Update for Quarter 1, 2014 on Thailand's economy across various industry sectors by THAI EUROPEAN BUSINESS ASSOCIATION (TEBA).

1. COUNTRY REPORT THAI-EUROPEAN BUSINESS ASSOCIATION (TEBA) QUARTER 1 2014

3. Preface
Business continues amid political
uncertainty...
The Center for Economic and Business Forecasting (CEBF)
of the University of the Thai Chamber of Commerce (UTCC)
says the Thai economy may have passed its lowest point
and will bounce back if no political violence occurs.
According to CEBF Director Thanawat Polvichai, economy-
related figures and statistics compiled by the Bank of Thai-
land and the Ministry of Finance have shown some positive
signs which indicate that the Thai economy is recovering and
may have bottomed out from its economic hardship.
He made known that Thailand should see its economy
bounce back after the second quarter under the circum-
stance that the political situation does not exacerbate.
Furthermore, he said the government’s decision to revoke
the emergency decree had regained confidence from foreign
nations as more foreign tourists have been seen since the
decree’s withdrawal.
In the first quarter TEBA has organized a number of Thai-
European bilateral business activities such as a business mis-
sion to Germany and seminars on Investment in Europe for
Thai businesses. Participants agree that future business
growth depends on today’s activities.
The AEC advantage
In spite of the political uncertainty, Thailand is still positioned
as a fully functional hub for many industry sectors and
shows significant potential for growth not only in Thailand
but in the entire region.
Decisions like Volkswagen Group’s participation in Phase II
of the Eco Car program speak a clear language that busi-
ness opportunities in Thailand and ASEAN persist.
Bangkok, May 2014
Ulrich Kaiser
President
Thai-European Business Association
Hugh Vanijprabha
Executive Director
Thai-European Business Association
i

4. Political Situation
1
The poll on 2nd February being nullified by a court order, un-
paid farmers in the rice-pledging scheme, ongoing smaller
street protests by both pro- and anti-government support-
ers, court cases against key politicians including the care-
taker Prime Minister - “judgement day” will determine the
future of Thailand’s ongoing political turmoil.
As key political figures have been more open for discussions
and foreign capital has returned to Thailand, these are the
signs to demonstrate the belief that there is some light now
at the end of this gloomy tunnel.
How will the ongoing political crisis end? The nation agrees
on the need for an election but how do we get there, respect-
fully. All eyes are focusing on three independent regulatory
Hopeful signs, but many
devils lie in the details
2

5. agencies for the next couple months, namely the Constitu-
tional Court, the Election Commission (EC) and the National
Anti-Corruption Commission (NACC).
Government scrutinized for abuse of
power
The court has ruled against the Prime Minister for unconstitu-
tional removal of National Security Council Chief Thawil Pli-
ensri; the NACC is scrutinizing the government on corruption
in the rice-pledging scheme.
In all cases, a new election would be held but the “re-
spected” one differs in the details. Pheu Thai politicians want
to return to power as soon as possible via the earliest possi-
ble election date. The Democrats have not made it clear
whether they would contest an election.
Scenario 1 - If the cabinet can still retain its caretaker status
until an election is held, Pheu Thai is in favour to win again.
Historically, the Pheu
Thai stronghold is
from the provinces
with a lower GDP per
capita. Hence they
are strongly support-
ing the election to be
held as soon as possi-
ble and have already
suggested that the
20th July date set by
the EC may be too
late.
Scenario 2 - If the whole cabinet is removed from office,
there will be a “vacuum” period in which a “transitory admini-
stration” will take control of the reform process before the
next election. Though very few legal experts believe it is pos-
sible, the Supreme court and the Senate can potentially ap-
point an interim government invoking Section 7 of the Consti-
tution, which states that, “Whenever no provision under this
Constitution is applicable to any case, it shall be decided in
accordance with the constitutional practice in the demo-
cratic regime of government with the King as Head of the
State.” But, whether a public referendum should be held and
what areas are to be reformed, and most importantly, how
can we establish a “neutral” Prime Minister accepted by all
parties is yet to be determined.
On the other hand, it is undeniable by all that it is in the best
interests of the country to have a fully-functional administra-
tion and that a conflict with no end in sight will further dam-
age the country’s economy. The various parties’ financial sup-
porters and big conglomerates will ensure that normality
must be returned at the earliest possible time. Hopeful signs,
but many devils lie in the details.
3

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7. Macro Economic
Overview
2
A number of economists and organisations have come out
recently with predictions for Thailand’s economic growth rate
for 2014.
The Asian Development Bank (ADB) says that if a working
government is installed in the latter half of the year, then
growth could be 2.9 percent this year and then increase to
4.5 percent in 2015. Before the political instability, the ADB
had been predicting a growth rate for 2014 of 4.5-5 percent.
The International Monetary Fund (IMF) is currently predicting
a similar 2.5 percent growth for the Thai economy this year -
down from the 5.2 percent it had previously predicted. The
IMF’s sister institution the World Bank is currently estimating
three percent economic growth for Thailand. The Bank of
Applications for investment
privileges rose 28 percent in
the first three months of the
year [Board of Investment]
4

8. Thailand (BOT), meanwhile, is predicting 2.78 percent growth
for this year if a new government is formed in the second
half of the year and that a delay to 2015’s budget implemen-
tation is no longer than one quarter.
In its Montery Policy Committee Decision on 23rd April, the
Bank of Thailand states:
Growth of the Thai economy in the first quarter of 2014 is ex-
pected to contract by more than previously assessed from
domestic demand. Private investment and tourism have felt
greater impact from political uncertainties. Exports of goods
gradually improved but could not offset the overall subdued
growth. Looking ahead, the prospect for economic recovery
hinges importantly on the political developments. Economic
expansion this year is expected to be lower than previous as-
sessment, and driven mainly by exports.
Investment
Thailand’s Board of Investment (BOI) has reported that appli-
cations for investment privileges reached 234 billion baht in
the first quarter of 2014, a decline in value of 10 percent com-
pared to the first quarter of 2013. However, when looking at
foreign investment, applications for investment privileges
rose 28 percent to 201.97 billion baht in the first three
months of the year compared to the same period last year.
While overall investment applications have declined, the
automotive/components and machinery sector has seen a
dramatic 265 percent increase in investment due mainly to
preparation for the second phase of the eco-car project.
Japan remains the leader in terms of foreign investment in
Thailand in the first quarter of 2014, followed by investment
from the United States, China and South Korea, with invest-
ment from the latter three countries rising significantly during
the January-to-March period.
According to the Ministry of Commerce, new business regis-
trations in the first quarter of 2014 reached 15,419, a 22 per-
cent decline from the same period last year. However, part of
the decline in registrations has been attributed to tougher
controls on the registration of lottery distributors, something
not considered as having a serious effect on the rest of the
economy.
The situation was looking up towards the end of the quarter
with registrations in March increasing by eight percent
month-on-month over the number of registrations in Febru-
ary. The Ministry of Commerce has projected that new busi-
ness registrations this year will be similar to last year. By the
end of March, there were a total of 561,245 businesses regis-
tered in Thailand with a combined 10.77 trillion baht’s worth
of registered capital.
Trade
Thailand’s total foreign trade during the first two months of
2014 reached 73 billion US dollars. This was a decrease of
8.70 percent from the first two months of 2013 when total
foreign trade was at around 80 billion US dollars.
Total exports from Thailand during January and February
2014 were 36.27 billion US dollars, showing a slight 0.20 per-
cent increase over the 36.20 billion US dollars achieved in
the first two months of 2013.
Imports from the rest of the world totaled 37 billion US dol-
lars in January and February this year. This is a 16% de-
crease from the 44 billion US dollars of imports in the begin-
ning of 2014.
5

