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ASIA-PACIFIC TRADE AND INVESTMENT REPORT 2015 Supporting Participation in Value Chains Asia-Pacific Trade Briefs Thailand Merchandise trade: Thailand’s economy is highly dependent on exports of goods and services. In 2014, total merchandise trade accounted for about 107.6% of GDP – compared to 50.4% for the Asia-Pacific region in total. Thailand’s exports are highly diversified across 4355 products and 127 markets, compared to the Asia-Pacific average of 2107 products and 95 partners. Almost half of its exports (48.3%) are destined to China, the United States, Japan, and Hong Kong, China while over a third (39.5%) of imports in 2014 are sourced from China and Japan. However, domestic turmoil together with persistently weak external demand dragged Thailand into trade recession in 2014. The country’s merchandise exports contracted by -0.4% which was below the region’s sluggish export growth of 1.5%. Merchandise imports contracted sharply by -9.0% as a result of weak demand both from the domestic and export markets as well as Baht depreciation. Services trade: Thailand’s services exports contracted -5.7% in 2014 – from an average of 12.7% annual growth between 2010-2014. This was led by a sharp decrease in tourism and transport services exports most likely due to political unrest. Tourism accounts for over half of all Thailand’s services exports. Services imports contracted -3.1% in 2014 – from an average of 4.3% annual growth between 2010-2014. This was led by a sharp decrease in imports of transport services. Transport services account for over half of all Thailand’s services imports. Global value chains (GVCs): As reflected in the share of intermediate goods in trade and the major export and import products, Thailand participates in GVCs as a producer of intermediates. Trade in intermediates is markedly higher in Thailand (31%) than the Asia-Pacific regional total (22%) for imports, and marginally higher in Thailand (19%) than the region (18%) for exports. The country’s top export and import products prominently feature intermediate goods (i.e. integrated circuits; motor parts; diodes and transistors). Foreign direct investment (FDI): Both FDI inflows and outflows contracted in 2014, for the first time since 2010. FDI inflows fell sharply, by -10.3% – following several years of rapid growth – averaging 8.3% a year between 20102014. FDI inflows to Thailand dropped more sharply than total FDI inflows to the region (-1.5%) because of the combination of weak economic growth and persistent political tensions. Tariffs: Average MFN applied and effective tariffs at 10.9% and 12.0% are slightly higher than Asia-Pacific averages of 7.4% and 7.4%. Average WTO bound duty, at 25.3%, is above the Asia-Pacific average of 21.7%. Trade costs: Intraregional trade costs with Thailand have fallen markedly since 2009. It is costlier for Asia-Pacific economies to trade with Thailand than with East Asia-3 (China, Japan and Republic of Korea) – the intraregional benchmark – however almost the same as with EU-3 (France, Germany and United Kingdom) – the extraregional benchmark. Based on the UNRC Survey 2015*, Thailand’s trade facilitation and paperless trade implementation score is at 75.3%, compared to 46.5% for the Asia-Pacific. Trade agreements: Thailand has 13 trade agreements in force, much higher than the Asia-Pacific average of 7 agreements. Fifty five per cent of exports are to PTA partners, compared to 35% for the Asia-Pacific. Seventy one per cent of imports are from PTA partners, compared to 45% for the Asia-Pacific. Annual Growth (%) Figure 1. Key trade and investment indicators 13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6 -7 -8 -9 -10 -11 6.1 4.8 - 0.4 1.5 - 9.0 - 1.0 - 3.1 - 5.7 - 10.3 - 1.5 Thailand Asia-Pacific Thailand Asia-Pacific Thailand Asia-Pacific Thailand Asia-Pacific Thailand Asia-Pacific Merchandise Exports Merchandise Imports Services Exports 2013-2014 Services Imports FDI Inflows 2010-2014 *Country notes summarising results of the UNRC Survey 2015 are available at: http://unnext.unescap.org/UNTFSurvey2015.asp Figure 2. Top merchandise markets 25 Australia; -2.8 Germany; 3.0 Indonesia; -3.5 20 Singapore; 4.2 Hong Kong, China; -4.5 15 Indonesia; 4.7 Republic of Korea; -4.6 15 Australia; 4.7 United States; -6.4 Malaysia; 5.8 Malaysia; -7.4 Hong Kong, China; 6.0 10 Singapore; -9.1 10 Japan; 10.7 5 5 Japan; -18.8 United States; 13.1 China; -20.7 China; 18.5 1-20 -30 -10 0 10 Imports (%) 20 0 2 30 -8 -6 1-4 -2 Exports (%) Rice.; 1.9 Parts and accessories (other than c; 1.9 Petroleum oils and oils obtained fr; 2.2 Motor cars and other motor vehicles; 2.5 Parts and accessories of the motor ; 2.5 Telephone sets, including telephone; 2.9 Natural rubber, balata, gutta-perch; 3.1 Motor vehicles for the transport of; 3.5 Electronic integrated circuits.; 4.8 Automatic data processing machines ; 8.7 0 2 Imports (%) Figure 4. Trade in goods by their use 4 6 8 2 10 Exports (%) Figure 5. Foreign direct investment 100 16 90 14 58 70 60 64 70 73 50 40 30 20 18 19 10 0 31 22 10 8 6 4 8 12 11 13 Thailand Asia-Pacific Thailand Asia-Pacific Exports Raw Materials 12 Value in USD billions Total Exports (%) 80 2 0 2011 Imports Intermediate Goods Final Goods Figure 6. Tariffs 2012 2013 FDI Inflows 2014 FDI Outflows Figure 7. Trade costs 100 100 90 80 60 50 40 76.3 30 20 10 25.3 0 MFN Bound 10.9 12.0 MFN Applied Effectively Applied Thailand Asia-Pacific Binding Coverage Ad valorem equivalent (%) 90 70 Rate (%) 0 Petroleum oils and oils obtained fr; 1.3 Diodes, transistors and similar sem; 1.5 Automatic data processing machines ; -1.5 Telephone sets, including telephone; -2.0 Parts and accessories (other than c; -2.2 Commodities not specified according; -2.7 Parts and accessories of the motor ; -2.9 Gold (including gold plated with pl; -3.2 Electronic integrated circuits.; -3.7 Petroleum oils and oils obtained fr; 5.3 25 India; 2.7 Germany; -3.2 20 Figure 3. Top merchandise products 80 70 60 50 2009 Thailand 2010 2011 East Asia - 3 2012 EU-3 Sources: Trade and tariff data were accessed through WITS. FDI data was accessed through UNCTADstat. Notes: Trade data follows the HS2007 classification. Mirror data is used. Products are defined at the 6-digit level. Definitions: Primary, intermediate, consumer, and capital goods are defined using UNCTAD System of Accounts. Final goods are defined as the sum of consumer and capital goods. Bound tariff is the maximum most favoured nation (MFN) tariff permitted under WTO obligations. MFN applied tariff is the tariff applied on imports among WTO members. Effectively applied rate is the lowest tariff available, i.e. preferential rates where available. Authors: Aman Saggu and Luca Parisotto; comments from Mia Mikic, Witada Anukoonwattaka, Rajan Ratna, and Adam Heal; contact: [email protected].