Local Time in Thailand: Print

Doing Business in Thailand

Market Overview

Thailand, the second largest economy in ASEAN after Indonesia, is an upper middle-income country with an open economy and a gross domestic product (GDP) of $404 billion and 3.2% annual growth in 2016.

Thailand is the 28th largest export destination for the United States.  Two-way trade of goods and services in 2016 averaged $40 billion, with $29.5 billion in Thai exports to the U.S. and $10.5 billion in U.S. exports to Thailand.

U.S. exports to Thailand contracted by 6.5%, while U.S. imports from Thailand increased by about 3.1% for the same period in 2015.

Among countries in Asia, Thailand ranks as the United States’ 9th largest export destination after China, Japan, Hong Kong, South Korea, Singapore, Taiwan, India, and Malaysia.

An export-dependent economy, Thailand exported a total of $215.3 billion worth of goods in 2016.  The United States was Thailand’s No. 1 export market (11.2%), followed by China (11.1%) and Japan (9.4%).  The top ten export items were machinery (17.4%), electronics appliances (13.9%), vehicles and automotive parts (12.7%), gems and jewelry (6.6%), rubber (5.7 %), plastic (5.3%), mineral fuels (2.9%), meat and seafood (2.8%), medical device and supplies (2.5%) and cereals (2.1%).

Thailand is one of the world’s most visited countries and tourism is vital to the Thai economy; it contributes approximately 10% of the country’s Gross Domestic Product (GDP).  Despite a temporary slowdown and the postponement of economic activities in the 4th quarter, during the period of mourning after the passing of His Majesty King Bhumibol Adulyadej in October, Thailand recorded 32.58 million tourist arrivals in 2016, an 8.91% increase over 2015. The nine main airports of Thailand served a record 129 million passengers in 2016, an increase of 14.7% over 2015.

In 2016, the Thai economy grew by 3.2%, improving from 2.9% in 2015. Private consumption, public investment, and private investment expanded by 3.1%, 9.9% and 0.4%, respectively. Export growth was null with 0% growth. Meanwhile, the inflation rate was 0.2% and the current account registered a surplus of 11.4% of GDP.

The Thai economy is projected to grow by 3-4% in 2017. Thailand's cabinet approved an infrastructure action plan worth $25.2 billion for 2017. Therefore, government spending in infrastructure will be a major driver of the economy. Risk factors include the economic situations of trading partners, fluctuations of money markets, uncertainty in the international economic policies of the United States, European politics, and international politics.

Market Challenges

In May 2014, the Thai military suspended the constitution and took control of the government in a coup d’état. Reforms have been ongoing as a new constitution is drafted, and a constitutional referendum secured approval in August 2016. The current administration announced its intent to hold general elections in 2018 once the constitution is in place. With slightly accelerated growth in 2016, Thailand’s economy has remained stable despite its challenges over the past three years.

Thai industries face intense competition from both global and domestic suppliers of goods and services. Many domestic companies are family businesses that span generations, and are now led by second- and third-generation businessmen and women who are highly educated and possess deep knowledge of their industries.

Thailand’s mass market is price conscious and generally served by local suppliers and/or low-priced imports. U.S. exporters with products that are competitive for reasons other than price should work with a local partner to undertake an appropriate market entry strategy.

High tariffs in many sectors remain an impediment to market access. While Thailand’s average applied most favored nation (MFN) rate averaged 10.7 percent in 2014, ad valorem tariffs can be as high as 50 to 80 percent, and the ad valorem equivalent of some specific tariffs (charged mostly on agricultural products) is even higher. About one-third of Thailand’s MFN tariff schedule involves duties of less than 5 percent, and almost 30 percent of tariff lines are MFN duty free, including for products such as chemicals, electronics, industrial machinery, and paper. Thailand has bound all tariffs on agricultural products in the WTO, but only approximately 70 percent of its tariff lines on industrial products. The highest ad valorem tariff rates apply to imports competing with locally produced goods, such as automobiles and automotive parts, motorcycles, beef, pork, poultry, tea, tobacco, flowers, wine, beer and spirits, and textiles and apparel.

