Companies with fewer than 50 employees make up more than 90 percent of all Thai businesses. Under the one-village-one product campaign promoted by the government of Prime Minister Thaksin Shinawatra in the early 2000s crafts and products produced on the local level were given a boost by government loans. The program, modeled after a similar program in Japan, was credited with starting a number of new businesses in rural areas that had traditionally been left out of economic growth. According to Global Entrepreneurship 18 percent of the population of Thailand was involved in starting business in the previous 48 months compared to 2 percent in Japan and 14 percent in China.

Thailand's performance in managing its money and banking affairs through successful development and diversification of its financial institutions was impressive in the 1960s and 1970s. However, economic imbalances in the early 1980s and the rising tendency of governmental intervention put the financial sector under stress, thus reducing its efficiency in resource mobilization and allocation. Efforts to remedy the economic imbalances in the Fifth Economic Development Plan in the late 1980s and early 1990s included restructuring monetary, exchange rate, and interest rate policies; strengthening the open securities market; and encouraging competition among financial institutions. [Source: Library of Congress]

The money and capital markets were still underdeveloped in the mid-1980s. One striking fact was that the money market was very rudimentary and there was practically no open market for short-term securities; the only investors in treasury bills and government bonds were commercial banks and a few other financial institutions, which had to hold them until maturity. Certificates of deposits did not exist, and, for all intents and purposes, promissory notes issued by the finance companies were nonnegotiable. In order to increase the liquidity aspect of government bonds, in April 1979 the Bank of Thailand established the government bond repurchase market. In reality this was only a brokerage window at the central bank for institutional investors and, therefore, did not help to achieve the desired objective of open-market operation. Thus, Thai interest rates were determined, to a significant degree, by international forces rather than central bank sales and purchases of government securities. [Library of Congress, 1987]

Stock of narrow money: $44.63 billion (31 December 2011 est.), country comparison to the world: 47; $43.2 billion (31 December 2010 est.). Stock of broad money: $428.1 billion (31 December 2011 est.), country comparison to the world: 24; $390.7 billion (31 December 2010 est.). Stock of domestic credit: $402.5 billion (31 December 2011 est.), country comparison to the world: 29; $365.5 billion (31 December 2010 est.) [Source: CIA World Factbook]

See 1997-1998 Asian financial crisis

Thai Stock Market

Market value of publicly traded shares: $268.5 billion (31 December 2011), country comparison to the world: 29; $277.7 billion (31 December 2010); $138.2 billion (31 December 2009)

Stock of direct foreign investment - at home:$146.7 billion (31 December 2011 est.) country comparison to the world: 27; $137.2 billion (31 December 2010 est.). Stock of direct foreign investment - abroad: $34.79 billion (31 December 2011 est.), country comparison to the world: 38; $24.17 billion (31 December 2010 est.). [Source: CIA World Factbook]

The Stock Market of Thailand is located in Bangkok. Performance is expressed with the SET Index. In 2010 it was headed by a woman Patareeya Benjapolchai. The Thai stock market is driven by both foreign investor and local traders, many of them day traders who act more like gamblers than investors. Many Thais buy stock on margin. The government has passed legislation to curb speculative investing.

The Security Exchange of Thailand (SET) had combined the functions of securities market and securities commission, providing the legal framework for underwriting and trading of corporation shares of common stocks and bonds as well as government securities. In 1974 the SET assumed the functions of the Bangkok Stock Exchange, which never had been very active. In 1976 the SET had an upsurge because of expansionary monetary policy. In 1978 the SET collapsed, however, because of massive speculation, easy margin finance of up to 70 percent of a transaction, unpreparedness and inexperience of the brokers as well as the investors, and inadequate regulation and supervision of the market and such activities as inside trading and manipulation. The government created at that time two special public funds to purchase securities in order to limit the negative effects of price swings in the SET. Many investors, however, held on to their investments that had declined in value in order to wait for a better price, thus decreasing normal stock market activity. The hesitation to trade in the market created a surplus problem for the SET, further damaging investor confidence. Some economists suggested that more specific regulations and supervisory systems were needed in order to revive the SET and restore public confidence. [Source: Library of Congress, 1987]

Banks and Financial Institutions in Thailand

As of 2007, there were three state-owned commercial banks and five state-owned specialized banks, 15 Thai commercial banks, and 17 foreign banks in Thailand. State-owned facilities included the Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives, the Industrial Finance Corporation of Thailand, the Government Housing Bank, and the Small Industry Finance Corporation of Thailand. [Library of Congress]

The Bank of Thailand is the primary state-owned facility. It has responsibility and authority for monetary control in its role as the central bank and serves as the fiscal agent and the financier of the government, regulating the money supply, foreign exchange, and the banking system; and also serving as the lender of last resort to the banks.

