Guidance

Overseas Business Risk: Thailand

Updated 21 June 2023

1. Political Situation

National elections took place in May 2023. Initial results show that opposition parties have secured a majority of the seats in the lower chamber of Thailand’s Parliament. A period of coalition negotiation is now underway. The Election Commission of Thailand is expected to ratify the results by mid-July 2023, with the formation of a new Government expected in the weeks thereafter.

The political situation in Thailand can be volatile. In recent years, there have been instances of civil and political unrest. You should avoid any protests, political gatherings, demonstrations or marches.

Lèse-majesté (criticism of the monarchy in any form) is a crime, which can be interpreted broadly and carries a long jail sentence. Some foreign (including British) and Thai journalists, Human Rights Defenders and members of the public have faced criminal charges, including for defamation, sedition, and under the Computer Crimes Act for raising concerns, making political comments, and sharing articles online that could been seen as portraying Thailand negatively or making accusations about individuals.

More information on political risk, including political demonstrations, is available in FCDO Travel Advice.

2. Economic Situation

Thailand is the world’s 24th largest economy (World Bank, 2021) and the second largest economy in the Association of Southeast Asian Nations (ASEAN). Covid-19 caused the economy to contract by 6.1% in 2020, the sharpest fall since Asian Financial Crisis in 1998, due to its reliance on exports and foreign tourism. The economic growth then recovered to 1.5% in 2021 and further strengthened to 2.6% in 2022.

Economic growth is projected to be 3.6% in 2023 and 3.8% in 2024, supported by a revival in the tourism sector. Goods exports are anticipated to drop slightly in 2023 due to the global economic slowdown. Exports have long been the country’s main growth driver. Thailand’s goods exports accounted for 61% of GDP (as of 2022) where key exports are cars and parts, computers, jewellery, rubber products, and plastic pellets.

The tourism sector is recovering after the government ended all Covid-19 entry restrictions in July 2022. Thailand received 11.2 million foreign tourist arrivals in 2022, up from around 428,000 in 2021. The remains below pre-pandemic levels with nearly 40 million in 2019, when foreign tourist receipts accounted for 12% of Thailand’s GDP. With the return of Chinese tourists, Thailand expects foreign arrivals of 28 million in 2023 and 35 million in 2024.

Public debt to GDP ratio was 61% at the end of February 2023, up from 41% before the pandemic as Thailand borrowed about 1.5 trillion baht (£35 billion) to fund Covid-19 stimulus measures. The debt ceiling was raised from 60% to 70% of GDP in September 2021 to accommodate higher borrowing to support economic recovery after Covid-19. Risks to fiscal sustainability remain manageable given that the debt stock is largely denominated in local currency and sufficient domestic liquidity is available to absorb the government’s refinancing needs. External debt accounts for less than 2% of the total public debt.

However, Thailand’s household debt level is among the highest in Asia. Household debt was already high before the pandemic – 80% of GDP at the end of 2019 with the pandemic causing a sharp increase of 10-percentage point of household debt to GDP before the debt inched down to 86.9% of GDP in the fourth quarter of 2022.

Thailand currently has 14 regional and bilateral free trade agreements (FTAs) with 18 countries. As a member of ASEAN , Thailand joined the Regional Comprehensive Economic Partnership (RCEP) which entered into force in January 2022, making it the world’s largest trade deal. The RCEP countries are the 10 members of the ASEAN plus China, Japan, South Korea, Australia and New Zealand. RCEP eliminated a range of tariffs but the major benefit is the harmonisation of the rules of origin that sets out how much regional content a product must have to qualify for duty-free treatment.

Thailand has previously expressed an interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade bloc connecting a wide group of economies. However, a plans to submit an application continue to be delayed over concerns regarding agricultural and pharmaceutical sectors.

[Please note the policies outlined below are those of the previous Government and may change following the recent elections.]

Public investment and government spending are the key drivers of economic recovery. The public sector continues to invest in construction projects. The 20-year Transport System Development Strategy (2018-2037) includes: upgrading the rail network, intercity motorways, and the Bangkok mass transit system (sky-train, underground and monorail); expanding airport capacity in Bangkok and the regions; and port and other infrastructure improvements in the Eastern Economic Corridor (EEC) economic zone.

Thailand is also making renewed efforts to attract foreign direct investment and move up the value chain through Thailand 4.0 industrial strategy to transform Thailand into an innovative economy. Under Thailand 4.0, the government aims to attract investment into 12 target industries including automotive, smart electronics, affluent medical & wellness tourism, agriculture and biotechnology, food, robotics, logistics and aviation, biofuels and biochemical, digital, medical services, defence and education development. The EEC is a government initiative to revitalise industrial zone in the eastern seaboard area in Thailand by improving infrastructure and providing incentive packages to attract business investment with a focus on these sectors.

Read the World Bank’s more in-depth publication on the issues of Doing Business in Thailand (PDF, 1,785KB).

