Which Australian Companies
are Thriving in Thailand?
Could Yours?
James Wise
Australian Ambassador to Thailand
Greg Wallis
Senior Trade Commissioner
Australian Embassy
Bangkok
Roadshow on Thailand: WHY?
Australian companies in Thailand are asking:
• How good can it get?
• Why are so few Australian companies here?
Thai market is misunderstood in Australia?
• Why?
What is Thailand really like?
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Why Is Thailand’s Profile Low?
• Overshadowed by understandable focus on:
– China
– India
• Indonesia naturally looms large
• Other ASEANs more familiar:
– Singapore, Malaysia, Vietnam
• “Flavours of the month”
– Myanmar
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Thailand: Common Views
• Poor and undeveloped
• Good place for a holiday
• Language barrier
• Natural disasters
• Corruption
• Political instability
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Rank
Country
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
United States
China
Japan
India
Germany
Russia
Brazil
United Kingdom
France
Italy
Mexico
Korea
Spain
Canada
Indonesia
Turkey
Iran
Australia
Taiwan, China
Poland
Argentina
Netherlands
Saudi Arabia
Thailand
South Africa
2011 GDP (PPP)
($Billions)
15,076
11,300
4,444
4,421
3,114
2,383
2,294
2,288
2,214
1,847
1,667
1,554
1,406
1,395
1,125
1,075
991
915
876
771
716
701
688
602
555
Thai Economy: Big
ASEAN Ranking
Rank
Country
2011
GDP (PPP)
(Billions)
15
Indonesia
1,125
24
Thailand
602
29
Malaysia
464
32
Philippines
391
39
Singapore
315
41
Vietnam
300
75
Myanmar
83
102
Cambodia
34
122
Brunei
21
130
Lao P.D.R.
17
Source: IMF, World Economic Outlook Database, October 2012
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Thai Economy: Sophisticated
• 10th biggest car maker
(>2m cars)
• Regional hub for auto,
electronics, consumer
goods, processed food.
• Middle class: 12 million
- Malaysia (12m)
- Indonesia (2.6m)
- Vietnam (1.6m)
• Dynamic retail sector
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Great Place for a Holiday
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Great Place for a Holiday
• 952,000 Australian visitors
– ≅ one in 25 Australians
• Over 99% have a trouble-free stay
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But I don’t speak Thai ….
• You don‟t have to
• Money and English are the languages of business
• English is more widely spoken than before
– and its use will continue to spread
• Bilingual professional help easy to find
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Natural Disasters
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Floods
• Floods showed
Thailand is critical to
supply chains
• Forced Japan to
reassess Thailand
– Verdict: nowhere
better
– New Japanese
investment boom
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Corruption
Country
Ranking
Singapore
5
Brunei
46
Malaysia
54
China
80
Thailand
88
India
94
Philippines
105
Indonesia
118
Vietnam
123
Cambodia
157
Laos
160
Myanmar
172
• Corruption risk is in
government sector
• Massive private sector
is corruption-free
Source: Transparency International
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Corporate Governance
2007
2010
2012
1. Hong Kong (67)
1. Singapore (67)
1. Singapore (69)
2. Singapore (65)
2. Hong Kong (65)
2. Hong Kong (66)
3. India (56)
3. Japan (57)
3. Thailand (58)
4. Taiwan (54)
4. Thailand (55)
4. Japan (55)
5. Japan (52)
4. Taiwan (55)
4. Malaysia (55)
6. Korea (49)
6. Malaysia (52)
6. Taiwan (53)
6. Malaysia (49)
7. India (49)
7. India (51)
8. Thailand (47)
7. China (49)
8. Korea (49)
9. China (45)
9. Korea (45)
9. China (45)
10. Philippines (41)
10. Indonesia (40)
10. Philippines (41)
11. Indonesia (37)
11. Philippines (37)
11. Indonesia (37)
Source: Asian Corporate Governance Association, September 2012
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Corporate Governance
154
signatory companies
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Political Instability
%
4,000
3,500
Coup
Attempted coup
2011 Tsunami
and floods
Major protests
3,000
2008 GFC
2,500
2,000
1,500
1997-98 Asian
Financial Crisis
1,000
500
0
Source: GDP Data from Thailand‟s National Economic and Social Board
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Meritocracy, Money and Virtue
• Uneven government, strong administration
• Workplaces are not politicised
• All politicians are pro-market, pro-business
• Virtue in Thailand to be rich or richer
• Thais are pragmatic
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What colour is this car?
This car is
green.
This car is black.
This car
is red.
This car is blue-red.
