Why Thailand?
Thailand is the United
States’ 24th largest trading partner. Two-way trade in 2007
was about US$31 billion, with $23 billion in Thai exports to the
U.S. and $8 billion in U.S. exports to Thailand. From 2006
to 2007, U.S. exports to Thailand grew by 4 percent, while
imports to the U.S. grew by about 1 percent. In Asia,
Thailand ranks as the United States’ 7th largest trading partner
after China, Japan, Taiwan, Korea, Singapore and Malaysia.
The U.S. and Thailand have enjoyed a special commercial relationship for 175 years, most recently under the Treaty of Amity and Economic Relations signed on May 29, 1966. Under the treaty, with the exception of a few sectors, U.S. companies operating in Thailand are afforded national treatment, which places them on an “equal playing field” with Thai companies, a privilege offered to no other trading partners’ companies.
The Thai economy is export-dependent, with exports accounting for 60 percent of its gross domestic product (GDP). Thailand’s GDP performance has averaged between 5 and 6 percent since the recovery of the Asian financial crisis. GDP growth in 2007 stood at 4.8 percent, and 2008 is forecast to have the same growth rate.
Trade Agreements
Thailand is a member of the Association of Southeast Asian Nations (ASEAN). In 1992, leaders of ASEAN governments approved a Thai proposal to establish the ASEAN Free Trade Area (AFTA), which aims to reduce tariffs on most processed agricultural and industrial products traded among ASEAN countries. The scheduled tariff reductions have continued to be pushed forward; currently, most reductions will be in place by 2015. ASEAN is examining the possibility of expanding this special trade relationship with Australia, New Zealand, China, South Korea, India and Japan. Currently, Thailand has a limited bilateral free trade agreement with China and a partial agreement with India. Additionally, on Jan. 1, 2005, Thailand implemented an FTA with Australia, and in 2007 the nation signed a trade agreement with Japan.
Market Opportunities
Thailand’s economic growth has created
opportunities for U.S. companies in a number of infrastructure
sectors, including electrical power, telecommunications and
renewable energy. Thai consumers are creating opportunities
for new sales of U.S. medical products, cosmetics, security
equipment, food supplements and educational services.
Thailand also continues to look for U.S. suppliers of automotive
accessories, defense equipment, broadcast equipment, food
processing and packaging equipment, and laboratory and scientific
instruments.
Best Prospects
Robust economic growth in Thailand has created numerous opportunities for U.S. companies in varying industry sectors, including the following:
- Automotive Parts and Services
- Broadcast Equipment
- Cosmetic Products
- Defense Equipment
- Education Services / Study Abroad
- Electrical Power Systems
- Food processing and Packaging Equipment
- Health Care and Medical Equipment
- Laboratory and Scientific Instruments
- Safety and Security Equipment
- Telecommunications Equipment
- Water Pollution Control Equipment
Government Regulations Regarding Foreigners Doing Business in Thailand
Prior to conducting business
in Thailand, Americans should be familiar with the restrictions
on foreign businesses in Thailand, especially the Alien Business
Law (ABL). Because of the Treaty of Amity and Economic
Relations, American companies are exempt from many of the
restrictions on foreign investment imposed by ABL; however, being
familiar with ABL and other restrictions is important.
Also known as the National Executive Announcement No. 281 of
1972, ABL restricts business activity of aliens, or non-Thai
residents. “Alien” and “alien business” is defined as a
natural person or juristic person without Thai nationality.
This includes a business with at least one-half of the registered
capital held by aliens. The three categories of restrictions are
as follows: 
- Category A is completely closed to foreigners (with a few exceptions) doing business in certain sectors, most notably accounting, law and architecture.
- Category B is closed to foreigners unless promoted by the Board of Investment. Category B sectors include fishing, printing, tour agencies and other businesses.
- Category C requires an Alien Business License for retail, wholesale and other businesses. A complete list of restricted industries can be obtained upon request.
While exempt from many of these regulations, American businesses are restricted from doing the following:
- owning land
- engaging in the business of inland communication
- engaging in inland transportation and communication industries
- engaging in fiduciary functions
- engaging in banking involving depository functions
- engaging in domestic trade in indigenous agricultural products
- exploiting land or other natural resources
- for more information about Thailand government regulations, please visit http://www.buyusa.gov/thailand/en/foreign_act.html.
Market Entry Strategy
Thailand’s businesses and consumers are
extremely price- conscious and tend to favor lower prices over
product quality or other benefits. Exporters whose products
have a competitive advantage other than price should plan to work
with local Thai partners and undertake an extensive strategic
marketing plan.
Furthermore, Thailand’s average most-favored-nation (MFN) tariff rate is 11 percent, with the agricultural sector being 24 percent and industrial sector at 9 percent. The highest tariff rates are applied to imports that compete with locally produced goods. This often leads to even further price pressures for U.S. exporters hoping to successfully penetrate the Thai market.
Obtaining a local partner, such as an agent or distributor, is still the preferred means of entering the Thailand market for the first time, as it is one of the most efficient and effective ways to reach Thai buyers. The agent or distributor can facilitate and expedite the market entry with their market knowledge and established networks. U.S. businesses owners should become familiar with the business culture of Thailand, as interpersonal relationships are a vital factor for successful transactions.
Additionally, the U.S. Commercial Services staff of U.S. officers and Thai trade specialists at the U.S. Embassy in Bangkok can assist U.S. firms in researching and accessing the Thailand market, as well as solving commercial problems.
Thailand at a Glance
His Majesty the King of Thailand
| Location: | Southeastern Asia, bordering the Andaman Sea and the Gulf of Thailand, southeast of Burma |
| Land Boundaries: | Burma, Cambodia, Laos and Malaysia |
|
Area: |
Total: 329,560 sq. km. (slightly larger than
New Mexico) Land: 325,360 sq. km. Water: 4,200 sq. km. |
| Climate: | Tropical; rainy, warm, cloudy southwest monsoon (mid-May to September); dry, cool northeast monsoon (November to mid-March); southern isthmus always hot and humid |
| Population: | 65,493,296 (July 2008 est.) |
| Languages: | Thai, English (secondary language of the elite), ethnic and regional dialects |
| Currency: | Baht (1 THB = U.S.$ 0.03) |
|
GDP Real Growth Rate: |
4.8 percent (2007 est.) |
|
GDP per capita (PPP): |
$7,900 (2007 est.) |
|
GDP |
Agriculture: 11.4 percent Industry: 43.9 percent Services: 44.7 percent |
| Labor Force: | 36.9 million (2007 est.) |
| Government: | Constitutional monarchy |
| Head of State: | H. M. King Bhumibol Adulyadej (King Rama IX) |
| Head of Government: | H. E. Somchai Wongsawat, Prime Minister |
Contact the U.S. Commercial Service in Thailand
For more information on how U.S. Commercial Services Thailand can help you enter the Thai market, visit www.buyusa.gov/thailand/en/.
For complete U.S. Commercial Services Thailand contact information, visit www.buyusa.gov/thailand/en/contact_us.html.