefore, this is what and how the laws

of Thailand was works and running in the system of government at the present time.

2.3.4.5. Free Trade Agreement

Thailand’s six free trade agreements (FTAs) with Australia, China, India, New Zealand and the 10

member countries of ASEAN (Association of Southeast Asian Nations) have made Thailand an

even more attractive place to invest. Exports of electronics, automotive and auto parts, sectors in

which foreigners are heavily invested, have increased significantly. Not only have FTAs

drastically expanded duty free access to 2.87 billion people, key industries have been liberalized,

logistics streamlined and regulations on foreign investments further liberalized.

The FTAs have also provided investors with competitive advantages in the importation of raw

materials, components and other production inputs by reducing and eliminating import duties on

these items. Some of the free trade initiatives also opened new markets and industries to foreign

direct investment, such as the ASEAN Investment Area (AIA) Agreement and the Thailand-

Australia FTA, which enables Australian investors to own majority control of investments in

selected industries in Thailand without BOI promotion. Some FTAs have also harmonized customs

codes and product standards, speeding trade flows. Thailand’s participation in multilateral

agreements has meant that Thai and Thai-based international manufacturers have gained

considerably, increasing Thailand’s allure as a production and export base.

2.3.4.6. Opportunities for AEC

Thailand is a country in the central of the ASEAN community. It is very good opportunities to

integration with the regions and over the world in term of trade, investment and economic systems

in it. So, they will have strengthen and opportunities to integration into Asean community and

international economy as well. As Thailand is has joining with AEC members will see that

advantages from many things give

to Thailand chance to become a

most country of regional economic,

trade, and investment sectors.

There are some factors of

opportunity to integration with

AEC as follows:

1. Location of Thailand is a central

of the region with most of its

connecting to borders ASEAN

countries. So, this will bring

Thailand connecting with many

countries for easily doing business

and trade. And avoiding of too

much cost. But, anyway the locations of Thailand still facing with natural disaster as the, flooding,

landslide, drying season and so on.

2. Yet Thailand is as development country in this areas which is has a higher development level

than other countries in this region basic on the education, big skillful of labor and workers and

quality of personality, and other is it has high quality public healthcare, developed infrastructure,

especially the transportation network. Moreover, Thailand currency is accepted by our neighboring

countries in border trading transactions.

3. Dimension of the domestic markets and land. Thai economy is the second largest in ASEAN,

after Indonesia. Another is Thai population size is large equal to each population of Myanmar and

Vietnam. It will make forward to Thai economic and provide the enough labor to companies and

investment sectors, and it also considering that their income level and purchasing power of Thai

people is higher than other countries in this region. Land is also a factor to make Thailand more

power in it because they have enough land and capital for doing business and convenience

foreigner.

4. As mentioned above that Thailand has a good relationship with other countries base on foreign

policies. So, in this case Thailand has a relationship economic with ASEAN in term of trade,

investment, such as the numerous income from ASEAN is about 7.5 billion US dollars in 2010 or

15 percent of the total intra ASEAN value of trade make a ranking third country after Singapore

and Malaysia. In addition, it also has an Asian trade surplus of 1.36 billion US dollars, second

country after Singapore and is the only one country has trade surplus to Asean community.

On the other hand, Thailand is also has weaknesses fall into many opposite categories while

integration and joining with AEC. There are some factors make Thailand lose some benefits and

opportunities into the AEC.

1. People of Thailand is less of understanding and awareness the survey results of many institutions

about the AEC as its importance, impact, and need for readiness for integration and joining with it

in term of doing business, education and for large enterprises involved in business with other

countries. Therefore, this case will Thailand has obstruct in entrepreneurs from seizing the

opportunity the chance offered by the AEC which they are not prepare and unable to face the

impact of the AEC at the right time.

2. Thailand is increasing country in higher business financial cost of the wage rate in this areas,

which investors are looking to invest in new places that have lower wage of labor costs than China

and other countries. So, that is why investor in the world is likely to remove into the new emerging

economies in the region such as Indonesia, Myanmar, and Cambodia, Laos and so on. Moreover,

the costs of energy, transportation and logistics in relative is very high, associating with high

international oil prices. Therefore, this is a factor to make Thailand to lose its attraction of

investment.

2.3.5. The system of Thai Banks Operation and other sectors

In doing business and investment in another country, the system of banks is very important and

essential for economic developments, trade and investment in process of system of payments,

exchange currency and financial. So, in this case, what is the system of Thai banks and how its

performance in the financial system management.

