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THE REPORT
Thailand 2012




ECONOMY     ENERGY          INDUSTRY
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Oxford Business Group - Thailand 2012
9




Country Profile
A wide range of natural resources keeps exports up
Recent political developments bring back democracy
Economy resurgent following devastating floods
Rejecting violence and building international credentials
Negotiations with neighbours to bolster regional trade
10     COUNTRY PROFILE SNAPSHOT




     By 2025, Thailand is expected to have a population of over 70m




     Life in colour
     A diverse ecosystem and population help the country thrive
     The Kingdom of Thailand, formerly known as Siam,                 neighbouring countries like Cambodia and Vietnam
     is situated in the heart of South-east Asia. Thailand            had rippling effects for the region. The US remained
     lies between the Lao People’s Democratic Republic                a close ally during this period, and Thailand receiv-
     to its north-east, Myanmar to its north-west and                 ing approximately $2bn in economic and military aid
     western, Cambodia to the south-east, and Malaysia                and permitted US military bases on its territory.
     on the southern border.                                             Following the conclusion of the Vietnam War in
     GEOGRAPHY: Thailand comprises 76 provinces,                      1975, Thailand reformed its diplomatic policies and
     which are divided into districts, sub-districts and vil-         asked US forces to remove their military outposts.
     lages. Covering an area of approximately 514,000 sq              The 1970s were also marked by domestic political
     km, the country can be broadly divided into four                 unrest, with periods of military rule and civil demon-
     geographic regions. The central region includes the              strations upending stability throughout the nation.
     Bangkok metropolitan area and the basin of the                   In 1973, student demonstrations against the mili-
     Chao Phraya River, which runs from north to south                tary junta were so severe that after violence began
     and flows into the Gulf of Thailand. Next, the north-            King Bhumibol Adulyadej gave sanctuary to the stu-
     ern region, which is heavily forested and mountain-              dents in the Chitralada Palace. He then expelled the
     ous makes up roughly one-third of Thailand’s total               prime minister and removed the reigning junta.
     land mass. It encompasses the Khorat Plateau and                 ECONOMY: Stability and economic progress char-
     is boarded on the north and the east by the Mekong               acterised the mid- to late-1980s, as booming mar-
     River. The southern region extends roughly from                  kets and political stability allowed the economy to
     Chumphon, 460 km south of Bangkok, through the                   move forward. Growth remained strong at roughly
     Kra Isthmus along to the Thai-Malaysian border,                  6% and increased to above 8% in 1986, a level it
     which is framed by the Gulf of Thailand to the east.             maintained for 10 years. Growth rates hit their peak
     HISTORY: The Kingdom of Thailand was formally                    between 1988 and 1990, averaging 12% per year.
     erected in the mid 14th century, although Thais first               However, the rapid economic expansion did not
     began settling in their present territory as early as            last, and years of soaring market growth were abrupt-
     the sixth century. By the end of the 13th century,               ly halted by the Asian economic crisis in 1997-98.
     they ruled most of the western region. Known as Siam             The Thai economy became mired in a deep reces-
     (land of the white elephant) until 1939, Thailand is             sion resulting from the severe financial problems
     the only country in South-east Asia to have never                that faced many Thai companies, banks and finan-
     been colonised. Although an Anglo-French accord                  cial institutions. Exports, which were a significant driv-
     signed in 1896 guaranteed Thailand’s independence                er of growth, collapsed in 1996 and raised doubts
     as buffer between the two powers, Great Britain                  about the Bank of Thailand’s ability to maintain the
     had held a colonial foothold in the region since in              baht’s peg against the dollar. A variety of interna-
     1824. In 1932, a coup established a constitutional               tional investors that had previously been investing
     monarchy in Thailand, with a representative govern-              heavily in the state removed or lost their capital,
     ment based on universal suffrage. Thailand’s sover-              leaving many sectors of the economy exposed, most
     eignty was not seriously challenged until the Sec-               notably in the real estate sector where foreign invest-
     ond World War when Japan invaded the country.                    ment had been particularly high.
        International events continued to influence Thai-                Like the recent global financial crisis that emerged
     land throughout the 1960s as conflicts arising in                out of the US sub-prime market, the recession spread

     www.oxfordbusinessgroup.com/country/Thailand
COUNTRY PROFILE SNAPSHOT                                                                      11




rapidly throughout the region. The crisis that had first
materialised in Thailand quickly spread to Indone-
sia, Malaysia and later South Korea as well.
CLIMATE: Under the Koppen Climate classification
system, Thailand is described as having a tropical
monsoon climate, characterised by warm tempera-
tures and high humidity levels. However, variations
are found between the north and south.
The south has both a rainy and a dry season. The rainy
season differs between the west and the east coasts:
the south-west monsoons generally bring heavy
storms from April to October, while the east coast
rains begin in September and end in December.
   The north has a savannah climate with three dif-
ferent seasons. The first is a mild and sunny winter
with temperatures ranging in the mid-20°C range
from November through February. A hot summer
season follows extending roughly from March
through May, with temperatures hovering between
28°C and 37°C and lasting until the monsoon arrives.
                                                           Buddhism is the religion of 94% of Thais, and as such, plays a part in many aspects of society
The rainy season typically begins in late June and con-
tinues through until October.                              reach a stable population of 70.2m by 2025. The
RELIGION & CULTURE: The dominant religion in               capital city Bangkok alone is home to anywhere
Thailand is Hinayana Buddhism or Theravada Bud-            between 8m and 10m people, and it is by far the
dhism, similar to that practised by other countries        biggest city in the country.
in the region including Sri Lanka, Myanmar, Cambo-            Of the population, 78% are ethnically Thai, but
dia and Laos. Buddhists make up roughly 94% of the         within this group a significant range of dialects and
total population, while Muslims represent 3.9%, Con-       diversity of customs exists. The largest minority group
fucians 1.7% and Christians some 0.65%.                    is the ethnic Chinese, which comprises 11% of the
   Naturally, Buddhism forms an integral part of Thai      population and is mainly centred in Bangkok, espe-
culture, acting not only as the dominant religious         cially in the thriving Chinatown district of the city.
faith, but also comprising the base of many of the         Other prominent ethnic groups include Malays, Cam-
country’s rituals, its monarchy and the national iden-     bodians, Indians and Vietnamese.
tity. The country’s tri-colour flag emphasises this        LANGUAGE: The majority of the local population
influence with the two white stripes representing          speaks Thai. The language can be traced to the Tai
Buddhism. The white runs alongside red bands sym-          language family that has its roots in the Austric lan-
bolising the colour of the nation, and blue stripe         guage group. Four main Tai languages are spoken
represents the monarchy. Religion also influences the      across the country, the most common being Central
country’s art, literature and architecture. Buddhist       Thai or Bangkok Thai. The others include Southern
temples, shrines and intricate statues decorated in        Thai, Northern Thai and Laotian, commonly referred
gold are a ubiquitous feature of the Thai landscape.       to as North-eastern Thai. The Thai language is
   Many Buddhist males above the age of 21 are             believed to have originated in the region now bor-
ordained for a period between five days and three          dering Vietnam and China.
months at least once during their lifetimes. This rit-     NATURAL RESOURCES: Thailand is home to an
ual often takes place during the rainy season when         abundance of natural resources. Metallic resources
monks stop their travels and remain in their monas-        include lead, tin, tungsten, tantalum, zinc, iron, and
teries. To this day, the custom is supported by the        silver. Gold deposits are located in Phichit, Loei,
Thai government and forms an important part of a           Narathiwat, Phetchabun and Prachinburi.
young adult male’s life. As a result, even male civil         In terms of energy resources, Thailand has both
servants are allowed to leave their positions for up       onshore and offshore gas and oil fields. The coun-
to three months to complete their monastic duties.         try’s proven oil reserves stood at roughly 659m bar-
Each day of the week is associated with a Buddhist         rels by the end of 2011. Reserves have increased in
colour: yellow for Monday, pink for Tuesday, green         recent years after standing at 100m barrels in 1987
for Wednesday, orange for Thursday, blue for Friday,       and 300m barrels in 1997, however the reserve rate
purple for Saturday and red for Sunday. It is there-       has remained relatively constant since 2006 as new
fore a sign of respect for visitors to adopt this colour   discoveries have balanced out the depletion of old
coordination in their dress.                               reserves. Nevertheless, Thailand is the region’s sec-
POPULATION: Thailand is the 20th-most populat-             ond-largest net oil importer after Singapore. Other
ed country in the world with a population of about         natural resources include natural gas, fluorite,
65.7m. The average annual population growth rate           gypsium, lignite, rubber, timber and a multitude of
is estimated to be around 0.7%, and is projected to        locally harvested food products and fish from the sea.

                                                                                                        THE REPORT Thailand 2012
12                            COUNTRY PROFILE OVERVIEW




                            The country’s first female prime minister was elected in 2011




                            Rising tides
                            A democratic ethos and populist politics carry the nation forward
                            Today, Thailand is undergoing its most profound trans-          by a military coup d’état in 1947, military govern-
                            formation of the last 30 years. The military coup d’é-          ments soon became the custodians of democracy in
                            tat of September 19, 2006 that deposed the populist             Thailand with US support as a pivotal ally in the fight
                            prime minister, Thaksin Shinawatra, radically altered           against communism in South-east Asia. Consolidat-
                            the nation’s political dynamic, launching the country           ing their role over the next three decades, the mili-
                            into five protracted years of domestic strife and weak-         tary restored the monarchy’s standing after its descent
                            ened international standing.                                    into relative obscurity and self-imposed exile post-
                               However, last year’s peaceful landslide election win         1932. Civilian prime ministers held office for just 12
                            by Yingluck Shinawatra, Thaksin’s younger sister, has           months between 1947 and 1972. Following the suc-
                            restored much confidence in the country’s demo-                 cessful assimilation of several waves of Chinese immi-
                            cratic process. Thailand’s first female prime minister          grants during the 1950s (and overcoming fears of a
                            is now taking pragmatic steps to engage all parties in          “red wave”), US economic and military support to
                            a concerted dialogue of national reconciliation and             Thailand as the war in Vietnam escalated became the
                            to rebuild the nation’s international credentials. At the       catalyst for a fledgling middle class in the 1960s. The
                            same time, the kingdom continues to enjoy sustained             rise of this socioeconomic group ignited demands for
                            economic growth largely inviolate from political cir-           accountable, representative democracy in the 1970s.
                            cumstance, as it has done since the introduction of             DEMOCRATIC DEMANDS: Student-led demonstra-
                            a constitutional monarchy in 1932 and throughout                tions in 1973 brought about the expulsion of then-
                            80 years of democratisation.                                    prime minister, Field Marshal Thanom Kittikachorn.
                            SIAM RESOLUTE: Emerging from the virtual col-                   This was followed by a brief interlude of civilian gov-
                            lapse of the Siamese empire following the Burmese               ernment until a violent military assault on Thammasat
                            pillaging of its historic capital Ayuthuya in 1767 only         University and a subsequent coup saw a return to mil-
                            to then fend off British and French colonial overtures          itary rule from 1976 to 1988. Middle class demands
                            in the 19th century, the Thai nation remains distinct-          rose again at the turn of the decade, rejecting mili-
                            ly patriotic and independent.                                   tary rule and precipitating a military crackdown in
                               At the centre of its contemporary political system           1992 that was only ended by King Bhumipol Adulyadej
                            lies the monarchy, due in part to the astute diplomat-          summoning protagonists to the palace for a televised
                            ic policies of reform and modernisation pursued by              lecture on the need for unity.
                            King Chulalongkorn (King Rama V, 1853 − 1910), which               Although taking place 16 years apart, 1976 and
                            preserved the then Kingdom of Siam’s sovereignty                1992 were formative years for many of Thailand’s
                            from European influence. The ceding of some terri-              leading political figures and activists. This cadre of lead-
                            tories to the European powers remains a bitter chap-            ers flourished in a new era of heightened democrat-
                            ter that still punctuates fringe elements of Thailand’s         ic participation and economic prosperity during the
                            contemporary political dialogue.                                1990s. The rising tide came to a head with the 1997
The first military coup     MILITARY CUSTODIANS: Aspirations to reclaim the                 “people’s” constitution, which brought ballot voting
d’état occurred in 1947,    ceded territories motivated Thailand’s alignment with           to both upper and lower houses of parliament for the
following which the
                            Japan during the Second World War. This was opposed             first time. Yet until the emergence of telecoms mag-
armed forces aligned
themselves with the US in   by the Free Thai Movement, the group that later                 nate Thaksin Shinawatra’s Thai Rak Thai (Thais love
the fight against           became the foundation for the principally pro-Amer-             Thais) (TRT) party in 1998, political movements had
communism.                  ican governments following the war’s end. Overthrown            been catering primarily to their urban constituencies.

                            www.oxfordbusinessgroup.com/country/Thailand
COUNTRY PROFILE OVERVIEW                                                                                13




POPULIST AWAKENING: TRT was the first party to
actively canvass and engage Thailand’s rural majori-
ty as its election platform. Grounded in mainstream
populist strategies that particularly appealed to indebt-
ed farmers following the Asian financial crisis, Thaksin
offered universal access to health care, education,
debt alleviation and rural development funds. His sub-
sequent landslide election wins in 2001, 2005 and
2006 continue to set the Thai political agenda today.
   By 2005, Thaksin was the first Thai prime minister
in the country’s history to serve his full mandated
term in office, during which time Thailand, labelled as
a “darling of democracy” in South-east Asia, saw con-
tinued economic recovery and an expanded role on
the global stage. It was tempered, however, by the sys-
tematic subverting of activities meant to safeguard
democracy and allegations of abuse of power, cor-
ruption, human rights violations and even suspicions
of plots to usurp the monarchy. Opposition manifest-
ed en masse in the yellow-shirted People’s Alliance
                                                            The prime minister is limited to two four-year terms and leads the largest political party in parliament
for Democracy (PAD) movement that took to the
streets on the back of largely urban and middle-class       peaceful solution, expressed in the open and trans-                        The Thai Rak Thai Party
popular support. Led by Thaksin’s erstwhile business        parent election results of July 2011.                                      ushered in a new era of
                                                                                                                                       populist politics in 2011
partner, Sonthi Limthongkul, the PAD’s obstruction of       GOVERNMENT: Thailand is a constitutional monar-
                                                                                                                                       and was the first major
government contributed to Thaksin’s decision to call        chy and a parliamentary democracy, as stipulated in                        political movement to
a snap election in 2006, just three months into his sec-    the 2007 constitution drafted by the military-appoint-                     emphasise the demands of
ond term. The PAD led opposition parties boycotting         ed Constitution Drafting Assembly. It replaces the                         the rural masses.
the vote, and Thaksin secured 60% of the electoral roll.    1997 constitution, which was abrogated in 2006.
However, hounded by continued street demonstra-             Approved by public referendum in 2007, executive
tions, one-party rule lasted just four months. The          power is vested in the government with King Bhumipol
nation’s 18th military coup d’état took place on Sep-       Adulyadej as the reigning monarch and head of state.
tember 19, 2006. As part of its actions, the coup           The prime minister is the leader of the largest party
removed Thaksin, who remains in self-imposed exile.         or coalition in parliament and is limited to two four-
INTERVENTION & STREET POLITICS: The 2006                    year terms. The leader of the ruling party is required
coup was a response to the political evolutions in Thai     to hold a seat in the lower chamber of parliament,
society, most notably to the demands for accountable        and representatives must relinquish any holdings in
government and accelerating the transition of polit-        major companies prior to assuming a role in office.
ical control from Bangkok to the masses.                       The Cabinet, or Council of Ministers, is restricted
   In May 2010 Thailand’s political landscape was           to 35 ministerial positions, of which 20 are head min-
punctuated by confrontations between the govern-            isters and 15 are without portfolio, including the
ment, the PAD, the pro-Thaksin red-shirt movement,          deputy prime minister and several other deputy min-
the United Front for Democracy Against Dictatorship         isters. Members must receive royal approval. The Cab-
(UDD), which emerged in 2006, and the military. The         inet is authorised to submit bills to the House of Rep-
grievances that arose out of the events between 2005        resentatives, the decisions of which are in turn subject
and May 2010 remain fundamental to the dialogue             to the non-partisan upper house, the Senate.
of reconciliation now under way (see analysis).                The lower house is composed of 500 members, of
   However, by December 2008 the power of street            which 375 are elected through single constituency
politics was already waning. The PAD struggled for rel-     elections and 125 are appointed according to party-
evance as a Democrat Party-led coalition took pow-          list proportional representation. The current speaker
er following the Constitutional Court’s dissolution of      of the house is PT’s vice-chairman and former minis-
TRT’s successor, the People’s Power Party (PPP). Mar-       ter of culture and justice, Somsak Kiatsuranont.
ginalised by its occupation of national airports and           The senate is mad up of 150 members who are
an increasingly far-right-wing message, it never fully      restricted to one six-year term each. It comprises of
recovered its popular base, despite branching into          76 senators that are directly elected, one from each
mainstream politics via the New Politics Party (NPP).       province and one from Bangkok. The remaining 74 rep-                       The 2006 military coup
   Military confrontations in Bangkok with red-shirts       resentatives are appointed by the Senate Selection                         sparked a wave of conflicts
in 2009 and 2010 brought an end to the street poli-         Committee, composed of the heads of the Constitu-                          and angry street politics.
                                                                                                                                       The consequences of these
tics uprisings. The protracted confrontation and deaths     tional Court, Election Commission, National Counter
                                                                                                                                       altercations left Thais
of 92 protesters and soldiers in April and May 2010         Corruption Commission (NCCC), State Audit Commis-                          demanding greater stability
deeply affected public opinion. At the brink of an          sion, Chief Ombudsman, and one judge from both the                         and a peaceful political
open conflict, these events sparked demand for a            Supreme Court and the Supreme Administrative Court.                        process.


