Thailand: Economy Of Opportunity?


Cavan Hogue

Thailand remains one of Australia's better relationships and, as the Thai economy picks up, this should be translated into more economic opportunities for Australians. The visit to Australia by Prime Minister Thaksin in late May highlighted both the successes and the problems.

The visit did not receive the kind of coverage that the Australian media reserves for Thai jails and sex tourism but it was useful and successful at the political level and, in the long term, at the commercial level. Prime Minister Howard has not shown much talent for cultivating close relationships with regional leaders but he does seem to have achieved good rapport with Dr Thaksin. For his part, Dr Thaksin has made an effort to maintain good relations with Australia and does not engage in public criticism of Australia.

The two prime ministers agreed that the recently completed scoping study justified the commencement of formal negotiations for a Free Trade Agreement between Australia and Thailand. The scoping study suggested that the Agreement would increase Australian exports of agricultural products, pharmaceuticals, aluminium and large passenger vehicles/components. The services sector, especially banking and professional services, would also benefit. The Thais will no doubt want something done about some Australian quarantine regulations which they see as disguised protection; in some cases this suspicion is justified.

The Thai Government has come under fire in Bangkok for perceived attacks on the media, over-sensitivity to criticism and the use of political office to advance the commercial interests of the Thaksin telecommunications empire. However, Dr Thaksin retains considerable popular support and the government is likely to see out its full term of four years. Most of his populist statements are no more than rhetoric. But some foreign businesses say they have suffered problems with work permits and the dual pricing system. Hopefully, a free trade agreement would provide a mechanism for sorting out any such problems.

The Thai Stock Exchange is booming, with both Thais and foreigners as buyers. Interest rates are low, which turn people's thoughts away from bank deposits and domestic consumption is growing. Memories of the boom and bust are fading. All these are encouraging signs, especially if foreign interest in shares translates into more investment. While the Government has not tackled things like debt and transparency as strongly as it might, political stability and a return to domestic growth are positive factors for foreign investors.

WATCHPOINT: The Free Trade Agreement with Australia combined with a resurgent Thai economy should boost bilateral trade, although poor media coverage tends to underplay the strength of the relationship in the public mind.


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