Purchase OBG Publications

With the market capitalisation of its bourse at around BT11.97trn ($391.42bn) as of late March 2014, Thailand has relatively deep and liquid capital markets by regional standards. A derivatives market has grown significantly since 2007, with particular interest in index and single stock futures, as well as gold futures. Following the Asian financial crisis, brokers in Thailand have remained more cautious in their leverage, with margin lending in 2013 at $2.6bn, compared to $3.9bn prior to the crisis. The value of outstanding bonds on the Stock Exchange of Thailand has reached $291bn by June 2013, up 11.8% year-on-year. Government bonds are the most widely traded fixed-income securities, accounting for roughly 880% of daily trades. The kingdom’s large domestic investor base, with strong retail participation, is a sound basis for future expansion. Although the growth of corporate earnings will slow from its peak in 2012, the outlook for Thai equities remains strong. This chapter contains interviews with Vorapol Socatiyanurak, Secretary-General, Securities and Exchange Commission, Thailand; Charamporn Jotikasthira, President and CEO, Stock Exchange of Thailand; and Chaipatr Srivisarvacha, CEO, KT ZMICO Securities Company.

Thailand is the second-largest recipient of foreign direct investment (FDI) in South-east Asia after Indonesia, with exports accounting for 62.3% of GDP in 2012, or 75% including goods and services. Japan has cemented its position as the largest source of FDI: its share of investment reached 44% in the first three quarters of 2013, up from the 30-40% annual range in the decade to 2012. Trade in China has been instrumental in supporting Thai Exports throughout the global financial crisis, growing 21.03% in 2011. As the Chinese economy slowed in 2013, however, exports to the mainland shrunk 1.61% year-on-year in the first three quarters of 2013. Although trade with ASEAN has grown swiftly in recent years, accounting for 16% of total exports in 2012, slowing regional growth and the effect of slumping currencies caused exports to ASEAN to grow at a slower 6.3% year-on-year in the first nine months of 2013. This chapter contains interviews with Udom Wongviwatchai, Secretary-General, Thailand Board of Investment (BOI); Håkan Buskhe, President & CEO, Saab; and Takanobu Ito, President & CEO, Honda Motor Company.

The second-largest economy in South-east Asia and the 34th-largest worldwide, Thailand had a GDP of $366bn and a per capita income of $5168 in 2012. Over the past decade, the economy has expanded at an average rate of 4.3%. Since 2008, however, there have been large economic swings that have been exacerbated by seasonal changes. As a major exporter, Thailand is exposed to fluctuations in global demand, and weak growth in its key export markets of the EU, the US, and Japan has been a constraint in recent years. Exports contracted by 4% year-on-year by November 2013. With household debt increasing dramatically, the central bank has raised concerns over the pace of loan growth. Over the longer term, the economy will need to boost higher value-added production to drive growth and ensure it is spread more evenly among the population. Political stability will be key to sustaining strong tourism performance and to the public investment that is so crucial for Thailand to achieve its longer-term growth potential. This chapter contains interviews with Kittiratt Na Ranong, Deputy Prime Minister and Minister of Finance; and Kan Trakulhoon, President and CEO, SCG.

With a legal viewpoint from OBG partner, Todung Mulya Lubis, Senior Partner, Lubis Santosa & Maramis, this chapter navigates Indonesia’s legal framework, with focus on anti-corruption measures and other updates that may affect businesses and potential investors.

Featuring a tax viewpoint from OBG partner, Ay-Tjhing Phan, Tax Leader, PwC Indonesia, this chapter gives an overview of the tax system in Indonesia, with focus on changes to the tax system in recent years and regulations for potential investors.

In 2002, a new amendment to the constitution required that central and local authorities spend 20% of their budgets on education, a level achieved in only one year, 2009. The Indonesian education system is large, well-funded, fast growing and quickly improving. Despite some difficult years as a result of the 1997-98 Asian financial crisis and some ineffective policies instituted in its aftermath, the government has made a significant commitment to the sector. In 2013 the government increased the number of years of compulsory education from nine to twelve, the former having been a requirement since 1994. If Indonesia can carry out its programmes effectively, the improvements will be reflected in test scores and international rankings. Foreign universities would then be keener to form partnerships that further raise the country’s global standing. While Indonesia has faced significant setbacks in the past, it has made real progress in health care provision and the system is about to dramatically improve. The country is currently implementing a universal healthcare plan and, if all goes according to schedule, by 2019 everyone in the country will receive medically necessary services free of charge. Reimbursement rates need to be set at a level that the government can afford, but one that attracts the full participation of for-profit medical groups. Ultimately, the sector would like to attract inward medical tourism dollars and begin competing with the likes of Thailand, the Philippines and Malaysia. For international medical groups, the country will become a major target for business and investment, with new equipment, technology and capital needed to build the sector. If the government allows for enough international participation on good terms, the Indonesian health sector will be a profitable and growing market for health care operators. This chapter contains interviews with Nafsiah Mboi, Minister of Health; and Hasbullah Thabrany, President, South-east Asian Public Health Education Institutions Network.