CONTENTS

October 2014 Volume 24 No. 10

On 12 September Prime Minister Prayut delivered his Government’s policy statement to the National Legislative Assembly, in which he outlined the policy direction of Thailand’s new government. The statement covered 11 policy areas, including upholding and protecting the institution of the monarchy; national security and foreign affairs; reduction of social disparities and providing greater access to state services; education, religion, art, and culture; public health quality and people’s health; the enhancing of economic potential; Thailand’s role in the ASEAN Community; the development and application of science, technology, research and development, and innovations; natural resource security and the creation of equilibrium between conservation and sustainable use of natural resources; good governance and anti-corruption efforts; and law and justice.

“My working principles are act first, do it seriously, and act promptly” said the Prime Minister.

The current government will promote royally initiated projects; it will work hard to suppress international crime, and will try and find a resolution to the violence in the South. To address social disparities it will promote the rights of the elderly, marginalized people and the disabled. It will work to solve the problems of landless farmers and address public land encroachment.

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Prime Minister Announces Policy 1

News Bites / BOI Net Applications 2Industry Focus: Logistics 4Thailand a Top-10 Destination 72015 ASEAN Business Outlook Survey 8

Siam Commercial Bank’s EIC Report 10BOI’s Missions and Events 11Thailand Economy-At-A-Glance 12

Continued on P. 3

Prime MinisterAnnounces Policy

NEWS BITES BOI NET APPLICATIONSInvestment in Power Generation to Cope with Thailand’s Economic Growth

Thailand will invest more in the construction of power plants in order the cope with the growing demand for domestic consumption and the country’s economic growth.

NCPO had approved investment projects of the Electricity Generating Authority of Thailand, the Provincial Electricity Authority, and the Metropolitan Electricity Authority to meet the needs of households and the industrial sector and to promote energy security in the future.

The Board of Investment (BOI) recently approved promot iona l pr iv i leges for investment in waste-to-energy facilities and renewable energy power plants. It is intended to encourage the use of energy generated from waste and other renewable energy sources.

Workforce Development

Four organizations, namely the Department of Skill Development, the Office of the Vocational Education Commission, the Federation of Thai Industries, and the Thai Autoparts Manufacturers Association, have joined forces in developing workforce for industries and helping ease labor shortages. The objective is to develop the Thai workforce in response to the market demand and in line with the labor situation. A target has been set for Thailand to produce 3.5 million vehicle units in 2020.

Thailand and China Boosting ASEAN Connectivity

At the end of 2013, Thailand and China, along with Lao PDR and the Asian Development Bank, completed the Fourth Mekong Friendship Bridge. This bridge connects Lao PDR to the northern part of Thailand at Chiang Khong in Chiang Rai province and represents the last so-called “missing link” on Route No. 3A, connecting Thailand to Lao PDR and on to Kunming in China along the GMS North-South Economic Corridor.

Joint efforts are also being made with China and Lao PDR to expedite the signing and implementation of a memorandum of understanding (MOU) to facilitate the cross-border transport of people and goods along Route No. 3A.

2013(US$ = 31.57 THB)

2013 (Jan - Aug)(US$ = 31.60 THB)

2014 (Jan - Aug)(US$ = 32.00 THB)

Number of projects Value Number of

projects Value Number of projects Value

Total Investment 2,237 34,335 1,225 21,325 886 13,015

Total Foreign Investment 1,132 16,622 780 10,008 550 9,011

By Sector

Agricultural Products 6 101 51 592 25 185

Minerals / Ceramics 1 19 24 447 21 502

Light Industries / Textiles 6 20 41 282 24 262

Automotive / Metal Processing 17 159 256 5,384 145 5,550

Electrical / Electronics 19 167 151 1,042 113 407

Chemicals / Paper 16 169 91 565 64 1,222

Services 15 157 166 1,695 158 883

By Economy

Japan 562 8,959 414 6,439 250 3,127

Europe 132 679 84 541 83 2,328

Taiwan 53 221 36 175 26 83

USA 55 368 40 258 20 1,271

Hong Kong 39 639 25 542 20 244

Singapore 93 722 53 426 41 349

By Zone

Zone 1 23 139 242 1,208 175 735

Zone 2 39 451 402 5,782 285 7,380

Zone 3 18 203 135 3,018 90 896

Unit: US$ MillionNote: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries.

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Also among the 11 policy areas set out by the current administration is to reform the education system and promote vocational training, as well as foreign language study and understanding foreign cultures. “More scholarships will be provided to support technology-related studies.”

The government will also work to overhaul national health security in order to provide access to health care for all. “Monitoring system of epidemics, emerging diseases, and re-emerging diseases will be strengthened.” It should be noted that Thailand is already a medical tourist destination with international standard hospitals and cutting edge medical equipment. Expanding access to all the people of Thailand will make investment in this sector even more attractive.

