Keynote Address by H.E. Mr. Abhisit Vejjajiva,

Prime Minister of the Kingdom of Thailand

“The Prime Minister Meets Investors”

Friday, 18 June 2010 at 13.05 hrs, IMPACT Convention and Exhibition Center

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Excellencies,

Presidents of Thai and foreign chambers of commerce and industry,

Distinguished Guests, Ladies and Gentlemen,

1. It is once again a great pleasure to have the opportunity to meet and talk with key investors, who are all friends of Thailand. Your continued presence and unwavering commitment to Thailand is extremely important as the country moves back to normalcy. And as you know, we are in the process of rehabilitation and reconciliation – to which all of you can make very vital contributions.

2. Let me also take this opportunity to thank all of you because over the past few months, where we have been through a very painful period, not just for the Thai people but all of you who live here, we have seen many of you voicing concerns and making very useful comments and suggestions for Thailand to move out of the crisis. And let me reassure you that we appreciate your concerns and your support throughout the difficult times. Let me emphasize that we have always given its best effort in ensuring the continuity and safety of foreign businesses and investments in the country. We have attached utmost importance to the well-being of foreign investors and the expatriate community. We will continue to do so to provide security and we stand ready to extend any necessary assistance which may be needed. Thailand must move forward

3. As you may have seen on television or you may have read in newspapers that last week, I wrote an open letter---a short one---to all Thai citizens. I emphasized, and you can quote me on this, that “Thailand must move forward”. I told the Thai people that it is now time we reconciled, drawing our hearts as one, for reform. The aim is essentially to protect the nation’s main institutions, redress inequalities and injustice, communicate constructively with one another, and find and accept the facts and truth about what have happened, and putting into motion the political process that is democratic, efficient, and transparent. I know that there are enormous challenges, and that the objective that we have set out for this reconciliation plan is certainly not easy to achieve. Certainly they cannot be achieved unilaterally by the Government, but will require the efforts of not just all Thai people, but from our friends and partners. So for my part, I will do my best to arrange for all voices and all ideas to be heard, to help us move forward beyond this crisis and create a new future for Thailand.

4. It is indeed time for Thailand to unite and rebuild together. In making a call for all Thais to draw their hearts as one for reform, I have invited various sectors in Thai society to be part of this reform process. The Reconciliation Plan has five main points, all equally important, and to all of which we can all make contributions, including the business sector as well as our friends and partners from abroad. Many sectors have already moved ahead, and I have been encouraged by some of the initiatives that the business sector is taking.

5. Many Thai organisations, The Thai Federation of Industries, the Bankers’ Association and the Board of Trade, have already pledged their support for the plan, and have even drawn up some of their own activities and initiatives that they can take to support the plan. On some of the issues, they have even mentioned to me that they would also seek the support and participation of the foreign chambers. All of this, I think, is exemplary. And I hope that not just in the business sector, but in your capacity as people who live here, will be part in many other efforts, which may be diverse but have one common objective---which is to move Thailand forward and to achieve the ends of this reconciliation plan.

6. You have seen already, that as soon as the protest was called off, there have been many activities that should encourage us and inspire us, given the level of participation by ordinary people. The effort that you saw, for instance, a few days after the protest ended—in the “Big Clean Up”. Or the efforts, and the attempts to help rebuild the area already affected by the protests, and also the initiatives to reach out to the people who felt that they have been affected by the events of the last few months. All of this, I think, reconfirms that the Thailand that all of you have come to know, very very well, for many of you through many decades, and, this is still our basic strength and very strong foundations for the process of reconciliation and for moving forward.

7. Of course not everything has returned to normal. The Emergency Decree is still in place in Bangkok and a number of provinces, in order to make sure that we do not see further incidents of unrest or criminal behavior, and to ensure that the law can be efficiently enforced. As many of you would have witnessed first hand, the decree being in place or the state of emergency being in place, does not basically interfere with the business interests of investors, and impinges very very little, if at all, on the basic rights and liberties of people in Thailand.

