Thailand WT/TPR/S/255 
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IV. TRADE POLICIES BY SECTOR 
(1) AGRICULTURE  
(i) Features 
1. Agriculture contributes about 10% to Thailand's GDP1 and accounts for about 34% of 
employment.2  In 2010, agriculture exports (WTO defin ition) represent about 12% of total exports of 
goods and 4% of imports.3  Agriculture is more important to Thailand's economy than these figures 
suggest as they do not take into account the su pply of agriculture goods and services or the 
importance of food processing to employment and the economy. 
2. Agriculture's contribution to GDP has declined from nearly 14% in 1990, reflecting the faster 
growth in manufacturing and services compared with ag riculture.  In real terms, agriculture grew by 
an average of just over 2% per year in the 2000-10  period but growth was erratic, ranging from 12.7% 
in 2003 to a decline of 2.4% in 2004 as production followed the changes in international commodity 
prices and domestic production conditions.4 
3. Thailand is a major producer of several agricultural products.  It is the second biggest 
producer in the world of cassava and pineapples, the third biggest producer of mangoes and a big 
producer of several other important agricultural prod ucts such as palm oil, sugar cane, coconuts, and 
paddy rice.  Rice is Thailand's most important crop but production is relatively diverse.  In 2008, the 
top ten products combined made up less than three-quarters of the total value of production 
(Table IV.1). 
Table IV.1 
Production of selected agricultural products  
('000 tonnes) 
 2003 2004 2005 2006 2007 2008 2009 2010 % world 
production 
in 2009 
Rice 27,038 28,538  30,292 29,642 32,099 31,651 31,463  .. 4.6 
Mangoes 1,700 1,700  1,800 1,800 2,303 2,374 2,470  .. 7.0 
Pig meat 660 677  669 865 915 864 756  1,312 0.7 
Chicken meat 1,227 878  950 962 986 1,019 1,506 1,543 1.3 
Sugar cane 74,259 64,996  49,586 47,658 64,365 73,502 66,816  .. 4.0 
Dried chillies and peppers 60  75  90 115 153 162 170  .. 5.8 
Cassava 19,717 21,440  16,938 22,584 26,916 25,156 30,088  .. 12.5 
Natural rubber 2,860 3,007 2,977 3,070 3,022 3,167 3,090 .. 30.2 
.. Not available. 
Source:  FAO Stat online database;  and the Thai authorities. 
4. Of a total land area of 52.6 million hectares, a bout 41% is used for agriculture, of which about 
half is in rice paddies.  Although rice producti on is not increasing as rapidly as production of other 
                                                      
1 Bank of Thailand online information.  Viewed at:  http://www.nesdb.go.th/Default.aspx?tabid=95 
[July 2011]. 
2 National Statistical Office online information.  Viewed at:  http://web.nso.go.th/en/survey/lfs/ 
lfs2010_tab.htm [July 2011]. 
3 Comtrade online database. 
4 Bank of Thailand online information, "Thailand's Macro Economic Indicators".  Viewed at:  
http://www.bot.or.th/English/Statistics/EconomicA ndFinancial/EconomicIndices/Pages/index.aspx# 
[March 2011]. WT/TPR/S/255 Trade Policy Review 
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crops and animal products, it still dominates farming in Thailand.  There are 5.79 million farm 
holdings in Thailand, practically all of them are family farms, with an average farm size of 3.2 ha. 
5. Foreign investment in agriculture in Thailand is restricted by the Land Code B.E. 2497 (1954) 
which prohibits purchase and owners hip of land by foreign persons or foreign owned enterprises 
based in Thailand, although foreigners may lease land and buildings for periods of up to 30 years.  