                                                                                                          THE REPORT Thailand 2012
Oxford Business Group - Thailand 2012
COUNTRY PROFILE OVERVIEW                                                                     15




The current senate president is General Teeradej
Meepien, formerly permanent secretary of the Min-
istry of Defence and chief ombudsman.
   Thailand’s government and bureaucracy remain
highly centralised despite calls for increased auton-
omy and for powers to be handed to local government.
Grouped into six regions, broadly defined by histori-
cal and ethnic identities, the 76 provincial (changwat)
governors are all appointed by the Ministry of Interi-
or, while Bangkok, technically considered Thailand’s
77th province, and Pattaya have elected mayors. The
three southern border provinces of Yala, Songkhla
and Narathiwat remain under special state-of-emer-
gency decrees enacted in 2004 following the resur-
gence of a violent Islamist insurgency amongst the
majority ethnic Malay population.
LEGAL FRAMEWORK: Three tiers of courts make up
Thailand’s judiciary system. The Courts of Justice, com-
posed of the Court of First Instance, the Court of
Appeals and the Supreme Court of Justice, or Dika,
                                                             The Pheu Thai Party leads the parliament with a six-party coalition
which is the final level of appeal in matters of crimi-
nal law. The Dika is also the forum for prosecutions         economic performance, the party suffered from unco-                     The current constitutional
of politicians, which has placed it at the centre of         operative coalition partners and was confronted by                      court saw its powers
                                                                                                                                     expanded in 2007 following
several anti-corruption cases brought against elect-         protracted pro-Thaksin street protests in 2010. The
                                                                                                                                     the 2006 military
ed officials in the last six years.                          subsequent military crackdown on protesters hurt                        intervention, alongside
   Established by the 1997 constitution, the Consti-         the party, reinforced by an anti-Thaksin election plat-                 constitutional amendments
tutional Court is the highest authority on constitution-     form, yet it secured 31.8% of votes cast (159 seats).                   brought in that year.
al matters. Strengthened in 2007 as part of the con-            Led by Newin Chidchob, the Bhumjaithai Party mir-
stitutional amendments, its rulings are at the centre        rors TRT’s populist platform. Once favoured by the
of perceived establishment bias following the disso-         PPP administration, it was later ostracised for “betray-
lution of the TRT and PPP parties, while dismissing sim-     ing” the pro-Thaksin parties by joining the Democrat
ilar cases against the Democrats in 2010.                    coalition in 2008. PT recriminations deliberately cam-
   Other judicial tiers include: the administrative courts   paigned heavily in Bhumjaithai-held seats during the
with jurisdiction over conflicts between the state,          2011 election, a move which helped halve the par-
state organs and private citizens; the courts of trade,      ty’s expected election yield. While it took 6.8% of the
tax and labour; and the military courts.                     votes (34 seats), it has been kept out in the cold by
POLITICAL PARTIES: The Pheu Thai (“for Thais”)               the PT-led government.
Party (PT) was founded in 2008 as the successor to              The Chartthaipattana Party replaced the Chart Thai
both the TRT and pro-Thaksin PPP. Both were dis-             Party that was also banned in 2008. Led by Chumpol
solved and their executives banned from politics for         Silpa-archa, the party has crossed the parliamentary
five years by the Constitutional Court in 2007 and           floor several times in the last decade. First allied with
2008, respectively. Led by incumbent Prime Minister,         TRT and PPP, it joined the 2008 Democrat coalition
Yingluck Shinawatra, PT has continued TRT and PPP’s          before siding with Bhumjaithai in the 2011 elections,
populist platform and took 53% of the vote (265 seats)       only to break ranks and join the PT coalition in July
in the 2011 general election. As the dominant force          that year. It holds 3.8% of the votes (19 seats).
in Thai politics, its electoral base is concentrated            With just 1.4% of the vote (7 seats) each, Chart Pat-
among the rural and urban poor, particularly in north        tana Puea Pandin (CPPP) and Phalang Chon, an off-
and north-east Thailand, as well as Bangkok.                 shoot of Bhumjaithai, are minor coalition partners in
   The Democrat Party, led by former prime minister          the PT government. CPPP includes both former TRT
Abhisit Vejjajiva, makes up the current opposition and       members and opponents, following a merger with
Thailand’s oldest political party, although it has not       the Puea Pandin Party in 2011. CPPP is led by Wan-
won an electoral plurality in any election since 1992.       narat Channukul, who served as minister of energy in
Maintaining a conservative political position with           the Democrat coalition and briefly as minister of indus-
strong links to the establishment, the Democrats’            try in the current administration.
electoral support base is concentrated throughout            2011 ELECTION: Since 1992, Thailand has main-
Bangkok and southern Thailand in the middle to upper         tained a plurality of political parties that has con-                   The Pheu Thai (PT) Party
socioeconomic classes. The Democrats formed a six-           tributed to a succession of coalition governments.                      has picked up the mantle of
                                                                                                                                     the disbanded TRT. PT’s
party coalition government in 2008 with the alleged          While PT’s 2011 election win constituted a parlia-
                                                                                                                                     2011 parliamentary victory
tacit backing of the military, replacing the dissolved       mentary majority, its six-party coalition is less indica-               has seen it continue
PPP coalition parties and serving in office until its        tive of election platform compatibilities than old                      populist politics that focus
election defeat in July 2011. Despite a very strong          alliances renewed. However, the election campaign                       on urban and rural masses.


                                                                                                          THE REPORT Thailand 2012
16                              COUNTRY PROFILE OVERVIEW



In the 2011 election          in 2011 highlighted the depth of the Thai political spec-    these continue to influence the popular platform on
campaign, candidates and      trum, with 40 competing parties and an estimated             which PT relies, tying them to an unpredictable, but
competing parties spent       spend of BT39bn ($1.24bn), according to the Kasiko-          necessary ally in the UDD.
$1.24bn, significantly more
than expected, and
                              rn Research Centre; an 85% rise on the 2007 estimate            The election also highlighted the question over the
vote-buying was markedly      of BT21bn ($670m). Whereas vote-buying was a com-            moral authority of elected officials. The previous six
reduced.                      mon and all-too-apparent stain on the previous elec-         years brought growing public disenchantment with
                              toral process, appearing in charges levelled against         politicians and leaders across the spectrum. The Rak
                              TRT and PPP, observers have noted Thailand’s improved        Thailand Party of former massage parlour king pin,
                              performance in terms of monitoring and transparen-           Chuwit Kamolvisit, was the unlikely beneficiary of pub-
                              cy over the past six years.                                  lic ire. Campaigning on an independent, anti-corrup-
                              NEWCOMERS: The 2011 election was also notable                tion platform, he attracted substantial support from
                              for the emergence of three political parties and move-       young adults, first-time voters and notable figures
                              ments that defied traditional norms. The New Politics        among Thailand’s intelligentsia, winning four seats.
                              Party (NPP), the PAD’s vehicle to mainstream politics,       While a small player, support for the party’s platform,
                              was founded in 2009, espousing a hard-line nation-           despite its leader’s unconventional background,
                              alistic and royalist ideology, provoking military con-       betrays a growing public unease with Thailand’s polit-
                              frontations with Cambodia. Although wracked by a             ical leadership among the new generation of voters.
                              schism in 2011 over demands by PAD leader Sonthi             THAILAND TODAY: PT’s six-party coalition govern-
                              Limthongkul that it boycott the election, its short-lived    ment faced an unforgiving set of circumstances and
                              political aspirations illustrated the rejection of hard-     events in the months immediately after taking pow-
                              line nationalism by the general Thai electorate.             er. Foremost amongst its opponents’ concerns and alle-
                                 Diametrically opposed to the NPP, the red-shirt           gations is the belief that Yingluck is a placeholder for
                              movement also made a point to distance itself from           her brother. Whilst this claim has been strenuously
                              the hard-line and confrontational tactics of 2009 and        denied, Thaksin’s frequent consultations with PT advi-
                              2010. With the movement’s UDD leaders abroad or              sors and government members in neighbouring coun-
                              in jail, the movement re-emerged in the form of grass-       tries, openly and documented by local media,
                              roots “red shirt villages” that espoused demands for         have added fuel to the speculations. The real extent
                              socio-economic equality and justice independent of           of Thaksin’s influence, however, remains unclear,
                              their calls for Thaksin’s return. Whilst distinct from PT,   and Yingluck insists that she governs with impartiality.
COUNTRY PROFILE OVERVIEW                                                                        17




   Facing unshakeable opposition from the private
and public sectors to increase the minimum wage to
BT300 ($9.57) per day in general and to BT15,000
($478.50) per month for graduates, derailing key elec-
tion pledges, Thailand’s worst floods in 60 years
abruptly terminated the government’s honeymoon
period in October 2011.
   By the end of January 2012, 65 provinces had been
declared disaster zones. Over 800 people died, with
13.6m more affected, while seven industrial estates
and 20,000 sq km of land had been inundated. The
government’s response to the national tragedy was
slow as it struggled to coordinate between 17 sepa-
rate agencies and manage the flooding. Its inability
to adequately communicate the situation or devise
an effective response strategy brought visceral criti-
cism of the government, but little drop in its popu-
larity. In contrast, the military’s deployments, grass
roots coordination and resilience of the Thai bureau-
cracy restored much of the public’s confidence.
SEATING ARRANGEMENT: The January 2012 cab-                 The October 2011 floods were a national disaster, leaving nearly 800 people dead and over 13m affected

inet reshuffle was partially in response to the floods,    fold. However, the proposed Keynesian economic poli-                   The end of the five-year
although many criticised members retained their            cies would pose substantial fiscal burdens on the                      political ban on TRT party
                                                                                                                                  leaders is likely to influence
seats. In all, 10 new cabinet members were named,          state, undermining political stability and increasing
                                                                                                                                  the next reshuffling of the
including Natthawut Saikua, a red-shirt leader. Appoint-   dependence on further deficit and borrowing. With                      Cabinet, with many
ed as the deputy agriculture and cooperatives minis-       depressed export demand, a shortage of labour and                      expecting that this will
ter, Natthawut objects to the prior lack of red-shirt      a low tax-paying base, Thailand currently has insuffi-                 occur later in 2012.
representation. Other important changes included           cient revenue streams for such political aspirations.
the appointment of Air Chief Marshall Sukumpol                Such populist nurturing is a two-edged sword for
Suwanatat as minister of defence, reinforcing civilian     Thailand. Debt-laden governments can produce volatile
oversight of the armed forces, and the removal of the      political environments and the commencement of
finance minister, Thirachai Phuvanatnaranubala.            the ASEAN Economic Community (AEC) in 2015 could
Replaced by then deputy prime minister and minis-          yet heighten populist demands. Although the coun-
ter of commerce, Kittiratt Na-Ranong, the former sec-      try’s established manufacturing industry has sus-
retary-general of the Securities and Exchange Com-         tained the economy through several downturns, it is
mission, Thirachai publicly condemned his removal as       feared that Thailand’s current and future labour forces,
an attempt by the government to manipulate public          upstream industrial capabilities, financial institutions
debt figures, which are now approaching the consti-        and services sector have lost much of their momen-
tutional limit of 50% of GDP (see Economy chapter).        tum and will lack the necessary competitive edge to
   Such incidences underlined the resistance of many       compete in the open market that the AEC guarantees.
institutions to PT oversight and control, which will          Just three years ahead of the AEC, this economic
continue to plague the government during its term          imperative may prove to be Thailand’s greatest polit-
in office. However, May 2012 heralded the return of        ical challenge. Despite the political instability of recent
the first 111 TRT executives from their five-year polit-   years, Thailand registered economic growth in every
ical moratoriums. Many observers expect a second           quarter bar six in the 21 months since the coup. That
cabinet reshuffle later in 2012 that will see some of      said, the last six years of political conflict squandered
Thaksin’s “A-team” players return to the bench. Yet        Thailand’s lead among the regional economies and
standing in their way are the current incumbents, a        deprived it of billions of baht from would-be investors.
new generation of politicians who are not expected         OUTLOOK: Following six years of political strife, the
to pass quietly into the night. As the party remains       2011 election was a public rejection of violence and
careful not to upset the national balance of power,        extra-constitutional interventions by non-state actors
PT’s own internal politics may prove to be the most        in favour of full, participatory democracy. While Thai-
effective check and balance in government.                 land’s political crisis looks to be at an end, grievances
ECONOMIC PRESSURES: Demand for socio-eco-                  remain deeply engrained on all sides of the political                  Recent political campaigns
nomic equality among the rural and urban masses            spectrum. An ongoing dialogue between the parties                      have championed
drives much of Thai politics. This issue remains an        is only the first step in a broader programme of nation-               economic equality as well
important focus to the coveted popular political sup-      al reconciliation that will continue for many years.                   as greater welfare
                                                                                                                                  provisions. Such policies
port base, which has transitioned from a position of       Thailand’s economy remains on a strong footing, but
                                                                                                                                  have effectively attracted
“recipient” to “provider” of political support. Accord-    managing the public debt, investor confidence and                      voters, but are likely to
ingly, Thailand has witnessed a flux of competitive        the aspirations of its party forerunners may prove to                  be hard to sustain in the
populism that has brought many politicians into its        be the PT government’s greatest challenge for 2013.                    long term.


                                                                                                      THE REPORT Thailand 2012
18                               COUNTRY PROFILE ANALYIS




                               Prime Minister Yingluck met with President Obama in late 2011




                               Back to business
                               Rebuilding international standing
As a member of ASEAN,          The 2011 elections gave the government a strong man-            DIPLOMATIC RESPONSIBILITY: To the east, relations
Thailand is party to a range   date to regain a proactive international role, stressing        with Cambodia remain strained following bitter military
of multilateral trade
                               commitment to democracy, justice and reconciliation.            skirmishes over the Temple of Preah Vihear in 2010.
agreements and is
currently considering          Following the 2006 military coup d’état, Thai prime             Goaded by right wing elements, the Thai government
joining the Trans-Pacific      ministers were denied meetings with the US president,           allowed the conflict to spill over into the UN Security
Partnership. The country is    a historically routine matter for a close US ally in South-     Council, the International Courts of Justice (ICJ) and
also building a network of     east Asia. The November 2011 meeting between Prime              UNESCO in 2011, undermining Thailand’s internation-
bilateral agreements
                               Minister Yingluck Shinawatra and President Barack               al credentials. Representing Thailand at the UN, Sihasak
around the world.
                               Obama at the East Asia Summit, just three months after          acknowledges that the politicisation of the issue is the
                               her appointment, was a clear endorsement of Thailand’s          reason behind the international intervention. Both Thai-
                               return to a democratic process.                                 land and Cambodia have maintained a ceasefire since
                                  Membership in ASEAN has been important to the                2011 and await the final ICJ ruling on ownership of the
                               country’s global positioning, and Thailand’s economy            temple’s 4.6-sq-km grounds. “Eventually the court will
                               and geographic location made it a leading player in the         decide, but both sides must recognise that our rela-
                               organisation prior to 2006. Speaking with OBG, Sihasak          tionship will have to move forward,” Sihasak said.
                               Phuangketkeow, the permanent secretary of the Min-                 “We have to bring Thai foreign policy into a new era
                               istry of Foreign Affairs, reinforced Thailand’s commit-         by looking beyond Thailand, by looking at how we can
                               ment to ASEAN and integration with East Asia. “Promot-          contribute to the broader issues of the international
                               ing ASEAN in the region is one of our key foreign policy        community to deal with global challenges,” Sihasak told
                               objectives while moving beyond the immediate parochial          OBG. “I would like to see our foreign policy clearly raise
                               interests of Thailand itself,” he said.                         the banner of democracy, human rights and humani-
                                  Thailand’s preference for ASEAN to be a central force        tarian principles. These are important values shared by
                               for broader free trade in the Asia-Pacific region would         the international community and should be reflected
                               allow the organisation to balance the economic inter-           in the conduct of our own foreign policy.”
                               ests of China, India and the US, which had pushed for           BACK TO BUSINESS: The government knows that a
                               Thailand’s inclusion in the latest multilateral free trade      strong diplomacy record and high international stand-
                               agreement, the Trans-Pacific Partnership (TPP).                 ing will also open doors for Thai business. The efforts
                               WELL PLACED: Thailand’s strong political and trade rela-        made by the former premier Abhisit Vejjajiva to expand
                               tionship with Myanmar, now increasingly attractive to           business opportunities were frustrated by uncooper-
                               global investors, are an advantage. Thailand’s support          ative coalition parties and a weak parliamentary major-
                               for a transition to greater democracy and internation-          ity slow to act due to a number of political issues.
                               al engagement in Myanmar has helped to position Thai-              However, the renewed push for international engage-
                               land as the gateway to this emerging economy.                   ment and expansion has allowed Thailand to close a
Stronger ties with                Establishing deeper ties with Myanmar also supports          number of free trade agreements and other ties with
Myanmar are proving            growth of the Southern Economic Corridor, which brings          African and Latin American countries over the last five
positive for both countries,   India into the fold, linking it with ASEAN and China.           years. Pheu Thai’s parliamentary majority and return to
as well as the wider region,
                               Thailand and India are strengthening their relationship         a more democratic political process has helped rebuild
with Myanmar facilitating
India’s entry into the         and working to establish reciprocal economic ties. Suc-         investor confidence after six years of instability and the
South-east Asian economic      cessful integration on Myanmar into the arena is expect-        2011 floods. It is clear that within the global and
sphere.                        ed to benefit regional economic flow on the whole.              economic arenas, Thailand is getting back to business.

