Thailand, the second largest economy in ASEAN after Indonesia, is an upper middle-income country with an open economy, a gross domestic product (GDP) of $479 billion, and 3.9% growth in 2017.
Thailand is the 26th largest export destination for the United States. Among countries in Asia, Thailand ranks as the United States’ 9th largest export destination after China, Japan, Hong Kong, South Korea, Singapore, Taiwan, India, and Malaysia. Two-way trade of goods and services in 2017 averaged $42 billion, with $31.2 billion in Thai exports to the U.S. and $10.8 billion in U.S. exports to Thailand.
U.S. exports to Thailand increased by 3.8%, while U.S. imports from Thailand increased by 5.8% for the same period in 2017.
An export-dependent economy, Thailand exported a total of $236 billion in 2017. The United States was Thailand’s second largest export market (11.2%), led by China (12.4%) and followed by Japan (9.4%). The top ten export items were machinery including computers (17%), electrical equipment (14.4%), vehicles (12.1%), rubber (6.9%), gems (5.4%), plastics (5.4%), minerals (3.5%), meat and seafood preparations (2.7%), optical/technical/medical apparatus (2.4%), and cereals (2.3%).
Thailand is one of the world's most visited countries, and tourism is vital to the Thai economy; it contributed approximately 9.4% of the country's GDP in 2017. Tourism is expected to rise by 7.8% in 2018. Thailand recorded 35.4 million tourist arrivals in 2017, an 8.8% increase on the previous year. The nine main airports of Thailand served a record 129.2 million passengers (including 1 million Americans), up from 121.7 million recorded in 2016.
In 2017, the Thai economy grew by 3.9%, improving from 3.2% in 2016. Private consumption and total investment increased by 3.2% and 0.9% respectively. Export value grew by 9.7% while inflation averaged 0.7% and the current account remained in a surplus of 10.8% of GDP.
The Thai economy is projected to grow by 4.2% to 4.7% in 2018, mainly supported by the acceleration of world economic growth, the expansion of government expenditure, and the acceleration of public investment of key infrastructure projects.
To promote infrastructure development, Thailand has published the Eastern Economic Corridor (EEC) Act to support EEC development of integrate related infrastructure and utilities to connect land, sea, and air through high-speed rail links, ports, and airports. The EEC scheme covers 30 existing and new industrial zones, with expected investment of $55 billion in 3 eastern provinces — Chachoengsao, Chon Buri, and Rayong. The EEC’s targeted industries include next-generation cars, smart electronics, medical, wellness tourism, agriculture and biotechnology, food, robotics, aviation, biofuels, and digital technologies. Risk factors include the economic situations of trading partners, fluctuations of money markets, and uncertainty in international economic policies and international politics.
Partnering with a local agent or distributor is the most effective way to enter the Thai market and reach potential Thai buyers. The agent or distributor can facilitate and expedite market entry with their extensive market knowledge and established distribution networks and relationships with key business and government officials. The Commercial Section at the U.S. Embassy in Bangkok provides a series of customized business development services to assist U.S. firms planning to enter or grow their presence in the market.
MISCELLANEOUS INVESTMENT FACTS
While Thailand’s applied most favored nation (MFN) rate averaged 10.7% in 2014, ad valorem tariffs can be as high as 50 to 80% and the ad valorem equivalent of some specific tariffs (charged mostly on agricultural products) is even higher.
Legal & Political
In May 2014, the Thai military suspended the constitution and took control of the government in a coup d’état. Reforms have been ongoing as a new constitution was drafted and a constitutional referendum secured approval in August 2016. The current administration has announced its intent to hold general elections in early 2019.. With slightly accelerated growth in 2017, Thailand’s economy has remained stable despite its challenges over the past 3 years.
U.S. businesses operating in Thailand should be aware that the government recently amended its Civil Procedure Code to include class-action lawsuit provisions. This amendment increases the rule of law and consumer protection in Thailand, but it may leave some businesses at higher risk. This may result in higher insurance premiums, especially for small businesses.
Treaties & Agreements
The 1966 Treaty of Amity and Economic Relations, the most recent iteration of the 1833 Treaty of Amity and Commerce, facilitates U.S. and Thai companies' economic access to one another's markets. The two countries also have agreements addressing sales of agricultural commodities and investment guarantees and regularly conduct discussions under the Trade and Investment Framework Agreement to advance bilateral trade. In 2013, the United States and Thailand signed an agreement on science and technology cooperation that enshrined protections for intellectual property while facilitating joint research programs, government to government collaboration, and private sector investment and technology transfer.
The Thai-U.S. Creative Partnership, active since 2011, builds on existing public-private and intergovernmental relationships, seeking to highlight innovative industry, identify new opportunities for collaborative ingenuity between the two countries, and spur increased productivity.
Thailand is a founding member of ASEAN and strongly supports its efforts to promote economic development, social integration, and stability throughout the region. Thailand and the United States belong to a number of the same international organizations, including the United Nations, ASEAN Regional Forum, Asia-Pacific Economic Cooperation forum, International Monetary Fund, World Bank, and World Trade Organization. Thailand also is a Partner for Cooperation with the Organization for Security and Cooperation in Europe and an Organization of American States observer.