However, the Foreign Business Act B.E. 2542 (1999 ) prohibits foreigners from activities that fall 
under three lists: 
 under List One (businesses not permitted for forei gners for "special reas ons"), foreigners are 
prohibited from rice farming, horticul ture, and farming of animals; 
 under List Two, on the grounds of national safety or security or affecting arts and culture, 
tradition, folk handicraft or natural resources a nd the environment, foreigners are prohibited 
from sugar cane farming unless they obtain the permission of the Minister of Commerce with 
the approval of the Cabinet;  and 
 under List Three, on the grounds that Thai nationa ls are not yet ready to compete, foreigners 
are prohibited from rice milling and rice flour pr oduction, domestic trade in native products, 
and plant cultivation and propagation unless permitted by the Director-General of the Commercial Registration Department with the approval of the Foreign Business Committee. 
6. Agriculture production varies considerably from one  part of the country to another.  While 
rice farming is by far the biggest user of land in  most regions, in the Southern Region it represents 
only 10% of cultivated land, and rubber pl antations represent over half of land use.
5  In general, land 
devoted to growing crops other than rice is increasing  as farmers have been encouraged to diversify.  
(ii) Trade in agriculture 
7. With a relatively open economy and a large agri cultural surplus, Thailand is a major exporter 
of several products, particularly rice, canned ch icken meat, sugar, canne d pineapple, and cassava 
(Table IV.2).  Thailand is the principle supplie r of rice to the world market, making up nearly 
one third of world exports although producing less than  5% of world production.  Thailand is also a 
major exporter of processed foods rather than basic commodities, w ith exports of cassava starch 
almost equal to exports of cassava, and exports  of preserved pineapples and preserved chicken 
exceeding exports of the fresh or frozen products.  Th ailand is also the world's major source of natural 
rubber making up over one third of total exports  and nearly one third of total production. 
8. Exports are concentrated in relatively few pr oducts.  In 2010, rice represented 27% of all 
agriculture exports (WTO definition, which does not include rubber) from Thailand and sugar another 
11%.  This pattern of exports has been relatively st able for some years, although the total value has 
increased significantly for rice, sugar, canned chicke n, and cassava.  The increase in rice and sugar 
prices since 2005 has increased their share of total ag riculture trade from about 16% of the total value 
of agriculture exports in 2005 to 38% in 2010.   
9. The main destination for Thailand's exports of agriculture goods varies with the product.  In 
2010, Nigeria was the main destina tion for rice, followed by the United States, Côte d'Ivoire, South 
Africa, and the Philippines.  The main destination for sugar exports is Indonesia followed by Japan, 
                                                      
5 National Statistics Office (2003). Thailand WT/TPR/S/255 
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Cambodia, and the Philippines.  The main destinati on for cassava is China, which takes practically all 
of Thailand's exports of this product. 
10. Imports of agriculture products are more widely  distributed than exports, with the top ten 
representing about 60% of total imports of agri culture goods.  The main imports are inputs for 
domestic production (oil-cake and soy beans mostly fo r animal feed, and cotton for textiles) rather 
than food, although imports of wheat and concentrat ed milk are also important (Table IV.3).  The 
main sources for oil-cake and soy beans are Braz il and Argentina while the main sources for cotton 
and wheat are the United States and Australia.  New Zealand and Australia are the main sources for dairy products. 