                               www.oxfordbusinessgroup.com/country/Thailand
COUNTRY PROFILE VIEWPOINT                                       19




                                                              Bhumibol Adulyadej, King of Thailand




A balanced approach
His Majesty Bhumibol Adulyadej, King of Thailand, on his philosophy for
sustainable development
When considering development, first and foremost              the national level, this philosophy is consistent with a
we must keep in mind humanitarian considerations. If          balanced development strategy which will reduce the
we are to be kind to our fellow countrymen, known to          nation’s vulnerability to shocks and excesses that may
be in dire need, the authorities endowed with both            arise due to the effects of globalisation. At the same
knowledge and wealth must go to their assistance.             time, it is essential to strengthen the nation’s moral
   When the country is faced with difficulties and peo-       fibre so everyone, particularly public officials, academ-
ple in the remote areas are suffering, we cannot sim-         ics, business people and financiers adhere to princi-
ply stay put in this paradise of a capital. If we want the    ples of honesty and integrity.
people to be prosperous, we have to invest in devel-             A balanced approach with patience, perseverance,
opment projects which will involve budgets that may           diligence, wisdom and prudence is indispensable to
cost hundreds or even thousands of millions of baht.          cope with the challenges arising from extensive and
But this expense is justified. If the project is a good       rapid socio-economic, environmental and cultural
one, the people will very soon derive benefits from it.       change. It requires thoughtful planning with consid-
   When people talk about solving the current crisis,         eration for contingencies, and maintaining the reserves
one of the things they talk about is “globalisation.” We      of money and resources necessary to tide one through
say we are now in the age of globalisation, and we must       any bad times that occur. Self-sufficiency means hav-
“comply” with it and follow its rules. If we fail to follow   ing enough to live on and to live for. If everybody has
through with what we have committed to, others will           enough to live on and to live for, that is good. And if
be dissatisfied. Why? Both because they are also in trou-     the whole nation is able to reach this status, that would,
ble and because we would find it more difficult to            of course, be even better.
recover from the crisis ourselves.                               Self-sufficiency means that whatever we produce,
   The countries in this region are not the only ones         we have enough for our use. We can rely on ourselves
affected by the crisis. Even prosperous and stable            – as people say, we can stand on our own legs.
countries are in trouble. This is because if a problem           But sufficiency carries a broader meaning. It is hav-
is not solved in one corner of the world, other parts         ing enough and being satisfied with situations as they
are also affected. So we must try to support the peo-         exist. If people are contented, they are less greedy.
ple, providing them with jobs, so that they earn an              With less greed, they will face fewer problems. Coun-
income and can survive the crisis.                            tries should value having just enough, which means
   Development must take account of a country and             being contented, being honest and not being greedy.
its people’s physical, sociological and cultural environ-     This will make people be satisfied.
ments. By the local sociological environment, we mean            Being sufficient does not restrict people from hav-
the certain characteristics and ways of thinking which        ing a lot, or possessing luxury items, but it does imply
we cannot force people to change. We cannot require           one must not take advantage of others. Everything must
people to do those things they will not choose to do.         be within limits. We must say what is necessary, act as
We can only suggest. If we go in and find out what the        is needed and work as is adequate. Thus, sufficiency
people really want, and then fully explain how they can       here means within the proper bounds and reasons of
best achieve their aims, the principles of development        the country and the people.
can be fully and effectively applied and implemented.            Adapted from His Majesty’s royal speeches in 1974,
   “Sufficiency economy” applies to conduct and a way         1997, 1998 & 1999 and His Majesty's speeches on the
of life at individual, family, and community levels. At       Royal Development Projects in 1970.

                                                                                                     THE REPORT Thailand 2012
20     COUNTRY PROFILE INTERVIEW




     Yingluck Shinawatra, Prime Minister




     Heal and grow
     OBG talks to Prime Minister Yingluck Shinawatra
     How did the floods of late 2011 affect the admin-            What is the government’s strategy for restoring
     istration’s priorities? What reforms are most press-         confidence in long-term investment in Thailand?
     ing following such a natural disaster?                       YINGLUCK: Business confidence in Thailand remains
     YINGLUCK: The government has given high priority to          strong, not only because of our policies but also because
     alleviating the impact of the floods and putting in place    of our solid economic fundamentals. That is why our
     measures that will help to prevent such crises from          economy is forecast to expand by around 5.5-6.5% in
     occurring again in the future.                               2012 in the form of a v-shaped recovery, despite the
        We are turning the flood into an opportunity to make      floods in 2011. That is why foreign companies affect-
     Thailand’s infrastructure and economy safer from such        ed by the floods continue to invest in our future. The
     disasters. A multi-billion-dollar flood recovery and         fiscal and financial position is sound. Public debt stands
     restructuring package has been set aside to compen-          at 40% of GDP. The level of foreign exchange reserves
     sate and assist affected sectors in the recovery effort      is high at $180bn. We also have a large pool of skilled
     and to ensure that small and medium-sized enterpris-         labour that is valued by multinational companies.
     es, entrepreneurs and industrial estate development             In terms of policies, this government is committed
     can resume production as soon as possible.                   to promoting domestic demand through investment and
        More than $11bn has been set aside to create an           government spending. Projects that have been planned
     improved water and crisis management system. Flood           include large transport and infrastructure schemes to
     walls, barriers and dams are being built to protect indus-   promote national and regional connectivity.
     trial estates and communities.                                  With regard to policies for the private sector, corpo-
        Floodways and diversions are being created to allow       rate income tax is being lowered from 30% to 23% in
     water to flow in and out. Drainage systems are being         2012, and to 20% in 2013. We have removed some
     built to prevent water build-up. Information databas-        restrictions to make it easier for companies to set up
     es and contingency plans are being developed.                regional operating headquarters here. In addition, labour
        Most importantly, a single command authority on           skills are being upgraded. Thailand is preparing itself
     water management is being put in place to oversee and        for the ASEAN Community in 2015, which will make the
     execute plans, in particular during times of crisis.         South-east Asian region of over 600m consumers a sin-
        At the regional level, ASEAN has given full support       gle market and production base.
     to my initiative to work together to address and pre-           The message I received from foreign investors, both
     vent flooding. This government will continue its poli-       in Thailand and abroad, including at the annual meet-
     cies such as strengthening domestic demand, pursu-           ing of the World Economic Forum in Davos in January
     ing people-centred development, creating a                   2012, is that they are confident in Thailand’s econom-
     business-friendly environment and expanding invest-          ic future and would like to continue to be our trading
     ment in transportation and logistics.                        and investment partners. Thailand’s hosting of the
        In addition, we will be following through on the high     World Economic Forum for East Asia in 2012 is expect-
     priority agenda announced when we took office. This          ed to underscore that message. In view of the current
     will take a variety of forms, including the empowering       mix between our water management and recovery
     of women so that they can contribute further to the          package on the one hand, and people-centred devel-
     country’s economic development and strengthening             opment and business-friendly economic policies on
     education for our children, which is a very impor-           the other, Thailand is striking the appropriate balance
     tant form of investment for the future of our country.       between emergency relief and long-term planning.

     www.oxfordbusinessgroup.com/country/Thailand
COUNTRY PROFILE INTERVIEW                                      21




What are the challenges to fostering unity and rec-           Which are the most urgent priorities on your for-
onciling the political differences of recent years?           eign policy agenda? What bilateral relationships in
YINGLUCK: The political situation in Thailand has been        Asia would you like to develop?
back to normal for some time now. The elections in July       YINGLUCK: One of the most important foreign policy
2011 were a fresh start which resulted in a peaceful          priorities of this government is to expedite the promo-
transition of power. They also showed that all sides are      tion and development of close and cordial relations with
committed to resolving issues through democratic              neighbouring countries by enhancing cooperation
processes. The elections saw voter turnout of 75%, one        between the public sector, private sector, people and
of the highest in recent years. In my visits to foreign       the mass media to cultivate mutual understanding and
countries and at international meetings, the message          promote mutual interests. This will lead to expanded
from our foreign friends is the same – they strongly          cooperation in all relevant areas, including trade, invest-
support Thailand’s democracy and this government,             ment, tourism promotion, transportation and people-
which came from a democratic process.                         to-people ties. Indeed, this is part of Thailand’s overall
    We should not overlook the fact that the political        foreign policy of maintaining good relations with all
events in Thailand in the past few years reflect increased    members of the international community.
activism on the part of the Thai people, who have                In this regard, I am pleased that in my visits to neigh-
become more aware of the importance of politics to            bouring countries in South-east Asia, there has always
their lives and want to make their voices heard. The diver-   been a warm reception, as well as a great receptivity
sity of views being expressed by different groups shows       and willingness to reciprocate these policies.
that Thailand is a vibrant democracy and an open soci-           As a founding member of ASEAN, Thailand attaches
ety. However, one cannot deny that political activism         great importance to the realisation of a people-cen-
in the past few years has also been marred by violent         tred and effective ASEAN Community in 2015. We are
incidents and a lack of compromise. While this is truly       committed to playing a more proactive role in commu-
regrettable, it is perhaps part of the process of learn-      nity building and in developing an ASEAN-centred
ing how to become a more mature democracy which               regional architecture that promotes peace, prosperity
Thailand has to go through. I am sure that democracy          and progress. To this end, Thailand supports the devel-
in Thailand will emerge stronger after this experience.       opment of enhanced connectivity within our region,
   Recognising that more work remains to be done on           whether in the Greater Mekong subregion, ASEAN or
this issue, this government attaches great importance         beyond, and will use its geographical location and oth-
to promoting national reconciliation. The government          er assets to promote further progress in this area.
supports the work of the Truth and Reconciliation Com-           In addition, as a member of good standing within the
mission of Thailand (TRCT), established by the previ-         international community and with Bangkok serving as
ous government, and the TRCT’s recommendations. A             regional headquarters for the UN as well as for other
compensation package has been approved to provide             international organisations, Thailand will be playing an
remedies to all sides that suffered losses in the politi-     active role in the international community and with
cal violence of the past several years.                       relevant organisations to address global issues of com-
   Political stability has been the fruit of this govern-     mon concern, particularly those that impact Thailand
ment’s efforts so far. We will continue to consolidate        and the region. One such issue is disaster manage-
these gains by supporting good governance, the rule           ment, which Thailand is hoping will benefit from
of law, human rights, transparency and accountability.        enhanced regional and international cooperation.

                                                                                                    THE REPORT Thailand 2012
22     COUNTRY PROFILE INTERVIEW




     Surin Pitsuwan, Secretary-General, ASEAN




     Pulling together
     OBG talks to Surin Pitsuwan, Secretary-General, ASEAN
     How will a free and open investment regime help                 the ASEAN economic ministers (AEM) in August 2007.
     increase investment into ASEAN?                                 The roadmap provides for the detailed measures and
     SURIN: ASEAN’s vision for an integrated regional econ-          action plans to integrate logistics services, and involves
     omy includes the free flow of investment and servic-            the participation of various related ASEAN bodies in
     es. To this end, set out several strategic initiatives in the   trade, services, Customs, transport, telecommunica-
     ASEAN Economic Community (AEC) Blueprint and has                tions and investment, as well as private sector bodies.
     taken concrete steps to realise these by 2015.                     ASEAN also actively conducts public-private engage-
        One of the bold steps that ASEAN took to establish           ment dialogues. In October 2010, ASEAN leaders adopt-
     this free and open regime is the ASEAN Comprehen-               ed the Master Plan on ASEAN Connectivity, which is
     sive Investment Agreement (ACIA). An important pillar           intended to add value to and expedite the implemen-
     of the ACIA is its liberalisation component, in which a         tation of the logistics roadmap and the AEC Blueprint,
     negative list approach was adopted in the so-called             and to address issues such as market access, trade and
     reservation list, with all else being open. ASEAN also          Customs facilitation, supply chain security and cross-
     agreed to progressively reduce or eliminate the reser-          border, inter-state and multimodal transport through
     vations contained in the list following the strategic           clear measures, targets and timelines.
     phases outlined in the AEC Blueprint, and member                   From the trade in services side, significant progress
     states are working to improve their investment regimes.         is made in the liberalisation of the nine logistics serv-
        On a far greater scale, ASEAN has also entered into          ices subsectors. This year all member states will be
     free trade agreements with dialogue partners through            required to open their logistics services up to 51% for-
     which we are trying to expand our reach in terms of             eign ownership, and up to 70% by the end of 2013. With
     source of investment. We have to provide adequate pro-          these ambitious targets, trade barriers will be kept at
     tection to investors and their investments to remain            minimum level and links between the logistics providers
     competitive. Our agreements have safeguarding pro-              among ASEAN countries will be improved.
     visions which enable direct recourse through the
     investor-state dispute settlement mechanisms.                   How can ASEAN nations work together to position
        Promotion and facilitation are two of the main pil-          the region as a world leader in tourism?
     lars of the ACIA, and we recognise that we has to               SURIN: ASEAN has been implementing a number of
     increase awareness of ASEAN as an integrated invest-            regional initiatives to promote ASEAN as one tourism
     ment area in order to attract and increase both intra-          destination or market, such as developing multiple-
     ASEAN and foreign investment into the region. To do             country or region-wide tour packages, joint promotion
     this we are looking at streamlining and simplifying pro-        campaigns and ASEAN-wide tourism websites.
     cedures for investment applications and approvals and              ASEAN is currently coordinating joint marketing
     establishing one-stop shops for investors.                      efforts in our main source markets, i.e. China, Korea, Japan
                                                                     and Australia. This joint work is being undertaken in addi-
     How are logistical integration issues being addressed           tion to the individual tourism offices that member
     in order to transform ASEAN into a single market?               states already operate in these markets. The collabo-
     SURIN: Logistics services is the 12th Priority Integra-         ration includes: establishment of ASEAN common area
     tion Sector (PIS) and ASEAN plans to achieve full inte-         at international travel fairs, the creation of the ASEAN
     gration of logistics services by 2013. ASEAN has a              Promotional Chapter for Tourism in Australia and pro-
     roadmap for this process, which has been endorsed by            motion of tourism products on a dedicated webpage.

     www.oxfordbusinessgroup.com/country/Thailand
COUNTRY PROFILE ANALYSIS                                                                    23