9. In terms of Europe, total trade between Thailand and Europe
decreased by 17.67 percent in the first two months of the
year compared to same period of the year before. Total trade
with Europe reached just 9 billion US dollars compared to
the 11 billion US dollars that was achieved in January and
February 2013.
This means that trade with Europe now represents just 12.44
percent of Thailand’s total foreign trade, down from the
13.80% that it represented in the first two months of last
year.
Thai exports to Europe in the first two months of the year
showed a significant increase, rising 16.46% over the 3.9
billion of last year’s period to 4.6 billion this year. This means
that exports to Europe now represent 12.74 percent of Thai-
land’s total exports, an increase from the 10.96 percent in
the first two months of last year.
Thai imports from Europe have fallen 36.72 percent in the
first two months of 2014 compared to the same period of
2013. In 2013, Thai imports from Europe were worth 7.1 bil-
lion US dollars. This has now decreased to 4.5 billion US dol-
lars this year.
Exports still to meet its 5% target
The Commerce Ministry said Thai exports dropped by 3.12
percent in March and one percent in the first three months of
2014 but was optimistic that overall exports for the whole
year will meet its five percent target.
Permanent secretary of the ministry Srirat Rastapana said
exports in March declined to 19.94 billion US dollars while
imports fell 14.19 percent to 18.48 billion US dollars, result-
ing in a trade surplus of 1.46 billion US dollars.
But for the first quarter, exports dropped by one percent to
56.21 billion US dollars while imports shrank 15.41 percent
to 55.50 billion US dollars, representing a trade surplus of
706 million US dollars, she said.
If the political situation returns to normal quickly, exports
could grow by 10 percent for the whole year, largely due to
the IMF’s 3.6 percent world economic growth projection, up
from 3 percent in 2013.
Monetary & Currency Issues
According to Siam Commercial Bank’s Economic Intelli-
gence Center, Thailand is not at immediate risk of capital out-
flow pressures that have affected other Emerging Market
economies such as Indonesia, India, and Turkey.
Emerging market economies have seen their currencies un-
der pressure from the threat of capital outflow. EIC believes
that Thailand is in a fundamentally better situation than those
countries in at least two major ways. First, Thailand has a
low and stable inflation rate of around 2-3% […] Second,
Thailand does not have a chronic current account deficit. […]
For 2014, EIC expects that these fundamentals will remain
sound. Headline inflation will continue to remain stable at
around 2.2% on average, and core inflation will remain sub-
dued at around 1.3%, on the low side of the Bank of Thai-
land's target range of 0.5%-3.0%, owing to weak domestic
demand. […] The current account is expected to improve to
a surplus of around 0.5% of GDP from a deficit of 0.6% of
GDP last year.
6

10. According to Dr. Prasarn Trairatvorakul, Governor of the
Bank of Thailand (BOT):
The Thai economy may not confront a sudden shock, when
one looks back at the private sector's situation during the
time of the Asian economic crisis in 1997. The private sec-
tor's debt-to-equity ratio presently averages 1 time, whereas
back in 1997, it stood at 8-9 times. Moreover, commercial
banks are presently cautious about their business operations
and have strong loan-loss provisions
In its latest assessment, the financial ratings agency
Moody’s says:
Thailand's Baa1 government bond rating with a stable out-
look remains underpinned by the government's strong finan-
cial position, marked by low funding costs and a favorable
debt structure, and also by limited external vulnerabilities.
In many respects, Thailand's credit metrics remain well posi-
tioned compared with its immediate rating peers.
Inflation
Thailand’s consumer price index (CPI) was two percent year-
on-year in the first quarter, with month-on-month inflation
being 0.22 percent at the end of March. Core inflation in
March was at 1.21 percent and headline inflation at 2.11 per-
cent. The country’s Ministry of Commerce predicts 2.24 per-
cent inflation for the second quarter, with 2.12 percent infla-
tion for the first half of the year. Recent hot weather and a
drought has led to reduced supplies of agricultural raw mate-
rials and this as pushed up food prices. The Bank of Thai-
land (BOT) has said that it expects headline inflation for this
year to be around 2.5 percent, largely due to rises in cooking
gas costs.
7

11. Automotive Industry
3
While a number of commentators are expecting a decline in
domestic automotive demand this year, Kasikorn Research
explains that part of this is due to the very high base of com-
parison that lasted until mid-year due to the first-car-buyer
program.
Due to the excessively high levels of demand in 2012 and
first half of 2013 from the first-car-buyer program that
brought forward much future demand, Thailand’s domestic
automotive industry is currently in a period of market normali-
zation.
Kasikorn Research: We believe that this plunge will be short-
term since foreign investors still view Thailand as a major re-
gional production base that is full of investment potential. Fu-
ture investments would assist us in gaining larger export mar-
Thailand’s domestic market
enters “period of market
normalization”
8
Assembly of Mini Cars at BMW Manufacturing (Thailand)

12. kets, as well as technological developments that would yield
higher quality products.
A report in The Nation newspaper on the recent Bangkok In-
ternational Motor Show states that bookings at the event
were down just four percent compared last year when very
high levels of bookings were seen as consumers made the
most of the last chance to take part in the first-car-buyer tax
program.
A further report in the Nation explains that while demand
was down for the sub-compact car segment, the biggest
beneficiary of the first-car buyers program, the luxury car
segment did particularly well.
Eco Car Project – Phase II kicks off
Another major event in the Thai automotive industry in the
first quarter of this year has been the closing date for applica-
tions to take part in the second phase of Thailand’s eco-car
project. The success of the first phase looks sets to be re-
peated in the project’s second phase, which includes stricter
environmental requirements on manufacturers. Thailand’s
Board of Investment (BOI) has stated that the response has
been better than expected.
A total of 10 companies have registered for the project, com-
mitting a combined total of 139 billion baht of additional in-
vestment. This will lead to an eventual 1.5 million units per
year being manufactured under the project.
Volkswagen Group comes to Thailand
Five of the project’s participants had already participated in
the first phase of the project. These are: Toyota, Honda, Nis-
san, Suzuki and Mitsubishi. They will be joined by Mazda,
Ford, General Motors, and Volkswagen, the latter of which
will be making its first investment in production facilities in
Thailand. Bangkok
9

13. Additional Purchase of NGV buses
In other news, the Bangkok Mass Transit Authority (BMTA)
plans to purchase 3,183 additional NGV buses. However, the
current interim administration does not have the authority to
approve the purchase. The purchase deal is suggested by
the National Anti Corruption Commission (NACC) to be
opened up for auction instead of being an exclusive deal
with a particular company.
Skill Development Program
The Office of Industrial Economics is pushing for a project to
develop human resources in the automotive industry, which
has set a target to produce three million cars per year with
2017.
The Director of the Office of Industrial Economics, Somchai
Harnhirun, says the project seeks to educate and train auto-
motive personnel as trainers, assessors and operators. The
program's curriculum covers three main disciplines, includ-
ing production and management, quality assurance and test
and engineering and research
Thailand Automotive Institute
introduces new President
The Thailand Automotive Institute (TAI) has introduced its
newly-appointed president, Mr. Vichai Jirathiyut, who is deter-
mined to add a pollution tax to automobiles.
After taking office, President Vichai unveiled the organiza-
tion’s future plans and policies, saying it would focus on auto-
motive technology, research and development, and environ-
mental preservation; adding that the institute would push for-
ward with the idea of establishing an automotive testing cen-
ter as well as making Thailand an automotive production hub
of the ASEAN region.
According to him, the first project to be initiated would be an
automobile tax imposed based on the levels of carbon emis-
sions. He however said the matter would have to be thor-
oughly discussed with the Excise Department and other re-
lated agencies, while expecting the project to be launched in
2016.
10

