Investors looking for quick end to Thai political crisis as AEC looms

Economy February 10, 2014 00:00


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INDIAN INVESTORS in Thailand are looking forward to a quick end to the political conflict and expect the country to recover within six months

They believe Thailand can link India to Asean and serve as a second base of investment after the motherland. However, if the crisis drags out to a year, some Indian investors may find alternative places to do business.

Susheel Saraff, president of the India-Thai Chamber of Commerce, said last week that with the Asean Economic Community (AEC) coming soon, other countries may likely offer more competitive and conducive business environments in certain industries. But so far no members have indicated such plans to move trade to other Asean countries, although some are exploring new ventures in other countries post-AEC. 
“Everybody and business people feel some problems and their businesses have been impacted by the political conflict, particularly the tourism industry and trading. But history ensures that Thailand could bounce back very fast. Indian tourists still come to Thailand, despite some worries. The Indian government may be the last country that would issue a warning to its citizens,” he said.
The Indian business community thinks that the current situation is a temporary phase and in the long run the growth and investment scenario will be in favour of business especially after the integration into the AEC region. Like other foreign businesses operating in Thailand, Indian firms look for political stability and would like to see Thailand return to normal as soon as possible.
Besides their own assessment and perceptions in the foreign media, many news reports about Thailand’s situation make them worry. 
According to the chamber, a million Indian tourists come to Thailand each year, while about 70,000 Thais travel to India. Susheel said that with the uncertainty in politics in Thailand, Indian tourists could grow slower than the normal 10 per cent a year to only 3-4 per cent this year.
In terms of investment, there are several existing businesses that want to expand in Thailand and are also looking forward to the AEC to explore other countries. 
“Many Indian businesses are now looking to go global and the AEC, including Thailand. Thailand can provide a great choice due to close proximity, lower costs of cargo movements and similar cultures,” he said. 
Indian businesses that are looking to invest more and use Thailand as an Asean hub are in such industries as in steel, electronics, motors, rubber tyres, jewellery, nylon, textile, medicine, real estate, service and hospitality.
Recently Larsen & Toubro has participated in various tenders for EHV transmission lines and sub-station projects held by Egat for Thailand. 
Investment by Indian and Thai companies into both countries is growing. Indian FDI is estimated at about US$2 billion since the 1970s. Approved Indian investment in 2011 was $56 million and in 2012 was $196.4 million. 
Thailand has invested $139.2 million in India from April 2000 to last September. However, the real figure is higher, as several Indian-Thai investors in Thailand are counted as Thai investors.
In 2011, 15 investment proposals from India worth $56 million were approved. In 2012, 25 proposals worth US $200 million were approved. Thailand has invested $102.44 million in India. 
The Thai Board of Investment has said Indian companies invested Bt30.2 billion in Thailand from 2007-12 and it is seeking to attract more such investment.
Indian companies such as Aditya Birla Chemicals (Thailand), Apollo Tyres (Thailand), NTS Steel and Tata Motors invested in 114 projects in the Kingdom during the period.
More Thai enterprises should |consider doing business and invest-ing in India, as demand there is high in many areas, especially food processing, hydropower development and services. 
Many leading Thai companies in the fields of agro-processing, construction, automobile manufacturing, engineering and banking are active and growing their presence in India. Major Thai companies active in India are CP Aquaculture (India), Ital Thai Development., Krungthai Bank, Charoen Pokphand (India), Stanley Electric Engineering India, Thai Summit Neel Auto, Thai Airways International, Precious Shipping, Dusit Group in the hotel and hospitality Industry, Pruksa Real Estate and Srithai Superware, a maker of melamine tableware.
To promote more investment from India, the chamber called on the government and agencies to encourage the signing of a comprehensive bilateral free-trade agreement this year after more than 29 rounds of negotiations.
Since the early harvest free-trade scheme came into effect in 2003, traders and investors have been waiting for a comprehensive pact so that they can invest and do more business here. 
Also, a roadway connecting Northeast India to Thailand should be developed to make trade, logistics and investment easier.
Many regulations need to be made practical and flexible as some rules have hindered trading and investment by foreigners including Indians, he added.