CONTENTS October 2015 Volume 25 No. 10 Page Thailand’s New Economic Direction 1 News Bites / BOI Net Applications 2 Industry Focus: ASEAN Economic Community 4 National Food Institute 6 Transport Infrastructure Investment for the Future of Thailand 8 IT Salaries in Thailand 9 Thailand: Low Cost Construction 10 Thailand’s Aircraft Sector Moves Forward 10 BOI’s Missions and Events 11 Thailand Economy-At-A-Glance 12 Continued on P. 3 Thailand’s New Economic Direction Prime Minister Prayut Chan-o-chat has shown a commitment to revitalizing and strengthening Thailand’s economy, and recently put in place a new team to lead the economic program during the next phase. On 18 August 2015, he appointed Dr. Somkid Jatusripitak to steer his economic program, returning to government service with an ambitious plan to restore consumer confidence and spur small and medium sized enterprises to increase spending. In a weekly address to the nation, the Prime Minister has underlined the importance of SMEs to the economy, and of the contribution of farmers and low wage earners. He indicated that in order to maintain steady economic growth, the government has set up 5 different missions, which it will implement simultaneously: First, the government will look after and mitigate the hardship of fellow agriculturists and low-income earners. Second, it will build stability in local and regional economies. In the past, the country’s economic growth relied heavily on exports. We need to bring balance and strengthen the economy through internal factors which rely on the growth of local and regional economies. This can be achieved through the promotion of tourism, social activities, OTOP products, community enterprises, cooperatives, and community markets.
Transcript
CONTENTS
October 2015 Volume 25 No. 10
Page
Thailand’s New Economic Direction 1
News Bites / BOI Net Applications 2
Industry Focus: ASEAN Economic Community 4
National Food Institute 6
Transport Infrastructure Investment for the Future of Thailand 8
IT Salaries in Thailand 9
Thailand: Low Cost Construction 10
Thailand’s Aircraft Sector Moves Forward 10
BOI’s Missions and Events 11
Thailand Economy-At-A-Glance 12Continued on P. 3
Thailand’s New Economic Direction
Prime Minister Prayut Chan-o-chat has shown a commitment to revitalizing and strengthening Thailand’s economy, and recently put in place a new team to lead the economic program during the next phase. On 18 August 2015, he appointed Dr. Somkid Jatusripitak to steer his economic program, returning to government service with an ambitious plan to restore consumer confidence and spur small and medium sized enterprises to increase spending.
In a weekly address to the nation, the Prime Minister has underlined the importance of SMEs to the economy, and of the contribution of farmers and low wage earners. He indicated that in order to maintain steady economic growth, the government has set up 5 different missions, which it will implement simultaneously:
First, the government will look after and mitigate the hardship of fellow agriculturists and low-income earners.
Second, it will build stability in local and regional economies. In the past, the country’s economic growth relied heavily on exports. We need to bring balance and strengthen the economy through internal factors which rely on the growth of local and regional economies. This can be achieved through the promotion of tourism, social activities, OTOP products, community enterprises, cooperatives, and community markets.
NEWS BITES BOI NET APPLICATIONSUS Investors Affirm Thailand’s Great Economic Potential
Prime Minister General Prayut Chan-o-cha recently welcomed more than 70 members of the US-ASEAN Business Council, from 29 leading US companies, who affirmed that Thailand has great potential in this region and that they wanted to play a part in strengthening the Thai economy
The Government and the National Council for Peace and Order have put in place related laws and measures, such as the Facilitation of Official Permission Granting Act, the one-stop-service center, the Integrity Pact, and the CoST system, which focuses on ensuring efficient, comprehensive, and integrated government services. Various laws and regulations are also being amended to reduce trade and investment obstacles and facilitate the mobility of products, labor, and investment.
New Energy Efficiency Plan and Energy Security Policy
The National Energy Policy Council has approved the Energy Efficiency Plan, to be implemented from 2015 to 2036, aimed at reducing Thailand’s energy intensity by 30 percent, against 25 percent in the previous plan.
The Energy Efficiency Plan also comprises several measures, for instance, the use of high energy-efficiency equipment and buildings will be promoted. The measures are expected to reduce domestic energy consumption by more than 8.5 trillion baht in the next 20 years.
The National Energy Policy Council also approved criteria for the price structure of electricity to ensure that electricity rates would be set appropriately, based on the real production costs. This would also ensure fairness for consumers. The new price structure will be announced later in 2015.
Accelerating Halal Industrial Development in Thailand
The Ministry of Industry has set a target to upgrade the status of Thailand to one of the top five largest exporters of halal products and services in the world within the next five years.
Strategies already endorsed by the Cabinet seek to develop halal standards, enhance the production potential for halal products and services, promote the brand “Thailand Diamond Halal” in the international market, and strengthen the country’s halal industry through research and development.
It is expected that more than 7,900 billion baht will be spent on the implementation of these strategies. Out of this amount,
2014(US$ = 32.90THB)
2014 (Jan-May)(US$ = 32.52 THB)
2015 (Jan-May)(US$ = 33.55 THB)
Number of projects Value Number of
projects Value Number of projects Value
Total Investment 3,363 65,101 471 9,161 306 1,438
Total Foreign Investment 1,573 31,094 334 7,072 155 407
By Sector
Agricultural Products 789 8,158 57 391 31 121
Minerals / Ceramics 103 4,685 16 470 10 80
Light Industries / Textiles 120 1,274 14 90 7 22
Automotive / Metal Processing 736 9,895 111 4,866 39 99
Electrical / Electronics 384 4,418 77 199 67 47
Chemicals / Paper 485 12,693 42 784 17 99
Services 746 23,980 154 2,362 135 971
By Economy
Japan 643 8,164 155 2,202 40 153
Europe 243 4,668 43 1,974 36 21
Taiwan 72 780 9 21 10 36
USA 70 3,858 11 812 7 3
Hong Kong 43 701 16 225 9 44
Singapore 121 1,279 18 102 26 90
By Location
Central 1,113 9,867 180 783 138 544
East 1,294 40,770 183 7,070 74 321
South 190 1,524 21 204 19 96
Unit: US$ MillionNote: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries / Statistics on net applications are adjusted whenever applications are returned to applicants due to insufficient information.
