2002 Investment Climate Statement for Thailand
The Royal Thai Government (RTG) has long maintained an open, market-oriented economy and encouraged foreign direct investment as a means of promoting economic development, employment, and technology transfer. Thailand welcomes investment from all countries and seeks to avoid dependence on any one country.

Thailand 's economic situation remains dominated by its attempts to recover from the 1997-98 Asian Financial Crisis and its aftermath. Pledging to spur economic recovery through a revival in domestic economic capacity and demand, a new government led by Prime Minister Thaksin Shinawatra took office in February 2001. Despite the new government's sometimes-nationalistic rhetoric and emphasis on domestic sources of economic growth, Thailand remains committed to economic reform and an open investment climate. The Thaksin government espouses a "dual track" development approach that combines building domestic economic capacity with facilitation of foreign trade and investment.

In the wake of the Asian Financial Crisis, the RTG embarked on an international Monetary Fund (IMF)-sponsored economic reform program designed in part to foster a more competitive and transparent climate for foreign investors. Many aspects of the reform measures enacted after the crisis were controversial, and were resisted strongly by the political opposition and other powerful elements of Thai society. Despite inconsistent political will for reform, weak bureaucratic implementation of some measures, and a change in government, the reform process continues to move ahead.

Crippled by a huge bad debt burden, the financial sector remains a primary focus of the RTG reform program. Legislation establishing a new bankruptcy court, reforming bankruptcy and foreclosure procedures, and allowing creditors to pursue payment from loan guarantors was enacted in 1999. Other 1999 reforms include amendments to the Land Code, Condominium Act, and the Property Leasing Act, all of which will liberalize restrictions on property ownership by non-Thais.

Replacing the 1972 National Executive Council Announcement Number 281, otherwise known as the Alien Business Law, the Alien Business Act of 1999 governs most investment activity by non-U.S. nationals, opens additional business sectors to foreign investment, and increases maximum ownership stakes permitted in some sectors above the standard 49 percent limitation.

Economy overview
In 1997/98, the Thai economy was in a deep recession as a result of the severe financial problems faced by many Thai firms, particularly banks and finance companies. In the early 1990s, Thailand liberalized financial inflows; banks and other firms borrowed in dollars and did not hedge their positions because there was no perceived exchange rate risk.

These funds financed a property boom that began to taper off in the mid-1990s. In addition, export growth - previously a key driver of the Thai economy, collapsed in 1996, resulting in growing doubts that the Bank of Thailand could maintain the Baht's peg to the dollar.

The Bank mounted an expensive defense of the exchange rate that nearly depleted foreign exchange reserves, then decided to float the exchange rate, triggering a sharp increase in foreign liabilities that cash-strapped Thai firms were already having trouble repaying.

In August 1997, the government headed by Prime Minister Chawalit signed an agreement with the IMF for access to a US$14 billion facility to supplement foreign exchange reserves and restore financial market stability. Chawalit resigned in November 1997, however, under pressure for lacking a coherent approach to managing the IMF program and the financial crisis. Democratic Party leader Chuan Likphai formed a seven-party coalition government and closely adhered to the IMF program, tentatively re-establishing financial stability by February 1998.

An economic turnaround requires rescheduling the large short-term foreign liabilities of Thai firms, restoring high rates of export growth to finance foreign liabilities, and extensively recapitalizing the banking system.

Thailand is aggressively promoting tourism, textiles and garments, agricultural processing, beverages, tobacco, cement, light manufacturing, such as jewelry, electric appliances and components, computers and parts, integrated circuits, furniture, plastics; world's second-largest tungsten producer and third-largest tin producer.