In December 2006, The Bank of Thailand sought to stem the flow of foreign funds into the country. This led within one day to the largest drop in stock prices on the Stock Exchange of Thailand since the 1997 Asian financial crisis. The massive selling by foreign investors amounted more than US$708 million. The Bank of Thailand has a woman governor Tarisa Watanagase. She a shrewd of the bank when the stock market crashed after currency controls were introduced.

Thailand had many types of financial institutions, subject to different laws and regulated by different agencies. Most of them were privately owned, but some were state owned. In the mid-1980s, 30 commercial banks had 1,526 branches handling the majority of all financial transactions in Thailand. The 16 largest banks accounted for over 90 percent of assets, deposits, and loans of the commercial banks, indicating a high concentration and little competition in the banking industry. Moreover, despite the impressive growth of banks, entrance by new banks was limited. [Source: Library of Congress *]

Finance and security companies comprised the second largest group of financial institutions with assets equaling nearly 22 percent of those of commercial banks. Concentration also existed in the securities industry, the 5 largest companies (out of 112) holding 19 percent of all finance and security assets. The finance companies were created by many domestic and foreign banks to overcome banking restrictions. Although they were intended to increase competition with commercial banks, the objective was not met because many banks used the companies as an extension of their own activities. *

Dangerous levels of nonperforming assets at Thai banks helped trigger the attack on the Thai baht by currency speculators that led to the Asian financial crisis in 1997–98. By 2003 nonperforming assets had been cut in half to about 30 percent. Despite a return to profitability, however, Thailand’s banks continue to struggle with the legacy of the financial crisis in the form of unrealized losses and inadequate capital. Therefore, the government is considering various reforms, including establishing an integrated financial regulatory agency that would free up the Bank of Thailand to focus on monetary policy. In addition, the Thai government is attempting to strengthen the financial sector through the consolidation of commercial, state-owned, and foreign-owned institutions. Specifically, the government’s Financial Sector Reform Master Plan, which was first introduced in early 2004, provides tax breaks to financial institutions that engage in mergers and acquisitions. The reform program has been deemed successful by outside experts. *

Rural Finance in Thailand

Beginning in the late 1960s, the government gave top priority to increasing credit availability to the agricultural sector despite the fact that agricultural performance had been excellent during the previous two decades. The emphasis was on providing credit to agriculture at below market interest rates and channeling credit to poor farmers. In 1975 the central bank imposed a mandatory credit allocation system, under which a required minimum of 5 percent of all outstanding bank loans were allocated to agriculture. This quota was increased to 7 percent, then 9 percent, and finally to 13 percent by the mid-1980s. Moreover, all new rural and provincial branches of banks were required to lend 60 percent of their local deposits in the area served by the branch, with one-third of that amount reserved for farmers. [Library of Congress, 1987=]

In 1966 the government established the Bank for Agriculture and Agriculture Cooperatives to supply credit for the development of the agricultural sector. In the 1980s, it became the most important single source of credit for farmers, and it had a wide coverage of 62 branches and 514 field units located throughout the country; more than 2 million farm families were reached directly and indirectly via the cooperatives and farmers associations. Noninstitutional sources, such as agriculture and savings cooperatives, supplied 50 percent of agricultural credit, and commercial banks and the agricultural banks each supplied 25 percent. Finance for nonagricultural activities in the rural sector, which provided 50 percent of rural income, was largely neglected. =

Thaksin’s Financial Programs to Help the Rural Poor

In the early 2000s, Prime Minister Thaksin Shinawatra helped the rural poor with a $2 billion Village Fund that gave $25,000 each to Thailand's 77,000 villages and small towns to fund low-cost loans to villagers. Local committees were allowed to lend money to villagers as they saw fit. Villages that had success with the program were allowed to upgrade the fund to a minibank in which they took in savings as well as gave out loans. Money was also dished out for infrastructure projects like roads and irrigation systems A three-year moratorium froze $1.6 billion in farm debt.