3,286.5 million baht will be allocated to the Ministry of Industry, which will join hands with various relevant organizations in accelerating halal industrial development. Thailand now ranks 13th among the world’s largest halal producers. Starting from the 2016 fiscal year, the Government will set aside 403.8 million baht for various organizations to carry out projects to develop and enhance the potential of Thailand’s halal business.
Under the strategies for developing and enhancing the potential of Thailand’s halal business, a major boost will be given to food and beverage, textiles and garments, cosmetics, pharmaceutical products, herbs, restaurants, tourism business, hotels, hospitals, and spa services.
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Third, emphasize improving the quality of Thai products by the enhancement of processing and packaging of SME products as well as industrial products. These products need R&D and innovation in order to create added-value, which will in turn create more income for the people and producers, and make Thailand more competitive.
Fourth, promote mega investments, with an aim to lay down a strong economic foundation, be they special economic zones, infrastructure improvement, and regional connectivity.
And fifth, trade and investment with other nations must be promoted while cordial diplomatic relations must be maintained and strengthened.
Likewise, shortly after being appointed Deputy Prime Minister, Dr. Somkid, in laying out his agenda as a leader of the government economic team before an audience from the Thai public and private sector, announced the new direction for the economy that would boost competitiveness and seek to mitigate the impact of the global economy by giving more attention to domestic needs. He aims to decrease Thailand’s dependence on exports, representing a significant portion of Thailand’s GDP.
While continuing to support the goal of a digital economy for Thailand, DPM Somkid will direct his attention to strengthening the Kingdom’s economy by creating industrial clusters that will in turn strengthen SMEs and have a multiplier effect for economic growth. The government will also return its focus to local products and One Tambon, One Product (OTOP) development.
In fact, speaking at the launch of the “SME Provincial Champions” program, which aims to create business prototypes to mobilize the provincial economy, the Prime Minister remarked that SME promotion is a key mechanism in driving national economy,
and that strengthening and enhancing the competitiveness of SME production and services is essential to maintain economic stability.
Likewise, speaking at the Economic Policy and Thailand Direction seminar, held at the Dusit Thani Hotel on 27 August 2015, Deputy Prime Minister announced that the government will promote six new industrial clusters, which would include processed food and value-added agriculture products; automobiles and parts; electrical, electronic and telecommunications; petrochemical and environmentally friendly chemical products; IT and digital cluster; and textiles and garments. Also, there would be a “Rubber City” utilizing local resources (natural rubber) and an educational institution cluster to help improve the skills of the Thai work force.
The Map Ta Phut and Laem Chabang seaports and industrial areas would also be expanded and bring down logistics costs for those investing in Thailand.
On 1 September, the Cabinet moved quickly to approve several measures.
The first creates a fund of 60,000 million baht for the Village and Urban Community Fund. According to reports, 30,000 million baht will come from the Government Savings Bank and another 30,000 million baht from the Bank for Agriculture and Agricultural Cooperatives. Each village, or community, will receive a revolving fund of up to one million baht.
“We point out the importance of SMEs, with around 2.7 million entities, to the Thai economy as they account for 37 per cent of national gross domestic product and employ around 11 million people. While most of the SMEs are running domestic businesses, they represent 25 per cent of Thailand’s exports,” Tim Leelahaphan, Maybank’s Thailand economist was quoted to say in The Nation newspaper.
Second, with the Ministry of Interior as the core agency in allocating five million baht to each sub-district, a budget has been approved for 36,275 million baht for job creation projects such as repairing water sources, water distribution systems and health centers, schools and central markets in 7,255 sub-districts. These projects will be undertaken in line with His Majesty the King’s philosophy of the Sufficiency Economy.
And third, offers a budget of 40,000 million baht to implement small investment projects, with each project worth not more than one million baht. The three measures have a total budget of 136,275 million baht.
The Thai economy currently faces headwinds from the slow return to growth in the United States, European Union, and now from China and elsewhere, but its economy is nevertheless fundamentally sound. With renewed confidence in the domestic market, and with an injection of funds to boost spending and provide stimulus, the economic future looks bright.
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INDUSTRY FOCUS
ASEAN Economic Community
The Association of Southeast Asian Nations (ASEAN) is intensifying efforts to realize the ASEAN Economic Community (AEC) and implement initiatives to achieve a single market and production base, allowing the free flow of goods; and freer flow of services, investments, and skilled labor; and greater movement of capital across the region. With over 600 million people, ASEAN’s potential market is larger than the European Union or North America. Next to China and India, ASEAN possesses the world’s third largest labor force, characterized by its youth and dynamism. Furthermore, with an ever-growing and diverse consumer market, coupled with a combined gross domestic product of US$2.4 trillion, ASEAN will be the fourth-largest economic region in the world by 2050, according to research conducted by McKinsey Global Institute. The growth of the region’s various economies and its rising middle class speak volumes for the future as companies can tap into expanding opportunities.
With a population that is young, entrepreneurial, and increasingly cosmopolitan, labor productivity is sure to increase if education and skills training are adjusted properly to meet the needs of an integrated marketplace. The availability of skilled labor and the ease of doing business and getting investments going will be crucial for foreign companies to invest in ASEAN. Foreign direct investment (FDI) last year in the five largest ASEAN economies – Indonesia, Malaysia, the Philippines, Singapore and Thailand – totaled US$128 billion, exceeding China’s FDI of US$117 billion.
On its 40th anniversary in August 2007, ASEAN adopted the ASEAN Economic Community Blueprint, which advanced the completion target to 2015 from 2020. Four pillars define the AEC: (1) creating a single market and production base, (2) increasing the region’s competitiveness, (3) promoting equitable economic development, and (4) further integrating ASEAN with the global economy.
