Moving Ahead with AEC: Opportunities and Challenges

August 30, 2012

2

Population and Economic Dynamism Drive Opportunities within AEC

Rank Country Population (Million)

1 China 1,343

2 India 1,205

3 ASEAN 609

4 European Union 401

5 United States 314

Population

Rank CountryGDP

(Trillion)

GDP

Growth %

1 European Union 15.7 1.6

2 United States 15.3 1.7

3 China 11.4 9.2

4 India 4.5 7.2

5 Japan 4.5 -0.7

6 Germany 3.1 3.1

7 Russia 2.4 4.3

8 Brazil 2.3 2.7

9 United Kingdom 2.3 0.7

10 France 2.2 1.7

ASEAN 2.2 4.4

GDP (2011)

3

มูลค่าการส่งออกของไทย

28,62554,045

44,33432,49040,15132,791

22.6% 22.7% 24.3%25.5%21.3% 21.3%

0

50,000

100,000

150,000

200,000

250,000

2007 2008 2009 2010 2011 2012 6M

Mio.USD

ASEAN (9) China Japan United States Euro area (15 ) Others

ASEAN Markets are Increasingly Important for Thai Products

Source: Information Technology and Communication Center, Office of the Permanent Secretary, Ministry of Commerce

4

Thailand: Intra-ASEAN Trading

สัดส่วนการส่งออกของประเทศไทยไปประเทศในกลุม่อาเซียน

0

1

2

3

4

5

6

7

8

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

6M

%

 Malaysia

 Singapore

 Indonesia Vietnam

 Philippines

 Cambodia Laos

 Burma

 Brunei

สัดส่วนการน าเข้าของประเทศไทยจากประเทศในกลุม่อาเซียน

0

1

2

3

4

5

6

7

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

6M

%

 Malaysia

 Singapore

 Indonesia

 Vietnam Laos

 Cambodia Burma

 Philippines

 Brunei

Export from Thailand Import to Thailand

Source: Information Technology and Communication Center, Office of the Permanent Secretary, Ministry of Commerce

5

ASEAN Countries’ Export Profile

Major Goods Export (Mio.USD)

1 2 3 4 5

Malaysia

Machinery and Transport Equipment Manufactured Goods

Mineral Fuels, Lubricants, etc.

Animal and Vegetable Oils and Fats Chemicals

90,941 37,878 33,066 17,558 13,027

Singapore

Electronic, Electrical

Equipment Fuels

Chemicals & Chemical

Products Manufactured Goods Food & Beverages

189,577 80,117 43,842 14,632 6,743

Thailand

Electronic, Electrical

Equipment

Motor Cars, Parts and

Accessories

Precious Stones and

Jewellery Rubber Fuels

26,903 17,712 11,652 7,896 7,797

Indonesia Petroleum Products Palm Oil

Electronic, Electrical

Equipment Rubber Minerals

46,765 16,312 10,373 9,373 8,148

VietnamTextile and Garments Crude Oil Marine Products Computer and Parts Wood and Wood Products

15,794 4,905 4,644 3,421 3,372

Philippines

Electronic, Electrical

Equipment Special Transactions Transportation Minerals Construction Materials

25,440 6,580 3,944 2,278 1,206

CambodiaTextile and Garments Marine Products N.M. N.M. N.M.

4,330 120

Brunei DarussalamCrude Oil LNG Methanol N.M. N.M.

4,740 4,200 100

MyanmarNatural Gas Wood and Wood Products Matpe Textile and Garments Marine Products

2,447 580 441 368 205

Laos Wood and Wood Products Electricity Textile and Garments Minerals Coffee

164 140 138 110 36

6

AEC: No Longer About Taxes and Tariffs

Country 2010 2013 2015 2017

Free Movement of Goods: All Import Tariffs to 0% to 5%

Original ASEAN members

Normal ItemsSensitive Items

All Members 0%All Members 0%

New ASEAN members

Normal ItemsSensitive Items

All Members 5%Vietnam 5%

All Members 0%Laos Myanmar 5% Cambodia 5%

Free Movement of Services: Increasing Foreign Ownership

PIS*LogisticsOthersBanks

70%Same51%25%

70%

2012: All up to 20 bank branches

70%

Qualified ASEAN banks

7

Thailand as a Major Transportation Hub

Source : Bangkok PostSource: Italian-Thai Development Co., Ltd.

8

Logistics: A Lot of Work Needed

Country 2007 2010 2012

Singapore 1 2 1

Hong Kong, China 8 13 2

Finland 15 12 3

Germany 3 1 4

Netherlands 2 4 5

Denmark 13 16 6

Belgium 12 9 7

Japan 6 7 8

United States 14 15 9

United Kingdom 9 8 10

Malaysia 27 29 29

Thailand 31 35 38

Philippines 65 44 52

Vietnam 53 53 53

Indonesia 43 75 59

Cambodia 81 129 101

Lao PDR 117 118 109

Myanmar 147 133 129

Logistics Performance Index Ranking

Source : World Bank Source: The National Economic and Social Development Board

Logistics Costs to GDP

5.87.1

4.9

7.2

5.2

7.2

7.3

3.1

6.6

2.5

6.7

2.7

6

1.6

1.4 1.31.3

8.2

0.4

0.30.4

0

2

4

6

8

10

12

14

16

18

Thailand United

States

Thailand United

States

Thailand United

States

Thailand

2008 2009 2010 2011

Pro

port

ion to G

DP

(%

)

Transportation Cost Inventory Holding Cost Logistic Administration Cost

9

Road-based Logistics is Not Going to Work

Transport of Thailand as of 2010

Source: Ministry of Transport Source : World Bank

Road

Rail

Coast

Ship

Plane

10

Country 2011-2012 2010-2011

Finland 1 1

Sweden 2 2

Switzerland 3 4

Singapore 4 5

Belgium 5 7

Denmark 6 3

Germany 7 19

Netherlands 8 10

Iceland 9 6

Taiwan,China 10 11

Malaysia 38 49

Brunei Darussalam 61 64

Thailand 62 59

Indonesia 69 66

Philippines 71 73

Vietnam 103 93

Cambodia 120 122

Higher Education and Training

2011-2012 rankings

Training Quality and English Proficiency

EF English Proficiency Index 2011 In Asia *

Source : World Economic Forum (WEF)

* Product of EF Education First, a global language training company, based on the results of over 2 million test takers from non-native English-speaking countries

Thailand

Source : World Economic Forum (WEF)

11

Increasing Obsession with College Degrees?

Source: Office of The Education Council, Ministry of Education

Graduates in 1997-2009

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Person

Vocational Certificate

Bachelor's Degree

12

Thai Banks Stand Ready to Assist

13

ASEAN Banks Across AEC

14

Concluding Thoughts

AEC2015 is an important milestone within ASEAN community, but it is not going to bring about major shift in how countries in the region connect with one another

For Thailand, the opening up and accelerating developmental pace of the “continental ASEAN” might be a much more important event in terms of national priority

Key challenges remain for Thailand, specifically logistics and education

Logistics are being discussed as part of various mega-project initiatives, but not the latter

Thai banks are well placed to service fellow Thai businesses, more for the “continental ASEAN” than the “islander ASEAN”