                                                           Proposed changes to the 2007 constitution worry the military




Burying the hatchet
Regrouping, recouping and ready to move on
Reconciliation was central to Pheu Thai’s (PT) 2011        upholding the court’s rulings is crucial to ensuring
election platform, a sentiment that continued to           that justice is served. They have resisted all moves
resonate with voters despite five years of confronta-      to expunge TRT and PPP leaders, fearing that this
tion following the 2006 military coup that had oust-       would pave the way for Thaksin’s return to Thailand
ed and exiled the prime minister Thaksin Shinawa-          and politics. PT’s proposal also faces opposition
tra. Since receiving her overwhelming mandate in the       among its own supporters. Many want to see the PAD
2011, Prime Minister Yingluck Shinawatra, Thaksin’s        leadership held accountable for its six-month occu-
sister, has stuck to the specifics of the campaign         pation of Government House, attacks on red-shirt
promise. Reconciliation has remained a priority            supporters and the closure of national airports in
despite hurdles, yet finding the right path leading        2008. The PAD’s ability to operate with impunity was
to the new era remains a challenge.                        in stark contrast to the aggressive measures the mil-
SPEAKING SOFTLY: Addressing the grievances on              itary took against red-shirt supporters for similar
both sides of the pro- and anti-Thaksin divide is nei-     felonies. Of the military’s actions, the most divisive
ther straightforward nor assured. Anti-Thaksin sen-        remain its partisan refusal to intervene when the PPP
timent still runs deep among supporters of the Peo-        government declared a state of emergency in 2008,
ple’s Alliance for Democracy (PAD) and members of          and the military crackdowns of April and May 2010
the establishment, colouring their views of PT’s pop-      that saw 92 deaths (86 civilian), over 2000 wound-
ulist base and policies. Despite PT’s popular mandate,     ed and the burning of several buildings.
the government has recognised the need to tread               Previous negotiation attempts by the Democrats
lightly. Future military intervention remains unlikely     in the weeks before the confrontations had failed
given the international and domestic condemnation          due to disunity and lack of compromise among the
it would no doubt provoke.                                 leadership of the United Front for Democracy against
   The military cites Thaksin’s abuses of power while      Dictatorship (UDD), a pro-Thaksin umbrella group,
in office, notably corruption and electoral irregular-     precipitating a military crackdown. However, the
ities, as the justification for the coup and the disso-    labelling of the protests as “terrorism” and mishan-
lution of both Thai Rak Thai (TRT) and its successor,      dled investigations by the internal security agency,
the People’s Power Party (PPP).                            the Department of Special Investigations (DSI), into
   These verdicts, handed down by the Constitution-        the deaths, remains disputed and contentious. Since
al Court in 2007 and 2008, respectively, alongside         PT came to power, the DSI has reverted to many of
the decision to terminate the premiership of PPP           its original findings that found the military respon-
leader, Samak Sundaravej in September 2008, are            sible in some deaths, although they have yet to rule
still condemned by pro-Thaksin groups as political-        conclusively on all cases.
ly motivated miscarriages of justice.                      CONSTITUTIONAL CHANGE: While the amnesty                              Living up to its campaign
   These rulings and the Constitutional Court’s rejec-     proposal is debated, PT has proposed the formation                    promise of “reconciliation”
tion of a case to dissolve the Democrats in 2011 for       of a 99-member Constitutional Drafting Assembly                       is proving to be challenging
alleged electoral fraud and vote-buying, perpetuate        (CDA) through Article 291 of the 2007 constitution.                   for the PT government.
                                                                                                                                 Delicate negotiations and
claims of judicial impartiality, a hotly contested issue   The move to repeal certain sections of the current
                                                                                                                                 appropriate reparations
fuelling allegations of double-standards.                  constitution and revert to some principles of the                     ensure that the process will
AMNESTY OR JUSTICE: PT’s solution has been to pro-         1997 framework has caused the military establish-                     require compromise,
pose a blanket amnesty. However, to many opponents,        ment to fear that this will strip immunity from coup                  patience and time.


                                                                                                      THE REPORT Thailand 2012
24                                    COUNTRY PROFILE ANALYSIS



                                                                                                land’s Rubicon moment. The 1991 coup, 1992
                                                                                                upheaval and 1997 constitution were chapters in the
                                                                                                nation’s struggle against military influence and for
                                                                                                democratic reform. Yet the 2011 election has made
                                                                                                the country’s demand for a new social contract inclu-
                                                                                                sive of justice and equality impossible to bury.
                                                                                                   This is a positive development for Thailand, with
                                                                                                the debate squarely in the public forum. Yet barri-
                                                                                                ers remain, and reconciliation on this scale is unprece-
                                                                                                dented in Thailand. The grievances of previous coups
                                                                                                and conflicts were allowed to drift into obscurity,
                                                                                                although this does not seem to have had a notice-
                                                                                                ably harmful affect on national development. Today’s
                                                                                                pervasive connectivity means that this is no longer
                                                                                                possible, says Ramkhamhaeng University’s associate
                                                                                                professor of political science, Chaichana Inkawat.
                                                                                                “Social media will be [the foundation of] new poli-
                                                                                                tics in Thai society. It may not be like the Arab Spring,
                                                                                                but it will remain a huge influence,” Chaichana said.
                                                                                                ACCEPTING RESPONSIBILITY: To reconcile, each
PT allocated BT2bn ($63.8m) to a compensation fund as part of the reconciliation process
                                                                                                side must be willing to recognise the legitimate griev-
Proposed changes to the             leaders and lead to the annulment of Constitution-          ances of other parties. However, PT’s BT2bn ($63.8m)
2007 constitution will have         al Court rulings. At the time writing, the proposed         compensation fund for victims of both the political
to be approved by national
                                    changes are under discussion in the wider political         violence and the insurgency in the south, announced
referendum, a volatile but
arguably more democratic            and judicial arenas. The court ruled that individual        in 2011, may be the closest the government is able
process.                            amendments may be applied, but not a wholesale              to venture in acknowledging the responsibility of
                                    constitutional re-write. Furthermore, any changes           the state for the events.
                                    must be approved via national referendum.                      It is for this reason that previous initiatives have
                                       This verdict neither fully endorses nor rejects mod-     been unsuccessful. The Thailand Truth and Recon-
                                    ifications, but it does throw the process into a volatile   ciliation Committee (TTRC), created in 2010 and re-
                                    political ring. The court’s decision also undermines        constituted by the PT government, is headed by
                                    the function of the CDA, which would give the gov-          Anand Panyarachun. Despite being one of Thailand’s
                                    ernment greater control over reforms, ruling that the       most popular and conciliatory prime ministers,
                                    CDA’s legitimacy rests in the approval which was            appointed in the aftermath of the 1991 coup, the
                                    expressed through the referendum.                           dialogue he created brought little traction to the
                                       Such moves are not purely partisan; rather they          TTRC. In parliament, former 2006 coup leader and
                                    respond to bipartisan calls to review sections of the       now Matubhum Party head, general Sonthi Boon-
                                    constitution. The 1997 constitution’s broad consul-         yaratglin is the chairman of the House Committee
                                    tative approach was seen as genuinely participato-          on National Reconciliation, but has refused to dis-
                                    ry in contrast to the 2007 draft, which was engineered      cuss many details of the coup.
                                    with the deliberate exclusion of some stakeholders.            Central to the debate is the exile of Thaksin and
                                    Irrespective of the 2007 constitution’s merits, much        if he will return. He recognises the upheaval that his
                                    of the ongoing discourse stems from its genesis,            permanent return would cause. While public provo-
                                    which is cast in the shadow of the political circum-        cations suggest an imminent return, practical and
                                    stances at the time of its creation.                        political realities preclude this possibility. Opponents
                                    THE REAL QUESTION: Such issues are at the heart             are steeling themselves for this scenario, and are pre-
                                    of the reconciliation debate. Tacitly, the pursuit of       pared to pursue legal action.
                                    reconciliation, first fielded by the Democrats in 2010,        Although substantive constitutional reform and
                                    has become a question of where the moral author-            reconciliation are still a ways off, the process of
                                    ity to lead and govern resides today. The social divi-      ongoing consultation has provided an alternative to
                                    sions and foundations of this debate, long latent in        confrontation and conflict, facilitating broader
                                    Thai society, were exacerbated by the 2006 coup d’é-        national dialogue. “The political system should reflect
Heightened
                                    tat, when many who had previously fought against            the changes in Thai society and give greater space
interconnectivity and the
rise of social media mean           military intervention condoned the coup. The belief         for all to participate in politics,” said Sihasak
that current grievances             that the military acted in the interests of the nation’s    Phuangketkeow, the permanent secretary of the
cannot be swept under the           greater good deeply pervaded public opinion, civil          Ministry of Foreign Affairs, speaking with OBG. Yet
rug and forgotten. Today’s          society speakers and parts of the bureaucracy.              both the government and the people are faced with
conflicts must be
                                       This division of ideologies continues today. While       a choice, said professor Gothom Arya of the Human
addressed, and both sides
need to be willing to accept        the contemporary conflict and debate are seen by            Rights and Peace Council at Mahidol University: “They
the legitimate grievances           many as just another chapter in Thailand’s evolution        must absorb and accommodate the new model
of the other.                       toward democracy, last year’s election was Thai-            of government, or remain an asynchronous society.”

                                    www.oxfordbusinessgroup.com/country/Thailand
COUNTRY PROFILE INTERVIEW                                         25




                                                               Lyonpo Khandu Wangchuk, Minister for Economic Affairs, Kingdom
                                                               of Bhutan




A close affinity
OBG talks to Lyonpo Khandu Wangchuk, Minister for Economic Affairs,
Kingdom of Bhutan
What is the thrust of the bilateral economic rela-             important strategy that we can learn from. We can
tionship? How high do economic ties rank?                      share our experiences with environmental conserva-
WANGCHUK: As two Buddhist kingdoms whose mon-                  tion and economic development, our grassroots-based
archs are revered for their benevolence, love for their        five-year planning and our hydropower knowledge. We
people and vision, Thailand and Bhutan enjoyed close           have seen an increasing number of high-level contacts
relations even before the establishment of formal diplo-       and visits between government officials of both the
matic ties in 1989. The links have grown rapidly over          countries. Thailand also offers scholarships for
the years. There is a close affinity between our royal         Bhutanese students and there are many Thais working
families, people and governments. There is also strong         in development projects in the country.
commitment to further enhance our relations and
cooperation on a variety of fronts.                            How can economies such as those of Bhutan and
   On the economic front, Thailand is a major source           Thailand drive higher-value tourism?
of imports for Bhutan, and in recent years we have             WANGCHUK: Thailand has a very large tourism indus-
seen an increasing range of consumer goods from Thai-          try and caters to all the market segments from budg-
land. Bangkok is the number-one destination for thou-          et to ultra luxury. Thailand offers a diversity of culture,
sands of Bhutanese travellers. Druk Air has daily flights      geography and products for high-value tourism. For
to Bangkok and we expect more flights in the coming            my own country, Bhutan faces stiff competition from
years. In 2011 we received a Thai trade delegation of          many destinations, even in the high-end segment, and
over 40 members on a mission to explore business               it is important for us to position ourselves as a unique
opportunities. They were well received by our business         and once-in-a-lifetime experience for visitors. To mar-
community. There is also an investment by a Thai com-          ket this concept we have a new Bhutan logo with the
pany in our hotel sector. In the tourism sector, Thais are     tagline “Happiness is a Place”. We are promoting invest-
among the10 largest markets for us. We held a road-            ments in luxury hotels by allowing 100% foreign own-
show in Bangkok in 2010 to encourage more invest-              ership and encouraging our hotels to upgrade to at least
ment. Recognising the importance for closer trade              a three-star category. To tackle infrastructure chal-
relations, we have initiated negotiations on a prefer-         lenges, the national airline is planning to expand to new
ential trade agreement with Thailand.                          destinations and a new airline has been approved.
                                                                   However, even high-end tourism is not without its
What lessons can Bhutan and Thailand learn from                share of problems. A couple flying in a private jet over
each other’s economic development strategies?                  generates a much larger carbon footprint than 114 pas-
WANGCHUK: Bhutan is particularly interested in the             sengers travelling in one of our Airbus 319 jets. We want
success of Thailand’s small and medium-sized enter-            to encourage more per-capita spending by a small
prises as well as its promotion of traditional Thai art        group of tourists rather than expanding the number
and crafts and the food processing industry. Many of           of visitors because we can never compete in the mass
our officials have visited Thailand’s royal projects, indus-   tourism market. Many of Bhutan’s historical and cul-
trial estates, farms and industries, and we see that the       tural attractions are not designed for very large num-
strategies have been well designed. Overall, Thailand’s        ber of visitors. Some of these institutions are still places
dual-track development strategy of attracting foreign          of worship and are an integral part of Bhutanese life;
direct investment and promoting exports of manufac-            we want to allow visitors to enjoy the beauty and charm
tured goods, and stimulating domestic demand is an             of the country in solitude without being disturbed.

                                                                                                        THE REPORT Thailand 2012
26     COUNTRY PROFILE VIEWPOINT




     William Hague, UK Secretary of State for Foreign and
     Commonwealth Affairs




     Bound together
     William Hague, UK Secretary of State for Foreign and Commonwealth
     Affairs, on UK-ASEAN relations in the 21st century
     Today the idea of the “developed West and developing         region are strongest with our Commonwealth part-
     rest” is all but irrelevant. The world has changed and       ners, Singapore and Malaysia. But while strengthening
     so must the UK if we are to prevent our role and influ-      these we should be looking for opportunities else-
     ence in international affairs from declining. Key to this    where as well. We also need to continue to work along-
     will be making the most of opportunities presented by        side EU partners to secure free trade agreements with
     a new international paradigm in which economic pow-          ASEAN countries to open markets and boost trade. Fur-
     er and influence is moving east and south. We are doing      thermore, we need to do more to promote two-way
     this by shifting our diplomatic weight to reflect these      investment. International institutions rate the UK as
     changes and by building our relationships with emerg-        the easiest place to do business in Europe, with the
     ing powers. These relationships will be increasingly vital   strongest business environment on the continent and
     for forging agreements on the international stage and        the lowest barriers to entrepreneurship in the world.
     for boosting trade and investment that support the UK.          But our relationship is about more than trade and
        South-east Asia epitomises the rationale for this         investment. We have interests in maintaining security
     approach. The ASEAN countries are already more pop-          in a region that straddles some of the world’s most
     ulous than the EU and the Arab world, have a larger          important shipping routes and in tackling common
     economy than India and absorb more UK exports than           threats, such as terrorism, nuclear proliferation, cyber-
     China. They hold substantial geopolitical significance,      crime and climate change. There are a number of sep-
     with influence on neighbouring major powers. They            aratist or other conflicts within ASEAN, and tensions
     should be, and are, key partners for the UK.                 remain in the South China Sea. The UK has a wealth of
        The region deserves serious attention from global         experience and we are keen to share our knowledge
     partners. The UK is fortunate to draw on a foundation        to promote stability. We form part of a small group of
     of existing relationships, and we already enjoy multi-       countries formally supporting efforts by the Filipino Gov-
     billion pound trade and investment links with ASEAN.         ernment and rebel groups to end their conflict.
     Our largest businesses in finance, energy, life sciences        The voices of ASEAN leaders will be increasingly influ-
     and food and drink are establishing a regional foothold      ential, both regionally and globally, in the future. Indone-
     and more of our retailers are becoming household             sia’s impressive democratisation and Malaysia’s strong
     names, especially in Thailand. Furthermore, every year       stand against violent extremism can serve as examples
     over 30,000 ASEAN students study in the UK, often            for the entire international community.
     returning to positions of influence. They form part of          We also want to work with ASEAN members on cli-
     the rich people-to-people links between our countries.       mate change. They are among the heaviest emitters of
        We build on these links all the time. On his visit to     greenhouse gases, but could also be among those most
     Indonesia last month the business secretary, Vince           seriously affected by the consequences of changing
     Cable, launched the new UK-ASEAN Business Council            temperatures. Any durable solutions will therefore
     to strengthen commercial engagement with the region.         require commitment and close coordination with ASEAN.
     The government’s public-private partnership body,               Thus, our approach will be to build up our relations
     Infrastructure UK, is already in the Philippines sharing     with ASEAN, to share expertise and knowledge, to pro-
     expertise, and we aim to do this more widely across the      mote increased and freer trade and to work together
     region. Moreover, we continue to support develop-            in a wide range of areas, from security to climate change.
     ment, democratic freedoms and transparency. But there        We will continue to look east, toward the tremendous
     is more we can do. Our commercial relationships in the       wealth of opportunity to be found in South-east Asia.

     www.oxfordbusinessgroup.com/country/Thailand
Oxford Business Group - Thailand 2012
28      COUNTRY PROFILE VIEWPOINT