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The Business
Environment for
Australia in Thailand
18
Ease of Doing Business
ASEAN + China/India
1. Singapore
11. Finland
2. Hong Kong, China
12. Malaysia
12. Malaysia
3. New Zealand
13. Sweden
18. Thailand
4. United States
14. Iceland
79. Brunei
5. Denmark
15. Ireland
1. Singapore
91. China
99. Vietnam
6. Norway
16. Taiwan, China
7. United Kingdom
17. Canada
132. India
8. Korea, Rep
18. Thailand
133. Cambodia
9. Georgia
19. Mauritius
138. Philippines
10. Australia
20. Germany
163. Lao PDR
128. Indonesia
Source: The World Bank‟s Doing Business 2013
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Bloomberg’s Most-Promising Emerging Markets
for Investors*
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Country
China
Thailand
Peru
Chile
Malaysia
Poland
Turkey
Russia
Indonesia
Czech Republic
Hungary
Colombia
South Africa
Mexico
India
Overall Score
80.2
63.5
60.9
56.5
52.4
51.3
50.9
50.5
49.8
47.7
47.4
47.1
44.7
44.0
42.3
* March 2012 issue of
Bloomberg Markets
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Thailand and Australia (1)
› Australia‟s 9th biggest trading partner
› Bilateral trade (2011-2012) worth A$ 17.7 billion
› Bilateral trade (1989-2011) has grown 3.6 times faster
than Australia‟s global trade
› Important source of students
› 20,000 students (6th biggest globally)
› TAFTA in place since 2005
› Strong government links
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Thailand and Australia (2)
› Significant Australian investments in Thailand:
Sectors:
• Auto Parts
• Consumer
• Marine
• Manufacturing
• Mining
• Logistics
• Infrastructure &
Construction
• Professional
Services
Companies: Bluescope, Worley Parsons, ANCA, Visy, Toll, Linfox,
Kingsgate, Futuris, Grant Thornton, Blackmores, Macquarie,
Brambles, QBE
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What are 23 Australian Companies in Thailand
Saying?
› “We are here because Australia isn’t big enough.”
› “It is a good business environment; much easier than
China, Vietnam, India & Indonesia”.
› “think about your ROE”
› “ Business is good, with strong growth & profitability.”
› “Our engineering and R&D is still done in Australia.”
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What are 23 Australian Companies in Thailand
Saying?
› “There is a shortage of skilled labour.”
› “Thailand is no longer a low cost labour market.”
› “Productivity needs to be improved.”
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Reasons for setting up business in Thailand
To service regional or international
market
64.1%
To service Thai market
To re-export to Australia
Other
59.4%
14.1%
6.3%
Source: Online Survey by AustCham Thailand
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Thailand-Australia Free Trade Agreement
(TAFTA)
› 94% of Thai tariffs on Australian goods eliminated
› Special Agricultural Safeguards (SSGs) limit
import of some products (beef, dairy, some
horticultural) under TAFTA duty rates
› Trigger levels increasing yearly
› Improved access for investors with Australian
ownership permitted in various sectors
› Helps facilitate visa requirements for Australians
working in Thailand
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Bilateral trade between Australia and Thailand
from 2005-2012
25000
A$M
20000
18,707
15000
10000
16,339
19,089
17,708
13,642
TAFTA
9,609
20,324
11,336
5000
0
Source:
1) ABS 5368.0 - International Trade in Goods and Services, Australia, Dec 2012
2) ABS 5368055003 table 5.13 and 7.13- International Trade in Services by Country, by State and by Detailed Services Category,
Financial Year, 2011-12
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Board of Investment (BOI)
Incentives to Invest in Thailand
› Many benefits provided
› Current system: 3 zones that have
different levels of incentives
› New regulations (2014) will focus
on type of business activity
› Aim is to boost knowledge based,
creative, green, alternative
energy, hospitality and logistics
sectors
Source: BOI Flyer
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Board of Investment (BOI) Incentives to Invest
in Thailand
Future Supported Sectors
• Basic infrastructure and logistics
• Basic industry (steel, petrochemicals, pulp and paper, machinery)
• Medical devices and scientific equipment
• Alternative energy and environmental services
• Services that support industrials sectors
• Advanced core technologies (biotechnology, nanotechnology,
advanced material technology)
• Food and agricultural processing
• Hospitality & Wellness
• Automotive and transport equipment
• Electronics and electrical appliances
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Australian Business
Discovering Thailand:
Export and Investment
Success Stories
31
Futuris Automotive Finds Success in
the 'Detroit of the East'
•
•
•
•
•
One of 20+ Australian companies
2011: 7,500 m2 facility
2013: new 8,000 m2 facility open
Supply full seat systems and interior
trim to GM, Ford and AAT in Thailand
plus multiple export contracts
Design & Development in Melbourne
Success Stories # 1
Images used with permission from Futuris
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Visy Captures Food Packaging Market
•
•
•
2009: VisyFood Plastics
decided to be where its
customers are
Supply packaging solutions for
Dole, Coca-Cola and Heinz
Manufacturing in Thailand for
local use and export to Japan,
China and USA
Source: www.dole.co.th
Success Stories # 2
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Honeycombes Revives Used Cane Harvesters
•
•
Before refurbishment
After refurbishment
•
•
Good quality machines in
Queensland
Demand growing for
mechanisation in Thailand
40 refurbished machines sold
$8 million business to date
Success Stories # 3
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Sweet Arrival for Pink Lady Apples
•
•
•
Launched in August 2012 at
Bangkok‟s major supermarket
chain.
