Thailand Country Outlook 2011

U.S. Commercial Service, BangkokCommercial Counselor Michael McGee

Commercial Attaché Francis “Chip” Peters

Thailand At A Glance

About the size of Thiland

Over 65 million people

Bangkok 8-10 million

Chiang Mai over 180,000

Infrastructure

Suvarnabhumi Airport

Laem Chabang Port (20th in world)

Eastern Seaboard – Industrial Zone

Political Overview

Type of Politics: Constitutional Monarchy

Head of State: King Rama IX Prime Minister: Yingluck Shinawatra

PM Yingluck Shinawatra

King Bhumibol Adulyadej

Democracy Monument, Built in 1932 to Commemorate Thailand 1st Constitution

Thailand Economic Outlook

GDP: $263.5 billion

GDP per capita: $3,921.3 (09)

Inflation rate: 5.5% (08), -0.9 (09)

Unemployment rate: 1.4% (08); 1.5% (09)

Key industries

Tourism, food processing, agro-industry, automotive, electrical & electronics, gems & jewelry, services

- Tourism revenue accounted for 6% of GDP

Thailand’s Market StrengthsStrategic Location in the Heart of Southeast AsiaInexpensive Source of LaborFuture Growth PotentialGovernment Support for Free Trade AgreementsCheap Property for Investment & RentalHigh-quality InfrastructureExcellent Healthcare & Int’l SchoolsQuality of Life for ExpatriatesFriendly Local People

Challenges in Thailand

Political Situation Corruption/Transparency Weak IPR Protection Currency/Strong Thai Baht Customs/Tariffs Issues Unrest in Southern

Provinces

Thailand, Gateway to Southeast AsiaMajor Transportation

30 Commercial Airports; 4 Major International Airports 9 Major Ports; 2 Primary Seaports (Klong Toey Port in Bangkok

& Laem Chabang Port in Eastern Seaboard)

64, 600 Km. Highway Network

4,070 Km. Railway Line

Greater Mekong Subregion (GMS) Highway Routes – Planned and in Existence

Thailand: The Heart of ASEAN

Key ASEAN location for: Tourism Medical Tourism World-class Healthcare

Service Automobile

Manufacturing Fashion & Jewelry

The Association of Southeast Asian Nations is a 10 member countries with 580 million consumers (9% World Population)

Importance of ASEAN to US

One of the fastest growing economies

A number of infrastructure development projects

Combined GDP of over $1.5 trillion

ASEAN integration by 2015

Strategically significant region

Concluded FTAs with China, Japan, South Korea, Australia-New Zealand Region & signed FTA in goods with India

U.S. Investment in Thailand

The U.S is the second largest investor in Thailand, after Japan – investment estimated at approximately $24 billion.

Key areas for US investment:

- Petroleum & chemicals

- Finance

- Consumer products

- Automobile production

US-Thai Trade Facts

In 2009, US was Thailand’s largest export market ($16.6 billion), China was 2nd ($16.1 billion)

In 2009, Thailand was our 23rd largest trading partner ($26 billion) & 28nd largest export market ($7 Billion)

US is Thailand’s 3rd largest trading partner after Japan and China

- Imports from US $8.4 billion; exports to US were $16.6 billion

US is Thailand’s 4th largest supplier- after Japan, China & Malaysia

US–Thai Treaty of Amity

Allows American citizens & businesses incorporated in the US or in Thailand to maintain a majority shareholding or to wholly own its company in Thailand (engage in business on the same basis as would a Thai national). These companies are exempt from most of the restrictions on foreign

investment imposed by the Foreign Business Act of 1999.

But still restrictions on investment in communications, transport, fiduciary functions, banking involving depository functions, the exploitation of land or other natural resources & domestic trade in agricultural products.

