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Official Name: Kingdom of Thailand (The country was known as Siam until 1939.)

Internet Domain: .th
International Dialing Code: +66
Time Zone: UTC+7 (12 hours ahead of Washington, DC during Standard Time)

Table of Contents

Location and Size Comparative Economic Indicators
Government Credit and Collections
Legal System Risk Assessment
People Business Climate
Economy Business Protocol
Economic Indicators Articles of Interest
Other Sources of Info

Location and Size

Area: 513,115 sq. km. (198,114 sq. mi.); equivalent to the size of France, or slightly smaller than Texas. Thailand is a country of mountains, tropical rainforests and flat plains.

Government

Thailand is a constitutional monarchy. Unlike other Southeast Asian countries, Thailand was never colonized. Its traditional founding date is 1238. Thailand adopted its current constitution following an August 19, 2007 referendum.

Its governmental branches include: Executive comprised of King Bhumibol Adulyadej (chief of state since 1946) and Prime Minister Samak Sundaravej (head of government); Legislative -- bicameral, with a fully-elected House of Representatives and a partially-elected Senate; Judicial – composed of the Constitutional Tribunal, the Courts of Justice, and the Administrative Courts.

Legal System

Thailand's legal system blends principles of traditional Thai and Western laws. Thai business regulations are governed by criminal law rather than civil law. Thailand does not recognize decisions by foreign courts. The judicial system runs at a comparatively slow pace when trying to enforce a contract. Therefore, bribing civil servants charged with overseeing regulations to speed up legal procedures is a common practice.

Thailand has not accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?)

People

Thailand's highly successful government-sponsored family planning program has resulted in a dramatic decline in population growth from 3.1% in 1960 to less than 1% today. Life expectancy also has risen. However, the AIDS epidemic has had a major impact on the Thai population. Today, over 500,000 Thais live with HIV or AIDS--approximately 1.4% of the adult population. Each year, 25-30,000 Thais die from AIDS-related causes. Ninety percent of them are aged 20-49, the most productive sector of the workforce. The situation could have been worse; an aggressive public education campaign in the early 1990s reduced the number of new HIV infections from over 100,000 annually to around 15,000 annually.

  • Population: 65,593,298 (July 2008 est.)
  • Population growth rate: 0.6%
  • Languages: Thai (official language); English is the second language of the elite; regional dialects
  • Literacy: 92.6%
  • Ethnic Make-up: Thai 75%, Chinese 14%, other 11%
  • Religions: Buddhist 94.6%, Muslim 4.6%, Christian 0.7%, other 0.1% (2000 census)

Economy

During an economic boom in the 1980s, Thailand’s agriculture-based economy transformed as Thais flocked to work in industry and the services sector. The bubble burst in the Asian financial crisis of 1997. Stock and property prices plummeted, dragging down the currency and leading to bankruptcies, recession and unemployment. With a well-developed infrastructure, a free-enterprise economy, and generally pro-investment policies, Thailand appears to have fully recovered from the 1997-98 Asian Financial Crisis.

For the past fifteen years, Thai economic growth has been driven by exports and foreign direct investment (FDI). Economic growth in 2007 was due almost entirely to robust export performance. Exports have performed at record levels, with the high technology sector generating over 60% of total exports.

Currency: Baht (THB)

Leading Markets (2006): US 12.6%, Japan 11.9%, China 9.7%, Singapore 6.3%, Hong Kong 5.7%, Malaysia 5.1%

Leading Exports-commodities: textiles and footwear, fishery products, rice, rubber, jewelry, automobiles, computers and electrical appliances

Leading Suppliers (2006): Japan 20.3%, China 11.6%, US 6.8%, Malaysia 6.2%, UAE 4.9%, Singapore 4.5%, Taiwan 4.1%

Leading Imports-commodities: capital goods, intermediate goods and raw materials, consumer goods, fuels