     Tony Blair, former Prime Minister of the UK




     Key components for success
     Tony Blair, former Prime Minister of the UK, on challenges and
     opportunities of globalisation
     In the light of the devastation caused by flooding, I have   to set that within the context of basic elements of fair-
     huge sympathy and admiration for the courage, digni-         ness: essential workplace rights, basic principles that
     ty and determination of Thai people. Thailand is open        mean that people get access to quality training and skills,
     for business and can be confident of its future, and the     welfare systems that help people back into work.
     world should be confident as well.                              The second point is that our welfare and public sec-
        It is important that Thailand has increasingly focused    tor systems have to be reshaped and reformed in light
     on English proficiency in its schools, because success       of the changes around us. There is no welfare system
     today is not only measured by a nation’s pride in its own    that will work unless it balances the contribution from
     culture, but in its openness to others. Thailand has big     the state with individual responsibilities. There is no pub-
     advantages: its culture, its people and its geography.       lic service that will work unless it is flexibly organised,
     But Thailand operates in the global economy, especial-       unless there are different providers, which offer choice
     ly as it is an exporting nation.                             for consumers, and where it is innovative in the use of
        Global economy is in trouble and that trouble is com-     technology. Countries that are still developing their
     ing from Europe. In this European crisis I also think        public welfare systems should learn from our experi-
     there are important lessons for how ASEAN develops.          ence so as they create those systems in the 21st cen-
     The arithmetic and politics of integration must be in        tury they can avoid some of the mistakes we made in
     sync. Europe faces essentially the same challenge as         creating these systems in the 20th century.
     nations everywhere today, including Thailand. The essen-        The third component is that if it is true that societies
     tial nature of that challenge is the challenge of change     succeed if they combine economic enterprise with
     – the speed and the scale of the change happening in         social justice, and if they have a different type of rela-
     the world today. There is now intense competition and        tionship between state and citizen, human capital and
     as countries become more prosperous so they find             its development is the key to the future. The biggest
     they have competition from lower-wage nations. To            injustice that anyone can suffer is a poor education.
     continue to compete in this environment, they have to        That education is not just about learning; it is an edu-
     move up the value-added chain.                               cation to be creative. Foreign direct investment can
        The way the world is changing is important in its         bring intellectual capital into our countries that, along-
     speed and its scale, not just for companies, but also for    side a proper functioning education system, can deliv-
     countries and for governments. The problem is that           er economic prosperity in the future.
     change moves fast and, in my experience, government             When I look at Thailand today – and I know there are
     moves slow. I think there are three key lessons of gov-      issues of reconciliation in Thai politics – I still think
     ernment. The first is the most successful countries          there is a genuine serious basis for confidence in Thai-
     combine strong commitment to economic enterprise             land. Thai people are respected in the world, Thailand
     with strong commitment to social justice. People used        is as good a place as any to come and do business. This
     to think these two were exclusive, but I think today the     is a country with enormous potential. One of the most
     two go together. For business we need regulation that        importance things to do – not just as an individual but
     is sensible but not too burdensome, a predictable rule       as a country – is to put all the problems to one side and
     of law. We need to encourage enterprise, particularly        think of the opportunity, the potential. And in relation
     small enterprises. We need to create an environment          to Thailand, we should be proud of what it is, where it
     in which investors feel confident, in which outside          has come from and where it is going, and confident that
     investors feel comfortable to invest. But we also need       its destination will be one of success and prosperity.

     www.oxfordbusinessgroup.com/country/Thailand
Oxford Business Group - Thailand 2012
Oxford Business Group - Thailand 2012
Oxford Business Group - Thailand 2012
Oxford Business Group - Thailand 2012
Oxford Business Group - Thailand 2012
Oxford Business Group - Thailand 2012
Oxford Business Group - Thailand 2012
Oxford Business Group - Thailand 2012

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Oxford Business Group - Thailand 2012