8. Our tasks now are to assess what transpired, to address legitimate grievances that have been voiced, to mitigate the losses in business, personal or otherwise, and to rebuild what has been destroyed and to hold responsible all of those who committed criminal acts. We are all of course, deeply saddened by the losses, particularly, the losses of lives. The circumstances of the deaths will be transparently investigated by an independent committee. We have already appointed a chairman who is an esteemed former Attorney-General. You would have seen that he is doing all he can to reach out to make sure that the process is independent, transparent and also inclusive. At the same time, the other components of the reconciliation plan are also making steady progress. A reform committee to resolve some of the structural problems in Thailand is about to be set up. Before I came here, I just went to see former Prime Minister Anand who has agreed to participate in leading the reform process as part of the reconciliation plan. And also the issues of Constitution and media reforms are also making headway, as we try to invite participation of all stake-holders on these issues.

9. As we walk the path of reconciliation, let me underline that we are not ignoring the prevailing disparities and the fact that many provinces have yet to enjoy the prosperity, the pace of development and economic opportunity that exist in city of Bangkok. Likewise, we recognise that many people have been led to believe that they are disenfranchised and that our parliamentary system somehow does not offer them sufficient representation. Rest assured that I will work hard to dispel this notion and to ensure an equal voice for all. Our development programs will be determined by what is in the best interest of Thailand and to make it competitive in the global economy. Measures for private sector rehabilitation

10. In the meantime, the legal process will run its course, in full compliance with the judicial framework, and the Government will move forward to mitigate the suffering that has been inflicted and to rebuild what has been torn down. And towards that end, you would also have learned that the Government has already approved and authorised a number of measures to aid businesses directly affected by the protests.

11. And of course we have been encouraged and touched by the active and compassionate contributions by the private sector as well. Many firms and individuals have stepped up to help, such as the offer of temporary free retail space for the affected retailers to conduct business. Again, this is testament to the fact that the majority, almost all Thai people, are ready and willing to be part of this reconciliation process.

12. Efforts are being made to restore Thailand’s image and its reputation as a premier tourist destination. Tourism operators will be called on to help find a way to restore this sector. As a start, tax incentives are being offered to boost the domestic tourism market. Fees have been cut to provide some relief to affected airlines and provide a bridge until we re-enter the peak season of tourism. Again, in this area, let me take this opportunity to express my appreciation for the efforts of many of you who have tried to create the right understanding and to correct factual inaccuracies that may have been distributed during the protests. Economic outlook for a strong economy

13. As far as the economy is concerned, if you look back to when this government assumed office, you would recall that the global economy then was entering a severe recession. Some will say that it was probably technically going to be a depression. And in the first quarter when this government was in office, we experienced an economic contraction of -7.1% in the first quarter of 2009. The prospects then for many looked very bleak. When I met you last, I laid out a plan to make sure that we will see a recovery. Our own lenders would see it by the end of last year. Of course one year later, the first quarter of this year, we witnessed economic growth that reached 12%, actually the highest growth in Thailand for 15 years.

14. What is even more impressive about that recovery and growth is that it is certainly very broad-based. Export growth was very strong, going at the rate of 32%; the tourism sector for the first 3 months grew by almost 30%. And we saw a recovery in both domestic consumption and private investment. Agriculture, industrial and service sectors have all witnessed quite a strong recovery. While certain risks remain in the economy, both as a consequence now of the political challenges we faced, and also from external factors still, particularly the debt crisis in the European Union, we still expect growth for the year. Officially, the various agencies put it between 4.5 to 5.5%. My own target, and I believe it is a very possible target, is that we will try to reach 6 % for the whole year.

15. As confidence returns, during the 1st quarter of 2010 we saw household consumption expenditure growth of 4%; private investment growth 15.8%; unemployment at a very very low percentage; and manufacturing production expanding by 22.8%. This year we anticipate that auto manufacturing will increase to its highest level in 50 years, affirming Thailand’s current ranking as the 13th largest auto manufacturing country in the world.