In November 2007, ASEAN leaders also approved the Initiative for ASEAN Integration Strategic Framework and Work Plan (2009-2015), which is meant to bridge the perceived “development divide” between the older and economically more advanced members, known as the ASEAN-6 (Brunei, Indonesia,
Malaysia, the Philippines, Singapore and Thailand), and the four newer ones – Cambodia, Laos, Myanmar, and Vietnam. Equally significant, under the ASEAN Free Trade Agreement, the Common Effective Preferential Tariff scheme has brought down tariff rates on goods coming from ASEAN members to virtually zero for the ASEAN-6. The four new ASEAN members have until the end of this year to reduce their tariffs.
From automobiles and parts to natural resources, the variety and quality of products and services traded has made ASEAN the fourth-largest export region in the world. Even more so, the launch of export-processing zones across ASEAN has increased interaction internally and externally. Further advances are expected once the AEC in 2016 allows for greater movement of goods, services, skilled labor and investment. However, improvements are required for intra-regional trade to reach its full potential, since some countries still have some tariff and nontariff barriers in place.
Notable progress has been made on the AEC’s first pillar, which is fundamental to developing a single market and production base in goods. Tariffs have been reduced substantially, with more than 70% of intra-regional commerce in ASEAN enjoying zero tariffs, and less than 5% of goods being subjected to tariffs of more than 10%. These developments will encourage intra-ASEAN trade in manufacturing and agricultural goods. Although progress has been made with the signing of mutual recognition agreements in seven professions, realization of the trade in services agreement is much slower.
Nonetheless, slow yet steady progress has been seen in attaining the goals of liberalizing investment and capital flows. The signing of the ASEAN Comprehensive Investment Agreement in 2012 was an important step in building a better business environment for the private sector in the region. Moreover, to enhance trade facilitation, the National Single Window (NSW) program currently is observed by the ASEAN-6.
Modest achievements are visible regarding the second and third pillars of the AEC. Among the highlights are the adoption of the ASEAN Intellectual Property Rights Action Plan 2011-2015 to strengthen intellectual property institutions in the region; the adoption of the Master Plan on ASEAN Connectivity to enhance the region’s transport connectivity and energy security; and the actualization of the ASEAN Strategic Action Plan for Small and Medium-Sized Enterprise (SME) Development, which aims to give guidance on the flagship projects and other SME initiatives in the region to promote inclusive growth.
Meanwhile, the implementation of the fourth pillar has progressed well over the past decade. ASEAN not only has emerged as the hub of free trade agreement (FTA) activity in the Asia-Pacific, but also has assumed a leadership role in negotiating trade rules for connecting Asia to the rest of the world. FTAs have been concluded with ASEAN’s six dialogue partners: Australia, China, India, Japan, South Korea, and New Zealand. Moreover, negotiations for the Regional Comprehensive Economic Partnership (RCEP), covering ASEAN and its dialogue partners, were launched in 2012. If signed and put into action, the RCEP will become the world’s biggest trade bloc, covering 40% of global commerce, and will provide significant economic gains to members.
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When compared with China and India, the AEC is the best alternative for investors. Through the vertical and horizontal integration of ASEAN’s individual national economies, it will stimulate intra-regional investment, trade and business connections, thereby benefiting both foreign and local firms. Challenges remain in the elimination of NTBs such as a single channel for imports, price control measures, natural resource subsidies and preferential treatment of state-owned enterprises. Indeed, many of the remaining challenges to achieving the goals of the AEC are tied to ASEAN’s ability to harness cooperation and commitment, and address the development divide among its members.
According to the business survey, Re-drawing the ASEAN Map, sponsored by Baker & McKenzie and CIMB, companies are increasingly managing the ASEAN region as one economic entity rather than ten separate economies. Some 76% of MNCs operating in Southeast Asia now have a strategy that is tailored specifically to the ASEAN bloc. And while the countries of Southeast Asia remain deeply diverse and different, they are gradually growing more alike. This is enabling companies to be more regional in their strategy. The report reveals that 64% of companies believe their customers across ASEAN are becoming more similar. As a result, 62% of companies are standardizing the products and services they offer across ASEAN. Moreover, MNCs already have multicultural environments and employee exchange policies in place within their organizations, putting them in a much better position to recruit talent from ASEAN countries.
While larger companies seem ready for the AEC, small and medium-sized enterprises (SMEs) are less prepared. According to a survey by the Asian Development Bank, less than one-fifth of ASEAN firms are ready for the transition. This is despite the fact that small to and medium-sized businesses generate approximately 90% of ASEAN jobs and 30 to 50% of GDP.
The abundance of resources as well as lower manufacturing costs will assist SMEs increase their productive capacities. A certain level of competition is always healthy for any business, and this will spur on SMEs to perform better and improve their operating procedures. Plus, being viewed as a single large market also encourages integration which, in turn, will lead to greater economic proficiency for ASEAN as it meets the challenges of other big markets in the vicinity, such as China and India. However, elevated competition also means some SMEs may be left behind. The ability to identify the risks and benefits of the AEC and to take advantage of this new marketplace may not come easily to everyone, which means not every business will be able to grasp the opportunities as well as they should.
For Thai SMEs, the best trade and investment prospects are Indonesia and the CLMV (Cambodia, Laos, Myanmar, and Vietnam) group. Without a doubt, the AEC will open a window for Thai SMEs to engage in more trade and commerce, like selling consumer goods or construction materials, and operating small retail businesses. Thai goods and services already are well known and have a good reputation within neighboring countries as products from Thailand are preferable when compared to goods from China in terms of quality.