  • 1. THE REPORT Thailand 2012 ECONOMY ENERGY INDUSTRY BANKING REAL ESTATE CAPITAL MARKETS INSURANCE CONSTRUCTION AGRICULTURE TOURISM TELECOMS & IT INTERVIEWS 9 781907 065637
  • 3. 9 Country Profile A wide range of natural resources keeps exports up Recent political developments bring back democracy Economy resurgent following devastating floods Rejecting violence and building international credentials Negotiations with neighbours to bolster regional trade
  • 4. 10 COUNTRY PROFILE SNAPSHOT By 2025, Thailand is expected to have a population of over 70m Life in colour A diverse ecosystem and population help the country thrive The Kingdom of Thailand, formerly known as Siam, neighbouring countries like Cambodia and Vietnam is situated in the heart of South-east Asia. Thailand had rippling effects for the region. The US remained lies between the Lao People’s Democratic Republic a close ally during this period, and Thailand receiv- to its north-east, Myanmar to its north-west and ing approximately $2bn in economic and military aid western, Cambodia to the south-east, and Malaysia and permitted US military bases on its territory. on the southern border. Following the conclusion of the Vietnam War in GEOGRAPHY: Thailand comprises 76 provinces, 1975, Thailand reformed its diplomatic policies and which are divided into districts, sub-districts and vil- asked US forces to remove their military outposts. lages. Covering an area of approximately 514,000 sq The 1970s were also marked by domestic political km, the country can be broadly divided into four unrest, with periods of military rule and civil demon- geographic regions. The central region includes the strations upending stability throughout the nation. Bangkok metropolitan area and the basin of the In 1973, student demonstrations against the mili- Chao Phraya River, which runs from north to south tary junta were so severe that after violence began and flows into the Gulf of Thailand. Next, the north- King Bhumibol Adulyadej gave sanctuary to the stu- ern region, which is heavily forested and mountain- dents in the Chitralada Palace. He then expelled the ous makes up roughly one-third of Thailand’s total prime minister and removed the reigning junta. land mass. It encompasses the Khorat Plateau and ECONOMY: Stability and economic progress char- is boarded on the north and the east by the Mekong acterised the mid- to late-1980s, as booming mar- River. The southern region extends roughly from kets and political stability allowed the economy to Chumphon, 460 km south of Bangkok, through the move forward. Growth remained strong at roughly Kra Isthmus along to the Thai-Malaysian border, 6% and increased to above 8% in 1986, a level it which is framed by the Gulf of Thailand to the east. maintained for 10 years. Growth rates hit their peak HISTORY: The Kingdom of Thailand was formally between 1988 and 1990, averaging 12% per year. erected in the mid 14th century, although Thais first However, the rapid economic expansion did not began settling in their present territory as early as last, and years of soaring market growth were abrupt- the sixth century. By the end of the 13th century, ly halted by the Asian economic crisis in 1997-98. they ruled most of the western region. Known as Siam The Thai economy became mired in a deep reces- (land of the white elephant) until 1939, Thailand is sion resulting from the severe financial problems the only country in South-east Asia to have never that faced many Thai companies, banks and finan- been colonised. Although an Anglo-French accord cial institutions. Exports, which were a significant driv- signed in 1896 guaranteed Thailand’s independence er of growth, collapsed in 1996 and raised doubts as buffer between the two powers, Great Britain about the Bank of Thailand’s ability to maintain the had held a colonial foothold in the region since in baht’s peg against the dollar. A variety of interna- 1824. In 1932, a coup established a constitutional tional investors that had previously been investing monarchy in Thailand, with a representative govern- heavily in the state removed or lost their capital, ment based on universal suffrage. Thailand’s sover- leaving many sectors of the economy exposed, most eignty was not seriously challenged until the Sec- notably in the real estate sector where foreign invest- ond World War when Japan invaded the country. ment had been particularly high. International events continued to influence Thai- Like the recent global financial crisis that emerged land throughout the 1960s as conflicts arising in out of the US sub-prime market, the recession spread www.oxfordbusinessgroup.com/country/Thailand
  • 5. COUNTRY PROFILE SNAPSHOT 11 rapidly throughout the region. The crisis that had first materialised in Thailand quickly spread to Indone- sia, Malaysia and later South Korea as well. CLIMATE: Under the Koppen Climate classification system, Thailand is described as having a tropical monsoon climate, characterised by warm tempera- tures and high humidity levels. However, variations are found between the north and south. The south has both a rainy and a dry season. The rainy season differs between the west and the east coasts: the south-west monsoons generally bring heavy storms from April to October, while the east coast rains begin in September and end in December. The north has a savannah climate with three dif- ferent seasons. The first is a mild and sunny winter with temperatures ranging in the mid-20°C range from November through February. A hot summer season follows extending roughly from March through May, with temperatures hovering between 28°C and 37°C and lasting until the monsoon arrives. Buddhism is the religion of 94% of Thais, and as such, plays a part in many aspects of society The rainy season typically begins in late June and con- tinues through until October. reach a stable population of 70.2m by 2025. The RELIGION & CULTURE: The dominant religion in capital city Bangkok alone is home to anywhere Thailand is Hinayana Buddhism or Theravada Bud- between 8m and 10m people, and it is by far the dhism, similar to that practised by other countries biggest city in the country. in the region including Sri Lanka, Myanmar, Cambo- Of the population, 78% are ethnically Thai, but dia and Laos. Buddhists make up roughly 94% of the within this group a significant range of dialects and total population, while Muslims represent 3.9%, Con- diversity of customs exists. The largest minority group fucians 1.7% and Christians some 0.65%. is the ethnic Chinese, which comprises 11% of the Naturally, Buddhism forms an integral part of Thai population and is mainly centred in Bangkok, espe- culture, acting not only as the dominant religious cially in the thriving Chinatown district of the city. faith, but also comprising the base of many of the Other prominent ethnic groups include Malays, Cam- country’s rituals, its monarchy and the national iden- bodians, Indians and Vietnamese. tity. The country’s tri-colour flag emphasises this LANGUAGE: The majority of the local population influence with the two white stripes representing speaks Thai. The language can be traced to the Tai Buddhism. The white runs alongside red bands sym- language family that has its roots in the Austric lan- bolising the colour of the nation, and blue stripe guage group. Four main Tai languages are spoken represents the monarchy. Religion also influences the across the country, the most common being Central country’s art, literature and architecture. Buddhist Thai or Bangkok Thai. The others include Southern temples, shrines and intricate statues decorated in Thai, Northern Thai and Laotian, commonly referred gold are a ubiquitous feature of the Thai landscape. to as North-eastern Thai. The Thai language is Many Buddhist males above the age of 21 are believed to have originated in the region now bor- ordained for a period between five days and three dering Vietnam and China. months at least once during their lifetimes. This rit- NATURAL RESOURCES: Thailand is home to an ual often takes place during the rainy season when abundance of natural resources. Metallic resources monks stop their travels and remain in their monas- include lead, tin, tungsten, tantalum, zinc, iron, and teries. To this day, the custom is supported by the silver. Gold deposits are located in Phichit, Loei, Thai government and forms an important part of a Narathiwat, Phetchabun and Prachinburi. young adult male’s life. As a result, even male civil In terms of energy resources, Thailand has both servants are allowed to leave their positions for up onshore and offshore gas and oil fields. The coun- to three months to complete their monastic duties. try’s proven oil reserves stood at roughly 659m bar- Each day of the week is associated with a Buddhist rels by the end of 2011. Reserves have increased in colour: yellow for Monday, pink for Tuesday, green recent years after standing at 100m barrels in 1987 for Wednesday, orange for Thursday, blue for Friday, and 300m barrels in 1997, however the reserve rate purple for Saturday and red for Sunday. It is there- has remained relatively constant since 2006 as new fore a sign of respect for visitors to adopt this colour discoveries have balanced out the depletion of old coordination in their dress. reserves. Nevertheless, Thailand is the region’s sec- POPULATION: Thailand is the 20th-most populat- ond-largest net oil importer after Singapore. Other ed country in the world with a population of about natural resources include natural gas, fluorite, 65.7m. The average annual population growth rate gypsium, lignite, rubber, timber and a multitude of is estimated to be around 0.7%, and is projected to locally harvested food products and fish from the sea. THE REPORT Thailand 2012
  • 6. 12 COUNTRY PROFILE OVERVIEW The country’s first female prime minister was elected in 2011 Rising tides A democratic ethos and populist politics carry the nation forward Today, Thailand is undergoing its most profound trans- by a military coup d’état in 1947, military govern- formation of the last 30 years. The military coup d’é- ments soon became the custodians of democracy in tat of September 19, 2006 that deposed the populist Thailand with US support as a pivotal ally in the fight prime minister, Thaksin Shinawatra, radically altered against communism in South-east Asia. Consolidat- the nation’s political dynamic, launching the country ing their role over the next three decades, the mili- into five protracted years of domestic strife and weak- tary restored the monarchy’s standing after its descent ened international standing. into relative obscurity and self-imposed exile post- However, last year’s peaceful landslide election win 1932. Civilian prime ministers held office for just 12 by Yingluck Shinawatra, Thaksin’s younger sister, has months between 1947 and 1972. Following the suc- restored much confidence in the country’s demo- cessful assimilation of several waves of Chinese immi- cratic process. Thailand’s first female prime minister grants during the 1950s (and overcoming fears of a is now taking pragmatic steps to engage all parties in “red wave”), US economic and military support to a concerted dialogue of national reconciliation and Thailand as the war in Vietnam escalated became the to rebuild the nation’s international credentials. At the catalyst for a fledgling middle class in the 1960s. The same time, the kingdom continues to enjoy sustained rise of this socioeconomic group ignited demands for economic growth largely inviolate from political cir- accountable, representative democracy in the 1970s. cumstance, as it has done since the introduction of DEMOCRATIC DEMANDS: Student-led demonstra- a constitutional monarchy in 1932 and throughout tions in 1973 brought about the expulsion of then- 80 years of democratisation. prime minister, Field Marshal Thanom Kittikachorn. SIAM RESOLUTE: Emerging from the virtual col- This was followed by a brief interlude of civilian gov- lapse of the Siamese empire following the Burmese ernment until a violent military assault on Thammasat pillaging of its historic capital Ayuthuya in 1767 only University and a subsequent coup saw a return to mil- to then fend off British and French colonial overtures itary rule from 1976 to 1988. Middle class demands in the 19th century, the Thai nation remains distinct- rose again at the turn of the decade, rejecting mili- ly patriotic and independent. tary rule and precipitating a military crackdown in At the centre of its contemporary political system 1992 that was only ended by King Bhumipol Adulyadej lies the monarchy, due in part to the astute diplomat- summoning protagonists to the palace for a televised ic policies of reform and modernisation pursued by lecture on the need for unity. King Chulalongkorn (King Rama V, 1853 − 1910), which Although taking place 16 years apart, 1976 and preserved the then Kingdom of Siam’s sovereignty 1992 were formative years for many of Thailand’s from European influence. The ceding of some terri- leading political figures and activists. This cadre of lead- tories to the European powers remains a bitter chap- ers flourished in a new era of heightened democrat- ter that still punctuates fringe elements of Thailand’s ic participation and economic prosperity during the contemporary political dialogue. 1990s. The rising tide came to a head with the 1997 The first military coup MILITARY CUSTODIANS: Aspirations to reclaim the “people’s” constitution, which brought ballot voting d’état occurred in 1947, ceded territories motivated Thailand’s alignment with to both upper and lower houses of parliament for the following which the Japan during the Second World War. This was opposed first time. Yet until the emergence of telecoms mag- armed forces aligned themselves with the US in by the Free Thai Movement, the group that later nate Thaksin Shinawatra’s Thai Rak Thai (Thais love the fight against became the foundation for the principally pro-Amer- Thais) (TRT) party in 1998, political movements had communism. ican governments following the war’s end. Overthrown been catering primarily to their urban constituencies. www.oxfordbusinessgroup.com/country/Thailand
  • 7. COUNTRY PROFILE OVERVIEW 13 POPULIST AWAKENING: TRT was the first party to actively canvass and engage Thailand’s rural majori- ty as its election platform. Grounded in mainstream populist strategies that particularly appealed to indebt- ed farmers following the Asian financial crisis, Thaksin offered universal access to health care, education, debt alleviation and rural development funds. His sub- sequent landslide election wins in 2001, 2005 and 2006 continue to set the Thai political agenda today. By 2005, Thaksin was the first Thai prime minister in the country’s history to serve his full mandated term in office, during which time Thailand, labelled as a “darling of democracy” in South-east Asia, saw con- tinued economic recovery and an expanded role on the global stage. It was tempered, however, by the sys- tematic subverting of activities meant to safeguard democracy and allegations of abuse of power, cor- ruption, human rights violations and even suspicions of plots to usurp the monarchy. Opposition manifest- ed en masse in the yellow-shirted People’s Alliance The prime minister is limited to two four-year terms and leads the largest political party in parliament for Democracy (PAD) movement that took to the streets on the back of largely urban and middle-class peaceful solution, expressed in the open and trans- The Thai Rak Thai Party popular support. Led by Thaksin’s erstwhile business parent election results of July 2011. ushered in a new era of populist politics in 2011 partner, Sonthi Limthongkul, the PAD’s obstruction of GOVERNMENT: Thailand is a constitutional monar- and was the first major government contributed to Thaksin’s decision to call chy and a parliamentary democracy, as stipulated in political movement to a snap election in 2006, just three months into his sec- the 2007 constitution drafted by the military-appoint- emphasise the demands of ond term. The PAD led opposition parties boycotting ed Constitution Drafting Assembly. It replaces the the rural masses. the vote, and Thaksin secured 60% of the electoral roll. 1997 constitution, which was abrogated in 2006. However, hounded by continued street demonstra- Approved by public referendum in 2007, executive tions, one-party rule lasted just four months. The power is vested in the government with King Bhumipol nation’s 18th military coup d’état took place on Sep- Adulyadej as the reigning monarch and head of state. tember 19, 2006. As part of its actions, the coup The prime minister is the leader of the largest party removed Thaksin, who remains in self-imposed exile. or coalition in parliament and is limited to two four- INTERVENTION & STREET POLITICS: The 2006 year terms. The leader of the ruling party is required coup was a response to the political evolutions in Thai to hold a seat in the lower chamber of parliament, society, most notably to the demands for accountable and representatives must relinquish any holdings in government and accelerating the transition of polit- major companies prior to assuming a role in office. ical control from Bangkok to the masses. The Cabinet, or Council of Ministers, is restricted In May 2010 Thailand’s political landscape was to 35 ministerial positions, of which 20 are head min- punctuated by confrontations between the govern- isters and 15 are without portfolio, including the ment, the PAD, the pro-Thaksin red-shirt movement, deputy prime minister and several other deputy min- the United Front for Democracy Against Dictatorship isters. Members must receive royal approval. The Cab- (UDD), which emerged in 2006, and the military. The inet is authorised to submit bills to the House of Rep- grievances that arose out of the events between 2005 resentatives, the decisions of which are in turn subject and May 2010 remain fundamental to the dialogue to the non-partisan upper house, the Senate. of reconciliation now under way (see analysis). The lower house is composed of 500 members, of However, by December 2008 the power of street which 375 are elected through single constituency politics was already waning. The PAD struggled for rel- elections and 125 are appointed according to party- evance as a Democrat Party-led coalition took pow- list proportional representation. The current speaker er following the Constitutional Court’s dissolution of of the house is PT’s vice-chairman and former minis- TRT’s successor, the People’s Power Party (PPP). Mar- ter of culture and justice, Somsak Kiatsuranont. ginalised by its occupation of national airports and The senate is mad up of 150 members who are an increasingly far-right-wing message, it never fully restricted to one six-year term each. It comprises of recovered its popular base, despite branching into 76 senators that are directly elected, one from each mainstream politics via the New Politics Party (NPP). province and one from Bangkok. The remaining 74 rep- The 2006 military coup Military confrontations in Bangkok with red-shirts resentatives are appointed by the Senate Selection sparked a wave of conflicts in 2009 and 2010 brought an end to the street poli- Committee, composed of the heads of the Constitu- and angry street politics. The consequences of these tics uprisings. The protracted confrontation and deaths tional Court, Election Commission, National Counter altercations left Thais of 92 protesters and soldiers in April and May 2010 Corruption Commission (NCCC), State Audit Commis- demanding greater stability deeply affected public opinion. At the brink of an sion, Chief Ombudsman, and one judge from both the and a peaceful political open conflict, these events sparked demand for a Supreme Court and the Supreme Administrative Court. process. THE REPORT Thailand 2012
  • 9. COUNTRY PROFILE OVERVIEW 15 The current senate president is General Teeradej Meepien, formerly permanent secretary of the Min- istry of Defence and chief ombudsman. Thailand’s government and bureaucracy remain highly centralised despite calls for increased auton- omy and for powers to be handed to local government. Grouped into six regions, broadly defined by histori- cal and ethnic identities, the 76 provincial (changwat) governors are all appointed by the Ministry of Interi- or, while Bangkok, technically considered Thailand’s 77th province, and Pattaya have elected mayors. The three southern border provinces of Yala, Songkhla and Narathiwat remain under special state-of-emer- gency decrees enacted in 2004 following the resur- gence of a violent Islamist insurgency amongst the majority ethnic Malay population. LEGAL FRAMEWORK: Three tiers of courts make up Thailand’s judiciary system. The Courts of Justice, com- posed of the Court of First Instance, the Court of Appeals and the Supreme Court of Justice, or Dika, The Pheu Thai Party leads the parliament with a six-party coalition which is the final level of appeal in matters of crimi- nal law. The Dika is also the forum for prosecutions economic performance, the party suffered from unco- The current constitutional of politicians, which has placed it at the centre of operative coalition partners and was confronted by court saw its powers expanded in 2007 following several anti-corruption cases brought against elect- protracted pro-Thaksin street protests in 2010. The the 2006 military ed officials in the last six years. subsequent military crackdown on protesters hurt intervention, alongside Established by the 1997 constitution, the Consti- the party, reinforced by an anti-Thaksin election plat- constitutional amendments tutional Court is the highest authority on constitution- form, yet it secured 31.8% of votes cast (159 seats). brought in that year. al matters. Strengthened in 2007 as part of the con- Led by Newin Chidchob, the Bhumjaithai Party mir- stitutional amendments, its rulings are at the centre rors TRT’s populist platform. Once favoured by the of perceived establishment bias following the disso- PPP administration, it was later ostracised for “betray- lution of the TRT and PPP parties, while dismissing sim- ing” the pro-Thaksin parties by joining the Democrat ilar cases against the Democrats in 2010. coalition in 2008. PT recriminations deliberately cam- Other judicial tiers include: the administrative courts paigned heavily in Bhumjaithai-held seats during the with jurisdiction over conflicts between the state, 2011 election, a move which helped halve the par- state organs and private citizens; the courts of trade, ty’s expected election yield. While it took 6.8% of the tax and labour; and the military courts. votes (34 seats), it has been kept out in the cold by POLITICAL PARTIES: The Pheu Thai (“for Thais”) the PT-led government. Party (PT) was founded in 2008 as the successor to The Chartthaipattana Party replaced the Chart Thai both the TRT and pro-Thaksin PPP. Both were dis- Party that was also banned in 2008. Led by Chumpol solved and their executives banned from politics for Silpa-archa, the party has crossed the parliamentary five years by the Constitutional Court in 2007 and floor several times in the last decade. First allied with 2008, respectively. Led by incumbent Prime Minister, TRT and PPP, it joined the 2008 Democrat coalition Yingluck Shinawatra, PT has continued TRT and PPP’s before siding with Bhumjaithai in the 2011 elections, populist platform and took 53% of the vote (265 seats) only to break ranks and join the PT coalition in July in the 2011 general election. As the dominant force that year. It holds 3.8% of the votes (19 seats). in Thai politics, its electoral base is concentrated With just 1.4% of the vote (7 seats) each, Chart Pat- among the rural and urban poor, particularly in north tana Puea Pandin (CPPP) and Phalang Chon, an off- and north-east Thailand, as well as Bangkok. shoot of Bhumjaithai, are minor coalition partners in The Democrat Party, led by former prime minister the PT government. CPPP includes both former TRT Abhisit Vejjajiva, makes up the current opposition and members and opponents, following a merger with Thailand’s oldest political party, although it has not the Puea Pandin Party in 2011. CPPP is led by Wan- won an electoral plurality in any election since 1992. narat Channukul, who served as minister of energy in Maintaining a conservative political position with the Democrat coalition and briefly as minister of indus- strong links to the establishment, the Democrats’ try in the current administration. electoral support base is concentrated throughout 2011 ELECTION: Since 1992, Thailand has main- Bangkok and southern Thailand in the middle to upper tained a plurality of political parties that has con- The Pheu Thai (PT) Party socioeconomic classes. The Democrats formed a six- tributed to a succession of coalition governments. has picked up the mantle of the disbanded TRT. PT’s party coalition government in 2008 with the alleged While PT’s 2011 election win constituted a parlia- 2011 parliamentary victory tacit backing of the military, replacing the dissolved mentary majority, its six-party coalition is less indica- has seen it continue PPP coalition parties and serving in office until its tive of election platform compatibilities than old populist politics that focus election defeat in July 2011. Despite a very strong alliances renewed. However, the election campaign on urban and rural masses. THE REPORT Thailand 2012