14. Aviation &
Aerospace Industry
4
The air transport industry is growing rapidly, especially in the
Asia Pacific region. Thailand, with a growth rate of 13.7 per-
cent, shows incremental passenger demand for air travel
due to the rapid expansion of low-cost airlines fostering com-
petition in fares, which allows low-income people access to
affordable travel by air. In addition, the integration of the
countries in the region with the ASEAN Economic Commu-
nity (AEC) by 2015 will help facilitate greater movement of
investment, goods, services and labor within the region of
Southeast Asia. This includes an “open sky” policy. The sin-
gle aviation market will further the growth of the aviation in-
dustry and hence it will become much more advanced.
The aviation industry is likely to grow as well as the air trans-
port industry. While the demand for travel increases, airliners
Asia is the region with
higher growth rates than any
other region.
11
Suvarnabhumi Airport, Bangkok

15. are looking to increase the fleet to meet demand. After pur-
chasing, it is necessary to maintain the aircraft to an interna-
tional standard set by the Department of Civil Aviation (DCA).
In the past, most manufacturing and aftersales services were
located in North America and Europe. However, such busi-
nesses are likely to expand into different regions in order to
cater to growing demand and reduce production costs.
In Thailand, there are 49 licensees for engaging in the air
transport business with
334 commercial aircraft
and 188 private aircraft,
which makes a total of
552 registered civilian
aircraft. One of the ma-
jor costs in operating an
aircraft is its mainte-
nance. However, cur-
rently, aircraft repair cen-
ters in Thailand are
scarce. Large operators
such as Thai Airways
International have their
own aircraft mainte-
nance center, but this is
not able to accommo-
date the needs of other
airlines adequately.
Other air maintenance
centers in the country
are of a smaller size
with a very limited ca-
pacity for maintenance
of aircraft. Hence, air-
craft in Thailand must
be maintained or re-
paired at aircraft mainte-
nance centers in other
countries, especially those in Singapore, which results in a
loss to the Thai economy.
The aviation maintenance and repair industry, as a part of
the industry’s value chain, grows with respect to air transport
demand. In 2012, the number of aircraft worldwide was ap-
proximately 20,840 and is expected to grow to a total of
29,955 aircraft by 2022, an increase of 3.7 percent per year.
Meanwhile the aircraft maintenance industry worldwide was
valued at approximately 79,500 million US dollars in 2012
and is expected to increase to about 68,400 million US dol-
lars by 2022, an increase of 3.3 percent per year.
The aviation maintenance and repair industry, as a part of
the industry’s value chain, grows with respect to air transport
demand. In 2012, the number of aircraft worldwide was ap-
proximately 20,840, and this is expected to grow to a total of
29,955 aircraft by 2022, an increase of 3.7 percent per year.
Meanwhile, the aircraft
maintenance industry
worldwide was valued
at approximately 79,500
million US dollars in
2012 and it is expected
to increase in value to
about 68,400 million US
dollars by 2022, an in-
crease of 3.3 percent
per year.
Asia has higher growth
rates than the other re-
gions. The aircraft main-
tenance industry is an
activity that utilises com-
plex and advanced tech-
nology. It is generally
referred to as MRO
(Maintenance, Repair
and Overhaul), and can
be divided into four
main segments: line
maintenance, airframe
and modification, en-
gine maintenance and
c o m p o n e n t m a i n t e-
nance. Airlines around
the globe instead of operating in-house aircraft maintenance
will increasingly look to the outsourcing option as a future
trend. Hence, this industry provides good prospects for serv-
ice providers in Asia that have strengths in lower costs and
an availability of skilled workers. Thailand has a major role in
driving forward the ASEAN aviation single market and has
been assigned as the main coordinator of ASEAN air trans-
portation. It must make the most of such opportunities to the
benefit of the country.
12

16. The Ministry of Transportation has a policy to develop the
country's aviation industry and reduce dependence on for-
eign countries. The policies will help promote Thailand as a
regional hub for aircraft maintenance. Thailand has an advan-
tage in terms of its geography and supporting industries, this
has provided the country with high potential, which can be
developed as alternatives in the manufacturing of aircraft
parts and setting up repair centers supporting Singapore:
• Target local and foreign airliners in particular those from
neighboring developing economies with potential for ex-
pansion of aviation.
• Establishing industrial and aviation repair center will create
jobs, technology transfer and utilization of other local in-
dustries, thereby stimulating the economic growth of the
country in support of the liberalization of ASEAN.
Hence, the Office of Transport & Traffic Policy & Planning’s
(OTP) current mission is to study, analyze and develop a mas-
ter plan on transport and traffic in the country, including
analysis and reporting of transportation, safety and environ-
mental matters related to the transportation system, as well
as to study the development of provincial airports under the
responsibility of the Department of Civil Aviation, which will
lead to the formulation of policy for the development of 28
provincial airports.
Nok Air’s profit nosedives
Nok Airlines Plc’s net profit plunged 90.2 percent in the first
quarter, which it attributed to more intense industry competi-
tion, Thailand’s political turmoil and the weaker baht against
the US dollar. The budget carrier’s earnings for January to
March were 40.9 million baht, down from 416 million in the
same period last year, it said in yesterday’s filing to the Stock
Exchange of Thailand. Nok Air, 39 percent owned by Thai
Airways International, highlighted intense competition in the
domestic airline industry, both from full-service airlines and
low-cost carriers (LCC). The entry of a new LCC — Thai Lion
Air — was also blamed for depressing profitability.
Airport City for Phuket
Airports of Thailand Plc (AoT) is soliciting interest from the
private sector to take part in developing what it calls the
Phuket International Airport City on over 24,000 square me-
tres now in use as an outdoor car park.
An architect's impression of Phuket airport after the expan-
sion is finished.
Phuket International Airport City
The multi-billion-baht scheme is part of AoT's unprece-
dented push to transform areas within six airports under its
purview into commercial zones to create extra revenue and
lessen dependence on earnings from aeronautical opera-
tions.
Phuket airport was chosen as one of the three initial sites, in
addition to Suvarnabhumi in Samut Prakan and Don Mueang
in Bangkok, because of its heavy passenger traffic.
Phuket is the country's third-busiest airport, with nearly 12
million passengers expected to pass through this year. Capi-
tal expenses for the three priority locations are estimated at
over 30 billion baht.
Phuket's proposed Airport City will be up to 23 metres tall,
the maximum height permissible by law for buildings located
500 metres from the seashore, according to the AoT's con-
ceptual plan.
13

18. Oil & Gas
5
While the oil & gas sector in Thailand is not quite as big as in
Malaysia and Indonesia, nevertheless, the sector is quite ac-
tive, with numerous foreign and local companies conducting
activities of late.
Foreign investors in the oil and gas industry consider Thai-
land's prolonged political tensions as just a blip, according
to Deloitte.
"It's just a short-term thing. From the business perspective,
[the political turmoil] has not jeopardised Thailand. It's busi-
ness as usual," says Steven Yap, partner for energy and re-
sources and mergers and acquisitions tax leader for South-
east Asia.
Increased activities and new
investments in the Thailand
oil & gas sector
14
Oil Platform, Gulf of Thailand

