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Background

The Kingdom of Thailand was established in the mid-14th century. Known as Siam until as recently as 1939, Thailand is the only Southeast Asian country never to have been taken over by a European power.The country remains firmly independent of external influences. A bloodless revolution in 1932 led to the formation of the current constitutional monarchy.

In September 2006, a Military Coup ousted then Prime Minister Thaksin Shinawatra. The interim military government then held elections in December 2007 that saw the former pro-Thaksin People's Power Party (PPP) emerge at the head of a coalition government. The anti-Thaksin People's Alliance for Democracy (PAD) in May 2008 began street demonstrations against the new government, eventually occupying the prime minister's office in August. Clashes in October 2008 between PAD protesters blocking parliament and police resulted in the death of at least two people. The PAD occupied Bangkok's international airports briefly, ending their protests in early December 2008 following a court ruling that dissolved the ruling PPP and two other coalition parties for election violations. The Democrat Party then formed a new coalition government and Abhisit Wetchachiwa became prime minister.

Thailand has a well-developed infrastructure, a free enterprise economy, and some generally pro-investment policies, Not surprisingly Thailand's economy was one of East Asia's best performers from 2002-04, averaging more than 6% annual real GDP growth. However, overall economic growth has fallen sharply in recent times - averaging 4.9% from 2005 to 2007 as persistent International reports of a political crisis eroded investor and consumer confidence, and damaged the country's image unfairly. The growth rate fell to 2.6% in 2008. Exports remained the key economic driver as foreign investment and consumer demand stalled. Export growth from January 2005 to November 2008 averaged 17.5% annually. what has been called the 2008 global financial crisis further darkened Thailand's economic horizon, we at Ebeling Heffernan identified this as the perfect opportunity for investment using the age old theory of buying low, selling high.
Moving Forward
Thailand has a population of some 66m people making it one of the 20 largest populations in the world and is within 2 hours flying time of 4 billion people. Thailand is strategically and economically placed to become one of the worlds great economies as China, India and the rest of Asia develop.
This is not a far distant dream, much of the change is currently underway, Thailand produced 1m cars this year and will produce 1.2m cars in 2010, mostly sold in regional markets. Thailand's food and manufacturing industries are growing at double digit rates year on year.
AFTA is set to bring a whole new market in the coming year, the ASEAN Free Trade Area (AFTA) is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries.

The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now comprises ten countries of ASEAN. All the four latecomers were required to sign the AFTA agreement in order to join ASEAN, but were given longer time frames in which to meet AFTA's tariff reduction obligations.

The primary goals of AFTA seek to:

Increase ASEAN's competitive edge as a production base in the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers; and Attract more foreign direct investment to ASEAN.

The primary mechanism for achieving the goals given above is the Common Effective Preferential Tariff (CEPT) scheme, which established a schedule for phased initiated in 1992 with the self-described goal to increase the "region’s competitive advantage as a production base geared for the world market".

The countries in AFTA have a combined population of 1b people.

Export Growth

Chairman of the Federation of Thai Industries (FTI) Santi Vilassakdanont projected that the country’s exports would expand at least 10 per cent next year. Mr Santi said his projection was based on the country’s ability to expand its export markets in member countries of the Asean and in other countries who are Thailand’s trade partners under the free trade agreement (FTA) such as China and India.

Thailand's gross domestic product should increase by at least three per cent next year, Finance Minister Korn Chatikavanij predicted on Thursday.

"The Thai economy has passed its lowest point and it is capable of expanding by four to five per cent in 2010," Mr Korn said.

However, the fragile global economy and the country's political uncertainty could impede growth and lower the confidence of investors next year.

"The government will continue launching new measures to bolster the economy continuously such as tax measures, the expansion of the third generation (3G) mobile broadband network and the establishment of a national savings fund." he said.

Federation of Thai Industries (FTI) chairman Santi Vilassakdanont predicted the export sector would expand at least 10 per cent next year.

Mr Santi said his forecast was based on the country’s ability to expand its export markets in Asean member countries and other countries that are Thailand’s trade partners under the free trade agreement (FTA) such as China and India.

He said the recovering economies in the United States, the European Union and Japan were still fragile.

The FTI chairman pointed out that oil price fluctuations and foreign currency devaluation were two key risk factors for the export sector.

“If other countries devalue their respective currencies, Thailand should also consider devaluing the baht to maintain its competitiveness,” Mr Santi said.

He said the production capacity utilization in the industrial sector stood at about 60 per cent. The figure should increase to about 65 to 70 per cent next year due to the improvement in several industries, including automobiles, electronics and food industries.

The construction industry should also see substantial growth, thanks to the government’s Thai Khem Kaeng (Strong Thailand) stimulus scheme.

Thailand is an investment destination not to be overlooked.

Disclosure: Long Thailand
Source: Shayne Heffernan: Looking at Thailand for 2010 and Beyond