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Opportunities in Thailand

28 February 2013

After the United States and Europe, Asia is the largest receiver of Foreign Direct Investment. Economic development in Asian countries as Japan and South Korea has mostly been driven conglomerates (called Keiretsu in Japan and Chaebol in South-Korea): large diversified companies controlling major industries.

Thailand’s and other Southeast Asian countries’ economic progress, on the other hand, has been built around a structure of smaller companies instead of giant conglomerates and a strong internal demand. Thailand’s consumer spending, for example, experienced an increase of 7% in 2012 up to 620.000 billion BHT.

In 2012, growth in Thailand beat the expectations to reach 6.4% while only 4.5% was expected. This was a 18% higher growth rate than Thailand was seeing in 2011.

However, growth is always higher after natural disasters, when the economy continues running again after a halt and rebuilding proceedings require a lot of economic activities. But this is not fully explaining Thailand’s good economic performance; in fact the growth reflects the dynamic nature of the country.

Thailand’s dynamic economy and consequently strong export position enabled the country to find new ways of growth, resulting in the growth of a strong middle-class.

Perspectives are good for 2013 since the forecasted growth is expected to be 4.6%.

Another important point when observing an economy is to observe the debt and inflation. Here it is a sustainable 41.7% of GDP, as well as inflation is 3%, which is low for a developing country.

These economic figures demonstrate some of the strengths of Thailand such as a solid infrastructure, the relative good level of education and high use of English in business.

Furthermore, Thailand is a hub in South-East Asia, a door to easily enter Chinese, Indian or other Southeast Asian markets for foreign companies due to its location and its good relations with its neighbours.

But even in the blue sky as portrayed, clouds can appear: Thailand is not the most ethical country to invest in and burdened under high corruption. These are things Thailand should fight into the future, although relative some of its ASEAN partners it is still doing well on this field.

In this time of uncertainty in Europe and the USA, investing in Asian markets and Thailand in particular, could provide an investor of more return than on the European and American markets. In the last three years, Thailand already outperformed stock indexes in Europe and the USA as can be seen in the graph below (red = Dow Jones, green = Stock Exchange of Thailand, orange = FTSE).

This is where Broadgate Financial could be of assistance with our expertise about investing and our on-going projects. At Broadgate Advisory, we are equipped to give you the best advice about investing in Thailand.

 Pierre-Louis Vouteau
Portfolio Support Officer
pierre@broadgatefinancial.com

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official position of The Broadgate Financial Group.