Thailand, translated into English means "Land of the Free". It is located in Southeast Asia, positioned between Burma, Laos, and Cambodia and borders the Andaman Sea and Gulf of Thailand. Thailand covers an area just over 510 thousand square kilometers which is a little over twice the size of Wyoming. It is considered the 20th largest country in the world, with a population just under 67 million. Of this population, 75% are Thai and about 14% are of Chinese origin and almost all of Thailand's residents are Buddhist (94.6%). (CIA - The World Factbook -- Thailand, 2009)
It is believed that the original Thais settled in the Southeast Asia region from southern China around 10 A.D. Until the 11th or 12th century, Thailand, (referred to as Siam until 1939) was ruled by the Khmers. However in 1238, two Thai chiefs revolted against the Khmer control and formed the first independent Thai kingdom. The Kingdom of Thailand was unified in the 14th century and Ayutthaya was established as the capital. It remained the capital until it was invaded in 1767 and destroyed by the Burmese empire. Thereafter, the capital was moved to Bangkok, where it still remains today. In the years that followed, Thailand was able to gradually create a democratic form of government and in 1932 a constitutional monarchy was established as a result of a bloodless revolution. The slow growth of democracy was due mainly to the strong military presence and the military's ability to influence the politics in Thailand. (Thailand History | iExplore, 2009)
While Thailand is the only Southeast Asian country that has never been colonized by a European power it is still a country that has been heavily dependent on the Western world throughout the course of history. During the outbreak of World War I, Thailand remained neutral and even maintained good relations with Germany. However King Vajiravudh, the monarch at the time, believed that joining forces with the Allied troops would give Thailand "an excellent opportunity for us to gain equality with other nations." Despite the uncertainties of many members of the Royal government, Vajiravudh declared war on Germany and Austria-Hungry on July 22, 1917. Thailand later became a participant in the post-war treaties at the Versailles Peace Conference and was also a founding member in the League of Nations. (Stearn, 2009)
World War II presented a different situation for Thailand. When sporadic fighting between the Thai's and the French broke out in early 1941, Japan recognized an opportunity to unify with Thailand. Under pressure from Japan, Thailand declared war on Britain and the United States; however, because the Thai ambassador in Washington refused to hand over the declaration, the United States refrained from declaring war on Thailand. Following, the loss of the Axis powers, Thailand signed an alliance with the United States and these two have kept a close relationship. With the threats of communist revolutions in neighboring countries, Thailand has used the support of the United States to minimize the expansion of communism in their region. (LePoer, 1987)
In July of 1997, the collapse of the Thai baht led to one of the largest financial crisis ever encountered in Asia. It was referred to as the Asian Crisis. Up until this point, Thailand had experienced a period of steady growth for over a decade. Similar to the stock market crash experienced by the United States in 1929, the economic success of Thailand may have been the leading the cause of Thailand's failures in 1997.
Thailand's government was blinded by their success in the early 1990's and refused to identify that problems were arising for their country. Because of their rapid growth, Thailand was able to attract substantial short-term capital inflows allowing their domestic banks to increase their abilities to give out loans. However, because of an inadequate banking system, weak corporate governance, and the lack of transparency in the financial sector, the allocation of these resources was inefficient which stimulated reckless investment decisions and caused the prices of assets to be unrealistically augmented. In addition to the influx of foreign funds, a crisis in the foreign exchange market was developing that Thailand was unable to identify. Thailand's government made the decision to float the baht which depreciated the baht more than 20 percent against the US dollar. Another important cause of the Asian Crisis was the weak export exchange experience by many countries in Asia during the mid-1990s. This can be attributed to the appreciation of the US dollar against the yen and China's devaluation