Table IV.2 
Exports of selected agricultural products, 2005-10 
HS Code Product description  2005 2006 2007 2008 2009 2010 % of 
world 
exports 
in 2008 
1006 Rice 000 tonnes 7,542 7,434 9,198 10,216 8,620  8,940  32 
US$ million 2,322 2,579 3,470 6,108 5,046  5,341  29 
1701 Cane or beet sugar 000 tonnes 3,041 2,239 4,408 5,012 5,053  4,501  4 
US$ million 703 734 1,259 1,432 1,803  2,152  8 
1602 Other prepared or preserved 
meata 000 tonnes 284 306 336 408 398  439  14 
US$ million 874 990 1,187 1, 789 1,641  1,832  18 
2008 Fruits, nuts otherwise 
prepareda 000 tonnes 774 889 835 904 780  767  16 
US$ million 622 699 775 964 805  892  9 
0714 Manioc, arrowroot, salepb 000 tonnes 3,035 4,217 4,562 2,888 4,364  4,279  69 
US$ million 319 456 558 480 607  817  39 
2309 Preparations used for animal 
feeding 000 tonnes 386 418 433 456 461  491  2 
US$ million 447 504 589 708 702  802  4 
1108 Starches, inulinb 000 tonnes 1,421 1,759 1,459 1,235 1,759  1,711  30 
US$ million 235 376 408 449 488  772  20 
2106 Food preparations not 
elsewhere specified 000 tonnes 401 397 369 396 399  422  7 
US$ million 422 443 433 530 580  659  9 
3505 Dextrins and other modified 
starches 000 tonnes 674 646 788 727 712  706  25 
US$ million 275 298 403 458 391  510  16 
2103 Sauces 000 tonnes 154 152 165 176 193  221  5 
US$ million 161 192 234 295 340  410  8 
4001 Natural rubber 000 tonnes 2,952 3,057 2,966 2,832 2,740 2,734 36 
US$ million 3,695 5, 430 5,641 6, 721 4,308 7,896 35 
a Exports under HS 1602 are mostly canned chicken, a nd exports under HS 2008 are mo stly canned pineapple. 
b Exports under HS 0714 are almost entirely manioc (cassava), a nd exports under HS 1108 are almost  entirely starch from cassava . 
Source:  UN Comtrade database.  Viewed at:  http://comtrade.un.org/ [March 2011]. 
Table IV.3 
Imports of selected agricultural products, 2005-10 
HS Code Product description  2005 2006 2007 2008 2009 2010 
2304  Oil-cake and other solid residues from the 
extraction of soyabean oil. 000 tonnes 1,881 2,174 2,105  2,193  2,077  2,616 
US$ million 480 513 616  1,028  879  1,054 
1201  Soya beans, whether or not broken. 000 tonnes 1,608 1,395 1,541  1,723  1,535  1,819 
US$ million 463 376 559  968  692  810 
5201  Cotton, not carded or combed. 000 tonnes 504 422 393  436  350  384 
US$ million 612 570 536  715  485  730 
1001  Wheat and meslin. 000 tonnes 1,148 1,006 857  696  1,105  1,700 
US$ million 237 217 258  332  313  443 
0402  Milk and cream, concentrated or containing 
added sugar 000 tonnes 103 99 88  87  75  91 
US$ million 230 220 302  341  169  292 
1901  Malt extract;  food preparations of flour, 
groats, meal, starch or malt extract... 000 tonnes 71 64 65  79  68  78 
US$ million 167 164 183  270  237  277 
2106  Food preparations not elsewhere specified 
or included. 000 tonnes 24 28 31  37  33  39 
US$ million 132 161 192  247  237  272 
2309  Preparations of a kind used in animal 
feeding. 000 tonnes 197 241 248  217  212  245 
US$ million 136 166 173  221  207  244 
Source:  UN Comtrade database.  Viewed at:  http://comtrade.un.org/ [March 2011]. WT/TPR/S/255 Trade Policy Review 
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(iii) Agriculture policies 
11. The Ministry of Agriculture and Cooperatives is responsible for formulating agriculture 
policy.  The main focus of domestic policy is on im proving productivity on small farms and the main 
policy objectives are:  to increase employment in agriculture;  to improve marketing of agricultural 
products, particularly products fro m small rural communities;  to im prove irrigation and water supply 
management;  and to establish a national farmer c ouncil.  To achieve these objectives the Ministry has 
three principal strategies in place: 
(i) the Farmers and Farmers' Organization Deve lopment Strategy, which seeks to stabilize 
farmers' incomes through crop insurance schemes, developing a futures market, and 
supporting contract farming.  Under the Developm ent Strategy, a national farmer council is to 
be set up and training programmes and a farmer loans scheme developed; 
(ii) the Production Development Strategy, which ai ms to improve productivity through more 
efficient production and research and developm ent.  The Production Development Strategy 
also seeks to improve value added through produc t development, marketing, and certification;  
and 
(iii) Infrastructure Development, which focuses on resource management, particularly water 
supply and irrigation.6   
12. In addition, the Royal Initiative Agricultural Project and other Royal Development Projects 
are intended to improve agriculture productivity a nd reduce risk mainly through research and training. 