Corruption and lack of transparency in government procurements are major concerns for U.S. companies. Where corruption is suspected during the bidding process, government agencies and state enterprises reserve the right to accept or reject any or all bids at any time and may also modify the technical requirements. This allows considerable leeway for government agencies and state-owned enterprises to manage procurements, while denying bidders recourse to challenge procedures. There are frequent allegations that the Thai government makes changes to technical requirements for this purpose during the course of procurements. Despite a Thai government commitment to transparency in government procurement, U.S. companies and the Thai media continue to report allegations of irregularities. Thailand is not party to the World Trade Organization Agreement on Government Procurement; it obtained observer status in June 2015.

Customs law in Thailand does not fulfill the standards established by The International Convention on the Simplification and Harmonization of Customs Procedures, otherwise known as “the Kyoto Convention.” Major problem areas include Thailand’s Customs Penalty Regime and Customs Valuation Procedures. The penalty for undervaluing imports into Thailand, even if done through negligence or by mistake, can be accompanied by a prison sentence up to ten years. The system is incentivized by the distribution of rewards from these penalty payments to customs officials involved in the investigation of each case. Additionally, the procedure for determining “Customs Value” remains opaque as the valuation methodologies, determined by Ministerial Regulations, are subject to frequent change. Confusion over the guidelines can lead to increased risk of misinterpretation and misapplication of goods valuation methods.

U.S. businesses operating in Thailand should be aware that the government recently amended its Civil Procedure Code to include class-action lawsuit provisions. This increases rule of law and consumer protection in Thailand, but may leave some businesses at higher risk. This may result in higher insurance premiums, especially for small businesses.

The regulatory environment protecting intellectual property in Thailand is at times difficult to navigate. Patent registration can be a lengthy process, sometimes requiring several years. Patent and trademark infringement is common in Thailand. U.S. companies have successfully protected their intellectual property through litigation in the Thai courts, but these cases can be costly and time-consuming. Counterfeit goods continue to circulate widely in Thailand, contributing to the country’s continued status as a Priority Watch List country in the 2017 Special 301 Report by the Office of the U.S. Trade Representative. While counterfeiting of hard goods such as DVDs, CDs, and apparel remains a problem, recent widespread usage of the Internet and mobile devices in Thailand has resulted in a large increase in online pirated goods such as camcorder-recorded movies and pirated software.

Market Opportunities

Thailand maintains an open, market-oriented economy, and encourages foreign direct investment as a means of promoting economic development, employment, and technology transfer. Thailand continues to be a prominent destination for foreign direct investment, and many U.S. multinational and small- and medium-sized companies alike have invested successfully in the country. Thailand continues to welcome investment from all countries and seeks to avoid dependence on any one country as a source of investment.

Thailand’s economic growth has created opportunities for U.S. companies in a number of infrastructure sectors including electrical power, telecommunications, and renewable energy.

Thai consumers are also creating opportunities for new sales for U.S. medical products, automotive accessories, agricultural equipment and chemicals, cosmetics, food supplements, outdoor recreation equipment, franchising and educational services among others. Thailand also continues to look for U.S. suppliers of aerospace and defense equipment, broadcast equipment, food processing, packaging equipment, and environmental technologies.

Market Entry Strategy

Partnering with a local agent or distributor is the most effective way to enter the Thai market and reach potential Thai buyers. The agent or distributor can facilitate and expedite market entry with their extensive market knowledge and established distribution networks and relationships with key business and government officials.  The Commercial Section at the U.S. Embassy in Bangkok provides a series of customized business development services to assist U.S. firms planning to enter or grow their presence in the market.

The Commercial Service in Bangkok provides a series of services customized to assist U.S. firms planning to enter the market.  For a list of professional service providers in the Thai marketplace that can assist U.S. companies in the assessment, completion, and/or financing of export transactions, see: Services for U.S. Companies.

Country Commercial Guide
Market Overview
Thailand Map_2

  Notice to Visitors!

  The link you have chosen will take you to a non-U.S. Government website.

  If the page does not appear in 5 seconds, please click this: outside web site

  Export.gov is managed by the International Trade Administration and external links are covered by its website  disclaimer statement.

  Notice to Visitors!

  The link you have chosen will take you to a non-U.S. Government website.

  If the page does not appear in 5 seconds, please click this: outside web site

  BuyUSA.gov is managed by the International Trade Administration and external links are covered by its website disclaimer statement.