THAILAND NTDB OVERSEAS BUSINESS REPORTS access provided by UM-St. Louis Libraries

From: OVERSEAS BUSINESS REPORTS (THAILAND)

University of Missouri-St. Louis

Match 10 DB Rec# - 24,703 Dataset-MARKET

| ZEC

Text :
THAILAND - OVERSEAS BUSINESS REPORT - OBR9301

SUMMARY

This article is derived from a report dated January 1993, prepared at the
U.S. Government - U.S. Department of Commerce, Washington, DC. The article
consists of 42 pages and discusses the economic and commercial climate in
Thailand, with emphasis on information useful for potential U.S. sellers and
investors. It includes the following sections:

Economic and Foreign Trade Outlook
Best Export Prospects
Industry Trends
Distribution and Sales Channels
Transportation and Utilities
Advertising and Research
Credit
Trade Regulations
Investment
Guidance for Business Travelers
Information Sources
Key Thai Government and Quasi-Government Agencies
Market Profile

TABLE OF CONTENTS

Economic and Foreign Trade Outlook

Best Export Prospects

Industry Trends
Gross Domestic Product--Major Sectors--Business Climate
Government Role

Distribution and Sales Channels
Import Marketing--Domestic Trade Channels--Market
Characteristics and Preferences--Purchasing Power

Transportation and Utilities
Water Transport--Air Transport--Rail Transport--
Road Transport--Electricity

Advertising and Research
Advertising Agencies--Media--Market Research

Credit
Capital Availability--Equity--Regulation of Supply--
Financing Sources

Trade Regulations
Documentation Procedures--Taxation of Imports--
Marking and Labeling Requirements

Investment
Foreign Investment--United States - Thailand
Commercial Agreements--Forms of Business Organization--
Foreign Investment Policies and Regulations--Labor Relations--
Licensing and Franchising--Intellectual Property Rights

Guidance for Business Travelers
Entrance Requirements--Requirements for a Stay of More Than 90
Days--Pertinent Treaties and Regulations-- Foreign Exchange
Language--Holidays

Information Sources
Government Representation--U.S. Government Publications

Key Thai Government and Quasi-Government Agencies

Market Profile

ECONOMIC AND FOREIGN TRADE OUTLOOK

Thailand has one of the developing world's strongest economies. Over the
past 30 years, Thailand's real growth rate has averaged 7 percent. During
the period from 1988-90, the annual growth rate exceeded 10 percent. This
solid growth rate was due mainly to an increase in exports and a surge in
investment in Thailand. Thailand has also benefited from the realignment of
East Asian currency values. Although Thailand has traditionally had an
agrarian-based economy, its manufacturing and service sectors have grown
tremendously in both size and significance, now accounting for almost
two-thirds of the gross domestic product in value terms.

Agriculture and fishery production continue to play a significant role in

the Thai economy. Rice is the country's most important crop, and more than
60 percent of the Thai population depend on the cultivation of rice for
their livelihood. Recent economic indicators show that this percentage is
gradually decreasing. Other agricultural commodities produced in
significant amounts include cassava (tapioca), rubber, maize (corn), and
sugar. The export of processed foods (such as canned tuna, frozen shrimp,
and canned pineapples) has increased dramatically.

Thailand's trade with other countries has increased greatly, over the past
five years, contributing to the economy's rapid growth. From 1987-1991,
Thai exports soared by 143 percent, while imports into Thailand increased by
176 percent. Thailand's largest export market is the United States, with
which it has a trade surplus. Japan is Thailand's second largest export
market and also the largest import supplier. Other major trading partners
include the European Community, China, Hong Kong, Singapore, and Taiwan.
Thailand is a member of General Agreement on Trade and Tariffs (GATT).

One key to Thailand's healthy economy is foreign investment. The single
largest foreign investment is an estimated $3 billion investment by Unocal
(Union Oil of California) in the development of natural gas fields in the
Gulf of Thailand. Other U.S. investors in Thailand include AT&T,
Colgate-Palmolive, Exxon, Union Carbide, and many others. Many large
multinational electronics companies have set up production in Thailand;
international brands manufactured there are sold on the local markets.

Based on current forecasts, it appears likely that the Thai economy will
continue on its path of rapid growth and industrialization. This bright
forecast should attract continuing inflows of private capital which should
make the Thai market an attractive and potentially very profitable one.
U.S. firms can expect strong competition from other foreign companies. This
would include companies based in Japan, which is the largest foreign
investor in Thailand. The variety of opportunities in Thailand merit
serious investigation and aggressive pursuit. The following sectors offer
the best prospects for U.S. exports.

BEST EXPORT PROSPECTS

Telecommunications Equipment - Thailand's total market for
telecommunications equipment is estimated at $770 million for 1992. Total
market growth may average 10 percent a year for 1992-94. Market demand,
coupled with rapid advances in communications and information technology,
has compelled the Thai Government to open doors for the private sector to
participate in new telecommunication plans -- largely through the offering
of long-term concessions to private firms for various telecommunications
services.

Recent concession agreements include one awarded to Telecom Asia to install
2 million phone lines, one to an affiliate of the Loxley Group for a one
million line project for the provincial areas, one to Shinawatra Computer
Company for a satellite (constructed in the United States), and an optical
fiber project awarded to Com Link Company. Other concessions include a
second international telephone switching center, the second ASEAN
(Association of Southeast Asian Nations) fiber optic submarine cable, and
projects supporting the Eastern Seaboard Development zone. Promising
subsectors include telephone switching equipment, optical fiber cables,
mobile telephone equipment, and paging systems.

Pollution Control Equipment - Rapid industrialization has resulted in
significant air and water pollution. There is a real need for pollution

control equipment; but little effective demand because of inadequate
environmental protection laws. The Seventh Plan, which runs from 1991 to
1996, gives high priority to wastewater treatment and also sewage and
drainage systems, particularly in Bangkok and other major cities. More than
$1 billion will be spent on these plants over the next five years. Auto
exhaust emissions are also a problem. In May 1991, the government
introduced unleaded gasoline and is accelerating the timetable for requiring
catalytic control systems on new cars.

Medical Equipment and Supplies - There is a growing need for hospitals,
clinics, and other medical facilities in Thailand. Many doctors and
dentists are U.S. trained and prefer high-quality U.S. equipment. The
Social Security Act of 1990 will encourage more people to seek medical help
rather than rely solely on over-the-counter remedies. The Thai market for
medical equipment and supplies grew from $85 million in 1988 to $115 million
in 1992, with growth expected at roughly 7 percent for 1992-94.

Food Processing and Packaging Machinery - The total market for food
processing and packaging machinery in Thailand was estimated at $175 million
in 1992, of which $62 million was imported. The market is expected to grow
by 7 percent per year. Machines for the following industries have the best
growth potential: fruit and vegetable processing/packaging; meat, poultry,
and egg processing/packaging; fish and seafood processing/packaging; and
fats and oil extraction and processing.

Computers and Peripherals - Total Thai demand for computers and peripherals
was estimated at $1.25 billion in 1992, almost all of which was imported.
Effective July 10, 1991, the duty on computers and peripherals was reduced
from 20 to 5 percent and the duty on parts of the central processing unit
was reduced from 10 to 5 percent.

Computer purchases by government offices and state enterprises are expected
to grow by 10 percent per year through 1995. Purchases by the private
sector are forecast to grow by more than 20 percent per year.

Micro-computers will have the biggest market share, but workstations and
hard disk drives will have the highest growth prospects. There will be
significant business opportunities for laptop computers, notebook computers,
workstations, hard disk drives, and laser printers. Demand for software
services will also grow rapidly.

Food Franchising/Supermarkets - The industrialization of Thailand and its
concurrent economic development have brought a change in Thai eating
habits. This change is seen in the popularity of Western-style (including
fast food) restaurants and in displacement of traditional "wet markets" by
modern supermarkets. Products with good retail potential include fresh
fruit and nuts, snack foods, confectionery, health foods, cheese, and wine.
The food service and food processing sectors represent a good market for
specialty produce, beef, beverage bases, soup mixes, fruit fillings, butter
oil, emulsifiers, and spices.

INDUSTRY TRENDS

Gross Domestic Product

Thailand's economy was characterized by high growth rates -- averaging
roughly 10 percent annually from 1988-90. The value of Thailand's gross
domestic product (GDP) in 1991 was roughly $93 billion. Despite a modest
slowdown during 1991 to 8 percent growth, Thailand still has one of the

fastest growing economies in the world. Real GDP is expected to grow by an
average of 7 percent or more over the next few years.

Major Sectors

Agriculture - Agricultural production rose almost 4 percent in 1991,
compared with a 1.8 percent contraction in 1990. Production of most major
crops grew modestly in 1991. While almost 60 percent of Thailand's labor
force continues to be employed in agriculture, the relative importance of
the agricultural sector as a contributor to GDP has declined. The National
and Social Economic Development Board reports that agriculture accounted for
about 12 percent of 1991 GDP. This is down from 23 percent a decade
earlier, and this percentage is expected to continue to decline. The Thai
Government estimates that by 2000, only 49 percent of the labor force will
be employed in agriculture.

Manufacturing - Thailand's increasingly diversified manufacturing sector,
which since 1979 has made the largest contribution to the nation's economy,
accounted for some 26 percent of GDP in 1991. Real output growth in the
sector, 15 percent in 1989 and 14 percent in 1990, slowed in 1991 to about
10 percent, due in part to high interest rates and modest demands for wage
hikes.

The export component of the sector continued to be dynamic in 1991. This
dynamism is attributed to the recent growth in export-oriented direct
investment, the price competitiveness of Thai products, and government
policies which encourage exports.

Industries in which production has increased rapidly include computers and
electronics, garments and footwear, furniture and wood products, canned
foods, gems and jewelry, toys, and plastic products. Production for the
domestic market was also important to continued strong output during 1991.
High growth industries include construction materials, foods and beverages,
and electronic appliances. Growth in the automotive industry in 1991 was
affected somewhat by the substantial reduction in import duties on cars and
components in July 1991.

Other Sectors - Growth in the construction sector slowed substantially from
22.7 percent in 1990 to roughly 16 percent in 1991. The industry, seriously
overheated during 1990, showed modest reduction in the pace of project
starts in 1991, particularly for projects in secondary locations. During
1991, construction of private office and residential properties continued to
show more vigor than public sector projects. Higher domestic demand
contributed to modest growth in the wholesale and retail trade sector which
passed the agricultural sector to take second place in terms of contribution
to GDP in 1989. The financial and services sectors grew modestly during
1991, although tourism was hurt slightly by the 1991 Gulf War, particularly
in the first quarter of the year.

In 1991, earnings from tourism, which totaled roughly $4.4 billion, were
slightly below the 1990 level. The number of tourists visiting Thailand
declined by 4 percent. This slowdown in the tourism sector follows several
years of double digit growth. Earnings from tourism contribute about 5
percent of GDP and contribute substantially to an overall
balance-of-payments surplus.

Business Climate

The Thai Government has a history of changing hands peacefully with relative
frequency. However, the basic orientation towards a free enterprise system

has been a part of the Thai philosophy for many years. This system does not
usually change with the leaders. A well-established government bureaucracy
generally adds stability to the government even though cabinet ministers may
change. Thailand is committed to trade and welcomes foreign private
investment. Thailand's pro-business stance, conservative fiscal and
monetary policies, abundant natural resources and skilled labor all help to
create a generally good investment climate.

In order to encourage investment in priority sectors, the Thai Board of
Investment (BOI) offers certain "promotion privileges" to investors. Any
firm may invest in Thailand without BOI approval as long as it complies with
local laws, but BOI approval is necessary to qualify for promotional
privileges. Privileges granted to firms may include tax holidays,
guarantees against competition, waivers of import duties on machinery,
components, and raw materials, and assistance with residency permits.
Preconditions for receipt of promotional privileges vary from industry to
industry, but may include export performance requirements and minimum
capital investments requirements.