The New Agricultural Theory, an example of the Philosophy of Sufficiency Economy, is based on 
guidelines for the management of land and water re sources with the objective of making agriculture 
sustainable at the household, community, and regional levels. 
(a) Market access 
13. The average MFN applied tariff on imports of agricultural products (WTO definition) is 
26.5% which is much higher than the average fo r non-agricultural products (9%).  Furthermore, 
average tariffs vary a lot from one product group to another ranging from zero for cotton up to 49.2% 
for beverages and tobacco.  Furthermore, with in each product group there is a large degree of 
variability with tariffs ranging from zero up to 65%.   In most cases, applied MFN tariffs are lower 
than bound rates, which average nearly 37% fo r agricultural products (see Chapter III(1)).  
14. According to the authorities, one tariff line fo r an agricultural product is unbound and several 
are partially bound.7 
15. Thailand notified imports under 23 tariff quotas fo r an eclectic mix of products ranging from 
milk and cream to onion seeds.  Fill-rates vary wide ly with in-quota imports of some products greatly 
exceeding the minimum quota (such as potatoes, so ybeans, and soybean cake) while some quotas are 
hardly used (such as garlic, coconut, copra, and maize).8   
                                                      
6 MOAC, Office of Agricultural Economics (2010) and Council of Ministers (2008a), p.14. 
7 The unbound tariff line is HS 05059010 (duck feathe rs), and partially bound tariff lines are: certain 
types of live bovines ( HS 01021000 and 01029090), some chicken meat products (02071300), some tariff lines for whey (04041091 and 04049000),  a tariff line under animal hair (05029000), a tariff line under skins of birds 
(05059090), a tariff line under bones treated with acid (05069000), and two tariff lines under mung beans 
(07133110 and 07133190). 
8 WTO documents G/AG/N/THA/55, 63, 67 and 71. Thailand WT/TPR/S/255 
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16. Administration methods used for tariff quotas vary, although all quotas are open to all 
supplying countries.  Import certificates are require d from the Department of Foreign Trade in the 
Ministry of Commerce for all tariff quotas except sugar (certificates from the Office of Cane and 
Sugar Board in the Ministry of Industry) and unm anufactured tobacco (certificates from the Excise 
Department of the Ministry of Finance).  Alloca tion of tariff quotas to importers tends to be quite 
complex with partial allocations on a first-come-fi rst-served basis, to manufacturers for imports of 
raw materials, to historical importers, and to producer groups.9 
17. Some quotas are administered in ways that c ould limit access.  For example, in 2011 in-quota 
imports of maize are limited to the state-owne d Public Warehouse Organization, which may import 
only during 1 March to 30 June.  In late 2010, in r esponse to rising prices, the Ministry of Commerce 
announced that it was suspending application of qu otas and tariffs on soybeans, and soybean meal 
would be subject to a tariff of not more than 2% with no tariff quota limit.  However, imports were to 
be restricted to a limited number of private companies or trade associations.10  
18. Thailand has reserved the right to use the sp ecial agricultural safeguard (SSG) on 52 tariff 
lines including some dairy products, potatoes, onions , garlic, longans, coffee, tea, pepper, maize, 
soybeans, copra, palm oil, sugar,  tobacco, and silk.  However, up to end-2008 it had never used it 
(Thailand's most recent notification is for calendar years 2007 and 2008).11 
(b) Domestic support 
19. Thailand supports agriculture in a number of different ways.  The policy choice depends on 
whether it is a net exporter or net importer of th e product and on the tariff protection it can apply to 
that product.  The focus of policies has been on infr astructural improvement, particularly on irrigation 
and drainage, and, in recent years, there has been  an increasing emphasis on research, pest and disease 
control, and extension and advisory services.  However, there are also several programmes that 
directly affect production and trade, including  for rice, sugar, palm oil, and maize. 