of their Yuan. In addition, exporting decreased for Asian countries because of a significant loss in markets when the North American Free Trade Agreement (NAFTA) was established. (Aghevli, 1999)These underlying issues in Thailand caused the Thai baht to collapse in the summer of 1997. Many Asian countries were left vulnerable to the same demise. The IMF came to the aid of Thailand and various Asian countries hit by this crisis in August of 1997. On the condition that Thailand implement laws pertaining to their banking policies, the IMF would loan Thailand more than 17 billion dollars to aid in their recovery. By 2001 Thailand's economy had been fully restored and in 2003 the debt to the IMF was fully relinquished, four years ahead of schedule. (Aghevli, 1999)
Thailand's predominant economic model is one based on free-enterprise with their economy heavily dependent on the exports of their goods and services. Exporting alone made up over 70% of their GDP in 2008. Also, because of Thailand's abundant supply of rich land and diversity of natural resources such as; tin, rubber, natural gas, tungsten, tantalum, timber, lead, fish, and many more, Thailand has been able to build a reputable agriculture industry. About 42% of Thailand's population is employed in agriculture (CIA - The World Factbook -- Thailand, 2009). Rice is their most valuable crop and Thailand is number one exporter of rice in the world. However, because of the current economic crisis Thailand has been forced to find other means of growth for their economy. The manufacturing sector is now Thailand's most robust portion of their economy and contributes most to their growth. Technology intensive products such as electrical appliances, vehicles, and integrated circuits are Thailand's major exports. (Thailand Economy, 2009)
As a result of Thailand's well-developed economic infrastructure and its free enterprise mentality, Thailand was able to be one of East Asia's strongest performers between 2002 and 2004. The GPD growth rate was at an average of more than 6% (CIA - The World Factbook -- Thailand, 2009). However, the current economic crisis that has hit so many nations has hit Thailand as well. The economic situation taking place in North America, Asia, and Europe has also had significant consequences for Thailand due to the fact that a majority of Thailand's exports are sent to these markets. With the combination of political uncertainty and the global financial crisis, Thailand's economic growth and their current GDP was just under 5% in 2008 (The World in Figures: Countries, 2008).
The Next 4 Billion
According to a study done in 2004, of Thailand's population, only 10% were living below the national poverty line and only 1.26% of the population lives on less than a dollar a day. Thailand is significantly different from their Asian counterparts and these percentages are reflective in the BOP spending of Thailand. Thailand is one of five countries in Asia or Africa where spending by the mid-market segment exceeds that of the BOP. This is demonstrated in the discrepancies that exist in Thailand's market spending at the BOP in relation to other Asian countries. In the information and communication technology (ICT) market, Thailand's BOP population only accounts for 29% of the market share. This is a substantial drop from other Asian countries where the BOP population consists of over 89% of the ICT market. In addition, Health spending at the BOP in Thailand accounts for only 44% of the market, a significant difference from that of other Asian markets. Water spending also presents another difference in Thailand. Urban areas tend to dominate BOP water markets; however, in Thailand rural markets dominate BOP spending.
Traditional transportation spending in Asian BOP markets is significantly different in Asian countries from that of Thailand. BOP market spending in Thailand accounts for only 30% of the market, as opposed to every other measured Asian country that has a BOP spending greater that 60% in this market. While most Asian BOP transportation markets are bottom heavy, BOP transportation spending in Thailand is considerably top-heavy. Average transportation spending per year is in a BOP household is 601 dollars in Thailand, a significant increase in spending over other Asian countries.
In Asia, BOP housing spending controls the housing market, with an exception of Thailand of course, where a little more than 50% of the total housing spending is in the mid-market. BOP housing markets are substantially focused in the rural markets in Thailand with only 47% of the BOP making up the housing market.