Thaksin proposed granting certificates of assets, including real estate and other possessions, to villagers which they could use as collateral for bank loans. Some villagers were given $4,000 concrete homes for which they paid $13 a month. Others got grants for school uniforms and textbooks. One woman in the impoverished northeast who increased her income 10-fold by growing organic mushrooms with a soft loan from the government told AP, “He took care of us poor people first and foremost . Before there was no one who looked out us.”

Under the one-village-one product campaign promoted by the government crafts and products produced on the local level were given a boost by government loans. The program, modeled after a similar program in Japan, was credited with starting a number of new businesses in rural areas that had traditionally been left out of economic growth.

Some of the money was wisely invested and put to good use in starting up and expanding small businesses. Some was treated like a cookie jar to pay off debts and buy stuff that otherwise would have been bought with money earned from working. There reports of local leaders lacking the business skills to properly manage the money and people using the money to buy cell phones in places that didn’t have signals. There were also worries that much of the growth was fueled by artificially low interest rates and poorly-thought-out public spending and this could fuel inflation and leave people badly indebted if interest rates rose. Some described Thaksin’s economic policies as the“Thaitanic”

Industrial Finance in Thailand

Commercial banks, finance companies, and the Industrial Finance Corporation of Thailand (IFCT) have traditionally been the main suppliers of credit to the industrial sector. Commercial banks accounted for nearly 70 percent of the total credit granted to the manufacturing sector by the mid-1980s, the finance companies 24 percent, and IFCT the rest. Although the share of the IFCT was modest, it was the only one that offered extensive term-financing on a project basis. It was a private institution, but its mandate was to grant loans for projects having a low financial rate of return, which were unacceptable to commercial banks but were important to the economy as a whole. Such loans were possible because of the government guaranty for liquidity assistance to small borrowers and soft-term loans. The activities of the IFCT were hampered, however, by its being limited to fixed assets financing and by the lengthy project-evaluation procedure. [Library of Congress, 1987=]

Finance companies tended to deal with smaller borrowers than did commercial banks in their lending to manufacturing firms because they were allowed to charge higher rates to offset the higher risk associated with smaller borrowers. Yet, because of the limited regional spread of their branch networks and their limited resources, they could not fill all the gaps left by commercial banks, such as the supply of long-term loans. =

Commercial banks provided the widest range of services. Besides credit, they offered checking services, short-term trade credits, guarantees for third-party borrowing, foreign exchange services, and letters of credit. The breakdown of bank loan portfolios showed 19 percent for discount of trade bills, 58 percent for overdrafts, and 23 percent for loans. Because discounting and overdrafts were short-term activities, the 23- percent share for loans meant that long-term financing was scarce relative to short-term financing. Because fixed assets such as land and buildings represented the preferred collateral for banks, smaller borrowers with fewer fixed assets tended to be limited in their access to loans. Once a borrower had pledged its assets to banks for short-term financing, it could not use the assets for collateral with another institution, such as the IFCT, for long-term loans. =

Real Estate Boom in the 2010s

By the 2010s, Bangkok was again alive with cranes and choked wit construction dust. Janesara Fugal of Agence France-Presse wrote: An ever-increasing number of pristine new apartment blocks jostle for space in desirable areas, vying for custom as billboards written in idiosyncratic English promise swanky lifestyles. It is a far cry from a decade ago, when the city was littered with the skeletal remains of abandoned tower blocks, casualties of the 1997 Asian financial crisis that devastated the region. [Source: Janesara Fugal, Agence France-Presse, July 31, 2011]

The Bank of Thailand has described 2010 as the “golden year for real estate businesses,” with strong demand for homes – driven by low interest rates and increased consumer confidence – causing a flurry of new buildings. This resulted in a 13.6 percent increase in registrations of new homes in Bangkok to the highest level since the 1997 crisis, according to the bank’s 2010 annual report. The bank said it would be “vigilant” for signs of a bubble – which it defined as a “sharp” increase in asset prices combined with strong growth in home loans. A bubble could then burst if demand drops off and there is a glut of available properties.

