Meeting with H E Dr Surakiart Sathirathai Hon'ble Minister of Foreign Affairs - Thailand
July 13, 2001

Address by Address by H E Dr. Surakiart Sathirathai Hon'ble Minister of Foreign Affairs - Thailand

Distinguished Members of the FICCI,
Ladies and Gentlemen,

I am indeed honoured to be invited by the Federation of Indian Chamber of Commerce and Industry to address this distinguished gathering of leading businessmen in trade and industry of India. I also appreciate the commendable efforts of the FICCI in providing a forum for interaction between the public officials and members of the private sector. It is gratifying that the FICCI has played a constructive role in promoting trade and investment activities between our two countries.

Thailand and India have long enjoyed close and cordial ties. Throughout these years, our warm friendship has flourished and our relations expanded covering wide areas of cooperation. India shares a common border with ASEAN, and shares a common ocean with Thailand, namely the Indian Ocean. Our geographical proximity and historical cultural ties continue to bind our two countries and peoples. In this spirit of friendship, the Thai Government is actively pursuing the "Look West Policy" with a view to enhancing cordial relations and promoting constructive cooperation with India and South Asia. Likewise, I am encouraged by India's "Look East Policy" towards countries in my region which include Thailand. India is, therefore, high on our list of potential partners in terms of trade and investment as both countries have much to offer one another.

This year will be a historic year for exchange of visits, starting with myself choosing India as the first South Asian country to visit upon assuming my duties as Foreign Minister in February this year. My Prime Minister will pay an official visit to India sometime in November. The most important is that Her Majesty the Queen will represent His Majesty the King to pay a State Visit to India in February 2002. This is a clear manifestation of the importance Thailand attaches to our relations with India. During this visit, I had very constructive discussions on multilateral and bilateral cooperation with high-ranking dignitaries of India, significantly H.E. President Narayanan, H.E. Prime Minister Vajpayee, and Foreign Minister Singh. Various issues that were discussed will open up more opportunities for an even closer and productive cooperation.

Indeed, the level of enthusiasm and activities undertaken by both thai and Indian businessmen is testimony to our determination to expand bilateral cooperation for our mutual benefit. Foreign and Defense Minister Singh and I have agreed that we should set the target for bilateral trade volume of 2 billion USD within three years. To achieve this, we have agreed that a study for a bilateral free trade agreement (FTA) should be contemplated. I have also proposed an account trade or counter purchase system where payment in dollars is needed only for periodic net settlement. I also proposed to your leaders that since Thailand and Vietnam have already entered into a rice pool arrangement, namely cooperation on rice exports thus avoiding price undercutting, we would like to invite India to join us which may develop into an Organization of Rice Exporting Countries (OREC). Such arrangement will benefit our farmers significantly because their income will increase and be more stable.

In the area of investment, I will be signing, this afternoon, the Proces-Verbal of the Exchange of the Instrument of Ratification of the Agreement between Thailand and India for the Promotion and Protection of Investments. The Agreement will serve as an effective mechanism to help expand our bilateral economic cooperation. I am also convinced that, with our efforts and resources, bilateral cooperation in potential areas such as computer and computer software, information technology, agro-industry, construction and tourism can be intensified. The economic benefits derived from our partnership in these areas will contribute to enhancing the Thai-indo economic cooperation and partnership.

We attached priority to IT as another promising area of bilateral cooperation. India is well recognized as being the "Silicon Valley of the East". Given the Indian expertise and knowledge in the field of software technology and the Thai strength in the industrial sector of electronics and computer software, we can establish a partnership in this area. I hope that through these productive consultations, we will obtain concrete results which will enable both sides to increase cooperation in the spirit of partnership.

Distinguished Guests,

My presence here today is also timely, for I can elaborate the main thrust of the policies of the new Thai administration which assumed office in February this year. In particular, I wish to reassure you of the political and economic environment which is conducive to the expansion of your business interests and activities in Thailand and the region.

