Thailand Board of Investment Mr. Korn Dabharansri Deputy Prime Minister India August 2003 THAILAND OF INVESTMENT

Thailand Board of Investment Relationship Between India and Thailand Indian Business That Have Come to Thailand Have Prospered 4Pulp and Paper 4Jewelry 4Hotels 4Software Dipak Jain and Narayana Murthy Named to Thai Prime Minister’s Eminent Person’s Advisory Board

Thailand Board of Investment Free Trade Agreement Process Began a Year Ago When H.E. Thaksin Shinawatra Visited India Work Has Continued and I am Meeting with Indian Government to Finalize Details FTA is Expected to be Signed When H.E. Atal Behari Vajpayee Pays State Visit to Thailand in October

Thailand Board of Investment FTA– Early Harvest FTA Will Begin With So-Called “Early Harvest” of Around 100 Items 4Tariffs on these items will be gradually reduced 4Goal is zero percent tariff by 2010 Remaining Items to Be Phased In, Following Negotiations

Thailand Board of Investment Benefits of FTA Bi-lateral Trade in 2002 was Just Over US$1 billion. 4+32% from 2001 Our Goal is to Double bi-lateral Trade by 2004

Thailand Board of Investment Thai Economic Overview Despite Global Uncertainty, Thai GDP Expanded By 5.2% in Early projections for 2003 were %, due to concerns about impact of war in Iraq 4Ministry of Finance projects 5.1% growth this year 4Many in government expect growth to be 5.5-6%, both this year and next

Thailand Board of Investment All Segments of Economy Growing Domestic 4Capacity utilization at 70% Exports – Our Traditional Engine of Growth 4Turnaround started in 2 nd half of last year 4+18% in 2003 (Jan-June) 4Full-year projection raised to US$76.8 billion, a 10.8% increase from last year, and a new record for the country

Thailand Board of Investment Strong Across The Board International Reserves Remain Strong Baht Has Strengthened and is Trading in Narrow Band Inflation Remains Low Clearly, We Are at The Start of a New Growth Cycle

Thailand Board of Investment Foreign Investment Investment Figures Confirm Economic Strength, as FDI is a Leading Economic Indicator Target for 2003 is 200 Billion Baht 4First 6 months of the year, we attracted 166 billion baht (+55%) 4Clearly, then, we will surpass full- year projection

Thailand Board of Investment Importance to Thailand of Indian Investment BOI Figures ( ) India Ranks #14, With 34 Billion Baht of Investment, Ahead of: 4Australia 4Switzerland 4Belgium 4Italy Over That Period, Indian Investors Have Created More Than 12,000 Jobs for Thais

Thailand Board of Investment Restructuring the Thai Economy In the Past, Exports Were Our Traditional Engine of Growth 4While that strategy worked very well, during 80s, it left is vulnerable to external events To Protect Our Economy From External Shocks, We Have Placed Great Emphasis on Strengthening Economy at Grass Roots Level 4Retraining of rural poor 4Improving financing options

Thailand Board of Investment A Rising Tide Lifts All Boats We Have Offered Hope to Those That Had None 4Revolving Fund 4OTOP 4People’s Bank By Enabling Villagers to Utilize ‘Local Knowledge’ 4Increase household income 4Stimulate domestic consumption 4Increase economic activity

Thailand Board of Investment Supporting SMEs Established an SME Bank to Ensure Promising Enterprises Have Access to Necessary Capital Lowered Corporate Income Tax on SMEs from 30% to 20% Offered Additional Tax Incentives for Companies to List on Market for Alternative Investments (MAI)

Thailand Board of Investment Finance Sector Reform To Solve Problem of NPLs from 1997 Crisis, We Transferred NPLS to State-Run Asset Management Corporation (TAMC) 4More Than 500 Million Baht of Debt (70%) Has Been Resolved 4The balance should be cleared by the end of this year As a Result, Banks Are Once Again Lending 4Profits Are Up 140% in First Half

Thailand Board of Investment Bureaucratic reform Government Undertook First Revision of Thai Civil Service in More Than a Century New Ministries Created Departments Combined to Improve Efficiency Staff Retrained to Function in “New Bureaucracy”

Thailand Board of Investment Open Door Policy While Strengthening Domestic Economy and Reforming our Finance Sector, We are Also Looking to Open Markets 4FTA With China 4Working Towards FTAs with Australia, Bahrain and USA 4Our Objectives are to Provide Thai Manufactured Products with Maximum Opportunities

Thailand Board of Investment AFTAAFTA Thailand Has Also Been One of the Driving Forces in ASEAN and the ASEAN Free Trade Area (AFTA) 4Progressive implementation Once Implemented, AFTA Presents a Unified Market of More than 500 Million

Thailand Board of Investment PrivatizationPrivatization As You Probably Aware, Thailand is Selling Stakes in Many State-Owned Enterprises 4PTT – Listed on Stock Exchange (SET) and is one of the largest capitalized firms 4Soon to come are privatization of ØAirport Authority ØPort Authority ØTelephone Organization ØTobacco Monopoly

Thailand Board of Investment

Thailand Board of Investment Thailand: The Heart of Asia