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NEWS UPDATES Asean Affairs        12  February 2011

Thai bank warns of AEC competition

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The retail food, packaging and hospitality sectors stand to be the most affected by the arrival of the Asean Economic Community (AEC) in 2015, says the Thai bank, Siam Commercial Bank.

Chief economist Sethaput Suthiwart-Narueput said that given the seriousness of the threats posed, the government and the private sector alike must speed up preparations to cope with the looming changes and increased competition from regional markets.

Cooperation among Asean countries under the AEC will allow regional business operators to hold 70 percent stakes in Thailand's service sector, up from only 49 percent now, he said. Moreover, skilled Thai labor in the services industry will likely move to higher-income countries such as Singapore and Malaysia.

"Net income in those two countries is about triple Thailand's, so a "brain drain" of skilled Thai labour in the business sector could very well occur," said Dr. Sethaput, who urged continued development of the country's education system and human resources.

On the other hand, the AEC will also provide greater opportunities for regional investment by Thai service operators, particularly in Malaysia and Singapore, which have higher margins for earnings before interest, tax, depreciation and amortisation.

Those sectors most likely to attract Thai investors are advertising, printing, software and the Internet, retail food, pharmaceuticals, information technology, sales agents and department stores.

Dr Sethaput also said Thailand had high potential in three other sectors - real estate for retirees, local-brand hotel management, and halal foods.

The combined economic value of all Asean members stands at U$1.5 trillion, while their total international trade is worth $1.6 trillion. Combined foreign direct investment amounts to $50 billion.

The region sees 65 million foreign travellers annually and has a estimated population of 601 million.

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This year in Thailand-what next?

04 January 2011
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