Thailand
MAIN FEATURES OF ECONOMY
Domestic Economy
Production
The production decelerated owing to 2.7% decrease in agricultural sector as a result of the prolonged effect of Avian Influenza; and decrease in shrimp export, resulting from anti-dumping measure from the United State of America. Non-agricultural sector also decelerated by 6.8% due to slowdown in services sectors such as financial intermediation, transport and communication, and public administration. However, manufacturing, construction, and trade still grew up with high growth rates.
Agriculture dropped by 2.7% due to 13.7% and 7.9% decreasing of livestock and fishery respectively. The continual decreased in livestock affected by the existing of the Avian Flu. Moreover, growth in fishery sector contracted by 7.9% owing to decrease in exported shrimp, resulting from anti-dumping measure from the United State of America.
Manufacturing expanded by 7.9%, higher than 7.3% in 2Q04 mainly due to rising production in light industries especially beverage, wearing apparel; and wood and wood products. However, capital goods and high technology industries slightly decelerated especially motor vehicles.
Construction grew by 8.2% owing to higher expansion of public construction while private construction decelerated at 12.1% as a result of the slowdown of residential construction in line with an increase of construction material prices.
Transport and communication rose by 8.3%, lower than 10.4% in 2Q04. This was mainly from the decelerating of growth of air transportation by 9.3%, compared to 38.8% in 2Q04. Furthermore, telecommunication services growths still remain unchanged, standing at 10.8%.
Hotel and restaurant still expanded at 15.8% even though lower than 28.4% in 2Q04. This was a result of the high growth of hotel services in accordance with a large number of foreign tourists, which increased by 12.6% compared with the same period of previous year although the Avian Flue outbreak re-occurred.
Financial intermediation increased by 11.6%, lower than 16.7% in 2Q04 owing to the decelerating performance of commercial banks and insurance.
Demand
Household consumption and investment slightly decelerated and government consumption showed a decline in compensation of employees in real term. While trade and services balance recorded a surplus of Baht 70.2 billion.
Domestic demand: decelerated both household consumption, government consumption, and investments.
1. Consumption: Household consumption expenditure decelerated by 5.5% owing to the standard of living tended to increase due to the rise of goods and services prices which caused by higher gasoline prices. Moreover, second round Avian Flu outbreak also reduced consumption of poultry products. Government consumption increased merely by 0.1% as a result of a reduction in compensation of employees in real term.
2. Investment: rose by 11.5%, decelerating from 12.9% in 2Q04. The private investment grew by 14.6%, lower than 16.1% in 2Q04 due to the rising price of building materials and the housing market starting to saturate. Meanwhile, government investment expanded by 5.9%. This was a result of government construction by the extra budget provided as a subsidy from central fund.
Net exports: Net exports of goods and services at constant prices showed the decelerated contraction by 5.9%, compared to the 18.3% decline in 2Q04.
1. Exports rose by 8.1% and recorded the highest value at Baht 1.19 trillion. This was due mainly to
an expansion of both major export markets and non-traditional markets in Africa, South Asia and Middle East.
2. Imports grew by 12.0% and also recorded a very high payment which was mainly from the import of capital goods and intermediate products for producing the exported goods in supply chain system, such as base metal product, integrated circuits, computer components and crude oil.
Politic
The Economist Intelligence Unit still expects the ruling Thai Rak Thai party, led by the prime minister, Thaksin Shinawatra, to win the next parliamentary election in mid-February 2005. Although Thaksin’s credibility has suffered, his populist policies continue to appeal to the electorate. Furthermore, despite international condemnation, his tough military response to the insurgency in the south is appealing to nationalist sentiment. The government is targeting a balanced budget in fiscal year 2004/05 (October-September).
CHARACTERISTICS OF MARKET
Thailand is the agricuture base country with 60 million population. 8.6%, 33.5% and 57.9% of GDP are from agriculture. Manufacturing and service sector respectively. Thailand is developing country and rely on export business. Export in Thailand accounted for 55-60% of total gross domestic. The major export are the product which modified agriculture raw materials (food, organic chemical, textile, furniture, toy), electronic products and accessories, and vehicle part.
Thai market is open system. International trading culture and English language are widely recognized.
