This an emerging and dynamic economy with great potential

It is a good idea to understand the nature of Thai economy if you are considering looking for a Thai partner. The prospect of relocating to Thailand may emerge or you may simply maintain ties with the country. Part of the appeal of meeting a Thai partner is the opening up of a new horizon which could spell opportunity at some point in the future such as purchasing a second home, investing or considering retirement to Thailand which has many advantages in this respect.

An emerging economy with great potential

An emerging economy, it is entirely wrong to think of Thailand as a second class state or inferior. It is an emerging country in the growing Asian economic zone and worthy of respect. Thailand's economy is emerging from the shadows of the great financial crisis of 1997 and the subsequent devaluation of the country's currency. Since then, the Thai government has been trying to stimulate economic growth while adapting a prudent fiscal policy.

The 2006 coup

Questions have been raised about Thailand’s economic stability. This has not been helped by the bloodless coup of 2006 in which former Prime Minister Thaksin Shinawatra was deposed by the military. Despite this, Thailand seems to be making steady progress but confidence in the economy is lacking. A strong proponent of opening up Thailand’s economy and driving high growth rates, Mr. Shinawatra was somewhat successful although his style of government caused serious divisions in Thai society. The new government promotes what is termed a ‘sufficiency’ economic concept.

Impressive growth and business friendly

Thailand remains a strong and business friendly economy. It is the only state in South East Asia which was never colonised and has been a constitutional monarchy since 1932 having been independent for nearly 600 years. Free market policies pursued by the government in recent years resulted in impressive growth in the order of 4-6% but this was interrupted when the political crisis prompted the military to depose the democratically elected Mr Shinawatra. While the interim governments approach is more cautious, progress continues. In spite of the political uncertainty caused by the coup, the Thai baht has actually increased in value in the last 12months.

Free Trade agreements

Thailand is actively pursuing a free trade agreement with the United States and is a key participant in the Asean group of nations whose stated aim is the creation of a Pan-Asian free trade zone. Thailand is regarded as a good country to do business in, ranking number 50 in the league of the world's freest economies. In spite of events last year, it has actually continued to improve its position. Currently it ranks number 9 out of 30 Asian countries. Thailand enjoys a high level of business freedom. It takes less than the world average to open a business in the country at 33 days compared to the world average of 48. Some experts believe that it should be even easier to start a company and that this should be changed to maximise entrepreneurship.

Tax rates

The top income tax rate is 37% with the top corporation tax rate at 30%. There is also a VAT and a property tax. Government spending is also trim with state owned businesses and properties contributed to its overall revenue. Overall government tax take as a percentage of GDP is 15.9%.

Attractive labour market for employers

The Thai labour market is a benign one for employers with an abundance of cheap labour and very flexible labour laws. One of the country's key challenges is to deal with corruption which pervades all aspects of the economy and undermines confidence. While this might be so,Thailand has a better record than most Asian countries.

Public debt is the challenge

Thailand's biggest problem is the level of public debt which requires the economy to generate sustained growth rates of 5% per annum to prevent the debt from getting out of control. A range of government enterprises engaged in oil production, electricity production and telecommunications combine with a growing manufacturing base are the key engines for growth in the economy.

Property market recovering

The property market has been also slowly recovering as the government encourages banks to make retail offerings available so that middle class Thais can afford to purchase new homes. In addition the government has engaged in a number of mega projects which culminated last year when Bangkok's new international airport Suvarnabhumi Airport opened its doors some 30 kilometres east of Bangkok.

Love affair with the car

Thais have a love affair with their cars. Ordinary Thais pay astronomical prices to purchase their cars with nearly 400,000 new cars entering the system every year. The country's demand for energy is growing and it is one of the key priorities of the government with a key ministry dedicated to dealing with the issue.

A mushrooming retail market

There has been a sharp and noticeable increase in retail investment in Thailand with big worldwide chains such as Tesco, Carrefour, Big C and Makro all opening their doors throughout the country. In addition, highly visible and spectacular shopping centres have been developed in Bangkok such as the Siam Paragon complex.

Thai tourism

Thailand's tourist sector has returned to record levels after slumping in the aftermath of the 2002 tsunami which effected the south of the country. Inward investment from large hotel chains has been substantial and continues.

Banking system

Thailand has a dynamic and service orientated banking system which many farang find impressive. Foreign ownership of Thai financial institutions is restricted and there are some concerns about the success of financial regulation which does not meet international standards. In the light of the 1997 debacle, this is a cause of concern for the government. The government holds substantial shareholdings in Krung Thai Bank, Siam City Bank and Bank Thai which are among the top 10 domestic banks.

Telecommunications infrastructure

Additionally, the country has an impressive and competitive telecommunications sector which is making advances in mobile and broadband communications. The Thai government under Thaksin shook up the sector. In spite of extensive privatisation, there are still some public involvement in the sector which is less than progressive.