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Thailand is fast becoming a rich northern frontier for Australian business and a commanding gateway to the region’s economic powerhouses of India and China, as well as Indochina and the Greater Mekong sub-region.
“Thailand is one of Australia’s most important markets in Southeast Asia and both countries have longstanding and deep connections,” explains Michael Helleman, Austrade’s Senior Trade and Investment Commissioner Thailand.”
“Over 3,000 Australian companies export to Thailand, and around 200 maintain a physical in-country presence. Australia’s key goods exports to Thailand include gold, coal and natural gas. Thailand’s key exports to Australia are passenger and goods vehicles.”
Australia’s goods and services trade with Thailand in 2022:
Exports: A$8,995.7million
Imports: A$18,696.7 million
Total merchandise trade (exports + imports): $A27,692.4 million
Investment in Thailand: A$4,830 million
Investment from Thailand: A$10,370 million
More comprehensive trade data can be found here on the DFAT website
Bi-lateral Agreements
Thailand is Australia’s 11th largest trading partner, with the commercial relationship underpinned by the Thailand-Australia Free Trade Agreement (TAFTA). Since TAFTA’s entry into force on 1 January 2005, trade in goods has more than doubled.
To further promote trade and investment, and as a complement to TAFTA, on 17 November 2022, Australia and Thailand signed a Strategic Economic Cooperation Arrangement (SECA) Memorandum of Understanding (MOU) [PDF 118 KB].
Additionally, Australia and Thailand are parties to the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) and the Regional Comprehensive Economic Partnership Agreement (RCEP).
The Government’s recent strategy document released in September 2023, Australia’s Southeast Asia Economic Strategy to 2040 explains the importance of Thailand to Australia’s economy.
The new action plan is focused on raising awareness, removing blockages, building capability and enhancing trade and investment, especially across key sectors like agriculture & food, resources, green energy transition and education & skills.
Opportunities for Australian Exporters
Mr Helleman identifies several sectors Australian exporters should consider.
“As the world’s largest medical tourism market— the result of low-cost medical treatments and high-quality healthcare—Thailand also boasts business opportunities for healthcare service providers, with the Thai government offering various investment incentives for manufacturing of medicine and equipment,” says Mr Helleman.
Michael Helleman, Austrade Senior Trade & Investment Commissioner Thailand, speaking to senior representatives from 23 Australian education providers and 45 higher education institutions from six ASEAN countries participating in the ASEAN – Australia TNE Workshop held in Bangkok on 13th March 2023.
The food and beverage market in Thailand is a burgeoning sector, with the market value increasing by nearly seven per cent per year. Food categories performing particularly well include dairy products, wine and beer, nuts, fresh vegetables, seafood, beef, and bread and cakes.
“Since the TAFTA safeguard was lifted in 2021, there has been increased demand and opportunities for beef (chilled and frozen), both prime and secondary cuts, lamb, seafood, dairy products, horticulture (fresh produce), wine, non-alcoholic beverages and also packaged foods,” he explains.
Thailand is experiencing increasing demand for international foods, especially Australian, as disposable income increases. This is especially prevalent within the packaged food and beverage segment, where the emerging middle-class consumer base is keen to spend on small indulgences for premium categories like ice cream, chocolate, 100% fruit juices, coffee and crackers.
“Australian products are in high demand thanks to their perceptions as clean, healthy and high-quality. Specifically, this includes Australian meat, dairy, fruit and vegetables, and packaged products, including fruit juices, functional beverages, grain and cereal products, sweet spreads, pasta, chocolate, confectionery and ready-to-eat foods.
Mr Hellman says that it is important to note, that from October 2021, all food imported into Thailand requires a production certificate (such as HACCP, ISO, GMP) as per a new Ministry of Public Health Notification.
“This new requirement covers all food products, including uncooked meat, fresh fruits and vegetables. Previously, this requirement applied only to packaged food.”
Thailand is embracing digital technologies to innovate, create new businesses, and compete in a global market. It is expected this focus will help to strengthen the Thai economy as SMEs are digitally equipped and grow. The Thai government also has an ambitious goal of seeing the digital sector contribute at least 25 per cent of the country’s GDP.
“The value of Thailand’s digital industry in 2022 hit 2.6 trillion baht (A$110.8 billion), up 14 per cent from 2021, according to a joint survey and assessment regarding the status of the country’s digital industry in 2022 carried by the Digital Economy Promotion Agency (Depa) and the IMC Institute,” Mr Helleman continues.
“Australian expertise software and hardware development is highly regarded as companies in Thailand have become more selective and strategic in their digital adoption. Data centres and cloud service & digital connectivity businesses are tapping into major trends where global players are using technology to operate data centres in Thailand and service customers.”
The country’s digital industry includes five main sectors: software, hardware and smart devices, digital services, telecommunication, and digital content. The digital services industry showed the highest demand, driven by a growth in the value of fintech and health tech businesses in line with global trends.
Other emerging areas include the hardware and smart device sector which encompasses, computer peripherals, printers, storage, smart devices, robots and automation. Additionally, the animation industry grew 15 per cent last year, with its total value standing at 3.94 billion baht (A$167.9 million).