16. Looking ahead, the House of Representatives recently passed the first reading of the Budget Bill for Fiscal Year 2011, which is set to be at around 2.7 trillion Baht and with a 400 billion Baht deficit this year. You would of course recall that last year when we announced our plans for the stimulus packages, we had intended to borrow up to 800 billion baht, as a special borrowing apart from the budget deficit to boost the economy. It is a testament to the strength of the economy, even now, that we can now safely say that we no longer need to seek the 400 billion baht loan as the second half of that special loan. We will instead use the budgetary process to run what is still very much a reasonable deficit, given the circumstances and to preserve fiscal discipline. We are confident that we can implement the various investment projects, particularly those focusing on infrastructure and water resources, transport and communications, health and education, without having to seek externally.

17. So indeed, I remain optimistic about the fundamentals of the Thai economy. As we move beyond the protests, the changing global investment landscape will open the opportunity for Thailand to continue to transform itself from a low-wage manufacturing base into an economy that is founded on creativity and innovation – one that is knowledge-based.

18. I believe there will be many new opportunities for regions of the country that may not have benefited from traditional manufacturing industries. We have allocated a substantial amount of the budget, and also the Thai Khem Kaeng stimulus package---to the creation and the support of the creative economy, and will be establishing the Creative Economy Agency, which will assist in the translation of policy into action. The overall picture of the stimulus package, around 40 % has already been disbursed, and that must be one of the contributing factors of the strong growth in the first quarter.

19. On the investment front, I am confident that if we can refocus attention on the facts and on the economic data, investors will continue to view Thailand as among the best locations. Despite the challenges, including of course the political events that took place, investment applications for BOI promotion that were received during first five months, that is right up to the end of May, actually increased in value by 7.3% and in terms of the number of projects by nearly 50% year-on-year. Total foreign investment applications from January through May 2010 have reached 86 billion baht. These values are more than double from the 41 billion baht received in the same period last year, and it reflects the ongoing recovery, both in the global and domestic economies. With other emerging economies pursuing FDI, of course, we can neither afford, nor have the desire, to compete in a race to the bottom. The very evolution of our free-market, consumer market, dictates that wages increase, and that to maintain equity and competitiveness, the value of our productivity must likewise increase.

20. Let me strongly underline that we are committed to strengthening the economic competitiveness in the global economy. We are committed to securing a competitive advantage for Thailand that is based on quality and excellence – not cheap labor. And we are committed to free and fair trade, whereby competition results in progress and is rewarding all those who participate.

21. Added to that, the ASEAN Economic Community, to be realised by 2015, will establish ASEAN as a single market of more than half a billion people with a combined GDP of over US$ 1.5 trillion. As we move to the realisation of that Community, we also hope that you will play a much more proactive role in realising the huge opportunities and selecting Thailand as your business and production bases for the ASEAN region. And even when the world was facing the economic crisis, Thailand and countries in East Asia continued to expand their economic cooperation. As ASEAN Chair last year we led ASEAN to sign many investment agreements, the latest being with India, which will be effective in 2016. East Asia is the largest economic bloc in the world, housing half the world’s population, half the world’s foreign currency reserves and one third of world trade. The region, therefore, will be the most dynamic in the world in the years ahead. We are committed to being an active member of the global economy, as can be seen by the many free trade agreements we have. The ASEAN-China Free Trade Agreement, which entered into force at the outset of this year, creates a market of 1.7 billion consumers, with trade of US$ 1.23 trillion. Likewise, Japan, Australia, New Zealand, India and other countries all have some form of trade agreement with Thailand that enable investors in this country to gain access to the world’s largest consumer markets.

