Thailand: Non-Commercial Risks For Foreign Investors

2003

Cavan Hogue

There are three potential sources of non-commercial risk for foreign investors and traders in Thailand: a) Muslim terrorist attacks; b) civil unrest by NGOs; and, c) anti-foreign government action.

a. In recent years, sensible central government policies have virtually removed the separatist unrest in the Muslim provinces along the Malaysian border. However, the provision of money, equipment and training by foreigners (possibly including JI or Al-Qaeda) to a few extremists has raised the possibility of attacks within Thailand on targets seen as 'western'. These targets could include popular tourist resorts or foreign firms. However, since they are a small minority in a defined geographical area, Thai Muslims can never be more than a nuisance to the central government. Also, since Thailand is not seen as a close ally of either the United States or Israel, it is likely to be a lower priority target than countries like the UK or Australia.

b. Human rights groups and local conservationists have been increasingly active. For example, the Forum of the Poor has been protesting for some time that the Government is not doing enough for the poor – especially the rural poor. This movement has grown and the Government’s response has tended to be somewhat heavy-handed. This could conceivably turn 'anti-foreign' and lead to attacks on foreign businesses, but so far there have been no signs of this and its focus at present is on the Thai Government. However, foreigners are always easier targets than powerful local interests. Recent protests over the Thai-Malaysian pipeline in Southern Thailand show what can happen with politically unpopular investments. This has been something of a major media issue, because of claims that the police used violence to break up a protest last December.

c. Despite some anti-foreign populist rhetoric, Prime Minister Thaksin is not likely to engage in serious anti-foreign measures. On the contrary, the Government has been making strenuous efforts to attract foreign investment. To some extent, Government officials have been difficult over issues such as the issuance of visas for foreigners, but this is no worse than United States Immigration Department actions against people of Middle Eastern origin seeking to enter the United States. Official corruption, especially at a local level, does exist and may cause some difficulties for foreign firms, especially if they decline to meet local officials' demands.

Nonetheless, by world and regional standards, Thailand is a relatively safe place to invest and to trade. Like anywhere else, criminal elements exist and local customs must be taken into account. The possibility of an isolated terrorist attack can never be ruled out, but it can’t be ruled out in Australia either.

WATCHPOINT: Thailand should remain an attractive destination for foreign investment, though it, like its neighbours, must navigate in the more troubled waters of the current global situation.

 

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