As demand slowed after the June 2010 expiry of stimulus measures – such as two-year interest-free home loans for first-time buyers – developers increasingly resorted to high-risk strategies in their fight to fill properties. Homebuyers with “insufficient purchasing power or subprime customers” were persuaded to buy, the bank said, while lenders also boosted the number of loans at 90 percent or more of the property value.

To help “maintain economic stability,” the bank responded by making some high loan-to-value lending more expensive for financial institutions. Property research group Agency for Real Estate Affairs (AREA) said it had detected a build-up in oversupply and warned that the level would become unsustainable. Its figures show there were more than 135,000 unsold property units in Bangkok and its suburbs as of July 2011, including projects under construction. Another 100,000 units are expected to come in to the market next year.

Large Companies in Thailand

Siam Cement is Thailand’s largest industrial conglomerate. It is headed by Chumpol NaLamlieng, a Harvard-educated former World bank loan officer and close friend and advisor for King Bhumibol Adulyadej.

Siam Cement was hit hard by the Asian economic crisis. It racked up $4 million in debt and posted loses of $1.2 billion in 1998. Thanks to a good management, the company quickly rebounded after restructuring, spinning of non-cor businesses to reduce its debts. The energy-dependant company also suffered when oil prices rose through the roof.

See Food Processing, Alcohol, Rich People

Retail in Thailand

Large mostly international chain stores such as Tesco, Royal Ahold, Carrefour and Nakro have moved into Bangkok and other parts of Thailand in a big way. In the process they have put a number of small mom-and-pop operations out of business, many of them owned by Thais of Chinese descent. There have calls of patriotism and campaigns for Thais to buy from Thais to tackle the problem. An anti-tank rocket was fired at a Tesco superstore in what is believed to be to have been a terrorist attack against the British supermarket chain, which had been the target of several other bomb attacks.

Small stores, peddlers and markets are found throughout Thailand. Women have traditionally dominate the markets. Large towns and cities have well stocked supermarkets. In rural areas the selection is more limited. Stores of the beaten track generally have cookies, packages of noodles and soup, cheese, potatoes, sardines, Cadbury chocolate bars, milk, fruit and vegetables, powdered and condensed milk and hard candy. Meat and ice cream are usually hard to get. Local markets sell things like potatoes, rice, cabbage, tomatoes, pumpkins. squash, dried fruit, nuts, vegetables, yoghurt, bread, fruit and melons

Tesco Lotus, a franchise of the British supermarket chain, has a reasonably large presence in Thailand. It has even an eco-friendy store in Bangkok with wind turbines and a solar-powered cooling system that releases 50 percent less carbon dioxide than the typical Tesco Lotus store and saves the company around $30,000 a month on it energy bills.

On shopping, Nattawud Daoruang wrote on his blog Thailand Life: In Thailand, tourists are surprised that they can buy the same things here as in their country and also we have really big shopping malls around Bangkok. People don't have to go to the local market, they can buy everything they want in the supermarkets or hypermarkets. I have two hypermarkets within ten minutes of my house (Lotus Tesco and Big C) and two more next to each other about 15 minutes away (Makro and Carrefour). [Source: Nattawud Daoruang Thailand Life, February 13 2007]

The number Convenience stores in the Bangkok area in 2000: 7-Eleven 1,520; Central Minimart 22; Am/pm 130; Family Mart 100; V-shop 70; Tiger Mart 300; Jiffy Jet 100; Star Mart 200; PTT 120; Q8 95; Lemon Green 90; Select 100. TOTAL: 2,847.

Supermarkets: Tops 41; Food Lion 19; Villa 7; Jusco 10; Foodland 7; TOTAL: 84. Hypermarkets: Tesco - Lotus 24; Big C 23; Makro 19; Carrefour 11; Auchan 1; TOTAL: 78

Market Vendor Violence in Bangkok

In November 2008, AP reported: “A blast wounded 13 people in Bangkok when assailants hurled an explosive device at market vendors who had gathered to protest a rent hike at the government-owned facility, police said. The blast occurred in the Thai capital at around 1 a.m. when some protesters were sleeping in makeshift tents while others gathered outdoors, police Col. Sutip Palitkusontap said. Two of the protesters remained hospitalized with serious injuries, but the rest have been released, said Surachet Sathitniramai at the Narenthorn Medical Center. [Source: Associated Press, November 13 2008]

Hundreds of vendors who operate stalls at the outdoor market in Bangkok have been staging a protest since Wednesday against Legal Professional Co. Ltd., the facility's new privately contracted management company, Sutip said. Two men were seen dropping a plastic bag from a fly-over bridge onto the protest side at an intersection in Klong Toey district before the blast occurred, Sutip said, citing witnesses.

