1
The Thailand-EU FTA in historical perspective EABC – The EuroCham in Thailand Thailand – EU partnership Growing the Thai economy Conclusions Q&A
Supported by the European Union
2
The Thailand-EU FTA negotiation is the latest example of the EU growing closer to ASEAN ◦ Dec. 2009 - EU approves FTA negotiations with ASEAN member states ◦ 2010 – EU begins FTA negotiations with Singapore and Malaysia ◦ 2012 – EU begins FTA negotiations with Vietnam ◦ Dec. 2012 – Singapore-EU FTA negotiations completed ◦ Mar. 2013 – Thailand-EU FTA negotiations begin
Supported by the European Union
3
The European-ASEAN Business Centre (EABC) represents the interests of the European business community in Thailand With our consortium partners we have a combined membership of about 2,000 companies in Thailand There are nine advocacy working groups
Supported by the European Union
4
EABC members are active and positive contributors to the Thai economy and society Many have been in Thailand for decades and consider it home We need Thailand to be economically strong and prosperous
Supported by the European Union
5
The EABC strongly supports the Thailand-EU FTA The Thailand-EU FTA will:
◦ Provide immediate benefits to the overall Thai economy ◦ Boost EU investment in Thailand ◦ Help take Thailand’s service sector to the next level
By entering this Partnership for Growth Thailand will create a virtuous cycle of economic growth and development Supported by the European Union
6
Thailand will not enter the FTA as a ‘junior partner’ ◦ The EU is Thailand’s 3rd largest trading partner ◦ The EU is the largest investor in ASEAN Million EUR
EU Imports and Exports with Thailand
Source: European Commission, May 2013 Supported by the European Union
7
Millions US$
EU FDI
US FDI
Source: Bank of Thailand
Supported by the European Union
8
ď ˝
The Thailand-EU FTA will promote trade
and investment and increase Thai access to the EU market
EU imports of Thai goods expected to grow 6.7% (950 million EUR) in the first year of the FTA
An additional 0.56% Thai GDP growth related to the FTA
“Thailand's Trade Options. Managing Trade Relations with the EU", Study prepared for Board of Trade November 2012. Supported by the European Union
9
US$ Millions
FDI Inflows Selected ASEAN Members
R1,000 million
Inward FDI Stocks South Africa
South Africa-EU FTA
Source: ASEAN Secretariat
Source: South African Reserve Bank Supported by the European Union
10
The FTA will allow significantly greater investment in Thailand’s service sector and bring much needed knowledge and technology transfers Services are critical for moving to the next level of economic development but Thailand’s service sector has lost its competitive edge
Supported by the European Union
11
ď ˝
The service sector is a critical part of the Thai economy but it is losing its competitive edge
Services as % of GDP
Thailand’s Service Exports
Source: World Bank Development Indicators 2013
Supported by the European Union
12
Services as a share of GDP Comparison of services sector contribution to GDP in selected economies, 1970 and 2010 80
Services (% of GDP) 70
60
40
30
China Korea, Rep. Malaysia Taiwan, China Thailand
20
10
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
Percent
50
13
50% of GDP comes from the service sector compared to 41% from manufacturing
The service sector employs 44% of the labour force compared to 14% for manufacturing
100%
100%
90%
80%
70%
70%
60%
60%
30%
Agriculture
Source: NESDB
Manufacturing
Service
Agriculture
9
9
9
9
8
9
2010
2011
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0%
10 10 10 10 10 10 9
2009
0%
2008
10%
2007
10%
20%
2006
45 44 42 42 41 39 39 40 39 40 40 41 39 42
38 39 38 39 40 41 41 41 42 42 41 43 41
2005
30% 20%
40%
2004
40%
50%
2003
16 16 16 15 16 15 14 14 21 14
2002
14 15 15 15
2001
50%
52 51 51 51 49 50 50 50 49 49 50 49 50
2000
41 41 42 42 43 45 46 45 45 46 46 45 41 44
1999
80%
90%
Manufacturing
Service
Supported by the European Union
14
($ per person per annum)
Source: IMD World Competitiveness Yearbook 2012
Supported by the European Union
15
Most of the developed economies are innovation-driven economies Factor driven
Bangladesh, Cambodia, Nigeria, Pakistan, Vietnam, Zimbabwe
Transition from 1->2
Brunei, Philippines
Efficiency driven
China, Colombia, Indonesia, Malaysia, Thailand, South Africa
Transition from 2->3
Argentina, Brazil, Chile, Mexico, Russia
Innovation driven
Australia, Canada, Singapore, Hong Kong, Korea, Japan, EU, US, Taiwan
16
In ASEAN the EU has just finalized an FTA with Singapore and is currently in negotiations with: Malaysia, Thailand and Vietnam
Total Trade: 775,153 Total FDI: 63,997
Total Trade: 415,722 Total FDI: 12,001
Total Trade: 458,904 Total FDI: 7,778
Total Trade: 199,582 Total FDI: 7,430
Data: millions US$ Source: ASEAN Secretariat
Supported by the European Union
17
Making the adjustments that go with the FTA will yield multiple benefits for Thailand ď ˝ The launch of the FTA will put in motion a process that leads to increasing prosperity for Thailand ď ˝
Supported by the European Union
18
Thailand-EU FTA
More attractive investment destination
More competitive economy
Increased FDI
Increased skills/ technology transfer Supported by the European Union
19
Thailand is faced with unique opportunities to grow its economy, but if the FTA is delayed it may loose this chance and its neighbors move ahead Thailand should lock in its FTA benefits before the AEC comes into effect in 2015 Today’s opportunities outweigh its challenges and Thailand is moving forward with vision and confidence Supported by the European Union
20
The global economy is becoming ever more integrated and Thailand is part of this trend The Thailand-EU FTA creates a true Partnership For Growth with numerous important benefits for Thailand’s economy In particular this agreement will increase investment and facilitate technology and skills transfer to Thailand’s service industry Supported by the European Union
21
As long-standing participants in Thailand’s society and economy the EABC and its member companies express our strong support for the Thailand-EU FTA
Supported by the European Union
22
23
24