Thailand and the UK have formed a Joint Trade and Economic Committee to explore new opportunities to improve bilateral trade. The committee discussed partnerships in a variety of important sectors, including agriculture, financial services, healthcare, and the digital economy.
Thailand presents growing opportunities for British businesses in these sectors, especially as it is among four ASEAN countries predicted to have a GDP exceeding US$1 trillion by 2030. Through JETCO, Thailand and the UK are eager to restore bilateral trade to US$7 billion from the drop to US$5.5 billion in 2021.
The UK and Thailand formed the first Joint Economic and Trade Committee (JETCO) on June 21, 2022, to discuss and explore new opportunities for bilateral trade and to address trade barriers that impact businesses.
Representatives from both countries discussed partnerships in several areas, including the digital economy, agriculture, healthcare, and financial services. Over the last five years, Thai-UK trade has fallen from US$7 billion in 2017 to US$5.5 billion in 2021. The two sides are aiming to increase this back to US$7 billion. The UK was Thailand’s 22nd largest trade partner in 2021, accounting for one percent of total Thai trade. Meanwhile, Thailand was the UK’s 40th largest trade partner, accounting for just 0.4 percent of total UK trade.
Under JETCO, a Letter of Intent on Digital Cooperation was signed between Thailand’s Ministry of Digital Economy and Society and the UK’s Department for Digital, Culture, Media, and Sport. The letter aims to strengthen cooperation in the digital economy and harness a competitive digital economy.
According to a report by Google, Temasek, and Bain & Company, Thailand’s digital economy saw a gross merchandise value (GMV) of US$30 billion in 2021, an increase from US$20 billion in 2020. The industry is expected to have a GMV of US$56 billion by 2025, the third-largest in ASEAN behind Vietnam and Indonesia. Thailand saw some nine million new digital consumers since the start of the pandemic, with e-commerce being the main driver of the growth in its digital economy. The e-commerce sector is predicted to have a GMV of US$35 billion by 2025, up from US$21 billion in 2021.
Thailand and the UK will have annual future dialogues on issues that will advance agricultural trade relations. Market access and promoting policy exchange will be important areas of collaboration.
Agriculture is a very diverse and competitive sector in Thailand and has been a major part of the country’s early economic development, contributing to around eight percent of GDP. The country’s naturally fertile land combined with well-developed infrastructure provides a strong foundation for this sector, propelling both smallholder farmers and large agriculture companies to be at the forefront of global agri-business. Thailand is among one of the world’s largest exporters of rice, rubber, seafood, and sugar as well as a base for many multinational food manufacturing companies such as Mondelez International, Coca-Cola, and Danone. Thailand’s Office of Agricultural Economics reported that Thailand’s agricultural exports totaled 1.3 trillion baht (US$36.6 billion).
Thailand will be eager to collaborate with British businesses on tackling inefficiencies within the agriculture sector, such as the lack of modern technology and knowledge of modern farming techniques. The Thai government hopes to increase domestic production by ramping up these efforts.
Both countries will explore opportunities for the importation of healthcare products. Thailand’s healthcare is poised to be an essential economic driver in the long term. Virtually all of the country’s population is covered under universal healthcare, which was introduced in 2001 — one of only a few lower-middle-income countries to do so.
According to CEOWORLD Magazine, Thailand was ranked 13th in the world for its healthcare system, higher than Norway (15), New Zealand (16), Germany (17), Switzerland (18), and the United States (30). The UK was ranked 10th.
Further, the Thai government wants to push the country as a hub for medical tourism and medical device manufacturing. In 2019, before the pandemic, Thailand received over four million medical tourists, ranking first among medical tourism destinations worldwide. Medical tourists chose Thailand for its low-cost but high-quality medical treatments, especially for procedures, such as plastic surgeries, cardiac, orthopedic, infertility treatment, and eye surgeries, among others.
Thailand saw over US$5 billion worth of medical device exports in 2020, which is nearly double the number of imports at US$2.6 billion. The leading subsectors include:
Thailand’s Central Bank intends to deepen its engagement with the UK in areas of financial innovation, bolster corporate governance, promote sustainable finance, and boost accounting standards. In 2020, the British government formed a strategic partnership with the Bank of Thailand to support economic recovery and financial services.
The UK’s financial services industry, the third-largest in the OECD in 2020, contributed £164 billion (US$201 billion), or 8.6 percent of total economic output. The sector was the largest in London.
Thailand has made substantial progress in developing its financial sector, particularly in improving standards and restoring the health of its financial system since the 1997 Asian financial crisis. The country reformed its banking sector by closing 56 financial firms and promoting the nationalization and mergers of small and medium banks with foreign banks.
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ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in Singapore, Hanoi, Ho Chi Minh City, and Da Nang in Vietnam, Munich, and Essen in Germany, Boston, and Salt Lake City in the United States, Milan, Conegliano, and Udine in Italy, in addition to Jakarta, and Batam in Indonesia. We also have partner firms in Malaysia, Bangladesh, the Philippines, and Thailand as well as our practices in China and India. Please contact us at asia@dezshira.com or visit our website at www.dezshira.com.
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