"It remains unclear what kind of explosive device it was and who was behind the attack," he said. There was no claim of responsibility for the attack and no indication that the blast was related to Thailand's ongoing political strife. Protesters have been camping out for months at the Thai prime minister's office in hopes of persuading the government to resign. The market's land is owned by the Port Authority of Thailand, which recently hired new management for the market. The protesters allege the bidding process for the hiring was not transparent, and that they have been treated unfairly by the new management, which has sharply raised rents without improving conditions.


Thailand’s economy remains export-dependent, with exports accounting for 60 percent of a GDP that stood at roughly $270 billion as of 2008. Thailand’s exports, worth approximately $180 billion per annum, consist primarily of agricultural products, including fish and rice, the latter of which Thailand is the largest exporter of in the world, as well as textiles, rubber, automobiles, jewelry, and computers/electronic appliances. [Source: Tourist Authority of Thailand + ]

Exports make up to 70 percent of Thailand’s GDP compared to the world average of 24 percent and 35 percent in China. Tourism money often helps Thailand get a trade surplus while high energy cost can result in a trade deficit.

As a traditional agrarian country with rich natural resources, and with almost 50 percent of the population engaged in agriculture, Thailand has emerged as the largest rice exporter in the world. Moreover, other agricultural products, both from farming and fisheries, including processed agricultural products, are important to Thai exports. At present, however, both the workforce numbers and production quantities have decreased in the agricultural sector, while industry and tourism have become more significant to Thailand’s GDP. At the same time, Thailand imports a large number of foreign goods. Import statistics reflect that investment in various fields in Thailand depends on capital goods such as machinery, equipment, and tools. +

Current account balance: $5.322 billion (2011 est.), country comparison to the world: 31; $13.1 billion (2010 est.). In 2006 Thailand posted a merchandise trade surplus of US$2.3 billion. In 2005 Thailand had a negative current account balance of US$3.7 billion. This deficit reflected the deterioration in the merchandise trade account, mainly because of a sharp rise in the import bill. According to an International Monetary Fund report, the current account deficit stood at US$3.7 billion in 2005. As of June 2006, total external debt was US$57.83 billion, or about 34 percent of gross domestic product (GDP). Foreign exchange reserves, once depleted during the financial crisis of 1997–98, increased steadily to US$41 billion in 2003, US$51 billion in 2004, US$52 billion in 2005, and US$59 billion in 2006. . [Source: Library of Congress, CIA World Factbook]

Thailand seeks expanded trade through free-trade agreements and multilateral cooperation within such organizations as the Asian Development Bank, Asia-Pacific Economic Cooperation, Association of Southeast Asian Nations, and World Trade Organization. Under the auspices of the Asian Development Bank, Thailand joined the Greater Mekong Subregion’s development program in 1992. Japan and the United States are Thailand’s top two trading partners and sources of direct investment. Thailand grants the United States preferential treatment for investment under the Thai-U.S. Treaty of Amity and Economic Relations of 1966. Despite close economic ties between Thailand and the United States, the relationship suffers from disputes over agricultural trade, intellectual property rights, and customs procedures. In July 2005, Thailand reached bilateral free-trade agreements with key trading partners, such as Australia, New Zealand, China, India, and Bahrain. However, the trade deals were unpopular with domestic political opponents of the Thaksin Chinnawat government (2001–6) who claimed that the agreements failed to sufficiently protect Thai interests. China is gaining importance as a trading partner and competitor for foreign direct investment and export markets, particularly in the areas of agriculture, computer hardware, and textiles. [Source: Library of Congress]

Exports from Thailand

Thailand is one of the world's leading exporter of rice. Major exports items: textiles and footwear, seafood and fishery products, rice, rubber, jewelry, automobiles, computers and electrical appliances. Among the items exported to Japan are seafood products, tapioca starch, pineapple, chicken, footwear and leather.

As Thailand lies in the middle of mainland Southeast Asia, endowed with raw materials and rich natural resources, as well as efficient and low-cost labor, the country is eyed as a strategic investment venue with high export potential.