Regarding the ASEAN Comprehensive Investment Agreement, the accord is not an investment catchall that any business type or investor can profit from,
and it contains precise definitions of authorized investments and investors. An investor under the ACIA can be either a natural or juridical person. A natural person is defined as a national, citizen, or permanent resident of an ASEAN member state. A juridical person is defined as any legal entity under the applicable laws of an ASEAN member state whether for profit or non-profit, or private or government owned, and can be a corporation, trust, partnership, joint venture, sole proprietorship, association, or any other legal business entity. A very important feature of this definition is that a juridical person in ASEAN member state controlled by a third country national also is defined, with some caveats, as an allowed investor.
The overall goal of the ACIA is to establish a freer, open, transparent and integrated investment regime for domestic and international investors throughout the ASEAN region, and the ACIA’s benefits include investment liberalization, non-discrimination, transparency, investor protections, and Investor-State Dispute Settlement.
For ASEAN to be a truly competitive region, infrastructure development is crucial. The Asian Development Bank (ADB) has estimated that ASEAN requires an annual infrastructure investment of US$60 billion annually until 2020. To this end, the ASEAN Infrastructure Fund was created in 2011, comprising equity contributions from ASEAN member countries and co-financed by the ADB, to address the region’s critical infrastructure development needs.
Another priority area is labor mobility, particularly of professionals, that will require careful consultation and collaboration. This issue is recognized in the AEC Blueprint. When investing or expanding in the region, companies may want to use a mix of manpower from headquarters as well as the local work force or have local talent trained elsewhere in the region. In such scenarios, the movement of labor will be critical. Similarly, financial integration is essential but it will be imperative to manage the risks of liberalization.
Actually, infrastructure development among the ASEAN countries, encompassing the development of hard infrastructure such as roads, ports and airports, as well as soft infrastructure such as human resource development and training are being concentrated. The harmonization of technical standards, with the objective of “One standard, one test accepted everywhere,” is an initiative in facilitating trade. Likewise, mutual recognition agreements (MRAs) enable companies to produce more standardized products and pool skilled labor effectively.
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National Food Institute
Thailand Investment Review had the opportunity to learn more about the National Food Institute from its President, Mr. Saovapruk Yongvut, and the importance of this sector to Thailand’s growing economy.
Mr. Saovapruk Yongvut, President of The National Food institute, recently supplied Thailand Investment Review with valuable information and insight on the work of the NFI and on Thailand’s food industry. The NFI, he writes, was set up and started operation on October 15, 1996. NFI is an organization under the Industrial Development Foundation of the Ministry of Industry. Today, it has over 150 staff working in various areas of expertise and providing services to both private and public food-relevant sectors.
The NFI’s mandate is to promote development of the food industrial sector so as to make them competitive in the world market. NFI’s mandate is reflected in all our activities and services. For example, it has been continually conducting market surveys and gathering food industry-relevant information which we share with the pertinent and interested private and
public sectors. NFI conducted researches that contributed to the development /improvement of quality standards; problem solving as well as building food safety awareness. It has organized and conducted seminars and training workshops to build/improve the competence of the people working in the food sector. It provides services in food inspection, laboratory testing and product certification as well as technical assistance related to implementation of GMP, HACCP and other food safety and quality management systems and laboratory management to the private sector. It also provides services to assist food manufacturers conform with the legislative requirements of the country as well as the major importing countries of our products; promote cooperation between private and public sectors, facilitate market linkages by providing a platform for networking or organizing activities for the food entrepreneurs to improve and widen their business perspective through information exchanges, networking or business matching. NFI also foster cooperation on research and development among the academics, the government institutions and the private sector with the view of venturing more on researches with practical and commercial applications.
NFI’s strategic services are focused on:
(1) Policy research - to address trade-related issues with potential impacts to our food industries. NFI’s aim here is to study the effects and evaluate the risk that our products are exposed to under the changing market environment and to come up with strategies/policies that would help food producers cope or leverage the impacts of the changes/development. NFI’s present policy or strategy is to promote aggressive development of the food industry.
Upon closer examination, a more integrated market could lower transaction costs. In particular, it could bring down inventory costs by reducing the number of specialized products that companies need to keep in stock and by minimizing the chances of goods arriving after customers need them. Standardization is important for multinationals, which have global networks. However, small and medium enterprises, too, will find harmonization useful.
An update on the AEC’s progress was provided at the 26th ASEAN Summit, held in Malaysia in April 2015. The meeting’s statement noted that the AEC Scorecard – which assesses the degree of target actualization in the AEC Blueprint – stood at 90.5% out of 506 measures. Even though the figure can be debated, there is consensus that forward momentum does exist and a realization that integration will help increase ASEAN competitiveness vis-à-vis China and India.
Contentious issues, such as agriculture, non-tariff barriers, integration of the less-developed CLMV (Cambodia, Laos, Myanmar, Vietnam) members, and financial integration remain to be worked out. According to the US International Trade Commission report on the AEC, challenges were seen in the area of importing and exporting with procedures for trading ranging from relatively easy to very difficult. The quality of logistics services also varies among the ASEAN members, such as customs brokerage, freight forwarding, and express delivery.
In many ASEAN countries, restrictive regulations hamper the delivery of high-quality logistics services.
Obviously, executives have to adjust strategy. Inside the AEC, managers will increasingly have to pursue sales opportunities across the region while focusing relentlessly on cost efficiencies by integrating their operations across the region, managing through lean techniques but also developing effective corporate centralization. Externally, managers residing overseas are going to have to start paying better attention to this new opportunity. Many of them right now seem to have eyes for only China and India. Asia is much more than either of these two countries and managers need to study and better understand the possibilities that the AEC presents.
The AEC project has been crucial for moving ASEAN from its beginnings as a political grouping in 1967 to becoming one of the most dynamic regional economic blocs in the developing world. The solidarity and enthusiasm shown by ASEAN members in trying to meet the AEC goals are notable. Finally, the AEC is a work in progress. Some promises have been met, but significant challenges also remain. Awareness among policymakers and final users is growing. ASEAN is criticized often for weak institutions, which also has made AEC implementation difficult. But only time will tell how much of this can be changed. With the AEC and ASEAN Charter in place, the region already has evolved into a rules-based association.