The food market is an exceptionally large sector market for BOP consumers. BOP spenders in Thailand, however, only account for 67% of the food market, the only country in Asia with a BOP share less than 80%. (Hammond, Kramer, Katz, Tran, & Walker, 2007)
Thailand became the World Bank's 43rd member on May 3, 1949. In 1950, in an effort to assist Thailand in their post-war reconstruction of their railways, ports, and irrigation capabilities, the World Bank contributed their first loan to Thailand in the amount of 25 million dollars. In an effort to support Thailand's social and economic development the World Bank has lent Thailand more than 7 billion dollars and they have also received over 90 million in grants. Because of this contribution, Thailand's government was able to fund projects to provide housing and improve the sanitary conditions in Thailand's cities. In addition, the World Bank has contributed over 134 million dollars in credits to improve Thailand's educational system between 1966 and 1982. The borrowed funds were used to increase the amount of technical manpower, enhance the construction of schools and colleges, and improve the quality of education. Through the International Finance Corporation (IFC), a branch of the World Bank, manufacturers in Thailand have received almost 3 billion dollars. These loans assisted Thai manufacturers secure long-term credit, re-finance debt, upgrade their machines, expand their production lines, and import capital goods. The World Bank also came to aid Thailand in their recovery from the Asian Crisis donating 1.4 billion dollars of the 17.2 billion dollar economic rehabilitation package for Thailand. These loans were made to assist the Thai Government reorganize finance companies, aid in economic and financial modifications, and protect the underprivileged from the effects of the crisis. (World Bank, 2008)
On August 20, 1997, Thailand was approved by the IMF for a stand-by credit to support the Thai's government economic program for recovery after the Asian Crisis. The IMF identified that the depletion of foreign reserves had to be of main concern and lent Thailand a total of 16.7 billion dollars. The stand-by credit approved was over 505 percent of Thailand's quota of SDR, access to IMF financing, in the IMF. In order to accelerate the response given to Thailand, the IMF utilized the Emergency Financing Mechanism (EFM). These quick actions by the Thai government and the IMF are the leading causes why Thailand was successful in their recovery. (IMF Approves Stand-by Credit for Thailand, 1997)
Hofstede Culture Dimensions
According to Hofstede, Thailand has a power distance index of 64. Their score is lower than the Asian average of 71, which could explain why Thailand's BOP is not of the norm in comparison to other Asian countries. Thailand's ranking, however, is still indicative of a society that incurs a high level of inequality of power and wealth. Thailand displays this feature through the high esteem that is attributed to their royal members (Hofstede G. , 2009).
In addition to a high power distance, Thailand also obtained a high uncertainty avoidance score. This is indicative through their strict legal system and over conservative accounting standards (Hofstede G. , 2009).
Thailand scored a 20 on the individualism scale indicating a society that is extremely collectivist (Hofstede G. , 2009). This mentality is prevalent in most Asian cultures and is evident through a Thailand's predominately Buddhist following. Buddhist's recognize that individuals are part of a society and these individuals should make contributions that benefit the whole society (Changkhwanyuen, 2004).
On the masculinity scale, Thailand received a 34 indicating a society that is feminine in nature. Thailand's score is significantly smaller than the Asian average of 53 (Hofstede G. , 2009). The feminine nature of Thailand has been exhibited through their numerous bloodless revolutions that the country has encountered throughout the years. In addition, Thailand's less assertive nature is demonstrated through one of the countries favorite expressions, "mai pen rai," which translates into "never mind; it doesn't matter; everything will be all right".
Accounting Values based on Gray
According to Gray's hypothesis, Thailand should have an accounting system that displays statutory control, uniformity, conservatism, and secrecy.
Statutory control entails a society that prefers compliance with the laws and regulations imposed by regulators. Thailand's uniformity trait indicates that accountants are expected to enforce consistent practices among a variety of businesses. This strict compliance with laws and their uniform mentality is a result of Thailand's high uncertainty avoidance and power distance and low individualism scores. According to Gray's hypothesis, when factoring in Thailand's femininity mentality in addition to Hofstede's other cultural dimensions, an accounting system based off of conservatism and secrecy will be developed. Thailand's conservative attitude indicates that their accountants display a more cautious attitude when making measurements. This is to manage their uncertainty of future events. Additionally, because accountants in Thailand value secrecy, they will be not be very likely to disclose information related to the business to persons other than those closely associated with the management and financing of the business. (Chanchani, Willett, 2004)
Corruption Perception Index
With a score of 3.4, Thailand ranked 84 on the corruption perception index. This low score indicates that Thailand has a society of high corruption. An example of this perceived corruption in Thailand is indicated through the bribery system that is very prevalent in Thai culture. It is not uncommon for cops, city inspectors, and even high-ranking politicians to succumb to a bride by an individual hoping to slip past the laws and regulations of Thailand. While the Thai government is in the process of implementing more severe anti-corruption laws, it is very uncertain as to if these new rules will make a difference. (Winn, 2009)
Introduction to Thailand's Financial World
In today's highly technological global environment, it is arguable that no one country in its entirety, regardless of any distinguishing geographical isolating characteristics, is without outside financial influence. Likewise, the financial institutions which govern a nation are not without the influence of the local culture, traditions, values, and way of life of the people that occupy that nation and the country of Thailand is no exception.
