Indo-Thai ties are characterised by a shared culture and history that dates back thousands of years. In a freewheeling interaction with The Dollar Business, H.E. Chutintorn Gongsakdi, Ambassador of Thailand to India, talks about the strong cultural and economic connect between the two nations and what the future might have in store for the bilateral relationship.
Interview by Ahmad Shariq Khan | November 2017 Issue | The Dollar Business
TDB: What are your views on the current state of Indo-Thai bilateral trade?
H.E. Chutintorn Gongsakdi (CG): Economic and commercial linkages form an important aspect of Thailand’s partnership with India. The past few years have seen a rapid intensification of these linkages. As of now, IT, pharmaceuticals, biotechnology, automotives and tourism are the thrust areas that have been identified for cooperation between the two nations. We also consider India as an ideal, cost-effective, quality sourcing destination with expertise in chemicals, auto parts, electrical machinery, precious and semi-precious stones, iron & steel products and medicinal & pharmaceutical products, amongst others. I am confident that being part of Regional Comprehensive Economic Partnership (RCEP) will help both the nations chieve further growth.
Going forward, we envisage investments by Indian and Thai companies in each other’s countries to grow. Investments from both sides are already pouring in and is on an upward trajectory. Thai business groups in India, today, include leading companies in the fields of agro-processing, construction, automotive, engineering and banking. Major Thai companies active in India include Charoen Pokphand (CP) Group, Italian-Thai Development Public Co. Ltd. (ITD), Delta Electronics, Rockworth Office Systems Furniture, Thai Airways International and SCG Trading. From the Indian side, Indorama Group, Aditya Birla Group, Tata Group, Ranbaxy, Dabur, Lupin, and NIIT are doing great business in Thailand reflecting the diverse sectors of interest, which include chemicals, textiles, pharma, steel, automotive and IT. Groups like Aditya Birla and Indorama have had business presence in Thailand for several decades.
TDB: India’s ‘Look East’ policy has been put into action and the country is looking at improving its trade ties with its eastern counterparts. Have Thai businesses felt the wave of change?
CG: In my view, under the effective leadership of Prime Minister Narendra Modi, the Indian side has been actively following up on its ‘Act East’ agenda, which is not only quite well-timed but also well intended and is targeted at a region which is certainly going to be the next growth driver for, at least, this part of the world. However, there is a need by both sides to speed up efforts and remove bottlenecks, especially to bridge trust deficits that still exist. I have met a few Thai business owners here, who unfortunately, faced a not-so-favourable business experience in India, mainly due to issues related to ease of doing business. Thai businesses in India believe in trading fairly as per the law of the land. I believe, there is a need for confidence-building measures (CBMs) to ensure that Thai businesses and their interests feel protected. Also, while I do applaud the Indian government’s measures aimed at eradicating corruption, the issue still hampers businesses. I hope and believe that in the coming days, the Indian government would proactively work towards reducing and ultimately eliminating this menace.
TDB: As the ASEAN-India Dialogue Partnership turns 25, how are India and Thailand collaborating to reap the benefits that the partnership offers?
CG: Going forward, since India is going to be a force to reckon with in the world economic arena, I would like to see more Indian engagement in ASEAN. India’s presence, together with that of other regional powers, in my view could help ensure stability in the ASEAN region. Further, we deeply applaud India’s focus on its north-eastern region in engaging with ASEAN. This makes sense as we have a land connection there. However, air and maritime connectivity are also important as we want a relationship with the whole of India. The India-Myanmar-Thailand Trilateral Highway Project and its extension to Laos and Cambodia are one of the currently proposed projects to help achieve greater ASEAN-India physical connectivity. The project plans to connect the ASEAN Highway Network with the highway system in eastern India. These are the aspects that need to be leveraged and strengthened further.I want Thailand to be considered India’s greatest economic partner in the ASEAN region. Some well-known Indian companies are already active, both in Thailand and the ASEAN region. However, going forward, I would like to see many more new players explore the ASEAN market. Indian companies have much to offer in sectors like space, defence, pharmaceuticals, biotech and IT.
TDB: What is the status of Thailand’s Eastern Economic Corridor (EEC)?
CG: We are bullish on the Eastern Economic Corridor and its trade and developmental potential. We believe initiatives such as the EEC offer many win-wins. The project aims to change Thailand from a country reliant on foreign technology to a self-sufficient innovative economy. The EEC Act will also relax some regulations and create a one-stop-shop for businesses.
With EEC, we aim to develop the country’s economic infrastructure and develop our eastern provinces of Chonburi, Rayong, and Chachoengsao into a leading ASEAN economic zone for technological manufacturing and services with strong connectivity to its neighbours. It also involves the establishment of regional R&D centres and improving Thailand’s logistics infrastructure with increased links and expansion to our neighbouring countries’ sea, land, air and railway transport networks. The project includes three deep sea ports, Laem Chabang Port, Map Ta Phut and Sattahip, that will be surrounded by free trade zones (FTZs), and three airports: Don Mueang, Suvarnabhumi, and U-Tapao. The policy aims to help position Thailand as a “Gateway to Asia”.
Overall, EEC is designed to accommodate ten target industries: Next-generation cars, smart electronics, medical and wellness tourism, agriculture and biotechnology, food, industrial robotics, logistics and aviation, biofuels and biochemicals, digital and medical services. I believe that in many of them, India already has great expertise and world- proven recognition. I call upon all Indian institutions to join us and reap first mover’s advantage.
TDB: What attracts Indian?investors to Thailand?
CG: Thailand offers manufacturing skills at costs which are still low compared to other more developed countries. For instance, all the leading world auto majors are now leveraging the cost-effectiveness of Thailand. Our EEC, which replicates the model of economic development plans of other countries, is going to offer many incentives and tax benefits. Under EEC, industries will benefit from an incentive promotion package which goes beyond the current regulations of the Thai Board of Investment (BOI) Act. According to the BOI, those investing in EEC area will enjoy incentives that are highly competitive. These include 50% deduction on corporate income tax (CIT) for five years in addition to a CIT exemption presently available along with incentives in line with the Competitive Enhancement Act.
TDB: The Indian government has relaxed its FDI norms. How do Thai companies?plan to?capitalise?on this?
CG: We are quite impressed with the reform agenda. There are dozens of Thai companies who have either already already invested or are soon going to do so. Many are already in joint ventures in India. We admire ‘Make in India’, ‘Skill India’ and ‘Digital India’ initiatives. They all are well intended, and I believe, as a result of these initiatives, India is already witnessing economic growth across the length and breadth of the country.