The key economic trends throughout 2016 in Thailand—as identified by The Business Year—have been the huge infrastructure spending pledged by the government and the growing regional connectivity spurred on by the integration of the ASEAN Economic Community (AEC). Both directly and indirectly, each of these factors are set to transform the business landscape throughout the Kingdom, providing newfound opportunities and incentives to investors looking at Thailand as their next destination.
Above all, investors will be looking to make use of the various specialized industrial estates and special economic zones (SEZs) being developed throughout the country, and particularly, along its borders. Coupled with the government’s ambitions to drastically reduce logistics time and costs through mass upgrades to road, air, sea and rail routes, these plans will give Thailand’s manufacturers unprecedented access to the region, and beyond. Indeed, almost all of the multinational companies operating locally, which have traditionally used Thailand as a springboard to branch out into the CLMV countries, see the combination of improved infrastructure and regional connectivity as an overwhelmingly positive step that will only further accelerate the country’s role as a natural economic hub.
Ease of Doing Business
The Doing Business Index, issued annually by the World Bank Group, has historically played an important role in Thailand’s appeal to FDI. Throughout the previous decade the Kingdom was regularly breaking into the top-25 countries according to the index, and thus a clear leader amongst its Southeast Asian neighbors, notwithstanding Singapore, which sits comfortably in first place. Over the years, a combination of growing regional competition and internal instability has pushed Thailand further down the pecking order in 49th place out of 189 countries currently covered. Broken down, Thailand is said to be performing very well on issues such as providing electricity (11th in the world), protecting minority investors (36th), and dealing with construction permits (39th). In contrast, the country is being weighed down by poor procedures for tax paying (70th), starting a business (96th), and obtaining credit (97th).
As such, Prime Minister Chan-o-cha has instructed his economic team to reform the out-dated regulations that are hampering the country’s progress in this regard, and fight for a place amongst the world’s top 20 by 2018. Companies looking to establish themselves in the Kingdom from 2016 onward will already begin to enjoy some of the effects of the reforms, such as being able to register a company in one day, even faster construction permits, and a new loan-collateral law, which will offer smoother access to credit.
As an Asian society whose citizens predominantly practice Buddhism, respect is everything—especially in the business world. Punctuality is hugely important, despite Bangkok being considered one of the busiest, most congested cities in the world. If business travelers find themselves stuck in traffic, they are implored to inform their hosts of their delay in advance, and also be prepared to jump onto one of the several thousand orange-wearing motorbike taxis, which are far better suited for meeting tight deadlines. In general, however, a typical meeting in Thailand differs very little from what one could expect in the West. Meetings are quite direct and very little time is wasted on informalities. So much so, that for a country that has built its reputation on its extremely warm service and hospitality, meetings can often appear rather cold. There are, however, two business norms that can go a long way in building initial rapport with the host. Firstly, one should always greet their counterpart by slightly bowing with palms pressed together in a prayer-like fashion; this is standard across society, and the business world is no exception. Second, although it may seem somewhat insignificant, handing over business cards with two hands, not one, and performing a slight bow, is also seen as a sign of respect and likely to be noted by the host.