U.S. firms, except in certain fields, are accorded national treatment under
the 1966 Treaty of Amity and Economic Relations between the United States
and Thailand. Foreign firms are allowed to repatriate profits. Thai labor
practices present few impediments in the management of work forces. This
situation is due mainly to the fact that only 2 percent of the Thai
industrial work force is unionized. Relatively few restrictions and a
strong economy contribute to Thailand's favorable investment climate.

Government Role

The Thai Government owns or controls a substantial portion of the economy.
It owns and operates the postal service, telephone, telegraph, radio, and
television communications, the railroads, ports, and an airline. Government
monopolies also exist in the tobacco industry and in the manufacture of
playing cards. Manufacturing industries in which the government
participates or has interests include glass, rubber, canned fish products,
automobile batteries, petroleum, and petroleum refining.

Other fields controlled by the government through direct participation or
special arrangement (including concessions to private operators and
licensing) include the mining and exploitation of minerals, the production
and distribution of electricity, the water supply, passenger transport
(other than the government-owned railroad), banking, and insurance,
including life insurance. In 1989, the Thai Government placed a logging ban
on all government-owned lands. Due to the fact that no private individual
or company owns any forested area of any significant size, the ban
effectively prohibits logging in all remaining forests.

DISTRIBUTION AND SALES CHANNELS

Import Marketing

Thailand is emerging as an important and attractive open market. Consumers
are also opening up to new ideas and products. Coupled with a highly
literate population, the time is right for new products and industries to
become competitive in Thailand. In addition, Thailand serves as a
springboard to sell products in Laos and Cambodia. The population of the
three countries is roughly 81 million people. Once the embargo against
Vietnam is lifted, Thailand will also serve as a springboard for products
going into Vietnam.

Methods for marketing imports in Thailand have tended to be simple and akin
to merchant trading, but, as the competition grows, businesses are realizing
that there are benefits to modern promotional methods. In looking at
importers and marketers, there are four main categories. Each offers
advantages and disadvantages, depending upon the product to be covered.

The first category includes long-established expatriate firms with strong
resources and a large turnover. However, in such diverse operations, the
value of business from a medium-sized principal is often small in the firm's
overall activities, and the product may be neglected. On the other hand, a
particular product may be central to the firm's operations and therefore
receive more attention.

The second category includes smaller importers who generally specialize in
one line of business in which they have valuable contacts. They may
specialize in selling to one or more government departments or have special
contacts within only one industry.

The third category offers good prospects for many medium-sized U.S.
exporters. This category is comprised of the newer companies that are
trying to expand into major marketing companies. They frequently have both
technical backing and modern marketing techniques.

The fourth category consists of private firms heavily involved in the
import/export business. These firms are known as International Trading
Companies (ITC). The advantage of using an ITC is that they receive
preferred treatment by the BOI. ITCs are exempt from import duties on
machinery, and receive a reduction on import duties imposed on raw materials.

Careful agency selection is important. In most cases, a local
representation agreement is the best way in which an American exporter can
obtain worthwhile business. An agent is useful and necessary for foreign
companies bidding on government tenders. The experience and knowledge of
the Foreign Commercial Service Officers at the U.S. Embassy in Bangkok can
be drawn upon to try to match product with representation. The Department
of Commerce's International Trade Administration provides this matching
service through its district offices located throughout the United States.

In looking at Thailand's legal requirements regarding agents and
distributors, agreements between suppliers and agents/distributors are
governed by the general contract law under the Thailand Civil and Commercial
Code. The relationship between the two parties is basically a buyer-seller
relationship under the sale of goods contract. This arrangement avoids any
tax exposure under the Thai Revenue Code. Importers must also obtain
licenses for certain products including food, drugs, and chemicals. It is
the responsibility of the local agent or distributor to apply for any
necessary licenses.

Direct Selling - The Alien Business Act of 1979 places some limitations on
direct selling (See "Regulation of Import Marketers".) Consequently,
patterns and procedures for direct selling are undergoing some changes. At
the time the Alien Business Act was issued, direct selling was limited to
petroleum sales by three major international oil companies. Their sales
organizations were all located in Bangkok with their service stations spread
throughout the country. Otherwise, direct selling is used mainly to market
soaps (mostly detergents), cosmetics, paper products, proprietary drugs, and
low-priced consumer products for the home. Any company considering direct
selling in Thailand should concentrate first on Bangkok, where the per
capita income is three to four times higher than the national average.

Regulation of Import Marketers - Foreign firms interested in establishing a
marketing subsidiary in Thailand must conform to the provisions of the Alien
Business Act. Most marketing subsidiaries would fall within Category C of
the Alien Business Act; namely wholesale trade except in native agricultural
products and real estate. Class C businesses also include retail trade in
machinery, engines, tools, and sales of food and beverages to promote
tourism. Any alien wishing to operate a business pertaining to the above
outlined activities must file an application for a license with the Director
of Commercial Registration in the Ministry of Commerce.

Domestic Trade Channels

Agriculture, forestry, hunting, and fishing provide work and the means of
living for a large portion of the Thai population. Many essential
commodities are grown and consumed by the producer or distributed on a local
level. An increasing production surplus is being used for the purchase of
items most of which are imported. Both the distribution and collection of
commodities that enter trade are centered in Bangkok. Exceptions are a few
export commodities such as rubber, tin, and rice. These are exported from
sites closer to production locations. Domestic trade is dominated by
private enterprise. Some establishments employ 100 persons or more.

Trade is carried on by a wide variety of commercial organizations. Some are
devoted to wholesale trade; others are devoted to retail trade. Wholesale
and retail enterprises also are combined with office organizations. In some
instances, retail outlets are connected with production centers.

Wholesale firms located in the Bangkok and Thonburi areas are agents for the
sale of imported goods. In some instances, exporting firms become
wholesalers. Retail goods are distributed by outlets that vary from highly
sophisticated and modernized urban establishments to small general stores,
or by traveling salespeople.

Almost every kind of retail outlet, ranging from reasonably modern
supermarkets to the traditional floating markets, is represented in
Bangkok. In addition to the small general store, over 40 department stores
serve the greater Bangkok metropolis. Consumer needs also are filled by
almost every kind of specialty shop, including dress shops, florists,
jewelers, shoe dealers, furniture shops, electronic equipment shops and many
others. Many department stores and supermarkets are also found in suburban
centers. Personal, technological, and professional services also are
available in the metropolitan areas.

Among the leading retailers in Bangkok are Central Department Store,
Phaholythin Road; The Mall Shopping Center, Ramkamhaeng/Ngarmwongwan Roads;
Robinson Department Store, Rajadamri/Silom Roads; Siam Jusco,
Ratchadapisek/Rattanatibet Roads; and Sogo Department Store, Ploenchit
Road.

Government Procurement - The government is Thailand's largest buyer. It
usually purchases by means of tenders issued by the various end-user
agencies and departments. Among the most active buyers of foreign goods for
the public account is the Foreign Purchasing Section of the Supply and
Procurement Department, Electricity Generating Authority of Thailand,
Charansanitwong Road, Bang Kruai, Nonthaburi. Others include the Provincial
Electricity Authority, 200 Ngam Wong Wan Road, Chatuchak, Bangkok; Purchase
and Stores Department of the Metropolitan Electricity Authority, 121
Chakphet Road, Bangkok; and the Department of Highways, Ayudhaya Road,
Bangkok.

Thailand's procurement regulations require nondiscriminatory treatment of
all potential bidders. Locally supplied products tend to receive
preferential treatment, even if the imported product could be purchased at a
lower cost. This type of preferential treatment is usually specified in
advance.

The guidelines for procurement can be confusing and even conflicting at
times, due to government budgeting and the source of funds for purchases.
There does not appear to be any discrimination towards U.S. suppliers and
their products or services. In selling to the Thai Government, firms should
follow two basic guidelines: first, have a long-term strategic selling
approach, and second, have a knowledge of the buyers and their needs.

Effective December 26, 1991, all Thai Government offices and state
enterprises are required to use the following procedures when seeking to
enter into joint ventures with the private sector or grant concessions to
the private sector. First, a feasibility study on the technical, financial,
environmental and consumer impact is mandatory. Second, an independent
consultant must be hired to provide consultation services for projects
exceeding $200 million in investment or assets. The consultant is required
to prepare a report on the individual project.

New projects must also be reviewed by the Thai Government's National
Economic and Social Development Board. Projects without financial burden
are reviewed by the Ministry of Finance and approved by the Cabinet later.
After obtaining Cabinet approval, the project owner is required to invite
the private sector to bid on the project. The terms of reference are
required to be included with the contract.

Invitations to bid on government tenders usually require that a deposit of
up to 5 percent accompany the bid. The deposit is returned to unsuccessful
bidders, and the successful bidder's deposit is retained as a performance
bond and is returned after completion of the project. In some cases,
successful bidders are required to furnish a performance bond in addition to
their original deposit.

In looking at the criteria that the government uses to evaluate bids, price
is the most important factor. Quality, delivery, credit terms, maintenance
and service facilities are also weighed. On the other hand, price bidding
does have the advantage of minimizing the danger of collusion, since it
maximizes objectivity in awarding contracts.

Available information on such tenders is published in the Commerce Business
Daily, which is published by the U.S. Department of Commerce. This
publication may be ordered through the district offices of the Department of
Commerce's International Trade Administration, or from the Superintendent of
Documents, U.S. Government Printing Office, Washington D.C. 20402.

Major Private-Sector Purchasers - Major private sector purchasers include
rubber estates, mines and industrial enterprises that do not generally cover
their requirements directly. Usually, their needs are supplied by the large
import companies with which they have standing orders for recurring
requirements and which go into the market for them to contract for
non-recurring (one-time) purchases.

In dealing with these large customers, the import companies sometimes trade
on their own account, but more frequently act as indent agents. Where
maintenance and servicing of equipment are involved, the foreign supplier is
likely to appear as a party in the sales contracts. However, even in the

maintenance and servicing fields, more and more of the larger import houses
are quite active, often undertaking to service equipment on their own
account.

Market Characteristics and Preferences

Thailand is located in Southeast Asia, covers almost 200,000 square miles of
the Indochinese Peninsula, and is roughly the size of Texas. There are four
main geographical regions, each with somewhat different natural resources
and economic development. Thailand's highly fertile central plain is one of
the richest sources of food in Asia. Vast quantities of rice are grown
throughout the region. Consequently, Thailand is the world's leading
exporter of rice.

Roughly 85 percent of the people are of Thai ethnic origin and another 12
percent are of Chinese descent. The remaining 3 percent consist of Malays,
concentrated in southern Thailand along the Malaysian border, and hill
people, who are found along the borders of Burma and Laos.

Most Thai are Buddhists, generally religious in their own lives and tolerant
of foreigners of other faiths. No important religious taboos affect their
trade. However, some cultural practices should be observed. The national
diet consists chiefly of rice and fish supplemented by fruits and vegetables
available locally.

The country and its people are mixtures of old and new, conservative and
progressive. The market for new housing, modern housing conveniences,
up-to-date production facilities and marketing techniques is gradually
spreading. Several general tastes and preferences regarding marketing are
evident.

Price - Price is of paramount importance, particularly in the purchase of
general consumer goods, small machinery, and appliances. Although Thai
business people and consumers are aware of the benefits of higher priced and
more durable goods, they are often in the position of being able to afford
only less expensive items. American exporters should appreciate the pricing
advantage in the Thai market. They should eliminate from both their price
and product any components that are related entirely to distribution within
the United States. This effort can be the deciding factor in gaining and
holding a competitive position for specific American products.

Package Labels - Most Thai prefer to have labels, instructions and
descriptions that accompany imported products printed in the Thai language.
They also prefer weights and measures on merchandise to be given in metric.
The visual appearance of the package is also important. Buyers tend to like
items that are attractive and have a good presentation. As a practical
reminder, the packaging should be very sturdy in order to protect the
product from the Thai transportation modes.