19. “Streets remain safe and the
country's fundamentals are
still sound with a sizeable
population of 60 million peo-
ple,” he said.
“However, the high tax bur-
den on O&G concessions
has made investors think
twice about Thailand and
going to other destinations,”
said Stuart Simons, E&R
leader and a tax partner at
Deloitte Thailand.
Besides the 50-per-cent pe-
troleum income tax, inves-
tors in Thailand's O&G fields
are subjected to royalties
and other levies.
"Certainly, the government
should look at cutting taxes
on marginal oil and gas
fields," he said.
Yap said Thailand may also consider applying the production
sharing system, which has been used in many other coun-
tries, to replace the current taxation regime for O&G conces-
sions.
At the "Deloitte O&G Summit" held in Bangkok recently, the
consulting firm's energy experts predicted a continued up-
trend in foreign direct investment (FDI) in the global O&G in-
dustry.
PTT Expects Increased Profits in 2014
PTT PCL, Thailand’s largest oil & gas company, has stated
that it aims for a net profit in 2014 of 100 billion baht (3.10
billion USD), an increase from the company’s profits last year
of 94.6 billion baht. However, Thomson Reuters is forecast-
ing the company making a profit of 105 billion baht this year.
Profits are expected to increase this year due to the com-
pany’s fifth gas separation plant running at full capacity this
year as well as profits last year having been depressed due
to significant costs following a major oil spill last year off the
coast of the popular tourist
destination of Samet island
in Thailand’s Rayong prov-
ince.
Other news from the com-
pany includes PTT Explora-
tion & Production PCL
(PTTEP), the largest publicly
listed oil and gas explorer in
Thailand, agreeing to pur-
chase oil & gas assets in
Thailand belonging to US
energy company Hess Corp.
for around 1 billion USD. The
purchase will give PTTEP
shares in the Pailin, Morokot
and Ubon oil fields as well as
two currently producing gas
fields.
The deal follows a similar
deal last year when PTTEP
together with Indonesia’s PT
Pertamina paid 1.3 billion USD for assets in Indonesia also
belonging to Hess.
The recent Thailand acquisition will increase PTTEP’s produc-
tion by around 17,000 barrels of oil equivalent per day ac-
cording to PTTEP. PTTEP now has investments in over 40
projects in Southeast Asia, Australia, the Middle East, North
and South America and Africa.
Singapore Company Buys into Thai
Concession
A wholly owned subsidiary of Singaporean company Loyz
Energy has just completed a 65 million USD purchase of a
20 percent interest in three producing concessions in Thai-
land’s Petchabun basin 300 km north of Bangkok. The main
operator of the concession is ECO Orient (Thailand), with
Carnarvon Thailand having the remaining 20 percent stake.
Output from the concession has reportedly increase to 3,000
barrels per day in April from the 1,200 barrels per day that
was being produced back in February. The company ex-
pects that the concession will be delivering 4,000 barrels per
day within May. The concession is estimated to have re-
15

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21. Construction &
Infrastructure
6
The Thai government is currently working on a plan to re-
duce logistics costs to 13 percent of GDP from the current
level of 15 percent by 2016. However, this will require very
large investments in infrastructure. The means for achieving
this are currently on hold due to the Constitutional Court re-
cently ruling that the government bill for raising two trillion
baht in loans to finance infrastructure projects was unconsti-
tutional. From 2007 to 2011, Thailand managed to reduce its
level of logistics costs from 17.1 percent of GDP to 15.5 per-
cent of GDP. Thailand is currently ranked 38th in the world in
the World Bank’s 2012 Logistics Performance Index.
Infrastructure projects will
boost Thailand’s economic
output by as much as one
percent
16

22. Commercial Property
The office property market is looking healthy at the moment
according to a recently released research report on the Asia
Pacific office market by CB Richard Ellis (CBRE). The report
says that the political crisis hasn’t so far appeared to affect
Bangkok’s office market and that competition for office
space is expect to intensify with vacancies being at or close
to historic lows. The report goes on to say that the growth in
the amount of occupied space in 2013 was 200,000 square
meters, the best rise since 2006.
Residential Property
The latest market figures for Bangkok’s residential property
market show that in the first quarter of 2014 presales have
fallen by 42 percent. This has been attributed to reduced pur-
chasing power due to rising household debt and the political
instability. Research by Maybank Kim Eng Securities (Thai-
land) shows that residential launches in greater Bangkok in
the first quarter delivered 20,433 units and 56.47 billion baht
of value, representing a 42 percent and 43 percent decline
year-on-year respectively.
However, a recent survey by the Nation newspaper shows
that land prices on the Bangkok-Nonthaburi road in northern
Bangkok have tripled since 2010 due to the construction of
17

23. the Purple Line extension of Bangkok’s mass transit rail sys-
tem. The survey shows condominium prices in this area ris-
ing on average by 20 percent per year since 2010. Industry
experts say that when the Purple Line extension is complete
next year then demand will increase even further.
The Purple Line extension is just one of five other mass-rail
transit extensions currently under construction in Bangkok,
with even more at the planning stage. The total length of rail
lines in the current plan total 508 kilometers, and will be con-
structed between 2010 and 2029. The Mass Rapid Transit
Authority of Thailand has also prepared next cabinet ap-
proval for the construction of three skytrain extended routes:
Green, Pink and Orange with a total budget of 225 billion
baht. (www.mrta.co.th)
The State Railway of Thailand (SRT) is due to begin a six bil-
lion baht program of track renewals and earthworks enhance-
ment to begin this quarter on the main line running south
from Bangkok. However medium-term investment in the
main line network, particularly the high-speed train, is in
doubt after the program was declared ‘unconstitutional’ in a
court ruling. Any revival of the ambitious proposals, which
included funding for a network of four standard gauge fast
passenger lines, double-tracking of the metre-gauge net-
work and a series of urban rail projects in Bangkok, is de-
pendent on the election of a permanent government.
(www.railway.co.th)
Implementation of three motorway projects by the Depart-
ment of Highways under a public-private partnership (PPP)
for the Bang-Pa-In – Saraburi – Nakhon Ratchasima highway
(a total of 196 kilometers) worth 84.6 billion baht; an EIA ap-
proved Western Intercity motorway (Bang-Yai – Ban-Pong –
Kanchanaburi), which covers a distance of 96 kilometers
worth 55.6 billion baht; and Pattaya and Rayong’s Map-Ta-
Phut needs an investment of 16 billion baht to construct a 32
kilometer motorway link. (www.doh.go.th)
The Airports of Thailand Plc (AoT) also plans to develop “air-
port city” projects at six key airports nationwide (Suvarnab-
humi Airport, Don Mueang Airport, Phuket Airport, Chiang
Mai Airport, Chiang Rai Airport and Hat Yai Airport), with an
initial investment of more than 30 billion baht for the first
three locations.
18

24. ICT
7
The major development in the telecommunications & ICT sec-
tor in the beginning of 2014 has been the launch of digital TV
channels. They will immediately reach around 70 percent of
the country’s 22 million households.
Around 10 million households will receive vouchers from the
country’s telecoms regulator giving them discounts on pur-
chasing the set-top boxes needed to receive the digital sig-
nal.
It is expected that digital TV will attract 10 percent of the tele-
vision audience within this year, a share worth around THB
7.69 billion. TV advertising spending in 2014 is expected to
increase by around 7.4 percent
Digital TV will attract 10 per-
cent of the television audi-
ence within this year
19
Thaicom Satellite