To address the economic needs of the nation,” the Government will stimulate national economy through acceleration of spending of pending budget in investment for FY 2014, and use of the Government’s budget. In 2015, the budget of 2.575 trillion Baht will be allocated to every province according to their needs and order of priorities.”

The Prime Minister also stated that “Energy prices will be restructured as part of the energy reform. Taxes, state interests, and private interests will be adjusted and balanced. The Government will also promote alternative energy and renewable energy, as well as provide new sources of energy.”

Also in the works is to approve qualified investment projects that are pending, and to initiate public-private partnerships in infrastructure projects with potential for suitable return. In the long run, the government will develop infrastructure for transportation by expanding the electric train in Bangkok and linking it with the surrounding suburbs. Also, to improve Suvarnabhumi airport through phase 2 development and implement improvements to Don Muang airport.

The Prime Minister also said that the Government needs to lay a foundation for the digital economy and ICT development. He said that State-owned enterprises will have to adapt and compete in creating new technologies. Also commented on was

that the development of IT system, analysis centers, laboratories, research institutes and centers will be established.

He said that research incentives should be enhanced, that legal barriers must be eliminated and that IT development must be feasible for commercial use.

Looking forward to the AEC, the government plans to establish a center for the purchase and export of agricultural products from neighboring countries. There will also be an economic committee at the ministerial level that will meet on a regular basis to discuss changing economic situations.” Trade related regulations will be adjusted and procedures will be streamlined through a single-

window system.”

The government is aware of the need to reform the tax collection system and will address this, in addition to managing public debt that is now over 700,000 million baht. In this regard, the government will also be promoting innovation and set expenditure on research and development at not less than one percent of national income, with a 30:70 proportion of public-private investment, including the establishment of research centers.

The government will also be addressing the need to improve infrastructure and transportation in Thailand, particularly through mass transit projects in Bangkok, and at Suvarnabhumi and Don Muang airports. In this category, the government will also work to improve economic and transit links that promote trade and investment in the various regions of the country.

The Prime Minister noted that the National Council for Peace and Order (NCPO) would support Government operations, so that it could move forward in accordance with the three-phase roadmap set by NCPO.

In the short time it has been at the helm of government, the country has returned to a stable path of development and with a terrific and improving investment climate.

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INDUSTRY FOCUS

LogisticsStrategically located at the crossroads of mainland Southeast Asia, the Kingdom of Thailand shares a common land border with four neighboring countries totaling 5,582 kilometers. In fact, there are 30 Thai provinces physically connected with Myanmar, Laos, Cambodia, and Malaysia. Presently, Thailand is linked to its neighbors through an extensive and functioning network of roads, waterways, and air routes. Yet with the ASEAN Economic Community looming in the distance and the Thai government’s drive to lift the country out of the middle-income trap, improvements need to be made in the field of logistics if the Kingdom aims to achieve future progress and prosperity.

Over the past 20 years, Thailand’s international trade has expanded over 600%. Manufacturing exports, in particular, have increased to where they account for 86% of the country’s total exports as of September 2014. Such growth, aided in part by the Kingdom’s bilateral trade agreements with Japan, South Korea, China, India, New Zealand, and Australia, has led the Thai government to upgrade its logistics infrastructure and expertise. Currently, foreign companies dominate the logistics industry in Thailand. Its top 10 freight forwarders are Maersk Line, K&N, DHL, UPS, Schenker, Panalpina, Phoenix International, BAX Global, Agility, and UTI.

Totaling US$ 219 billion worth of goods, exports contributed to 58% of Thailand’s GDP in 2013, and the transport sector underpinned this notable performance. The export-dependent nature of the Thai economy, with recent structural changes toward a higher share of value-added manufactured goods and

level of global trading, requires a strong and integrated transport and trade facilitation system. As a result, the government of Thailand is working on improving its trade systems such as the customs. An e-logistics system is currently being introduced, to cut logistics cost, reduce paperwork, optimize routes and flows, and increase the time management proficiency of freight transport companies.

The logistics sector is a huge industry in Thailand. It contributes about Bt300 billion to the economy annually, accounting for 3.2% of the country’s total GDP and providing employment to some 3.5 million Thais. Furthermore, the Kingdom has been witnessing a downward trend of logistics cost per GDP over the past decade, from a range of 16-18% during 2001-2008 to a range of 14-15% during 2009-2012. Transportation costs in Thailand remain high due to a limited capacity of competitive alternative modes of transport albeit the efforts of operators to apply IT to lower hauling overheads. In addition, the sector still relies heavily on land transport (accounting for 83% share) despite the elevated price of oil. According to the 2014 Logistics Performance Index conducted by the World Bank, Thailand ranks 35 in logistics competency among all 160 countries, thereby demonstrating its competitiveness in the region compared to other developing countries.