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(2) Supporting/facilitating/ promoting production of value-added food product development that are both acceptable and compliant to requirements of the world market.
(3) Updating pertinent technical and administrative people with relevant and analyzed information. Such information is often used in preparing business plan, identifying issues and scope for market research and in promoting information exchanges. Updated food industry-related information is now available in the NFI website at www.nfi.or.th and at the Food Intelligence Center at http://fic.nfi.or.th.
(4) Providing standardization advisory services including pre-audit and pre-assessment of the food establishments’ quality/food safety management system in preparation to their appl icat ion for GMP, HACCP, BRC, ISO 9001:2008, ISO 22000:2005, ISO/IEC 17025, or Clean Technology certification. Coaching is also provided on the implementation of Green Productivity by manufacturers wanting to improve not only their production efficiency but also reduce their environment impacts through carbon and water footprints reduction.
(5) Providing public or in-house training/workshops on food-related issues to improve the competence of the people working in the food sector.
(6) Providing laboratory testing services on microbiological and chemical analyses as well as proficiency testing on a number of microbiological and chemical analyses for food and water.
(7) Other services include process validation through calibration of measuring instruments and test assessment of temperature distribution and heat penetration in food in closed containers.
In looking at the strength of the Thai food industries, we are informed that it lies mainly on its quality production and management systems meeting international quality standards. Secondly, Thailand is endowed with quality raw material supplies, skillful manpower with knowledge of modern food production techniques and availability of other supporting industries that strengthen the entire food chain including packaging material manufacturing industries, transport and logistics services as well as warehouses and cold storage services. Finally, Thailand, being in a strategic location and a popular tourist destination, has attracted many foreigners to invest in our food industry. This has presumably accounted for the improvement of Thailand’s World Economic Forum ranking as the 31st top world food exporter in 2014-2015, up from 37th place the year before.
Thailand is one of the countries with high potential to become a Halal food hub in Asia for the following reasons. Firstly, Thailand has an abundant supply of quality raw food materials and food ingredients. In fact many Muslim countries have already been sourcing cassava starch, sugar, fresh chicken and many others from Thailand. Secondly, Thailand’s food production system meets international hygiene standard (Codex). GMP, a basic market requirement is a mandatory requirement for all food establishments in Thailand that produce FDA list of controlled products. As such, Halal food producers would only need to incorporate a few more required practices in their production system to be Halal-compliant. Thirdly, Thailand has strong and independent religious agencies such as the Central Islamic Council of Thailand (CICOT) and the 36 Islamic Provincial Committee that are capable of certifying production system conformance to Halal food standards. Additionally, there are also government agencies and universities that can provide technical assistance to food business operators putting their food production system in conformance to Halal standards.
Finally, the present government, in its effort to drive Halal food businesses and products forward, has even appointed a national committee to promote its development by drafting a 5-year strategy plan (2016-2020), which has been already endorsed by the parliament.
In 2015, Thailand’s export of Halal food is expected to amount to 215,000 million Baht, a 6% increase from that of last year. Major markets for Thai Halal food include Indonesia with 19% share and Malaysia with 18% share. Other markets include the Muslim countries in the Middle East and in Africa whose combined market share comprises of 56% of our total Halal food exports. Our exports to those countries though has slowed down presumably because of the lowering of oil price knowing that these countries largely relies on oil price for their incomes.
Important industry trends to be watching
Based on the survey results on opinions of private food industry sector around the globe that were published at the Journal of Food Engineering, the ten trends that would impact on food producers within the next 5 years and that we ought to be watching include:
1. The use of more automatic machine or robots in the production line.
2. Safety aspects of food3. Changing consumers’ demand4. New product development5. Improvement of machineries for modern production line
and increasing new production lines6. Lean system of production to cut down on wastes7. Point on rules and regulation 8. Reduced package size or packaging renovation9. Audit by reliable agencies10. Sustainable method of production
Based on the list, our strength of having abundant supply of raw materials may no longer suffice to compete in a highly competitive globalized trade as other players would be entering the scene offering the same products albeit for lower prices. The results of the study suggests that innovation and technology are the major ways to go for the Thai food industry to compete in the near future.
Among the measure that need to be taken for Thai food businesses to remain competitive in the world market, it is important that they listen to the changing market trends and adapt changes through improvement in production efficiency throughout the supply chain to reduce production costs and able to offer competitive prices in the world market. Likewise, promotion of value creation in products which means that products should not only meet the basic requirements for food but also should satisfy the complex needs of the consumers. Strategic thinking of ways to gain market to meet consumer’s satisfaction, which requires a deep understanding of the market and their consumer’s behavior and preferences and thorough planning to position and advocate the product’s image in the market. Improvement in food production/management systems and product standards to meet international requirements for food safety and traceability. And preparation to compete in the digital era of competition to be able to exploit the use of the technology to its fullest advantage. Using the world wide web on line system of communication in businesses and in reaching out consumers can provide SMEs a platform that would enable them to conduct their businesses with minimal resources.
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Transport Infrastructure Investment for the Future of Thailand
Thailand continues to improve the nation’s infrastructure and its connectivity with neighboring ASEAN countries in the run-up to the ASEAN Economic Community. In August of this year, Prime Minister Prayut Chan-o-cha spoke of the progress being made on Thailand’s transport infrastructure investment with China and Japan.
Thailand is working with China in the development of a railway project, with medium-speed trains running between 160 to 180 kilometers per hour. The project is divided into four sections, with a total length of 873 km. The first section is from Bangkok to Kaeng Khoi, covering 133 km. The second section is from Kaeng Khoi to Map Ta Phut, with a length of 246.5 km. The third one covers 138.5 km from Kaeng Khoi to Nakhon Ratchasima, and the fourth one from Nakhon Ratchasima to Nong Khai, covering 355 km.
The timeframe for the railway project is three and a half years, beginning with the construction of the first section from Bangkok to Kaeng Khoi. The third section from Kaeng Khoi to Nakhon Ratchasima will begin by December of this year.