Quality - Thai buyers are very quality conscious, although this factor is
often outweighed by price. Buyers are also aware that products manufactured
outside the United States by subsidiaries or affiliates of American firms
are often of a lesser quality. Sometimes they prefer the American-made
product as is the case with toiletries. In other instances, they prefer
products that are manufactured outside the United States such as electronic
appliances.

Service - Servicing of products is an absolute necessity, particularly in
selling machinery and equipment. A fully stocked parts department,
knowledgeable repair personnel, and expeditious servicing are provided as a

standard function by many foreign suppliers. Thai buyers also demand
greater service back-up from all manufacturers.

Specifications - Product specifications and the initiative of the supplier
to alter products to meet the local demand can often be the determining
factor in making sales. The ability of the American manufacturer to supply
up-to-date equipment for medium or small-scale production can determine the
success of the marketing effort. Simple matters such as supplying
electrical products with appropriate 220 volt ratings and appropriate plugs
are often overlooked by U.S. exporters. Product flexibility is very
important in meeting the government's procurement requirements. For
government tenders, it is also important for bidders to follow detailed
specifications in the tender or risk disqualification.

Merchandising - Foreign suppliers now working in the Thai market are
beginning to apply more up-to-date merchandising techniques. The use of
imaginative advertising, proper attention to the effective displays of
products, care in selection and appropriate supervision of the distributor,
and the introduction of other modern merchandising methods are helping
foreign suppliers win sales from their competitors.

With regard to brand preferences, a survey by one Bangkok ad agency revealed
that 50 percent of the customers of ten supermarkets and grocery stores in
Bangkok bought the products they did because of their brand names. Somewhat
conflicting information comes from a Thai brewery official who claims that
consumers' choice of a brand name is based on the kind of premium offered at
the time. He also notes that Thai women have a greater tendency than Thai
men to try new products.

Purchasing Power

Thailand's population is estimated at more than 57 million and is increasing
at a rate of less than 1.6 percent annually. The largest population
concentration is in Bangkok, which had an estimated 6 million residents at
the end of 1991. As in all developing countries, the population in Bangkok
is continually swelled by unemployed and displaced farmers and their
families. Bangkok is the commercial hub of the country. Only three other
cities have populations of more than 140,000: Chiang Mai in the north,
Nakhon Ratchasima on the Korat Plateau, and Hat Yai on the Malay Peninsula.

According to a study by the National Economic and Social Development Board,
regional income disparity within Thailand is substantial. The average per
capita income in Thailand was $1,630 in 1991. Significantly higher income
levels are found in Bangkok and a few other areas where manufacturing or
tourism are the major activities. Income levels are lower in some of the
more rural areas. Per capita income in the northeast, the poorest region in
Thailand, was less than $470 in 1989, while average per capita income in
Bangkok was estimated at over $3,700 in 1989.

TRANSPORTATION AND UTILITIES

Water Transport

The majority of maritime trade enters Thailand, and clears customs, at the
river port of Klong Toey. The port, located on the Chao Phraya river in
central Bangkok, has become very congested in recent years. The congestion
is due mainly to the enormous increase in imports and exports and a lack of
space for expansion. Other problems include slow customs clearance times
and overall dockside congestion.

In June 1988, American Presidential Lines (APL) launched a six-month
experiment to test the feasibility of using the underutilized naval port at
Sattahip, which is located 100 miles southeast of Bangkok, as an alternative
to Klong Toey. APL convinced Thai Government authorities to lower rates on
the state railway and open a container freight depot at Bang Sue, to make
the intermodal link to Sattahip possible and economically attractive. The
experiment proved successful and APL transferred all of its operations there
in September 1989.

The current cargo capacity at Sattahip is adequate with room for future
expansion. Sattahip's storage space covers roughly 420,000 square yards.
This space is used for transit sheds, containers, and two wharves. Sattahip
is leased by the Port Authority of Thailand from the Royal Thai Navy. This
lease expires in 1993.

In addition to the Sattahip Port, the Thai Government opened two new deep
sea ports on the Eastern Seaboard. Laem Chabang opened in January 1991 and
Map Ta Phut opened in June 1990. Both ports still have some facilities
under construction and will be fully operational by 1993. Both ports also
have room for future expansion.

Laem Chabang is expected to become not only become the center for maritime
trade entering Thailand but also the rest of Indochina. When fully
operational, Laem Chabang's facilities will include three container
terminals, one multi-purpose terminal, one agri-bulk terminal, and one
coastal shipping terminal. Map Ta Phut's facilities will include one
multi-purpose terminal and two liquid terminals. Map Ta Phut is expected to
become a major terminal for the petrochemical industry. Upon completion of
these two ports, Thailand's total cargo handling capacity will jump from the
current 16 million tons per year to 26 million tons per year.

The Thai Government also opened two other smaller deep-sea ports in 1989.
They are located in Phuket and Songkhla, both of which are in southern
Thailand. Phuket is located along the Strait of Malacca, while Songkhla is
located on the Gulf of Thailand. While the other ports are publicly owned
and government operated, these ports are privately owned and operated by
C.T. International Corporation. The facilities at Phuket include two wharves
for container cargo and a good rocky harbor which needs no dredging.
Songkhla's facilities include two container wharves, one multi-purpose
wharf, and a harbor which needs biannual dredging. Both ports can
accommodate ships up to 100,000 deadweight tons.

The ocean transit time between the United States and Thailand varies. From
the West Coast, the time is roughly 20 days. From the Gulf of Mexico
region, the time is about 30 days. From the East Coast, the estimated time
is 40 days. Transit time also varies according to the ship's itinerary and
the point of transshipment in the Far East. The following carriers offer
service to Bangkok:

American Presidential Lines (APL), 1800 Harrison Street Oakland, California
94612; tel: (415) 272-8000. APL offers weekly service from the West Coast,
with transshipment in Kaohsiung, Taiwan.

Evergreen, One Evertrust Plaza Jersey City, New Jersey 07302; tel:(201)
915-3200. Evergreen offers weekly service from the East Coast with
transshipment in Tokyo.

Maersk Inc., P.O. Box 880 Madison, New Jersey 07940; tel:(201) 514-5000.
Maersk offers weekly service from both the East and West Coasts and the Gulf

of Mexico with transshipment in Tokyo.

Sea-Land Service Inc., P.O. Box 800 Islen, Menlo Park, New Jersey 08838;
tel: (201) 632-2000. Sea-Land offers weekly service from both the East and
West Coasts and the Gulf of Mexico with transshipment in Hong Kong.

Information and assistance regarding ocean transportation is also available
from regional and area offices of the Maritime Administration, U.S. Department of Transportation, or at any local office of the carriers listed
in this section.

Air Transport

Airport congestion was another problem that the Thai Government faced
towards the end of the 1980s. In March 1992, six firms were selected to
plan and supervise the construction of Nong Ngu Hao International Airport.
Nong Ngu Hao will be located approximately 20 miles from central Bangkok.
Don Muang International Airport, which is also in the greater Bangkok area,
is undergoing major renovations. A third major international airport
project is located in Rayong. The Rayong-U Taphao airport is being
converted from a naval air base into a largely cargo-oriented facility, with
some passenger capabilities.

The Airports Authority of Thailand (AAT) and the Aviation Department in the
Ministry of Transport and Communications are responsible for national and
international airport operations. The AAT is a state-owned enterprise that
operates Don Muang, Chiang Mai international airports and the provincial
airports at Hat Yai and Phuket. The AAT will also operate Nong Ngu Hao upon
its completion. The Aviation Department is responsible for the remaining
airfields and provincial airports. Of the 6 provincial airports, 15 have
regularly scheduled traffic.

Nong Ngu Hao is being built in four phases over a 30-year period. The first
phase involves the design and planning of the airport and the construction
of the passenger terminal, cargo facilities, and two runways that will be
capable of handling planes of any size. Nong Ngu Hao will be a state of the
art facility. By 2000, when the first phase will be completed, Nong Ngu Hao
will be capable of handling 21 million passengers per year. The remaining
three phases will mainly deal with expansion of the airport to handle
increases in passenger traffic.

Don Muang is currently the main entry point for international traffic into
Thailand and also serves as the central hub for the majority of domestic air
traffic. It will remain a major airport with the completion of Nong Ngu
Hao. Its current capacity is roughly 20 million people per year and by
2000, it will be operating at or near this number. Due to a lack of land,
there is no space available for a major expansion of the airport runways.
Thus, the renovation projects must focus on other facilities, including the
modernization of the air cargo facilities for perishable goods, and the
expansion of the international wing. By 1995, the cargo capacity will be
roughly 1,380,000 tons per year.

Rayong-U Taphao airport is located roughly 125 miles southeast of Bangkok,
along the Gulf of Thailand, in the Eastern Seaboard Development Zone and
will be operated by the Eastern Seaboard Development Committee. The
majority of the improvements are focused on the cargo facilities. A small
passenger terminal is also being built.

The three provincial airports that are operated by the AAT are also
undergoing renovations. Chiang Mai, which is located in northern Thailand,

is both a commercial airport and a Royal Thai Air Force Base. Renovations
include the expansion of the passenger terminal and the aircraft parking
apron. Currently, its only international fights are charter flights.

Hat Yai, which is located in southern Thailand, is an international airport
that acts as a hub for flights to and from Malaysia, Singapore, and
Indonesia. Hat Yai's passenger terminal is being expanded and modernized
and new aircraft contact gates are being installed.

Phuket is the smallest of the international airports in Thailand. It is a
commercial airport with no cargo handling capabilities. Phuket's passenger
terminal and aircraft parking apron are undergoing expansion. The
modernization and expansion of these airports is scheduled to be completed
by 2010.

Thai Airways International (THAI) is the state-owned and -operated airline.
THAI has flights throughout Thailand, Southeast Asia, the Middle East, Europe, and to the U.S. West Coast. During the period of 1988-1990, THAI's
income grew an average of 10 percent per year.

Cargo revenue, which accounts for roughly 25 percent of THAI's overall
income, has grown by an average of 38 percent for the period between 1987
and 1991. THAI is currently undergoing renovation and modernization of its
fleet. By the end of 1995, THAI will have a fleet of 75 planes, many of
which will be only three or four years old.

There are also three privately owned domestic air carriers. Bangkok Airways
Company Limited provides regularly scheduled flights, while Thai Flying
Services Company Limited and Sahakol 1990 Air Company provide chartered
flights. Tropical Sea Air Company was granted a license in May 1991 to
offer seaplane services linking beach resorts in the Gulf of Thailand.

Rail Transport

The State Railway of Thailand (SRT) operates roughly 2,300 miles of track
throughout the country. With over 600 stations, the SRT is a good form of
transportation. The SRT owns 357 cars, of which 30 are for passenger use
and 127 are for cargo. SRT also owns 75 diesel locomotives. By 1996, SRT
will have purchased 30 new locomotives, 270 new passenger cars and 750 new
cargo cars.

Lines radiate in all directions from Bangkok to connect with important
administrative and commercial centers. The southern line extends along the
entire east coast of peninsular Thailand and joins the Malaysian railroad
system at the border. The northern line terminates at Chiang Mai. A third
line branches to the east from the Bangkok-Chiang Mai line about 50 miles
north of Bangkok, and at Nakhon Ratchasima forks northeast to the Laos
border and east to Ubon.

In 1989, SRT began a major program to install lines to the ports at Laem
Chabang and Map Ta Phut. Both lines would be spurs off of the
Bangkok-Sattahip route. However, delays caused the project to be put off
until 1990. Construction is scheduled to be completed by September 1993.

The link between Bangkok and the Eastern Seaboard ports will greatly
facilitate the transportation of cargoes, particularly container cargo.
There are four major freight terminals in the Bangkok area. Two other major
terminals are located at Bang Sue, which is near Sattahip and Laem Chabang
ports, and Paholyothin. There are also six other marshaling/transfer yards
located throughout Thailand.