Signed in 1833 & Amended in 1966

Flooding in Thailand

Worst flooding in 50 years Flooding closes 7 industrial estates

in Bangkok area Over 650,000 Thai workers

displaced Extensive Disaster Recovery and

Rebuild Efforts Expected Water management,

infrastructure, construction… Contact: Office.Bangkok@trade.gov

2010 Best Prospects For U.S. Exporters

Aircraft & Aircraft Parts &

Automotive Parts & Aftermarket Equipment

Defense Sales

Education & Training Services

Electrical Power System/Equipment

Electronic Components

Food Processing & Packaging Equipment

Franchises

Medical/Laboratory/Healthcare Devices

Safety & Security Equipment

Telecommunication & Broadcast Equipment

Laos Market - Opportunity & Challenges

Population: less than 6 million

Advantages: Political stability Low costs of land, labor & energy Plentiful land & water resources Abundant mineral resources

Challenges Small market, with low purchasing power Undeveloped basic infrastructures & logistics, scarce skilled labor Unstable currency, difficult for investment plan Protective regulation, rather than investment promotion oriented

Cambodia Market - Opportunity & Challenges

Population: About 14.5 million

Advantages: Pro-business, pro-growth policy Low labor & business costs Abundant natural resources, especially oil & gas Liberal policy towards foreign worker inflow Investors can set up 100% foreign-owned investment projects Largely dollarized economy & absence of capital & exchange controls

Challenges Corruption, under-the-table costs add 50% to cost of doing business Inefficient government bureaucracy Inadequately educated, skilled workforce Inadequate transport & communications infrastructure Undeveloped financial & banking system Ineffective legal system

Burma - Business Outlook

Population: About 48 million

US trade and investment sanctions in place - Limited exports of U.S. products occurs Unrecorded & under-recorded border trade very common Major trading partners:- Thailand, China, Singapore, Japan, Malaysia, S. Korea & Bangladesh In 2009, USA exported $7 million & imported $100,000

Challenges Corruption & cronyism Opaque & arbitrary policymaking/unpredictable trade policies No rule of law & no independent judiciary Inadequate infrastructure & outdated technology Undeveloped financial & banking system

The U.S. Commercial Service

Agency: – U.S. Department of Commerce

Mission: – Promote U.S. Exports– Protect U.S. Commercial Interests Abroad– Promote Investment in America

Locations: – In US: 109 Export Assistance Centers– Overseas: 128 offices in 77 countries

Our Role

Counseling US Companies– Changes in regulations & standards– Economic trends– Networking and contact Lists

Trade Promotion– Organize US Pavilions at trade shows– Supporting trade missions – Arranging meetings with potential distributors

Advocacy for US Firms– Support for major tenders– Resolving trade barriers

How to Find the Right Partner

Practical Tip for SMEs in the US Looking to Export

• Identify prospective distributors, sales agents, or partners

• What’s their experience? What regions and industries do they cover?

• A critical mistake is rushing into an agreement with the wrong partner

How the US Commercial Service Can Help:• Locate qualified local companies as

partners, agents, or distributors

• Consider our “Gold Key Service”

• We help select local companies to meet

with and join you in these initial meetings

Promote Your Products & Services

• If you already have a distributor in Thailand or a local office, we can help you extend your reach

• Target key potential clients by sector and position

• Offer an educational seminar that both informs and provides exposure for your firm

How the US Commercial Service Can Help:• Consider our “Single Company Promotion” service

• We invite contacts among government, media, and private industry, with invitations from the US Embassy

• Help you identify deal audience at your press event, seminar, product launch, or reception.

Practical Tip for US SMEs with a Presence In Thailand

Thank You

Useful Sites

• US Embassy Bangkok Web site

bangkok.usembassy.gov

• Commercial Service Web site www.buyusa.gov/thailand/en

ขอบคุ�ณคุรั�บ

Government Public Work ProjectsRail-based Mass Transit Projects

Government allocated $8 billon to fund mass transit system in Bangkok over the next 5 years.

Projects over the next 5 years will mostly be developed by the Mass Rapid Transit Authority of Thailand (MRTA) and the State Railway of Thailand (SRT).

• Upcoming Projects: Extension of First Subway Line (Blue Line) & Expansion of Subway Network Extension of the Elevated Transit System “Skytrain” (Green Line) Double Tracking & Expanding of Rail Networks (Red Line) Upgrading Signaling & Communication Systems, Maintenance Center Sourcing of new locomotives.