25. Mobile Operators Prepare for Signal
Auctions
Later this year, Thailand will be holding two separate mobile
communication spectrum auctions. The two spectrums are
1,800 and 900 MHz. Two licenses are available for the 1,800
MHz spectrum worth THB 11.6 billion each and will be for a
period of 19 years. The winners of the licenses will be re-
quired to cover at least 40 percent of the population within
four years.
It is expected that these auctions will be an “important driver
for the telecom business and the Thai economy,” according
to Siam Commercial Bank. The auction of the two band-
widths will support rising demand for 3G and 4G mobile com-
munication services that is coming from a greater ownership
of advanced smartphones.
In addition to the extra government revenue, the auctions
will lead to further investment in the mobile network infra-
structure as well as mobile communication content and appli-
cations. The infrastructure investments are expected to
amount to more than 100 billion baht over the next 3-5 years
following the auctions.
Thaicom 8 Satellite Project Gets
Approval
The Thai Telecom Committee has recently given approval to
the Thaicom 8 satellite project. The satellite will be launched
in the 78.5 degrees east orbital slot. The license for the satel-
lite will last for 15 years
Michael Araneta, head of operations for IDC Research Thai-
land states that ICT investments will grow to a projected
7.2% in 2014 over the previous year, in a clear sign that the
market is moderating. Araneta states, "The political tension
is definitely one factor, as several decision-makers are taking
a wait-and-see approach for how ongoing issues will be re-
solved.
The market is also seeing the holding back of government-
backed schemes such as the One Tablet per Child, Free Wi-
Fi, and Smart Cities.
However, there are other factors too such as rising house-
hold debt, slowing corporate and consumer sentiment, and
the emergence of disruptive technologies that change IT
strategies of Thai companies." Araneta remarked, "The slow-
down is caused not just by political turbulence."
New sources of growth for the ICT
market
IDC notes that the local ICT market needs to quickly shift to-
wards IT projects that are led by large private enterprises.
Fortunately, there will still be strong spending from several
sectors that are working on a clear business-as-usual mode
such as manufacturing, financial services, telecoms and lo-
gistics. Araneta continues, "The use of Thailand as a hub for
the ASEAN Economic Community (AEC) is also gaining mo-
mentum, and is bringing new sources of growth to the ICT
market in general."
IDC Research Thailand's top ten predictions for 2014 are the
following
1. Annual ICT spending growth will moderate to 7.2%, but
will present a steep inflection point in the second half of
2014.
2. The industry's renewed focus on Business Continuity
Planning (BCP) will make Thailand a testing ground for
new disruptive technologies in the ASEAN region.
3. In order to move towards CYOD, Thai companies need to
develop their mobility masterplans.
4. New players will accelerate competition in Fiber to the x
(FTTX).
5. Digital TV uptake will be strong, but will come below plan
for 2014.
6. Japanese manufacturing firms will make Thailand rele-
vant in the Internet of Things (IoT) discussion.
7. 40% of ICT spending in Myanmar will originated from or
be sourced through Thailand.
8. The phablet is the winning consumer device for 2014.
9. The next-5 markets will grow by at least 15%, making
Metropolitan Bangkok less a center for ICT spending.
10.High growth in mobile financial transactions will bring
Thailand closer to a digital economy.
Despite political tensions, the Thai market will see the first
successful use cases of disruptive technologies such as Big
Data and Cloud Computing. These will make Thailand rela-
tively ready to take on the Third Platform of IT in the next
three years.
20

26. Tourism
8
The Tourism Authority of Thailand (TAT) will adjust the pro-
jected figure of foreign visitors this year of 28.4 million down
due to ongoing negative factors that continue to hit the tour-
ism sector. Thailand’s political turmoil has started to take toll
on the number of Chinese tourists visiting the Kingdom with
arrivals declining over 50%.
The Vice president of Thai-Chinese Tourism Association Mr
Anek Sricheewachart said Thailand’s political turmoil has
dampened tourism industry with now the number of Chinese
tourists visiting the Kingdom saw a year-on-year drop of 41-
68%.
In 2014, the Tourist Authority
of Thailand (TAT) expects
28.01 million international
tourist arrivals.
21

27. Overall, foreign tourist arrivals fell 5.85 percent year-on-year
during the January-to-March period. There were 6,598,240
trips to Thailand over the first quarter of the year, down from
the 7,007,904 trips during the same period last year. How-
ever, with the recent revocation of the state of emergency in
Bangkok and a period of relative calm in terms of protest ac-
tion, it is hoped that tourism may recover.
Interestingly, Europe was the only tourism source market dis-
playing a growth in arrivals during the first three months.
There were 680,728 tourist trips from Europe in the first quar-
ter of the year, a 2.25 percent increase over the 665,722 trips
in the same period of last year.
Breaking down the European region into an individual coun-
try level, there were declines in tourist arrivals from Belgium
(-20.36 percent), Norway (-14.17 percent), UK (-13.14 per-
cent), Germany (-10.98 percent), Ireland (-9.04 percent),
Spain (-5.81 percent), Switzerland (-2.10 percent), and Aus-
tria (-1.32 percent). Meanwhile, the biggest
growth came from Finland (+49.25 percent), Italy (+18.08 per-
cent), Eastern Europe (+15.02 percent), Russia (+9.86 per-
cent) and Sweden (+7.22 percent).
When looking at the outlook for the rest of the year, Kasikorn
Research estimates that assuming the political instability con-
tinues into the second quarter of 2014, “the Thai tourism mar-
ket may experience further deceleration, with the number of
tourists totaling 178.0 million (based on the number of travel-
lers per trip), growing 7.9 percent YoY, thus generating THB
725 billion in tourism-related revenue, rising 8.2 percent
YoY.”
VISITOR ADVICE
To provide the best service possible during the current politi-
cal situation, Suvarnabhumi Airport has prepared the Airport
Operation Center (AOPC), open 24 hours daily, situated be-
hind check-in counter row R, Departure Hall, 4th floor of the
Passenger Terminal.
Also, the Passenger Assistance Center (PAC), open 24-hours
daily, situated between Entrances 7 and 8, Arrival Hall, 2nd
floor of the Passenger Terminal. Furthermore, passengers
can contact Airport Information Counters available through-
out the Passenger Terminal. Suvarnabhumi Airport also has
foreign language interpreter/translator available in Chinese,
Japanese, Russian and Korean to help passengers.
22

28. Agro-Food Industry
9
A recent report by TMB Bank’s TMB Analytics division sug-
gests that Thai food exports are likely to do very well this
year due to the growing world economy. The food industry
currently brings in revenues of 500,000 million baht per year.
Most of Thailand’s exports go to Japan (22 percent), the EU
(18 percent) and the US (14 percent). Last year food imports
by the US and EU grew by 7.0 and 3.6 percent respectively.
In Japan, issues with the exchange rate led to food imports
shrinking by 12.7 percent. However, there is positive news
from Japan in that the country has recently allowed the im-
port of frozen chicken from Thailand for the first time in
around 10 years. This could be a massive benefit to Thai-
land’s poultry sector.
One of the Thailand’s
strongest sectors with
opportunities to export to
major markets.
23

29. The TMB Analytics report suggests that the most promising
sectors are the seafood and meat sectors. In regard to sea-
food, Thailand had recently been seriously affected by early
mortality syndrome (EMS) that has caused problems with the
shrimp industry. However, recent investigation shows that
this problem is now declining. Another sector mentioned in
the report that has a positive outlook is the canned and proc-
essed fruits sector, which the report says is currently in high
demand globally.
Thai Restaurants Get Seal of
Approval
Thailand’s Ministry of Com-
merce will be awarding
300 more “Thai Select”
awards to Thai restaurants
overseas in an effort to pro-
mote Thai food and give
high-quality Thai restau-
rants an award to highlight
their high level of quality.
So far a total of 484 restau-
rants have so far been
awarded, and the ministry will be giving out 300 more to
qualifying restaurants.
Rice Troubles
News on Thailand’s agrofood industry has been dominated
recently by the problems surrounding the country’s rice-
pledging scheme. Numerous rice farmers have been unable
to receive payments for the rice they have previously deliv-
ered. The situation has been complicated further by the
status of the current caretaker government with constrained
abilities to take action.
In addition to criticisms of the implementation of the rice-
pledging program, there have been other criticisms of the
actual effect of the program on the rice industry. As the pro-
ject artificially raised the price of rice, this has led to Thailand
losing competitiveness in the international market. Thailand
has slipped from being the world’s number one rice exporter
into the No. 2 slot behind India. However, part of this can be
attributed to India deregulating rice exports, allowing more of
the country’s output to reach the world market.
Since the dissolution of parliament to pave the way towards
new elections last year, the rice-pledging scheme has ended.
This has led to the market price for rice dropping gradually.
Rice is now at 7,000 baht per ton, whereas it was previously
at 15,000 baht per ton before. Effort by the government to
raise money to pay the farmers that have so far not been
paid through selling the government’s stockpile of rice has
further pushed down the price of rice. At the same time, pro-
duction costs have been increasing, meaning profits have
declined.
Thailand’s rice exports have now increased in volume by
33.65 percent compared to the amount in the first quarter
last year to a total of 2.2 million tons. However, in terms of
export value, exports have dropped by 6.8 percent to 1.03
billion US dollars but down 0.5 percent in Thai baht terms
due to the weaker value of the baht.
The caretaker government’s immediate priority is to pay
those rice farmers that have yet to receive payment. How-
ever, the next government that Thailand has will have to look
at the longer-term issues with Thailand’s rice sector.
24