20. For rice, a producer price support scheme introdu ced in 2001 effectively provided producers 
with a guaranteed price for rice.  Under the progra mme, farmers were given a low-interest loan (a 
mortgage) based on the quantity of ri ce harvested and the loan rate.  If market prices were greater than 
the loan rate, the loan could be repa id at the loan rate plus interest or, if prices were below the loan 
rate, with the harvested rice.  Th e programme was suspended in 2006 after stocks of nearly 5 million 
tonnes were accumulated.  However, it was reintrodu ced for 2008 with the loan rate of B 10,000 per 
tonne for the first harvest and B 14,000 per tonne for the second harvest (equivalent to about US$304 
and US$425, respectively, at the average 2008 excha nge rates).  Stocks of 2.5 million tonnes were 
acquired by end-September 2008.12  In marketing year 2009/10, when stocks reached 6 million 
tonnes, the mortgage scheme was replaced by a pr ice insurance scheme.  Under the new scheme, 
producers are paid the difference between an insura nce price and a weekly benchmark price.  The 
scheme has become popular, with 3.5 million farmer s registered.  Insurance prices range from 
B 15,300 per tonne for up to 14 tonnes of fragrant ri ce per household to B 9,500 per tonne for up to 25 
tonnes of glutinous rice per household.13  These are the equivalent of about US$503 and US$312, 
respectively, at the average exchange rate for January-June 2011.   
                                                      
9 WTO documents G/AG/N/THA/70, 66, 62, and 58. 
10 USDA Foreign Agriculture Service (2011). 
11 WTO documents, G/AG/N/THA/16, 19, 31, 36, 41, 44, 46, 54, 60, 65, and 68. 
12 Forssell (2009). 
13 Oxford Business Group (2011);  and the Thai authorities.  WT/TPR/S/255 Trade Policy Review 
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21. In October 2011 the guaranteed price system reverted to a mortgage scheme with prices 
ranging from B 15,000 per tonne for paddy rice to B 20,000 for fragrant rice.  The Bank for Agriculture and Agriculture Cooperatives is to pr ovide loans to the Public Warehouse Organization 
and the Marketing Organization for Farmers to purchase rice at this price at the start of the new 
mortgage scheme.
14  The increase in guaranteed prices, along with the severe flooding in the country, 
has raised concerns about the impact on world pri ces and the quantity of rice Thailand will be able to 
export.15 
22. According to the authorities, the Government no longer purchases or stockpiles rice for price 
support.  However, it has been reported that existi ng stocks have been sold for export, with 2-3 
million tonnes released in 2010 and 2-3 million tonnes s till held as stocks at the end of that year.16  
Sales are through public auctions, and the authoriti es noted that they take measures to ensure the 
auctions are competitive with no collusion between buyers. 
23. The sugar industry in Thailand is  overseen by the Office of the Cane and Sugar Board, is 
made up of representatives of the Government, th e milling industry, and producers.  The Board sets 
ceiling prices for producers, and the quantities and pri ces of refined and raw sugar that can be sold by 
the sugar mills to the domestic market.  With an  applied MFN tariff of 65%, Thailand can maintain 
domestic prices higher than international prices an d prevent lower priced imports undermining the 
scheme.  In most years, the domestic price is highe r than world prices.  However, as of October 2010, 
the controlled price for sugar was set at B 19 per kg for white sugar and the wholesale price for refined sugar at B 20 per kg, which were lower than international pr ices and led to concerns about 
domestic shortages.