In May 1990, SRT unveiled a plan for a "bullet train" that would link
Bangkok and the Eastern Seaboard Industrial Zone. The Eastern Seaboard
Development Board estimates that by 1995 there will be approximately 100,000
people working on the Eastern Seaboard. The train would be convenient for
the workers because it would enable them to travel from Bangkok to work and
back home in the same day.

Road Transport

The most important form of transportation in Thailand is the national
highway system, which is recognized as one of the best developed in
Southeast Asia. The Highway Department, which is part of the Ministry of
Transportation and Communications, is actively upgrading the highways to
help support the rapid economic growth in regional areas like the Eastern
Seaboard. Thailand's road network has roughly 26,700 miles of national and
provincial highways, and suburban roads. Bangkok is linked directly with
all the other major Thai cities. In addition, highways also link Thailand
with Laos, Cambodia, Vietnam, Malaysia, and Burma.

The majority of the interprovincial highways are being upgraded to four-lane
highways. In addition, new primary highways are being built that will link
the Eastern Seaboard with Northeastern Thailand. These projects will add
roughly 3,500 additional miles to the highway network. The majority of
these projects, which are expected to be completed by 2000, are being
contracted out to private firms, due to a steady increase in the workload on
the Highways Department.

The majority of the motor vehicles in Thailand are used in the Bangkok area,
causing severe congestion. The congestion is compounded by the lack of a
mass transit system. However, plans are being finalized for the
construction of an elevated rail system. Some of the projects, aimed at
relieving congestion, currently under way in Bangkok include a tollway to
Don Muang Airport, a new beltway around Bangkok, and numerous overpasses in
an attempt to free up major intersections.

Truck and passenger transport is dominated by large private companies.
However, there are some small independent owner-operators. The
interprovincial trucking business is shared by the government-sponsored
Express Transport Organization (ETO) and private operators. ETO provides an
integrated long-distance trucking service with a network of nationwide
depots. ETO operates an inland waterway service from the port at Swasdi,
three bus routes and exclusive trucking services at Klong Toey.

During 1990, an estimated 300,000 cars and trucks were sold in Thailand.
This number includes 53,485 passenger cars, 193,339 commercial vehicles,
which includes light trucks, vans, buses; and six-to-ten wheelers. Overall
market shares are Toyota (25 percent), Isuzu (23 percent), Nissan (17
percent), Mitsubishi (13 percent), Mazda (6 percent), other Japanese (11
percent) and non-Japanese
(5 percent).

Electricity

The Electricity Generating Authority of Thailand (EGAT) is the sole producer
of electricity. However, amendments to the EGAT Act which would allow it to
form joint ventures with the private sector, to organize new companies to
produce electricity, came into force on March 11, 1992.

The first plant that EGAT plans to partially privatize will be Rayong's

gas-fired power station. This will be one of three new large-scale plants
that EGAT expects to partially privatize. EGAT currently does not plan to
privatize plants already in operation.

As of September 1991, EGAT's installed generating capacity was 9,626.51
megawatts (MW). EGAT also purchases surplus electricity from Nam Ngum Dam
in Laos. By 1996, the demand for electricity will approach 13,000 MW.
Thus, EGAT is currently building new plants adding 1,300 MW by 1996 and
increasing capacity to 15,791 MW by 2000. Between 1992 and 1996, EGAT is
planning to build 19 new plants at a total cost of over $8.4 billion.
Twenty-two projects are expected to come on-line over the next 10-15 years.

Two other agencies are involved in the distribution of electricity
throughout Thailand. The Metropolitan Electricity Authority (MEA)
distributes electricity to Bangkok and the surrounding provinces. The
Provincial Electricity Authority (PEA) distributes electricity throughout
the remaining provinces. Both the MEA and PEA buy their electricity from
EGAT.

Up until the early 1980s, Thailand relied on imports for nearly
90 percent of its fuel. After the oil crisis in 1982, the Thai Government
began exploring for domestic fuel sources and researching alternative fuel
sources. EGAT now imports half of its fuel, most of which is oil. The
remaining fuels, which come from within Thailand, include coal, natural gas,
and hydroelectric plants. Most of EGAT's new plants will be fueled by
fossil fuels. Other plants will utilize hydroelectric dams.

ADVERTISING AND RESEARCH

Advertising Agencies

Over seven full pages of ad agencies are listed in the 1990 Greater Bangkok
Telephone Directory. The listings are broken down by specialty. These
specialized fields include (with the number of agencies in parentheses)
"Agencies and Counselors" (150), "Direct Mail" (3), "Indoor" (1), "Motion
Picture" (5), "Newspaper" (4), "Outdoor" (17), "Periodical" (3), "Radio"
(21), "Specialties" (1), "Television" (10), and "Transportation" (3). From
1988-1990, advertising expenditures grew by an average rate of 22 percent.
By the mid-1990s, expenditures are expected to grow by roughly 30 percent
per year. The main cause of this growth is the overall growth in the Thai
economy.

Business people seeking an advertising agency can choose between a domestic
agency or a foreign-based agency with offices in Bangkok. The majority of
the foreign firms in Thailand are based in either Japan or the United
States. Some of the leading agencies include Lintas Ltd., J. Walter
Thompson, Far East Advertising, Saatchi & Saatchi, Synergy, Thai Image, and
The Work Shop & Studio. Some of these agencies are part of firms that are
engaged in a much wider range of activities in Thailand than in most other
countries. Some ad agencies also deal in other parts of the advertising
industry, such as space brokerage and sign-making.

The U.S. exporter buying local advertising space is advised to select an
agency that is knowledgeable about the cultural characteristics of the Thai
people. Most ad agencies feel that although the English-language media
reach only a small audience, they do reach the most affluent and influential
segment of the Thai population. Thus, advertising of industrial equipment
and materials as well as some consumer goods in the English-language media
in Thailand is probably well advised. If a product is designed for

consumption by the mass public, then the advertisement should be in the
Thai-language media.

Media

In Thailand, television is a major advertising medium. Over 50 percent of
all advertising expenditures are spent on television advertisements. Print
advertising has emerged as another leading advertising source. As of 1991,
it held roughly 25 percent of the total advertising market. Radio is also a
good advertising medium because almost 85 percent of the Thai population
owns a radio. Magazines serve as a good advertising medium for products
that target specific markets.

Television - Television and advertisements shown before movies are two of
the most effective forms of advertising. They are effective because Thai
consumers often tend to respond better to graphic displays than written
text. However, ads are very expensive.

Thailand has nine television stations, and two cable companies, with each
having three channels. All of the television stations in Bangkok have
modern, up-to-date production equipment. Television is governed by the Mass
Communications Organization of Thailand (MCOT). MCOT's duties involve
licensing and granting concessions to cable companies. The emergence of the
two cable networks has forced MCOT to allow the other Thai television
stations to broadcast 24 hours a day.

International Broadcasting Network (IBC) was granted its concession in 1989
and Siam Broadcasting & Communication Company (Thai Sky) was granted its
concession in 1990. Currently, both cable networks only broadcast in the
greater Bangkok area. However, IBC plans to be broadcasting to the
provinces by 1995. IBC has allocated one of its channels solely to news
coverage, with feeds from CNN, NBC, and CBS of the United States, ITN from
England, and AITV from France.

Newspapers - Newspapers tend to be the preferred form of advertising medium
for two reasons: it is inexpensive and almost everyone in Thailand reads a
daily newspaper. Advertising is the heaviest during the months of November,
December, and January. The leading Thai newspapers include The Daily
Mirror, The Daily News, Dao Siam, Matichon, Siam Rath, and Thai Rath all of
which are printed in Thai. The leading English papers include The Bangkok
Post, The Nation, and The Herald Tribune.

Radio - There are 67 broadcasting stations in Greater Bangkok and another
135 stations scattered throughout the rest of Thailand. All of the stations
are capable of being received throughout the country. However, there are
some stations that do not broadcast advertisements of any kind.

Magazines - There are roughly 80 major magazines published in Thailand, of
which 60 are printed in Thai and 20 are printed in English. Some of the
more popular Thai magazines include Darapapayon, Khao Thai, and Muay Siam.
Major English magazines include Discover Thailand, Business in Thailand,
Manager, and Newsweek International.

Market Research

Business research agencies in Thailand offer two main services. The first
is market research, which offers a description and analysis of market
conditions at a given time. The second is a feasibility study to determine
whether or not the time is right to build a new factory or to launch a new
product.

There are 25 agencies listed in the Bangkok telephone book that deal with
market research. There are 9 agencies listed under the heading "Market
Research and Analysis" and 16 under the heading "Research and Development
Service." The list of agencies under "Market Research and Analysis"
includes CSN & Associates Co. Ltd. and Marketing Behavior Co. Ltd. Agencies
listed under "Research and Development Service" include Development Services
Ltd. and Analysis and Report Co. Ltd. In addition, there are two firms that
are listed under both headings, Deemar Co. Ltd. and Research and Data
Resources Co. Ltd.

Market research is the best tool to use when trying to evaluate the Thai
market. Telephone surveys and questionnaires by mail are not highly
regarded as a source of candid responses from a public that is wary of
dealing with strangers. However, one veteran Thai market researcher feels
that the tendency of Thai not to offend the interviewer by a critical
response is declining.

U.S. exporters may be wise to keep in mind that good cross-cultural research
requires a questionnaire written by individuals having an extensive
knowledge of the Thai culture and its characteristics. Thus, a
questionnaire written in Thai would get a better response than one written
in English.

Further information regarding Thai tastes and preferences that may be
weighed in advertisement planning is located in the section entitled "Market
Characteristics and Preferences."

CREDIT

Capital Availability

A large corporate borrower, with a good credit rating, will have no problem
securing debt funding in Thailand at attractive rates. Thai banking
institutions are actively seeking creditworthy borrowers and know that they
must offer attractive rates to the savvy corporate treasurers who know that
alternatives exist to domestic borrowing in Thailand.

For smaller scale operators, particularly new-to-market firms, debt
financing has always been a problem in Thailand. Thai banks have increased
their capacity to analyze business proposals and have become more
"institutionalized." Nevertheless, failure to agree and enforce generally
acceptable accounting standards and the persistence of a kind of "old boy
network" frequently mean that the substance of a business proposal becomes
less important than personal contacts at the bank in question.

The second largest group of Thai financial institutions (measured by assets)
are the 105 finance and security companies, which account for about 14
percent of total financial sector assets. Finance and security companies
have averaged over 30 percent annual growth in assets since 1987.

Finance companies may now underwrite securities issued by the government or
by state enterprises. Other activities include short-term finance,
rental/purchase, underwriting trade, and providing financial advisory
services. Security companies may engage in brokerage activities, underwrite
debt instruments and equity-linked securities, and manage provident and
mutual funds.

Equity

The 1974 Stock Exchange of Thailand Act established Bangkok's stock exchange
as the only entity in Thailand authorized to handle stock transactions.
Trading began on April 30, 1975. At the end of 1991, 276 companies were
listed on the SET, with a combined market capitalization value of $36
billion. Average daily volume during 1991 was approximately $125 million.

A widely followed measure of the SET's market price movement is the "SET
Index", which includes all shares listed on the SET. It is adjusted for new
listings, delistings, and capitalization changes. The SET Index was at 100
on the first day of operation, the index peaked at 1,060 in 1990.

In its drive to make Bangkok a major financial center, the Thai Government
created the Securities and Exchange Commission (SEC) in 1992. The SEC is
designed to bring uniformity to the capital markets in Thailand. The SEC
also established a framework that increases the protection of investors and
promotes the development of new financial instruments.