The financial institutions, the methods of accounting, and the business sector of Thailand are all very unique. Influenced by its close ties to the United States and Western culture alike, Thailand has somewhat similar standards to U.S. GAAP. In correspondence with this, their accounting methodology and practice also incorporates that of International Financial Reporting Standards. Taking both their use of U.S. GAAP and IFRS into consideration, it is likewise important to note that Thai culture has added its own fingerprint of individuality to the financial world found within Thailand. Hence, it is these three separate influences which comprise Thailand's modern financial structure and foundation of doing business.
The Financial Culture - Gray, Hofstede, and Financial Behavior
In order to fully comprehend Thailand's financial structure it is first critical to recognize the societal values from which the accounting values were derived. According to Gray, Thailand's predicted financial behavior and characteristics would be "most influenced by the accounting values of statutory control, uniformity, conservatism, and secrecy" as it is considered an under-developed country. (Radebaugh & Gray, 1997)
Taking into account Hofstede's cultural analysis, Thailand has a high level of collectivism, power distance, uncertainty avoidance, and femininity (low masculinity). [i] (Hofstede G. , 1980) It is these characteristics, in turn, which spur financial behavioral trends unique to the region. In particular, these cultural and behavioral norms effect the Thai accounting in a generalized form in that the "Thai people are often far too modest and over conservative when forecasting" their financial positions, often "to the point of over-prudence." (Renaud, 2003)
The Accounting Authorities and Profession in Thailand
There are currently two governing bodies which control aspects related to accounting in Thailand for the purposes of fair representation and compliance. The "Institute of Certified Accountants" and the "Auditors in Thailand" are these two main governing bodies, the only exception of which is the extension of the "Board of Supervision of Auditing Practice" which is actually a branch of the government under the Ministry of Finance. The board oversees auditing standards and proposes new regulation, while the two governing entities license (with the exception of auditors) and oversee the accounting practitioners. (Renaud, 2003)
As previously mentioned, when examining the accounting and disclosure principles used in Thailand, one can most certainly see Western influence in the underlying practices. In particular, the Thai accounting profession use the accrual method of accounting and the historical cost principle when compiling financial statements. Equally important are the principles of consistency, prudence, matching revenue/expenses, and going-concern which are all incorporated and practiced by Thai accountants in a highly structured and rule based environment, given a few exceptions. Lastly, similar to U.S. GAAP and IFRS Thai accounting regulates that any departure from the established standards must be disclosed and explained in the foot notes of the financial statement. (Renaud, 2003) (Ernst & Young, 1996)
Thai Accounting Principles
In many ways Thai accounting appears to be comprised largely of a mix between U.S. GAAP and IFRS, with a slight twist involving interpretation after taking into account cultural trends and norms. Regardless, one can recognize and clearly distinguish the influence global business has had on Thailand's accounting standards.
The following is generalized listings of important accounting standards and methodology concerning commonly referenced accounting items and concerns. Each brief summary was based on local practice and research performed by Ernst & Young, with the intention that one should be aware and cautious when addressing each of these issues in Thailand:
Please Note: Italics indicate items which are more heavily influenced by IFRS
Inventory: Inventory is valued at lower of cost or market. Although the last-in, first-out (LIFO) method is allowed, first-in, first-out or average cost methods are more commonly used by businesses to determine inventory cost.
Fixed Assets: Fixed assets are generally carried at historical cost less accumulated depreciation. As an alternative to the above method, value determined by an independent appraiser is also allowed providing that the basis of valuation is fully disclosed in the accounts.
Interest Capitalization: Interest on borrowings for the acquisition of assets is capitalized as part of the cost of the related assets. However, only interest incurred before the assets are substantially completed is capitalized.
Improvements: Asset improvement costs are generally capitalized.
Depreciation: Allowed fixed assets depreciation methods include straight-line, sum-of-the-years'-digits, declining-balance, or unit-of-production. Straight-line method is most widely used. (U.S. uses MACRES for tax purposes)
Long-term Investments in Securities: Long-term investments in marketable securities must be stated at the lower of cost or market. Long-term investments in other securities are stated at cost. However, a provision must be made for any permanent decline in value of an investment.
Accounting for Income Taxes: In general, income tax payable is expensed in the same year that liabilities incur. Deferred tax accounting is used primarily by listed companies.
Leases: Both operating lease and finance lease methods are used for accounting purposes. However, all leases are treated as operating leases for tax purposes. In general, income derived from hire-purchase sales is recognized in the year the sale is made. But the interest element of the income is deferred and amortized to income when installments are due.
