Location, Area, Topography and Population
Thailand, formerly known as Siam, is situated in Southeast
Asia. It is bounded on the north and west by Myanmar, on the north and
east by Laos and on the southeast by Kampuchea. In the south it becomes a
peninsula bounded by the Indian Ocean on the west, Malaysia on the south
and the Gulf of Thailand on the east. The total area of the country is
approximately 514,000 square kilometers.
Apart from the peninsula of Thailand, which consists mainly of
narrow coastal lowlands, backed by low and wooded mountain ranges, the
country comprises four main upland regions-in the west, north, northeast
and southeast-all surrounding a large central plain which is drained by
the Chao Phraya River.
The climate is
tropical and, in general, there are three distinct seasons. The monsoon
season begins around the end of May and lasts to the middle of November
when the cool season takes over until mid-February when it gives way to
the hot or summer season. There are some areas of the country where the
start and length of the wet season vary; in the south there is no distinct
Thais are wellknown for their friendliness and
hospitality. A large majority of over 62 million citizens of Thailand are
ethic Thai, along with strong communities whose ethnic origins lie in
China, India and elsewhere. About 7 million people reside in the capital
city of Bangkok.
Approximately 85% of the
population of Thailand is of Thai ethic origin. The
largest minority group is the ethnic Chinese who comprise over 12 % of the
population. The predominant religion Thailand Buddhism to which 95 % of
the population adheres. Islam accounts for 4 % and is concentrated in the
South adjacent to Malaysia. The balance of the population is predominantly
Christian. The literacy rate is approximately 93% for adults over 15 years
of age. The official language is Thai, but the use of English is
Government: Thailand has had a
constitutional monarchy since 1932. Parliament is composed of 2 houses,
The House of Representatives and the Senate. Both representatives and
senators are elected by the people. A prime minister elected from among
the representatives leads the government. The country is divided into 76 provinces.
The Bangkok Metropolitan Administration comes under an elected governor.
Appointed provincial governors administer the other 75 provinces
(Changwat), which are divided into districts (Amphoe), sub-districts
(Tambon) and villages(Mu Ban).
Head of State:
H.R.H. King Bhumibol
(Rama IX of the Chakri Dynasty)
Thailand's present government took office in February 2001
under the premiership of Police Lieutenant Colonel Thaksin
Shinawatra, leader of the Thai Rak Thai Party.
One of the main economic policies under the
present Government is the Dual Track Development Strategy. The Dual
Track Development strategy is aimed at raising domestic productivity and
demand on the one hand, and expanding exports and foreign direct
investments on the other. Under this strategy, the government has
initiated several programs to promote growth and development at the
grassroot level. One of the programs,
One Tambon, One
Product (OTOP) , was created to help communities to use their local
knowledge to develop and market their unique products. Furthermore,
a Village Fund, the People's Bank, and provision of
Small and Medium Enterprise
(SME) credits were created to promote grassroots enterprise. The
success of this Dual Track Development Strategy is evident. In 2003, the
economy grew by 6.3 per cent, one of the highest rates in the world.
For purpose of administration, the
country is divided into 76 provinces and the Bangkok metropolis, each
under the control of a governor, each province is divided into districts,
sub-districts communes and villages. The governors are appointed by the
King on the advice of the minister of interior, except for the governor of
Bangkok, who is directly elected by Bangkok residents.
Relations and International Organizations
Thailand has historically
adopted a flexible approach in its conduct of external relations. The
success of this approach is evidenced by the fact that Thailand is the
only country in Southeast Asia, and one of the few in all of Asia never to
colonized by Western powers . Following the end of the world War II,
Thailand's main external concern was to ensure that the spread of
communism, first in China and later in Vietnam, Kampuchea and Laos, did
not spill over into Thailand. Consequently, in the early 1950s the Thai
Government decided to align with the West in general, and the United
States in particular. In 1954, Thailand became a party to a regional
collective security arrangement called the Southeast Asia Treaty
Although SEATO was dismantled in 1975, Thailand and the
United States remain allies under the Manila Pact , which served as a
basis for SEATO and remains in force today.