17  Thus, although it has been stated that  sugar is the most heavily protected of 
Thailand's agricultural industries18, this does not seem to have b een the case in the past year. 
24. Thailand also has price support policies for other agriculture products, including maize, 
manioc, some tropical fruits, and shallots.  In mo st years the support levels are relatively low and 
Thailand relies on its tariff structure to maintain do mestic prices, and provide a consumer, rather than 
a taxpayer, transfer to producers. 
25. Export subsidies 
26. Thailand does not have commitments for expor t subsidies.  Notifications to the WTO 
Committee on Agriculture cover the period up to 2008 and indicate that it has not used export 
subsidies covered by Article 9 of  the Agreement on Agriculture.  
(iv) Support levels 
27. Thailand has domestic support commitments from the Uruguay Round for a maximum 
Current Total Aggregate Measurement of Support (A MS) of B 19,028.48 million, which entered into 
effect in 2004 at the end of the implementation pe riod.  The Current Total AMS was not designed to 
measure the economic or monetary value of suppor t to producers but to measure compliance with 
commitments.  In its notifications, Thailand h as provided information on the budgetary outlay for 
support provided under different schemes for different  products.  For some products, such as sugar 
                                                      
14 MOAC, press release 5 October 2011 and MCOT online news 8 October 2011.  Viewed at:  
http://www.moac.go.th and http://www.m cot.net/EnglishNews [October 2011]. 
15 IRIN (2011). 
16 USDA Foreign Agriculture Service (2010b). 
17 USDA Foreign Agriculture Service (2010c). 
18 Warr (2008). Thailand WT/TPR/S/255 
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and dairy, there is little or no budgetary outlay as ma rket access measures are us ed to maintain prices 
above international levels. 
28. Thailand's most recent notification for domestic  support is for the years 2005, 2006, and 
2007.19  This shows that about half of all support to agriculture was for infrastructural services 
(mostly for dams, drainage, and irrigation) and did not benefit producers directly.  The total support 
for infrastructural services and other measures notif ied in the Green Box averaged about B 40 billion 
in the 2000-07 period (Chart IV.1).  In addition, to Green Box support, Thailand also provides price 
supports for several products, particular ly rice, as well as input subsidies. 
05,00010,00015,00020,00025,00030,00035,00040,00045,00050,000
2000 2001 2002 2003 2004 2005 2006 2007
Source:     WTO notifications.B millionChart IV.1
Agriculture support, 2000-07
Green box Article 6.2 de minimis Current total AMS
 
 
29. Within the Amber Box, most of Thailand's support to agriculture is for rice farming, which is 
also the biggest agricultural subsector (Cha rt IV.2).  Most other support is below de minimis  levels, 
that is, less than 10% of the value of production of that product. 
                                                      
19 WTO document G/AG/N/THA/72, 27 October 2010. WT/TPR/S/255 Trade Policy Review 
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05,00010,00015,00020,00025,000
2000 2001 2002 2003 2004 2005 2006 2007
Source:     WTO notifications.B millionChart IV.2
Amber box support (including de minimis), 2000-07
Current AMS - rice de minimis Current AMS - other products
 
(2) FISHERIES  
30. The fisheries industry in Thailand contributed over 2% to GDP, 3.6% to total exports, and 
5.4% to total employment in 2008 for both fishing a nd fish processing.  Nearly half of all exports of 
fish products are frozen or preserved shrimps, mainly  from aquaculture rather th an capture fisheries.  
Exports grew at annual average rate of over 6%  per year in the 2004-10 period, reaching nearly 
US$7 billion in 2010, the result of a combination of ri sing prices and higher yields (Chart IV.3).  The 
main destination market for exports is the United States, followed by Japan and Australia. 
