The Sri Lanka Thailand Business council was established in 2000. The council has been in the forefront of promoting bilateral trade between the two countries. The council has a very strong membership consisting of many business institutions that trade with Thailand. The council promotes the membership to visit Thailand for trade exhibitions annually on any sector which would cater to the needs of the organisations.
The Agreement on Economic and Technical Cooperation between Sri Lanka and Thailand was signed in January 1996 during the visit of the Sri Lankan Foreign Minister to Thailand. Accordingly the first meeting under this cooperation agreement was held in June 2000 in Bangkok. At this meeting the two sides reviewed the overall state of trade cooperation between the two countries and emphasised the need to further expand the bilateral trade to its full potential.
Even though the formal diplomatic relationship between these two countries commenced in 1955 the actual Sri Lanka-Thailand relationship goes back to more than 1,000 years. Buddhism is the common religion between these two countries, which have had a relationship since the Sukhothai Period, B.E. 1800.
Thailand has been consistently recognised as one of the world’s top locations for the Ease of Doing Business. In 2012, the World Bank ranked Thailand 17th out of 183 countries. Thailand’s advantage as a location for foreign business is enhanced by the host of Free Trade Agreements (FTA) and Early Harvest Schemes that provide duty-free imports of raw materials and components, as well as duty free access to markets around the world. Thailand has already entered into agreements with ASEAN and countries such as China, India, Japan, New Zealand, and Australia.
Export goods of Thailand include sugar, textile, dried fish, cement and chemical products while import products from Sri Lanka include gems and jewellery, tea, spices, fibre and metal products. Commencing in 1997 Exports from Thailand to Sri Lanka has seen a steady increase from US$ 150.23 million to US$ 486.95 million by 2011. Starting in 1997 import goods from Sri Lanka has seen a drop in 2002-2005 but has since then increased to US$ 93.12 million by 2011. Overall trade volume has seen an increase by the year 2011 close to US$ 600 million.
Thailand is a country with a population of 72 million and the labour force is amounting to 39 million in 2010. In 2011 Thailand’s export turnover reached over US$ 225 billion USD nd the import turnover was 202 billion.
GDP growth of Thailand has increased periodically from 0.1% in 2011 to 5.0% in 2013. Thailand’s GDP percentages are high in both industry and service sectors – these two sectors cover up 64% of their GDP. Thailand offers foreign investors some liberal investment policies as there are no foreign equity restrictions in manufacturing sectors, 100% foreign ownership is possible in many services, there are no restrictions on foreign currency remittances, there is export requirement and there is no local content requirement.
Agriculture, agricultural products, mining, ceramics, basic metals, light industry, metal products, machinery, transport equipment, electronic industry, electric appliances, chemicals, paper, plastics, services and public utilities are eligible for BOI investment promotions in Thailand. They also provide 100% ownership land rights for foreign investors under BOI rules as well. Investors are allowed to bring in foreign experts and technicians for their manufacturing or management works.
There are several Sri Lankan companies which have been involved in Thailand, which have invested more than 1.2 billion Baht and during these years they have commenced more than 15 projects within Thailand. Carbokarn Co Ltd., Multiplas Furnishing Co Ltd., Infant World Ltd., Dipped Products (Thailand) Ltd., Trans Ceylon Gems & Jewellery, Touchwood Asia Co Ltd. and Shizuka Co Ltd. are some of the leading investors in Thailand who have invested more than 75% as Sri Lankan investors.
Thailand’s priority activities are agriculture and agro industry, research and development, software development, moulds and dies, biotechnology, alternative energy, manufacture of hi-tech products and waste recycling and recovery.
Thailand, being the world’s leader in agro based products and also being the 19th largest agricultural output destination, is one of the world’s leading producers of rice, despite the fact that the yield per hectare is low. In the early 1990s Thailand annually produced approximately 18.5 million metric tons of rice, up from about 11.3 million metric tons per year in the 1960s.
The second most important crop in value is rubber, which is raised mainly on plantations on the Malay Peninsula. In the early 1990s approximately 1.4 million metric tons of rubber was produced each year. Other important crops included cassava (21.1 million metric tons), sugarcane (46.8 million), maize (3.6 million), pineapples (1.9 million), coconuts (1.4 million), and kenaf (161,000), a fibre used in making canvas. Livestock totalled about 6.8 million cattle, 4.8 million buffalo, 5.1 million pigs, and 153 million poultry. The agro-industry plays a fundamental role in employment creation and income generation. Particularly the food and beverages processing sector remains important at all levels of economic development. An abundance of natural resources combined with significant investments in technology, food safety R&D and adhering to international quality standards have helped to dub Thailand as the ‘Kitchen of the World’. As the largest sole net food exporter in Asia, Thailand is one of the world’s largest producers of food products such as rice, canned tuna, frozen seafood, chicken and canned pineapple.
The One-Start-One-Stop Investment Centre (OSOS) which is a onetime stop for any investor was introduced in Thailand in 2009, helps investors to register a company, apply for investment promotion privileges, obtain a foreign business license, tax registration and other essential business needs as well.
The South East Asian economies came together under the umbrella of the Association for South East Asian Nations (ASEAN) in 1967. Like their European counterparts, ASEAN was initially regarded more as a political forum, intended to provide a ‘buffer’ against the spread of communism in East and South East Asia, rather than as a group with an explicit commitment to promote economic cooperation in the region. Thus, it was almost 25 years after its initial establishment that ASEAN took the initiative to accelerate economic integration through the creation of a regional free trade area.
Sri Lanka, which had been invited to accept membership of ASEAN from its inception, opted instead to maintain its commitment to a ‘non-aligned’ status. Global economic changes in the 1980s, however, prompted Sri Lanka to review its position, vis-à-vis membership of regional blocs, and it became a member of the South Asian Association for Regional Cooperation (SAARC) in 1985.
The latter part of the 1980s saw a proliferation of new regional trade blocs, and the emergence of three distinct economic power blocs in North America, Europe and East Asia. As the increasing cost of being on the periphery of these growth centres was becoming more apparent, Sri Lanka unsuccessfully sought to establish a dialogue partnership with ASEAN in 1992. ASEAN’s relations with third countries are presently at full dialogue or sectoral dialogue levels. The process of becoming a full dialogue partner starts with sectoral cooperation.
This year will be another golden year between Thailand and Sri Lanka since the Prime Minister of Thailand will visit Sri Lanka at the end of May, which will help strengthen economic relations between these two countries. There are some opportunities that can be expanded in Sri Lanka and Thailand, in the field of tourism, food processing and construction.
The Department of International Trade Promotion, Ministry of Commerce of Thailand organises the international exhibitions annually in all sectors. The Business Council encourages all their members to visit these exhibitions along with the support of the Royal Thai Embassy in Sri Lanka. Any institution that has been trading with Thailand is welcome to join the Business Council.