2.1 Key figures at a glance:

• Population: 66m (2022)
• GDP: USD 505.9bn, 24th largest economy (World Bank, 2021)
• GDP per capita: USD 7,066 (World Bank, 2021)
• Ease of doing business index ranking: 21st/190 (World Bank, 2019)
• Corruption perceptions index ranking: 101st/180 (Transparency International, 2022)

3. Business and Human Rights

In 2019, Thailand voluntarily adopted a National Action Plan on Business and Human Rights 2019-2022 (NAP) outlining policy commitments to implement the UN Guiding Principles on Business and Human Rights (UNGPs) – a set of guidelines for States and businesses to prevent, address, and remedy human rights abuses in business operations. As of May 2023, the draft 2nd NAP on Business and Human Rights is finalised, pending cabinet endorsement, and expected to become effective within this year. The new NAP maintains focus on implementation of UNGPs across four priority areas including (1) labour; (2) community, land, environment and natural resources; (3) human rights defenders; and (4) cross-border investment and multinational enterprises.

Despite the policy framework, there are still human rights concerns in relation to business and employment in Thailand. Trade unions are legal, although fairly inactive, and although workers have the right to strike, few exercise the right to do so. Trade Union activity remains largely muted. Thailand has not ratified ILO Convention 87 and 98 governing the rights to freedom of association and collective bargaining, which contributes to the low union density.

One area of concern is the treatment of migrant workers – predominantly from neighbouring countries such as Cambodia, Myanmar, and Laos. There are an estimated 4-5 million migrant workers in Thailand; only around 2.5 million are registered. Most are employed in the construction, manufacturing, primary and fishing industries or as domestic help. The Thai Government runs a verification process for migrants to facilitate regularisation of migrant workers, but uptake has been low with the majority of migrants remaining undocumented. As such they are denied access to healthcare or the minimum wage. Corruption remains a significant issue in migrant employment processes; they often have to pay high fees to brokers as part of the recruitment process leading to indebtedness.

There have been many reports of exploitation of undocumented migrants and organised trafficking. The US State Department’s Trafficking in Persons (TIP) Report 2022 has upgraded Thailand’s ranking to Tier 2 from the previous year (Tier 2 Watch List) recognising that Thailand is making significant efforts to eliminate trafficking and has noting an overall increase of efforts compared to the previous reporting period. Thailand has not ratified the 1951 Refugee Convention. Although the Thai Cabinet approved a resolution in December 2019 to establish the National Screening Mechanism (NSM), a domestic mechanism to identify and potentially protect refugees, it has yet to be implemented. Thailand has recently codified the non-refoulement principle in the Prevention and Suppression of Torture and Enforced Disappearances Act which prohibits forced return of individuals to a country where they may face torture or other forms of ill-treatment.

Working conditions for migrant labour in the fishing industry has attracted significant international attention. UN Working Group on Business and Human Rights in 2018 welcomed the steps taken by the government to enhance law enforcement and amend laws and regulations to improve welfare and protection measures for migrant workers in the industry, but it also called for similar efforts to be made in other sectors, including agriculture, energy, manufacturing, and construction. The TIP Report 2022 notes that Thai authorities have never reported identifying a victim of labour trafficking as a result of fishing vessel inspections conducted at ports.

Civic space is limited. Attacks, harassment, and intimidation against human rights defenders (including union leaders and community representatives) who speak out on business-related human rights abuses is prevalent. Report of UN Working Group on Business and Human Rights in 2019 notes the systematic use of Strategic Lawsuits against Public Participation (SLAPP) brought against human rights defenders, communities, and individuals involved in highlighting human rights concerns as a way to silence critical voices.

4. Bribery and Corruption

Bribery is illegal. The Bribery Act 2010 applies to non-UK companies operating in the UK and to UK companies working overseas. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Corruption is an issue in many sectors in Thailand. Transparency International’s 2022 Corruption Perception Index ranked Thailand 101st out of 180 countries with a score of 36 out of 100 (zero is highly corrupt). Though corruption is criminalised primarily by the Criminal Code and the Organic Act on Counter Corruption (BE 2542) 1990, it is still pervasive. Anyone doing business may encounter or hear of corruption and bribery in one form or another. Practices including facilitation payments, bribes and the giving and receiving of expensive gifts in order to develop business relationships are still common in certain areas. DBT and FCDO advice to companies encountering corruption is simple – don’t get involved. Companies should ensure that all their commercial activities in Thailand are compliant with the UK Bribery Act which came into force on 1 July, 2011.

Buying a property in Thailand isn’t straightforward and you should be aware of the risks before making any financial commitments. Foreign nationals have been caught up in property scams. Several British nationals also face criminal defamation charges for alleging fraud and malpractice. The legal process can take a long time and is expensive.

Read the information provided on our Bribery and Corruption page.

Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Thailand.