Consolidation: Only companies listed on the SET prepare consolidated financial statements. Accounts of reporting company and its subsidiary companies (reporting companies hold an equity interest of 50% or more) are consolidated. (Derived from a mix of U.S. and IFRS standards)
Foreign-Currency Translation: Foreign-currency transactions are translated into Thai Baht at the rates on the transaction dates. Foreign-currency assets and liabilities at year-end are translated at year-end rates. Foreign-exchange gains and losses are included on income Statements.
Land: Land is not depreciated.
(Ernst & Young, 1996)
As one can clearly see, Thai accounting principles incorporate a unique mix between U.S. GAAP and IFRS alike, but in some areas differ in unique ways from both sets of principles, usually deviating in a more conservative manner, indicative of Thai cultural influences.
Thailand's Conservative Accounting Nature
The following are few examples of what U.S. GAAP may deem as over conservatism, often stemming from the previously mentioned cultural influences unique to Thailand. The following information was comprised by Panwa Accounting, located in Bangkok, Thailand.
Juristic company or partnership should record expenses according to the regulation of accrued expenses or monthly accrual basis of expenses; any expenses incurred, though not yet paid, should be recorded as expenses. The expenses should be business related to show the actual status of financial statement. The recorded expenses should have supporting documents as evidence to prove that:
- The company / partnership is the payer.
- The expenses are actually paid (by having receipts). If the recipient could not provide a receipt, the company or partnership should provide a receipt form to be filled up and signed by the recipient.
Additionally, some expenses cannot be uses in tax computation; they are called "Un-deductible Expenses." But according to the principles of accounting, these have to be recorded to show the correct status of financial statement. Below are some examples of un-deductible expenses:
- Entertainment expenses that are not covered in ministerial regulations. If covered, they have to be more than 0.3% of the total income or the paid-in capital, whichever is larger.
- Tax penalty or penalty for criminal case
- Expenses that cannot be proved who is the recipient or expense that do not have any financial evidences.
- Expenses that do not involve business process
- Unreasonable high expenses, etc
(Panwa Accounting, Bangkok, Thailand)
The Revenue Code permits the use of varying depreciation rates according to the nature of the classes of assets which have the effect of depreciating the assets over periods that may be shorter than their estimated useful lives. These maximum depreciation rates are not mandatory; a company may use lower rates that approximate the estimated useful lives of the assets. But if a lower rate is used in the books of the accounts, the same rate must be used in the income tax return.
A statutory reserve of at least five percent of the annual net profits arising from the business must be appropriated by the company at each distribution of dividends until the reserve reaches at least 10 percent of the company's authorized capital.
Stock dividends are taxable as ordinary dividends and may be declared only if there is an approved increase in authorized capital. The law requires the authorized capital to be subscribed in full by the shareholders.
(Panwa Accounting, Bangkok, Thailand)
Outsourcing in Thailand
Many nations today are currently addressing the issue of offshore outsourcing. Thailand, similar to many counties, is also taking this issue into careful consideration. In fact, offshore outsourcing for many nations is what helps benefit Thailand, due to their numerous professionals with qualified accounting degrees seeking employment. Today, there are several accounting outsourcing companies established and thriving in the country already, many of which offer top-notch services and guaranteed high-quality work. The following is a brief self-description given by one accounting provider which specializes in solely offshore outsourced work.
"Professional Outsourcing Solutions Ltd. (POS) is a leading provider of accounting outsourcing in Thailand serving knowledge based financial and accounting support services to clients. We are consistently adding value for our clients by delivering world-class services and continuous cost savings for them. In response to customer demands, POS's management team can offer a level of service to meet your requirements efficiently at a low cost." [ii] (Profession Outsourcing Solutions Ltd.)
It is very interesting to see the capabilities that the instant transfer of information has enabled business to perform on a global scale. Professional Outsourcing Solutions Ltd. is only one example of a company taking advantage of modern technological opportunities.
The Future of Thai Accounting
Conclusively, Thai accounting principles, standards, and rules is comprised of a very unique blend of significant influences including outside financial standards, such as U.S. GAAP and IFRS, and the strong cultural heritage and conservative nature of the Thai people. It is this blend of influences which result in variations of accounting requirements which are often deemed as the causes of complexity and frustration on the behalf of outsiders who do business in Thailand.
