Mr. Chairman,

Excellencies,

Distinguished Guests,

Ladies and Gentlemen,

Introduction 

      It is my great pleasure to speak at this seminar for the second year in a row on Thailand’s investment environment and its way forward. I would like to express my thanks to the Joint Standing Committee on Commerce, Industry and Banking for organising this event, together with the cooperation of the Joint Foreign Chambers of Commerce.  This year is a particularly timely to speak on this issue of the investment environment and its way forward, as the government is stepping up its activities to make Thailand more competitive in the 21st century global economy.

      You may recall that when we last met Thailand and indeed the entire world were only just at the height of a global severe economic recession. Following the event of October 2008, just two months before I assumed office, global equity markets had dropped sharply; and in the first quarter of last year Thailand’s GDP contracted by 7.1%.  Everybody at that time was extremely worried that the recession, or indeed a depression, would be protracted and that there would be a sharp rise in unemployment, which would not only cause short-term suffering but also affect the medium and longer-term growth prospect. 

      But this economic storm has finally passed as far as Thailand is concerned.  The economy has pulled through and remains strong. Both as a country and as a people, we have demonstrated time and time again our remarkable resilience. Every time that we face a crisis, we learn some lessons and use them to build a more stable and solid future. 

Current Economic and Investment Situation  

      This time, throughout the crisis, the first and second government stimulus packages to boost the domestic economy and investing in infrastructures,  and then following a higher than expected  recovery of the world economy, Thailand’s economy picked up with the first quarter of this year showing 12% year-on-year growth, and also showing signs of a broad base recovery   -- in terms of export, private investment and private consumption.  Indeed, our export values have increased by 32%, private investment 15.8% and manufacturing production 22.8%.  Figures of the first five months of this year, Thailand’s exports grew by about 35%, and we are now confident that a target of 18% growth for the whole year is achievable for exports.    Even tourism in the first three months grew by almost 30%.  And the combination of faster-than-expected first quarter growth, global economic recovery, boosting our export sector, and the revival of domestic spending, has led us to increase our GDP growth projections to between 5 and 6 % for the whole year, up from earlier projections of 3.5 to 4.5%. The IMF has been even more upbeat; it has recently made an upward revision of its projection of Thailand’s economic growth to 7%. 

      Despite the political situation in April and May of this year, the number of investment applications for BOI promotion during the first half of this year increased by 50% year-on-year.  The value of projects as far as the applications are concerned also up by 7.8% compared with the same period last year. The value of total foreign investment applications nearly reached 100 billion baht, almost double the first half of 2009. This reflects that both global and domestic economies are back on track.  And last Friday, the BOI approved 14 more projects for investment promotion, covering a wide range of industries and with a total worth of more than 60 billion baht.  

      Recent announcements made by several world-class companies further confirm that Thailand still holds strong potential -- and continues to be an attractive destination -- for long-term investment in the eyes of investors. For instance, Ford Motors has announced a 15-billion baht investment plan to build a new state-of-the-art passenger car plant.  Mitsubishi has announced its plan to expand its investment here, to build 200,000 eco-cars for export.  Moreover, a world-class food manufacturer has also revealed its plan to invest a further 3.4 billion baht to expand its production capacity in Thailand. 

Thailand’s current competitiveness 

      As I look forward, ladies and gentlemen, I am confident in the economic future of Thailand.  We are competitive and with increased emphasis on creativity and innovation, a strong banking system, and world class financial services, we will become even more so. Already Thailand ranks 12th  of  183 countries for ease of doing business and receives high marks for expat living and cost of living, and for its overall tax burden.

      As far as bureaucracy is concerned, Thailand is ranked in the Political Economic Risk Consultancy survey as the third most efficient out of 12 Asian countries. Our physical infrastructure is world class and will continue to improve. Last month, FDI Magazine released the results of its first Global Free Zone of the Future Award and Thailand’s Industrial Estates are ranked second best for economic potential out of 66 economic zones around the world. BOI offers among the best incentives for investment. 

      Moreover, a recently approved incentive package for Regional Operating Headquarters was recently announced, offering significant incentives on both corporate and personal income taxes, so that Thailand is now the most competitive country in the region for locating an regional operating headquarters.