The World Bank’s rankings on Ease of doing Business and Transparency Index’s Corruption Perception Index

5. Terrorism Threat

The Foreign, Commonwealth & Development Office (FCDO) Travel Advice says that terrorists are very likely to try to carry out attacks in Thailand. In the past, there have been attacks in Bangkok and other parts of the country. Bomb and grenade attacks have been indiscriminate, including in places visited by foreigners. You should take care, particularly in public places, follow the advice of the local authorities and monitor local media reports. The Thai authorities have on a number of occasions warned of the possibility of attacks to coincide with symbolic dates or holidays.

The FCDO advises against all but essential travel to the provinces of Pattani, Yala, Narathiwat and southern Songkhla – Thailand’s ‘Deep South’. Martial law has been in place in nearly all areas within these provinces since 2006. The security authorities can detain suspects without charge, censor the media, conduct searches and seize documents.

Read the information provided on our Terrorism threat page in the Travel Advice for Thailand from the Foreign, Commonwealth & Development Office.

6. Protective Security Advice

Read the information provided on our travel advice

7. Intellectual Property

Intellectual Property Rights (IPR), as intangible assets, are a key factor in the competitiveness of your business in the global economy. IPR can protect your innovation from competitors and can also be an important source of cash flow though licensing deals or selling IP. IPR infringement can lead to loss of business, revenue, reputation and competitive advantage unless you take steps to protect your IP both in the UK and abroad.

When exporting to Thailand, it is essential to register your rights in there as soon as possible in order to be able to defend and enforce them. IP rights are territorial in nature which means that registrations in the UK or another country’s jurisdiction are not automatically enforceable in others.

Thailand is a member of the World Trade organisation (WTO) and is thus a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (PDF, 194KB) which sets international standards for various aspects of IP.

It is also a signatory to a number of international intellectual property (IP) treaties administered by the World Intellectual Property Organisation (WIPO):

• the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (PDF, 946KB) - sets international standards for various aspects of IP;
• the Paris Convention - Protection of Industrial Property;
• the Patent Cooperation Treaty (PCT) - provides for a common patent filing system.
• the Copyright Treaty (WCT) - protection of works and the rights of their authors in the digital environment.

Thailand is also undertaking a programme of reforms of IP laws, including the Trademark Act and amendments to the Copyright Act which entered into force in August 2022. However, many counterfeit documents and goods (i.e. clothing, jewellery and pirated software, CDs /DVDs etc) are openly on sale, particularly online.

High profile raids and arrests by Thailand’s law enforcement agencies of producers and vendors of counterfeit goods do regularly take place, but these typically do not target the main source of the counterfeit items. While noting significant progress, In May 2022, the US Trade representative kept Thailand on its Intellectual Property Watch list.

8. IP Top Tips for Businesses:

• There is a backlog of patent applications through the PCT system in Thailand therefore it is advisable to register via the direct national route where possible, as application wait time may be reduced.
• It is essential to register your rights in Thailand in order to be able to defend and enforce them. IP rights are territorial in nature which means that registrations in the UK or another country’s jurisdiction are not automatically enforceable in others.
• Thailand works under a first to file system, meaning he first person to file an IP right there will own that right when granted. This means an earlier user may find they are infringing a later filed registration.
• Thailand is part of the ASEAN Patent Examination Co-operation (ASPEC), a regional patent work-sharing programme among 9 participating ASEAN Member States (AMS). The purpose of this programme is to share search and examination results between the participating offices to allow applicants in participating countries to obtain corresponding patents faster and more efficiently. ASPEC is free of charge and operates in English.
• It is worthwhile noting that Thailand is undertaking systematic measures to reduce IPR violations in every sphere of business activity, including producing, distributing, selling, importing and exporting.
• In 1997 they established the Central Intellectual Property and International Trade Court (CIPITC) which has exclusive jurisdiction to adjudicate civil and criminal cases involving IP.
• In March 2013 the National IRP Centre of Enforcement (NICE) was launched aimed at ensuring well- coordinated efforts in the prevention of IPR violations in Thailand.
• In February 2022, Thailand published amendments to the Copyright Act which included notice-and-takedown provisions intended to address infringement online, and provisions against circumvention of technological protection measures.

Businesses are generally encouraged to learn more about IP issues relevant to their specific industry sector and to consider defensive measures early in their plans to enter the Thai market.

The UK Intellectual Property Office has an IP attaché based in Singapore with specific focus on providing support and advice to UK companies in Thailand.

9. Useful information can also be found at the following:

• Intellectual Property Office - a UK Government agency providing free and impartial advice on protecting and registering your IP in the UK and abroad;
• The Thai Department of Intellectual Property (DIP).

10. Organised Crime

Read the information provided in the Crime section of the FCDO Travel Advice. Read the information provided on our Crime and Fraud Prevention pages

11. Contact

Contact the DBT team in Thailand for more information and advice.