Top Industries: tourism, textiles and garments, agricultural processing, beverages, tobacco, cement, light manufacturing such as jewelry and electric appliances, computers and parts, integrated circuits, furniture, plastics, automobiles and automotive parts; world's second-largest tungsten producer and third-largest tin producer

Top Agricultural Products: rice, cassava (tapioca), rubber, corn, sugarcane, coconuts, soybeans 

Economic Indicators

2004 2005 2006 2007 2008(e)
GDP (USD billion) 161.3 176.2 206.3 225.8 239.9
Economic growth (%) 6.3 4.5 5.1 4.5 5.5
Inflation (%) 2.9 5.8 4.6 3.0 2.8
Exports (USD billions) 94.9 109.2 127.9 151.1 169.5
Imports (USD billions) 84.1 106.0 114.3 125.8 144.8
Foreign debt (% of GDP) 32.9 31.2 28.2 23.7 20.8
Foreign currency reserves (In months of imports) 5.0 4.2 5.0 5.8 5.9
Exchange rates (THB per USD)
2008 = 09/18/2008
40.3 40.3 38.1 32.5 34.5
Exchange rates (THB per EUR)
2008 = 09/18/2008
50.1 50.1 47.7 44.5 49.0

(e)estimate

Comparative Economic Indicators - 2007

Thailand Vietnam Cambodia Laos Malaysia China
Population (millions)* 65.6; 86.1 14.2 6.7 25.3 1,330.0
Population growth (%)* 0.6 1.0 1.8 2.3 1.7 0.6
GDP - PPP**(USD billion) 519.4 221.4 25.9 12.7 357.4 6,991.0
GDP per capita - PPP** (USD) 7,900.0 2,600.0 1,800.0 2,100.0 13,300.0 5,300.0
Economic growth 4.5 8.5 9.1 7.1 6.0 11.9
Inflation (%) 2.2 8.3 5.9 4.5 2.1 4.8
Unemployment rate (%) 1.4 5.3 2.5
(2000 est)
2.4
(2005 est)
3.2 4.0
Exports (USD billions) 151.1 46.7 4.3 1.0 169.9 1219.0
Imports (USD billions) 125.8 51.7 5.5 1.9 132.7 908.1
Foreign debt (% of GDP) 23.7 -9.6 29.0 63.0 28.5 11.4
Currently Bhat
THB
Dong
VND
Riel
KHR
Kip
LAK
Ringgit
MYR
Yuan Renminbi
CNY
Exchange rates (per USD)
on 9/18/2008
34.5 16,875.2 4,191.9 8,845.8 3.4 6.8
Exchange rates (per EUR)
on 9/18/2008
49.0 23,955.9 5,950.7 12,569.9 4.9 9.7

* 2008 estimates
** PPP – Purchasing Power Parity

Credit and Collections

[H3] Overseas Press & Consultants (OP&C) Evaluation:

  • Collection Experience: Fair-Good
  • Exchange Delays: 3 months
  • Preferred Credit Terms: Unconfirmed letter of credit
  • Minimum Credit Terms: open account

One-third of shipments to Thailand are on open account. One-sixth is paid for in advance; and one-sixth is covered with a letter of credit. Three-quarters of importers deposit payments locally within one month of due date. The banks process exchange transfers in three months.

ABC-Amega’s collection experience in Thailand

ABC-Amega does not get very concerned about military coups in Thailand and we have had almost no experience to suggest the country’s various coups have caused any real disruption in ongoing business relations.

Dispute Resolution

Decisions of foreign courts are not accepted or enforceable in Thai courts.

Thailand has an independent judiciary that generally is effective in enforcing property and contractual rights. The legal process is slow in practice, however, and litigants or third parties sometimes affect judgments through extra-legal means.

Thailand has a civil and commercial code, including a Bankruptcy Act. Monetary judgments are calculated at the market exchange rate.

Thailand has signed the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, but has not yet ratified that Convention. Thailand is a member of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NY Convention), however, and enacted its own rules on conciliation and arbitration in the Arbitration Act of 1987.