Below are selected interest rates as of August, 1991

Deposits
Percent per year
Savings 9.00%
Time Deposits
3 to 6 months 13.25-15.50%
6 to 12 months 12.50-13.00%
12 to 24 months 12.00-13.00%
2 years and over 11.50%

Loans and Overdrafts
Priority Sectors 19.00%
Others 19.00%

Prime Rates
Minimum overdraft 16.00%
Minimum loan 16.00%

Regulation of Supply

Money supply regulation is accomplished and controlled by the government's
central bank, the Bank of Thailand (BOT). The BOT has the authority to
control credit by rediscounting short-term commercial paper and engaging in
open market operations; however, the latter authority has not been exercised
extensively. The BOT also has the authority to establish reserve
requirements for commercial banks.

Under the Commercial Banking Act of 1979, the BOT, with the approval of the
Ministry of Finance, is empowered to regulate maximum deposit rates, maximum
interest rates and discounts, maximum rates for services rendered by
commercial banks, maximum deposits for letters of credit, and maximum
deposits for security demanded as surety on transactions.

The Finance Ministry is responsible for the supervision and management of
the national finances. The Ministry prepares taxation plans, manages public
credit and foreign exchange, and controls some state enterprises and
government monopolies.

Financing Sources

With the notable exception of the SET, the capital markets in Thailand are

quite thin. The main financial instruments available to the individual are
bank deposits, promissory notes issued by finance and securities companies,
and shares of stock. On the borrowing side, the primary sources of
financing are loans from commercial banks or finance and securities
companies, stock offerings, and foreign borrowing. Government bonds and
bills are mainly held by commercial banks to satisfy various reserve
requirements.

The Security and Exchange Commission (SEC) Act, effective in May 1992,
allows the SEC and the Bank of Thailand to issue new regulations governing
commercial paper and government and state enterprise debt that should
encourage the development of primary and secondary markets. The SEC will
permit companies to issue debt instruments with maturity periods of zero to
270 days and 3 years to create a primary market for debentures and notes for
efficient mobilization of funds.

The leading Thai banks include Bangkok Bank, Thai Farmers Bank, Krung Thai
Bank, Bank of Ayudhya, and Siam Commercial Bank. Leading American-based
banks in Thailand include Bank of America, Chase Manhattan Bank, and
Citibank.

TRADE REGULATIONS

Documentation and Procedures

Shipping Documents - Normally required for shipment are a commercial
invoice, a bill of lading, a sanitary certificate if appropriate, and any
other documents prescribed in the instruments of payment. Packing lists are
recommended as a service to the customer.

Import Licensing - A license must be obtained from the Ministry of Commerce
for a few import items, including some foods, materials, and industrial
products. In general, the items under import licensing control may be
classified into three categories: (1) goods whose import is normally
prohibited in order to protect local industries; (2) goods whose import is
subject to a requirement for concurrent purchase of similarly goods produced
domestically; and (3) goods whose import is controlled for health, security,
or other reasons.

The first category of goods is the largest. Domestic production of
practically all these items is considered sufficient for home consumption.
Examples of goods for which a license is required are vinyl chloride
monomer, diesel engines, compressors, and palm oil.

In addition to the licensing by the Ministry of Commerce, importers should
be aware of the laws administered by other agencies that regulate trade in
certain goods. Goods covered by these laws include arms, ammunition, and
explosives; opium and other dangerous drugs; playing cards; television,
radio, and wireless sets; tobacco; certain plants; and weighing and
measuring instruments. A sanitary certificate is required for seeds,
fruits, and live animals.

Effective November 18, 1986, the Thai Government imposed a regulation
requiring all imported foodstuffs to be accompanied by certification stating
that they meet radiationdata standards. Public Health Notification Number
102 establishes a tolerance for CS-137 of 6 BQ/kg. U.S. Embassy officials
presented Thai Food and Drug authorities with numerous and documents from
the U.S. Environmental Protection Agency and other scientific and health
authorities attesting to the safety of U.S. food products. However the
Embassy's attempt to get a waiver for these products has not been successful.

Despite the initial delays and inconveniences that the radiation standards
engendered, most U.S. exporters now appear to be having little or no trouble
in marketing their goods. Thai authorities accept certificates from state
governments, private laboratories, and other testing agencies.

The Thai Food and Drug Agency (FDA) must register all imported food items.
The cost of applying for a license is roughly $400 per item. Products
imported in bulk require laboratory analysis at a cost of $40 to $120 per
item. Products imported in consumer-ready packaging require laboratory
analysis at a cost of $200 per item. Some food items must be registered as
"controlled food items" at an additional cost of $200. The entire
registration process requires at least three months and can take up to a
year.

In 1974, Thailand passed the Cosmetics Act. Subsequent notifications and
regulations under the Cosmetics Act issued by the Ministry of Public Health
cover prohibited materials, quality standards, such as heavy metal traces,
permitted colors and pigments (colors certified by the U.S. Food and Drug
Administration (USFDA) are acceptable), and controlled substances and the
conditions for their use. In addition, when a substance is used as a part
of a product's name or its labeling, a method of analysis for that substance
in final product form, as well as efficiency data showing consumer benefit,
must be submitted to the Thai FDA for approval.

There are two types of cosmetics in Thailand, ordinary and controlled.
Ordinary (non-controlled) cosmetics do not require product registration, but
are subject to the labeling requirements. Controlled cosmetics are those
products containing ingredients on the controlled substance list and are
subject to licensing and product registration. To secure an import permit,
product samples, quantitative formula, notarized/legalized letter
guaranteeing compliance to the Thai cosmetics regulations, and
identification of preservatives must be submitted to the Thai FDA. The
following are needed to register controlled products (in addition to those
requirements needed to secure a permanent import permit): method of analysis
for the controlled (active) substance, and compendia references for all
nonactive ingredients.

All items must be accompanied by a detailed list of ingredients, a
manufacturing process description, the name and address of the manufacturer,
their registration numbers, date of manufacture, and the net weight of the
contents.

U.S. medical equipment exports to Thailand must have a "certificate for
product for export," issued by the USFDA and duly certified by the Royal
Thai Embassy in Washington D.C. or by the American Embassy in Thailand.

Entry - Most goods exported from the United States to Thailand, whether by
sea or air, enter at Bangkok. The provincial ports, such as Phuket and
Songkhla, and the new deep-sea ports at Laem Chabang and Map Ta Phut play
small roles.

All merchandise entering Thailand except for transshipment or transit is
subject to customs examination. Customs entry forms must be prepared and
submitted together, with original or duplicate shipping documents, to the
Chief of the Import and Export Division, Department of Customs, Bangkok, or
to the designated official at any other entry point. Transit and
transshipment goods may be cleared through customs upon application by the
intermediate consignee. Physical examination of the goods is usually waived.

Advanced Import Entry System - An advanced entry system has been
implemented to assist importers with the customs process. The system
allows documents to be processed in advance of the arrival of the goods. If
all of the required documents are in order, all that is needed upon arrival
of the goods is to pay the assessed duty and port charges.

The advanced entry system has proven to be very successful, allowing for
most settlements to be made prior to the arrival of the goods. Shipping
agents have information on expediting clearance of goods through customs.
Many importers may find it worthwhile to utilize the new system.

Reexport - Under Section 17 of the Customs Code of Thailand, duty-drawback
of nine-tenths (but not exceeding $50) of the duty paid is allowed when the
goods are reexported within one year, provided that the reexported goods
have not been used or processed in Thailand. Refund of the duty paid can be
requested on a case-by-case basis from the Department of Customs when goods
have been imported for processing in Thailand and reexported within one year
from the date of import. Import duties are exempted only when a prior
request for a bonded warehouse has been approved by the Department of
Customs, or if written approval has been issued by the Thai Board of
Investment (BOI). However, the goods must be processed locally and
reexported within one year from the date of import.

Samples and Advertising Matter - Samples with commercial value are dutiable
under the applicable tariff category while those of no commercial value are
admitted duty free. Commercial travelers bringing in dutiable samples may
either post bond or pay the duty. If the samples are then reexported within
six months, the bond is cancelled or the deposit is refunded.

Advertising matter, whether for sale or free distribution, is subject to
duty. For printed advertising matter the duty is 40 percent ad valorem or
roughly 15 cents per kilogram, whichever is higher.

Abandoned Goods - Goods held in customs custody become subject to government
disposal if not claimed within four months of entry, or if in arrears in
rent or warehouse charges. The agent of the importing vessel is given a
14-day option of either clearing the goods through the Department of Customs
or reexporting them.

Fines and Penalties - The Legal Division of the Customs Department is
responsible for levying and enforcing any fines or penalties with regard to
cases of fraud. Very seldom do these cases involve fraudulent intent, but
instead result from carelessness, confusion, or general misunderstanding.

Thailand adopted antidumping legislation in 1964. The Antidumping Act
applies to the importation and sale of merchandise at less than its normal
price, which might cause damage to domestic industry.

Taxation of Imports

Tariff Structure - Since 1988, the Thai customs tariff has been based on the
Harmonized System (HS). Most duties are ad valorem, however, some are
specific. When the tariff lists both ad valorem and specific rates for an
item, the rate yielding the higher revenue applies. The ad valorem duties
range from zero to 150 percent.

The trade-weighted average level of Thai tariffs is approximately
23 percent, compared with a 5 percent average U.S. tariff level. Only 12
percent of Thailand's duties are "bound", which means that they can be
raised arbitrarily and disrupt business plans. Trade-weighed average duties

for consumer products are roughly 40 percent, capital goods duties average
roughly 25 percent, and the average duty on other products is 16.5 percent.

Basis of Duty Assessment - Ad valorem duties are assessed on the wholesale
cash price (exclusive of import duty) for which goods of like kind and
quality are capable of being sold without loss at the time and place of
importation, without deduction or abatement. Specific duties are calculated
on the unit, value, or weight. Duties based on weight are based on the net
weight exclusive of packing materials, except where expressly stated
otherwise.

Export duties are imposed on a limited number of products, including rice,
scrap iron and steel, hides, skins, leather, and rubber.

All duties are payable in baht, the Thai currency, at the time goods clear
through customs ($1.00 = 25.25 baht, 1991). The metric system is used for
expressing weights and measurements. Customs surcharges are levied on some
products which can be produced locally and are protected by the BOI.

One problem with customs procedures in Thailand is arbitrary customs
valuation, which constitutes an import barrier. Thai customs keeps a record
of the highest price of any product imported from any given country from
invoices of previous shipments to use as a check price to assess tariffs on
subsequent shipments of similar products from the same country. Customs may
ignore actual invoice value in favor of using the check price. Automatic
uplifts, reference prices, and minimum values increase the amount of customs
duty.

Tariff Clarification - Importers may request an advanced ruling for the
Tariff Classification Section of the Customs Department. The request may be
accompanied by samples, a description of the goods, and a narrative
justifying a certain classification. If the Classification Section seeks
advice from outside technical experts, the cost of obtaining this advice is
charged to the applicant.

Internal Taxes - In January 1992, the Thai Government introduced a
Value-Added Tax (VAT). The VAT covers manufacturers, service providers,
wholesalers, retailers, and most importers. The initial VAT rate is 7
percent.

The full weight of the VAT ultimately rests with consumers. Commercial
enterprises producing a product will have to pay the VAT but will obtain
either a credit or a refund, equal to the amount paid, and will therefore
have no net VAT liability. The vendor will add the VAT like any other tax
and send the money to the government. The consumer will receive no such
credit or refund.

Over the long run, the VAT will broaden the Thai tax base, simplify the tax
system, and improve tax collection efficiency. The VAT replaced the old
business tax, which was imposed against the goods or service provider, not
the consumer.

In addition, the excise tax system was adjusted to complement the VAT. For
products that are subject to both the VAT and an excise tax, the Excise
Department will collect the amount above 7 percent. Products subject to
both taxes include automobiles, yachts, perfume, tobacco, alcoholic
beverages, playing cards, and large air conditioners.

Marking and Labeling Requirements

Whenever weights and measures shown on containers or merchandise offered for
sale are in foreign systems, all numbers must be given in metric, carried
out to one decimal place. The Thai language must also be used. Certain
products must meet special labeling requirements. For example, canned milk
must be labeled to show the kind, trademark of the milk, name of the
manufacturer, and the location of the factory. In the case of skim milk ,
the label must state, in Thai script of not less than 7 millimeters; "Skim
milk. Not to be used for nursing babies."

