Thai business relations to Arab countries need a kick

The business ties between Thailand and the Middle East are capable of development, says Anirut Smuthkochorn, Secretary to the Thailand Trade Representative and also Chairman of the Middle East committee for the Board of Trade of Thailand, who organises trade delegations and conferences to promote the Thai-Middle East relations.

Interviewee: Anirut Smuthkochorn, Secretary to the Thailand Trade Representative

Developing trade between Thailand and the Middle East is a difficult task and needs promotion, is the experience of Smuthkochorn, who visits the region regularly and maintains contact to important businessmen, government representatives and opinion leaders in the Middle East. He was organising conferences together with the Thai Industrial Association, the Islamic Chamber of Commerce and Industry, and several other trade events over the last years which covered sectors such as tourism, agriculture and food, small and medium companies, and others.

“There is a difference between Thailand and some other South East Asian countries with whom the Middle East is doing business: Thailand is not a Muslim country,” says Smuthkochorn. “Therefore, developing trade with the Middle East can sometimes be difficult for Thailand.”

However, the country has a lot of potential, for example in technology, agriculture, and the food industry, all sectors where “many investors from Korea and Japan are already active”, he says.

The subsectors of halal food as well as halal tourism and similar Islamic ventures open chances for Middle East investors, “but at present, there is not so much activity. The Middle East is also spending less than before the 2008 crisis. They are signing memorandums of understanding here and there, then go home and sleep on it. This can be improved.”

As for Islamic banking, Smuthkochorn says that “opening a bank is not easy in Thailand.” He attributes this to a mere issue  of competitiveness: “Maybe the domestic sector doesn’t want Arab banks to come here, because they have a lot of money, and this could be a threat for them.” However, there is already one Islamic bank in the country, the Islamic Bank of Thailand, which has been established with government support to tap the growing potential of Islamic banking, and also the insurance system called takaful, which, for example, is being offered by Thai banking group Finansa.

Smuthkochorn also sees growing potential in health tourism. Major hospitals lure a growing number of patients from the Middle East to Bangkok, and, in reverse, international Thai hospitals such as Bangkok Hospitak, Bumrungrad or Phyathai Hospital have already set up operations in the Middle East, namely in the UAE and in Oman.

Other promising sectors are the food and petrochemical industry, says Smuthkochorn, but inflow of foreign investment from the Middle East is weak. A few years ago, Kuwait was offered to cultivate land in Thailand for the Arab country’s own growing food demand under a lease term agreement in a free trade zone, but, however, the plans didn’t work out so far, he says.

“Sometimes I don’t understand the rich men from the Middle East as they are not moving forward. But not to forget, there are political issues going on in the region right now which may also slow down investment activity abroad,” Smuthkochorn says.

The biggest Middle East investors to speak of in Thailand so far are the Jumeirah Group, and Saudi Prince Al Waleed’s Kingdom Holding, which both invested into the hospitality sector, together with a few smaller investments from Bahrain into property development.

“The best investment for Middle East businesses in Thailand would be the food sector,” Smuthkochorn emphasises.

“There are a lot of opportunities for staples, fruits, seafood and the like, everything what Middle East people want to eat. The concept is to be value-adding, this means to produce something with a greater value and customer benefit,” he says.

This also applies to the gems and jewelry sector, he adds.

“We export a lot to the Middle East, and there are certainly opportunities for investors here in Thailand.”

After the 2011 floods, investment into water management is also highly sought-after by the Thailand government.

“It seems that Arab companies at present are not so interested to invest, but it could be a good opportunity, as rebuilding the infrastructure and new concepts for flood barriers are getting a financial backup by the World Bank and other international institutions,” Smuthkochorn says.

He adds that he is going to organise a new conference for Middle East investors and representatives in Bangkok in August 2012, with a focus on industry, banking, insurance and halal businesses.

“It is my viewpoint that Thailand is not a better country to invest than others in the region, but we are really on the right track with our economy,” Smuthkochorn says.

“My advice for investors is: they should really look into what they want to do here. Thailand entails great opportunities, with the ASEAN Economic Community, the new free trade agreements with China, India and Australia and its location as a hub for the entire South East Asia.”