However, regardless of these difficulties, Thailand's accounting system aims to conservatively and fairly represent financial information deemed for the benefit of its users, the people and investors, over that of its producers and the companies doing business. This outlook, which often is the goal for many other nations, such as the United States, is rarely ever as publicly emphasized as it is in Thailand. It is important to note however that large exceptions and deviations from this do exist, and corruption of officials seems to be a prevailing problem. Big business in Thailand is not exempt in this regard, and bribery, secrecy, extortion, and other various issues plague the financial system with regularity and frequency. However, regardless of whatever moral systemic problems may exist, Thailand nonetheless is and will remain a major player in the world market and business abroad.
Thailand's legal environment stems from the roots on the name of the country itself. Thai translates to free.
Thailand follows codes and there are no discovery procedures. This is similar to countries like, Germany, France, Italy, Switzerland, Japan, and Mexico. The legal system in the United States and United Kingdom is different because the common law system is followed. Both systems however are rooted from Roman laws.
Only Thai nationals are allowed to hold positions in the legal profession. There was an Alien Working Act in 1972 that allowed foreign attorneys that were practice before then to continue giving legal advice (Tilleke & Gibbins, 2009).
Like the United States, Thailand has statutes of limitations. Depending on the crimes, these can change from one month to ten years. The state cannot be sued and there are no such things at liquidated damages and punitive damages.
The Court System
Thailand has a sophisticated court system that is different than that in the United States, but similar is some aspects.
Thailand's court system is broken into four different types of courts, Military, Administrative, Constitutional, and Courts of Justice (Tilleke & Gibbins, 2009). The Courts of Justice are the most similar to the common courts in the United States. The system is setup that so that there are three levels: the lower court and two appellate levels. Most of the trials take place in the lower court and then if needed proceed up to the appellate levels (Tilleke & Gibbins, 2009).
The lower court, Courts of First Instance, is broken into different types as seen in Table 1.There are no juries in Thailand's court system. All decisions are made by judges. The number of judges that will oversee and decide on a case vary with complexity and severity.
On a world scale, it is important that Thailand has Labor and Intellectual Property and International Trade courts, since that seems to be a problem especially between Asia and the Western World.
Like the United States, Thailand has a Supreme Court called the Dika Court. The court is located in Bangkok and receives appeals on questions of law and questions of fact from the Court of Appeals. Most of the Dika Court cases are from the specialized court. Differing from the United States, Thailand has 80 to 90 justices in there Supreme Court and for important cases need at least half of the justices to agree (Tilleke & Gibbins, 2009).
Intellectual Property and International Trade
Thailand is in need of increased Intellectual Property (IP) laws. Counterfeiting and infringement are major problems not necessarily for the Thai people, but for the foreign owners of the IP. In regards to computer software, there are no laws that protect the original owner of the software.
In 2000, the Marks systems was adapted providing legal definitions and procedures in regards to trademarks, service marks, certification marks, and collective marks. People that wanted to initially trade mark "well-known" were accepted until August 2005. Those people had to prove that those "well-known" marks were theirs (Tilleke & Gibbins, 2009).
Thailand's labor laws are similar to those in the United States with many of the laws protecting the employees from the employer. The labor laws address, amount of time worked, child and female regulations, and vacation time.
Employees cannot exceed 8 hours of work in a day or 48 hours in a week. If the employee works more than the 48 hours, they are entitled to overtime which is compensated by law at 1.5 times the hourly rate. Resting throughout the day is important as well and for every 5 hours work, the employee must get at least 1 hour "rest period."
Children under the age of 15 are not allowed to work in Thailand. Labor inspections must be notified of all children under the age of 18 that are currently employed. Like the United States there are special time limits and work hours that is placed on minors. In regards to females, Thai employers cannot terminate due to pregnancy.
Like most governments, Thailand taxes it employees based on percentages of their income. Thai works can expect that 12%-25% will be taken out for Provident, Welfare, and Social Security, which are for the most part the same in the United States.
Thailand allows its national born citizens to buy land from the Kingdom. There are strict laws about aliens owning property in the country. Even businesses must be 51% Thai owned before they can own land. There is an exception for foreign owned business that received special privileges. Like most laws, the property law seems to have exceptions that allow the law to be bent.