Exports: $219.1 billion (2011 est.), country comparison to the world: 26; $193.6 billion (2010 est.); $130 billion (2006)

Exports partners: 1) China, 12 percent; 2) Japan 10.5, percent; 3) the United States, 9.6 percent; 4) Hong Kong, 7.2 percent; 5) Malaysia, 5.4 percent; 6) Singapore, 5 percent; 7) Indonesia, 4.4 percent (2011)

In 2005 Thailand exported US$109.2 billion of goods. Most exports related to manufacturing, including machinery and mechanical appliances (US$16.1 billion), electrical apparatus for circuits (US$8.9 billion), integrated circuits and parts (US$5.5 billion), and textiles (US$5.5 billion). Thailand’s principal export partners in 2005 were the United States (15.4 percent), Japan (13.7 percent), China (8.3 percent), Singapore (6.8 percent), and Hong Kong (5.6 percent). In the late 1980s, Thailand became a leading exporter of rice and Southeast Asia's largest producer of cars (from Japanese-owned plants). In the 1990s 60 percent of Thailand’s exports were agricultural products. At that time is that world‘s leading exporter of rice (followed by the U.S. And Vietnam), No. 2 in tapioca (befind Brazil) and fifth in coconuts. [Source: Library of Congress]

Top five exports by type: 1) Automatic data processing machines and parts, 10.34 percent; 2) Motor cars, parts, and accessories , 8.77 percent; 3) Precious stones and jewelry, 4.68 percent; 4) Refined fuels 4.44 percent; 5) Electronic integrated circuits, 4.07 percent. [Source: Office of the Permanent Secretary for Commerce]

Top five exports by country: 1) United States, 667,746.82 million baht, 11.41 percent; 2) Japan, 661,565.54 million baht, 11.31 percent; 3) China, 532,329.04 million baht, 9.10 percent; 4) Singapore 332,443.81 million baht, 5.68 percent; 5) Hong Kong 330,754.35 million baht, 5.65 percent. [Source: Office of the Permanent Secretary for Commerce]

Structure of Thai export items, classified by product type: 1) Industrial goods 75.30 percent; 2) agricultural (cultivation, livestock, fishing), 11.32 percent; 3) minerals and fuels 6.79 percent; 4) agro-industrial goods, 6.59 percent. [Source: ITC Center of the Office of the Permanent Secretary for Commerce, in cooperation with the Excise Department]

Major export destinations for Thai products: 1) ASEAN, 22.55 percent; 2) European Union, 13.16 percent; 3) United States, 11.41 percent; 4) Japan, 11.31 percent; 5) Other countries, 41.57 percent. [Source: ITC Center of the Office of the Permanent Secretary for Commerce, in cooperation with the Excise Department]

Imports to Thailand

Imported goods to Thailand include capital goods, intermediate goods and raw materials, consumer goods, fuels Most imports to Thailand are raw materials or machinery used in the production of various industrial products, as the country is rich in natural resources, agricultural products, and efficient skilled labor, but there is a shortage of certain resources such as crude oil. The most important trading partners include Japan, China, and the United States.

Imports: $202.1 billion (2011 est.), country comparison to the world: 25; $161.9 billion (2010 est.); $127 billion (2006).

Import partners: 1) Japan, 18.4 percent; 2) China 13.4 percent; 3) United Arab Emirates, 6.3 percent; 4) the United States, 5.9 percent; 5) Malaysia 5.4 percent; 6) South Korea, 4 percent (2009 est.)

In 2006 Thailand imported US$125.9 billion of goods, including raw materials and intermediates (US$51.9 billion), capital goods (US$33.1 billion), fuel and lubricants (US$25.4 billion), consumer goods (US$9.5 billion), and consumer durables, such as electrical appliances (US$6 billion). Thailand’s principal import partners in 2006 were Japan (20.4 percent), China (10.6 percent), the United States (6.7 percent), Malaysia (6.6 percent), and the United Arab Emirates (4.8 percent).