30. ASEAN Views
10
Myanmar: Economy to grow 7.8
percent in next two years
Myanmar’s economic growth is expected to pick up to an
annual rate of 7.8 percent in the next two fiscal years (2014-
15 and 2015-16), according to the Asian Development Bank
(ADB).
The country’s economic growth for the 2013-14 fiscal year
which ended in March is estimated at 7.5 percent, Xinhua
reported citing an ADB press release made available on the
bank’s latest Asian Development Outlook.
Sustained growth ahead for
ASEAN nations
25

31. A recent ADB study noted that Myanmar could reach upper
middle-income status by 2030 if it overcame development
challenges, but currently about 25 percent of the population
lives below the national poverty line.
“The ADB is keen to support investment in the energy, trans-
port, urban, agriculture, and social sectors such as education
and health, which will help build the foundations for inclusive
growth,” Takehiko Nakao, president of the ADB said during a
meeting with Myanmar President U Thein Sein on the side-
lines of the ASEAN Finance Ministers Meeting in Nay Pyi
Taw.
Vietnam: Economy will grow 5.5
percent this year
Vietnam’s growth is expected to rise modestly to 5.5 percent
in 2014 in the absence of visible progress in addressing
structural problems, the World Bank said in a recent report.
The trade and current accounts are expected to remain in
surplus this year, although by a smaller amount than in 2013.
Meanwhile, inflation is likely to stay within the government’s
target of seven percent in 2014 given the modest credit
growth and assuming that no major supply-side shocks ma-
terialize, the Washington-based lender said in the East Asia
Pacific Economic Update.
Vietnam’s economy expanded 5.4 percent last year from 5.3
percent in 2012. Inflation slowed to 6.6 percent in 2013 from
9.1 percent in 2012.
It said that strong exports and a sustained flow of external
capital and remittances have helped the country turn around
its external balances.
Domestic demand in Vietnam remains weak on account of
subdued private sector confidence, overleveraged state-
owned enterprises, undercapitalized banks, and shrinking
fiscal space.
Cambodia: Economy projected to
grow at 7.2 percent this year
Cambodia's economy is forecast to grow at 7.2 percent this
year, driven by continued robust growth of the garment and
tourism sectors in combination with continued global recov-
ery and political stability, the World Bank said in its Eco-
nomic Update report released recently.
"Economic growth for 2014 is projected to reach 7.2 percent
based on a continued global economic recovery, the return
of stability to the domestic economic environment and re-
newed confidence over the rest of the year," the report said.
"Potential further political uncertainty and labor unrest and an
economic slowdown in China may pose downside risks."
"Cambodia's economy has withstood domestic pressures
and managed to sustain its high growth," said Alassane Sow,
the World Bank Country Manager. "This strong growth may
help Cambodia to achieve its goal in reducing poverty by 1
percent a year."
Political disputes and wage hike demands in the garment
industry remain hot issues in this Southeast Asian nation. So
far, the country's main opposition party is still boycotting par-
liament after a contested election in July last year that
handed victory to the Prime Minister Hun Sen's ruling party.
Indonesia: Q1 GDP Growth Slower
Than Expected
Indonesia’s economy grew at a much slower than expected
pace in the first quarter as investments and exports weak-
ened, the statistics bureau said recently.
Gross domestic product in the January to March quarter
rose 5.21 percent from a year earlier, against 5.72 percent in
the fourth quarter and compared with 5.60 percent forecast
in a Reuters poll.
On a quarterly basis, the economy expanded 0.95 percent.
Growth in Southeast Asia’s biggest economy has been sup-
ported by buoyant domestic demand and underpinned by
strong consumption from a rising middle class.
Indonesia reported a narrower trade surplus in March of
$670 million on Friday, due to a modest decline in imports,
while exports eked out growth of 1.24 percent against a fall
the previous month.
26

32. Thai-European
Business Relations
11
Conference on Thailand Investment
Opportunities in the European Union
On 27 March 2014, the Thai Embassy to the EU in partner-
ship with the Department of European Affairs, Ministry of For-
eign Affairs hosted a conference on the topic of Thailand In-
vestment opportunities in the European Union at the Royal
Orchid Sheraton Hotel & Towers in Bangkok, with about 150
people from both the public and private sectors in atten-
dance. Guests inlcuded H.E. Nopadol Gunavibool, Thai Am-
bassador to the European Union, presided at the opening
ceremony. Director General Saran Charoensuwan of the Euro-
pean Affairs Department, M.R. Pongsvas Svasti, Former Min-
ister of Industry, the Ambassador of Greece to Thailand, the
Ambassador of Germany to Thailand and the Ambassador of
France to Thailand also attended the opening ceremony.
The conference aimed to provide knowledge and understand-
ing and promote opportunities for businesses and investors
between Thailand and Europe with the relevant authorities of
11 EU member states participating as a speakers to provide
information about the policies and measures to promote in-
vestments in EU Member States. There were also business
representatives from various sectors such as agriculture and
food that shared their experiences of investing in the EU.
These included representatives from S.Khonkaen, the CEO
of KC Fresh, and Thai Smart Life. In addition, the Thai gov-
ernment also provided information on measures to
strengthen and encourage investors to invest in foreign coun-
tries.
Furthermore, to enhance the ability to compete and push
business opportunities for trade and investment between
Thailand and Europe, this meeting also took the opportunity
to launch the Thai-European Business Dialogue, which is
based on the inspiration of the Permanent Secretary of the
Ministry of Foreign Affairs.
TEBA Booth at IZB 2014
Reaching out to European Automotive Buyers: As part of the
'World Class Automotive Supplier' initiative and the Thai-
27

