Most Australians do not see opportunity in Thailand beyond the beaches of Phuket. However, we should recognise Thailand as a modern Asian tiger, and prioritise it for trade efforts and investment.
Australians often view Thailand as a tourist destination rather than a business target. This is very unfortunate. Australian businesses should consider the economic and investment opportunities in Thailand and evaluate the country holistically. There is a reason why the Australian Department of Foreign Affairs and Trade prioritises ASEAN (Association of Southeast Asian Nations) and Thailand in its recent foreign policy White Paper. There is a reason why Germany, Japan, and so many other countries are shifting to and succeeding in Thailand. There is a reason why Australian businesses should jump on board the Thailand investment trend.
Most global Australian businesses have little choice but to go out of their comfort zone. Western markets are saturated. They generally only have head-above-water growth, are very expensive to operate in, and many Western consumers possess fixed consumption behaviours. Conversely, most Asian markets present stellar economic growth, are cheap to operate in, and boast young, curious consumers who recognise the prestige of foreign brands. So, while the West is comfortable and familiar, it presents an intolerably low number of opportunities.
So, why Thailand? Let’s begin with its economy: 3-4 percent real GDP growth (while this is fairly low for Asian standards, it’s very high globally) and 27th out of 190 in ease of doing business rankings (that’s better than Spain and France). The World Bank acknowledges Thailand’s “remarkable [and] successful” US$504 billion economy, which is very big compared to its ASEAN neighbours of Myanmar (US$71 billion GDP), Vietnam (US$244 billion GDP) and Malaysia (US$354 billion GDP). Thailand’s 2019 credit rating is of investment grade and positive. Despite recent signs of weakening (mainly due to a lack of foreign direct investment), the Thai economy remains very attractive.
Thailand is ideal for businesses with global supply chains and for companies beginning their ASEAN/Asian integration. Its geographic centrality on the Indochinese peninsula connects businesses to the Gulf of Thailand (easy access to China, Japan, Philippines and Korea) and the Andaman Sea (easy access to India, Malaysia, Indonesia and the Middle East). Thailand’s proximity to most key Asian markets means reduced logistical risks and lower transportation costs, making Thailand perfect for manufacturers.
Separately, the Thai Government has announced “Thailand 4.0” — a plan for aggressive growth and public stimulus in Thailand. Similar to the Chinese Belt and Road (but much less politically charged), Thailand 4.0 gives rise to massive investment opportunities, including the building of Smart Cities, US$65 billion in infrastructure packages, research and development boosts, and agricultural reform. Thailand needs consultants, know-how, and expert services, which many Australian businesses can offer. The country is hungry for more than plain commodity exports, and Australian businesses can offer more complex and thorough investment.
You may still be thinking that this is too risky. However, other developed countries have recognised Thailand’s investment opportunities. Germany’s Mercedes, Volkswagen and Daimler have all established their Asia-Pacific HQ’s in Thailand, for the geographic and economic reasons explained. The German Government is even encouraging its businesses to tap into Thailand 4.0, going the extra mile to promote investment opportunities through information campaigns. The Bangkok Post reports considerable Japanese FDI into Thailand. Thailand is so important to Japan that it is funding 300 Japanese small to medium-sized enterprises to visit Thailand and consider possible investment and business opportunities. Many other global businesses are also shifting operations to Thailand because of the China-U.S. trade war, and because of China’s politically sensitive Made in China 2025 Policy that prioritises its own domestic industries.
While there are trade inhibitors in Thailand, principally a serious corruption culture, the absence of the rule of law, and high political instability, such barriers are common throughout ASEAN, and failing to engage in the region and Thailand on these grounds denies considerable business opportunities. Western businesses can succeed in Thailand if they take appropriate steps to manage risks, set up the best company structures to their needs, and seek experienced strategic Thai-internationalisation advice.
James Dunn is a current Intern at the NSW Division of the Australian Institute of International Affairs.
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