The United States Senate Concurrent Resolution 40 adopted July 30, 1953,
invites U.S. exporters to inscribe, insofar as practical, on external
shipping containers in indelible print of a suitable size, "United States of
America."

INVESTMENT

Foreign Investment

Total U.S. direct investment in Thailand is probably between four and five
billion dollars. Although hundreds of U.S. firms are registered in
Thailand, the largest 20-25 firms probably account for more than three
quarters of total investment. U.S. firms are major participants in the Thai
energy, electronics, insurance, and chemical industries, and are also active
in the consumer products sector. U.S. investment, with notable exceptions,
targets domestic Thai consumption. Until the mid-1980s the United States
was Thailand's largest source of foreign direct investment. However, from
1987 through 1991, net flows of investment from Japan and Hong Kong were
higher. The U.S. commercial presence in Thailand is large and growing.

United States - Thailand Commercial Agreements

On June 8, 1966, a treaty of friendship, commerce, and navigation between
the United States and Thailand -- The Treaty of Amity and Economic Relations
-- came into force. In the treaty, each of the two parties (1) formally
endorses high standards regarding protection of persons, their property, and
their interests; (2) recognized the need for special attention to the
stimulation of international movement of investment capital for economic
development; (3) affirmed their adherence to the principle of
nondiscriminatory treatment in trade and shipping; and (4) agreed to accord
within their territories to citizens and corporations of the other,
treatment no less favorable than they accord their own citizens and
corporations (that is, national treatment) in respect to establishing and
carrying on commercial and industrial activities.

However, each country reserves the right to prohibit or limit the interest
of aliens in enterprises in domestic trade in indigenous agricultural
products, communication, transport or fiduciary functions, banking involving
depository functions, and the exploitation of land or other natural
resources, provided that it accords to nationals and companies, of the other
party, treatment no less favorable than that given to nationals and
companies of any third country. Each party may reserve for its own
nationals the practices of professions or callings. The treaty may be
terminated by either party at any time, with one year's advance notice.

The U.S. Investment Guaranty Program, which was established in 1954, is
operative in Thailand. Under the program, which is run by the U.S. Overseas
Private Investment Corporation (OPIC), U.S. investors may be insured against
(1) confiscation, nationalization, or expropriation of their enterprises;
(2) de facto expropriation due to a foreign government's breach of contract;

and (3) damages inflicted upon the physical assets of the enterprises
through revolution or insurrection.

Since 1965, American investors may be provided with "extended risk" coverage
under OPIC's Investment Guaranty Program.

Forms of Business Organization

With the exception of those restrictions noted in the section entitled
"Foreign Investment Policy and Regulations," foreign companies in Thailand
generally operate under the same laws, rules, and regulations as do Thai
companies. However, foreign businesses must obtain a license from the Alien
Business Registration Section, Department of Commercial Registration,
Ministry of Commerce before commencing business.

U.S. firms that claim an exemption from the provisions of the Alien Business
Law, under the provisions of the Treaty of Amity and Economic Relations,
must obtain a written confirmation from the Director-General of the
Department of Commercial Registration. This procedure is quite
straightforward. Assistance is available through the Commercial Section of
the U.S. Embassy in Bangkok.

The principal forms of business organizations, under Thai law, are sole
proprietorships, partnerships, and limited companies. In addition, branch
offices of foreign corporations are recognized and may be required to be
registered to do business in many sectors. A representative office of a
foreign company is not recognized as a distinct legal entity and may be
treated as a branch office for tax and other purposes. Joint ventures are
another less utilized type of business.

Sole Proprietorships - The sole proprietorship is an unincorporated business
owned by one person. All of the proprietor's assets, both business and
personal, are subject to attachment or other legal action which may be
brought with respect to the business. Registration of sole proprietorships
is made at the Revenue Department, where the sole proprietor must obtain a
taxpayer number.

Partnerships - In Thailand, three types of partnerships are recognized: an
unregistered ordinary partnership, a registered ordinary partnership, and a
limited partnership. Although the liabilities attached to the participants
vary, the general rule governing partnerships, of all types, are similar.
The Thai and American concepts of partnerships are basically the same, as
are the laws governing them. In Thailand, a partnership is defined as a
contract whereby two or more persons agree to unite to form a common
undertaking with a view of sharing the profits that may be derived therefrom.

Limited Companies - Under Thai law there are two types of limited
companies. One is the public limited company and the other is the private
limited company. The laws pertaining to public limited companies are found
in the Public Limited Companies Act of 1979. The formation of a private
limited company is governed by laws in the Civil and Commercial Code.

A limited company is commonly used by those who desire a more permanent
business in Thailand. A minimum of seven shareholders is required to
register such a company. This number must be maintained while the company
is operational. A limited company is formed with a Memorandum of
Association (Articles of Incorporation) and Articles of Association (by
laws) as its constitutive documents. Shareholder's liability is limited to
the amount of their investment, if any, and the remaining unpaid amount on
the par value of their shares.

A limited company is managed by a board of directors in accordance with the
law and its Articles of Association. Subject to the Alien Business Law and
other applicable laws and regulations, all shareholders may be aliens.

Under the Securities Exchange Act of 1975, companies incorporated in
Thailand have an option to apply to have their securities listed with the
Securities Exchange as either "registered" or "authorized." Currently, it
is not required that companies listed with the Securities Exchange be
incorporated as public limited companies.

Branches of Foreign Companies - A foreign company that plans to do business
in Thailand on its own, such as a construction project, usually establishes
a branch office to undertake the project. There are no special requirements
for foreign companies to establish a branch office in Thailand. However, an
Alien Business Permit is required.

Representative Office - A Representative Office is defined under the
Regulation of the Office of the Prime Minister 1986, as an office in
Thailand of a foreign company engaged in the business of international
trading. This definition excludes regional offices and other business
related, nontrading, activities. Representative Offices are not legally
allowed to engage in any profit-seeking or profit-making enterprise.
Representative offices must obtain an Alien Business Permit prior to
starting its activities.

Joint Ventures - When a contracted project cannot be carried out by a single
company, it is common for two companies to join forces. According to Thai
law, joint ventures have no legal validity and exist only for a particular
project or specific venture. They cannot be registered for legal existence
purposes although it can engage in business. Joint ventures must register
for Taxpayer Identification Registration. Foreign companies that
participate in joint ventures are also required to obtain an Alien Business
Permit.

Factors in Choosing a Form of Business Organization - A foreigner wishing to
enter business in Thailand may freely choose among the several forms of
business organizations described above. Generally foreign investors will
establish new business organizations, but it may be possible to purchase an
existing one. It is also possible to do business in Thailand as a branch of
a foreign company. However, for tax and other reasons, it may be more
advantageous to do business as a Thai limited company instead of as a branch
of a foreign corporation.

Foreign Investment Policies and Regulations

The Investment Promotion Act of 1977 is administered by the BOI, which is
responsible for promoting domestic and foreign investments that are
considered to be important and useful to the social and economic development
of Thailand.

The BOI has a wide range of investment incentives to award to potential
investors whose projects meet any or all of the following criteria:
significantly strengthen Thailand's balance- of-payments position,
especially through production for export; support the development of the
country's resources; substantially increase employment; locate operations in
the provinces; conserve energy or replace imported energy supplies;
establish or develop industries which form the base for further stages of
industrial development; or are considered important and necessary by the
government.

In general, firms that plan to use Thailand as a base for export-oriented
production tend to apply for BOI promoted status more frequently than do
firms that plan to serve mainly the domestic market.

Ownership Limitations - The Alien Business Law of 1972 restricts the
participation of non-Thai nationals in certain types of business
activities. This law narrows the freedom granted under the Civilian and
Commercial Code of Thailand, which governs commercial transactions and
corporate matters and would otherwise permit unrestricted participation by
all persons, regardless of nationality, in business matters. Restrictions
on business activities are classified into three categories, as follows:

Category A - Category A includes activities reserved for Thai nationals or
for juristic companies that are majority owned by Thai citizens. No foreign
national may engage in these activities as an individual. If a foreign
entity is an investor, the majority of the shareholding (amount of share and
number of shareholders) should be held by Thai nationals. Aliens engaged in
business activities listed under Category A as of November 1972 were given
until November 1974 to terminate their operations or to convert them into at
least 51 percent Thai-owned enterprises.

Category B - Business activities under Category B, the majority of the
ownership of which is held by aliens who were already operating in Thailand
as of November 1972, will be allowed to continue operations for an
indefinite period if the appropriate certificates are obtained from the
Alien Business Registrar. However, the government will no longer allow the
formation of companies that are majority owned by aliens to engage in
business activities listed under Category B, unless they are companies
promoted by the BOI.

Category C - As in the case of Category B, existing alien-owned business
enterprises classified under Category C are allowed to continue operations
indefinitely by securing the proper license. Moreover, the government may
allow the formation of new companies under Category C that are majority
owned by aliens, subject to certain conditions.

Only the types of business activities listed under Category C and any other
business activity not listed in these three categories are open to new
foreign investors, unless such investor is willing to accept a minority
position. If a transfer of the majority of shares, partnership interests,
or management to Thai persons takes place it is possible for an alien
business to lose its alien character and thereby fall outside the
application of the Alien Business Law.

Entrance and Repatriation of Capital - Since May 1991, the Thai Government
has substantially deregulated its foreign exchange controls removing most
limitations and allowing repatriation of investment funds, dividends, and
profits; as well as loan repayments and interest payments, to be made freely.

The government is also planning to develop primary and secondary commercial
paper markets that increase the possibility for local financing.

In May 1990, the Thai Government announced a sweeping liberalization of
Thailand's exchange control regime, with additional liberalizing measures
promised to follow. Commercial banks may process money transfers of up to
$100,000 per year without prior BOT approval. Commercial banks can also
process repayment of unregistered loans or remittances from the sale of
securities up to $500,000 per year without prior BOT approval.

Taxation - On December 24, 1991, the Thai Government approved substantial
reductions in personal and some corporate income tax rates. Taxes on
profits and on the repatriation of profits were also reduced. The new
rates, which went into effect on January 1, 1992, are part of the Thai
Government's efforts to restructure the Thai tax system. These reductions
will also soften the introduction of the VAT, which replaced the business
and municipal taxes. U.S. based companies and Americans working in Thailand
will receive substantial benefits from the tax reductions.

All companies and partnerships registered under Thai law, or incorporated
under foreign laws and conducting business in Thailand (that is, branch
offices) are subject to corporate income taxes. The tax rate is 30 percent
regardless of whether the company is listed on the stock exchange.

Limited companies (corporations) and partnerships organized under Thai law
are subject to income taxes on income earned from sources within and outside
of Thailand. Companies organized under foreign law but engaging in business
in Thailand through a branch are taxed only on income derived from sources
within Thailand.

Taxes are imposed on the net profits of a company ascertained in accordance
with generally accepted accounting principles, subject to conditions imposed
by the Revenue Code of Thailand and resulting from the conduct of the
business during the taxable year. As in the case of personal income, the
capital gains tax rule applies to corporate income.

The Thai Government reduced and unified the tax on profit remittances to a
flat rate of 10 percent. Previously, rates ranged from 25 percent for
individuals to 15 percent for foreign financial institutions. The new rate
is 10 percent across the board on income already subject to income taxes.

The Thai Government also lowered the tax rate on dividends from 15 to 10
percent. Taxpayers do not have to include dividend income as a part of
income for their personal income tax payments.

The Petroleum Income Tax - The Petroleum Income Tax Act of 1971 and as
amended in 1973 and 1979, imposes a special tax on income from petroleum
operations derived by a company that owns an interest in a petroleum
concession granted by the Thai Government or which purchases oil from a
concession holder for export. The current tax rate is 50 percent of
relevant profits.