  • 10. 16 COUNTRY PROFILE OVERVIEW In the 2011 election in 2011 highlighted the depth of the Thai political spec- these continue to influence the popular platform on campaign, candidates and trum, with 40 competing parties and an estimated which PT relies, tying them to an unpredictable, but competing parties spent spend of BT39bn ($1.24bn), according to the Kasiko- necessary ally in the UDD. $1.24bn, significantly more than expected, and rn Research Centre; an 85% rise on the 2007 estimate The election also highlighted the question over the vote-buying was markedly of BT21bn ($670m). Whereas vote-buying was a com- moral authority of elected officials. The previous six reduced. mon and all-too-apparent stain on the previous elec- years brought growing public disenchantment with toral process, appearing in charges levelled against politicians and leaders across the spectrum. The Rak TRT and PPP, observers have noted Thailand’s improved Thailand Party of former massage parlour king pin, performance in terms of monitoring and transparen- Chuwit Kamolvisit, was the unlikely beneficiary of pub- cy over the past six years. lic ire. Campaigning on an independent, anti-corrup- NEWCOMERS: The 2011 election was also notable tion platform, he attracted substantial support from for the emergence of three political parties and move- young adults, first-time voters and notable figures ments that defied traditional norms. The New Politics among Thailand’s intelligentsia, winning four seats. Party (NPP), the PAD’s vehicle to mainstream politics, While a small player, support for the party’s platform, was founded in 2009, espousing a hard-line nation- despite its leader’s unconventional background, alistic and royalist ideology, provoking military con- betrays a growing public unease with Thailand’s polit- frontations with Cambodia. Although wracked by a ical leadership among the new generation of voters. schism in 2011 over demands by PAD leader Sonthi THAILAND TODAY: PT’s six-party coalition govern- Limthongkul that it boycott the election, its short-lived ment faced an unforgiving set of circumstances and political aspirations illustrated the rejection of hard- events in the months immediately after taking pow- line nationalism by the general Thai electorate. er. Foremost amongst its opponents’ concerns and alle- Diametrically opposed to the NPP, the red-shirt gations is the belief that Yingluck is a placeholder for movement also made a point to distance itself from her brother. Whilst this claim has been strenuously the hard-line and confrontational tactics of 2009 and denied, Thaksin’s frequent consultations with PT advi- 2010. With the movement’s UDD leaders abroad or sors and government members in neighbouring coun- in jail, the movement re-emerged in the form of grass- tries, openly and documented by local media, roots “red shirt villages” that espoused demands for have added fuel to the speculations. The real extent socio-economic equality and justice independent of of Thaksin’s influence, however, remains unclear, their calls for Thaksin’s return. Whilst distinct from PT, and Yingluck insists that she governs with impartiality.
  • 11. COUNTRY PROFILE OVERVIEW 17 Facing unshakeable opposition from the private and public sectors to increase the minimum wage to BT300 ($9.57) per day in general and to BT15,000 ($478.50) per month for graduates, derailing key elec- tion pledges, Thailand’s worst floods in 60 years abruptly terminated the government’s honeymoon period in October 2011. By the end of January 2012, 65 provinces had been declared disaster zones. Over 800 people died, with 13.6m more affected, while seven industrial estates and 20,000 sq km of land had been inundated. The government’s response to the national tragedy was slow as it struggled to coordinate between 17 sepa- rate agencies and manage the flooding. Its inability to adequately communicate the situation or devise an effective response strategy brought visceral criti- cism of the government, but little drop in its popu- larity. In contrast, the military’s deployments, grass roots coordination and resilience of the Thai bureau- cracy restored much of the public’s confidence. SEATING ARRANGEMENT: The January 2012 cab- The October 2011 floods were a national disaster, leaving nearly 800 people dead and over 13m affected inet reshuffle was partially in response to the floods, fold. However, the proposed Keynesian economic poli- The end of the five-year although many criticised members retained their cies would pose substantial fiscal burdens on the political ban on TRT party leaders is likely to influence seats. In all, 10 new cabinet members were named, state, undermining political stability and increasing the next reshuffling of the including Natthawut Saikua, a red-shirt leader. Appoint- dependence on further deficit and borrowing. With Cabinet, with many ed as the deputy agriculture and cooperatives minis- depressed export demand, a shortage of labour and expecting that this will ter, Natthawut objects to the prior lack of red-shirt a low tax-paying base, Thailand currently has insuffi- occur later in 2012. representation. Other important changes included cient revenue streams for such political aspirations. the appointment of Air Chief Marshall Sukumpol Such populist nurturing is a two-edged sword for Suwanatat as minister of defence, reinforcing civilian Thailand. Debt-laden governments can produce volatile oversight of the armed forces, and the removal of the political environments and the commencement of finance minister, Thirachai Phuvanatnaranubala. the ASEAN Economic Community (AEC) in 2015 could Replaced by then deputy prime minister and minis- yet heighten populist demands. Although the coun- ter of commerce, Kittiratt Na-Ranong, the former sec- try’s established manufacturing industry has sus- retary-general of the Securities and Exchange Com- tained the economy through several downturns, it is mission, Thirachai publicly condemned his removal as feared that Thailand’s current and future labour forces, an attempt by the government to manipulate public upstream industrial capabilities, financial institutions debt figures, which are now approaching the consti- and services sector have lost much of their momen- tutional limit of 50% of GDP (see Economy chapter). tum and will lack the necessary competitive edge to Such incidences underlined the resistance of many compete in the open market that the AEC guarantees. institutions to PT oversight and control, which will Just three years ahead of the AEC, this economic continue to plague the government during its term imperative may prove to be Thailand’s greatest polit- in office. However, May 2012 heralded the return of ical challenge. Despite the political instability of recent the first 111 TRT executives from their five-year polit- years, Thailand registered economic growth in every ical moratoriums. Many observers expect a second quarter bar six in the 21 months since the coup. That cabinet reshuffle later in 2012 that will see some of said, the last six years of political conflict squandered Thaksin’s “A-team” players return to the bench. Yet Thailand’s lead among the regional economies and standing in their way are the current incumbents, a deprived it of billions of baht from would-be investors. new generation of politicians who are not expected OUTLOOK: Following six years of political strife, the to pass quietly into the night. As the party remains 2011 election was a public rejection of violence and careful not to upset the national balance of power, extra-constitutional interventions by non-state actors PT’s own internal politics may prove to be the most in favour of full, participatory democracy. While Thai- effective check and balance in government. land’s political crisis looks to be at an end, grievances ECONOMIC PRESSURES: Demand for socio-eco- remain deeply engrained on all sides of the political Recent political campaigns nomic equality among the rural and urban masses spectrum. An ongoing dialogue between the parties have championed drives much of Thai politics. This issue remains an is only the first step in a broader programme of nation- economic equality as well important focus to the coveted popular political sup- al reconciliation that will continue for many years. as greater welfare provisions. Such policies port base, which has transitioned from a position of Thailand’s economy remains on a strong footing, but have effectively attracted “recipient” to “provider” of political support. Accord- managing the public debt, investor confidence and voters, but are likely to ingly, Thailand has witnessed a flux of competitive the aspirations of its party forerunners may prove to be hard to sustain in the populism that has brought many politicians into its be the PT government’s greatest challenge for 2013. long term. THE REPORT Thailand 2012
  • 12. 18 COUNTRY PROFILE ANALYIS Prime Minister Yingluck met with President Obama in late 2011 Back to business Rebuilding international standing As a member of ASEAN, The 2011 elections gave the government a strong man- DIPLOMATIC RESPONSIBILITY: To the east, relations Thailand is party to a range date to regain a proactive international role, stressing with Cambodia remain strained following bitter military of multilateral trade commitment to democracy, justice and reconciliation. skirmishes over the Temple of Preah Vihear in 2010. agreements and is currently considering Following the 2006 military coup d’état, Thai prime Goaded by right wing elements, the Thai government joining the Trans-Pacific ministers were denied meetings with the US president, allowed the conflict to spill over into the UN Security Partnership. The country is a historically routine matter for a close US ally in South- Council, the International Courts of Justice (ICJ) and also building a network of east Asia. The November 2011 meeting between Prime UNESCO in 2011, undermining Thailand’s internation- bilateral agreements Minister Yingluck Shinawatra and President Barack al credentials. Representing Thailand at the UN, Sihasak around the world. Obama at the East Asia Summit, just three months after acknowledges that the politicisation of the issue is the her appointment, was a clear endorsement of Thailand’s reason behind the international intervention. Both Thai- return to a democratic process. land and Cambodia have maintained a ceasefire since Membership in ASEAN has been important to the 2011 and await the final ICJ ruling on ownership of the country’s global positioning, and Thailand’s economy temple’s 4.6-sq-km grounds. “Eventually the court will and geographic location made it a leading player in the decide, but both sides must recognise that our rela- organisation prior to 2006. Speaking with OBG, Sihasak tionship will have to move forward,” Sihasak said. Phuangketkeow, the permanent secretary of the Min- “We have to bring Thai foreign policy into a new era istry of Foreign Affairs, reinforced Thailand’s commit- by looking beyond Thailand, by looking at how we can ment to ASEAN and integration with East Asia. “Promot- contribute to the broader issues of the international ing ASEAN in the region is one of our key foreign policy community to deal with global challenges,” Sihasak told objectives while moving beyond the immediate parochial OBG. “I would like to see our foreign policy clearly raise interests of Thailand itself,” he said. the banner of democracy, human rights and humani- Thailand’s preference for ASEAN to be a central force tarian principles. These are important values shared by for broader free trade in the Asia-Pacific region would the international community and should be reflected allow the organisation to balance the economic inter- in the conduct of our own foreign policy.” ests of China, India and the US, which had pushed for BACK TO BUSINESS: The government knows that a Thailand’s inclusion in the latest multilateral free trade strong diplomacy record and high international stand- agreement, the Trans-Pacific Partnership (TPP). ing will also open doors for Thai business. The efforts WELL PLACED: Thailand’s strong political and trade rela- made by the former premier Abhisit Vejjajiva to expand tionship with Myanmar, now increasingly attractive to business opportunities were frustrated by uncooper- global investors, are an advantage. Thailand’s support ative coalition parties and a weak parliamentary major- for a transition to greater democracy and internation- ity slow to act due to a number of political issues. al engagement in Myanmar has helped to position Thai- However, the renewed push for international engage- land as the gateway to this emerging economy. ment and expansion has allowed Thailand to close a Stronger ties with Establishing deeper ties with Myanmar also supports number of free trade agreements and other ties with Myanmar are proving growth of the Southern Economic Corridor, which brings African and Latin American countries over the last five positive for both countries, India into the fold, linking it with ASEAN and China. years. Pheu Thai’s parliamentary majority and return to as well as the wider region, Thailand and India are strengthening their relationship a more democratic political process has helped rebuild with Myanmar facilitating India’s entry into the and working to establish reciprocal economic ties. Suc- investor confidence after six years of instability and the South-east Asian economic cessful integration on Myanmar into the arena is expect- 2011 floods. It is clear that within the global and sphere. ed to benefit regional economic flow on the whole. economic arenas, Thailand is getting back to business. www.oxfordbusinessgroup.com/country/Thailand
  • 13. COUNTRY PROFILE VIEWPOINT 19 Bhumibol Adulyadej, King of Thailand A balanced approach His Majesty Bhumibol Adulyadej, King of Thailand, on his philosophy for sustainable development When considering development, first and foremost the national level, this philosophy is consistent with a we must keep in mind humanitarian considerations. If balanced development strategy which will reduce the we are to be kind to our fellow countrymen, known to nation’s vulnerability to shocks and excesses that may be in dire need, the authorities endowed with both arise due to the effects of globalisation. At the same knowledge and wealth must go to their assistance. time, it is essential to strengthen the nation’s moral When the country is faced with difficulties and peo- fibre so everyone, particularly public officials, academ- ple in the remote areas are suffering, we cannot sim- ics, business people and financiers adhere to princi- ply stay put in this paradise of a capital. If we want the ples of honesty and integrity. people to be prosperous, we have to invest in devel- A balanced approach with patience, perseverance, opment projects which will involve budgets that may diligence, wisdom and prudence is indispensable to cost hundreds or even thousands of millions of baht. cope with the challenges arising from extensive and But this expense is justified. If the project is a good rapid socio-economic, environmental and cultural one, the people will very soon derive benefits from it. change. It requires thoughtful planning with consid- When people talk about solving the current crisis, eration for contingencies, and maintaining the reserves one of the things they talk about is “globalisation.” We of money and resources necessary to tide one through say we are now in the age of globalisation, and we must any bad times that occur. Self-sufficiency means hav- “comply” with it and follow its rules. If we fail to follow ing enough to live on and to live for. If everybody has through with what we have committed to, others will enough to live on and to live for, that is good. And if be dissatisfied. Why? Both because they are also in trou- the whole nation is able to reach this status, that would, ble and because we would find it more difficult to of course, be even better. recover from the crisis ourselves. Self-sufficiency means that whatever we produce, The countries in this region are not the only ones we have enough for our use. We can rely on ourselves affected by the crisis. Even prosperous and stable – as people say, we can stand on our own legs. countries are in trouble. This is because if a problem But sufficiency carries a broader meaning. It is hav- is not solved in one corner of the world, other parts ing enough and being satisfied with situations as they are also affected. So we must try to support the peo- exist. If people are contented, they are less greedy. ple, providing them with jobs, so that they earn an With less greed, they will face fewer problems. Coun- income and can survive the crisis. tries should value having just enough, which means Development must take account of a country and being contented, being honest and not being greedy. its people’s physical, sociological and cultural environ- This will make people be satisfied. ments. By the local sociological environment, we mean Being sufficient does not restrict people from hav- the certain characteristics and ways of thinking which ing a lot, or possessing luxury items, but it does imply we cannot force people to change. We cannot require one must not take advantage of others. Everything must people to do those things they will not choose to do. be within limits. We must say what is necessary, act as We can only suggest. If we go in and find out what the is needed and work as is adequate. Thus, sufficiency people really want, and then fully explain how they can here means within the proper bounds and reasons of best achieve their aims, the principles of development the country and the people. can be fully and effectively applied and implemented. Adapted from His Majesty’s royal speeches in 1974, “Sufficiency economy” applies to conduct and a way 1997, 1998 & 1999 and His Majesty's speeches on the of life at individual, family, and community levels. At Royal Development Projects in 1970. THE REPORT Thailand 2012
  • 14. 20 COUNTRY PROFILE INTERVIEW Yingluck Shinawatra, Prime Minister Heal and grow OBG talks to Prime Minister Yingluck Shinawatra How did the floods of late 2011 affect the admin- What is the government’s strategy for restoring istration’s priorities? What reforms are most press- confidence in long-term investment in Thailand? ing following such a natural disaster? YINGLUCK: Business confidence in Thailand remains YINGLUCK: The government has given high priority to strong, not only because of our policies but also because alleviating the impact of the floods and putting in place of our solid economic fundamentals. That is why our measures that will help to prevent such crises from economy is forecast to expand by around 5.5-6.5% in occurring again in the future. 2012 in the form of a v-shaped recovery, despite the We are turning the flood into an opportunity to make floods in 2011. That is why foreign companies affect- Thailand’s infrastructure and economy safer from such ed by the floods continue to invest in our future. The disasters. A multi-billion-dollar flood recovery and fiscal and financial position is sound. Public debt stands restructuring package has been set aside to compen- at 40% of GDP. The level of foreign exchange reserves sate and assist affected sectors in the recovery effort is high at $180bn. We also have a large pool of skilled and to ensure that small and medium-sized enterpris- labour that is valued by multinational companies. es, entrepreneurs and industrial estate development In terms of policies, this government is committed can resume production as soon as possible. to promoting domestic demand through investment and More than $11bn has been set aside to create an government spending. Projects that have been planned improved water and crisis management system. Flood include large transport and infrastructure schemes to walls, barriers and dams are being built to protect indus- promote national and regional connectivity. trial estates and communities. With regard to policies for the private sector, corpo- Floodways and diversions are being created to allow rate income tax is being lowered from 30% to 23% in water to flow in and out. Drainage systems are being 2012, and to 20% in 2013. We have removed some built to prevent water build-up. Information databas- restrictions to make it easier for companies to set up es and contingency plans are being developed. regional operating headquarters here. In addition, labour Most importantly, a single command authority on skills are being upgraded. Thailand is preparing itself water management is being put in place to oversee and for the ASEAN Community in 2015, which will make the execute plans, in particular during times of crisis. South-east Asian region of over 600m consumers a sin- At the regional level, ASEAN has given full support gle market and production base. to my initiative to work together to address and pre- The message I received from foreign investors, both vent flooding. This government will continue its poli- in Thailand and abroad, including at the annual meet- cies such as strengthening domestic demand, pursu- ing of the World Economic Forum in Davos in January ing people-centred development, creating a 2012, is that they are confident in Thailand’s econom- business-friendly environment and expanding invest- ic future and would like to continue to be our trading ment in transportation and logistics. and investment partners. Thailand’s hosting of the In addition, we will be following through on the high World Economic Forum for East Asia in 2012 is expect- priority agenda announced when we took office. This ed to underscore that message. In view of the current will take a variety of forms, including the empowering mix between our water management and recovery of women so that they can contribute further to the package on the one hand, and people-centred devel- country’s economic development and strengthening opment and business-friendly economic policies on education for our children, which is a very impor- the other, Thailand is striking the appropriate balance tant form of investment for the future of our country. between emergency relief and long-term planning. www.oxfordbusinessgroup.com/country/Thailand
  • 15. COUNTRY PROFILE INTERVIEW 21 What are the challenges to fostering unity and rec- Which are the most urgent priorities on your for- onciling the political differences of recent years? eign policy agenda? What bilateral relationships in YINGLUCK: The political situation in Thailand has been Asia would you like to develop? back to normal for some time now. The elections in July YINGLUCK: One of the most important foreign policy 2011 were a fresh start which resulted in a peaceful priorities of this government is to expedite the promo- transition of power. They also showed that all sides are tion and development of close and cordial relations with committed to resolving issues through democratic neighbouring countries by enhancing cooperation processes. The elections saw voter turnout of 75%, one between the public sector, private sector, people and of the highest in recent years. In my visits to foreign the mass media to cultivate mutual understanding and countries and at international meetings, the message promote mutual interests. This will lead to expanded from our foreign friends is the same – they strongly cooperation in all relevant areas, including trade, invest- support Thailand’s democracy and this government, ment, tourism promotion, transportation and people- which came from a democratic process. to-people ties. Indeed, this is part of Thailand’s overall We should not overlook the fact that the political foreign policy of maintaining good relations with all events in Thailand in the past few years reflect increased members of the international community. activism on the part of the Thai people, who have In this regard, I am pleased that in my visits to neigh- become more aware of the importance of politics to bouring countries in South-east Asia, there has always their lives and want to make their voices heard. The diver- been a warm reception, as well as a great receptivity sity of views being expressed by different groups shows and willingness to reciprocate these policies. that Thailand is a vibrant democracy and an open soci- As a founding member of ASEAN, Thailand attaches ety. However, one cannot deny that political activism great importance to the realisation of a people-cen- in the past few years has also been marred by violent tred and effective ASEAN Community in 2015. We are incidents and a lack of compromise. While this is truly committed to playing a more proactive role in commu- regrettable, it is perhaps part of the process of learn- nity building and in developing an ASEAN-centred ing how to become a more mature democracy which regional architecture that promotes peace, prosperity Thailand has to go through. I am sure that democracy and progress. To this end, Thailand supports the devel- in Thailand will emerge stronger after this experience. opment of enhanced connectivity within our region, Recognising that more work remains to be done on whether in the Greater Mekong subregion, ASEAN or this issue, this government attaches great importance beyond, and will use its geographical location and oth- to promoting national reconciliation. The government er assets to promote further progress in this area. supports the work of the Truth and Reconciliation Com- In addition, as a member of good standing within the mission of Thailand (TRCT), established by the previ- international community and with Bangkok serving as ous government, and the TRCT’s recommendations. A regional headquarters for the UN as well as for other compensation package has been approved to provide international organisations, Thailand will be playing an remedies to all sides that suffered losses in the politi- active role in the international community and with cal violence of the past several years. relevant organisations to address global issues of com- Political stability has been the fruit of this govern- mon concern, particularly those that impact Thailand ment’s efforts so far. We will continue to consolidate and the region. One such issue is disaster manage- these gains by supporting good governance, the rule ment, which Thailand is hoping will benefit from of law, human rights, transparency and accountability. enhanced regional and international cooperation. THE REPORT Thailand 2012