Top five imports by type: 1) Crude oil, 16.81 percent; 2) Machinery and parts, 8.32 percent; 3) Iron and steel products, 7.68 percent; 4) Chemicals, 7.05 percent; 5) Electrical machinery and parts 6.00 percent. [Source: Office of the Permanent Secretary for Commerce]

Top five imports by country: 1) Japan 1,116,459.47 million baht, 18.72 percent; 2) China, 670,342.74 million baht, 11.24 percent; 3) the United States, 380,675.40 million baht, 6.38 percent; 4) United Arab Emirates, 371,630.39 million baht, 6.23 percent; 5) Malaysia, 322,995.16 million baht, 5.42 percent. [Source: Office of the Permanent Secretary for Commerce]

Structure of Thailand’s import items, classified by product type: 1) Raw materials and semi-processed goods, 43.44 percent; 2) Capital goods, 24.29 percent; 3) Fuels, 20.77 percent; 4) Consumer goods 8.36 percent; 5) Vehicles and transport equipment, 3.07 percent; 5) Other products 0.07 percent. [Source: ITC Center of the Office of the Permanent Secretary for Commerce, in cooperation with the Excise Department]

Major import sources for Thailand: 1) Japan, 18.72 percent; 2) ASEAN, 16.81 percent; 3) European Union, 8.00 percent; 4) United States, 6.38 percent; 5) Other countries 50.09 percent. [Source: ITC Center of the Office of the Permanent Secretary for Commerce, in cooperation with the Excise Department]

Imports as a percentage of GDP (1999): 37.7 percent (compared to 40 percent in South Korea).

Thailand’s Trade Partners

While Thailand's traditional major markets have been North America, Japan, and Europe, in recent years Thailand's regional trading partners have become more important. China and Japan are Thailand’s largest trading partners.

China is one of Thailand’s top trading partner and an important source of foreign investment. Imports from China rose 87.3 percent between 2001 and 2003. Exports to China rose 53 percent between 2001 and 2003.

Japan is also one of Thailand’s top trading partner and has traditionally been its main source of foreign investment. Total trade between Thailand and Japan in 2003 was $28 billion, with exports from Thailand amounting to almost $12 billion. Among the items exported to Japan are seafood products, tapioca starch, pineapple, chicken, footwear and leather. In April 2007, the two countries signed a free trade pact that will eliminate 90 percent of the tariffs that existed in 2007 over 10 years. The agreement keeps in places some tariffs such as those on assembled vehicles that are to remain in place for several more years. The deal and been ready to sign earlier but was delayed by the coup in 2006.

The United States is one of Thailand’s main trading partner. It is one of the main importers of Thai goods. An obstacles to trade the Office of the U.S. Trade Representative has complained about a lack of transparency in Thai customs procedures, high tax rates, insufficient protection of intellectual property and complicated certification processes.

In March 2013, Thailand and the European Union announced that they would start talks on a free trade agreement. Thailand and Australia signed a free trade agreement in 2004.

Foreign Investment in Thailand

Stock of direct foreign investment - at home:$146.7 billion (31 December 2011 est.) country comparison to the world: 27; $137.2 billion (31 December 2010 est.). Stock of direct foreign investment - abroad: $34.79 billion (31 December 2011 est.), country comparison to the world: 38; $24.17 billion (31 December 2010 est.). Investment (gross fixed): 26.3 percent of GDP (2011 est.) country comparison to the world: 36. [Source: Thailand Foreign Office, The Government Public Relations Department][Source: CIA World Factbook]

Net foreign direct investment in Thailand in 2008, classified by source; 1) Singapore 26.55 percent; 2) Japan 25.85 percent; 3) United States 10.63 percent; 4) Hong Kong 4.05 percent; 5) United Kingdom 2.95 percent; 6) Others 29.96 percent. [Source: Bank of Thailand~~]

Net foreign direct investment in Thailand in 2008, classified by investment field (Net value 330,002.17 million THB): 1) Industries, 45.30 percent; 2) Financial institutions, 20.09 percent; 3) Real property 13.49 percent; 4) Trading, 10.29 percent; 5) Services, 7.86 percent; 6) Others 2.97 percent.~~

Thailand has a fast growing market, relatively cheap labor, natural resourcess and an ideal location in the heart of Aisa— all contributing to Thailand’s attractiveness as an investment destination. The Thai government promotes and supports foreign direct investment, a policy that greatly affects the nation’s economic development. It welcomes foreign direct investment that contributes to the development of infrastructure in the country, particularly in terms of transport and telecommunication. , as the appropriate infrastructure will in turn facilitate further investments. [Source: Thailand Foreign Office, The Government Public Relations Department]

One Thai businessman told National Geographic, "We are an open society that has always learned from outsiders." About a quarter to a third of capital investment in Thailand comes from foreign sources. Over the years Thailand has created incentives such a tax breaks to lure foreign investment. It has also has taken actions to discourage speculation. Laws were passed in December 2006, for example, restricted foreign ownerships of key business sectors.