Tax Clearance Certificate - Effective May 10, 1991, aliens traveling out of
Thailand are not required to apply for a Tax Clearance Certificate.
However, there are two exceptions to the new regulation, where Tax Clearance
Certificates must be obtained. First, aliens who are responsible for filing
tax returns, filing tax arrears, or taxes due before or while traveling out
of Thailand. Second, aliens responsible for the liabilities in submitting
tax returns and filing income tax on behalf of a company or juristic person
established under foreign law and operating a business in Thailand.

For more information on import/export duties, the VAT, and excise taxes, see
"Internal Taxes" section.

Labor Relations

The Labor Relations Act of 1975 regulates the establishment of employee
unions and employer associations. In general, the same procedures apply to
both. They must be licensed and registered with the Central Employees'
Union and Employers' Association, Registration Office of the Department of

Labor, in order to operate.

The private sector labor relations climate in Thailand is generally peaceful
with strikes relatively infrequent. Since a period of social unrest in the
mid-1970s, Thailand has averaged fewer than ten strikes a year. Many of the
large industries are owned or controlled by the Thai Government. (The State
Enterprise Labor Relations Act of 1991 abolished public sector labor unions,
which had been the backbone of the organized labor movement). Many small
industries are family owned and operated. Thus, independent employers still
are a small minority in Thai industry, and employer or manager associations
are not widely established.

The Labor Relations Act of 1975 also established procedures for settling
labor disputes by a conciliation officer, arbitrator, and labor relations
committee and established rules governing the conduct of strikes and
lockouts. However, disputes are resolved often on an ad hoc basis, often
with intervention by the Labor Department of the Ministry of Interior,
and/or the Office of the Prime Minister.

The Social Security Act of 1990 provides for employers to contribute 1.5
percent of the employees' wages for injury, sickness, disability, death, and
maternity. Additional employer contributions for child welfare and old age
as well as unemployment are expected to be introduced within the next five
years. There is also a workmen's compensation fund covering injury,
sickness, and death to which all businesses with 20 or more employees must
contribute.

As of 1990, the Thai labor force totaled 31 million people. This figure
includes all Thai, over the age of 13, who are actively seeking employment.
The legal minimum wage as of 1991 was $4.00 per day. A surplus of unskilled
and semiskilled labor is able to supply the demand of the rapidly growing
industrial sector. However, critical shortages of middle managers,
technicians, and skilled workers have erupted as a result of a surge in the
growth of the manufacturing, petrochemical, and other technologically
advanced fields. Many officials fear that these shortages are the biggest
impediment facing Thailand in its race to become the next Newly
Industrialized Country (NIC).

Licensing and Franchising

Under Section 70 of the Revenue Code of Thailand (1930) on submission of
returns by companies abroad, royalties from licensing and franchising are
subject to revenue tax. Levels of taxation differ and need to be considered
on a case-by-case basis. Franchising is open to all industries,
commodities, and services if not restricted by other laws, such as the Alien
Business and Occupation Laws.

Intellectual Property Rights

Improved protection in Thailand for U.S. copyright, patent, and trademark
holders is one of the most prominent trade issues between the United States
and Thailand.

Patents - The Patent Act of 1979 gives protection to inventions and product
designs. For an invention or product design to be patentable in Thailand,
it must have novelty, must involve an inventive step, and must have an
industrial application.

The Thai patent law provides the same means for foreign and Thai nationals
to secure, to exercise, and enforce the exclusive rights in patents. Only

Thai nationals and citizens of foreign nations which accept applications of
Thai nationals are eligible to apply for a patent in Thailand. Since
Thailand has no bilateral patent agreement with the United States, U.S.
nationals and industry have no guarantee of national treatment and no right
of priority to allow the filing of applications in Thailand on the basis of
a U.S. application.

On February 27, 1992, Thailand's National Legislative Assembly enacted
amendments to the Patent Act of 1979. These amendments became effective in
September 1992. The amendments extend product patent protection to
pharmaceuticals and their ingredients, food, beverages, and agricultural
machinery and increase the term of patent protection to 20 years from filing.

However, the law does not provide patent protection to pharmaceutical
"pipeline" products, that is, pharmaceutical products that have already been
patented in another country but were not patentable in Thailand at the time
of development. The amendments also include broad authority to issue
compulsory licenses and a requirement that the patent holder "work" the
invention in Thailand to avoid compulsory licensing. In addition, the law
creates a Pharmaceutical Patent Board with broad authority to require
sensitive cost and pricing information and allows severe penalties for
failure to supply sufficient information.

A patent registered in Thailand is not internationally protected. Although
Thailand has followed the World Intellectual Property Organization (WIPO)
guidelines, it does not belong to the Paris Convention for the Protection of
Industrial Property. Registration is required in a particular country where
protection is needed. Foreign patents which require protection in Thailand
must be registered in Thailand.

Foreign patent holders may enter into licensing agreements with parties in
Thailand. While such patents and designs are not protected under the Patent
Act, remedies under other laws may be available in the event a third party
produces the same product or applies the patent process or sells the product
in Thailand.

Copyrights - The Copyright Act of 1978 provides protection for any work in
the "literary, scientific, or artistic domain." This term is defined to
include a number of specific works such as literary, dramatic, artistic,
musical, audio-visual, cinematographic, and sound and video broadcasts.
Under the Copyright Act, a copyright arises upon creation of a work and
registration of the work is not required. Generally, protection is the life
of the creator plus 50 years.

Thailand belongs to the 1908 Berlin text of the Berne Convention, having
joined the convention in 1931. Thailand's obligations under the Berne
Convention to protect foreign copyrights are met by the terms of Section 42
of the Copyright Act as implemented in the 1983 Royal Decree Providing
Conditions for the Protection of International Copyright. U.S. works are
protected in Thailand by virtue of U.S. adherence to the Berne Convention
which superseded Thailand's obligations under earlier U.S.-Thai bilateral
agreements dating back to 1921.

Thailand's copyright law does not provide explicit protection for computer
software. However, a 1984 advisory opinion by the highly respected Thai
Juridical Council stated the Thai copyright law does protect software under
the "other works in the scientific domain" category. To date, there have
been no Thai court decisions that test the advisory opinion on computer
software. Thai Government officials have stated that the government is
considering adding a specific provision to the Thai copyright law that would

provide explicit protection for computer software.

Other U.S. concerns with Thailand's copyright law include inadequate
penalties for copyright infringement, public performance exceptions, and a
10 year limitation on translation rights.

In 1991, the Thai Government pledged to increase its enforcement efforts on
copyrights. The government centralized most enforcement activities in a
specialized police unit and set up a special prosecution division for
intellectual property protection. Despite these efforts, piracy of U.S.
books, records, cassettes, and movies remains extensive. Copyright owners
should consult competent legal counsel before marketing their products in
Thailand.

Trademarks - The Trademark Act of 1931 as amended by the Trademark Act of
1961 and the amendments passed in 1991 governs registration of and provides
for protection for trademarks, along with other ministerial regulations.
Thailand does not belong to any international convention on trademarks.

A trademark is defined by Thai law as "a device, brand, heading, label,
ticket, name, signature, word, letter, numeral, or any combination
thereof." A registrable trademark must be distinctive, not identical, or
confusingly similar with any registered mark of any other person and must
not contain any prohibitory elements such as royal or official arms or seals.

A registrable trademark must consist of at least one of the following:
signature of the applicant for registration or signature of some predecessor
in his business; name of a company, individual, or firm represented in a
special or particular manner; an invented word or words; a word or words
having no direct reference to the character or quality of the goods and
which do not denote a geographical name or surname; and any other
distinctive mark or marks.

In 1991, Thailand's National Legislative Assembly enacted amendments to the
trademark law providing for increased penalties for infringement and
protection for service, certificate, and collective, or well-known marks.
Trademark enforcement efforts are significantly more effective than
copyright enforcement; however, trademark infringement in Thailand is still
a problem.

GUIDANCE FOR BUSINESS TRAVELERS

Entrance Requirements

All aliens entering Thailand must carry valid passports. U.S. visitors are
admitted without visas for a stay of 15 days or less; for longer stays, a
visa appropriate for the purpose of the visit (tourism, business, or
student) must be obtained before arrival.

Listed below are the requirements for a Thai visa:

(1) A valid passport with at least six months remaining before its
expiration (2) One visa application form duly completed and signed by
applicant (3) Two passport size (2 inches by 2 inches) photographs (color
or black and white, front view) (4) Visa fees (for each entry) are payable
in cash or money order only:

Non-Immigrant Visa $20.00 (Maximum stay 90 days)
Tourist Visa $15.00 (Maximum stay 60 days)

Transit Visa $10.00 (Maximum stay 30 days)

Applications submitted in person and not requiring the approval of the
Immigration Division in Thailand are usually processed within 48 hours.
Visa application forms submitted by mail must include a self-addressed
envelope with postage stamps only (no metered stamps): $9.95 for post office
express mail service, $1.52 for certified mail. Applications submitted by mail are processed in about one week plus mailing time.

Applicants should call the Thai Embassy for additional information about
requirements for holders of U.S. passports or reentry permits who were born
in Laos, Vietnam, or Cambodia.

Visas must be utilized upon arrival at the port of entry. Visas must be
utilized within 90 days from the date of issuance. Therefore, applicants
should not apply for visas more than three months before traveling to
Thailand.

Requirements for a Stay of More Than 90 Days

The applicant must obtain approval from the Immigration Division in Bangkok,
Thailand. Such a visa can be obtained in one of two ways:

(1) The applicant may submit the applications through the Thai Embassy or
Consulate abroad.

(2) The firm in Thailand where the alien wishes to work may represent an
alien by applying directly to the Immigration Division in Bangkok.

There are no health requirements unless entering Thailand from an infected
area.

Pertinent Treaties and Regulations

The Treaty of Amity and Economic Relations between the United States and
Thailand governs the activities of visiting U.S. businesspersons. It
provides that each party may reserve for its own nationals the practice of
any profession or calling. A law related to this provision of the treaty is
the Thai Law of Occupations of Aliens, Decree No. 322, which came into force
March 13, 1973. The law concerns largely three categories of foreigners:
(1) those legally resident before the above date, (2) those with investment
promotion privileges, and (3) almost everybody else. The first two
categories are automatically allowed to choose their professions; the third
category is subject to the decree. Besides most skilled and unskilled trade
occupations, aliens are prohibited from occupations such as accounting, law,
architecture, advertising, brokerage, and civil engineering. They are also
prohibited from major industries including farming, fruit growing,
fisheries, rice milling, and sugar production.

Foreigners entering Thailand and desiring to work for more than 15 days must
obtain a work permit as well as the nonimmigrant or immigrant visa mentioned
earlier. In theory, foreigners intending to work in Thailand must have
their prospective employer file a request for a work permit with the Labor
Department. If the Ministry of Labor approves the employment, the foreigner
will be granted the appropriate visa and, once in Thailand, shall apply in
person for the permit. Questions and the initiation of actions to obtain
the work permit may be directed to the nearest Thai Embassy or Consulate.

Language

English is an accepted language for business and is widely spoken in Bangkok
commercial and government circles. Government offices and businesses will
usually have at least one English-speaking employee. English alone may be
sufficient for dealings with large private firms and high-level government
officials. English is also spoken in most hotels and department stores.
However, in dealings pertaining to consumer goods, a local agent or
representative will be necessary to reach the non-English reading and
speaking population.

Foreign Exchange

There is no restriction on the amount of foreign exchange and Thai currency
that may be brought into Thailand. Foreign visitors or persons in transit
may freely take out of the country all foreign exchange which they had
brought in without limit. However, they may not take out Thai currency
exceeding baht 50,000 per person, except for trips to Thailand's bordering
countries where an amount of baht 100,000 per person is allowed.