Thailand is a member of, and enjoys
good relations with other members of,
the Association of
Southeast Asian Nations (ASEAN), namely, Brunei, Malaysia, Indonesia,
the Philippines, Singapore and Vietnam, as well as with Myanmar. Since
1989, Thailand has emphasized the development of trade relations with
Kampuchea, Laos and Vietnam and its willingness to lead the development of
the region through trade and economic liberalization Political differences
with these countries have been substantially reduced. In October 1991, the
governments of Thailand, Laos, Vietnam, Brunei, Malaysia, Indonesia, the
Philippines, Singapore, the five permanent members of the Unites Nations
Security Council and the four competing factions in Kampuchea signed a
treaty under which the four factions agreed to participate jointly in the
government of Kampuchea and to return the country to democratic
government. Thailand anticipates that political and economic relations
with Kampuchea. Laos and Vietnam will continue to improve.
Thailand has shown a strong interest in the
development of multilateral regional relations. It has been a signatory to
international treaties including: the World Trade Organization (formerly
the General Agreement on Tariffs and Trade) (WTO); Agreement between the
Government of the Kingdom of Thailand, the Government of Malaysia and the
Government of the Republic of Indonesia relating to the Delimitation of
Continental Shelf Boundaries in the Northern Part of the Straits of
Malacca; the Fifth International Tin Agree-ment ; the Treaty of Amity and
Economic Relations Between the Kingdom of Thailand and the Unites States
of America; and the International Natural Rubber Agreement. In the
international financial context, Thailand is affiliated with major
multilateral lending institutions, including; the
international Monetary fund
(IMF), the International Bank for Reconstruction and Development
(The World Bank),
International Development Association (IDA), the
International Finance Corporation (IFC), and the
Asian Development Bank (ADB).
Thailand is also a member of United Nations, as well as a number of
specialized United Nations agencies, and of the international Coffee
Organization, the International Sugar Organization, the International
Natural Rubber Organization and the International Jute and Allied Fibers
Thailand is a party to
Trade Agreement (AFTA) under which no tariffs greater than 5% will be
applied after 2003 on products, other than certain unprocessed
agricultural products, traded among the ASEAN member countries. AFTA also
requires that tariffs on such unprocessed agricultural products be reduced
Outline of Recent Economic
decade of high growth, the Thai economy underwent a period of adjustment
in 1996 and 1997. Since the mid-1980s, the Thai baht had been effectively
tied to the US dollar. The appreciation of the dollar against other major
currencies in the 1990s resulted in a gradual loss of competitiveness of
Thai exports, leading to current account and trade
deficits. A downturn in investor sentiment led to the
Thai economy turning sharly downwards. The baht was floated in July 1997
and the government accepted a $17.2 billion rescue package from the
International Monetary Fund
(IMF) the following month.
Under the IMF
programme, Thailand instituted a number of reforms, including sweeping
changes to the financial sector and a programme to privatize the country's
60-plus state-owned enterprises. A framework to recapitalise the banking
sector and support corporate debt restructuring was established.
Longer-term reforms for the educational syterm, civil service and legal
framework were also launched. Programmes were also established to help
Thai Economy |
|GDP annual growth
as percent of
Source: National Economic and Social Development Board
improved the efficiency and productivity of the industrial
has undergone a remarkable revival following the 1997 crisis. Over the
past several years, economic growth has been among the strongest the
region, with 2002 growth of 5.4% and 2003 growth of 6.7%, second in the
region only to China . The fact that growth in 2003 came despite global
uncertainties such as the war in Iraq , the regional Sars outbreak and the
threat of terrorism is credit to the robustness of the country's domestic
economy and the diverse composition of its export base.
Exports expanded at a record-pace of 18.6% in
2003, with increases in both volumes shipped and prices driving the total
exports to an all-time high of approximately $75 billion Low interest
rates, high agriculture commodities prices and strong business and
consumer confidence helped drive domestic consumption and generate
momentum for further growth in 2004.
current account surplus of 8 billion in 2003, or 5.6% of Thailand's total
GDP, further helped boost the country's external stability.
debt at the end of 2003 was $52 billion, compared with $109 billion in
1997. Foreign reserves at the end of 2003 were approximately $43 billion,
or well over three times the level of short-term foreign debt.
government in mid-2003 completed an early repayment of all outstanding
loans owed to the
International Monetary Fund (IMF) a strong signal that
both Thailand and its economy have indeed moved past the crisis.
the fiscal side, higher-than-expected tax revenues, as a result of strong
economic growth, have led the country to project a return to a balanced
budget position by fiscal 2005, staring in October 2004. This will
represent the first balanced budget for Thailand since 1997 economic
crisis, and comes a full four years before previous estimates.
Thailand currently has 33 commercial
airports, seven of which operate international flights and the remaining
26 operates domestic services. Bangkok International Airport (also known
as Don Muang) is the main International Airport of Thailand. Thirty
million passengers were served in 2002, with the addition of over 900, 000
tons of cargo.
