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Thailand's economy is 65.6 percent free, which makes it the world's 50th freest economy.


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"Thailand's economy is 65.6 percent free, according to our 2007 assessment, which makes it the world's 50th freest economy. Its overall score is 0.5 percentage point higher than last year, partially reflecting new methodological detail. Thailand is ranked 9th out of 30 countries in the Asia–Pacific region, and its overall score is higher than the regional average.

 

Thailand enjoys high levels of business freedom, fiscal freedom, freedom from government, monetary freedom, and labor freedom. Opening a business takes less time than the world average, and overall licensing procedures are simple and transparent. Thailand imposes fairly high tax rates, and overall tax revenue is low as a percentage of GDP. Government spending is also low as a percentage of GDP, and state-owned businesses account for a small portion of overall revenue. Thailand's labor market is highly flexible, and firing a redundant worker is costless.

 

Thailand could do better in monetary freedom, investment freedom, and freedom from corruption. Though inflation is low, Bangkok directly subsidizes the prices of a number of staple goods. Foreign investment is subject to a variety of restrictions, and these restrictions are not enforced uniformly. Corruption is significant, although it is not as great a problem as it is in many neighboring countries.

 

Background:

 

Thailand has a strong and business-friendly economy. The only Southeast Asian state never to be colonized, it has been independent for over 600 years and a constitutional monarchy since 1932. Thai politics were already in turmoil in early 2006, and then the military deposed Prime Minister Thaksin Shinawatra in September as this publication was being prepared for printing. Consistent annual growth rates of 4 percent–6 percent in recent decades and relatively high GDP per capita are largely the result of free-market economic policies, manufacturing and agricultural exports, and tourism. In 2004, Thailand began negotiating a free trade agreement with the United States that has yet to be finalized.

 

Business Freedom - 76.1%

 

Starting a business takes an average of 33 days, compared to the world average of 48 days. To maximize entrepreneurship and job creation, it should be easier to start a company. Obtaining a business license is simple, but closing a business is difficult. The overall freedom to start, operate, and close a business is relatively well protected by the national regulatory environment.

 

Trade Freedom - 69.2%

 

Thailand's weighted average tariff rate was 5.4 percent in 2005. Some prohibitive tariffs, import bans, significant and complex import taxes and fees, export subsidies, burdensome standards and import licensing requirements, restrictive sanitary and phytosanitary rules, service market access barriers, non-transparent government procurement procedures, and weak enforcement of intellectual property rights add to the cost of trade. Consequently, an additional 20 percent is deducted from Thailand's trade freedom score to account for these non-tariff barriers.

 

Fiscal Freedom - 83.2%

 

Thailand has burdensome tax rates. The top income tax rate is 37 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT) and a property tax. In the most recent year, overall tax revenue as a percentage of GDP was 15.9 percent.

 

Freedom from Government - 91.2%

 

Total government expenditures in Thailand, including consumption and transfer payments, are low. In the most recent year, government spending equaled 17 percent of GDP, and the government received 6.2 percent of its revenues from state-owned enterprises and government ownership of property.

 

Monetary Freedom - 77.6%

 

Inflation in Thailand is low, averaging 3.9 percent between 2003 and 2005. Relatively unstable prices explain most of the monetary freedom score. The government retains authority to set price ceilings for 20 goods and services, including medicines, sound recordings, milk, sugar, fuel oil, and fertilizer, and influences prices through regulation, subsidies, and state-owned utilities. Consequently, an additional 10 percent is deducted from Thailand's monetary freedom score to account for these policies.

 

Investment Freedom - 30.0%

 

The law permits 100 percent foreign ownership except in 32 restricted service occupations. Non-Thai businesses and citizens may not own land in Thailand unless it is on government-approved industrial estates. Regulations are not enforced consistently or predictably and remain an obstacle to investment. Residents and non-residents may hold foreign exchange accounts, subject to approval in some cases and maximum limits. Foreign exchange transactions, repatriation, some outward direct investments, and transactions involving capital market securities, bonds, debt securities, money market instruments, real estate, and short-term money securities are regulated and require government approval in most cases.

 

Financial Freedom - 50.0%

 

Following the 1997 Asian financial crisis, Thailand pursued reform of its financial system. Financial regulation and supervision are largely transparent and have improved, although they remain short of international standards. Credit is generally allocated on market terms. Financial regulations can be burdensome. The government holds 56 percent of Krung Thai Bank, 48 percent of Siam City Bank, and 49 percent of BankThai, all of which are among the top 10 domestic banks. Foreign ownership of Thai financial institutions is restricted in some cases. The government's establishment of an investment fund in June 2003 raises questions of impartiality. Roughly 100 insurance companies are registered in Thailand, including many competitive foreign firms. Capital markets are relatively well developed and sophisticated. The stock exchange is active and open to foreign investors.

 

Property Rights - 50.0%

 

Thailand generally protects private property, but there are indications of inefficiency and corruption. The legal process is slow, and litigants or third parties sometimes affect judgments through extra-legal means.

 

Freedom from Corruption - 38.0%

 

Corruption is perceived as significant. Thailand ranks 59th out of 158 countries in Transparency International's Corruption Perceptions Index for 2005.

 

Labor Freedom - 90.4%

 

The labor market operates under highly flexible employment regulations that enhance overall productivity growth. The non-salary cost of employing a worker is low, and dismissing a redundant employee is relatively costless."

 

http://www.heritage.org/research/features/...cfm?id=Thailand

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Doing business in Thailand has gotten more complicated & less profitable since the departure of Toxin.

Probably this isn't the place to get into the reasons why but, from what i know, we can expect the Thai economy to suffer over the next 6 months.

 

I was in Bangkok last week on 3 day business trip, lots of companies talking about loosing staff due to poor exports, they are hurt by the exchange rate, rising costs & changed FDI regulations, there is a lack of confidence in LOS as a good place to do business, many business (especially in IT/Electronics) are looking for other locations & number 1 newbie seems to be Vietnam. HCMC building large scale IT parks & encouraging FDI with sensible biz regulations, despite still being a communist country...

 

I hope the Thai's can sort their problems sooner rather than later, no-way i want see LOS going to the dogs like Philippines has.

 

Of course if there's widescale unemployment & a recession in the Thai economy, maybe the mongering rates will drop...

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