The BOT Act sets out the objectives, scope of working and organization structure of the Bank of

Thailand in accordance with the international central banking standard in order to maintain the

financial system, the financial institution system and the payment system stability and efficiency

through the transparency and accountable procedure. The objective of this act is to enhance the

risk management measures of the financial institutions, to ensure the prudential and protect the

damage which may result from the financial institutions undertaking. It also has the aim to maintain

economic stability and entrust the depositors and the public by prescribing the good governance

rules for any person who perform the duty of a director, a manager, an officer or a person with

power of management of financial institutions.

Under the act, the Bank of Thailand has the duty to manage international reserves and to maintain

currency reserve in accordance with related laws to ensure the stability and confidence in the

currency. Besides, the BOT also has the duty to design, print, issue, manage and oversee

banknotes, in order to ensure that there are banknotes in an adequate circulating amount in line

with demand by the economic system.

The legal basis for exchange control in Thailand is derived from the Exchange Control Act (B.E.

2485) and Ministerial Regulation No. 13 (B.E. 2497) issued under the Exchange Control Act (B.E.

2485). These laws set out the principles of controlling, restricting, or prohibiting the execution of

all exchange or other operations in which foreign currency is concerned in whatever form.

2.3.5.1. Banknotes

The baht is the currency of Thailand. It is subdivided into 100 satang. The issuance of currency is

the responsibility of the Bank of Thailand. The Thai baht like the pound, originated from a

traditional unit of mass. Its currency value was originally expressed as that of silver of

corresponding weight (now defined as 15 grams), and was in use probably as early as the Sukhothai

period in the form of bullet coins known in Thai as phot duang.

In here are all the current Thai bank notes in use. It’s tried to show the notes in relative sizes. The

design of Thai notes includes many security features to make them difficult to forge. These are

some banknotes as follow:

Thai coins lack the color of the bank notes, but still

vary widely in size and design. The pictures below

show the current versions of the coins that you are

likely to encounter. In addition to these, a two-Baht

coin was introduced in 2007. The coin is only

slightly larger than the one-Baht coin, and the designs are also very similar, so there is often a lot

of confusion caused by the new coin. So much so that many cashiers don't give them out, and when

you do manage to get one, you'll frequently find that a "2" has been written on one of the faces.

Later batches sport a brass color to help distinguish them from one-Baht coins.

2.3.5.2. Needs of Key Stakeholders

The system of payments are the factors cases mechanisms for financial mobilization in the

economy and relative to all economic, trade and investment sectors, and it also including to the

service providers, users, and regulators. In fact, that the bank of Thailand has to evaluation the

needs of stakeholders in the system of payment to emphasis and make sure that the way and

roadmap of it will incorporation needs of these various groups of stakeholders. So, there are some

factors and cases conclude as follows:

(1) Service Providers is need to clarity on government policies which is very important to inputs

for the efficiency formulate in doing business plans and business promises.

(2) Service Users is need to make convenient, fast and cost efficiencies payment services in order

to influence and develop the competitiveness as well as confidence in system of payments in

security and stable.

(3) Government agencies is need the bank of Thailand has policy being able consistent with the

government and other investment sectors.

(4) The bank of Thailand is needs to be ensure that the system of payments are efficiency, stable

and safe, and that there are appropriate levels of competition.

2.3.5.3. Legal infrastructure

In conclusion that the legal infrastructure of Thailand is worrying the oversight of the system of

payments and service providers is effectively. That is mean Thailand has a good legislations that

for providing the bank of Thailand has absolute authority to oversight the system of payment. In

the the regulation of electronic payments is the bank of Thailand acquirement legal power pursuit

of royal decree regulating in electronic payment service to oversee the electronic payment service

providers in the providing of stable, safe and credible services, as well as compliance with the

laws.

From the aforementioned points, Thailand mostly receiving an evaluation from FSAP for matters

related to the systems of payment at the observed level only matters related to the legal

infrastructure and finality of payment receiving evaluations at the broadly observe level.

Therefore, this is the assessments are consistent with results from the global system of payment

survey, which evaluated the development of Thailand legal infrastructure is to be at the medium

low level.

2.3.5.4. The payment system as the infrastructure of financial system

BAHTNET is the system of payment in Thailand which is efficiency, stable safe as well as

complies with global standards. The Global Payment Systems Survey evaluation that the

Important Payment Systems are in different countries by consideration two key points, which are

first is systems design and policies relating to security, and efficiency, and secondly is the

proportion of high value places through the Real Time Gross Settlement System comparing to the

use of cheques for high value of payments.

