Analysis 

Impacts on Business  

Introduction

As Thailand enters the 21st century, it is seems fair to say that the prospects are bright.  Even though the country lost a lot of business and caused many difficult economic times for investors throughout the world, politically, the country has maintained a high profile and a friendly role in world affairs. Thailand enjoys full diplomatic relations with every major government, and is represented abroad by 52 embassies, 2 permanent missions to the United Nations, 15 consulates-general, 45 honorary consulates-general, 35 honorary consulates, and 13 trade centers. Apart from being the principle site of many diplomatic missions, and the regional headquarters of several international organizations, Bangkok has also established itself as an important international center for many very influential private companies.

As this website illustrates, Thailand has made several positive steps towards reforming their economy and creating a more secure business environment for foreign investors.  This is most true in the area of information technology as seen in the country's several initiatives to improve education, increase local research and development, and to invest in the necessary infrastructure.

However, there are still several obstacles that stand in the way of an easy road to success in Thailand and one of the biggest obstacle is that of corruption.  It is clear that the country of Thailand is willing to start lessening its grip on the domestic economy, however, it seems that this will take a long time and that any company that decides to establish a business in Thailand, should do so eagerly, but with both eyes wide open.

There are also institutions that are connected to Thailand and serving to provide them with external support - like the Association of Southeast Asian Nations.

Corruption (-)    back to top

Westerners will often complain that favoritism is an integral part of business and political practice within Thailand. As the country works to reestablish its domestic economy and global position, the Thai people are also beginning to speak out against the corruption and unfair behavior of the privileged and the powerful.  

The corruption element has a considerable impact on business - both domestic and international and even though piracy rates are lowering, the pace is very slow. Assuming that many of the pirates (and not all of them) are clever computer technicians and that the reason they choose to work in this illegal field is because the money is better than if they tried to get a job in a legal institution. Until this wage gap is addressed, the piracy will continue and will remain not only a threat to foreign and domestic business that has operations in Thailand, but it will continue to stifle local innovation. For the computer hackers know that if they take the time and the money to develop new software, the chance of it being stolen is high. So where is the incentive to invent and create and take risks?

 It would be impossible to imprison every offender of Intellectual Property Law in Thailand. It would also be ineffective to approach the problem in such a manner. For the people will continue to work around the system, until there is a real incentive for them to stop.  The public and private sector has a tough battle to face, but if they approached it by working with those who could help them, instead of putting time and money after a useless battle chasing after them, the possibility of becoming an IT leader in the Southeast Asian region will be a strong one.

E-Commerce is Dragging (-)    back to top

Private companies that are established in Thailand are at risk to lose competitiveness if Thailand delays in adapting to the e-commerce and information technology world.  Thailand should consider different avenues that would help the country as a whole gain ground in this important industry. Some of these avenues could include payment gateways, logistic gateways, escrow, EDI, ASP facilities, supply chain management, and marketplaces.

ASEAN Support (+)   back to top

The leaders of the ASEAN community are collaborating efforts to entice foreign investors back to their region. At the most recent ASEAN summit in November, 2,000 the group proposed an expanded Asian trade alliance that will ease trade relations among the community. The summit brought together all of the ASEAN countries, plus their counterparts from Japan, China, and South Korea.  The proposal include plans to build a railroad from Singapore to China, as well as a renewed commitment from each participating country to take aggressive actions that will increase the region's capabilities within the telecom and digital industries.¹

Strategic Positon (+)  back to top

There are many reasons that one would think that Thailand is not an advantageous country to invest in - but there are also many reasons why it should not be ruled out either.  Thailand is strategically located next to the fast-growing markets of Malaysia, Singapore, Taiwan and Hong Kong. It is already one of the main manufacturers and agricultural centers of Southeast Asia, and it is positioned to remain a leader in autos and electronics. Diversification, along with an increasingly open trade and investment environment, Thailand is again becoming a favorite among foreign investors and should be carefully considered by all.²

Kogod School of Business           American University        Other Country Reports

Sources:

^{1  Gutkin, Steven, "Southeast Asia Leaders Woo Investors," The Boston Sunday Globe, 11/26/2000}

2   Country Commercial Guide Thailand, Fiscal Year 1999,  Prepared by The Embassy of the U.S.A., Bangkok, Thailand