It must be said that the Thai economy needs to improve the efficiency of its logistics systems, which is revealed by its relatively high costs in relation to its GDP. Having a direct impact on both the industrial structure and spatial distribution of the economy,

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the costs associated with logistics in Thailand have a direct impact upon the sustainable development of the Thai economy. While the government of Thailand has taken proactive measures to reduce national logistics costs in relation to its GDP, it is now a priority to craft the appropriate logistics policies in order to propel forward the economic development of the Kingdom.

International trade largely has fueled Thailand’s industrial and commercial growth. Given this dependence on global trade linkages, freight logistics have played an important role in the competitive edge of various Thai industries. From a macro-economic perspective, outlays for logistics can be divided into four categories: transportation costs, inventory-carrying costs, administration costs, and infrastructure costs. Comprising expenditures for service, fuel, vehicle repair and maintenance, transportation costs usually account for over 49% of total logistics outlays in developed economies. Moreover, inventory-carrying costs consist of expenditures related to warehousing and financing, while administration costs include employee compensation and communications.

About 86% of Thailand’s cargo is currently moved by road, 12% by ship, 2% by train and the rest via air freight. With a road density of around 125.7 kilometers per thousand square kilometers, the Kingdom possesses an extensive road network of urban and

rural roads. Likewise, with the possibility of a Trans-Asian highway linking most countries on the Asian mainland, this could be the key contributor to Thailand becoming a regional logistics hub of ASEAN. In addition, the Kingdom is home to six international airports, affording access to all regions. A state-of-the-art facility located in the outskirts of Bangkok, Suvarnabhumi currently services over 100 commercial airlines. In 2013 alone it handled some 50 million passengers as well as 1.3 million metric tons of freight. Yet its ongoing phase-two extension will uplift capacity to 60 million passengers. Actually, Suvarnabhumi has been ranked as the 6th best airport globally by the 2013 ASQ Survey for the year 2012 in the category of large airports that provide service to more than 40 million passengers per annum.

As was reported in The Nation, Dr. Witoon Simachokedee, permanent secretary at the Ministry of Industry, declared that Thailand’s master plan for industrial logistics targeted a 15% reduction in logistics cost for manufacturing and a 10% increase in efficiency of logistics and supply-chain management by 2016. It is worth noting that last f iscal year (Oct. 2012-Sept. 2013), the Department received a budget of Bt110.8 million under the strategic plan for development of the country’s logistics system. About 30 projects already have been completed, which concentrated on 501 business operators, logistics-cost reduction of at least Bt3 billion, human resource development of at least 6,575 people and linkage improvement of at least 28 supply chains.

Indeed, the strategic plan consists of three main thrusts: Producing logistics-management professionals for manufacturing sites, promoting cooperation and linkages among business units in manufacturing supply chains, and supporting factors to raise the competitiveness of supply chains in specific industries. The targeted industries are food, petrochemicals, electrical appliances and electronics, automobiles and parts, textiles and garments, and rubber and rubber products. Taken as a whole, these industries hold 70% inventory.

Furthermore, it needs to be pointed out that Thai logistics costs hover around 17% of production outlays, while the European Union averages 8-9%. Accordingly, the Kingdom may employ the European model, as Germany is the regional center in Europe just like Thailand is for ASEAN. This advantage could be used to manage logistics costs efficiently through railways, roads, vessels and aviation. With the ASEAN Economic Community taking shape in 2015, it becomes imperative that Thailand moves ahead with its Bt2.4 trillion infrastructure project.

Some years ago, the Thai government adopted a policy known as the “three economic rings and five trade gateways” in order to maximize Thailand’s geographic position within Southeast Asia and its well-developed infrastructure and logistics networks. To

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explain, the three economic rings consist of ASEAN, ASEAN+3 (China, Japan and South Korea), and ASEAN+6 (China, Japan, South Korea, India, Australia, and New Zealand). Meanwhile, the five trade gateways refer to the Kingdom’s strong road and rail linkages to neighboring countries and beyond. These include the northern gateway, linking Thailand to Myanmar, Laos, and southern China; the northeastern gateway, linking Thailand to Laos, Vietnam, southern China, and East Asia; the eastern gateway, linking Thailand to Cambodia, Laos, and Vietnam; the western gateway, linking Thailand to several BIMSTEC countries, particularly Bangladesh, India, and Myanmar; and the southern gateway, linking Thailand to Malaysia, Singapore, and Indonesia.