Austrade Bangkok promotion
with the Victorian Government
and Apple and Pear Australia
Success with an initial export
of three containers in the first
two months
Success Stories # 4
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Ballantyne’s 60 Years in the Kingdom
•
•
Began in Thailand 60 years ago
selling cheese and dairy produce
to the Royal Household
Supply cheese powders to
bakeries, and butter and milk
powder to the Kim Chua Group for
its Imperial biscuit line.
Source: http://nla.gov.au/nla.pic-an13031955-4
Success Stories # 5
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Blackmores Supplements Global Growth
• Blackmores launched into
Thailand in 1997
• Already a market leader and
premium supplement brand
• Growth rate year on year of
over 20%
• Thailand amongst most
profitable markets globally
Success Stories # 6
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A Precise Springboard for Success
•
•
•
Gibbens Industries - small Central
Coast (NSW) manufacturer of
industrial springs
In Thailand to serve regional
markets and customers
Cash-flow positive 18 months after
arrival in Thailand
Success Stories # 7
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Where are the Opportunities for
Australian Businesses?
› Global Value Chains (GVCs), especially in the automotive, manufacturing,
and food sectors
› Education (at all levels)
› Skills development & vocational training for industry, especially in the
automotive, manufacturing, and food sectors
› Meat, wine, seafood, dairy, grocery, grains & horticultural produce
› Consumer & lifestyle products
› Energy and energy technologies
› Transport infrastructure
› Agricultural business
› Marine
› Green Building Products and Technologies
› Deep open-cut lignite (brown coal) mining
› Oil & Gas
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Automotive component supply and aftermarket
•
•
•
•
Global production base of 1-tonne pick-up trucks
Opportunity to access Global Supply Chains
Vehicle production in 2012 was 2.45 million units
Australia has a reputation as the premier off-road
aftermarket design and innovation centre
Source: www.saveprakan.com
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Education
Education dominates Australia‟s services exports to
Thailand. An Australian education is highly regarded by
Thais
Opportunities:
• English language skills
• Teacher training (up to Masters and PhD levels) and
teaching and learning methodologies
• University research collaboration, curriculum
development, student and staff exchange, internship
programs, study tours
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Skills development and vocational training
• Traditionally, a „higher education prestige oriented‟
society
• Thailand needs to address critical skills shortages in its
manufacturing and services sectors;
1) Automotive
2) Hospitality (food safety and food handling)
3) Aged care
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Meat, wine, seafood, dairy, grocery, grains &
horticultural produce (1)
BEEF & LAMB
•
•
•
•
Growing demand for beef as local production is
limited and inferior quality
Australian beef has 90% of the imported beef
market
Beef from Australia has TAFTA tariff of 18.67% in
2013 (normal tariff of 50%)
Lamb can be imported without any TAFTA tariff
(normal rate 30%)
WINE
•
•
France used to dominate, but Australian wines now
run a close second (35% vs 28%)
From Penfolds to Berri Estates
Image used with permission of
Bangkok Beer & Beverages
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Meat, wine, seafood, dairy, grocery, grains &
horticultural produce (2)
SEAFOOD
• All seafood without tariff under TAFTA
• Growing demand due to higher disposable
income
• More higher-value products for supply to the
growing tourism industry
DAIRY
• Thailand is not self-sufficient in dairy
production
• TAFTA has helped Australia gain market
share (various tariffs apply)
• Growing interest in specialty products,
especially cheeses
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Meat, wine, seafood, dairy, grocery, grains &
horticultural produce (3)
GROCERY
• Main competitors are from Europe, USA and Japan, not low cost
suppliers
• Increasing interest in gluten-free and healthy snacks, high-fibre, lowsugar, organic foods
• More than 50 brands available - Arnotts, Bickfords, Uncle Tobys,
Beerenberg, Capilano, Olive Grove, Bulla, Coon, Meadow Lea,
Allowrie, Peerless, Sanger, Tassal, San Remo, Cerebos, Berri, True
Organics
GRAINS
• All grains under TAFTA are tariff free
• Growing demand for grains for food production and feed grade
HORTICULTURE
• Thailand is negotiating with Australia on import protocols
• Most fruit enjoys lower or zero tariff under TAFTA
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Consumer & lifestyle products
Consumer and lifestyle products that meet Australian country of origin