The present Thai Government is the first administration elected under the provisions of the new Constitution, known to many Thais as the "People's Constitution". It is also the first time that a single party has won a majority in Parliament, capturing firm popular support across the nation. We intend to meet public expectations in political reform, economic progress and social development.

We are in a post crisis management. This management forms the basis of our economic platform and an integral part of Thai foreign policy. Our economic-led diplomacy will, therefore, need to correspond to the recovery process through market diversification, investment promotion, and human resources development.

Although the global economy is slowing down, the Thai economy is expected to register positive growth of 1.8 percent. Our trade balance for the first quarter of this year has a surplus of 66 million US dollars. Our current account enjoys a surplus of 1.4 billion US dollars whilst our balance of payments is also still in surplus. However, the Thai Government deems it necessary to promote domestic demand and to strengthen our grassroots economy in order to ensure the continuation of our economic recovery. We believe that the Government could serve as an effective agent of change in injecting counter-cyclical and productive fiscal stimulus that would keep our economy healthy.

Despite economic stimulation policy, the Thai Government is still pursuing sound and prudent macroeconomic policy. Our Central Bank Governor has already declared that maintaining the stability of our currency and our foreign reserves are the pinnacles of his priorities. Government spendings will focus on job and income creation. The balance between economic stimulus package and macroeconomic discipline is the core of our economic policy platform.

Distinguished Guests,

Thailand will continue her open door policy to foreign investment. We continue to be investment friendly to foreign investors and to continue the liberalization process. In fact, we are one of the very few countries, if not the only one, which has liberalized more than our schedule of commitment in the WTO. We look to your cooperation in restructuring the economy.

The Thai Government aims to generate and reinvigorate the country's economic momentum, as well as provide a firm foundation for sustained and balanced economic growth, through a two-prong approach, by:

1) redressing the supply side of economic stimulation equation in order to enhance the competitiveness of our real sectors, particularly the banking, corporate and export sectors; and

2) stimulating the demand side through poverty reduction and income creation at the grassroots level.

Our immediate tasks involve the restructuring of our banking, corporate and government sectors in a comprehensive manner. The financial sector is being reinvigorated through the establishment of the Thai Asset Management Corporation (TAMC), which is expected to start its operation in August this year. With the high majority in the House of Parliament, the Government managed to get the Government decree adopted quickly and smoothly. The TAMC is invested with special legal powers to fast-track the bad-debt clearance and to speed up debt restructuring. It is the first time that foreclosure law is incorporated into Thai law, i.e. its application to loans and assets under the TAMC. Our non-performing loans (NPL) currently stands at approximately 1.2 trillion baht or 20 percent of our total loans. The TAMC will reduce the country's NPL dramatically in order to stimulate credit extension and banking activities.

At the same time, the corporate "real" sector is being restructured through the development of longer-term sources of capital and debt restructuring. We hope to attract long-term portfolio investments in the stock and capital markets. Last month, the Thai cabinet approved three financial bills on equity market development, bond market development, and market infrastructure. These measures will help reinvigorate the Stock Exchange of Thailand through tax incentives and increasing liquidity. In addition, a new trading instrument has been established known as a Non-Voting Depository Receipt - NVDR to stimulate trading activities in the Stock market for institutional investors who previously had been barred from the existing Thai Trust Fund. The only difference between investing in the NVDR and the company's shares is the voting right. Unlike ordinary shareholders, NVDR holders cannot be involved in the company's decision-makings.

Our regulatory framework will be strengthened to enhance the quality of corporate governance. We are also fine tuning our business, trade and investment regulations, such as the foreign business and investment laws, to correspond to our long term development objectives while recognizing the need to promote and protect the interests of foreign investors and public shareholders. We hope to ensure accountability and transparency to combat corruption. Through our endeavours we expect corporations to be more mindful of international norms in business management. We hope to provide 'rational expectations" from our business practices for our foreign partners.