In addition to the aforementioned plan, Thailand already has in place a Logistics Development Strategy (2013-2017) that revolves around three missions and seven strategies. The first mission is supply chain competitiveness, which strives not only to increase competitiveness in supply chain management and potential business, but also to promote business related to trade and services in border town areas. The second mission concerns trade facilitation enhancement, which aims to develop transport services and logistics networks, to improve facilitation at gateways, and to promote services improvement and expand LSP (layered service provider) networks. And finally, the third mission deals with capacity building and policy driving factors, which endeavors both to develop human resource development systems and to create monitoring systems for self-improvement.

The ASEAN Economic Community will have a significant impact on trade between the ten member states. From Thailand’s perspective, the AEC will boost substantially the Kingdom’s trade with bordering countries (Malaysia, Myanmar, Laos and Cambodia) as well as countries further afield like China and Vietnam. Regional integration through the AEC will increase the demand for logistics services in Thailand. Raw materials, goods, and labor will be exchanged more freely, especially for border and transit trade, which are expected to expand substantially. Indeed, the AEC is expected to bring various benefits for ASEAN’s logistics industries in terms of regulations and other aspects such as simplified and harmonized customs procedures, improved transportation routes, and reduced tariffs.

Given the variety of logistics services – ranging from maritime cargo handling services to warehousing to customs clearance and more – the development of competitive logistics businesses in Thailand will require not only financial capability, but also technological know-how. As other ASEAN member states increase their equity participation in Thai businesses to up to 70%, local players will need to develop their competencies in order to compete effectively. As such, the Thai government has been developing the capabilities of the country’s logistic service providers through financial support and manpower training. It also has encouraged the logistics service providers to build networks that can interface seamlessly with logistic business partners from other ASEAN and Asian countries.

Other actions taken by the Thai government to increase efficiency of Thai logistics operations include development of e-logistics, paperless customs procedures across the borders of the Greater Mekong Subregion, and a One Stop Export Service Center, where 15 export-related organizations are located at one place to reduce the time required to obtain export documentation.

The National Economic and Social Development Board is aware of the need to develop the local industry if the Kingdom seeks to actualize its goal of becoming a regional logistics hub. To take action, it has divided Thailand’s logistics sector into a business framework across five types of activities: (1) cargo transportation inside and outside the country, by road, rail, sea, or air; (2) cargo storage, warehousing, packaging, and cargo distribution; (3) customs formalities; (4) other auxiliary logistics works; and (5) postal and parcel services.

Nonetheless, the logistics market in Thailand remains highly fragmented. Yet, trends such as outsourcing logistics services to 3PLs (Third-Party Logistics) to maximize cost efficiency and to diversify risk, as well as greater usage of heavy commercial vehicles/truck and long-haul transportation, are happening. The high value of cross-border trade between Thailand and its neighbors will provide numerous opportunities for relevant businesses throughout the supply chain. At present, many Thai corporations already have set up a logistics business in neighboring countries. Siam Cement Group (SCG), for example, has logistics and transport operations in Laos and Cambodia. Meanwhile, Loxley, a listed Thai conglomerate, has gained a foothold in Vietnam’s logistics market through a joint venture with Japan’s NTT Docomo Incorporated to establish Mobile Innovation.

Currently Thailand has the necessary infrastructure in place to attract foreign investment and is in the process of launching multi-purpose, low-cost logistics bases for companies. In order to develop into a proper logistics hub for the ASEAN region the Kingdom will need to start offering attractively priced logistics services. As a result, the Thailand Board of Investment is at this time granting generous tax and non-tax incentives to logistics projects. Among the many eligible activities are container yards or inland container depots (ICDs), loading/unloading facilities for sea transport, commercial airports, mass transit systems and transport of bulk goods including rail, pipeline and maritime transportation services, and logistics service centers including both domestic and international distribution centers (DCs and IDCs). Any foreign investor, in particular 3PLs, interested in entering the Thai market would be well-advised to take advantage of these opportunities.

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Thailand a Top-10 DestinationThe United Nations World Tourism Organization, in its Tourism Highlights 2014 Edition, reports that international tourist arrivals grew by 5% last year to a record 1087 million arrivals.

Although the global economy continues towards a slow recovery, there were an additional 52 million international tourists last year. The report notes that“…international tourism receipts in destinations around the world grew 5% in real terms (taking into account exchange rate fluctuations and inflation) to reach US$ 1159 billion (euro 873 bn). Growth in receipts mirrored the growth in international arrivals (also +5%), confirming the strong correlation between these two key indicators of international tourism.”