Thailand, China, and Lao PDR are joining a project to develop a railway network that will help reduce transportation costs for entrepreneurs and distribute wealth to the regional areas of the country.
Likewise, Thailand is working with Japan on three routes for a high-speed train project. The first route, 672 km, will run from Bangkok to Chiang Mai; the second route, 193.5 km, will connect from Bangkok to Rayong, and the third route, 211 km, from Bangkok to Hua Hin. Private sector investment will be sought for this project.
In addition to enhancing rail connections within Thailand and to the region, Thailand is also working on the Second Thai – Myanmar Friendship Bridge, linking Mae Sot, Tak province, with Myawaddy in Myanmar.
An inauguration ceremony for this project was held by Thailand’s Deputy Prime Minister Somkid Jatusripitak and the Deputy President of the Republic of the Union of
the Myanmar U Nyan Tun.
The br idge , wh ich is expected to be completed with in two years, wi l l help promote increasing trade along the East-West Economic Corridor (EWEC) route. In this connect ion, i t should be reca l l ed t ha t t he Myawaddy – Kawkareik Road is part of the Trilateral Highway Project linking Thailand – Myanmar–India and EWEC. It Myawaddy – Tanaosri portion of the road was comp le ted and unofficially opened for public use on 9 July 2006 and the Tanaosri – Kawkareik (26 kilometers) part was more recently completed in July 2015.
The road and the second Thai – Myanmar Friendship Bridge will connect the two countries and facilitate trade and investment.
Another aspect of the government’s move to create stimulus through infrastructure spending, which in turn attracts more investment, is in its mega-projects including 17 Transport Ministry projects. As reported in The Nation, “Bidding will start this year on construction contracts for Bangkok’s mass-transit East Orange (worth Bt110 billion), Pink (Bt31.2 billion), Yellow (Bt31.6 billion) and South Purple (Bt103 billion) lines and six standard-gauge dual-track rail routes worth Bt490 billion.”
Looking ahead over the next five years, investors can see a region that is becoming increasingly interconnected, with age old boundaries being opened and markets expanded. At the center of all this activity is Thailand, with its pro-business government and a liberal market economy.
Source: ACM Prajin Juntong, Deputy PM, meets with Mr. Masafumi Shukuri, President of International High-Speed Rail Association (IHRA)
October 2015
Page 8
IT Salaries in ThailandAs of 2015-Q3, multinational companies in Thailand were typically paying salaries for IT positions as shown in the following table. The job categories in the table are arranged by skill and level of experience. The column headed “Experience” refers to total years of IT work experience, not necessarily just experience with that specific skill.
Although the high end and the low end of the salary ranges have remained largely unchanged over the past year, we are seeing more positions being filled towards the higher end of most ranges. This reflects the ongoing demand for IT staff and contractors, especially those with good English language skills. As we predicted last year, more job descriptions are now including a requirement (or at least a request) for experience with cloud-related technologies (architecture and migration, as well as development and support). Many larger consumer-oriented companies have also added or increased the scope of senior positions with responsibility for “digital technology”. These are generally not hands-on roles, but rather are more focused on finding ways to create an overall IT strategy across multiple marketing and sales channels (web, mobile, point-of-sale, loyalty programs, etc.). The job functions which support that effort (such as data analytics and business intelligence) also continue to be in high demand.
Speaking of mobility, one noticeable trend has been the growing maturity o f SMEs in Bangkok’s sof tware development community, many of which focus on creating mobile and web-based applications (often for overseas customers). While this is a welcome change, it also increases the competition for the “best and brightest” developers and designers. So despite the possibility of a slowing economy, we don’t expect that it will get any easier to find talented IT staff in the coming year.
The amounts shown in the table are basic monthly salary only. Although genera l ly not guaranteed, most companies also pay an annual bonus of at least one month. Many larger companies also offer a health insurance plan and some also contribute to a provident fund on the employee’s behalf. Senior management positions often include benefits such as a car (or a transportation allowance), laptop, and mobile phone. Companies located in the provinces will sometimes offer an additional “upcountry allowance” or relocation benefit as an added incentive for skilled staff to take a job outside Bangkok.
The salaries assume staff who are Thai nationals, with at least a reasonable command of English (or better, for the more senior jobs). If the English proficiency is not strong, salaries may be slightly lower. Similarly, for those positions where certifications are indicated in the job description, candidates without certification can generally be hired for somewhat less.
Contractors are also often available on a fixed-term basis for many of these job functions. Contract rates are generally higher than salaries for permanent staff in the same position. Rates are also significantly affected by variables such as length of the contract.
3 - 7 years 45,000 - 70,000 7 - 10+ years 70,000 - 120,000+
Programmer/Analyst (RPG/400, COBOL) 5 - 7+ years 55,000 - 75,000+
System Analyst (salary varies with technical or application-specific skills and industry knowledge) 5 - 7 years 55,000 - 70,000
Mobile Developer (iOS SDK, Android SDK, UI / UX development) 2 - 3 years 30,000 - 45,000 3 - 5 years 50,000 - 70,000+
Web Designer / Graphic Designer 3 - 5 years 35,000 - 50,000
Digital Marketing / Search Specialist (SEM, SEO, PPC, etc.) 2 - 5 years 35,000 - 50,000
Digital Marketing Manager 5 - 10+ years 55,000 - 80,000+
Business Analyst (liaise between users and IT; not technology-specific) 5 - 7+ years 50,000 - 70,000+
Business Intelligence Developer / Data Modeler (Cognos, SAS, Business Objects, Hyperion, QlikView, Crystal Report, ETL, etc.) 5 - 7 years 55,000 - 75,000
Implementation Consultant ERP / Business Intelligence / Data Warehouse (SAP, Oracle, Dynamics, SharePoint, Cognos, Business Objects, Teradata, etc.)
