Since Thailand's economy was devastated by the Asian Financial Crisis, it has bounced back strongly, in line with regional trends. The country’s weak political outlook remains Thailand’s Achilles heel, given the entrenched political divide between the rural and middle and upper income class. While Thailand's economy will continue to be undermined by political volatility, it will not be completely hindered by it, and will continue to see growth in the manufacturing and tourism sectors over the coming years.

We keep our clients informed of the latest market moves and political developments in Thailand, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 22 of Thailand’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our results-proven research teams. Our aim is to keep you ahead of the curve, so you can feel confident doing business in Thailand.

Country Risk

Thailand Country Risk

Thailand Operational Risk Coverage (9)

Thailand Operational Risk

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BMI View: Thailand poses moderate operational risks to investors, though the rising cost of labour is a growing concern, as is the country's political instability. Thailand's overall Operational Risk score is boosted by a number of factors, namely its developed logistics network, an open economy and its increasing trend towards economic liberalisation. That said, significant risks do exist, notably the potential for an escalation of the current political violence into civil war, as well as the ongoing separatist violence in the south of the country. For these reasons, Thailand receives a relatively...

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Thailand Crime & Security

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Thailand is a generally safe place for foreign business travellers, expatriate workers and tourists, although ongoing criminal risks persist, particularly in urban areas. The main criminal risk to foreign workers in the country is petty crime such as pick-pocketing, as well as credit card fraud. That said, violent crime and sexual violence are not uncommon, particularly in and around Bangkok. There is also a risk that the current political instability could escalate into an urban guerrilla warfare campaign approaching civil war. Ongoing separatist violence poses a further threat in the south of the country. Thailand receives an overall score of 50.9 for Crime and Security Risk, which puts it 17th regionally.

Criminal risks in Thailand are moderate by regional standards, and there is no systemic threat to foreign workers in the country. The majority of crimes committed in Thailand consist, as mentioned above, of petty crimes and credit card...

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Thailand Labour Market

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Compared to other Southeast Asian countries, Thailand's labour market competitiveness is slipping. Due to a shortage of technical skills and unskilled labour, combined with rising labour costs, the country's is losing appeal as a manufacturing destination. Meanwhile, weakness in the education sector is preventing evolution of a knowledge-based economy, and poor foreign language skills prevent investment in international services.

Rising labour costs are the greatest element of labour market risk in the Thai economy, while a shortage of skills in key areas is another area of concern commonly cited by investors. This results from misalignment between industry and the education system, although education policy has improved significantly in the last decade. These elements combine to give Thailand a Labour Market risk score of 55.9 out of 100, ranking 54 th out of...

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Thailand Logistics

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BMI View: Thailand has established a strong logistics sector, supported by modern infrastructure and services - with the exception of the rail network. That said, the long-term competitiveness of Thailand's logistics sector is threatened by regular political upheavals. The Thai government has repeatedly failed to implement large-scale transport development plans, particularly in the rail sector, which has been neglected for decades. As a result, investors will start looking increasingly to Malaysia and Vietnam as manufacturing hub alternatives, offering stronger supply chain options. As an industrialised country with a large production base, Thailand has become a hub for international trade. Growth in trade and consumption has been matched by development in transport and utilities infrastructure. Subsequently, Thailand scores 75.1 out of 100 for Logistics Risk, ranking sixth in Asia, ahead of Vietnam (15th),...

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Thailand Trade & Investment

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Foreign direct investment (FDI) is falling in Thailand as investors back off amid political upheaval. Despite the slowdown, international trade continues, albeit at lower rates of growth. Strong fundamentals in the financial sector have maintained confidence in the national economy and have offered economic resilience in the face of political stress. Thailand scores 55.6 out of 100 in the BMI Trade and Investment Risk Index and is ranked 66th out of 170 countries globally. There are higher levels of risk in terms of the country's legal environment and moderate risk in terms of government intervention. Thailand performs most strongly for economic openness.

Thailand's lowest score in the Trade and Investment Risk Index is on the Legal component. Laws are geared in favour of domestic firms and state-owned companies, while the government retains power to implement controls and distort the market, which warps the playing...

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Thailand Industry Coverage (22)

Agribusiness

Thailand Agribusiness

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BMI View: Thailand will maintain its status as a key Asian agricultural provider in the coming years, as the sector benefits from strong export opportunities and government support, as well as an efficient food-producing industry. The sugar and livestock sectors are especially promising; however, the government's interference in the market, especially in the rice sector, will hinder the competitiveness of Thailand's production relative to its Asian rivals. Thailand will remain a key rice exporter, but may lose out to secondary...

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Autos

Thailand Autos

Commercial Banking

Thailand Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Thailand Consumer Electronics

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BMI View: In 2014 political uncertainty and baht depreciation were a drag on spending growth, resulting in uneven growth as the computer hardware and AV segments contracted, but handset sales continued to grow. However, this pattern is forecast to change as the economy strengthens from 2015, and we expect a revival in PC sales, while at the same time the smartphone market is expected to slow as a result of saturation and price erosion. In terms of total consumer electronics demand growth we forecast a CAGR of 4.1% in US dollar terms 2015-2019...