Land and buildings are considered different in the eyes of Thai law. Foreign businesses are free to own buildings, but not the law on which the building is located (Tilleke & Gibbins, 2009).
Problems in Thailand
Corruption is a major problem within Thailand. Charnchai Charuvastr, the president and CEO of the Thai Institute of Directors Associations (IOD) blames the corruption on political instability. Studies from the National Anti-Corruption Commission (NACC) found that Thailand has not improved on the corrupt levels in the last five years. The World Bank found six indicators in between 25-50 where 0 is most corrupt and 100 is least corrupt (Chudasri, 2009).
Bribes and corruption go together and Thailand is no exception. As seen in Table 2, the amount of money per bribe has increased significantly over the past 6 years.
Thailand's history is full of protests and coups. In recent history, many of the conflicts arise due to former Prime Minister Thaksin Shinawatra. There are two conflicting groups in Thailand and they both wear a certain colored shirts: yellow and red. The yellow shirts are for the People's Alliance for Democracy and the red ones for the Democracy against Dictatorship. Shirts colors have a lot of political meaning behind them in Thailand. Thaksin was ousted from power in a 2006 coup (The New York Times, 2009) and the red shirts are supporters. Yellows shirts honor the king of Thailand, King Bhumibol Adulyadej. Protests have been a common happening in Thailand since the coup in 2006 and are still not resolved today.
Impact of Globalization
Like most other countries entering in the current global market, Thailand is changing. Almost 200 years before North American was discovered by Europe, Thailand has been trading internationally. Thailand started as a self-sufficiency economy only exporting their surpluses and imported more crafts, just as silk, cloth, and guns (Pupphavesa, 2002, p. 3). Thailand continued to be a trader on the global market and in the 1960's 5-year plans to keep develop the country even further.
Through the past few decades, the globalization has also improved the quality of life. Adult illiteracy was cut in half from 10.7% to 4.7% during 1983-1999 (Pupphavesa, 2002, p. 18). Healthcare services and facilities were doubled in the 1990's. Transportation also improved in the 1990's. In 1990, Thailand only had 55% of the roads paved, while in 2000 Thailand had 98% (World Bank, 2008).
Even though the quality of life has increased, many social aspects of the country may be changing for the worse. Thai is the official language of Thailand and has many different dialects (Wikipedia). However, it is predicted that in the next 50-100 years, at least 14 of the country's 70 languages could die out (Min, 2006). The Kasong and Samre languages are thought to be beyond redemption with only 10 elders speaking it. Many of these less popular languages are only spoken by small villages in more remote areas, but as they become more connected with the rest of Thailand, it is necessary for the common language. Suwilai Premsrirat, director of the Institute of Language and Culture for Rural Development at Mahidol University of Bangkok, argues, "People might say that this is a natural process, but it is not. Globalization makes these things happen very fast. Like the loss of biodiversity, the loss of language is happening at an alarming rate. (Min, 2006)"
The income gap is another problem in Thailand and globalization has only increased it over the last decade. Globalization worsen the income distribution by channeling it to the to higher income families. This in return has created "education inequality, unequal credit accessibility, and market concentrations." (Pupphavesa, 2002, p. 18).
The sudden increase of globalization in the late 1980's and 1990's created an economy crisis in Thailand. In 1997, an economic boom in Thailand ended causing the economy to crash. Many of the family businesses of earlier decades had become big corporations with little transparency and disclosures (Pupphavesa, 2002, p. 22). These big corporations then had close ties to government officials, making the Thai economy more corrupt and instable.
Tourism has also been a large factor in the development of Thailand. As global travel has become more popular, Thailand has been a destination for beach traveling and those wanting to see Asia.
The Bottom of the Pyramid
Like most developing countries, the Bottom of the Pyramid (BoP) theories can be applied in Thailand. However, Thailand has a significant mid-market population that changes the BoP theories slightly (Hammond, Kramer, Katz, Tran, & Walker, 2007). The government has reached out to the lower income and rural areas offer interest-free loans.
Impact of Others
Thailand's direct foreign invest has increased 80 times between 1985 and 2008 (World Bank, 2008). Countries in Europe, the United States, and Japan have been investing greatly into Thailand as a solution for their outsourcing.
