Christopher F. Bruton Dataconsult Ltd, Bangkok, Thailand British Chamber of Commerce in Thailand American Chamber of Commerce Friday 30 October 2009 Amari Orchid Resort, Pattaya Light at the end of the tunnel? A brighter future for Thailand in 2010

Light at the end of the tunnel? A brighter future for Thailand in 2010 How does Thailand rate in the Region? Thailand’s politics: the weak link in the chain? Thailand’s economy: weak today but better tomorrow ?

1. How important is Thailand in ASEAN ? Sources: World Bank and UNDP GDP US$ billion (2007)Population millions (2007)

2. World Governance indicators Sources: World Bank: Aggregate Governance Indicators 2009 Overall score (max 600)Political stability (max 100) 525 Note: Overall score divided into six categories (accountability, political, stability, government effectiveness, regulatory quality rule of law, corruption control)

3. Decline in governance factors in Thailand Political stability Accountability Corruption control Rule of law Gov’t effectiveness Regulatory Quality Scores (out of 100) Sources: World Bank: Aggregate Governance Indicators 2009

4. Human development indicators Sources: UNDP Human Development Index 2009 (ranking in 181countries)

5. World Competitiveness rankings Sources: World Economic Forum: Global Competitiveness Report (134 countries) 2009/10 Note: (1) Laos and Myanmar not evalued (2) Thailand ranked 28 in 2006, 36 in 2009 (2009 ranking in 134 countries)

6. Ease of doing business ranking 2010 Sources: World Bank: Doing Business Series, 2009/2010 Note: Thailand improved from 20 in 2006 to 12 at present (ranking in 183 countries)

7. How does Thailand rate in the Region? Thailand accounts for 20% of ASEAN GDP, 12% of ASEAN population Governance: 4 th rank in ASEAN Declining governance ratings, especially political stability Decline in competitiveness: 28 th in th in 2009 Ease of doing business: 12 th rank: world leader

How does Thailand rate in the Region? Thailand’s politics: the weak link in the chain? Thailand’s economy: weak today but better tomorrow ? Light at the end of the tunnel? A brighter future for Thailand in 2010

8. Politics: weak link in the chain Long-term issues Political / economic power moving away from Bangkok  demographics; industrial relocation; devolution  North / Northeast rising politically  Eastern Seaboard rising economically Decline in political institutions, rise of “direct action” Authoritarianism versus populism: which is morally best, but which works better? Coalition legitimacy makes 2010 election inevitable Who will win?  demography plays its hand  risk of coalition components shifting to other side Could the democratic process be short-circuited yet again?

How does Thailand rate in the Region? Thailand’s economy: weak today but better tomorrow ? Thailand’s politics: the weak link in the chain? Light at the end of the tunnel? A brighter future for Thailand in 2010

9. Thailand’s economy: weak today but better tomorrow? Sources: Q3/08-Q2/09: NESDB Q3/09 to Q2/10 IMA forecasts Quarterly GDP performance and outlook Annual GDP Performance and outlook

10. Political trends and economic consequences: Case of the Stock Exchange of Thailand: October 2009 suggests economic forces predominate Note: 1. SET Index reached 2009 high points in October 2. Price correction was natural, perhaps inevitable Dec 05Dec 06 Dec 07Dec 08Jan 09 Feb 09 Mar 09Apr 09 May 09 Jun 09 Aug 09 Sep 09Jul 09 1 Oct 2 Oct 5 Oct6 Oct7 Oct8 Oct9 Oct 12 Oct13 Oct14 Oct15 Oct16 Oct19 Oct (April 1975 = 100) 20 Oct21 Oct22 Oct26 Oct27 Oct28 Oct29 Oct

11. Tend of the economy in 2009/2010 Consumption and investment  Weak 2008, negative 2009, recovery 2010  Government stimulus plan critical: will it happen? External sector  Strong trade in 2008, severe fall-off in 2009,  Recovery in 2010 depends on World trade flow restoration Major issues  Instability factor  Reorienting economy from external to domestic  Environment versus investment  Success of stimulus package  Competitiveness (strengthening Baht)  Rising public debt (38% of GDP in 2008, over 60% by 2012)

12. Key conclusions Thailand fundamentally strong; Search for stability under “Thai road to democracy” challenging to achieve; “Business as usual” attitude traditional in Thailand: we have seen it all before; But recovery in 2010 at best gradual: hard to counter world trends; Every crisis offers opportunities: M&A, asset acquisitions, liberaltisation; Risk management preparedness plans necessary to avert impact of crisis