New opportunities arise for Thai business as the process of creating a single economic market under the ASEAN Economic Community (AEC) will be completed this year. The objectives and process of regional economic integration is similar to the objectives and history of the European economic integration which culminated in the formation of the European Union.
Specifically, by the end of 2015, Thailand will be a part of the regional market with the population of 616 million people, an annual GDP growth of over 5%, and a market size of 2.3 trillion USD. Unified regional markets will imply the free flow of goods, services, labor and capital within the region. This process includes elimination of tariff and non-tariff barriers, facilitation of cooperation among member countries on fiscal and monetary issues and policies, customs modernization and liberalization, financial services and capital market liberalization, cooperation in food agriculture and forestry, infrastructural development, and the cooperation of governments in supporting small and medium enterprises (SME).
Indeed, supporting SME is one of the major components of the economic integration process. In August 2012, the first Joint Consultation between the ASEAN Economic Ministers and ASEAN SME Advisory Board was held. The ministers assured that their support for SME development in the region would be one of the top priorities towards 2015 and beyond.
ASEAN economic integration creates new business opportunities for potential investors in Thailand as it implies enhanced competitiveness of ASEAN member economies on the global scale, especially with China and India. Foreign direct investment will likely increase as foreign investors will start filling out market niches which are expected to become promising due to the larger market size and increased demand.
A larger market size creates opportunity for Thai businesses to increase sales and generate higher revenues, however, unless Thai business remains competitive by providing high quality goods and services for their consumers, it will forego these new opportunities.
Drastic economic changes like the ASEAN regional economic integration always creates both losers and winners. The winners are the ones who use their new opportunities wisely by managing to objectively evaluate comparative advantages they have over others and then using those advantages. As VisanuVongsinsirikul, director of the Dhurakij Pundit University’s ASEAN Community Preparation Centre (ACPC) said, “Thailand has advantages over other ASEAN countries in terms of geographical features, weather, races and cost of living. The question is how we can make use of the advantages we have?”
Thinking about this question and answering it carefully is currently at the core of successful business venture in Thailand. If you would like to find out more about this,subscribe for the newsletter right now for free and win the E-book “How to prepare your business for AEC.”