Other international airports in Thailand situate in
major cities of Thailand, such as Chiang Mai, Phuket, Hat Yai, U Ta Pao.
Chiang Rai Airport was also recently promoted to become an international
airport to facilitate the growing tourist industry and cross-boarder
The increasing demand for air transportation has surpassed
the current handling capacity of the existing airports. The government
planned a second international airport in Bangkok to relieve the air
traffic congestion. The construction of the second airport is underway and
is scheduled to in full operation in 2005.
The new airport is equipped with 4 runways with a
projected handling capacity 112 flights per hour providing services to100
million passengers & 6.4 million tons of cargo yearly.
Thai Airways International has long
been the only national carrier of Thailand. Currently, it has been
privatized and listed in the Stock Exchange of Thailand under the State
Owned Enterprises Privatization scheme of the government. Thai Airways
International is expected to face more competitors in the near future owed
to the forthcoming launching of new low-cost airlines by private
The trend should benefit both Thai and foreign
passengers in the near future.
--> Rail & Roads
The land transport
system of Thailand includes 79,180 km of highways providing efficient
passage to all regions of Thailand.
The government also realized
the necessity to enhance the inter-city transport infrastructure creat
ing links between Bangkok and
other major cities in each region of Thailand. At present, 225km of the
inter-city motorways are already in used. On completion of the
construction, the inter-city motorway is expected to stretch 4,150 km
long. Undoubtedly, it will be an important access to all major transport
systems which are vital for economic development of the country.
The other means of transport for visitor is the rail system. The
total length of railroads covers 4,880 km. Despite its relatively low
speed, trains are reliable, safe and reasonably priced. Currently, the
train system is run by the SRT which is one of the state-owned enterprises
that could be privatized in the future. Now the government tries to
implement policies to increase efficiency of rail services and to reduce
its financial losses resulted by its social service provisions.
For The Bangkok Metropolitan Region (BMR), the traffic in this
area is always congested considering millions of people travel on the
roads everyday and the demand grows even more rapidly owing to the recent
The government plans to ease the traffic
congestion by expanding the network of mass transit system in Bangkok as
well as improving the facility of express way.
The Bangkok Sky Train (BTS)
, operated by Bangkok Mass Transit System Plc, has started its service
in 1999. Its main objective is to help alleviate the chronic traffic
problems in Bangkok and to provide people with a fast and efficient means
of transportation within the central business region of Bangkok.
The BTS System can carry more
than 1000 passengers per train, which is an equal number of passengers of
800 cars. Today, the BTS carries approximately 300,000 passengers per
working day. F urther plan is being made to extend the coverage to a wider
area of Bangkok
addition to the operation of BTS, a new means of
transport, the Bangkok Subway by
Mass Rapid Transit Authority of Thailand (MRTA) will
officially start to launch its service on 12 August 2004.
--> Ocean Freight
Currently, there are five major ports in Thailand, of which two
are operated by of the
Authority of Thailand namely, the Bangkok Port (BP) and the deep water
port at Lam Chanbang Port (LCP). The rest are the Phuket Port, the Map Ta
Put port and the Sonkha Port. In addition, private sector also operates a
number of ports along coastal area and Cho Pra Ya river.
Authority of Thailand is on the SOEs list to be privatized in 2004 aiming
to achieve greater efficiency of their services by introducing the
participation from private sector.
Telecommunication services in Thailand are on par
with international standard, especially in urban areas such as Bangkok.
There are two fixed line service provider in Bangkok:
Telephone Organization of Thailand (TOT)
, a state enterprise, and
Telecom Asia (TA) , a private
company. Fixed line for offices and residences are abundance and phones
can be installed usually in a few days. Local call charge is at 3 baht per
call. Outside Bangkok area, phone services are provided by TOT and another
TT&T Public Co., Ltd
. All these providers combined networks to over 8 million lines
available with about 7.1 million lines in use.
services in Thailand are also at an international level. Direct
connections to almost every country are provided by the
Communication Authority of Thailand (CAT) . Since the beginning of the year
2004, there was significant decrease in international rates to many
countries around the world.
Mobile phones services are also
plentiful. There are 3 service providers utilizing GSM technology:
Advance Info Service (AIS) ,
Total Access Communication (DTAC) , and
TA Orange . Further more, there is
one CDMA provider, Hutch, and one Digital PCS provider,
Thai Mobile . Therefore, mobile
phones in Thailand are easily available at competitive price and wide
range of options. Most of the providers have both prepaid and subscription
option as choices for customers. Mobile phone subscribers has been growing
in number quite rapidly from less than 2 million in 1997 to about 15
million in January 2004.
