This document summarizes an investment risk rating presentation for Thailand given in November 2010. It discusses Thailand's ranking among ASEAN countries in terms of GDP, population, per capita GDP, and ease of doing business. Thailand is the second largest economy in ASEAN but has slipped in competitiveness and corruption rankings in recent years. The document also examines Thailand's economic indicators and challenges, including political instability, an ineffective national reconciliation campaign, and risks of further conflict between Red Shirt and Yellow Shirt factions.
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Afg thailand 2011 11-12
1. Automotive Focus Group Thailand
Opportunities and Challenges: An Investment
Risk Rating for Thailand
Friday 12 November 2010
Royal Cliff Beach Hotel, Pattaya
Christopher F. Bruton
Dataconsult Ltd, Bangkok, Thailand
(Tel: 662-233-5606/7, Fax: 662-236-8143, Email: chris@dataconsult.co.th)
2. 1.1 Thailand ranking by GDP, Population and Per Capita GDP
Sources: International Monetary Fund, World Economic Outlook Database, 2010
GDP (US$ billion 2010) (current prices) Population (million 2010) Per Capita GDP (US$) (current prices)
695.1
Note:
• Second largest economy (17.4% of ASEAN total)
• Fourth largest population (11.3% of ASEAN total)
• Fourth largest per capita GDP (54% above ASEAN average)
Part 1: How Thailand rates in an ASEAN context
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Thailand
AFG Pattaya 12 Nov 10
Thailand
234.6
Thailand
Total 1,800.5 600.3 3,000
3. Source: International Monetary Fund Database
(US$ with forecasts from 2010)
US$
China
Thailand
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 1: How Thailand rates in an ASEAN context
1.2 Thailand: GDP per capita, compared with China
Note: China overtakes by 2012?
4. AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 1: How Thailand rates in an ASEAN context
1.3 Thailand ranking for Ease of Doing Business
Sources: World Bank: Doing Business Series, 2011
(ranking in 183 countries)
5. AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 1: Ease of doing business: How Thailand rates in an ASEAN context
1.4 Rankings for Thailand and main ASEAN investment Competitors in 2011
Sources: World Bank: Ease of doing 2011
(ranking in 183 countries)
Ease of doing business factors
Thailand
Singapore
Malaysia
Vietnam
Indonesia
Philippines
Protecting investors
Trading across borders
Dealing with construction permits
12
12
12
2
1
2
4
37
108
173
63
62
44
47
60
132
61
156
Registering property
Enforcing contracts
Closing a business
19
25
46
15
13
2
60
59
55
43
31
124
98
154
142
102
118
153
Getting credit
Paying taxes
Starting a business
72
91
95
6
4
4
1
23
113
15
124
100
116
130
155
128
124
156
Total ranking
19
1
21
78
121
148
6. Sources: World Economic Forum: Global Competitiveness Report s
Note:
• Thailand slipping for past 10 years
• Vietnam, Indonesia improving
• Malaysia, Singapore stable
(ranking in 139 countries)
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 1: How Thailand rates in an ASEAN context
1.5 ASEAN Competitiveness rankings (2010/2011 compared with 2001/2006)
7. Source: Transparency International Survey 2010
Singapore
Malaysia
Thailand
Indonesia
Vietnam
Philippines
Cambodia
Laos
Myanmar
9.2 (1)
4.4 (56)
3.5 (78)
2.8 (110)
2.7 (116)
2.4 (134)
2.1 (154)
2.1 (154)
1.4 (176)
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 1: How Thailand rates in an ASEAN context
1.6 Transparency: the perception of corruption
Ranking among 176 countries shown in brackets
Brunei 5.5 (38)
Scores
:
8. Sources: UNDP Human Development Index 2009, 2010
(ranking among 169 countries)
• Human Development emphasizes education, health, social development
• Only Singapore, Brunei and Thailand improved ratings
• Thailand a middle ranking country
• Poor education and health: biggest handicap to development
Thailand
AFG Pattaya 12 Nov 10
20102009
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
1.7 ASEAN: Human development indicators
Part 1: How Thailand rates in an ASEAN context
9. Sources: World Economic Forum: 2010-2011
Note:
• Main defects relate to politics and government