ICT 2010 Projects: Re-introduction of E-Government Project (government

information network, $36.36 million from 2006-2014) Rolling out 3G broadband wireless network nationwide in Q4 of

2010 Investment for upgrading 3G network approx. $2 billion (total

2,700 cell sites nationwide)

Opportunities: 2G network maintenance 3G & WIMAX infrastructure & content

Government Public Work ProjectsICT Projects

Best Prospects:

• Automotive Parts & Services/Equipment Market: Assembling hub in South East Asia (ASEAN) for the world majors (including

GM & Ford) ASEAN’s largest assembling capacity (over 1 million units/year) ASEAN’s largest domestic vehicles market (650,000 units expected in 2010) ASEAN’s most capable automotive parts manufacturing industry Japanese manufacturers have largest share in the market (over 90%) One-ton pickups & small passenger cars most popular

• Best Prospects: Accessories & performance parts General automotive service equipment & tools Tire (wheel) & brake service equipment Body & paint repair service equipment

Best Prospects: • Broadcast Equipment Market: Total import in 2009 was $5.3 billion, with $52.3 million from US 80-90% of broadcast equipment imported from overseas Inevitable move from analog to digital TV platform in 2011 Once digital technology is available, approx $3 billion investment will

• flood into the market

• Best Prospects: Radio & TV transmission Radio consoles (radio) Studio equipment for radio & television Software systems (e.g. automation & advertising solutions) Microwave communications equipment

Best Prospects:

• Defense Equipment Market: 2010 defense budget approx. $4.7 billion Thai military’s ongoing modernization program with

government support

Focus on anti-riot & internal peacekeeping activities, border area & maritime interest protection, suppression of illegal immigrants & goods smuggling, anti-terrorism, disaster relief

• Best Prospects:• C4I tactical communication systems, helicopters (training, tactical,

transport), tanks & armored vehicles, training simulators, unmanned aerial vehicles (UAVs), air defense systems (ADSs), tactical data links (TDLs), electronic warfare (EW) equipment, coastal radar systems, amphibious landing crafts, multiple rocket launch systems (MRLSs) & combat communication equipment

Best Prospects:

• Education & Training Services Market: US dominates the market, with largest market share Thailand ranks 10th in number of students studying in the US Thai students taking overseas programs/training valued at $808

million Market is untapped & open to new-comers High brand recognition Word of mouth is crucial

Market Share of Overseas Study Destination

USA is the favorite destination, with 25,000 Thai students in 2009.

Australia

Canada

New ZealandUK

USA

0

5000

10000

15000

20000

25000

2008

2009

20082009

Best Prospects:

• Electric Power System Market: Generation capacity: 27.7 GW Growth in electricity demand: 2% Fuel mix: gas 70%, coal 20.8%, hydro 4.7%, • Fuel oil 1%, renewable 1.4%, imported 1.9%, diesel 0.2% Total import of electrical power equipment valued at $4.2 billion U.S. market share approx. 7%

• Best Prospects: Power generator, clean coal technology & alternative/renewable energy

technology Transmission & distribution equipment including underground power

cable & submarine cable extension Technology & know-how to develop & improve green energy & nuclear

power technology

Best Prospects: • Electronic Components Market: Market size of $26 billion in 2009; 2010 projected market $28.4 billion Total imports of $19 billion ($1.7 billion from US)

Manufacturing base for 4 out of 5 major HDD producers: Seagate, Western Digital, Hitachi & Fujitsu

Over 80% of raw materials used in production & assembling processes of HDD, integrated circuits (IC) & consumer electronics appliances are imported

The Semiconductor Industry Association forecasts that global semiconductor sales will grow by 10.2% to $242.1 billion in 2010 and by 8.4% to $262.3 billion in 2011

• Best Prospects: Integrated circuit (wafers, dice & chips, substrates & lead frames) Radio-frequency identification (RFID) Computer components (CPU, HDD, FDD, CD Rom drives, tape drives, monitors,

printers, LCD projectors, keyboards, mouses, network equipment) Automotive electronics