In the 1980s foreign enterprises accounted for about 30 percent of capital investment in the form of joint ventures with some twenty foreign countries. Japan provided more than one-third of total foreign investment, the United States more than one-seventh, and Taiwan less than one-eighth. The general attitude of the people toward foreign firms was favorable until the early 1970s. At that time, world commodities prices collapsed, causing hardship in the country. This collapse was popularly perceived as resulting from foreign involvement in the economy. Students and liberal elements demanded that contracts with foreign enterprises be reexamined and renegotiated. To placate these groups, the government revoked the extensive offshore concession of the foreign-owned Thailand Exploration and Mining Company (TEMCO). [Library of Congress *]

Between 1970 and 1980, investment represented on the average 25.2 percent of GDP, compared with 24.7 percent by the mid-1980s. This proportion was one of the lowest investment rates in Southeast Asia. The national savings rate had fallen even more, from an average of 22 percent during the 1970s to around 17.8 percent by the mid-1980s. Hence, the average current-account deficit of 7 percent of GDP during the early 1980s had been caused by a declining savings rate rather than by an increase in investment rate. This imbalance was more serious than one caused by rising investment because rising investment could pay for itself with increased output and, possibly, increased savings so that debt could be repaid. With falling savings, foreign borrowing was used not to raise investment but merely to fill the investment-savings gap, which was mirrored in the external debt ratio of 39 percent of GDP and 146 percent of exports by the mid1980s . The total debt service ratio went up from 17.3 percent in 1980 to more than 25 percent by the mid-1980s. The increase was an important factor in the decision of the government to sharply reduce authorization for new commitments of public debt. [Library of Congress *]

In 2005, the largest foreign investors in Thailand were the United States, Japan, Singapore, and the European Union. Taiwan is the No. 1 investor in Vietnam ($42.6 billion); the No. 2 in Malaysia (($7.3 billion); No. 3 in the Philippines ($737 million); No. 4 in Thailand ($5.1 billion); No. 5 in Indonesia ($7.7 billion). South Korea is a big investor in Thailand and Vietnam. Thailand was the No. 8 recipient of U.S. foreign investment in 2001. The amount of American money invested increased from $2.6 billion in 1990 to $3.7 billion in 2001.

Japanese Investment in Thailand

Over the last few decades Japan has been Thailand’s largest investor and biggest trading partner. Some Japanese see as Thailand a country very similar to post-war Japan. In 1987, Japan invested more in Thailand than it had in the previous 20 years. Total investment from Japan in Thailand in 2003 was $97 billion in 260 projects, with the majority of these in industrial manufacturing, electronics and electrical appliances. At this time a new Japanese plant opened up every two or three days in Thailand . The Japanese ambassador said he didn’t like this because he had to attend so many openings.

In the 1980s, the Japanese company Mitsui invested more money in Thailand than any other firm. It had more than 100 joint ventures, ranging from sugar mills to massive petrochemical facilities. At that time Toyota had three huge plants on the outskirts of Bangkok. One plant alone produced a car every 3.6 minutes. The largest project was a $356 million petrochemical plant with a 328 foot high distillation tower that was used to produce hydrocarbon gases for plastics factories. This plant was the showcase of the $1.5 billion Eastern Seaboard Development program. As of 1991 the Japanese had brought 300,000 new jobs to Thailand and this helped spur a growth rate in Thailand of 10 percent a year. [Source: Arthur Zich, National Geographic, November 1991]

One of Japanese biggest projects in Thailand in the early 1990s was a $800 million golf and country club that included three world-class courses, 4000 luxury homes and a 400 room hotel. As of 1992 the Japanese had built 73 golf courses in Thailand and had 59 under construction.

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Tourist Authority of Thailand, Thailand Foreign Office, The Government Public Relations Department, CIA World Factbook, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, Wikipedia, BBC, CNN, NBC News, Fox News and various books and other publications.

Last updated May 2014

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