The UNWTO reports the Asia and Pacific region to have the strongest prospects, with 6% growth in 2013 and similar growth this year. Looking at earning, the Asia and Pacific region had ever better 8% growth last year at US$ 359 billion; arrivals accounting

for 23% of the world’s total, receipts accounting for 31%. “As in 2012, South-East Asia was again the fastest growing subregion both in the region and in the world in 2013, with an increase of 11% in international tourist arrivals on the back of buoyant intraregional demand. Thailand reported strong growth (+19%), welcoming 27 million tourists, 4 million more than in 2012.”

The report also shows that Thailand has moved into the list of the world’s top 10 tourism destinations, in terms of both visitor numbers and visitor expenditure with record-breaking arrivals in 2013. “Thailand moved up two positions in the ranking by international receipts to 7th, while it entered the top 10 by arrivals in 10th position, in a bumper 2013 when international arrivals were up by 19 percent to 27 million and receipts by 23 percent to 42 billion US dollars.”

It is the first time that Thailand entered the top 10 list in terms of arrivals. Thailand was ranked No. 11 in 2012, when the number

of tourists totaled 22.4 million. UNWTO referred to this climb of five positions as an “amazing” development.

This year began with a slow start for tourism, for obvious reasons, and from January to July 2014 Thailand saw a 10% year on year drop with 13.6 million foreign arrivals. Malaysia is Thailand’s largest tourist market, followed by China and Russia.

According to the Tourism Authority of Thailand (TAT), international arrivals for the year are expected to reach 25.5 million, bringing in 1.2 trillion baht, with about one million Chinese tourists expected to visit Thailand between August and October.

Europe also shows a positive trend as Thailand works to encourage tourists, especially from France, Italy, and Spain. A recent news report shows that confidence remains strong among French tourists in particular, as a report released by French travel website Le Quotidien du Tourisme shows that Thailand is the most searched for destination in online search engines. The Tourism Authority of Thailand projects visitor numbers from France to reach over 636,400 by the end of 2014.

In a move to boost tourism the Immigration Bureau has allowed citizens of 48 countries and Hong Kong Special Administrative Region to get a 30-day extension of their stay in Thailand after the expiry of their normal period of stay. The 49 tourist markets generate about half of Thailand’s total visitor arrivals.

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2015 ASEAN Business Outlook SurveySince 2002 the U.S. Chamber of Commerce and the individual American Chambers of Commerce in the ASEAN region have compiled and disseminated the ASEAN Business Outlook Survey on an annual basis. The report serves as the primary indicator of US corporate sentiment in Southeast Asia. Its findings are based upon the assessments and outlook of 588 business leaders representing small, medium, and large US firms in all ten ASEAN member countries. Regarding the primary activity of the respondents, the services sector accounted for the largest portion with 55%, followed by manufacturing with 31%. Furthermore, the report provides timely and relevant data on regional economic issues and trends to a broad and diverse audience, from corporate executives to government leaders to academics. The survey’s readers rely on it to gain an insight into

the opportunities and challenges that are present across ASEAN for American enterprises.

Divided into several sections, the 2015 ASEAN Business Outlook Survey covers a number of areas that are pertinent for any company executive or manager based in Southeast Asia. For instance, there is a section that revolves around a series of questions about the region’s overall economic outlook, and another that concentrates on the expansion plans of US companies. Likewise, the report contains a section that examines the responses of US enterprises to ASEAN regional economic integration, and the region’s expanding economic ties with other major trading partners, while the impact of multilateral free trade agreements being negotiated is explored as well. Another part looks at factors affecting expatriate recruitment and retention. The final section breaks out the survey results on an individual country basis.

Generally speaking, the report illustrates that US firms remain optimistic about business prospects in ASEAN, as demonstrated by their expectations for investment expansion, workforce growth, and profit increases in 2014 and 2015. However, for each of these factors, the percentages of respondents expecting increases is slightly lower when compared to last year’s survey. With some variation, confidence levels remain stable for all ten ASEAN countries. Still, Indonesia, Vietnam, Myanmar, Malaysia, and Thailand were recognized as the top five targets for investment expansion. A significant minority of executives also expressed plans for diversifying investments from China into the ASEAN region over the next two years. For companies that intend to expand operations in their current locations, diversification of their customer base, availability of trained personnel, and reasonable production costs were cited as the main reasons for expected enlargement.

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With the impending establishment of the ASEAN Economic Community (AEC) in late 2015, US companies are focusing on the prospects that will emerge from regional economic integration, although most survey respondents hold the position that the goals of the AEC will be reached by 2020 or later. Nonetheless, three quarters of the respondents in Thailand indicated that the amount of company trade and investment in ASEAN increased in the past two years and even more expect this trend to continue in the next five years. Overall, 78% of Thai-based American business executives regard a single ASEAN market as important to helping the bottom lines of their firms in the region.

