Economic Base

Approaching a population of 70,000,000 Thailand is one of the larger South East Asian economies, posting impressive economic growth rates approaching 10% before the bubble economy burst in 1997. As a low cost manufacturing exporter, Thailand is well known for its automobile manufacturing industry, earning the nomenclature "the Detroit of Asia".

Much of Thailand's import expenditure just prior to the bust was for heavy manufacturing equipment, suggesting that exports would grow fast subsequently. While the Asian crisis caused major disruption to Thailand's industry, the downward spiral of the Baht helped reduce the cost of Thailand's exports. The relative bouyancy of Thailand's North American and European export markets at the time saved Thailand from economic annihalation, but overcapitalization in both the manufacturing and the property market remains an albatross around Thailand's neck with continuing high levels of both industrial, personal and banking institutions debt. Compounding the problem was the global recession of the early 2000s, the slow unimpressive recovery since, as well as domestic inflation incurred by rises in taxes imposed after the crisis.

Thailand has also developed a strong service sector. Tourism is a key service sector, with Thailand sporting a strong attraction to tourists from the West and East Asia. Tourism is the largest source of foreign exchange. However expenditure per visitor is low compared to neighbouring countries as well as internationally.

Other key industries include textiles, agricultural processing, beverages, tobacco, cement (Thai Cement is one of Thailand's most admired companies), semi conductors and integrated circuits. In terms of natural resources Thailand is well blessed with a favourable climate for fruit, vegetables and cereals, as well as tin and tungsten.

Machinery and manufacturing accounts for around 80% of Thailand's exports, followed by primary industry products notably agriculture and fisheries.

Thailand is one of most centralised countries in terms of wealth. The capital city of Bangkok and the adjacent Southern provinces houses a disproportionate level of wealth, in terms of both personal and industrial wealth. The population in the Central, North, and particularly Eastern regions of Thailand are characterised by farming and extreme levels of poverty, though a relatively favourable climate and natural resources makes living off the land in much of these areas easier. The large Eastern Issan region houses a large rural poor population and historically many in this region regard themselves culturally as "Laos" rather than "Thais". Thailand is a prime example of the division between the rural poor and the urban rich, with Bangkok continuing to attract rural immigrants for the higher salaries available there. This is particularly noticeable during public holidays in Bangkok when the city seems like a ghost town as the estimated 30% of itinerant workers return to their home towns.

Japan is a major investor and export market for Thailand, and until Japan reinforces tentative signs of recovery, the Thai economy will not live up to its promise. Japan is Thailand's second biggest export market after the US, and followed by Singapore, Hong Kong and Germany.

Consumer Market

Thailand is characterised by extreme disparities in wealth. The real middle class market is in Bangkok, with Chiang Mai in the North and some Southern cities containing smaller populations of middle class with relatively higher disposable incomes. There is a high demand for luxury vehicles for example, while many whole farming families survive on around 20 to 40 USD per month.

Unlike neighbouring countries like Malaysia, Singapore, Indonesia and the Philippines, Thailand has never been colonised though a French influence, as in much of Indo China, is evident. Bordering Indo Chinese countries like Burma/Myanmar, Vietnam and Laos fell to communist rule. Partly because of this Thailand consumers exhibit less of the Western influence than their South East Asian brothers. Indeed, with major interest in Thailand from Japan in the boom years and before, Japanese culture is often emulated, manifested in fashions. Unlike Singapore and Malaysia again, Thailand has a sophisticated and indigeneous popular culture, and local celebrities are strong opinion leaders amongst the young.

Thais are great whisky drinkers, with imported whiskies popular among the Bangkok middle class and yuppies, but local thai whisky (much cheaper despite a virtual monopoly due to the lack of import taxes) the staple recreational drink for the great majority or poor or rural Thais. Beer is the second most popular local drink, but the broad market is relatively price sensitive. Foreign brands like Heineken and Carlsberg have made major inroads into local brewer Boon Rawd's previous almost total market domination in the last few years by targeting Thailand's upper middle and yuppie class.

Political Stability

Thailand's contemporary political history has been marked by coups and fast changes in leadership compared to Singapore and Malaysia's decades spanning leadership. Yet there has not been a coup for more than a decade, and Thailand's anarchic form of democracy displays a substance which leaves the more authoritarian regimes in Singapore, Malaysia, China and Indo China scratching their heads. The reality is that Thailand is as secure place to do business as any of their neighbours in-spite or maybe because of their political system, and in the face of high levels of poverty.