33. European Business Dialogue, the Thai-European Business
Association (TEBA) will showcase the Thai automotive clus-
ter at the IZB International Automotive Supplier Exhibition.
The Thai-European Business Association (TEBA) has organ-
ized a booth at the IZB, Europe’s most important automotive
supplier exhibition. It is organized at a fairground next to the
headquarters of Volkswagen Germany and will give opportu-
nity to connect with buyers from around the world
Thai exports to the EU to be halted
Thailand may temporarily halt the sale of fresh vegetables to
the European Union (EU) until March 2014 to avoid being
banned from future exports over issues with contaminated
p r o d u c e .
That's according to a report in the Bangkok Post, which
noted that the restriction on exports could cause a shortage
of Thai products in the UK.
The paper reported that that last year, the EU discovered in-
sects in 16 fresh vegetables exported from Thailand for use
in traditional Thai cooking, including basil, chilli and cap-
sicum peppers, aubergine, bitter gourds and parsley.
The EU put Thailand on a warning notice and said it would
ban the import of Thai products if further insects were found
on produce more than five times over the space of 12
months from March 2013.
However, the Bangkok Post reports the EU has found in-
sects in Thai vegetable exports five times already so far this
year.
It added that the Department of Agriculture, under the Agri-
culture and Co-operatives Ministry, is likely to issue a ban on
the export of fresh vegetables to the EU until after 14 March,
2014 - when the 12-month warning period expires.
According to a survey by the Thai Trade Office in London,
prices of Thai vegetables have risen by 40 to 50 per cent
since the EU implemented strict rules on chemical residue
and insects in Thai products.
Mercedes-Benz growing in Thailand
After emerging as the only luxury automaker to witness dra-
matic sales growth during the first quarter of this year,
Mercedes-Benz is planning to accelerate into a leadership
position in the luxury fleet and used-car businesses as well.
During the first three months of this year Mercedes-Benz
sold 2,205 cars, with more than 1,000 being delivered in
March. This included a large number of small, fuel-efficient
models such as the A-Class and CLA with starting prices be-
low 2 million baht.
"The company is building awareness among target groups
through online channels and marketing activities along with
the active development of sales channels and people to de-
velop fleet and used-car professional staff at 31 authorised
dealers nationwide," said Grisnagorn Sawettanan, general
manager of sales at Mercedes-Benz Thailand.
28

34. Fishery Industry News
The European Parliament has voted that Thailand should be
required to address human trafficking and forced labour in
its fishing industry.
The vote coincides with trade negotiations between the EU
and the southeast Asian state and the result has been wel-
comed by the Environmental Justice Foundation (EJF).
The EU is Thailand's third largest trading partner and Thai-
land is the EU's third largest trading partner inside ASEAN,
with trade between the EU and Thailand reaching nearly €32
billion in 2012. However, evidence of widespread human
rights abuses and human trafficking in Thailand's fishing in-
dustry has overshadowed the negotiations.
The resolution, proposed by President of the European Parlia-
ment Fisheries Committee (PECH) Gabriel Mato, highlights
that: "The ILO and various NGOs have recently uncovered
serious shortcomings with regard to social and labour condi-
tions and respect for human rights in the Thai fishing indus-
try."
The resolution calls for Thailand to: "Respect, promote and
implement internationally recognised labour standards ... in-
cluding those on forced labour and child labour." It also calls
for Thailand to be required to cooperate in fighting Illegal,
Unreported and Unregulated (IUU) fishing, citing the involve-
ment of Thai-owned fishing vessels in IUU fishing in West
Africa.
Steve Trent, Executive Director of EJF, said: "Our investiga-
tions have shown that there is an integral link between terri-
ble abuses in the fishing sector and the mismanagement of
Thailand's fisheries. The abuses we have documented com-
monly occur on boats trying to maintain catches by going to
sea for longer and fishing further away.
"This decisive resolution by the European Parliament clearly
demonstrates that any trade agreement with Thailand must
be conditional on the Thai Government resolving the issues
of human trafficking and human rights abuses in its fishing
sector. Crucially, we need to see the Thai Government work-
ing towards a sustainable and ethical fishing industry and tak-
ing firm and decisive action against business owners and cor-
rupt officials exploiting modern day slaves.”
Stiebel Eltron Targets Growth in
Thailand
Stiebel Eltron - a manufacturer of water heaters, water filters
and hand-dryers - continues to target Thai sales growth of
20 percent this year, despite the country's economic slow-
down. The company, which was formed in 1924 in Germany,
has its Asian headquarters and production site in Ayutthaya
and is the market leader for water heaters in Thailand.
Last year, Stiebel Eltron Asia reported Thai revenues of more
than 800 million baht, some 20 percent higher than in the pre-
vious 12 months.
Roland Hoehn, managing director of Stiebel Eltron Asia, said
the company expected its improved distribution network,
increased support for key accounts and enhanced product
range would add similar growth to its figures this year.
"We believe our sales will achieve the targeted growth level
this year, [especially as] the company recorded sales in the
first quarter that were 40 percent above the same period last
year," he said.
Haco Group looks at long-term
prospects in Thailand
Haco Group, the authorised importer and distributor of inter-
national sanitary furnishings and tiles, has teamed up with
Spanish bathroom products and ceramic tile maker Roca
Group to tap into growing demand for high-end bathroom
products in Thailand.
"We are looking at the long-term prospects of the Thai mar-
ket, although demand and the economy right now are not
quite favourable," said Dhitipong Dowpiset, director of Roca
Bathroom Products Thailand. Haco has a 40 percent stake in
the joint venture, while Barcelona-based Roca controls 60
percent. Roca Thailand has a registered capital of 100 million
baht.
29

35. Suzuki Boosts Thai Exports to
Europe with Production Shift
Suzuki will be expanding exports from it Rayong plant in
Thailand this year following the production launch of its lat-
est global compact passenger car, called the Celerio. The
carmaker is shifting production for the latest model from its
Maruti Suzuki subsidiary plant in Manesar, India.
The Rayong plant opened in March 2012 and began produc-
tion of the Swift model that year for global markets. Addi-
tional production of the Celerio will begin in May this year,
initially for the Thai market, but this will be followed by mod-
els produced for the European market during the latter half
of 2014.
“The Swift is manufactured and exported to the ASEAN re-
gion,” said Takayuki Sugiyama, president of Suzuki Motor
(Thailand). “With the new Celerio, the Rayong plant will
now be expanding its exports to
Europe, thus increasing its im-
portance as a global produc-
tion hub.”
Suzuki has decided to shift
production of the Celerio for
export to Europe to Thailand
from India because the Rayong
plant in Thailand will be making the Euro-5
compliant model while the Indian plant continues to
manufacture the Euro-4 model for its domestic market.
The move means a drop in exports to Europe from India and
they are not expected to begin again until September 2015,
when a new model will be launched. Industry sources state it
is most likely to be the YRA premium hatchback.
In related news, Ford has announced it is moving production
of the Fiesta subcompact model from its facility in Cuauti-
tlán, Mexico to Thailand. While it is not confirmed whether
production will be at the carmaker’s facility, also located at
Rayong, Ford does produce the Fiesta there. Ford is thought
to have made the move to free up production capacity in
North America for other models.
Anfaco Insists on Excluding Thai
Tuna from the EU-Thailand FTA
The National Association of Manufacturers of Canned Fish
and Shellfish (Anfaco Cecopesca) is to once again ask the
authorities of the European Union for the exclusion of Thai
tuna from the free trade agreement that the European bloc is
negotiating with Thailand.
On Wednesday the general secretary of Anfaco Cecopesca
and president of Eurothon, Juan Manuel Vieites, is to meet
with Joao Aguiar, the chief negotiator of the European Com-
mission for the bilateral trade agreement.
Vieites will argue in his request that the tuna industry in Thai-
land is the main competitor of community fishermen of that
resource.
He will also express to Aguiar the concern that the European
industry supposes a possible tariff exemption and the aboli-
tion of the rules of origin for the companies in Thailand.
Anfaco argues that the free access of canned and
processed tuna products from Thailand to the
European market can seriously affect the fu-
ture of the sector in Galicia, Spain and
Europe.
"Thailand is highly competitive country in
the canned and processed tuna sector as is
shown in the production and foreign trade data, as it is
the main world producer and exporter of canned and proc-
essed tuna," stated Anfaco in a press release.
According to the data presented, in 2011 Thailand exported
91,357 tons of canned and processed tuna to the EU, that is
19 percent more than during the period between 2007 and
2011.
In late September, and in order to protect national canned
products, the Committee on Agriculture, Food and Environ-
ment of the Congress of Spain unanimously passed an offi-
cial statement in which it requested the EU to exclude the
canning sector and processed tuna from the free trade agree-
ment being negotiated with Thailand.
30