• Education and work ethic of workforce not major factors
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 2: Thailand Economic and Political Risk Factors
2.1 Thailand: Most problematic factors for doing business
AFG Pattaya 12 Nov 10
10. Political stability
Accountability
Corruption control
Rule of law
Gov’t effectiveness
Regulatory Quality
Scores
(out of 100)
Source: World Bank: Aggregate Governance Indicators 2009
(354) (361) (366) (344) (334) (318) (318) (280) (261) (263)
Notes:
• Thailand has enjoyed acceptable levels of government effectiveness, regulatory
quality (hitherto also rule of law, but now declining)
• Corruption control, accountability declined but now stable
• Political stability now nearing anarchy
(272)Total
scores
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
2.2 Governance factors in Thailand: 1996-2009
Part 2: Thailand Economic and Political Risk Factors
11. AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.1 Thailand: GDP Growth (constant prices) and inflation
Sources: National Economic and Social Development Board
(% change with 2010 forecast)% change
12. 3.2 Net Flow of Foreign Direct Investment (billion baht)
Source: Bank of Thailand
Baht billion
Note: Figures relate to all foreign investment,
BOI promoted or otherwise
450
400
350
300
250
200
150
100
50
0
(Baht billion inflow per full year)
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
13. AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.3 Thailand’s GDP and foreign trade
Sources: National Economic and Social Development Board
(US$ billion)
US$ billion
(forecast)
14. Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.4 Thailand’s principal export markets
AFG Pattaya 12 Nov 10
(% of total exports)
Source: Ministry of Commerce
Note:
• East Asia 55%
• North America / W. Europe 20%
ASEAN
Other
Taiwan
S. Korea
India
Middle East
Australia
Hong Kong
EU
USA
Japan
China%
%
%
%
%
%
%
%
%
%
%
%
15. AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.5 Foreign Tourist Arrivals / Hotel occupancy
Sources: Department of Tourism, Ministry of Tourism and Sports
(Hotel occupancy %)
Million
persons
(9 months)
16. Stock Exchange Index
Source: Stock Exchange of Thailand
Index
April 1975 = 100
(SET Index at month-end)
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.6 Thailand Investment and Financial Flows
Note:
• November 8 reach 1050
1050
17. Foreign Trading on Stock Exchange of Thailand: Monthly Buy/Sale (Billion Baht)
Source: Stock Exchange of Thailand
Baht billion
250
200
150
100
50
0
(Baht billion monthly total buy / sell transactions)
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.7 Thailand Investment and Financial Flows
18. Source: Bank of Thailand
Baht
per US$
(Baht per US$)
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.8 Baht Currency against US$: Year-end Exchange Rates
19. Source: Bank of Thailand
US$ billion
(Oct)
(US$ billion reserves at year-end)
AFG Pattaya 12 Nov 10
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 3. Thailand Economy: present situation and outlook
3.9 Thailand: International Reserves (year end figures)
20. • Risks at “Elite” Level:
Transitions are not easy in Thailand
Role of Privy Council has been a vital factor for stability behind the scenes
Military are determined to maintain decisive role in politics
Constitutional amendments are unlikely to produce acceptable ground rules
• Risks at “Political Operational” Level:
Democrat Party: dissolved or not dissolved - either way will cause conflict
Democrat / Bhumjaithai coalition is heading for break-up
Transparency campaign mounted by National Anti-Corruption Commission and
Chambers will add to instability
Election has been promised “sooner rather than later” by Prime Minister
Thaksin Shinawatra is now back on campaign trail
• Risks at “Social Evolution” Level:
Red Shirt / Yellow Shirt conflicts remain unresolved
National Reconciliation Campaign has been ineffective
No significant moves towards equal opportunities, closing of income gaps
Automotive Focus Group
Opportunities and Challenges: An Investment Risk Rating for Thailand
Part 4: Thailand’s Challenges to Economic Progress
4.1 Political Risks Affecting Investment
AFG Pattaya 12 Nov 10