An emerging and dynamic economy with potential
Thailand has experienced massive growth in recent years, despite set backs. In midst of an economic downturn, Thailand is pressing ahead with development projects and export growth.
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The 2006 coup and ongoing political crisis
Questions have been raised about Thailand's economic stability. This has not been helped by the bloodless coup of 2006 in which former Prime Minister Thaksin Shinawatra was deposed by the military. Despite this, Thailand seems to be making steady progress but confidence in the economy is lacking. A strong proponent of opening up Thailand's economy and driving high growth rates, Mr. Shinawatra was somewhat successful although his style of government caused serious divisions in Thai society. An interim government promoted what is termed a 'sufficiency' economic concept while the elected government since 2007 is striving, against a backdrop of the ongoing political turmoil, to persevere with the economic growth policies pursued by Thaksin.
Impressive growth and business friendly
Thailand remains a strong and business friendly economy. It is the only state in South East Asia which was never colonised and has been a constitutional monarchy since 1932 having been independent for nearly 600 years. Free market policies pursued by the government in recent years resulted in impressive growth in the order of 4-6% but this was interrupted when the political crisis prompted the military to depose the democratically elected Mr Shinawatra. While the interim governments approach was more cautious, some progress continued. In spite of the political uncertainty the Thai economy continues to perform moderately well. The deepening crisis, with ongoing street protests and the apparent inability of the new elected Thai government to control the situation, has begun to raise questions about Thailand among outside investors. Inward investment into Thailand is beginning to suffer.
Free Trade agreements
Thailand is actively pursuing a free trade agreement with the United States although this has run into some difficulty. Thailand is a also key participant in the Asean group of nations whose stated aim is the creation of a Pan-Asian free trade zone. This could be the key to Thailand's future economic development if political stability is restored. Thailand is regarded as a good country to do business in, ranking number 50 in the league of the world's freest economies. In spite of events last year, it has actually continued to improve its position. Currently it ranks number 9 out of 30 Asian countries. Thailand enjoys a high level of business freedom. It takes less than the world average to open a business in the country at 33 days compared to the world average of 48. Some experts believe that it should be even easier to start a company and that this should be changed to maximise entrepreneurship.
The top income tax rate is 37% with the top corporation tax rate at 30%. There is also a VAT and a property tax. Government spending is also trim with state owned businesses and properties contributed to its overall revenue. Overall government tax take as a percentage of GDP is 15.9%.
Attractive labour market for employers
The Thai labour market is a benign one for employers with an abundance of cheap labour and very flexible labour laws. One of the country's key challenges is to deal with corruption which pervades all aspects of the economy and undermines confidence. While this might be so,Thailand has a better record than most Asian countries.
Love affair with the car
Thais have a love affair with their cars. Ordinary Thais pay astronomical prices to purchase their cars with nearly 400,000 new cars entering the system every year. The country's demand for energy is growing and it is one of the key priorities of the government with a key ministry dedicated to dealing with the issue.
A mushrooming retail market
There has been a sharp and noticeable increase in retail investment in Thailand with big worldwide chains such as Tesco, Carrefour, Big C and Makro all opening their doors throughout the country. In addition, highly visible and spectacular shopping centres have been developed in Bangkok such as the Siam Paragon complex.
Thailand's tourist sector has returned to record levels after slumping in the aftermath of the 2002 tsunami which effected the south of the country. Inward investment from large hotel chains has been substantial and continues.
Thailand has a dynamic and service orientated banking system which many foreigners find impressive. Foreign ownership of Thai financial institutions is restricted and there are some concerns about the success of financial regulation which does not meet international standards. In the light of the 1997 debacle, this is a cause of concern for the government. The government holds substantial shareholdings in Krung Thai Bank, Siam City Bank and Bank Thai which are among the top 10 domestic banks.
Additionally, the country has an impressive and competitive telecommunications sector which is making advances in mobile and broadband communications. The Thai government under Thaksin shook up the sector. In spite of extensive privatisation, there are still some public involvement in the sector which is less than progressive.
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