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Defence & Security

Thailand Defence & Security

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BMI View: A military coup in 2014 has successfully imposed a short-term solution to restore order and stability under General Prayuth Chan-ocha. This interim government is set to remain in place until October 2015 at the earliest, but the army will continue to play a major role in domestic politics beyond the transition to civilian rule. Inefficient allocation of resources hampers development, but will not be addressed by any government in the near future.

The ouster of Prime Minister Yingluck Shinawatra on constitutional grounds in May 2014 triggered a rapid escalation in civil tensions across Thailand, pitting her 'red shirt' supporters against the largely urban, pro-establishment, 'yellow shirts'. With the caretaker government unable to calm tensions, the military stepped in and dismissed the interim administration. Temporarily imposing martial law and a curfew, as well as suspending much...

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Food & Drink

Thailand Food & Drink

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BMI View: The impeachment against former premier Yingluck Shinawatra will spark renewed political violence in Thailand, which would weigh on the nascent economic growth recovery. We may look to substantially lower our 2015 real GDP growth forecast of 4.1% should further negative political developments be forthcoming. The Thai economy has weathered a series of economic storms in recent years (from the global financial crisis to the Japanese tsunami and devastating floods) and we do not expect the political crisis to plunge the economy into recession. However, when we combine the uncertainty posed by the political stalemate with the downbeat outlook for Thai households amid elevated debt burdens, as well as external headwinds stemming from moderating growth in China and general weakness in the Japanese economy, real GDP growth seems likely to remain weak. As a result, we see downside risks to our food consumption forecast...

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Freight Transport

Thailand Freight Transport

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Positive Growth Expected In 2015

Thailand's freight industry will see positive growth in 2015, after a difficult 2014. In terms of cargo volumes, we expect increases in a range of roughly 2% to 7% depending on the transport mode, after a mixed 2014, during which a number of modes experiencing volume reductions. In 2015 the strongest growth rates will be in bulk tonnage handled in the ports and in rail freight; airfreight and road haulage will be somewhat more subdued.

We are forecasting a recovery in Thailand's economic outlook 2015, with GDP set to increase by 4.1%, after an almost standstill year in 2014. According to our estimates, 2014 will have been weaker than initially hoped, with growth of only 0.7%. This was due to a combination of factors. Despite ongoing efforts by the ruling junta to stabilise the political situation and stimulate the economy, the recovery was slow to gain traction....

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Information Technology

Thailand Information Technology

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BMI View: After a growth slowdown in 2013 and 2014 as economic and political uncertainty weighed on consumer and enterprise confidence, we expect IT market spending growth to accelerate in 2015. We forecast an IT market spending growth CAGR of 6.7% 2015-2019, with total value forecast to reach THB225.4bn in 2019. Over the medium term strong growth is forecast across all IT segments making the Thai IT market one of the largest and fastest growing in the region. Drivers such as high private final consumption and the economy's strong growth trajectory will...

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Infrastructure

Thailand Infrastructure

Insurance

Thailand Insurance

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BMI View: Thailand's insurance industry is one of the more developed among the emerging insurance markets in the Asia Pacific region. The life market is more advanced than the non-life sector at present, with higher rates of penetration and density. Both sectors are expect to show healthy growth in 2015, recovering well from 2014's turbulent domestic environment, though life insurance will continue to dominate, accounting for around 69.2% of gross premiums written in the country.

The military coup in 2014 undermined confidence in the Thai insurance market in 2014 and, along with currency fluctuations, this led to a market contraction of 3.0% in US dollar terms. The outlook for 2015 is more positive. Thailand is expected to record real...

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Medical Devices

Thailand Medical Devices

Mining

Thailand Mining

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BMI View: The cooling of the Chinese economy will remove the shine off mining investment in South East Asia. Frontier regions will be the first places where miners pull back their investment as brownfield projects take precedence. Nonetheless, it is certainly not all gloomy in the mining sector. Resilient demand from the power sector will continue to support growth in coal production, while the positive development of the nuclear sector in South Korea fuels uranium mining production.

Despite the rich deposits of untapped minerals on offer, we believe South East Asia's mining sector will struggle to uncover its potential over the coming years. The cooling of Chinese economic growth will remove a crucial pillar of support for mineral prices, particularly industrial metals such as iron ore and copper. For instance, we...

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Oil & Gas

Thailand Oil & Gas

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BMI View: Thailand is expected to remain driven by a strong oil and gas demand far outweighing the domestic production over our forecast period to 2024. With declining oil and gas reserves, we expect long-term oil and gas production trends to remain stagnant or negative, despite a slight increase in short to medium term. However, the 21st licensing round, scheduled for early 2015, poses an upside risk to our current reserves and production forecast.

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Headline Forecasts (Thailand 2013-2019)
2013 2014e 2015f

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Petrochemicals

Thailand Petrochemicals

Pharmaceuticals & Healthcare

Thailand Pharmaceuticals & Healthcare

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BMI View: Thailand will continue to be an attractive location to international drug makers as a result of its growing domestic pharmaceutical market with an ageing population and improving access to healthcare as well as its position as an entry point into the frontier markets of South East Asia. Japanese pharmaceutical companies such as Eisai in particular, have been attracted to the market and are looking to leverage the region's growth.

