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Thailand Company Formation
Despite bouts of political instability which threaten inward investment, Thailand remains a popular if challenging location for international investors. Because of soaring inflation, the Economist Intelligence Unit has reduced its forecast of domestic consumption and investment growth for 2008 and 2009. The following is an overview of the Thai economy, and its implications for Thailand company formation:
1.
Economic growth is expected to average 4.5% to 5% annually from 2008 to 2009. That said, gross domestic product (GDP) growth for the first quarter of 2008 was 6% year-on-year, the fastest growth since 2006 and exceeding the 5.7% growth in the fourth quarter of 2007. The key risks for the Thai economy in 2008 include:

i) An escalation of tensions in the south of the country, which could derail efforts to boost foreign direct investment (FDI) in the country;

ii) A drastic slowdown in global economic growth, which would inevitably reduce export growth, one of the key drivers of the Thai economy;

iii) Political tensions or instability, which may erode investor confidence, and

iv) Persistence of high crude oil prices or a renewed hike, which would lead to high domestic retail oil prices and consequently spark higher inflation. 
3.
Consumer price inflation is forecast to average 8.5% in 2008 due to high global food and fuel prices. In May 2008, inflation reached a decade-long peak of 7.6%.
3.
The Thai economy is dominated by export-orientated industries. Consequently, some investors choose Thailand company formation as a vehicle for an export-based manufacturing industry. Unfortunately, export revenue growth is expected to stall in 2008/2009, while demand for imports will increase. This will negatively affect Thailand’s current account position.
4.
In 2007, foreign direct investment (FDI) flows reached US$15 billion. Despite political instability, the value of investment projects approved by the Board of Investment rose 10% year-on-year in the first four months of 2008. To encourage private investment, new laws were revealed in 2008, introducing tax cuts for small and medium enterprises, relief in property transactions and tax benefits for firms listed on the stock exchange. 
5.
Manufacturing and the service sectors (including finance, education and tourism) are the two main contributors to Thailand’s GDP, at 39% and 37.9% respectively in 2007. However, trade and agriculture are still significant sectors. The majority of the GDP contribution is reliant on the export-oriented manufacturing of computers, electronics, vehicles and parts.
6.
The Thai government aims to attract investment in 6 key sectors these have been prioritised as the key to the country's development. These include i) agriculture and agro-industry ii) alternative energy iii) automotive iv) electronics and ICT v) fashion and vi) value-added services (including entertainment, healthcare and tourism). Consequently, an increasing number of investors consider Thailand company formation to conduct these activities, which may be eligible for government incentives including tax breaks. Thailand Board of Investment (BoI) is the government body responsible for awarding incentives to encourage Thailand company formation.
7.
The challenges of Thailand company formation and doing business in Thailand are highlighted in the Heritage Organization’s 2008 Index of Economic Freedom, in which Thailand ranks just 54th in terms of investment freedom. That said, Thailand ranks a surprisingly healthy 13th in the world in the 2008 Doing Business Survey by the World Bank. The survey measures factors including business start up procedures, time, cost and minimum capital required to start a business. Most international entrepreneurs engage the services of a professional Firm to handle all Thailand company formation formalities.
Other Information
Refer to the following links to read more about Thailand company formation:

Contact Us
For more information on Thailand Company Formation, purchase our Asia Business Setup book. Alternatively, contact email@healyconsultants.com or call us in Singapore (+65) 6735 0120.
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