31. Thailand has a large trade surplus in fisheries pr oducts, with imports of just over US$2 billion 
in 2010.  According to UN Comtrade database, nearly  half of all fisheries imports are frozen fish 
(mostly skipjack and bonito) imported for pro cessing and exported in prepared/preserved form.20   The 
main destinations for exports of canned fi sh are the EU, Japan, and the United States. 
32. The marine fisheries subsector is made up of commercial fishing in boats of over five gross 
tonnage and small-scale fisheries w ith smaller boats.  The small-scale fisheries operate near shore and 
exist at, or close to subsistence level.  According to the most recent census of marine fisheries in 
2000, there were 58,119 marine fishing boats, of whic h 80% were small scale.  However, nearly all 
the marine catch is taken by the larger commercial boats.   
33. Marine fisheries production was 2.1 million tonn es in 2007, worth about B 55,327 million, of 
which about 60% was taken inside Thailand’s Exclusive Economic Zone.21  However, this dropped to 
1.64 million tonnes, worth about B 42,147 million in 2008.  Fish catches have been falling since 1961, which indicates that over-fishing has been a problem, and official policy is now aimed at conserving 
and rebuilding stocks thro ugh management measures, such as:  restrictions on mesh sizes in parts of 
                                                      
20 UN Comtrade database.  Viewed at:  http://comtrade.un.org/ 
21 Department of Fisheries (2010) . Thailand WT/TPR/S/255 
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the Gulf of Thailand;  bans on commercial fishing w ithin 3 km of the shore;  and annual licensing of 
fishing rights with existing licence holders eligible for new licences. 
01,0002,0003,0004,0005,0006,0007,0008,000
2004 2005 2006 2007 2008 2009 2010
Source:     Comtrade online database:   http://comtrade.un.org/ [March 2011].US$ millionChart IV.3
Exports of selected fisheries products, 2004-10 
Shrimps prepared/preservedShrimps frozen
Tuna, skipjack & bonito prepared/preserved
Other fish or fish products
Note:          HS 030513 = shri mps frozen;  HS 160414 = tunas, skipjack & bonito prepared/preserved;  
HS 160529 = shrimps prepared/preserved.
 
 
34. Coastal and freshwater aquaculture has grown in response to the d ecline in the capture 
subsector.  Coastal aquaculture is mostly for pr awns, nearly all of which are exported frozen or 
preserved.  Freshwater aquaculture is more divers e but still dominated by two species:  catfish and 
tilapia, although breeding and culture of orna mental fish is becoming increasingly popular.22 
35. Official policy and research are the responsibility of the Department of Fisheries in the 
Ministry of Agriculture and Cooperatives while the Department of Marine and Coastal Resources in 
the Ministry of Natural Resource and Environment is responsible for the natural marine environment.  
Policy is currently aimed at encouraging local participation in decision making, training and 
education, improving sustainability while enc ouraging increased aquaculture production, and 
increasing the capacity of the overseas fishing fleet. 
36. Thailand provides some subsidies for research and development through various government 
agencies and responds to some of the problems faci ng the industry caused by rising fuel prices, the 
economic crises, natural disasters, and declining pri ces.  However, the authorities indicated that the 
amounts are quite small and are provided on a tempor ary basis and;  because they are provided by 
different government agencies, the authorities we re not able to provide a precise value. 
37. Under the Foreign Business Act B.E. 2542 (1999) and the Act Governing the Right to Fish in 
Thai Fishery Waters B.E. 2482 (1939), foreigners  are prohibited from commercial fishing in Thai 
fishery waters and within its speci fic economic zones.  However, the Act Governing the Right to Fish 
                                                      
22 FAO (2009). WT/TPR/S/255 Trade Policy Review 
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in Thai Fishery Waters (No.2) B.E. 2539 (1996) pe rmits foreigners to work in the crew of a fishing 
vessel provided they are registered under th e Working of Aliens Act B.E. 2551 (2008). 