Headline Expenditure Projections

  • Pharmaceuticals: THB145.5bn (USD4.5bn) in 2014 to THB153.0bn (USD4.7bn) in 2015; +5.2% in local currency terms and +4.4% in US dollar terms.

  • Healthcare: THB504.2bn (USD15.5bn) in 2014 to...

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Power

Thailand Power

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BMI View: We forecast electricity generation in Thailand to grow by 2.8% in 2015, relatively similar to growth in 2014. Meanwhile, we have moderated our long-term electricity generation forecasts for the country. This is because Thailand continues to experience challenges in procuring gas supplies and is clearly moving towards increasing its reliance on electricity imports.

We forecast electricity generation in Thailand to grow by 2.8% in 2015. The largest source of growth will be thermal generation, followed by non-hydropower renewable generation. Meanwhile, we have revised down our long-term forecasts for the Thai electricity sector, as the country continues to experience challenges in procuring gas supplies and is clearly moving towards increasing its reliance on electricity imports. We now see electricity generation growing an average of 3.0% per annum between 2015 and 2023, down from 3.8...

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Real Estate

Thailand Real Estate

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BMI View: We see good long term potential in Thailand's commercial real estate sector as regional economic integration continues as well as continued growth in Thailand's tourism sector. However, recent political instability has had a negative effect, both on economic growth and FDI.

There are a number of strengths in Thailand's commercial real estate sector, these include a business environment which is favourable to foreign investors as well as Thailand's geographical location. A number of major international players are present in the market and Thailand also boasts a real estate investment trust (REIT), all of these factors point towards a sector which is fairly developed.

Despite our favourable long-term outlook for the Thai commercial real estate sector, recent political upheaval has had a negative effect on the country's economy. Although a recent return to...

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Renewables

Thailand Renewables

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Despite the political turmoil leading to a military coup in May 2014 there are signs that our previous forecast still holds in place as the ruling regime sees solar energy projects as key to attracting foreign investments scared off by recent events. In 2015 non-hydropower renewable generation will grow by around 16.0%, with growth primarily in solar and wind generation. Growth in solar will be driven by commercial- and residential-scale projects, with companies such as Thailand's SPCG maintaining a large pipeline of commercial solar projects. Even though SPCG has already completed 36 solar power projects with a combined capacity of around 260MW over the past four years, the pipeline for solar power projects remains large. We note that the new Thai government...

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Shipping

Thailand Shipping

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Healthy Port Growth Expected in 2015

2015 will be a better year for Thailand's ports than 2014. In the context of a weak economy and a downturn in foreign trade, we now estimate that throughput levels contracted at both the country's main ports, Laem Chabang and Bangkok in 2014. But we are projecting a healthy recovery, with growth rates between 2% and 6%, in 2015.

We are forecasting a recovery in Thailand's economic outlook 2015, with GDP set to increase by 4.1%, after an almost standstill year in 2014. According to ourt estimates, 2014 will have been weaker than initially hoped, with growth of only 0.7%. This was due to a combination of factors. Despite ongoing efforts by the ruling junta to stabilise the political situation and stimulate the economy, the recovery was slow to gain traction. Negatives included a subdued export and investment performance, along with depressed construction and...

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Telecommunications

Thailand Telecommunications

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BMI View: Thailand's telecoms sector has faced a tumultuous few months with the Prime Minister approving a number of controversial new laws and policies which threaten to send the country back to an industry model akin to the concession-based revenue-sharing regime, that saw private companies partner with the inefficient state-owned enterprises. BMI also believes that there will be no spectrum auction, rather the 900/1800MHz spectrum will be allocated to the state-owned TOT and CAT Telecom . AIS has unveiled a plan to develop a nationwide broadband network to rival those of TrueOnline and TOT, while True has committed to...

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Tourism

Thailand Tourism

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BMI View : Although Thailand's tourism market experienced a slowdown in 2014 in the wake of the military coup, we hold a positive outlook for this well-established and popular tourism destination in the Asia Pacific region. Thailand has a strong and extensive transport network, including a wide range of air travel connections both regionally and globally. Visitor numbers are set to increase, and several global hotel groups are taking advantage of this growth potential to invest in new properties across the country.

Thailand was placed under military rule following the coup in May 2014. General elections were due in October...

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Water

Thailand Water

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BMI View: This quarter we have revised and expanded our forecasts for the water sector. We now cover non mains consumption and treated wastewater. With the continued stalling of the project pipeline and the persistent risk of both drought and flood damage, in conjunction with high losses and limited sanitation facilities, we view the Thai water sector as offering minimal opportunities and high risks to both services and infrastructure companies. The recent announcement that some urgently needed works are to be restarted is a positive step; however, we still anticipate delays and cancellations.

On March 12 2014, the central bank cut the benchmark policy rate by 25 basis points to 2.00%, the lowest since January 2011. Given that the Thai economy remains relatively fragile, we expect the benchmark...

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