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NEWS UPDATES 20 July 2010

Thai firms told to shape up

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Thai businessmen are being warned to shape up or else they could lose out from the various trade agreements that are set to be implemented over the next couple of years within the Asean community.

"We were a group of 16 (Asean+6) different houses with boundaries, but soon enough we will be one with no boundaries," said Kiat Sittheeamorn, president of the Thailand Trade Representative's Office, speaking at a packed seminar at the Asia Leadership Dialogue last Thursday and reported by the Bangkok Post.

"The question is whether the business model that is being implemented by most Thai entrepreneurs can remain the same. Can we implement the old strategies and still be competitive?

"I for one want to warn you to beware and start to adapt to the changes that are coming." Mr. Kiat told his audience that the 10-member Asean grouping undertook as many as 60 different commitments last year alone. He said these commitments, along with others that have already been signed, would start to be implemented between now and 2016, by which time Asean would enjoy a free flow of trade and investments including labour.

"The future can be changed but the past cannot, and therefore it is necessary to start changing now for businesses to be able to survive in the future," said Mr Kiat. As Thailand's chief trade negotiator, he has given local businesses the harshest public dressing down from the government's side. He told them to adapt or face an uphill battle in the future.

Asean+6 - which includes China, India, Japan, South Korea, Australia and New Zealand - today accounts for nearly half of the world's foreign exchange reserves. These countries also account for nearly a third of the world's trade. These numbers should be enticing enough for businesses to start taking a hard look at the opportunities available.

Asia, which has become the global economy's main engine of growth, is poised to expand further, regardless of what happens elsewhere, as trade flows within the region are on an upswing.

He said Thailand was not yet lagging behind in trade with lucrative emerging markets. Many local companies are tapping them as seen in the increase in two-way trade over the past five months.

"Trade within Asean has seen a sharp increase," he said. "It has risen by 53 percent with China, over 57 percent with India and more than 100 percent with Hong Kong."

As a trade representative who constantly searches for opportunities for Thai companies abroad, Mr. Kiat said he had found a niche for Thai homebuilders, as they are among the fastest in the world with an average of just 45 days needed to build a house.

He said this meant entrepreneurs could no longer operate with a "business as usual" mindset. Local businesses instead need to look at the issues and face the new challenges. This would help the Thai economy maintain its position as a pillar of Asean, he said.

Looking at Thailand's fundamentals, we can achieve 7% to 8% gross domestic product growth annually for years to come, as is evident from our growth last year and what is forecast for this year, with strong numbers despite the global economic crisis and political upheaval in the country," he said.

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