Economic Background For Investment In Thailand Part 1

Economic Background for Investment in Thailand

Until quite recently, Thailand had a reputation for being primarily a country which relied heavily on commodity exports, it used to be the world’s largest rice exporter.

However, this is no longer true, the agricultural exports used to represent more than 40 percent of the country’s export in the mid-80s. Now its share of the total export has dropped to only around 20 percent. The pace of industrialization and the growing proportion of exports taken up by manufactured goods reflect the increasing volume of investment which is going into industrial development. Thailand has enjoyed consistent economic growth for more than three decades whereby during the ‘60s and ‘70s average annual growth exceeded 7 percent, an impressive rate by any standards. But only over the last half decade or so has it become the real industrial powerhouse of the region
Economic growth in the year since 1987 has run at over 10 percent per annual, a rate which made the country the fastest growing in the region and perhaps the world. With the growth has come and influx of foreign investment, growth of the service sector, especially tourism, reduced unemployment and manageable levels of inflation. It has also brought significant changes in the structure of the economy. The principal change has been a general drift away from the agricultural sector which has shrunk in overall importance to the manufacturing sector whose share of overall production growth from 21.5 percent in 1986 increased to more than 30 percent in 1991. Its share looks set to increase still further in the years ahead.

Economic Development through National Development Plan

The economic development in Thailand began about 30 years ago when the country, for the first time, formulated and adopted the National Economic Development Plan in 1961. Before that period economic development was implemented without planning or direction. The National Development Plan became the main tool in achieving the target of the strategies in National development. Various development programs and projects were identified and coordinated umbrella, and human and financial resources were mobilized and accelerated the national development during each specific 5 year period.

The Royal Thai Government declared a “National Economic Development Plan” as the guidelines for economic development under three objectives. First, the Thai economy would be pushed forward to expand under the guidelines of the “National Economic Development Plan” Secondly, the Thai economy would develop without much restrictions and constraints. Finally, private sector would play a major role in investment and industrial development.

The economic development plan was accomplished by incorporation of the plan into the government and private sectors, as well as accounting for foreign investment and trade. This was done by analyzing the development of capital, natural resources technology and human resources in Thailand.

The First National Economic Development Plan continually emphasized development in Thailand. The Second National Economic Development Plan continually emphasized the development of infrastructure in such areas as communication and transportation. The Third Plan was named, the National Economic Development Plan, as it combined social economic development along with economic development in efforts to improve the quality of life for all Thais.