22. But we cannot afford to be complacent. We continue to move ahead. And to remain competitive in the global economy, we have also recently taken a number of initiatives. We have adopted new incentives for companies that locate their Regional Operating Headquarters (ROH) in Thailand, which will make us the most competitive in the region. The Cabinet has recently approved a package that increases relative attractiveness of Thailand in being the hub for ROH, and the package expands existing measures with more incentives. The ROHs will enjoy, for 15 years, a tax break for income earned outside Thailand and only 10% corporate income tax on income earned domestically. The expatriates of these ROHs will also benefit from the reduced personal income tax rate of 15% for eight years. These incentives, which have been effective since the beginning of this month, will revive confidence and attractiveness for foreign companies in Thailand to base their operations and regional headquarters in Thailand. I’m sure that the representatives of the BOI here today are ready to take all of you on board and explain further the full package, as well as the continued expansion of our services of the One Start One Stop investment facilitation centre, where the integrated services of 21 government agencies can be found in one location, to provide services and answer investors’ needs.

23. The BOI will also be actively supporting the drive towards a “Creative Economy” in Thailand, as I’ve mentioned before, and through its new investment policy for sustainable development, will help the country enhance its human resources potential through increased occupational training and education, as well as measures to strengthen the science and technology, high-technology and R & D sectors. These steps will support knowledge-based industries in Thailand. In addition, the policy will actively promote energy conservation and reduction of environmental problems in response to the global and domestic trend.

24. Beyond short-term economic policy packages, Thailand must gear for the future. My responsibility, as I have always said, is not just to stimulate the economy and take us out of the recession, but also to lay the foundation for our long term competitiveness. We will transform ourselves from being a low cost production base to becoming a producer of high technology, high quality products. Generous investment incentives have already been offered for projects meeting this objective, such as to R&D activities, high technology production, and human resources development.

25. And to make Thailand even more attractive, early last month the BOI approved changes in the regulation on visas and work permits for foreign experts and technicians working on R&D projects, extending the period from 2 years to 4 years.

26. The BOI is also cooperating with the National Science and Technology Development Agency in setting up a fund for private-public sector cooperation on R&D activities and high-tech training, under the BOI’s skills, technology, and innovation scheme. Both the first and the second stimulus packages have also allocated a huge amount of money to upgrading our education and training system, such as the free 15-year basic education program, in order to make our skilled manpower more abundant in the future.

27. On many levels, we remain very competitive and are getting even better. We receive high marks for expatriate living, for low cost of living, overall tax burden and also for infrastructure. The airport rail-link will soon be opened and the Skytrain network is continuing to expand, as well as major investments that will take shape during the next five years or over the next decade, like the transport and communications network, roads, rails, and so on. And regarding governmental services, just early this month, a survey conducted by Political Economic Risk Consultancy has ranked Thailand the third, as far as efficiency of the bureaucracy is concerned, out of 12 Asian countries.

28. The Government will continue to work on all the issues mentioned, as well as to continue to address some remaining problems, such as the issue of Map Ta Phut. All components are in place for a resolution, and for businesses to comply with the Health and Environmental Impact Assessment and go through a public hearing process. Indeed, despite the political challenges, you will see that the economic programs, policies and measures have continued to be on track and on time. Ladies and Gentlemen,

29. Thailand must move forward; Thailand is moving forward. Our nation was tested, but our losses shall not have been in vain. We will overcome the divisions and we must gear towards the future. We are geared towards the future. We will look forward, we will move stronger beyond the headlines, and we will bring back into focus the inherent strength, not just of the economy, but also of the country.

30. And as I look around the room, I continue to see potential partners. As always, we consider foreign investors to be our partners and friends, and we welcome your advice, insights and experience. We hope for your support in conveying our message to the larger investment community that Thailand is the place to invest. All this, as I have said, have been achieved through a very very difficult and painful period, economically and politically. Once again, let me express my appreciation for your continued support and commitment. There are many challenges ahead of us, but I am confident that the fundamental strength of the country, of the economy, and above all, of our people and with the cooperation and support of all of you, will make sure that Thailand will continue to move forward to greater things.

31. Thank you for your attention and thank you for your continued confidence in Thailand. Sawasdee Krub.