“Thailand serves as a significant source of contracts for animation, CG (computer graphics) and VFX (visual effects) projects,” Mr Helleman explains. “There are opportunities for Australia to collaborate in areas where Australia has strong capabilities covering user experience, digital content, and development design to fit in a global market and due to a shortage in a digitally talented workforce.’
A shortage of skills training in Thailand presents a valuable opportunity for Australian educational institutions, underscored by the strong perception in Thailand – and in many other Asian nations – that Australian education abroad is high quality.
Australia is top-of-mind for both English Language Intensive Courses for Overseas Students (ELICOS) and Vocational (VET) sectors due to the pricing and attractive working rights as international experiences are well regarded among schools, universities, and employers.
“Thailand is ranked number two in student enrolment numbers to Australia in Southeast Asia, followed by Philippines from January to September 2023.
“With ELICOS-educated students in high demand and a national focus to improve English language proficiency standards to help propel the country, opportunities continue to exist for teachers and education providers.”
Mr Helleman says that opportunities exist for teacher training as the Thai Government seeks international support to address the challenges of curriculum renovation, upskilling for pre-service teachers, proficiency, and efficacy of qualified teachers.
“Private education institutions are also focused on improving the quality of teaching by upgrading school teachers and universities to be able to teach other subjects in English. Additional opportunities exist in providing industry skills training in areas such as cyber security, data science, AI, and energy transition.
“Transnational education is the other area growing in demand post-COVID. This involves joint and dual degree programs delivered in cooperation between Thai and foreign universities for undergraduate students using a 2+2 model (two years in the home country & two years overseas) and or 3+1 model (three years in the home country & one year overseas).”
Similarities between Thailand and Australia’s military and training aircraft have generated opportunities for Australian firms, especially in areas where Australia is competitive such as aircraft maintenance, repair and overhaul (MRO) and parts supply.
“Other defence opportunities include niche products, services and technology associated with border protection; command, control and communications; repair maintenance and life extension; and infrastructure.
“Defence items imported from Australia into Thailand have included aircraft spare parts, naval vessel design and equipment, armoured protection systems, virtual reality (VR) solutions, land mine detectors and personnel protection.”
Emerging Opportunities
There are growing opportunities within the resources and energy sectors. The Thai Electricity market is a Single Buyer model, with State Utilities (buyers and distributors) responsible for ensuring power supply to its 71.6 million population and business sector.
At present, 63 per cent of total electricity generation comes from gas, with the remainder driven by coal 21per cent, biomass 9 per cent, solar 3 per cent, wind 2 per cent and hydro 2 per cent.
“With established industries undergoing a crucial phase of transformation to meet low carbon targets, opportunities exist for Australian businesses able to increase efficiency and the heating value of gas related power generation and pipelines.
“Providing flexible solutions to power systems to accommodate renewables into the grid system; EV charging behaviours, hybrid power and installation of smart metres nationwide are all areas of opportunity. This is also underpinned by the Thai government’s COP26 commitment to become carbon neutral by 2050 and have net zero GHG emissions by 2065.”
Advanced manufacturing and transport is also emerging as a lucrative sector for Australian exporters.
“Opportunities around Bio-Circular-Green (BCG) and Future Mobility is an increasing focus, having been a focus during APEC 2022 held in Thailand. The aim is to build an ecosystem where science, innovation and technology are applied to promote the efficient use of resources and sustainability.
“This would be complemented by diversifying demand for electric vehicles (EV), which is generated opportunities around the EV ecosystem including charging stations, mobile EV chargers, and EV maintenance and repair products.”
Challenges faced when exporting to Thailand
Thailand’s economic growth rate is slowing for 2023 and is expected to fall from an initial projection of 3.5 per cent to below 2 per cent. Mr Helleman notes that this may impact consumer spending in 2024.
Australian businesses also face strong competition from other countries, as Thailand has 14 Free Trade Agreements with 18 countries, as well as being a signatory to RCEP and AANZFTA agreements.
There are a number of cultural, political, and business etiquette factors to consider before entering the Thai market. Mr Helleman’s tips include:
Be punctual and wear formal clothing to business meetings. The way people present themselves correlates to professional standing.
It’s normal to have a social conversation before a Thai business meeting. Usual topics are family, age, hobbies and education.
While Thai is the official language and the business language, English is also widely spoken. However, most of the government authorities and legal documents use the Thai language, so it is recommended to have a professional translator to help you prepare, translate and examine the documents.
Many Thai people use LINE chat for both personal and business communication.
Austrade can help Australian companies familiarise themselves with local market conditions, as well as assist in developing export opportunities through a range of in-market and Australian-based services.
Austrade contact information
Michael Helleman
Senior Trade & Investment Commissioner Thailand
Esther Sun
Trade and Investment Commissioner Thailand
Australian Trade and Investment Commission (Austrade)
Email: [email protected]
Contact: 13 28 78
To learn more about how Austrade can help your business, visit austrade.gov.au
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