  • 16. 22 COUNTRY PROFILE INTERVIEW Surin Pitsuwan, Secretary-General, ASEAN Pulling together OBG talks to Surin Pitsuwan, Secretary-General, ASEAN How will a free and open investment regime help the ASEAN economic ministers (AEM) in August 2007. increase investment into ASEAN? The roadmap provides for the detailed measures and SURIN: ASEAN’s vision for an integrated regional econ- action plans to integrate logistics services, and involves omy includes the free flow of investment and servic- the participation of various related ASEAN bodies in es. To this end, set out several strategic initiatives in the trade, services, Customs, transport, telecommunica- ASEAN Economic Community (AEC) Blueprint and has tions and investment, as well as private sector bodies. taken concrete steps to realise these by 2015. ASEAN also actively conducts public-private engage- One of the bold steps that ASEAN took to establish ment dialogues. In October 2010, ASEAN leaders adopt- this free and open regime is the ASEAN Comprehen- ed the Master Plan on ASEAN Connectivity, which is sive Investment Agreement (ACIA). An important pillar intended to add value to and expedite the implemen- of the ACIA is its liberalisation component, in which a tation of the logistics roadmap and the AEC Blueprint, negative list approach was adopted in the so-called and to address issues such as market access, trade and reservation list, with all else being open. ASEAN also Customs facilitation, supply chain security and cross- agreed to progressively reduce or eliminate the reser- border, inter-state and multimodal transport through vations contained in the list following the strategic clear measures, targets and timelines. phases outlined in the AEC Blueprint, and member From the trade in services side, significant progress states are working to improve their investment regimes. is made in the liberalisation of the nine logistics serv- On a far greater scale, ASEAN has also entered into ices subsectors. This year all member states will be free trade agreements with dialogue partners through required to open their logistics services up to 51% for- which we are trying to expand our reach in terms of eign ownership, and up to 70% by the end of 2013. With source of investment. We have to provide adequate pro- these ambitious targets, trade barriers will be kept at tection to investors and their investments to remain minimum level and links between the logistics providers competitive. Our agreements have safeguarding pro- among ASEAN countries will be improved. visions which enable direct recourse through the investor-state dispute settlement mechanisms. How can ASEAN nations work together to position Promotion and facilitation are two of the main pil- the region as a world leader in tourism? lars of the ACIA, and we recognise that we has to SURIN: ASEAN has been implementing a number of increase awareness of ASEAN as an integrated invest- regional initiatives to promote ASEAN as one tourism ment area in order to attract and increase both intra- destination or market, such as developing multiple- ASEAN and foreign investment into the region. To do country or region-wide tour packages, joint promotion this we are looking at streamlining and simplifying pro- campaigns and ASEAN-wide tourism websites. cedures for investment applications and approvals and ASEAN is currently coordinating joint marketing establishing one-stop shops for investors. efforts in our main source markets, i.e. China, Korea, Japan and Australia. This joint work is being undertaken in addi- How are logistical integration issues being addressed tion to the individual tourism offices that member in order to transform ASEAN into a single market? states already operate in these markets. The collabo- SURIN: Logistics services is the 12th Priority Integra- ration includes: establishment of ASEAN common area tion Sector (PIS) and ASEAN plans to achieve full inte- at international travel fairs, the creation of the ASEAN gration of logistics services by 2013. ASEAN has a Promotional Chapter for Tourism in Australia and pro- roadmap for this process, which has been endorsed by motion of tourism products on a dedicated webpage. www.oxfordbusinessgroup.com/country/Thailand
  • 17. COUNTRY PROFILE ANALYSIS 23 Proposed changes to the 2007 constitution worry the military Burying the hatchet Regrouping, recouping and ready to move on Reconciliation was central to Pheu Thai’s (PT) 2011 upholding the court’s rulings is crucial to ensuring election platform, a sentiment that continued to that justice is served. They have resisted all moves resonate with voters despite five years of confronta- to expunge TRT and PPP leaders, fearing that this tion following the 2006 military coup that had oust- would pave the way for Thaksin’s return to Thailand ed and exiled the prime minister Thaksin Shinawa- and politics. PT’s proposal also faces opposition tra. Since receiving her overwhelming mandate in the among its own supporters. Many want to see the PAD 2011, Prime Minister Yingluck Shinawatra, Thaksin’s leadership held accountable for its six-month occu- sister, has stuck to the specifics of the campaign pation of Government House, attacks on red-shirt promise. Reconciliation has remained a priority supporters and the closure of national airports in despite hurdles, yet finding the right path leading 2008. The PAD’s ability to operate with impunity was to the new era remains a challenge. in stark contrast to the aggressive measures the mil- SPEAKING SOFTLY: Addressing the grievances on itary took against red-shirt supporters for similar both sides of the pro- and anti-Thaksin divide is nei- felonies. Of the military’s actions, the most divisive ther straightforward nor assured. Anti-Thaksin sen- remain its partisan refusal to intervene when the PPP timent still runs deep among supporters of the Peo- government declared a state of emergency in 2008, ple’s Alliance for Democracy (PAD) and members of and the military crackdowns of April and May 2010 the establishment, colouring their views of PT’s pop- that saw 92 deaths (86 civilian), over 2000 wound- ulist base and policies. Despite PT’s popular mandate, ed and the burning of several buildings. the government has recognised the need to tread Previous negotiation attempts by the Democrats lightly. Future military intervention remains unlikely in the weeks before the confrontations had failed given the international and domestic condemnation due to disunity and lack of compromise among the it would no doubt provoke. leadership of the United Front for Democracy against The military cites Thaksin’s abuses of power while Dictatorship (UDD), a pro-Thaksin umbrella group, in office, notably corruption and electoral irregular- precipitating a military crackdown. However, the ities, as the justification for the coup and the disso- labelling of the protests as “terrorism” and mishan- lution of both Thai Rak Thai (TRT) and its successor, dled investigations by the internal security agency, the People’s Power Party (PPP). the Department of Special Investigations (DSI), into These verdicts, handed down by the Constitution- the deaths, remains disputed and contentious. Since al Court in 2007 and 2008, respectively, alongside PT came to power, the DSI has reverted to many of the decision to terminate the premiership of PPP its original findings that found the military respon- leader, Samak Sundaravej in September 2008, are sible in some deaths, although they have yet to rule still condemned by pro-Thaksin groups as political- conclusively on all cases. ly motivated miscarriages of justice. CONSTITUTIONAL CHANGE: While the amnesty Living up to its campaign These rulings and the Constitutional Court’s rejec- proposal is debated, PT has proposed the formation promise of “reconciliation” tion of a case to dissolve the Democrats in 2011 for of a 99-member Constitutional Drafting Assembly is proving to be challenging alleged electoral fraud and vote-buying, perpetuate (CDA) through Article 291 of the 2007 constitution. for the PT government. Delicate negotiations and claims of judicial impartiality, a hotly contested issue The move to repeal certain sections of the current appropriate reparations fuelling allegations of double-standards. constitution and revert to some principles of the ensure that the process will AMNESTY OR JUSTICE: PT’s solution has been to pro- 1997 framework has caused the military establish- require compromise, pose a blanket amnesty. However, to many opponents, ment to fear that this will strip immunity from coup patience and time. THE REPORT Thailand 2012
  • 18. 24 COUNTRY PROFILE ANALYSIS land’s Rubicon moment. The 1991 coup, 1992 upheaval and 1997 constitution were chapters in the nation’s struggle against military influence and for democratic reform. Yet the 2011 election has made the country’s demand for a new social contract inclu- sive of justice and equality impossible to bury. This is a positive development for Thailand, with the debate squarely in the public forum. Yet barri- ers remain, and reconciliation on this scale is unprece- dented in Thailand. The grievances of previous coups and conflicts were allowed to drift into obscurity, although this does not seem to have had a notice- ably harmful affect on national development. Today’s pervasive connectivity means that this is no longer possible, says Ramkhamhaeng University’s associate professor of political science, Chaichana Inkawat. “Social media will be [the foundation of] new poli- tics in Thai society. It may not be like the Arab Spring, but it will remain a huge influence,” Chaichana said. ACCEPTING RESPONSIBILITY: To reconcile, each PT allocated BT2bn ($63.8m) to a compensation fund as part of the reconciliation process side must be willing to recognise the legitimate griev- Proposed changes to the leaders and lead to the annulment of Constitution- ances of other parties. However, PT’s BT2bn ($63.8m) 2007 constitution will have al Court rulings. At the time writing, the proposed compensation fund for victims of both the political to be approved by national changes are under discussion in the wider political violence and the insurgency in the south, announced referendum, a volatile but arguably more democratic and judicial arenas. The court ruled that individual in 2011, may be the closest the government is able process. amendments may be applied, but not a wholesale to venture in acknowledging the responsibility of constitutional re-write. Furthermore, any changes the state for the events. must be approved via national referendum. It is for this reason that previous initiatives have This verdict neither fully endorses nor rejects mod- been unsuccessful. The Thailand Truth and Recon- ifications, but it does throw the process into a volatile ciliation Committee (TTRC), created in 2010 and re- political ring. The court’s decision also undermines constituted by the PT government, is headed by the function of the CDA, which would give the gov- Anand Panyarachun. Despite being one of Thailand’s ernment greater control over reforms, ruling that the most popular and conciliatory prime ministers, CDA’s legitimacy rests in the approval which was appointed in the aftermath of the 1991 coup, the expressed through the referendum. dialogue he created brought little traction to the Such moves are not purely partisan; rather they TTRC. In parliament, former 2006 coup leader and respond to bipartisan calls to review sections of the now Matubhum Party head, general Sonthi Boon- constitution. The 1997 constitution’s broad consul- yaratglin is the chairman of the House Committee tative approach was seen as genuinely participato- on National Reconciliation, but has refused to dis- ry in contrast to the 2007 draft, which was engineered cuss many details of the coup. with the deliberate exclusion of some stakeholders. Central to the debate is the exile of Thaksin and Irrespective of the 2007 constitution’s merits, much if he will return. He recognises the upheaval that his of the ongoing discourse stems from its genesis, permanent return would cause. While public provo- which is cast in the shadow of the political circum- cations suggest an imminent return, practical and stances at the time of its creation. political realities preclude this possibility. Opponents THE REAL QUESTION: Such issues are at the heart are steeling themselves for this scenario, and are pre- of the reconciliation debate. Tacitly, the pursuit of pared to pursue legal action. reconciliation, first fielded by the Democrats in 2010, Although substantive constitutional reform and has become a question of where the moral author- reconciliation are still a ways off, the process of ity to lead and govern resides today. The social divi- ongoing consultation has provided an alternative to sions and foundations of this debate, long latent in confrontation and conflict, facilitating broader Thai society, were exacerbated by the 2006 coup d’é- national dialogue. “The political system should reflect Heightened tat, when many who had previously fought against the changes in Thai society and give greater space interconnectivity and the rise of social media mean military intervention condoned the coup. The belief for all to participate in politics,” said Sihasak that current grievances that the military acted in the interests of the nation’s Phuangketkeow, the permanent secretary of the cannot be swept under the greater good deeply pervaded public opinion, civil Ministry of Foreign Affairs, speaking with OBG. Yet rug and forgotten. Today’s society speakers and parts of the bureaucracy. both the government and the people are faced with conflicts must be This division of ideologies continues today. While a choice, said professor Gothom Arya of the Human addressed, and both sides need to be willing to accept the contemporary conflict and debate are seen by Rights and Peace Council at Mahidol University: “They the legitimate grievances many as just another chapter in Thailand’s evolution must absorb and accommodate the new model of the other. toward democracy, last year’s election was Thai- of government, or remain an asynchronous society.” www.oxfordbusinessgroup.com/country/Thailand
  • 19. COUNTRY PROFILE INTERVIEW 25 Lyonpo Khandu Wangchuk, Minister for Economic Affairs, Kingdom of Bhutan A close affinity OBG talks to Lyonpo Khandu Wangchuk, Minister for Economic Affairs, Kingdom of Bhutan What is the thrust of the bilateral economic rela- important strategy that we can learn from. We can tionship? How high do economic ties rank? share our experiences with environmental conserva- WANGCHUK: As two Buddhist kingdoms whose mon- tion and economic development, our grassroots-based archs are revered for their benevolence, love for their five-year planning and our hydropower knowledge. We people and vision, Thailand and Bhutan enjoyed close have seen an increasing number of high-level contacts relations even before the establishment of formal diplo- and visits between government officials of both the matic ties in 1989. The links have grown rapidly over countries. Thailand also offers scholarships for the years. There is a close affinity between our royal Bhutanese students and there are many Thais working families, people and governments. There is also strong in development projects in the country. commitment to further enhance our relations and cooperation on a variety of fronts. How can economies such as those of Bhutan and On the economic front, Thailand is a major source Thailand drive higher-value tourism? of imports for Bhutan, and in recent years we have WANGCHUK: Thailand has a very large tourism indus- seen an increasing range of consumer goods from Thai- try and caters to all the market segments from budg- land. Bangkok is the number-one destination for thou- et to ultra luxury. Thailand offers a diversity of culture, sands of Bhutanese travellers. Druk Air has daily flights geography and products for high-value tourism. For to Bangkok and we expect more flights in the coming my own country, Bhutan faces stiff competition from years. In 2011 we received a Thai trade delegation of many destinations, even in the high-end segment, and over 40 members on a mission to explore business it is important for us to position ourselves as a unique opportunities. They were well received by our business and once-in-a-lifetime experience for visitors. To mar- community. There is also an investment by a Thai com- ket this concept we have a new Bhutan logo with the pany in our hotel sector. In the tourism sector, Thais are tagline “Happiness is a Place”. We are promoting invest- among the10 largest markets for us. We held a road- ments in luxury hotels by allowing 100% foreign own- show in Bangkok in 2010 to encourage more invest- ership and encouraging our hotels to upgrade to at least ment. Recognising the importance for closer trade a three-star category. To tackle infrastructure chal- relations, we have initiated negotiations on a prefer- lenges, the national airline is planning to expand to new ential trade agreement with Thailand. destinations and a new airline has been approved. However, even high-end tourism is not without its What lessons can Bhutan and Thailand learn from share of problems. A couple flying in a private jet over each other’s economic development strategies? generates a much larger carbon footprint than 114 pas- WANGCHUK: Bhutan is particularly interested in the sengers travelling in one of our Airbus 319 jets. We want success of Thailand’s small and medium-sized enter- to encourage more per-capita spending by a small prises as well as its promotion of traditional Thai art group of tourists rather than expanding the number and crafts and the food processing industry. Many of of visitors because we can never compete in the mass our officials have visited Thailand’s royal projects, indus- tourism market. Many of Bhutan’s historical and cul- trial estates, farms and industries, and we see that the tural attractions are not designed for very large num- strategies have been well designed. Overall, Thailand’s ber of visitors. Some of these institutions are still places dual-track development strategy of attracting foreign of worship and are an integral part of Bhutanese life; direct investment and promoting exports of manufac- we want to allow visitors to enjoy the beauty and charm tured goods, and stimulating domestic demand is an of the country in solitude without being disturbed. THE REPORT Thailand 2012
  • 20. 26 COUNTRY PROFILE VIEWPOINT William Hague, UK Secretary of State for Foreign and Commonwealth Affairs Bound together William Hague, UK Secretary of State for Foreign and Commonwealth Affairs, on UK-ASEAN relations in the 21st century Today the idea of the “developed West and developing region are strongest with our Commonwealth part- rest” is all but irrelevant. The world has changed and ners, Singapore and Malaysia. But while strengthening so must the UK if we are to prevent our role and influ- these we should be looking for opportunities else- ence in international affairs from declining. Key to this where as well. We also need to continue to work along- will be making the most of opportunities presented by side EU partners to secure free trade agreements with a new international paradigm in which economic pow- ASEAN countries to open markets and boost trade. Fur- er and influence is moving east and south. We are doing thermore, we need to do more to promote two-way this by shifting our diplomatic weight to reflect these investment. International institutions rate the UK as changes and by building our relationships with emerg- the easiest place to do business in Europe, with the ing powers. These relationships will be increasingly vital strongest business environment on the continent and for forging agreements on the international stage and the lowest barriers to entrepreneurship in the world. for boosting trade and investment that support the UK. But our relationship is about more than trade and South-east Asia epitomises the rationale for this investment. We have interests in maintaining security approach. The ASEAN countries are already more pop- in a region that straddles some of the world’s most ulous than the EU and the Arab world, have a larger important shipping routes and in tackling common economy than India and absorb more UK exports than threats, such as terrorism, nuclear proliferation, cyber- China. They hold substantial geopolitical significance, crime and climate change. There are a number of sep- with influence on neighbouring major powers. They aratist or other conflicts within ASEAN, and tensions should be, and are, key partners for the UK. remain in the South China Sea. The UK has a wealth of The region deserves serious attention from global experience and we are keen to share our knowledge partners. The UK is fortunate to draw on a foundation to promote stability. We form part of a small group of of existing relationships, and we already enjoy multi- countries formally supporting efforts by the Filipino Gov- billion pound trade and investment links with ASEAN. ernment and rebel groups to end their conflict. Our largest businesses in finance, energy, life sciences The voices of ASEAN leaders will be increasingly influ- and food and drink are establishing a regional foothold ential, both regionally and globally, in the future. Indone- and more of our retailers are becoming household sia’s impressive democratisation and Malaysia’s strong names, especially in Thailand. Furthermore, every year stand against violent extremism can serve as examples over 30,000 ASEAN students study in the UK, often for the entire international community. returning to positions of influence. They form part of We also want to work with ASEAN members on cli- the rich people-to-people links between our countries. mate change. They are among the heaviest emitters of We build on these links all the time. On his visit to greenhouse gases, but could also be among those most Indonesia last month the business secretary, Vince seriously affected by the consequences of changing Cable, launched the new UK-ASEAN Business Council temperatures. Any durable solutions will therefore to strengthen commercial engagement with the region. require commitment and close coordination with ASEAN. The government’s public-private partnership body, Thus, our approach will be to build up our relations Infrastructure UK, is already in the Philippines sharing with ASEAN, to share expertise and knowledge, to pro- expertise, and we aim to do this more widely across the mote increased and freer trade and to work together region. Moreover, we continue to support develop- in a wide range of areas, from security to climate change. ment, democratic freedoms and transparency. But there We will continue to look east, toward the tremendous is more we can do. Our commercial relationships in the wealth of opportunity to be found in South-east Asia. www.oxfordbusinessgroup.com/country/Thailand
  • 22. 28 COUNTRY PROFILE VIEWPOINT Tony Blair, former Prime Minister of the UK Key components for success Tony Blair, former Prime Minister of the UK, on challenges and opportunities of globalisation In the light of the devastation caused by flooding, I have to set that within the context of basic elements of fair- huge sympathy and admiration for the courage, digni- ness: essential workplace rights, basic principles that ty and determination of Thai people. Thailand is open mean that people get access to quality training and skills, for business and can be confident of its future, and the welfare systems that help people back into work. world should be confident as well. The second point is that our welfare and public sec- It is important that Thailand has increasingly focused tor systems have to be reshaped and reformed in light on English proficiency in its schools, because success of the changes around us. There is no welfare system today is not only measured by a nation’s pride in its own that will work unless it balances the contribution from culture, but in its openness to others. Thailand has big the state with individual responsibilities. There is no pub- advantages: its culture, its people and its geography. lic service that will work unless it is flexibly organised, But Thailand operates in the global economy, especial- unless there are different providers, which offer choice ly as it is an exporting nation. for consumers, and where it is innovative in the use of Global economy is in trouble and that trouble is com- technology. Countries that are still developing their ing from Europe. In this European crisis I also think public welfare systems should learn from our experi- there are important lessons for how ASEAN develops. ence so as they create those systems in the 21st cen- The arithmetic and politics of integration must be in tury they can avoid some of the mistakes we made in sync. Europe faces essentially the same challenge as creating these systems in the 20th century. nations everywhere today, including Thailand. The essen- The third component is that if it is true that societies tial nature of that challenge is the challenge of change succeed if they combine economic enterprise with – the speed and the scale of the change happening in social justice, and if they have a different type of rela- the world today. There is now intense competition and tionship between state and citizen, human capital and as countries become more prosperous so they find its development is the key to the future. The biggest they have competition from lower-wage nations. To injustice that anyone can suffer is a poor education. continue to compete in this environment, they have to That education is not just about learning; it is an edu- move up the value-added chain. cation to be creative. Foreign direct investment can The way the world is changing is important in its bring intellectual capital into our countries that, along- speed and its scale, not just for companies, but also for side a proper functioning education system, can deliv- countries and for governments. The problem is that er economic prosperity in the future. change moves fast and, in my experience, government When I look at Thailand today – and I know there are moves slow. I think there are three key lessons of gov- issues of reconciliation in Thai politics – I still think ernment. The first is the most successful countries there is a genuine serious basis for confidence in Thai- combine strong commitment to economic enterprise land. Thai people are respected in the world, Thailand with strong commitment to social justice. People used is as good a place as any to come and do business. This to think these two were exclusive, but I think today the is a country with enormous potential. One of the most two go together. For business we need regulation that importance things to do – not just as an individual but is sensible but not too burdensome, a predictable rule as a country – is to put all the problems to one side and of law. We need to encourage enterprise, particularly think of the opportunity, the potential. And in relation small enterprises. We need to create an environment to Thailand, we should be proud of what it is, where it in which investors feel confident, in which outside has come from and where it is going, and confident that investors feel comfortable to invest. But we also need its destination will be one of success and prosperity. www.oxfordbusinessgroup.com/country/Thailand