Foreign investment pours into Thailand

[Spitfire]

Interesting article on the BBC about Thailand and the boom which seems to be taking off here.

Also interesting to know that Thailand's biggest money spinner is computer hard drives, rice and tourism is piecemeal compared to manufacturing.

Seems LOS has double digit growth at the moment too.

It really seems not to be phased by anything and is charging ahead. Change always seems to be happening at high speed here.

Plenty of food for thought about how this will turn out for them too.

Worth a read, I reckon.

http://www.bbc.co.uk/news/business-11632303

[STEVE G]

Also interesting to know that Thailand's biggest money spinner is computer hard drives, rice and tourism is piecemeal compared to manufacturing.

I was reading recently that Thailand is now the world leader in producing computer hard drives.

[PeteC]

Also interesting to know that Thailand's biggest money spinner is computer hard drives, rice and tourism is piecemeal compared to manufacturing.

I was reading recently that Thailand is now the world leader in producing computer hard drives.

Is it really a good thing though and can it be managed properly? Look at China and the Apple/Foxconn ongoing saga. I'm sure there are many more examples in China but a lid is kept on it all concerning media coverage.

Foreign corporations keep coming to Thailand because worker wages are low. If companies and the government keep wages suppressed in light of huge corporate growth and profit, this falls right into the Red Shirt agenda, and they'll recruit hundreds of thousands more to their side. Beating a dead horse again, I'll also ask where Thailand is going to find all the needed skilled labour given their dismal attitude towards education?

On the other hand if wages go up rapidly, so does inflation and that's not a good thing for expats here on fixed incomes, or for the Thais themselves as once prices go up, when have we seen them ever come down, even if the investment climate should reverse itself?

If Thailand ultimately becomes too expensive foreign corporations will go elsewhere, and some Thai owned business may go offshore as well in a decade or two. We've then come full circle back to rice farming and tourism.

The whole balancing act concerning foreign investment, production, exports, domestic consumption, wages, inflation and the population happiness factor has to be managed very carefully. I'm not sure the Thai government at least in its present form is capable of it.

China right now is not an example to follow. They have massive problems associated with rapid growth much of it being addressed with an iron hand. I hope that Thailand never goes that route, which makes the balancing job here even more challenging.

Interesting times ahead. Pete

[cozza]

Pete,

Another side of this is the "quantative easing" or purpose devaluation of the US dollar to be economically more competitive with Chinese manufacturing.

Could we in fact witness manufacturing return to the US because it becomes cheaper?

The currency war has just begun and it will be interesting to see how far it actually goes, maybe even scary...

[PeteC]

Pete,

Another side of this is the "quantative easing" or purpose devaluation of the US dollar to be economically more competitive with Chinese manufacturing.

Could we in fact witness manufacturing return to the US because it becomes cheaper?

The currency war has just begun and it will be interesting to see how far it actually goes, maybe even scary...

We could I guess. It's something I've mentioned a few times as a way for the UK to reinvent itself. Mags argued though that the UK has dismantled itself in terms of facilities and even the workforce who used to know how to do those jobs and manage facilities. The US I'm afraid is the same. The 'rebuild' up would take a long period of time.

As we know the US, UK and EU have replaced manufacturing with technology and services. In the case of Thailand they will never be able to do this as things stand now. So as I mentioned above, where else will they go except back to farming and tourism? There is no other fallback for them which is why it's so critical to manage their growth so carefully IMO. Pete

[migrant]

There is already talk in the US of a resurgence of manufacturing due to the dollar value, transportation costs and now, security costs.

In my little corner of the world my manufacturer clients are doing very well

[STEVE G]

The thing with manufacturing in the west is that it now tends to be massively automated so that it requires very little labour.
The UK motor industry still produces way over a million cars a year, mainly for Japanese companies but the workforce is a fraction of what it used to be in the seventies when it was huge employer.

[migrant]

The thing with manufacturing in the west is that it now tends to be massively automated so that it requires very little labour.

I agree, and this is why there is some increase in the manufacturing sector in my opinion. The labor (and related costs) used to be the primary reason for shipping overseas, but as Steve pointed out, with automation the differences then tend to be materials and added transportation costs.