Foreign currencies may be exchanged at any authorized banks, currency
exchange services, or authorized money changers. Banking hours are from
8:30 a.m. to 3:30 p.m. Monday to Friday except bank holidays. Currency
exchange services are open from 8:30 a.m. to 10:00 p.m. daily, while some
authorized money changers are open from 10:00 a.m. to 5:00 p.m. and beyond.
Some offer 24-hour service, mostly in hotels.

Credit cards are acceptable in major establishments in Thailand and may be
used to obtain local currency at pre-arranged authorized banks or currency
exchange services, as well as at some automated teller machines.

Import and export of gold other than jewelry are subject to licensing by the
Ministry of Finance. Foreign tourists are allowed to freely take out gold
ornaments.

The exchange rate of the baht with the dollar is about 25.5 to 1. Further
details are found in the section entitled "Foreign Investment Policy and
Regulations."

Holidays

Thai business establishments (and the U.S. Embassy) may be closed on
holidays set by the lunar calendar, which changes from year to year. Check
with the Thai Embassy or Consulates for exact dates. Thai national holidays
and their respective dates in chronological order for 1993 are: January 1
(New Year's Day), March 7 (Makha Bucha Day), April 6 (King Rama I Memorial
and Chakri Day), April 12-14 (Songkran Day), May 5 (Coronation Day), May 17
(Plowing Ceremony Day), June 4 (Wisakha Bucha Day), August 2 (Asalha Bucha
Day), August 3 (Buddhist Lent), August 12 (Her Majesty the Queen's
Birthday), October 23 (Chulalongkorn Day), December 5 (His Majesty the
King's Birthday and National Day), December 10 (Constitution Day), and
December 31 (New Year's Eve).

INFORMATION SOURCES

Government Representation

For information on investing in Thailand:

Office of the Economic Counselor (Investment)
Royal Thai Embassy
Five World Trade Center, Suite 3443

New York, NY 10048
Telephone: (212) 466-1745
Facsimile: (212) 466-9548

For information on importing from Thailand:

Thai Trade Center
5 World Trade Center, Suite 2447
New York, NY 10048
Telephone: (212) 466-1777
Facsimile: (212) 524-0972

Thai Trade Center
245 Peachtree Center Ave., N.E.
Suite 2104, Marquis One Tower
Atlanta, GA 30303
Telephone: (404) 659-0178
Facsimile: (404) 577-6937

Thai Trade Center
3440 Wilshire Boulevard, Suite 1101
Los Angeles, CA 90010
Telephone: (213) 380-5943
Facsimile: (213) 380-6476

For information on traveling to Thailand:

Tourism Authority of Thailand
Five World Trade Center, Suite 2449
New York, NY 10048
Telephone: (212) 432-0433
Facsimile: (212) 912-0920

Tourism Authority of Thailand
3440 Wilshire Boulevard, Suite 1101
Los Angeles, CA 90010
Telephone: (213) 382-2353
Facsimile: (213) 380-6476

For information on visas and other matters:

Royal Thai Embassy
2300 Kalorama Road, NW
Washington, DC 20008
Telephone: (202) 483-7200
Facsimile: (202) 234-4498

Other Thai consular offices and missions in the United States are at the
following locations:

Royal Thai Consulate-General
35 East Wacker Drive, Suite 1834
Chicago, IL 60601
Telephone: 312-236-2447
Facsimile: 312-236-1906

Royal Thai Consulate-General
801 N. La Brea Avenue
Los Angeles, CA 90038
Telephone: 213-937-1894

Facsimile: 213-937-5987

Royal Thai Consulate-General
20 East 82nd Street
New York, NY 10028
Telephone: 212-754-1770
Facsimile: 212-754-1907

U.S. Government Publications

Foreign Economic Trends - Thailand, published semiannually, Department of
Commerce, Washington, DC

Background Notes - Thailand, published by the U.S. Department of State,
Washington, DC

The two publications listed above are for sale by the Superintendent of
Documents, U.S. Government Printing Office, Washington, DC 20402.

The publications listed below are included in the National Trade Data Bank
(NTDB), an electronic source for international trade and export information
containing basic export information, country-specific information, industry
specific information, and industry-country information.

Country Marketing Program - Thailand, U.S. Department of Commerce

Industry Sector Analyses - Thailand, U.S. Department of Commerce

For more information on the National Trade Data Bank, call the NTDB staff at
(202) 482-1986 or write to:

U.S. Department of Commerce
Office of Business Analysis
HCHB Room 4885
Washington, DC 20230

KEY THAI GOVERNMENT AND QUASI-GOVERNMENT AGENCIES

For all telephone and facsimile numbers listed in this section, the country
code for Thailand is 66 and the city code for Bangkok is 2.

Office of the Prime Minister
Government House
Nakhon Pathom Road
Bangkok 10300
Telephone: 281-1107, 281-4040, 281-1149
Facsimile: 282-5131

Electricity Generating Authority of Thailand
Charunsanitwongse Road
Bangkruay
Nontaburi 11000
Telephone: 424-0101, 424-0111
Facsimile: 433-6317

National Economic and Social Development Board
962 Krung Kasem Road
Bangkok 10100

Telephone: 280-4095
Facsimile: 280-0892

National Statistical Office
Larnluang Road
Bangkok
Telephone: 282-7037, 281-3022
Facsimile: 281-3848

Office of the Board of Investment
555 Vibhavadi Rangsit Road
Bangkok 10900
Telephone: 270-1400, 270-1410, 270-1420
Facsimile: 271-0777

Tourist Authority of Thailand
4 Rajadamnoen Nok Avenue
Bangkok 10100
Telephone: 282-1143
Facsimile: 280-1744

Ministry of Agriculture and Cooperatives
Rajdamnoen Nok Avenue
Bangkok 10200
Telephone: 281-5955
Facsimile: 281-3514

Ministry of Commerce
Sanamchai Road
Bangkok 10200
Telephone: 225-8411
Facsimile: 226-3318

Ministry of Defence
Sanamchai Road
Bangkok 10200
Telephone: 221-2131, 222-1121, 222-1156
Facsimile: 566-1904

Ministry of Education
Wang Chan Kasem
Ratchadamnoen Nok Avenue
Bangkok 10300
Telephone: 281-6013
Facsimile: 280-0311

Ministry of Finance
Soi Areesamphan
Rama VI Road
Bangkok 10400
Telephone: 273-9021
Facsimile: 273-9408

Bank of Thailand
273 Samsen Road
Bang Khunprom
Pranakorn
Bangkok 10200
Telephone: 282-3322
Facsimile: 280-0449

Customs Department
Sunthornkosa Road
Klongtoey
Bangkok 10110
Telephone: 249-0431
Facsimile: 249-2874

Stock Exchange of Thailand
2nd floor, Sinthorn Building
132 Wireless Road
Bangkok 10330
Telephone: 254-0960
Facsimile: 254-3040

Ministry of Foreign Affairs
Wang Saranrom Palace
Bangkok 10200
Telephone: 225-0096
Facsimile: 225-8132

Ministry of Industry
Rama VI Road
Bangkok 10400
Telephone: 246-1137
Facsimile: 247-8004

Ministry of the Interior
Atsadang Road
Bangkok 10200
Telephone: 222-1141
Facsimile: 224-6188

Labor Department
Fuang Nakhon Road
Bangkok 10200
Telephone: 221-5140
Facsimile: 226-2890

Ministry of Justice
6 Rachini Road
Bangkok 10200
Telephone: 221-3161, 224-7280
Facsimile: 224-7285

Ministry of Public Health
Wang Devavesm
Sam Sen Road
Bangkok 10200
Telephone: 282-2121
Facsimile: 282-2226

Ministry of Science, Technology, and Environment
Rama VI Road
Phaya Thai
Bangkok 10400
Telephone: 246-0064, 246-1382
Facsimile: 246-8106

Ministry of Transport and Communications

Ratchadamnoen Nok Avenue
Bangkok 10100
Telephone: 282-8742, 281-3422
Facsimile: 281-3959

MARKET PROFILE

Foreign Trade

Imports (c.i.f.) - $38,636 million in 1991; $33,333 million in 1990. Thai
imports from the United States were $4,057 million in 1991; $3,598 million
in 1990. (Note: These are Thai Government data, which differ from U.S.
data in concept and coverage. Main imports from the United States:
aircraft and parts, electronic components, office machine parts, cotton,
precious stones, and sound recording media.

Exports (f.o.b.) - $28,272 million in 1991; $23,049 million in 1990. Thai
exports to the United States were $5,941 million in 1991; $5,224 million in
1990 (see note above). Chief Thai exports: computers, electronic
components and parts, fish and shellfish, VCRs, jewelry, footwear, and
textiles.

Trade Policy - Largely open. Moderate to high tariffs. GATT signatory as
of 1982.

Trade Prospects - See the Country Marketing Plan (CMP) for the complete list
of best prospects. The top sectors thought to offer the best prospects for
U.S. exporters are food processing and packaging machinery, computers and
peripherals, telecommunications equipment, medical equipment, and food
franchising/supermarkets.

Foreign Investment

Investment Prospects - Foreign investment is encouraged; investment climate
is good except for intellectual property problems and lack of a treaty to
avoid double taxation. U.S. firms receive national treatment in most cases
through the 1966 Treaty of Amity and Economic Relations. U.S. firms may be
100 percent U.S. owned in most sectors. Promotional privileges are
available from Thailand's Board of Investment. The Overseas Private
Investment Corporation offers programs to U.S. investors in Thailand.

Finance

Currency - Baht: valued against a basket of currencies. 25.5 baht equals
$1 (1992).

Commercial Credit Rates - Commercial bank prime rate was
14.5 percent at the end of 1991, down from a 16.5 percent rate in 1990.

National Budget - FY 1991 (ending September 30, 1991) budget expenditures
are authorized at $15.1 billion, a 15.7 percent increase in expected
expenditures over FY 1990.

Foreign Aid - U.S. commitments including Export-Import Bank of the United
States (FY 1970-1989), $870 million; Western (non-U.S.) countries, official
development assistance and other official flows bilateral commitments
(1970-1988), $8.1 billion; OPEC bilateral aid (1979-1989), $19 million.

Balance of Payments - International reserves were at $16.8 billion at the
end of 1991. Balance of payments showed a surplus of
$4.4 billion, up from $2.2 billion in 1990.

Economy

The Thai economy is currently in transition, from an agricultural economy to
a more open and broadly based one with a large manufacturing sector.
Although about 62 percent of the Thai labor force is in the agricultural
sector, manufacturing, wholesale and retail trade, service, and other
industries now account for almost two-thirds of the gross domestic product.

GDP - $93.3 billion in 1991, compared with $80.1 billion in 1990. Per
capita GDP at 1991 prices is $1,630.

Basic Economic Facilities

Transportation - Railroad system of 2,300 miles and highway system of 26,700
miles.

Communications - Currently, there are 3 telephone lines per 100 people. An
additional 3 million phone lines will be installed by 1996. Thailand has
over 300 radio stations, 11 TV stations, and 2 cable TV operators.

Electricity - Capacity of 7,270,000 Kw (1990). Household current is 220
volts/50 cycles.

Natural Resources

Land - 198,114 square miles: about the size of Texas.

Minerals - Sizable natural gas, tin, rubber, tungsten, lignite, petroleum,
tantalum, lead, gypsum, fluorite, and zinc

Forestry - Ban on logging implemented in January 1989 to stop deforestation
and encourage reforestation.

Population

Size - 57 million (1990), Thai 85%, Chinese 12%

Labor Force - 31 million; agriculture 59%, industry, commerce, services 26%,
government 8%

Education - 93% literacy rate, six years compulsory education: 96 percent
attendance

Language - Thai; English is the secondary language spoken by many Thai
business people.

--------------------------------------------------------------------------
This file extracted from Dept. of Commerce National Trade Data Bank (NTDB)
CD-ROM SuDoc No. C 1.88:993/12. Processed 12/01/1994 by software developed
by RCM (UM-St. Louis Libraries) / OBR_0009