Food Processing & Packaging Equipment Market: Thailand as world’s 7th largest food producer, with over 10,000 food

producers 2009 market size of $2.6 billion; expected growth rate of 10-15% for

the next few years Total imports of $1.9 billion, with $175 million from US (9% share)

Best Prospects: Packaging machinery & materials (e.g. film making, form-fill-seal, heat sealers), refrigerators, freezers, food & drink processing equipment, cooking & heating machinery, fruit, vegetable & herb processing equipment, snack foods & confectionery equipment, meat processing equipment

Best Prospects

Best Prospects:

• Medical Devices Market: $1.23 billion market size in 2009 with 12% growth rate 65% imports; US has 30% share 972 public hospitals (104,296 beds) & 328 private hospitals (36,120

beds) Use of local distributor is highly recommended Thai FDA requires medical device products registration prior to

importation

– Best Prospects: Heart valves & artificial blood vessels, disposable diagnostic test

kits, Quick diagnostic testing devices, respiratory devices & oxygen Therapy, rehabilitation devices, orthopedic & implant devices Invasive surgical devices, neurosurgical & other surgical devices Dermatological devices & accessories

Best Prospects: • Printing/Graphic Arts Equipment Market: Market size of $1.2 Billion in 2009; projected 2010 market size of $1.3 billion

Imports of printing machinery increased from $192 million in 2006 to $896 million in 2009, ($23 million from US)

Offset & digital printing machinery is 100% imported 0% import duty

Thailand became the largest printing hub in ASEAN

Major export destinations are Hong Kong, Japan & Singapore

• Best Prospects: Computer to Plate (CtP) technology

High-quality inkjet printers (digital photography, wide format inkjet printers, printer-based multi-function office devices, & digital presses in imaging & graphic space) & high-quality printing ink

Post press printing equipment (trimming, perforating, gluing, laminating & bindery machinery

Best Prospects: • Renewable Energy Market: Government 15-year Renewable Energy Development Plan: increase

electricity generation from renewable energy to 20% by 2022 Government supporting schemes & incentives:

Government’s subsidy as add-up price on purchasing price of electricity produced from less than 10MW renewable energy projects, called “Adder”

Board of Investment tax incentives Revolving fund program Government Co-Investing Scheme “ESCO Venture Capital Fund” Grants for biogas, municipal solid waste & solar hot water projects Technical assistances

• Best Prospects: Solar, wind, biomass, biogas

Safety & Security Equipment Market: Increasing government investment for public safety

Global requirements: international airports, seaports Market size of $319 million in 2009 Projected market size of $470 in 2010

Increasing private investment for property security Hi-end property market boom: condominium, hotels, detached houses Commercial property: shopping malls, office buildings

Best Prospects: Video surveillance systems: digital video recording & network transmission, CCTV

& night vision equipment Anti-intrusion device: alarm systems, fire/intruder alarm system Detection equipment: handheld/walkthrough metal detectors, motion Detectors X-ray/screening equipment Access control systems: card technology systems (smart card, proximity-card,

magnetic strip card), biometric devices, security doors & power fences

Best Prospects:

Best Prospects: • Telecommunications Equipment Market: ICT market in 2009 was $16.8 billion; projected 2010 market increase

7% Promising non-voice sector in 2010 is estimated at $787 million; 70%

increase over 2008

Stronger competition among telecom operators to expand new networks & prepare for new technologies, including 3G and WIMAX

Demand for network infrastructure

• Best Prospects: 2G network maintenance 3G network upgrades Broadband Internet infrastructure Wireless communication networks

Water Pollution Control Equipment Market: Estimated market size of wastewater treatment equipment in 2009 was

$177 million Import of equipment was $152 million; US share approx. 14% Growth is expected due to increasing investment in waste to energy &

government’s stricter environmental control Expected growth of 10-15% over next few years

Best Prospects: Pumps (submersible, centrifugal, aerator/mixer, dosing, vacuum) Sludge dewatering equipment (filter presses, belt press, small

dewatering systems) Screening machines (bar screens, shredding screens) Consultants & engineering services (pollution prevention technologies,

advance wastewater treatment, water monitoring system, biological treatment system, renewable energy technology

Advance water treatment chemicals

Best Prospects