Six years after the Asian currency meltdown, the scene in Thailand could not be more different. Foreign capital is pouring into the country, investor confidence remains high and the economy is stronger than those of its Southeast Asian neighbors.

While bad debts, financial instability and political uncertainty continue to plague some of the rest of the ASEAN countries, Thailand is attracting a significant amount of foreign direct investment and posting higher GDP growth than its neighbors.

Situated in the heart of Southeast Asia -- roughly equidistant between India to the west and the Philippines to the east -- Thailand has been a migratory crossroads throughout its history. A constitutional monarchy since 1932, Thailand has also molded an impressive social and cultural cohesiveness which makes the country a stable location for investment.

Aside from its geographical location, Thailand also relies on its solid competitiveness and low costs to spur growth. In the framework of powerful competition from China, the country has positioned itself as a cost-effective production base and carried out every effort to keep its investment climate and business conditions attractive.

Still the world’s largest exporter of rice, canned tuna, rubber and canned pineapples, Thailand has in recent years seen an increasing shift from labor- intensive to knowledge-intensive industries.

One case in point is the Thai automotive sector. With its skilled, well-educated and knowledgeable workforce, Thailand is now home to almost all of the world’s automotive assemblers. As leading auto manufacturers -- in particular those from Japan -- continue to shift regional production to Thailand, growth in this vital industry is set to continue in 2003 and beyond.

Aware of the importance of his country’s close relationship with Thailand -- which dates back over 600 years -- and the other ASEAN members, the Japanese prime minister Junichiro Koizumi designated 2003 as “Japan-ASEAN Exchange Year”. Japan is Thailand’s largest export market. ASEAN, established in the Thai capital Bangkok in 1957, has a total GDP of $737 billion and total trade of $720 billion. Currently, over 40 percent of Thailand’s foreign direct investment comes from Japan, while exports to Japan account for more than 60 percent of GDP. Japan’s ambassador to Thailand, Atsushi Tokinoya, refers to Japan’s bilateral relationship with Thailand as “good and productive”, and cites his host country as a “good partner in the areas of economics, security and political cooperation.”

Atsushi Tokinoya, Japan's ambassador to Thailand

“Our bilateral relationship is unique in that we enjoy a very close traditional relationship -- both economically and politically. The discourse between our two nations is very important. One of the most important aspects of our relationship is the economic element. As is evident in Bangkok, a large Japanese business presence has developed and a huge number of Japanese are successfully doing business here,” Tokinoya says.

The hub of Japan’s presence in Thailand is the Japan Chamber of Commerce in Bangkok. Established in 1954, JCC Bangkok is the largest JCC in the world with approximately 1,200 members.

“ASEAN is a large market and Thailand is instrumental to the growth of this region,” says JCC Bangkok’s president, Hiroo Sutoh. “Following the crisis, Japanese businesses increased investment rather than pulling out of Thailand. This is evidence that we have faith in this economy and this country.”

The Thai Prime Minister Thaksin Shinawatra and his administration have also made a significant contribution to the improvement of the overall investment environment and to the strength of the economy, projected to grow between 5 and 6 percent this year.

With its current economic success, it is also fitting that Thailand hosts the 2003 Asia-Pacific Economic Cooperation (APEC) forum, which will culminate with the Leaders Summit in October. Established in 1989, the 21-member APEC promotes economic dynamism and a sense of community within the Asia-Pacific region.

somphong wanapha, secretary general of the Thai Board of Investment

Tej Bunnag, Thailands’s secretary for foreign affairs, believes that the 2003 APEC summit will be an ideal opportunity to showcase Thailand. “It will tell the world that Thailand has fully recovered from the Asian crisis and is making good progress.” “Delegates to Thailand, both from the government and business sectors, will gain a better appreciation of what Thailand has to offer, not only as a tourist destination, but also as a dynamic regional hub for trade and investment,” Bunnag says. “Preparations are also underway for an agreement on Japan-Thailand Economic Partnership (JTEP). JTEP represents a unique opportunity for Japan and Thailand to move their mutually beneficial cooperation into a faster lane and onto a higher plane,” he adds.

But as Thailand moves into the fast lane, Somphong Wanapha, secretary general of the Thai Board of Investment, points out several challenges that remain if the country is to sustain its progress: “It is time for change in Thailand and we want to enhance the competitiveness of the Thai economy as a whole.”

“For Thailand to remain competitive, we must further upgrade the skill level of the Thai workforce and make Thai business circles aware of the changing environment. We must make Thailand even more attractive to foreign investors. We want to focus more on the quality of investment projects,” says Wanapha.

In this era of cutthroat competition and accelerating globalization, Thailand is making every effort to attract the marketing, distribution and production bases of foreign companies to its shores. The global race to lure foreign investment has reached fever pitch, and Thailand is determined to stay with the pack.

While Thailand has controlled inflation, stabilized its currency and shored up its currency reserves it will now have to assess its achievements, identify future objectives and remain adaptable to ensure growth in the future.

Against these unattained but achievable goals. Thailand may yet end up as the greatest success story of post-crisis Asia.

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