Distinguished Guests,

Although the crisis in Thailand has bottomed out and economic recovery is well under way, the Thai Government will not remain complacent. We are focusing on capacity-building for the local communities in order to minimize their vulnerability to the downside risks of globalization. We believe that Thailand should draw on the country's core strengths and potential, particularly at the grassroots level, to jump-start the economy, with the strength of the Bengal Tigers, and lay the foundation for self-sustaining economic development.

The Thai Government is now implementing long-term national development policies that are people-centered. First, the Government seeks to provide adequate access to credit for our farmers entrepreneurs and small-scale investors. We aim to stimulate human creativity and innovation at the grassroots level.

In this regard, the Government is implementing the Village and Urban Revolving Fund that would provide a locally managed fund of one million baht to each of the 70,000 villages in Thailand. The Government seeks to offer villages with the means to improve their income- earning capability. We have also established a micro-credit scheme known as the People's Bank which has just started its operation in lending to low-income people. We hope to reduce the dependence of household and small producers on high-rate financial sources that have proven to be a hurdle for poverty reduction.

Second, the Government will promote a "One Village One Product" scheme. Each community are being helped to develop, raise the value added content, as well as market their own local agricultural and handicrafts products or tourism services which are based on 'local ingenuity" and traditional indigenous expertise. The Government, as facilitator, will provide assistance and advice in terms of modern technology, new packaging standards, effective marketing and management techniques, if needed, to make these products attractive for both domestic and international markets.

Third, we are creating social opportunities for our people in health care and education. The Government is now in the process of providing nationwide health care, which is similar to a health insurance, at the cost of only 30 baht per visit. Human capital is being upgraded through reforms in the country's education system. We are preparing a generation of entrepreneurs who can respond effectively to the fast-changing, technology oriented global economy.

The Government plans to provide every village with Internet access and computers that rural citizens can use to further their education, develop new ideas as well as to increase their production efficiency. We hope to bridge the digital divide and create a knowledge-based society that will prepare Thailand and its people to adapt to new realities, to capitalize on the dynamics of globalization, and to be more competitive in the rapidly changing global economy.

Fourth, in order to enhance our international competitiveness, the Government aims to develop the Thai economy into a high-performance economy. Priority is attached to the development of sectors that we have unique advantages such as tourism, agro-business, automotive-related enterprises and electronics. We are promoting investment in these areas with emphasis on the use of more sophisticated technology and higher productivity. The desired goal of our national development strategy is to enhance qualitative productivity in order to increase our competitiveness.

We intend to increase our participation in international business and to benefit from the advancement of technology. As our small and medium size enterprises (SMEs) account for over 90 percent of Thailand's GDP, we are taking steps to enhance their competitiveness through capacity-building and stimulus measures. The Government has established the Bank for SMEs to provide adequate financial and more importantly R&D support. We hope to expand the country's productivity base, increase employment opportunity and generate income in order to sustain economic stability.

Fifth, in order to create more efficiency in our administration as well as boosting private investment, the Government will soon embark on ministerial and bureaucratic reforms in order to create more efficiency, transparency and accountability. The Prime Minister, with experiences in private sector management, has initiated several new management styles to the administration. We will also continue with the privatization of major state enterprises by restructuring their management and listing them in the Stock market. Foreign investors will be given the opportunity to invest in the listing of these enterprises.

Distinguished Guests,

As you lay down your corporate strategy, look to Thailand as Thailand plus. Thailand is the natural gateway for economic activities in Southeast Asia. Economic integration is being intensified within the region, known as ASEAN, under the framework of an ASEAN Free Trade Area or AFTA, comprising a market of half a billion people. Indeed, India is an active Dialogue Partner of ASEAN.

I have informed H.E. President Narayanan that Thailand supports ASEAN-India cooperation and the possibility of an ASEAN-India Summit. The various economic cooperative endeavours under this framework serve to enhance our mutual development strategies. Thailand recognizes India as a hub for forging business activities in the sub-continent of South Asia. Likewise, India can look at Thailand as a gateway to countries in the Greater Sub-Mekong region and ASEAN as a whole.