The Bankruptcy Court Act established a specialized court for bankruptcy cases. In 2007, the Court issued verdicts on 16,048 cases. Individual cases can take months or even years to work their way through the legal system, however, and many businesses have urged the government to speed up the bankruptcy procedure.

Risk Assessment

Coface Country Risk Rating: A3 -- Changes in generally good but somewhat volatile political and economic environment can affect corporate payment behavior. A basically secure business environment can nonetheless give rise to occasional difficulties for companies. Corporate default probability is quite acceptable on average.

Ducroire Delcredere Political Risk Rating: 1 – lowest risk
Ducroire Delcredere Commercial Risk Rating: A – lowest risk

Business Climate

Since 2001, Thailand's trade policy has focused on promoting free trade through regional, mainly bilateral, arrangements with China, Bahrain, India, Australia and New Zealand. Negotiations started with the US in 2004 remain suspended. Thailand is an active member of ASEAN.

Thailand is a member of the WTO and, politically, foreign investment in Thailand is seen as a means for the country to promote economic development, technology transfer and employment. Thailand is generally considered to be a business-friendly economy and has for several years been able to offer favorable investment incentives to foreign businesses (e.g. tax exemptions, especially if the investment includes new technology or is located in a less developed area) and good investment protection compared to many other countries in the region.

Conducting business in Thailand is in some respects comparatively easy. For instance, it takes an average of only 33 days and eight procedures to start a business in Thailand, as compared to 47 days on average in East and Southeast Asia. However, it is recommended that companies seek qualified legal advice when entering the Thai market, because Thai business regulations are governed by criminal law rather than civil law.

Thailand's assets include: exceptional geographical situation, social stability, expanding and diversified industrial base, high-quality infrastructure, good transport links and a revamped legal system. Having long capitalized on the low cost of Thai labor as the main comparative advantage – one that is tending to erode in the face of competition from neighboring countries like China and Vietnam -- the government is now looking to attract high added value activities and companies offering transfers of technology and know-how in an effort to meet the challenge posed by the Thai economy's rise in the value chain due to the country's emergence as an economic power.

Customs Duties and Quotas: Thailand has gradually reduced import quotas under its WTO commitments, replacing them with tariff quotas and fairly high customs duties. The average rate of customs duty is currently 8.8 per cent for industrial goods and 25 per cent for foodstuffs. These average rates, however, veil relatively high levels of tariff protection.

Market Access: Market access in many sectors remains difficult and fairly restricted via high customs and excise duties (176% for wines), as well as technical, regulatory and administrative non-tariff barriers (mandatory import licenses for foodstuffs, cosmetics and drugs, sector restrictions on foreigners, limited protection of confidential data for pharmaceuticals, etc.).

Economic Freedom: Thailand's economy is 63.5 percent free, according to 2008 Index of Economic Freedom, which makes it the world's 54th freest economy. Thailand is ranked 9th out of 30 countries in the Asia–Pacific region, and its overall score is higher than the regional average. Thailand enjoys high scores for business freedom, government size, and especially labor freedom. Thailand could do better in monetary freedom, investment freedom, and freedom from corruption.

Transparency of Regulatory System: Despite the good intentions of most regulatory regimes, consistent and predictable enforcement of government regulations remain problematic for investment in Thailand. Bribes to civil servants responsible for regulatory oversight and enforcement remains a common practice to expedite transactions. Firms that refuse to make such payments can be placed at a competitive disadvantage. However, most observers believe that the overall trend toward transparency in regulatory enforcement is positive, especially for foreign-owned businesses.

Protection of Property Rights: Property rights are guaranteed by the Constitution against condemnation or nationalization without fair compensation. Secured interests in property are recognized and enforced.

Intellectual Property Protection: Counterfeiting and piracy continue to plague intellectual property rights owners in Thailand. Particularly problematic sectors include optical media piracy of films, music, and software, end user computer software piracy, cable and satellite television piracy, textbook piracy, and counterfeiting of pharmaceuticals, apparel and luxury goods. The lack of sustained and coordinated enforcement and prosecution are key problems.