As for internet connection service, there
are 18 commercial ISPs, and 5 non-commercial providers providing services
to about 4 million personal and corporate account nationwide. Connections
available in the country are range from 56K dial-up to ISDN to broadband.
Both prepaid and subscription service is available. About 10,000 domains
are registered under “.th”.
Radio Broadcasting station in Thailand
are summed up to the number of 334 FM, 204 AM, and 6 shortwave stations.
There are 7 free television broadcasting network, 5 of them are state own,
and 1 cable TV broadcaster (broadcast through both satellite and cable)
providing service throughout the country.
As the country's largest
earner of foreign exchange, tourism is given every encouragement by the
Royal Thai Government, including full support to the
Tourism Authority of Thailand (TAT) in
order to carry out its mission and objectives
the onset of the financial crisis in 1997, Thailand has undergone a
remarkable economic transformation. One of the instrumental policies that
propelled a swift economic recovery for Thailand is the
Dual Track Policy of Dr. Thaksin Shinawatra, the Prime
Minister of Thailand which focuses on the duality of the exports and
domestic sectors to bring economic growth with stability, through the
actively supporting role of the public sector in a global context but not
necessarily dependent on the traditional economic powers of the world.
Thailand's economic growth trend has improved from -10.2
percent in 1998 to 6.3 percent in 2003. In addition exports, private
consumption and private investment have all displayed encouraging signs.
Despite global uncertainties such as U.S.-Iraq war, terrorism, and SARS,
Thailand has been able to withstand competently the knock-on effects from
those events owing much to the robust economic fundamentals embedded
within the root of the Thai economy.
FOREIGN TRADE AND BALANCE OF PAYMENT
value rose substantially in 2003, in line with the growth of trading
partners’economies as well as the recovery of the world electronics
industry and agricultural
Import value grew in tandem with domestic
demand and the need for
imported raw materials for the production of exports. Overall, the trade
account registered a higher surplus compared to the previous year, but the
services, income and transfers account recorded a smaller surplus because
the outbreak of SARS adversely affected tourism revenues. Nonetheless, a
large trade surplus led to a bigger current account surplus than in 2002.
Meanwhile, net capital movements
registered a much larger deficit due
to debt repayment by the BOT, the government and state enterprises coupled
with an accumulation of foreign assets by commercial banks. As a result,
the balance of payments recorded only a slight surplus this year compared
to a surplus in excess of US$4 billion in 2002.
value totalled US$78.4 billion, rising by 18.6 percent year-on-year as
export volume expanded by 10.0 percent while export prices surged by 7.9
percent. A key factor
behind this robust growth of Thai exports is the
expansion of major trading partners’ economies, particularly the ASEAN
countries and China. As a result, Thai exports to the ASEAN countries and
China together grew by 30 percent and accounted for 27.7 percent of total
exports in 2003. At the same time, manufactured exports benefited from the
recovery of the world electronics and vehicle markets, while demand for
agricultural products also rose, contributing to both higher agricultural
export volume and prices.
In 2003, import value amounted to
US$74.2 billion, up by 17.1 percent from the previous year due to a 9.3
percent surge in volume in line with recovering domestic demand and
greater need for raw materials to produce export products, while import
prices rose by 7.2 percent.
Services, and Current Account Balances
imports grew briskly in 2003, the more rapid expansion of exports led to a
higher trade surplus of US$4.2 billion this year compared to US$2.7
billion in 2002. However, the services, income and transfers account
registered a narrower surplus of US$3.8 billion, compared to US$4.3
billion in 2002, due to the outbreak of SARS which led to a 7.8 percent
year-on-year drop in the number of foreign tourists
and thus a significant decline in tourism revenues. Furthermore,
investment income receipts, especially of the public sector, fell in line
with declining rates of return. On the contrary, service payments rose as
outbound tourism expenditures increased by 5.8 percent despite a fall in
the number of outbound Thai tourists of 4.4 percent. In addition,
investment income payments rose from the previous year due to higher
interest payments as well as higher profit and dividend remittances by the
private sector, which more than offset the decline in interest payments by
the public sector due to the early payment of the IMF loan
as the increase in the trade surplus was of greater magnitude than the
reduction in the services surplus, the current account surplus widened
from US$7.0 billion in 2002 to US$8.0 billion this year.