Government Policy Direction 

    But as satisfied as we are with the economic indicators and the competitiveness of the country, the goal of this government is not to return to the status quo ante.  The government is determined to move Thailand forward, more competitively and innovatively. We must push forward our competitive advantage, particularly as our economy transitions towards a “creative” economy.

   Indeed, while the government is trying to come up with new initiatives to enhance trade and investment, we are also working very hard to address concerns expressed by the business community relating to Thailand's competitiveness.  All these efforts reflect the commitment of the government to making Thailand a “more productive and easier place to do business”. 

Human Resources Development and Creative Economy

   To achieve this goal, our task lies first and foremost in human resources development.  We need to enable Thai people to achieve their full potential through increased occupational training and education, and to adopt measures to strengthen the science and technology sectors. Together these steps would promote knowledge-based industries in Thailand. 

   A number of measures have already been put in place to upgrade human resources development and launch our drive towards becoming a creative economy. After the establishment of the National Creative Economy Policy Committee last year, which I chair, in order to set guidelines for creative economy policy and to ensure its implementation,  we are now in the process of forming a Creative Economy Agency that can oversee the economic transition and coordinate the many aspects that this entails. 

   In the budget, we have allocated 8.24 billion baht for creative economy activities by such bodies as the Industry Ministry, the ICT and the Science and Technology Ministries, and others would be working on this initiative.  As of 2 July 2010, 1.3 billion baht has been approved for the 2009-2010 period for various projects.  In this regard, I would like to point out to the excellent cooperation that exists between the Ministry of Science and Technology and the Ministry of Foreign Affairs, as they work to enhance our creative capacity by linking foreign technology and science with the local ones.  Already, Thai embassies are devoting more attention to identifying ways and means that our national capabilities in science and technology can be strengthened, particularly our universities and research and development facilities 

    The government is now working to increase university-business linkages and to support initiatives that can commoditize academic research. One recent example of cooperation is the design by Chiang Mai University of Thailand’s first robot that can read Thai sign language.  This was a collaborative project with the private sector and will benefit the speech and hearing impaired. 

Ease of Doing Business 

   Another task that the government takes very seriously is how to make investors feel comfortable and confident in putting their investment in Thailand. We try our best to ease investors’ concerns and eliminate obstacles to business ventures. 

    Obviously one outstanding problem is the Map Ta Phut issue. And while the four-party committee has already completed its work -- particularly in sending recommendations on how we may improve the environmental situation in the Map Ta Phut area and also make recommendations on the regulations to be issued, particularly on the list of activities that are deemed harmful to the environment and health -- the National Environmental Board has already begun its procedures of considering the issues of these regulations.  I am confident that over the next two months all the regulations and the frameworks for future applications will be clear; and while all the projects that still have the court injunction will be able to resolve the issue by the end of the year.  So, as we move forward we will take the Map Ta Phut issue as a very important lesson, not only in terms of the need to make sure that our regulatory framework is crafted with care so that no more uncertainties are created.  At the same time the government must do much more to ensure that there is trust and confidence between industries and also the local communities.  

    This is particularly important as we want to move towards a “greener and cleaner economy”, and press for “eco-friendly” industries to protect the environment and to conserve energy. This direction is reflected in the new BOI investment policy for sustainable development. In line with this policy direction, the BOI has approved a variety of measures. Among these, special incentives will be granted to promote machinery upgrades that conserve energy. Maximum incentives will be given to investment in energy conservation, alternative energy-related activities and the manufacturing of eco-friendly materials and products. 

     We also recognise that common to investments in all sectors, investors must have confidence in the system. Therefore, in an effort to improve transparency, the BOI has signed a memorandum of understanding with the Office of Public Sector Anti-Corruption Commission (PACC) to prevent wrongful activities and dealings between investors and state officials and to provide a channel for investors facing this problem to seek a remedy.

     Apart from issue-based solution, the government also tries to facilitate overall business operations further. The One-Start-One-Stop Investment Center (OSOS), which was established last year, is now the gateway for investors to meet and discuss their business operation with various government agencies under one roof.  In addition to this, we also aim towards a more streamlined business start-up process, which will reduce time for investors. Already through the collaboration between the Department of Business Development, Revenue Department and the Social Security Office, we now have the single point, single form and single document registration of tax ID, employer’s ID and company ID; and all of which by next year will become a “single number”.  Already the procedures for starting up the business, some of the procedures used to take four days it has now been reduced to 90 minutes.  So, starting up a business in Thailand will be quicker and easier.  