requirements can enter Thailand duty free
LIFESTYLE
• Australia has credibility and aspirational status
• Billabong, Quiksilver, Roxy, Seafolly, Bloch,
Holster, Diva ++
COSMETICS
• Niche market opportunities e.g. natural spa
products, natural skin care, cosmetic ingredients
• Cancer Council, Jurlique, Skin Doctors, Emu ++
NATURAL HEALTH SUPPLEMENTS
• Beauty and appearance create demand for specific
segment e.g. Coenzyme Q10, Glucosamine,
Calcium
• Weight management and sports nutrition
• Blackmores, Musashi
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Energy and energy technologies
• 2012: Thailand starts to import Liquefied Natural Gas
(LNG)
• Tender for six new power plants in late 2013, with a
combined capacity of 5400MW and cost of US$10.8bn
• Business opportunities from government authorities and
independent power producers:
–
–
–
–
Power generators, transmission and distribution equipment
Clean coal technology: sulphur calcium oxide reduction
Alternative/renewable energy technology
Smart Grid, Smart Metering, Smart Energy Management and
Energy Storage Technology
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Transport Infrastructure
THB4trn (US$63bn) to be invested in transport
infrastructure projects over the next 7 years
•
•
•
•
•
High-speed railway network
Urban transport – Bangkok MRT
Highway networks - ASEAN Highway Network Project (by 2020)
Water transport development of 5 ports in south
Air Transport – 2nd phase Suvarnabhumi
Pak Bara: www.thealami.com
Image source: www.bangkokmetro.co.th
Source: Business Monitor International, Thailand Infrastructure Report Q1 2013
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Agricultural Business
• Services and technology to increase
productivity and competitiveness, for
sugar, livestock, dairy, grains and
horticulture
• Need for increased mechanisation
• Thailand still imports 65% of its
processed dairy products requirements
• Thailand is Australia‟s third biggest
market for cotton
• Co-operation with Thai conglomerates for
supply into their international operations
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Marine
• Phuket - Asia‟s most attractive leisure marine destination
• Industry in Thailand has grown with tourism growth (> 22
million arrivals in 2013)
• Leisure craft, transfer ferries and related products and
services
• Several Australian manufacturers already active
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Green Building Products and Technologies
• Climate change concerns drive
demand
• Increasing awareness of building
standards, safety, and
environmentally friendly products
• Future growth in areas outside of
Bangkok, especially Phuket, for
high end luxury condos, hotels and
marinas
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Deep open-cut lignite (brown coal) mining
• EGAT has issues with operation of deep open-cut lignite
mining
• Opportunities may exist for:
– Slope stability: Geotechnical review and consulting of in-house
pit designs
– Transportation & communication systems
– Environmental management
– Production improvement
– Drainage/Sludge/Pumping systems
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Oil & Gas
•
Equipment Needed for Water and Sand
Management, and Subsea Production
o Enhanced oil recovery
o Marginal field development / innovative
processes for small oil & gas fields including
flare recovery systems
o Water treatment and sand management
o Sub-sea production systems
o Carbon reduction equipment
o Solutions for equipment fatigue, erosion, and
corrosion to prolong equipment life
o Decommissioning of platforms, particularly
fields with high mercury content
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Summary
›
›
›
›
›
A large & sophisticated market with a high “ROE”
The “Teflon Economy”
Global manufacturing power
Growing middle class driving demand
Australia a respected partner for supply of
consumer goods, foods, grains, services and
education
› Australian businesses have come to Thailand to
grow regionally
› TAFTA and BOI facilitate business growth
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Doing Business in Thailand
› Be aware of Thai culture (smile, wai and gifts) and
recognise the cultural and language barriers
› “Yes” doesn‟t always mean “Yes”
› Understand and respect social status
› Respect for the monarchy
› Relationship building is critical
› Be patient with bureaucracy
› Be flexible and accommodating
› Be open for technology transfer
› Use the BOI for investment
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Useful contacts
• Australian Embassy, Bangkok
www.thailand.embassy.gov.au
• Austrade
www.austrade.gov.au
• Thailand‟s Board of Investment
www.boi.go.th
• Australian-Thai Chamber of Commerce
www.austchamthailand.com
• Australia-Thailand Business Council (ATBC)
www.aust-thai.org.au
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