As was noted in the survey, US companies are utilizing ASEAN’s existing free trade agreements with major trading partners including Australia and New Zealand, China, India, Japan, and South Korea. Nearly half of manufacturing sector respondents report making use of ASEAN FTAs to export goods (e.g. electronics, consumer goods, machinery & equipment, and oil & petrochemicals) to partner countries, with China leading the way at 49%. Similar percentages of respondents (43%-47%) employ each of the other four FTAs. On the other hand, relatively few of the respondents in the services sector indicated that they currently use the provisions of these agreements. Having said that, the services agreements with India and Japan were not officially in place when the survey was conducted.

It has been pointed out that the existence of various agreements with different tariff reduction schedules, lists of exclusions, rules of origin, and timelines, have created a wide assortment of trade regimes across the region. However, respondents normally are not concerned about this particular issue, as 73% indicate that these agreements have either a positive or neutral effect on their operations in ASEAN.

Looking towards the future, about one-third of respondents expect that the Regional Comprehensive Economic Partnership (RCEP) will impact their company’s future investments in the region, while 40% say the Trans-Pacific Partnership (TPP) will impact future investment plans. The RCEP is a proposed free trade agreement between the ten member states of ASEAN and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand). Meanwhile, the TPP is a proposed regional free trade agreement being negotiated at present by twelve countries throughout the Asia-Pacific region, including the United States.

The 2015 ASEAN Business Outlook Survey takes note that American executives report a number of positive attributes of ASEAN’s investment environment, including high levels of personal security and the generally welcoming attitude of locals towards the US. Conversely, some of the negative aspects they cite include unstable political conditions, corruption, weak infrastructure, inadequate laws and regulations, and difficulties in moving products through customs.

Focusing on Thailand specifically, respondents have an optimistic outlook on the current business climate with the majority not

facing significant financing constraints nor seeing higher cost of borrowing. Business expansion remains high with 62% of executives surveyed stating they expect their companies in Thailand to expand, a dip since last year’s 75%, but the profit outlook remains strong with 82% expecting increased profits. On the other hand, American corporate executives in all ASEAN countries most frequently identify customs as the government agency with which they have the greatest levels of dissatisfaction.

Equally important, Thailand’s expat workforce generally is satisfied with living and working in the Land of Smiles as 93% report satisfaction with their assignments and 87% attempt to extend their time in Thailand, citing personal security, absence of hostility towards Americans, affordable housing costs, and good infrastructure as the biggest benefits. There still are concerns about the stability of the Thai government and political system, which is an issue for 80% of respondents, but this is to be expected given the recent political crisis that gripped the country over a period of six months.

The 2015 ASEAN Business Outlook Survey is a resource based upon the contemporary assessments and outlooks of senior executives from firms with an American majority interest, in all ten ASEAN member states. Indeed, the report offers a general overview of how resident American business leaders view the economic climate in Southeast Asia today and what they consider to be crucial trends to follow during this period of transformation for ASEAN.

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Siam Commercial Bank’s EIC ReportSiam Commercial Bank’s Economic Intelligence Center (EIC), in its report entitled Outlook, Quarter 3 2014, has forecast economic growth in Thailand of 1.6% in 2014.

“Factors that will drive the economy’s growth are:

1. Increased political stability after the National Council for Peace and Order (NCPO) came into power on 22 May 2014. Policy uncertainty has declined as NCPO has already undertaken measures that have helped to strengthen private sector sentiment, such as maintaining the VAT rate at 7%, endorsing the reduction in tax rates on personal income and corporate income; and fixing prices for diesel fuel and LPG.

2. Higher incomes resulting from the NCPO’s move to pay farmers some THB 90 billion due under the rice pledging scheme and from measures to encourage commercial banks to increase credit to SMEs.

3. Speeding up disbursements of investment budget while prioritizing stalled plans for investment in key infrastructure projects.”

The contribution to the recovery from consumption will likely be from non-durable goods such as food and other necessities, whereas durable goods such as automotives and electronic goods face spending constraints imposed by debt burdens.

In a positive note, EIC reports that private investment is now expected to be better than previous estimates as the business sentiment improves. “Moreover, regulatory changes on factory permit issuance, as reflected in the shortening of approval period from 90 days to within 30 days and the permit exemption for solar rooftop projects smaller than 1 megawatt, will give a boost to investor confidence.” In fact, EIC writes that capital spending in the solar rooftop business could be as high as THB 12 billion.

Power generation, sugar and waste management businesses are also seen to benefit from the change in the rule.

EIC also notes that the BOI will approve projects for a total value of about 700 billion Thai baht, with eco-car phase-2 identified as an area to benefit.