Major import items to Thailand are as follows:
- Raw material to manufacture for domestic market and export market. Ex oil, chemical, metal, fish and etc.
- Foreign manufacturing technology and machinery to improve industry effieciency.
- Technology, machine and equipment for infrastructure development in Thailand
- Western style consumer products for modern life style and high income group in domesitc market.
SPECIAL AREAS OF GROWTH
Since Thailand financial crisis in 1997, Thai government did not spend much money on mega infrastructure project. At present, Thailand are fully recovered from those financial crisis. THE government plans to spend up to 400 billion bath over the next eight years to increase the network of railways, both elevated and underground, to alleviate the traffic situation in the city
PROSPECTS FOR NORWEGIAN TRADE
Infrastructure project
Since Thailand financial crisis on 1997, Thai had delay many infrastructure project development. At present, Thailand is fully recovered from those financial crisis. Taksin Government will spend significant amount of money on the delay and new infrastructure development projects in order to make Thai follow the development of other Asian countries.
Airport Development and air transportation
Development of new airport (Suwanaphumi Airport), improve airport in major province will be the major development in this area.
Telecommunication infrastructure
Ex Satellite, Earth base station, Mobile phone network, DSH, fiber optic, switching unit and etc.
Sea port development
There are 5 principal ports with the total capacity of 3.45 million TEU, they are located in Bangkok, Laem Chabang, Map Ta Phut, Songkhla and Phuket. Most of traffic passes through major ports namely Bangkok and Laem Chabang, which also handle containers, serving 90 percent of imports and exports of the country.
Laem Chabang is the largest and the most modern deep-sea port accounting 1.65 million TEU and will be developed to serve the container traffic of 8.55 million TEU in 2010.Ex import of existing port facilities in Lamchabang. Ministry of Transport and Communication is to allow private sectors to jointly construct, manage and run Terminal A3 and the remaining terminals in the second phrase of Laem Chabang Port Project (Terminal C1, C2, D1, D2 and D3 ) of Laem Chabang Port. Hutchison Port Holdings win 30-year concession to build and run six new berths at Laem Chabang, There will have some demand for equipments to run those facilities.
Pollution control
Provincial municipal waste incinerator, Medical waste incinerator, River pollution monitoring, Air pollution monitoring unit, Desulfulization unit, provincial waste water treatment are the priority area in Thailand.
Transportation development
Road and bridge development, tunneling for subway system and etc.
Consumer product
Thailand provides a significant size consumer market of over 60,000,000 though the middle and upper classes are highly centralized in Thailand's major city . The consumer foodservice market is characterised by increasing expansion, both on a domestic and international level, for many local operators. The scale of global expansion in the form of franchising is more aggressive than domestic expansion, as the latter is hindered by intense market competition and the growing saturation of prime locations.
Overseas ventures form a crucial expansion strategy for a large number of local operators, given extensive support from government bodies as well as the escalating popularity of Thai cuisine in international markets, which is resulting in a favourable increase in consumer demand.
Many Norwegian products, Ex salmon, find successful result in Thai market Some Norwegian nich products; Ex Kavli, have put some effort and find the way to firmly sell their product in specific market segment
Aquaculture products
Thai also import significant volume of mackerels and salmon. Salmon market from Norway to Thailand is increasing more than 50% for more than 5 years as well as other Norwegian fish.
Manufacture under license in Thailand (outsource)
Thailand have long experience on production base from many countries for a long time. All infrastructure have been developed to facilitate outsourcing manufacturing. Skill labor cost are in competitive level. The area which good for outsourcing are food manufacturing, electronic assembly, furniture, other wooden products, software, toy and etc.
Investment
Thailand provides a significant size consumer market of over 60,000,000. Thailand is also long established market for many Norwegian companies Ex Yara, Telenor, SAS. Jotun, and ABB. According to market size, purchasing power, favourable business environment and consumption pattern, Thailand have room for interesting Norwegian product and service.
TRADE STATISTICS NORWAY-THAILAND
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Mer informasjon om norsk handel med Thailand kan du få ved å sende en e-post til sjefsøkonom i Innovasjon Norge
John Rogne, eller ved å ringe ham på (+47) 22 00 27 17.