The World Bank and IMF have also been involved with Thailand in the past. Thailand became a part of the World Bank in mid 1949 and in 1950; they received a 7 billion dollar loan from the World Bank. Thailand used this money to improve its infrastructure. Education has always been a measure for the World Bank, so the World Bank also gave Thailand 134 million for education in the 1960's. After the Asian economic crisis in the late 1990's, the World Bank gave Thailand an additional 1.4 billion dollars. IMF has had a smaller role in the financing of Thailand.
In cooperation with the World Bank, the Asia Foundation has been helping women get involved with the local governments. This can be difficult because people, especially women, can be illiterate and do not know how to vote. This program is called the Civic Participation in Local Governance (CPLG). The CPLG has also helped environmental problems in the northeast, dealing with water manage and hazardous industrial waste disposal (The Asia Foundation, 2009).
- Aghevli, B. B. (1999). The Asian Crisis: Causes and Remedies. Finance & Development: A quarterly magazine of the IMF , Volume 36, Number 2.
- Changkhwanyuen, P. (2004). BUDDHIST ANALYSIS OF CAPITALISM. The Chulalongkorn Journal of Buddhist Studies, Vol. 3.
- Chudasri, D. (2009, September 30). World Bank sees no progress on Thai corruption. Bangkok Post.
- CIA - The World Factbook -- Thailand. (2009). Retrieved November 24, 2009, from Welcome to the CIA Web Site Central Intelligence Agency: https://www.cia.gov/library/publications/the-world-factbook/geos/th.html
- Ernst & Young. (1996). Doing Business in Thailand: Ernst & Young's International Business Series. Ernst & Young International Ltd.
- Hammond, A. L., Kramer, W. J., Katz, R. S., Tran, J. T., & Walker, C. (2007). The Next 4 Billion. Washington D.C., United States of America.
- Hofstede, G. (1980). Culture's consequences: International differences in work related values. Thousand Oaks, CA: Sage Publications, Inc.
- Hofstede, G. (2009). Thailand Explained. Retrieved November 24, 2009, from Geert Hofstede: Cultural Deminsions: http://www.geert-hofstede.com/hofstede_thailand.shtml
- IMF Approves Stand-by Credit for Thailand. (1997, August 20). International Monetary Fund . Washington, D.C., United States of America.
- LePoer, B. L. (1987). Thailand - World War II. Retrieved December 3, 2009, from Country Studies.
- Min, L. L. (2006, October 23). Globalization: Saving Thailad's other languages - Arts & Leisure - International Herald Tribune. The New York Times , p. online.
- Pupphavesa, W. (2002). Globalization and social development in Thailand. Bangkok.
- Radebaugh, L. H., & Gray, S. J. (1997). International Accounting and Multinational Enterprises, Fourth Edition. Wiley & Sons, Inc.
- Renaud, P. (2003, August 27). Thai Business Visa. Accounting Standards in Thailand: A Better Understanding of what it Means , p. 5.
- Stearn, D. (2009). FirstWorldWar.com- A Multimedia History of World War One. Retrieved December 3, 2009, from Feature Articles - Thailand and the First World War: http://www.firstworldwar.com/features/thailand.htm
- Thailand Economy. (2009). Retrieved December 3, 2009, from Travel Document Systems: http://www.traveldocs.com/th/economy.htm
- Thailand History | iExplore. (2009). Retrieved 24 November, 2009, from Adventure Travel & World Travel | iExplore: http://www.iexplore.com/dmap/Thailand/History
- The Asia Foundation. (2009). Thailand. San Franciso.
- The New York Times. (2009, April 13). Thailand's "Colorful" Protesters. The New York Times.
- The World in Figures: Countries. (2008). The World in 2008: Economist Intelligence Unit , 110.
- Tilleke & Gibbins. (2009, August). Thailand Legal Basics. Retrieved December 2, 2009, from Tilleke & Gibbins: http://www.tginfo.com/
- Wikipedia. (n.d.). Thailand. Retrieved December 3, 2009, from Wikipedia: en.wikipedia.org/wiki/Thailand
- Winn, P. (2009, 24 November). Thailand Corruption, Chicago Politics, Blagojevich. Retrieved December 6, 2009, from GlobalPost: http://www.globalpost.com/dispatch/thailand/091119/thailands-anti-corruption-war-pressess
- World Bank. (2008). Millennium Development Goals.