Measures taken by the NCPO are seen to restore budget disbursement for 2014 back to historic levels, which is between 65 and 70%, which is a considerable improvement over the May 2014 level of 44.4%. EIC also notes the high priority given by the NCPO to infrastructure projects, including Suvarnabhumi Airport Phase 2, the Bang Pa-In–Nakhon Ratchasima Motorway, and the Rama 3–Dao Khanong–Outer Ring Road expressway. Those projects ready for investment, in the tender and procurement stage, are:

• the green line BTS Skytrain extension (Mo Chit – Saphan Mai – Khu Khot) valued at THB58.59 billion

• t h e d u a l - t r a c k r a i l p r o j e c t (Chachoengsao – Klong 19 – Kaeng Khoi) valued at THB11.35 billion.

“Looking ahead to 2015, EIC forecasts growth in Thailand at 4.7%. Factors supporting this outlook include:

1. Continuous strengthening of private sector sentiment fo l lowing s tab l iz ia t ion of the po l i t ica l s i tuat ion. The improved sentiment will drive private consumption and investment to expand by 3.6% and 13%, respectively.

2. Improving efficiency of government’s investment budget disbursement and increasing state-owned enterprises spending on infrastructure investment will result in public investment growing by 16.5%.

3. Stronger global demand and a rebound in foreign tourist confidence in Thailand should help merchandize export to grow by 4%, while tourist arrivals should increase by 10%.”

All in all, the outlook for Thailand’s economy under the leadership of the new government looks bright, with stable and sustained investment and an improved business climate.

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Mrs. Hirunya Suchinai, senior executive investment advisor of BOI, led a delegation from Bangkok and together with BOI Osaka held a seminar “Thailand: A Destination of Investment Opportunities” on 2 September 2014 at Kobe City, Japan.

BOI’S MISSIONS AND EVENTS

Ms. Duangjai Asawaachintachit, deputy secretary general of BOI, spoke at a seminar on “Thailand, New Markets, New Business Models, New Opportunities” in Sydney, Australia, which was one of three seminars held in the country from 23 -31 August 2014.

Ms. Ajarin Pattanapanchai, senior executive advisor of BOI, joined H.E. Mr. Pitchayaphant Charnbhumidol, ambaddador of Thailand to Brazil, at a seminar on “Business Opportunities in Thailand” on 4 September 2014 at FIEP, Curitiba, Brazil.

From 16 September to 19 September 2014 Ms. Bussarakum Sriratana, director of International Affairs Bureau, led an investment mission to the People’s Republic of China to the 11th CAEXPO Roundtable Meeting on Investment Cooperation.

Mr. Udom Wongviwatchai, secretary general of BOI, presents a souvenir to Mr. Eikei Suzuki, governor of Mie Prefecture, on 11 September 2014. Mr. Suzuki led a business delegation comprised of 25 members to explore business opportunities in Thailand.

Mr. Udom Wongviwatchai, secretary general of BOI, welcomed a delegation from the Government of Ethiopia, led by H.E. Dewano Kedir Haji, state minister for foreign affairs, and H.E. Mr. Peerasak Chantavarin, ambassador of Thailand to Ethiopia, on 17 September 2014.

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THAILAND ECONOMY-AT-A-GLANCE

Source: Stock Exchange of Thailand

Source: Bank of ThailandSET Monthly Closing Values

International Reserves / Short-term Debt (%)

Exchange Rate Trends

Industrial Capacity Utilization (%)

Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, ThailandTel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8222 Website: www.boi.go.th E-mail: head@boi.go.thBEIJINGThailand Board of Investment, Beijing Office Royal Thai Embassy No.40 Guang Hua Road, Beijing, 100600, P.R.China Tel: (86-10) 6532-4510 Fax: (86-10) 6532-1620 E-mail: beijing@boi.go.th

FRANKFURTThailand Board of Investment, Frankfurt OfficeBethmannstr. 58, 5.OG60311 Frankfurt am Main Federal Republic of Germany Tel: (49 69) 92 91 230Fax: (49 69) 92 91 2320E-mail: fra@boi.go.th

GUANGZHOUThailand Board of Investment, Guangzhou OfficeRoyal Thai Consulate-General GuangzhouNo.36 Youhe Road, Haizhu District, Guangzhou, P.R.C 510310 Tel: +8620 8385 8988 Ext. 220-225 +8620 8387 7770 (Direct Line)

Fax: +8620 8387 2700 E-mail: guangzhou@boi.go.th

LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General 611 North Larchmont Boulevard, 3rd Floor, Los Angeles, CA 90004 USA Tel: (1-323) 960 1199Fax: (1-323) 960 1190E-mail: boila@boi.go.th