Foreign Exchange: From the onset of the Asian crisis in 1997, the baht has been floating against the dollar. Anxious to maintain the local currency's stability, the central bank intervenes only on an ad hoc basis to cushion sharp fluctuations, and limit off-shore transactions, of the baht.

Conversion and Transfer Policies: Thai nationals are subject to quantitative limits on the amount of foreign currency that can be remitted abroad without specific permission of the Bank of Thailand. The limits vary depending upon the purpose of the transaction.

Corruption: Thailand has laws to combat corruption and is a signatory to the U.N. Convention against Corruption, but has delayed ratification pending a review of legal issues. According to the Global Corruption Barometer 2007, the general view by the public on the anti-corruption measures is somewhat pessimistic; 66% believe that the level of corruption will increase within the next three years, whereas only 25% think that it will fall.

The main source of corruption in Thailand is 'money politics', a term that refers to the flow of money within the political scene. The close personal connections between politicians, civil servants, and businessmen are the backbone of networks of corruption that reach from the central government down to local governments.

American executives with long experience in Thailand advise new-to-market companies that it is far easier to avoid getting started with corrupt transactions than to stop such practices once a company has been identified as willing to operate in this fashion. American firms that comply with the strict guidelines of the US Department of Justice Foreign Corrupt Practices Act are able to compete successfully in Thailand.

Political Violence and International Disputes: The government has suffered a number of primarily bloodless military coups. It is currently embroiled in a tense military stand-off with Cambodia along a section of their common border.

For more detailed information on these topics, visit the 2008 Investment Climate Statement – Thailand, of the U.S. Department of State or the Thailand Country Profile in the Business Anti-Corruption Portal.

Business Protocol

The Wai: The wai is the common form of greeting in Thailand and requires adherence to strict rules of protocol. The standard form involves raising both hands, palms joined with the fingers pointing upwards as if in prayer, then lightly touching the body somewhere between the chest and the forehead, The wai is both a sign of respect as well as a greeting and can be done while sitting, walking, or standing. Respect and courtesy are demonstrated by the height at which the hands are held and how low the head comes down to meet the thumbs of both hands. The person who is junior in age or status is the first one to offer the wai. The senior person returns the wai, generally with their hands raised to somewhere around their chest. If there is a great social distance between two people, the wai will not be returned.

Business Cards: Business cards are given out after the initial handshake and greeting. In theory, you should give your card to the most senior person first. It is advisable to have one side of your business card translated into Thai. Use your right hand to deliver your business card with the Thai side facing the recipient.

Business Attire: Business attire is conservative. Men should wear dark colored conservative business suits. Women should wear conservative business suits or dresses. Since Thai's judge you on your clothing and accessories, ensure that your shoes are always highly polished.

Names and Titles: Thais generally use first rather than surnames, with the honorific title Khun before the name. Khun is an all-purpose form of address that is appropriate for both men and women.

Conversation: Thai communication is formal and non-verbal communication is often more important than verbal communication. It is difficult for most Thais to say no, so you must be cognizant of their non- verbal communication. Watch your body language and facial expressions, as these will be believed over your words.

Meetings and Negotiations: Thais prefer doing business with people they respect. Relationships develop slowly and do not flourish after one meeting; it may take several meetings.

Articles of Interest about Thailand in the Economist

Sources for further information on doing business in Thailand

American Chamber of Commerce in Thailand

Business Guideline: Thailand, Business-in-Asia.com

Doing Business in Thailand, Chandler and Thong-EK

Doing Business in Thailand, U.S. Commercial Service

Embassy of the United States in Bangkok, Thailand

Royal Thai Embassy in Washington, DC

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Thailand. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Economic Indicators: Variety of sources including the CIA World Factbook, Coface Country Rating, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," August 2008.

Historical Exchange Rates: OANDA.com The Currency Site.