THAILAND - Diplomacy
Former Deputy Prime Minister, The Kingdom of Thailand
M.R. Pridiyathorn Devakula is a renowned Thai economist and Former Deputy Prime Minister of Thailand. Previously, he served as Governor of the Bank of Thailand and as Minister of Finance.
The areas of cooperation are diverse but our economic ties currently stand out, if you consider that the UAE and Thailand are each other’s biggest trading partners in the Middle East and Southeast Asia respectively. The UAE is also vital for our energy security as it has been our number-one import source of crude oil for many years now. Beyond the macro-level, I think that the people-to-people relations between both countries are actually very close. Many Emiratis have visited Thailand as tourists, many among them medical tourists, and they have a good impression of my country and its people. On the other hand, there are currently about 10,000 Thai nationals residing in the UAE and working in various sectors, ranging from heavy industry and infrastructure to the hospitality sector and the airline business; Thai people are contributing to the growth and prosperity of the UAE as well.
The UAE is not only our primary trade partner in the Middle East, but was our fifth largest trading partner worldwide in 2013, with a trade volume exceeding $20 billion for the first time in history. Both our exports to and imports from the UAE have risen continuously over many years, although for 2014 Thai imports from the UAE may decline for the first time. However, there is no cause for concern as this drop is mainly due to the falling average price of crude oil, which dominates our imports from the UAE. The UAE is a perfect hub for Thai trade to the Middle East because of its highly developed infrastructure, both physical and digital, its excellent connectivity to other parts of the world, and also its enabling trade and economic policy. This is best illustrated by the fact that the only Thai Trade Centre, which is the government export promotion agency, in the Middle East is based in Dubai. A number of large Thai companies such as PTT, Siam Cement Group (SCG), and Charoen Pokphand Foods (CPF) also have a representative office in Dubai, which cover not only the Middle East region, but also Africa in some cases. With the opening of Khalifa Port, the construction of the Midfield Terminal at the Abu Dhabi International Airport, as well as many other big, exciting projects, Abu Dhabi will certainly gain significance as another trade hub in the Middle East in the medium-term too.
“The UAE is not only our primary trade partner in the Middle East, but was our fifth largest trading partner worldwide in 2013.”
Foreign investment opportunities exist across all sectors in Thailand. We have an investment-friendly economic policy, a highly skilled workforce, reasonably well-developed infrastructure, and a favorable geographical location. These factors will be boosted even further by the establishment of the ASEAN Economic Community in 2015 when the 10 Southeast Asian nations become a single market and production base with free flow of goods, labor, and capital—and Thailand is right in the heart of it. In the coming years, there will be numerous investment opportunities in the logistics industry and related sectors, especially in the transportation infrastructure area, following the recent approval of the infrastructure development plan for 2015-22, which targets the improvement and expansion of the provincial rail network, highways, a sea port, and public transport in Bangkok. For the very short term, UAE oil firms might be interested in the coming petroleum concession bidding round, which is the first petroleum concession in Thailand since 2007. The Thai Board of Investment (BOI) also just approved the Seven-Year Investment Strategy for 2015-21, with a view to promote investments that create value for Thailand and those that have positive impact on the society and environment. Special incentives will be given to investments in, for example, high-tech and creative industries, the digital economy, projects located in 20 lower-income provinces, as well as the five special economic development zones in the border areas. In this regard, I would encourage potential investors to study this strategy in order to optimize their investment decisions. Moreover, the new investment promotion package also encourages the establishment of the International Headquarters (IHQ) and International Trade Center (ITC) in Thailand. IHQs and ITCs will enjoy various benefits including tax privileges; for instance, tax-free income from dividends and capital gains from overseas investment, tax-free income received from providing services to subsidiaries, and tax-free profit from trading products purchased from foreign sources and sold to foreign destinations. Additionally, the personal income tax on expatriate staff of IHQs and ITCs is reduced to 15%, which is half of the normal rate. Foreign companies that have production units in Thailand as well as in neighboring countries can establish their regional headquarters in Thailand and enjoy such benefits under the IHQ scheme. Foreign trading companies without production units can also apply for ITC privileges and carry out their out-out trading activities from trading bases in Thailand without any tax burden. These special privileges for IHQs and ITCs will soon turn Thailand into a global trading hub in the very near future contributing to even higher growth in the service sector, intra-ASEAN trade, as well as trade between ASEAN and countries outside the region.
Naturally I would like to see bilateral ties strengthened in all areas because this is what my colleagues in Bangkok and in the UAE are working hard to achieve. I have no doubt that our economic relations will grow further as both our countries are open economies with complementary characteristics but tremendous potential, especially the UAE with the prospect of hosting the World Expo 2020. Thailand and the UAE have agreed to establish a Joint Commission (JC) as the forum to drive forward our collaboration in all dimensions, and I sincerely hope that we can organize the first JC meeting some time in 2015. This would be very timely, as it will coincide with the 40th anniversary of Thai-UAE diplomatic relations. Lastly, I hope that the people-to-people ties will remain as strong as they are, if not become even stronger.
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