5 - 7 years 55,000 - 70,000
7 - 12 years 70,000 - 150,000
DBA (Oracle, SQL-Server) 5 - 7+ years 55,000 - 80,000 Data Architect / Data Scientist (higher end of salary range includes “Big Data” experience, e.g. Hadoop, Hive, Netezza, Redshift, Teradata, etc.) 12 - 15 years 140,000 - 250,000+
Software Development Manager 10 - 12+ years 90,000 - 140,000+
Solutions Architect / System Architect 12 - 15 years 120,000 - 150,000+ Cloud Technology Architect 10 - 15 years 130,000 - 170,000
IT Auditor, with certifications (CISA, CPA, COBIT, etc.) 10 - 12+ years 100,000 - 150,000
Presale Technical Consultant (Network / System Engineer, Cloud / Virtualization Consultant, for an IT vendor) 7 - 12+ years 70,000 - 100,000+
Network Engineer / Network Operations Center, with relevant certifications (CCNA, JNCIA, CompTIA Network+, etc.) 3 - 5 years 35,000 - 50,000+
Network Administrator / Telecom Engineer, with relevant certifications 5 - 7+ years 50,000 - 70,000
System Engineer / System Administrator, with relevant certifications (MCSE, MCSA, SCCM, SCOM, CompTIA Server+, etc.) 3 - 5 years 50,000 - 55,000
5 - 7 years 55,000 - 65,000
Network Security Administrator with vendor or other relevant certifications (Cisco, Checkpoint, CompTIA Security+, etc.) 5 - 7 years 50,000 - 70,000
Infrastructure Manager, with vendor or other relevant certifications (CCNP, MCSE, CompTIA Network+, etc.) 7 - 10+ years 70,000 - 90,000+
Senior Infrastructure Manager / Data Center Manager 10 - 15 years 120,000 - 150,000
Project Manager / Service Delivery Manager, with certifications (PMP, ITIL etc.) 10 - 12+ years 110,000 - 160,000+ Release Manager / Configuration Manager 10 - 15 years 120,000 - 170,000 Project Director / Program Director 15 - 20 years 200,000 - 300,000
IT Manager (salary varies significantly by industry and by the size of IT department and IT infrastructure) 10 - 12 years 90,000 - 150,000
IT Director / Digital Technology Director / Mobile Technology Director 15+ years 180,000 - 250,000+
Chief Information Officer / Chief Technology Officer (often includes some regional responsibility) 15 - 20+ years 250,000 - 400,000+
Source: ISM Technology Recruitment Ltd.
October 2015
Page 9
Thailand: Low Cost Construction
Thailand’s Aircraft Sector Moves Forward
Thailand remains a cost effective location for foreign investment, particularly when considered together with the infrastructure that is available, the motivation of the government to assist foreign investors and the incentives offered by the Thailand Board of Investment. Within ASEAN’s second largest economy, investors not only have access to a vibrant domestic market, but also are able to use Thailand as a gateway into ASEAN and into Asia.
The Thai government has been working hard to boost up the nation’s connectivity with its fellow ASEAN members, and to provide investors with easy access to both markets and labor. The Special Economic Zones (SEZs) being established along the border will facilitate access to the lower cost labor of some neighboring countries while maintaining a presence in Thailand. Likewise, the new International Headquarters and International Trading Centers policies will also facilitate this, while enjoying very attractive tax incentives from the Thai Revenue Department and service and assistance from the BOI.
One area where investors can find bargains in Thailand is in prime office occupancy costs, with the Kingdom being among the lowest in the region. But more than that, there has been no increase in construction costs over the past year. In fact, a standard low rise factory (under 10,000m2) carries construction costs of between US$448 and $567 per square meter (exchange rate at $1:THB33.5). Other costs are equally attractive, as indicated in chart 2.
While minimum wage has increased in recent years, many leading companies were already meeting the threshold and more, attracted to Thailand not so much by low cost labor and by the entire package that Thailand offers, including skilled and productive labor. In this regard, the government has indicated its intention to establish several economic clusters, one of which will consist of leading educational institutions and those undertaking research and development, which will facilitate a transfer of knowledge and further improve the skill levels of the work force.
Not long ago, the Thailand Investment Review newsletter team had the chance to visit the Triumph facility in Amata Nakorn Industrial Estate. A number of questions and topics were covered that provided an in-depth look into not only the prospects of the aerospace industry in Thailand, but also the future plans of Triumph in the country.
Now, Thailand’s aircraft and aircraft parts industry takes another step forward as Triumph Group, Inc. recently announced that its subsidiary, Triumph Aviation Services - Asia Ltd., signed a five year contract with Airbus S.A.S. to provide inspection, test, repair and modification of Airbus Proprietary Parts (APP) for the A320 and A330/340 programs. The company will provide maintenance and repair services of rudders, elevators, wing sharklets, flaps slats and other aircraft structures subcontracted by Airbus or received directly from Asia Pacific customers based on a collaborative marketing model.
Clearly, Thailand remains the place to invest and to position for the soon to be ASEAN Economic Community. An upper middle income country, liberal market economy, and a supportive government await those who invest in Thailand, the gateway to Asia.
Richard C. Ill, Triumph’s President and Chief Executive Officer, said, “This award is an important win for Triumph, strengthening our long-term relationship with Airbus and building our presence in the structural component MRO market. We are excited about our partnership with Airbus and their growing presence in the Asia Pacific region and look forward to supporting this program for many years to come.”
“This new contract signed with Triumph Aviation Services - Asia reflects our aim to develop our industrial partnerships in Thailand,” said Didier Lux, Airbus Head of Customer Services. “With a skilled talent pool, competitive environment and a centralized location in South East Asia, we believe that Thailand has great potential to develop its aerospace sector.”
October 2015
Page 10
BOI Executive Director of the Investment Marketing Bureau Dr. Bonggot Anuroj (4th from left), and Director of the Foreign Expert OSOS Services Group Krongkanoke Managitjonggol (4th from right), welcomed MACAE-Specialized Investment Agency Officers from Democratic Republic of Timor-Leste at the OSOS and gave a presentation on the role of BOI and new BOI investment policy, on 17 September 2015.