--> Net Capital Movements
capital movements were in deficit by US$8.6 billion this year,
widening from a deficit of US$4.2 billion in 2002 due mainly to the debt
repayment by the public sector as well as the accumulation of foreign
assets by commercial banks. The details of net capital movements in 2003
Capital flows of the private
sector recorded a deficit of US$8.8 billion, which was larger
than in the previous year. Of this, the
banking sector switched from registering a
surplus of US$1.8 billion in 2002 to posing a deficit of US$2.4 billion
this year with an accumulation of commercial banks’
foreign assets by US$1.6 billion as opposed to a reduction
of foreign assets by US$3.6 billion in the previous year. This
accumulation of foreign assets owed mainly to the commercial banks’ swap
transactions with the BOT. Meanwhile, debt repayments by
Bangkok International Banking Facilities (BIBFs) were
close to the previous
year’s level. As for the non-bank
private sector, a large deficit of US$6.4 billion was registered;
nevertheless, this was smaller than a deficit of US$7.5 billion in 2002.
Foreign direct investment, particularly equity
investment, recovered from 2002 because foreign investors
increased their direct investments in the metal and automobile industries,
whereas in the previous year foreign companies underwent financial
restructuring by converting equity into debt which resulted in a large
outflow of equity capital. Portfolio investment switched
from a deficit of US$1.1 billion in the previous year to a slight surplus
this year with inflows of foreign investment in equity securities and a
smaller amount of debt security redemption relative to the previous year.
At the same time, other loan repayments (between unaffiliated private
entities) fell from US$2.2 billion in 2002 to US$1.5 billion this year,
largely in the form of net debt repayment and early payment by the
chemical, machinery and transport equipment, and petroleum-product trading
flows of the public sector (including the
BOT) recorded a surplus of US$0.2 billion this year. The
BOT registered a net surplus of US$2.6 billion despite the early payment
of the IMF loan package which amounted to US$4.9 billion. The public
sector (excluding the
BOT) registered a deficit of US$2.4 billion, due largely to the
repayment of long-term loans under the debt refinancing and prepayment
plan of the
state enterprises. Loans that were refinanced were mostly for public
projects from Japan Bank for International Cooperation (JBIC).
--> Balance of Payments
the current account registered a large surplus, a much wider deficit in
the net capital movements compared to the previous year resulted in a
balance of payments surplus of only US$143 million in 2003, significantly
smaller than that of US$4.2 billion in 2002. Nonetheless, as a result of
the surplus in the balance of payments, international reserves at end-2003
rose to US$42.1 billion, equivalent to 6.8 months of imports, while the
outstanding net forward obligations of the BOT stood at US$5.2
CURRENCY AND FINANCIAL SYSTEM
The main institutions with
responsibility for policymaking and supervision of the financial system
Ministry of Finance
Bank of Thailand
(BOT, the central bank). The BOT also supervises banks, finance firms
and housing loan officials, and plays a key role in instituting market
--> Stock Market
Exchange of Thailand (SET) under the Securities Exchange of Thailand
Act, BE 2517 (1974), or the SET Act, enacted on May 20, 1974. In 2003, the
Thai stock market index ranged from 350.98 to 772.15. These figures
undoubtedly displayed signs of marked improvement from the beginning part
of 2003. Market value has continued to increase to 4,789,857.03 Million
baht at the end of 2003.
--> Bond Market
, the applicant must be financial institutions holding debt securities
trading license granted by the
Securities and Exchange Commission (SEC) . Currently (as
of January 15, 2003) Thai BDC has 46 members which represent nearly 100
% of financial institutions that have debt trading license (Dealers).
Trading is conducted on an over-the-counter basis. Thai BDC registers all
government debt securities automatically. For corporate bonds,
dealer-members together with an issuer must propose for the registration.
Although listing is not compulsory, in practice most bonds are registered
with Thai BDC except for the bonds issued without purpose to trade such as
bonds issued for debtor.
Until the baht went
into freefall in July 1997, the Thai currency was regarded as a strong and
stable currency. The baht has been strengthening against the US dollar
since the beginning of 2002. A peak of less than 40 THB/USD was reached in
July 2002. Strong portfolio inflows, speculative interest rate arbitrage
trading and rising confidence in the domestic economy also contributed to
the strengthening baht. The BOT, which is targeting exchange-rate
stability and the level of foreign reserve, has expressed concern about
the loss of export competitiveness signaled by a stronger baht, and there
has been some buying of US dollars to prevent further baht appreciation.