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Thailand Economic Structure

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Tips:Economic StructureAgriculture, forestry, and fishingDevelopments in agriculture since the 1960s have supported Thailand'
 Economic Structure

Agriculture, forestry, and fishing

Developments in agriculture since the 1960s have supported Thailand's transition to an industrialised economy. As recently as 1980, agriculture represented 70% of employment. In 2008 agriculture, forestry, and fishing contributed only 8.4% percent to GDP and even in rural areas farm jobs represent only half of employment. Thailand is the world's leading exporter of rice and a major exporter of shrimp. Other crops include coconuts, corn, rubber, soybeans, sugarcane and tapioca.

In 1985 Thailand officially designated 25 percent of the nation's land area for protected forests and 15 percent for timber production. Protected forests have been set aside for conservation and recreation, while production forests are available for the forestry industry. Between 1992 and 2001, exports of logs and sawn timber increased from 50,000 cubic meters to 2 million cubic meters per year.

The regional avian flu outbreak led to a contraction of Thailand's agricultural sector during 2004 and the tsunami disaster of 26 December 2004, devastated the west coast fisheries industry. In 2005 and 2006 agricultural GDP was stated to have contracted by 10 percent.

Thailand is the world's second largest exporter of gypsum after Canada, even though government policy limits gypsum exports to prevent price cuts. In 2003 Thailand produced more than 40 types of minerals with an annual value of about US$740 million. However, more than 80 percent of these minerals were consumed domestically.

In September 2003, in order to encourage foreign investment in the mining industry, the government relaxed severe restrictions on mining by foreign companies and reduced mineral royalties payable to the state.

Industry and manufacturing

Production line workers at a factory in Chachoengsao.

In 2007 industry contributed 43.9% of gross domestic product (GDP) but employed only 14% of the workforce. This proportion is the opposite of the one applying to agriculture. Industry expanded at an average annual rate of 3.4 percent during the 1995–2005 period. The most important subsector of industry is manufacturing, which accounted for 34.5 percent of GDP in 2004.

Thailand is becoming a center of automobile manufacturing for the Association of Southeast Asian Nations (ASEAN) market. By 2004 automobile production had reached 930,000 units, more than twice as much as in 2001. Two automakers active in Thailand are Toyota and Ford. The expansion of the automotive industry has led to a boom in domestic steel production.

Thailand's electronics industry faces competition from Malaysia and Singapore, while its textile industry faces competition from China and Vietnam.[50] But now according to the World Journal reported that the Thai Textile Association president Chung SHA said that although the global economic downturn, but the emerging markets leading role and the Thai-Japanese free trade agreement (FTA) signed, with Thai exports of textiles and garments for good.[citation needed]

Energy

In 2004 Thailand's total energy consumption was estimated at 3.4 quadrillion British thermal units, representing about 0.7 percent of total world energy consumption. Thailand is a net importer of oil and natural gas, but the government is promoting the use of ethanol to reduce imports of petroleum and the gasoline additive methyl tertiary butyl ether.

In 2005 daily oil consumption of 838,000 barrels per day (133,200 m3/d) exceeded domestic production of 306,000 barrels per day (48,700 m3/d). Thailand's four oil refineries have a combined capacity of 703,100 barrels per day (111,780 m3/d). Thailand's government is considering establishing a regional oil processing and transportation hub, serving the needs of south-central China. In 2004 natural gas consumption of 1,055 billion cubic feet (2.99×1010 m3) exceeded domestic production of 790 billion cubic feet (2.2×1010 m3).

Also in 2004, estimated coal consumption of 30.4 million short tons exceeded coal production of 22.1 million short tons. As of January 2007, proven oil reserves totaled 290 million barrels (46,000,000 m3), and proven natural gas reserves were 14.8 trillion cubic feet (420 km3). In 2003 recoverable coal reserves totaled 1,492.5 million short tons.

In 2005 Thailand consumed about 117.7 billion kilowatt-hours of electricity. Electricity consumption rose by 4.7 percent in 2006 to 133 billion kilowatt-hours. According to the state electricity utility, the Electricity Generating Authority of Thailand, power consumption by residential consumers has been increasing because of more favorable rates given to residential customers over the industry and business sectors. Thailand's state-controlled electric utility and petroleum monopolies are undergoing restructuring.

Services

In 2007 the services sector, which ranges from tourism to banking and finance, contributed 44.7% of gross domestic product and employed 37 percent of the workforce. Thailand's service industry is prominent and competitive that contributes to its export growth.

Tourism

Tourism makes a larger contribution to Thailand's economy (typically about 6 percent of gross domestic product) than that of any other Asian nation. Most tourists come to Thailand for various reasons—mostly for the beaches and relaxation, although with the ongoing insurgency in the deep South, Bangkok has seen a large increase in tourism over the past years.

Also, a sharp increase in tourism from other Asian countries has contributed largely to Thailand's economy even though the Baht has gained strength compared to most other currencies in the past two years. In 2007 some 14 million tourists visited Thailand. The Thai tourism industry includes a thriving sex industry. Successive Thai governments, however, continue to neglect sex workers rights under labor laws that persist in the criminalization of sex workers, allowing corrupt authorities and employers to exploit sex-workers' labor.

The easing of the monetary crisis, the renewed vigorous growth of the Chinese economy, the relatively stable internal political situation following the 2008–2009 Thai political crisis, and the 2009 flu pandemic having less of an impact as initially feared, have changed the tourism outlook for 2010. Thailand experienced a decrease of international visitors of 16% over the first six months of 2009 but the last four months of 2009 have seen a return of foreign tourists to Thailand with a marked increase in the months of November and December. The provisional numbers for 2009 have now been revised upwards to close to 14 million international visitors, which is a decrease of only 4% compared to 2008.

Banking and finances

Dangerous levels of nonperforming assets at Thai banks helped trigger the attack on the Thai baht by currency speculators that led to the Asian financial crisis in 1997–1998. By 2003 nonperforming assets had been cut in half to about 30 percent.

Despite a return to profitability, however, Thailand's banks continue to struggle with the legacy of the financial crisis in the form of unrealized losses and inadequate capital. Therefore, the government is considering various reforms, including establishing an integrated financial regulatory agency that would free up the Bank of Thailand to focus on monetary policy.

In addition, the Thai government is attempting to strengthen the financial sector through the consolidation of commercial, state-owned, and foreign-owned institutions. Specifically, the government's Financial Sector Reform Master Plan, which was first introduced in early 2004, provides tax breaks to financial institutions that engage in mergers and acquisitions.

The reform program has been deemed successful by outside experts. In 2007, there were three state-owned commercial banks and five state-owned specialized banks, 15 Thai commercial banks, and 17 foreign banks in Thailand

The Bank of Thailand sought to stem the flow of foreign funds into the country in December 2006. This led within one day to the largest drop in stock prices on the Stock Exchange of Thailand since the 1997 Asian Financial Crisis. The massive selling by foreign investors amounted more than US$708 million.

Labor 

Thailand's labor force was estimated at 36.9 million in 2007. About 49% were employed in agriculture, 37% in services, and 14% in industry. In 2005 women constituted 48 percent of the labor force and held an increasing share of professional jobs. Less than 4% of the workforce is unionized, but 11% of industrial workers and 50% of state enterprise employees are unionized.

Although laws applying to private-sector workers' rights to form and join trade unions were unaffected by 19 September 2006, military coup and its aftermath, workers who participate in union activities continue to have inadequate legal protection. According to the U.S. Department of State, union workers are inadequately protected. Thailand's unemployment rate lies at 1.5% percent of the labor force.

 



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