36. Country Focus:
The Netherlands
12
TEBA is always working to provide interested stakeholders
with improved information and insights on the key issues re-
lating to the Thai-European business environment. As a part
of this, we are kicking off our Thai-European Discussions se-
ries where we will be conducting interviews with some of the
key people in the sector to gain insights on the most impor-
tant business trends. TEBA will be speaking to senior execu-
tives of Thai and European businesses, government officials
and, as you will see from this inaugural interview, ambassa-
dors.
We are delighted that our first TEBA interview is with H.E.
Joan Boer, Ambassador of the Kingdom of the Netherlands
to Thailand. Mr. Boer kindly invited us to the beautiful Nether-
lands Embassy on Tonson Road in the heart of Bangkok for
Meeting with H.E. Joan Boer,
Ambassador of the Kingdom
of the Netherlands to Thai-
land
31

37. a discussion about his role and the current trends in Thai-
Dutch business relations. The large plot of green land where
the Netherlands Embassy is situated stands like a calm oasis
in contrast to the surrounding concrete jungle that is central
Bangkok. The grounds feature a small lake, an abundance of
trees and the modern embassy building standing next to the
traditional turn-of-the-century Thai house - infront of which
stand the herd of colourful cows representing different coun-
tries.
Supporting Dutch Business in
Thailand
“Well, the role of the embassy in supporting Dutch business
can be divided into two categories. For the larger Dutch com-
panies normally we only get involved when there is a big is-
sue, where a diplomatic approach is often seen as the best
way forward.
“For smaller companies, we handle everything from support-
ing their initial interest in the country, and help them with find-
ing producers and suppliers, conducting market research,
and having discussions with the BOI. We also provide them
with information on local taxes and business laws,” he tells
us.
Mr. Boer explains that with the Netherland’s-Thai Chamber
of Commerce is located at the Embassy; this allows them to
work together closely, forming what he calls a “One-stop Hol-
land House.”
Key Trends in Southeast Asia
On doing business in the region, Mr. Boer says, “It is rela-
tively easy to live here in Thailand and it is a dream for many
entrepreneurs. If you are in manufacturing, it is one of the
best places to be.” He tells us that he sees a lot of potential
in Thailand in terms of high value-added food products.
“Rice is not the most interesting agricultural food product
from Thailand anymore,” he says while talking about man-
gos. Though, he cautions that Thai industries, for example
the shrimp and tourism industries, need to be mindful of the
importance of sustainability.
Mr. Boer advises Thai companies to develop a more regional
view. “Thailand risks getting stuck in the middle-income trap
– it needs to focus on innovation and education in order to
move forward.”
While discussing improving innovation, Mr. Boer gives us an
example of a business strategy from a Dutch technology uni-
versity in Eindhoven, hometown of the Philips company. We
are told that in this compound there is just one restaurant
that everyone eats at. This way, people from different depart-
ments and levels of the organisation naturally interact with
each other and that this then leads to exchanges of ideas
and, therefore, to greater levels of innovation combining dif-
ferent disciplines. This is clearly simple and very effective
looking at the number of patented innovations coming from
that compound.
We move on to talking about Myanmar, where Mr. Boer
praises the English language skills of the Burmese people,
saying it is an important factor for doing business. With the
large oil pipeline project linking the country to China and the
growth of the Dawei seaport, he feels that this may in the
long term diminish the importance of Singapore as a trading
zone. In other sectors, he explains that the Shan Plateau is
great in terms of the potential for development of agriculture
and that its proximity to China will be of benefit. Mr. Boer
highlights the fact that Japan and China have been moving
heavily into Myanmar and advises Dutch companies to take
a long-term view of the country.
32

38. Discussing the growth of Myanmar, Laos and Vietnam, Mr.
Boer suggests that the center of business in mainland South-
east Asia will likely shift northwards and that Chiang Mai in
northern Thailand has a lot of potential as a future center of
trade and commerce in the region. He sees business being
focused on more of an East-West axis rather than a North-
South one.
Welcoming Business to the
Netherlands
In terms of welcoming business and people to the Nether-
lands, Mr. Boer poses one question: “Do we want more peo-
ple and businesses or less?” He is confident that more peo-
ple going to the Netherlands from Thailand and the region is
of clear benefit. There are around 30,000 Thai people living
in the Netherlands, many in the second generation of immi-
grants. Mr. Boer suggests “Rolling out the orange carpet” to
legitimate visitors going to the Netherlands and moving as
soon as possible to multiple-entry visas. We are told that
only 3% of visa applications to the Netherlands from Thai-
land are refused. He feels that the 97% of legitimate visitors
should not be hindered because of the 3% minority. If a po-
tential business visitor has been invited to visit the Nether-
lands, he wants them to be able to be there with as little has-
sle as possible.
Mr. Boer explains that there are numerous investment oppor-
tunities in the Netherlands. We are told that Thailand’s PTT
and Indorama have invested in the chemicals and petro-
chemicals industry in the Rotterdam area. Double A paper is
another example of a Thai investor in the Netherlands and
food products have a promising future.
Mr. Boer praises the Netherlands’ good tax structure and lan-
guage proficiency. “In fact, I have a Chinese daughter-in-law
who complains that she wishes to develop her ability to
speak Dutch; however, because almost everyone speaks to
her in perfect English, she has no opportunity to practice,”
he says.
“For Thai businesses wishing to invest in the Netherlands,
there are dedicated members of staff from the Netherlands’
investment agency based at the embassy in Bangkok 100%
focused on supporting Thai companies. They arrange com-
pany visits and assist with information on visas and tax is-
sues,” explains Mr. Boer.
With the Dutch having been around for 400+ years doing
business with the Thais from the beginning of when Thailand
started trading with the world, no doubt these close trade
and business ties will continue well into the future.
33

40. • Breakfast series on investment, free trade agreements, infrastructure and human resources.
• Ministerial meetings with Minister of Industry, Minister of Transport, Minister of Commerce of the Royal
Thai Government and other ASEAN ministers.
• Establishment of aerospace committee: Minister of Transport’s aerospace sub-committees on strategy,
human resource development and incentives. Contributed concept paper on national aviation industry
development.
• Contracted by Ministry of Industry to evaluate and recommend “Kitchen to the World” phase I
and II in Europe promoting Thai products and restaurants.
• Government delegation missions to Europe and in the region to promote both Thai and Euro-
pean businesses.
• Business matching and startups to Thai and European companies
• Capacity building workshops related to FTA and recommended on opportunities and challenges
for local businesses.
• Promoted businesses on Automotive and Energy, smartgrids and electric mobility and other new ad-
vanced technologies in policy making, supporting regulations and capacity building.
• Initiated HR development program to ensure that local business is supplied with quality workforce ade-
quately.
Key Achievements
in 2013
Our Mission
TEBA provides a cooperation platform representing localized businesses in Thailand in the
view to explore opportunities and at the same time enhance the competitiveness entering
ASEAN in order to support trade and investment between Thailand and Europe.
Moving forward into 2014
• Cross sectoral breakfast series including Human Resources, Logistics, Standards and ASEAN
• Sectoral specific continuous topics of interest from last year including Aerospace / Automotive / Energy / Food
• SME support center - capacity building and business matching between Thailand and Europe
Join Us Now
As a member, we will keep you up-to-
date with the latest development of
various industrial and business devel-
opment programs and access to our
capacity building programmes dedi-
cated to facilitate your businesses
Thai-European Business Association
Contact Us
The Trendy Building Sukhumvit 13
Unit 10/27, Floor 1A, Klongtoey-Nua
Wattana, Bangkok 10110, THAILAND
Tel: +66-(0)2-168 7486
Fax: +66-(0)2-168 7487
http://www.thaieuro.biz
info@thaieuro.biz
Corporate Members