While politics in Malaysia is primarily religious or ethnic based, politics in Thailand remains volatile and regionally based, with parties able to sustain a strong following in the East and North being rewarded by strong secondary influence in national politics. While the last decade has seen politics dominated by the Central and South power-based Democrats led by Chuan, and several Eastern power based parties like NAP and Chart Thai (Chavalit and Barnham), the last 2 years has seen the emergence from nowhere of the Thai Rak Thai (Thai Love Thai) party headed by Thaksin Shinawatra, Thailand's second richest man and owner of the powerful media and telecommunications company Shin Corp. A previous deputy Prime Minister, Thaksin's 1999 campaign devastated the then ruling and successful Democrat party by pure advertising spin. Caught asleep in the traditional mode of Thai political influence, the Democrats succumbed to a modern market research, PR and advertising campaign waged by the savvy Thaksin, particularly in the populous Issan region. TRT has changed the nature of Thai politics, evidenced by the dissolution of the previous powerful National Aspiration Party, the leadership seduced by the funding behind TRT.

While previous political power was nurtured through the traditional institutions of the army and police, Thaksin produced a stunning result for TRT in the last elections, a result that allowed TRT to govern in their own right, from a business and entrepreneurial background. While Thaksin's demonstration of the power of the media and advertising to target the dissastifactions of the broad Thai populace was right our of his business and marketing textbook, most middle class Bangkok based Thais looked forward to a more professional and private sector friendly administration from Thaksin. And it was not lonf before Thaksin's political leadership was being described as a corporate CEO style. It may not be long before Thaksin's new Thailand will be referred to as Thailand Inc.

Religion and Ethnicity

The great majority of Thais are Buddhist (around 95%), with some provinces in the South near Malaysia and including Phuket made up of a large proportion of Muslims. Around 75% are 'Thai', 15% Chinese with a significant number of Indian and other ethnic groups. Unlike Malaysia where there are strong social prohibitions against inter-marriage, there is a high level of intermarriage between Chinese and Thais in Thailand, contributing in part to the high level of religious and ethnic tolerance. Informally however, many Eastern 'Thais' prefer to refer to their ethnicity as 'Laos' or 'Kyhmer' (Cambodian), and many observers and scholars do reinforce that the Eastern parts of Thailand are culturally more similar to Laos than central Thai.

Language

Thai is the national language and spoken by the 94% of literate Thais. Again many from the East speak Laotian rather than Thai. English is very rarely spoken, though it is far more likely that you will find English speakers in Bangkok, amongst overseas-educated professionals and some younger generation managers and professionals who have taken the time to study the language. It is unusual to find senior managers or CEO's over 50 of local Thai companies who speak English to a high standard. Thai is a tonal language and is character based rather than based on Latin script. To some it sounds like Chinese and indeed there are some similarities in the tones used. Thailand's sub-optimal and underfunded educational system also discourages the growth of English skills, perhaps Thailand's most serious competitive disadavantage in international business compared to Singapore, Malaysia, the Philippines, and maybe even Indonesia.

Business Practices

Like other countries in the region, Thais prefer to establish personal relationships before entering into any business agreement. This goes far beyond the occasional lunch or dinner and is more likely to involved many informal meetings and gatherings over an extended period of time.

We will not go into the details of social and business etiquette in Thailand as it is available in many places on the internet, other than to reinforce the importance of deference to age and position, and avoiding the main social sins of pointing with any part of your body to people or objects, patting others on the head, personal contact, and exposing your feet. Thais are very modest dressers. It is unusual to see Thai men in shorts or Thai women in strapless dresses except for a few cases in international recreational or tourist areas.

Thailand has a complex regulatory structure for foreign operations and investment, as well as an even more complex legal system. Different regulations apply to different nationalities. For example, Americans have higher standard visa periods and some advantages in joint ownership of Thai companies. Related institutions such as the police and the legal support professions continue to have high levels of corruption - an understandable result of the low salaries paid to public servants. Hard and fixed rules are rare. Each case must be dealt with as a new one as interpretation and speed of execution often depends on the personnel involved at the time and their incentives.