Thailand offers a plenty of trade and investment opportunities for Australian exporters. Located in the heart of South East Asia, the Thai capital, Bangkok is an urban sprawl of more than 8 million people housing Thailand’s centre of political, economic, social and cultural activities.
If you took a map of South East Asia and pointed to the city closest to its centre, you’d find the Thai capital Bangkok under your finger. It’s an urban sprawl of more than 8 million people, housing Thailand’s centre of political, economic, social and cultural activities and has a fair claim as the unofficial capital of South East Asia.
New exporters
When considering South East Asia, Thailand is an attractive choice for many exporters, especially if they have travelled there for leisure previously. “Thailand is a society that welcomes foreigners,” says Duangjai Asawachintachit, director of the Marketing Bureau at the Thailand Board of Investment. She believes this willingness to work with and trade with other nations is a real plus, which means investors and exporters will find it easy to go there.
The Thai market is increasing in affluence and it’s a growing market, says Maurine Lam, Austrade senior trade commissioner in Thailand. “Its proximity and close time difference means Australian exporters are more comfortable with exporting to Thailand,” she adds.
The fact that Thailand is a market of more than 65 million people is often overlooked in favour of its larger neighbours China and India, but Lam says this is an advantage. “People focus on those large markets and that means there’s low competition for market entry into Thailand,” she points out. Added to that is our five-year-old bilateral free trade agreement, which indicates our existing healthy economic relationship.
Australia already has a strong brand presence there in a number of industries, so exporters in some sectors might find it easier to enter the Thai market if they have a product offering different from other Australian products, but in well regarded industries.“Food and beverage is a popular industry for Australian exporters. Australian food has always been seen as healthy, high quality, clean and green and of nutritional value, so our fresh meat, dairy products, the full range is seen as quality products,” says Lam. Much of Australia’s food forms part of the Thai supply chain. “The Thai processing sector is still doing quite well with regard to export, so they continue to demand quality raw materials.”
Existing exporters
The real opportunity in Thailand lies in its ability to add value to your supply chain through investments such as manufacturing operations. The Thailand Board of Investment has a number of incentives for businesses to set up there, particularly in target sectors such as agriculture and agroprocessing, automotive, alternative energy and yacht building, names Asawachintachit.
“In the agroprocessing industry, Thailand has abundant raw materials. We are the world’s largest producer of many agricultural commodities, for example sugar, which is in high demand for food and biofuels, so Thailand is ideal for Australian companies that have expertise in agroprocessing and in biotechnology, because we’re trying to move up the value-added ladder,” she explains.
Incentives range from tax holidays to relief from import duties. The incentives are provided on a sliding scale with the minimal incentives given to Zone 1—Bangkok and some of its surrounding provinces—due to a congestion of industry, and more for Zone 2 and Zone 3, away from the capital. “We use decentralisation as our theme in devising our incentives scheme,” says Asawachintachit.
The Board also encourages operations in industrial estates because it means the government “can have better environmental and infrastructure management and allocation of resources,” she adds. Lam agrees that industrial estates provide a great attraction. “The Thai government has industrial estates on the eastern seaboard and provides incentives for manufacturing operations,” she says. “We do have a lot of Australian companies establishing investments there, particularly the auto component industry. They’re there for a particular reason, it’s a cluster where there’s a synergy between companies set up there, and the government offers incentives such as lower land costs and utility costs for a manufacturing base. It also creates opportunities for improved efficiency of operations.”
The other thing she would like to pass onto existing exporters is to remember to maintain your relationships. “If you’re already doing business in Thailand, it is important that you are able to demonstrate to your current customer base that you’re committed to the market, in good times as well as bad times. Don’t just walk away from a market when things are difficult,” says Lam. “It’s about what you do together with the customer to progress. It’s very important in terms of opening that communication and doing things together to defend a particular position a business has.”
Advanced exporters
For more established exporters, Lam sees good opportunities in franchising businesses. “When people come out of unfortunate situations, being made redundant, they may be looking for opportunities to do their own business and they’ll be looking for lower cost of entry,” she notes.
Public private partnerships are also an emerging possibility considering the Thai government’s focus on infrastructure via a budget of almost 2 trillion baht for the next four years. “That will be in areas such as water supply management, utilities, logistics, information technology, mass transit, tourism, education, healthcare, food, alternative energy and green industry,” lists Lam. “All of those are opportunities, particularly in the clean energy area. Thailand is so dependent on imported sources of energy, and the Australian government has made energy a priority, so if we could introduce our technology, it’s an opportunity.”
Another interesting opportunity is in healthcare, specifically in medical tourism. “Thailand is the first developing country that has seen large numbers of people from developed countries come in for medical tourism. The Thai government is promoting that and, as economic times become more difficult, this becomes a more attractive option in terms of healthcare rather than the high health expenses in developed countries. That creates opportunities for medical equipment, advanced technology, health IT solutions,” explains Lam. “Last year there were 1.4 million foreign visitors receiving medical care in Thailand. The healthcare industry in Thailand is growing at an average of 15-20 percent.”