BOI Secretary General Mrs. Hirunya Suchinai delivered opening remarks and BOI Senior Executive Investment Advisor Ms. Ajarin Pattanapanchai gave a presentation at the seminar on “Thailand’s New Investment Promotion Strategies: Toward Sustainable Growth” at Nanning International Convention and Exhibition Center, Nanning, Guangxi Zhuang, China, on 19 September 2015.
BOI Deputy Secretary General Duangjai Asawachintachit (3rd from right), welcomed H.E. Maris Sangiampongsa, Ambassdor of Thailand to New Zealand,(4th from right) and New Zealand investors from the agricultural sector, at the OSOS on 15 September 2015.
Deputy Prime Minister H.E. General Dr. Tanasak Patimapragorn, H.E. Apiradi Tantraporn, Minister of Commerce, and BOI Secretary General Mrs. Hirunya Suchinai and other high ranking Thai government officials, joined a Round-table Dialogue with CEOs during the 12th China ASEAN Expo in Nanning, Guangxi Zhuang, China, on 18 September 2015, to provide information and exchange views on investment in Thailand.
Minister of Science and Technology Dr. Pichet Durongkaveroj presided over the signing of an MOU by BOI Secretary General Hirunya Suchinai and Permanent Secretary Ministry of Science and Technology (MOST) Weerapong Pairsuwan, to promote R&D in science, technology and innovation. The event was held at the One Start One Stop Investment Center (OSOS), Chamchuri Square, on 14 September 2015.
BOI Executive Director of the Investment Marketing Bureau Dr. Bonggot Anuroj welcomed government officers from Jiangsu Department of Commerce, and Jiangsu entrepreneurs led by Ms. Chen Xiaomei, Deputy Director General of Jiangsu Department of Commerce, China, at the OSOS on 15 September 2015.
BOI’S MISSIONS AND EVENTS
October 2015
Page 11
THAILAND ECONOMY-AT-A-GLANCE
Source: Stock Exchange of Thailand
Source: Bank of ThailandSET Monthly Closing Values
International Reserves / Short-term Debt (%)
Exchange Rate Trends
Industrial Capacity Utilization (%)
Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, ThailandTel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8316 Website: www.boi.go.th E-mail: [email protected] Board of Investment, Beijing Office Royal Thai Embassy No.40 Guang Hua Road, Beijing, 100600, P.R.China Tel: (86-10) 6532-4510 Fax: (86-10) 6532-1620 E-mail: [email protected]
FRANKFURTThailand Board of Investment, Frankfurt OfficeBethmannstr. 58, 5.OG60311 Frankfurt am Main Federal Republic of Germany Tel: (49 69) 92 91 230Fax: (49 69) 92 91 2320E-mail: [email protected]
LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General 611 North Larchmont Boule-vard, 3rd Floor, Los Angeles, CA 90004 USA Tel: (1-323) 960 1199Fax: (1-323) 960 1190E-mail: [email protected]
MUMBAIThailand Board of Investment,Mumbai OfficeRoyal Thai Consulate-General,Express Tower, 12th Fl., Barrister Rajni Patel Marg, Nariman Point, Mumbai, Maharashtra 400021 Republic of India Tel: (9122) 2204 1589-90 Fax: (9122) 2282 1071E-mail: [email protected]
NEW YORKThailand Board of Investment, New York Office 7 World Trade Center, 34th Floor, Suite F, 250 Green-wich Street, New York, NY 10007Tel: (1-212) 422 9009Fax: (1-212) 422 9119E-mail: [email protected]
OSAKAThailand Board of Investment, Osaka Office Royal Thai Consulate-General, Osaka, Bangkok Bank Bldg. 7th Floor , 1-9-16 Kyutaro-Machi, Chuo-Ku, Osaka 541-0056 Japan Tel: (81-6) 6271-1395 Fax: (81-6) 6271-1394E-mail: [email protected]
PARISThailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze75116 Paris, FranceTel: (33 1) 5690 2600 (33 1) 5690 2601Fax: (33 1) 5690 2602E-mail: [email protected]
SEOULThailand Board of Investment, Seoul Office#1804, 18th Floor, Koryo Daeyeongak Center,97 Toegye-ro, Jung-gu, Seoul, 100-706, Korea Tel: (822) 319-9998 Fax: (822) 319-9997E-mail: [email protected]
STOCKHOLMThailand Board of Investment, Stockholm OfficeStureplan 4C 4th Floor 114 35 Stockholm, Sweden Tel: +46 (0)8 463 1158 +46 (0)8 463 1172 +46 (0)8 463 1174 to 75 Fax: +46 (0)8 463 1160 E-mail: [email protected]
SYDNEYThailand Board of Investment, Sydney Office 234 George Street, Sydney, Suite 101, Level 1,New South Wales 2000, Australia Tel: +61-2-9252-4884 Fax: +61-2-9252-4882E-mail: [email protected]
TAIPEIThailand Board of Investment, Taipei Office Taipei World Trade Center 3rd Floor, Room 3E39-40, No.5, Xin-Yi Road, Sec.5Taipei 110, Taiwan, R.O.C. Tel: (886) 2-23456663Fax: (886) 2-23459223 E-mail: [email protected]
TOKYOThailand Board of Investment, Tokyo Office Royal Thai Embassy8th Fl., Fukuda Building West,2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 JapanTel: (81 3) 3582 1806Fax: (81 3) 3589 5176E-mail: [email protected]
Facts about ThailandPopulation (2014) 65 millionASEAN Population 625 millionLiteracy Rate 96%Minimum Wage 300 Baht/day
GDP (2014) US$ 404.8 billionGDP per Capita (2014) US$ 6,041.1 GDP Growth (2014) 0.9%GDP Growth (2015, projected) 2.7 – 3.2%Export Growth (2014) -0.3%Export Growth (2015, projected) -3.5%