MUMBAIThailand Board of Investment, Mumbai OfficeRoyal Thai Consulate-General, 1st Floor, Dalalmal House, Jamnalal Bajaj Marg, Nariman Point, Mumbai400 021 Republic of India Tel: (9122) 2204 1589-90 Fax: (9122) 2282 1525E-mail: mumbai@boi.go.th

NEW YORKThailand Board of Investment, New York Office 7 World Trade Center, 34th Floor, Suite F, 250 Greenwich Street, New York, NY 10007Tel: (1-212) 422 9009Fax: (1-212) 422 9119E-mail: nyc@boi.go.th

OSAKAThailand Board of Investment, Osaka Office Royal Thai Consulate-General, Osaka, Bangkok Bank Bldg. 7th Floor , 1-9-16 Kyutaro-Machi, Chuo-Ku, Osaka 541-0056 Japan Tel: (81-6) 6271-1395 Fax: (81-6) 6271-1394E-mail: osaka@boi.go.th

PARISThailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze75116 Paris, FranceTel: (33 1) 5690 2600 (33 1) 5690 2601Fax: (33 1) 5690 2602E-mail: par@boi.go.th

SEOULThailand Board of Investment, Seoul Office#1804, 18th Floor, Koryo Daeyeongak Center,97 Toegye-ro, Jung-gu, Seoul, 100-706, Korea Tel: (822) 319-9998 Fax: (822) 319-9997E-mail: seoul@boi.go.th

SHANGHAIThailand Board of Investment, Shanghai OfficeRoyal Thai Consulate-General15 F., Crystal Century Tower, 567 Weihai Road, Shanghai, 200041, P.R.China Tel: (86-21) 6288-9728, (86-21) 6288-9729 Fax: (86-21) 6288-9730E-mail: shanghai@boi.go.th

STOCKHOLMThailand Board of Investment, Stockholm OfficeStureplan 4C 4th Floor 114 35 Stockholm, Sweden Tel: +46 (0)8 463 1158 +46 (0)8 463 1172 +46 (0)8 463 1174 to 75 Fax: +46 (0)8 463 1160 E-mail: stockholm@boi.go.th

SYDNEYThailand Board of Investment, Sydney Office Suite 101, Level 1, 234 George Street, NSW 2000, Australia Tel: (+61) 2 9252 4884 Fax: (+61) 2 9252 2883 E-mail: sydney@boi.go.th

TAIPEIThailand Board of Investment, Taipei Office Taipei World Trade Center 3rd Floor, Room 3E39-40, No.5, Xin-Yi Road, Sec.5Taipei 110, Taiwan, R.O.C. Tel: (886) 2-23456663Fax: (886) 2-23459223 E-mail: taipei@boi.go.th

TOKYOThailand Board of Investment, Tokyo Office Royal Thai Embassy8th Fl., Fukuda Building West,2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 JapanTel: (81 3) 3582 1806Fax: (81 3) 3589 5176E-mail: tyo@boi.go.th

Facts about ThailandPopulation (2010) 66 millionASEAN Population 600 millionLiteracy Rate 96%Minimum Wage 300 Baht/day

GDP (2013) US$ 385 billionGDP per Capita (2013) US$5,647GDP Growth (2013) 2.9%GDP Growth (2014, projected) 1.5-2.5%Export Growth (2013) -0.2%Export Growth (2014, projected) 3.7%

Trade Balance (2013) US$ 6.4 billionCurrent Account Balance (2013) US$ -2.8 billionInternational Reserves (2013) US$ 167.23 billionCapacity Utilization (2013) 64.36%Manufacturing Production Index (2013) 175.80Core Inflation (2014, projected) 1.9-2.9Headline Inflation (2014, projected) 1.9-2.9Consumer Price Index (July 2014) 107.7 (2011=100)

Corporate Income Tax 10-20%Withholding Tax 0-15%Value Added Tax 7%

July Average Exchange RatesUS$1 = 32.10 baht€1 = 43.46 baht£1 = 54.82 baht100 ¥ = 31.56 bahtCNY1 = 5.18 baht

Top 10 Exports 2014 (Jan-Jun)

Product Share Value (US$ bn)

1 Motor cars, parts and accessories 10.78 12.15 2 Automatic data processing machines

and parts thereof7.79 8.78

3 Precious stones and jewellery 4.93 5.56 4 Refine fuels 4.68 5.27 5 Polymers of ethylene, propylene, etc

in primary forms4.35 4.90

6 Chemical products 3.89 4.39 7 Rubber products 3.53 3.98 8 Machinery and parts thereof 3.17 3.58 9 Electronic integrated circuits 3.12 3.51

10 Rubber 2.97 3.35 Total 112.70

Source: Ministry of Commerce

Source: Bank of Thailand

Source: Bank of Thailand BOI

October 2014

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