In the first point, the systems of design and policies relation to efficiency and security. So, it has

RTGS system for high value of payments with effects measuring and transparent policies to

reducing credit risks, quiddity risk and operational risks. In fact, system of Thailand is assess as

high development group. In the second factor, the proportion of high value placement thru the

RTGS comparing to the proportion of cheque usage, such as access medium high development

group. That is mean high value payments in Thailand are still being made by cheques.

Another of the access system of payment in Thailand is infrastructure can be deemed as

efficiency, stability and safety which there are still some matters that can be develop in further to

increase the efficiency and reduce risks, such as:

1. Risk prevention in inter-bank placement to reduction the risks associating with Thailand’s

ongoing reliance on high value cheques

2. Efficiency enhancement in the providing of services for capital institutions is to increase

convenience and reduction payment costs.

3. Development of the Business Continuity Plan (BCP) is for the systems of payment infrastructure

such as the BAHTNET system and other inter-bank systems of payment to emphasis and make

sure that it would be continuity of services as well as possible different kind of risks that might

increasing such as political unstable and natural disasters.

2.3.5.5. Payment Systems efficiency enhancement

The objective of payment systems efficiency enhancement is the purpose to provide domestic and

global money to transfers and payments to be fast and convenience, has suitable costs, and meet

needs of many groups of the users include the public sectors and organizations. Then, this will in

turn help to build the country in all capability. There are some roadmap of the project as follows:

1. The promotion and development of electronic payments are to stimulation greater to use

of electronic payments instead of cash among the public.

2. The projects is the purpose to facilitate the public from many of groups to have easily

access to services of payment thru the many channels thoroughly and efficiency as well as

sure that necessary consumer protection mechanisms have put in settle. The channel of

payment is high potential access that should be put into considering is mobile payment as

it offering a wide coverage to all of users, especially that consumers at the grassroots level.

2.3.5.6. The preparation for the AEC

As mentioned many things above about the readiness of the Thailand for integration and joining

into AEC. So, the preparation for AEC is most factors and case of purpose to make sure that it has

enough the infrastructure to support and provides cross border payments of Thai economic, trade

and investment among the all countries in Asean community. Therefore, there are some strategies

of the Bank of Thailand have defined it as the following action plans:

1. There are five major area readiness of Thailand to assess services of payment which are

Cross Border Trade Settlement, Cross Border Money Remittance, Cross Border Retail

Payments, Cross Border Capital Market Settlement, and Standardization. Another is the

legislation readiness regarding to the payment finality to support and provide systems of

payment linkages with another countries also been included.

2. Propose preparation guidelines for Thailand is readiness in services of payment.

3. Establish the plan that is systems of payment in Thailand will be ready to support the AEC

in 2015.

In additional, the bank of Thailand is also acts as the cochair together with bank of Indonesia for

the Working Committee on Payment and Settle Systems (WC-PSS), which is has been entrust with

the function of promotion and monitored progress according to the Payment Systems Development

Roadmap in the region, and coordinate with other Working Committees under the AEC framework

so that progress is made in the same direction.

Moreover, the bank of Thailand also will act as the main coordinator with the Central Bank of

Laos in a special Working Committee regarding standardization, which is responsible for

determine of the guidelines for the promotion of common standard for payment transactions

between countries. This also includes the promotion of knowledge creation and exchanging of

experiences within ASEAN countries to strengthen systems of payment development capabilities

thru the conducting workshops, internships and study visits.

2.3.5.7. Consumer protection and financial literacy

Consumer protection and financial literacy is to help the public access the knowledge and

understanding of payment services, thereby enabling them to have the ability to selected suitable

services to meet their needs. It also includes understanding their rights and roles, and

understanding the roles of agencies that are responsible for consumer protection. In additionally,

the consumer protection and financial literacy is involves working to emphasis and make sure that

the laws and regulation of it, also help make sure users confidence that services of payment usage

are efficient and safe.

Moreover, the PSC has assigned the bank of Thailand is to monitoring and assesses changing in

the systems of payment environment that it may affected to the Roadmap on an annual basis. So,

the Band of Thailand is will present findings to the PSC and supports recommendation for any

revision and amendment of the Roadmap in order to appropriately align with such new

developments. Therefore, this is the system of consumer protection and financial literacy