If the dollar ever recovers then I think there will be even more.

[elem]

Yes- business/manufacturing is good in Thailand this year!
There are some really interesting thai (equity) funds out there now if you have 5000USD or more to invest/ ING and HSCB just to name a few. Getting you a really good return at the moment..comparatively....
I would recommend keeping them for a year or two, then review your investments.
Send me a pm if you would like to discuss further - and I am speaking as a private investor, nothing to to w corporate or otherwise linked to financial markets.

[PeteC]

Here we go, a crack in the dike already concerning Thai competitiveness and willingness to expand industry here. Pete

Big shift to Dawei predicted
Map Ta Phut and South lose appeal

http://www.bangkokpost.com/business/eco ... -predicted

* Published: 14/11/2010 at 10:17 PM
* Online news: Local News

Thai heavy industry is likely to shift to industrial estates in Burma's western coastal city of Dawei instead of setting up facilities in southern Thailand or Map Ta Phut, warns the government's economic think-tank.

To prepare for massive development, Thailand needs to construct infrastructure to link Dawei to the Eastern Seaboard in Chon Buri.

The Burmese government is promoting the development of a huge port and industrial estate development in Dawei (Tavoy), for which SET-listed Italian Thai Development Plc will be a major contractor. The first-phase contract that ITD has signed for the 10-year project is worth an estimated US$8 billion. The entire project could be worth $58 billion or more.

Dawei isn't much today, but port development could be 10 times that of Laem Chabang in Thailand.

Companies planning to invest in a Dawei industrial estate include PTT Plc, Siam Cement Group and the upstream complex of a Japanese steel company.

Arkhom Termpitthayapaisith, secretary-general of the National Economic and Social Development Board, said the shift to Burma would be a response to environmental issues both in Map Ta Phut and southern Thailand.

It is quite clear, he said, that more heavy industry cannot be located in Map Ta Phut in Rayong, while the agency's survey showed residents in the South disagreed with the establishment of an oil refinery and petrochemical complex.

Thai governments for 20 years have been talking about a southern landbridge spanning Songkhla and Nakhon Si Thammarat as an industrial development area and location for petrochemical complexes, but the talk has come to nothing.

Now the focus has shifted to Burma, and the Transport Ministry will study building a new road link from Dawei via Ban Phunamron in Kanchanaburi to the Eastern Seaboard and Cambodia.

Mr Arkhom said Prime Minister Abhisit Vejjajiva also sought the support of the Chinese government for the Dawei project on the sidelines of the G20 meetings last Friday, encouraging Chinese companies to set up projects in an industrial estate planned by Thailand's Amata Corp.

China also plans to build a rail link from southern China to Dawei to provide another route to the sea.

It is predicted Dawei's wide-ranging infrastructure project will strengthen Thai competitiveness with improved access to raw materials such as natural gas and ore for the steel industry from the Middle East and South Africa.

He expects Thai transport costs would decrease because shippers will no longer need to use the Malacca Strait.

The Transport Ministry, meanwhile, is expected to adjust its 10-billion-baht plan for the Pak Bara deep-sea port in Satun province to make it a multi-purpose port serving both goods transport and tourism.

Pak Bara's status as a gateway for shipping to India and the Middle East is expected to diminish after the Dawei project is created.

[PeteC]

This is starting to mushroom. Here's an article about a specific industrial estate developer, Amata, who will expand into Burma. Pete

http://www.bangkokpost.com/business/eco ... industries

[PeteC]

A thought about the above current phenomena concerning industry moving to Burma. I think we're going to see reverse foreign worker movement. There is a large group of Thais who don't have the training or perhaps even the desire to make the jump from working hard industry to high tech, electronics etc., factory work. We have a work force in Burma who is basically not trained to do anything except haul concrete blocks and bags of dirt. These new Burma Estates will need men skilled in working heavy industry. I wonder if the Thais who go there will be treated as badly as migrant workers are here? Hopefully a quid pro quo situation resulting in migrants in Thailand being treated better than they are now, and receiving some rights and protection. Pete