New Paradigm of Development

     Of course, strong economic performance not only depends on the economic environment and policies environment, but also on a stable political environment.  What has transpired over the last couple of months here in Thailand, especially in Bangkok, obviously has had an effect on your confidence in the country.  The seizure of the main shopping district in Bangkok, sporadic violence and intrusion by armed elements, these have been unprecedented in Thailand.  But I can assure you that the government is doing its utmost not only to maintain peace and restore order, but also to make sure that there is an observance and enforcement of the rule of law while minimising the loss to the country as well as to the people. 

    And we know, for the country to move forward, the process of rehabilitation and reconciliation as well as reform must take place.  We encourage everyone to take part in this process, and will continue to do so because we know that the government alone cannot achieve reform and reconciliation.   We need contributions from all sectors of the society, and your views and suggestions will always be welcome.  At the end of the day, we want a reform that everybody would accept -- a reform that places the nation’s interest before that of any individuals or groups.  There are various channels that you can still participate and make contributions, and I encourage you all to do so.  

     I am pleased to inform you that the mechanisms --  the committees -- that will undertake these tasks as we head towards national reconciliation and reform, based on my five-point plan, have now been formed.  And I trust that they will set to work promptly and deliver their recommendations in due course.  The government gives them independence as they work towards these recommendations and we want the process to be driven by a broad-based support of the people.  In this regard, I very much appreciate the initiatives already taken by the private sector to help make further contribution and participate in this process.  I am sure their work would provide valuable contributions, and may set an example as to how the reform and reconciliation can be achieved.   

     One of the main issues that have to be addressed in this process clearly is the issue of disparities that continue to exist in our society.  We hear this loud and clear, not just during the protest but also every time that we make a survey or run a campaign to listen to the views of the people. This is truly a   legitimate cause of grievances as expressed in various forms; and the issues of disparity and inequality in opportunity must be addressed.  While the government has already tried to make efforts in these areas -- particularly reflected by the fact that our stimulus packages had in mind the need to sustain the purchasing power of the least fortunate and the poorest in our country but also in our initiatives on the agricultural sector by having now an income guarantee for farmers -- much more needs to be done.  And some of the structural issues would still have to be addressed.  So the issues of tax reform, land reform will be high on the agenda; and this will need cooperation and the input from all sectors including the business sector. 

     But I am sure that as we undertake these reforms and enable our people, empower our people, and create more equality there will also be new business opportunities.  There will be more investment and more public-private partnership as the economy is reformed structurally. And this is where you -- as investors -- will also be able to play your role.  And we will count on you to do so.

Ladies and Gentlemen, 

     While Thailand is walking a path towards national reconciliation and reform, we should not loose track of Thailand’s role in the international community.  We are located right at the heart of ASEAN -- a region that has tremendous business potential and by 2015 will be a market for  600 million people and has combined GDP of over 1.5 trillion USD. With our improved capacity and solid economic foundations, I strongly believe we can act as a hub for production bases and regional headquarters for your companies in the region, where emphasis is now on the creation of connectivity -- physical or otherwise.    

     Besides ASEAN, Thailand also provides linkages -- in terms of logistics -- between countries that border the Mekong River, including China.  It is also a key player in ACMECS and the GMS.  And with the numerous free trade and investment agreements that Thailand has entered into, and ASEAN has entered into, with countries like Japan, Australia, New Zealand, China and India, it is certain that Thailand can be your “Gateway to ASEAN”.   And as we move into the 21st century -- which is sometimes dubbed as “the Asian Century” -- we can also be your “passage to the future of Asia”.  

Closing

Ladies and Gentlemen, 

     Once again, as we move forward in making Thailand an even better location for your investments, we look forward to working in partnership with our investors and gain the benefit of your knowledge and experience.  Already, you have shown a commitment to generous corporate social responsibility, which has improved our schools and local communities.  I would ask that as we transition towards a new paradigm of development, that you support this initiative and help us to address income disparities and underemployment.

     I look forward to the outcome of this seminar and to the proposals and recommendations to be made by leading experts, including bankers, international institutions and various organisations.  We cannot hope to succeed in our quest without your assistance and I thank again for your trust and for your continued confidence in Thailand.

    May I wish you all a very fruitful seminar, thank you very much. 

**********************