The pace of ASEAN economic integration depends on human resources development and capacity-building for the new members, namely Cambodia, Laos, Myanmar and Viet Nam (CLMV) which lie in the Mekong Sub-region. Thailand will host the Third ASEAN Mekong Basin Development Cooperation (AMBDC) Ministerial Meeting in October 2001 in the northern Province of Chiang Rai to discuss development projects for the CLMV countries. We encourage your participation in the Sub-region not only in the development programmes but in seizing the opportunities for trade, investment, economic and industrial development.

We are now in the process of building a second bridge across the Mekong River connecting Thailand and Laos. The second bridge, a crucial link in the "East-West Corridor", will connect Thailand and Laos on the Highway Route 9, leading to Viet Nam and to the deep sea port of Danang on the South China Sea coast. As proposed by Thailand, the Ministers of the three countries have agreed to discuss plans for the establishment of economic free zones, on transportation, on tourism management, on telecommunication linkages and on the development of the deep sea port to facilitate trade in goods and services.

We are cooperating with Cambodia to build a road from Thailand to Siem Riep, the home of one of the seven world wonders i.e Ankor Wat which will generate tourism business in the region. We have also signed a Memorandum of Understanding (MOU) with Cambodia to negotiate development in oil and gas in the overlapping area in the Gulf of Thailand. On the western side of Thailand, we will restart our cooperation with Myanmar on the road linking Thailand and Myanmar to the Andaman Sea. Foreign Minister Singh and I agreed that trilateral cooperation between India, Myanmar and Thailand should be created to discuss road linkages, infrastructure development and linkages between the western coast of Thailand, southern coast of Myanmar and Eastern coast of India.

Such trilateral cooperation will open up more business opportunities in trade, investment and financial fields.

Linkages between India and Southeast Asia are also being forged Projects are being undertaken in regional and sub-regional frameworks, such as the Indian Ocean Rim Association of Regional Cooperation (IOR-ARC), BIMST-EC and Mekong-Ganga Cooperation, to promote trade, investment, tourism, utilization of fishery resources, science and technology, and transportation linkages between the regions of South Asia and Southeast Asia.

The cooperative sub-regional frameworks between South Asia and Southeast Asia, and between Southeast Asia and East Asia could be linked to enhance Asia cooperation. Thailand has initiated the idea of an Asia Cooperation Dialogue (ACD) embracing countries of Asia. Such unprecedented venue for dialogue could serve as an informal consultative forum for Asian Foreign Ministers and sectoral Ministers. I have raised this initiative with the ASEAN colleagues, China, Republic of Korea, west Asian countries, some South Asian countries, and yesterday with your President, Prime Minister and Foreign Minister. Their responses have been positive and supportive. Thailand hopes to host the first Asian Foreign Ministers' meeting to exchange views in an informal manner on areas of mutual cooperation. I appreciate the suggestion by Foreign Minister Singh that a core group of 7 nations , or we can call it an Asian version of G-7, should be set up to prepare for such meeting. Of course, I have invited India to be one of us in that core group. We very much look forward to India's active participation in this evolving process, both the public and private sectors.

Distinguished Guests,

Thailand remains committed to an open and free economic regime. We are interested in working together with you in promoting trade, investment and services for our mutual gain and benefit. We encourage you to forge business partnerships with the Thai counterparts.

Indeed, my visit to India is a part of Thailand's commitment to pursue closer and a more comprehensive economic ties with India in the spirit of partnership. We regard you as a partner in the region. We want to get you more involved. The opportunities are there for us to seize and utilize for mutual growth and shared prosperity. Both Governments have now determined to move quickly towards an even closer cooperation in many fields. And today, I have witnessed the enthusiasm of the Indian private sector, through the distinguished members of the Federation of Indian Chamber of Commerce and Industry present at this function. My discussion with your Government during this visit and your active participation will bring a new exciting chapter of India-Thailand relationship. Dhanvad - thank you.