(3) ENERGY  
(i) Introduction 
38. Although Thailand has significant resources of na tural gas and is an exporter of refined 
petroleum products, it is a net importer of energy, including electricity.  It also has an energy-intensive economy (as measured by primary energy consumption per 2005 U.S. dollar of GDP):  the 2008 level of nearly US$20,000 per Btu was over 40% higher than the average for Asia and Oceania and more than twice the world average,  although it was also lower than the 2005 peak.
23  
The main source of energy for electricity generation is natural gas, and the main sources for vehicle 
fuels are petrol, diesel, liquefied petroleum gas (LPG),  and natural gas.  The use of renewable energy 
is being encouraged through tax advantages, price controls, and subsidies for biofuels. 
39. The Ministry of Energy is responsible for government policy for the exploration and 
extraction of hydrocarbons as well as for produc tion, transmission, and sale of electricity.  
Government policy is to diversify the energy mi x, through domestic pr oduction and imports, and 
greater use of biofuels.  The State will continue to  apply controls to energy prices and to encourage 
conservation.24  The Energy Strategy, put forward in January 2009 by the Minister of Energy, set out  
detailed targets and the methodology to achieve them. These include:  improving energy security 
through diversification of both the supply and the sources of energy;  encouraging alternative sources 
of energy;  controlling prices;  conservation;  and environmental protection.25 
40. The Energy Policy and Planning Office (EPPO) in the Ministry of Energy is responsible for 
developing energy policies, including plans for managing energy shortages and improving 
conservation as well as coordinating, monitoring,  and overseeing implementation of government 
policy.26  The National Energy Policy Council, which is chaired by the Prime Minister and includes 
several government ministers and the Director-Gen eral of the EPPO, is responsible for submitting 
policy plans to the Council of Ministers, estab lishing the rules for setting prices, and monitoring 
private and public entities involved in energy to en sure that their operations comply with national 
energy policy.27 
(ii) Hydrocarbons 
41. Thailand is a net importer of petroleum and natural gas, with consumption of petroleum 
almost three times gr eater than production (Table IV.4).  Ho wever, Thailand is a net exporter of 
refined petroleum products using imports of crude as the raw material.  Although there has been some 
growth in the use of alternative fuels for trans port and renewable sources for generating electricity, 
fossil fuels continue to dominate the energy mix with  natural gas being the main fuel for electricity 
generation, followed by coal.   
                                                      
23 US Energy Information Administration online information.  Viewed at:  
http://www.eia.gov/countries/country- data.cfm?fips=TH [May 2011]. 
24 Council of Ministers (2008b). 
25 Minister of Energy (2009). 
26 EPPO (2006). 
27 National Energy Policy Council Act, B.E. 2535 (1992) as amended by the National Energy Policy 
Council Act (No.2), B.E. 2550 (2007), and the National Energy Policy Council Act (No.3), B.E. 2551 (2008).  
Viewed at:  http://www.eppo.go.th/index-E.html [May 2011]. Thailand WT/TPR/S/255 
 Page 111 
 
 
42. Production of oil has increased steadily sin ce 2000 reaching 330,000 bbl/day in 2009, up from 
about 176 bbl/day (Table IV.4).  Most of the oil produced is crude, but about one third are condensates from natural gas production.  The main  reserves of both are found off-shore in the Gulf 
of Thailand.   
Table IV.4 
Petroleum, natural gas and coal, production and reserves, 2000-09 
  2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Petroleum            
Total production '000 bbl/day 176 191 204 236 223 265 286 305 321 330 
Consumption '000 bbl/day 794 769 827 881 967 1,005 996 995 962 975 
Refinery 
capacity '000 bbl/day 899 1,064 1,068 1,068 1,068 1,078 1,125 1,125 1,17
5 1,240 
Proved reserves bn bbl 0.4         0.5 
Natural gas            
Production bn cu m 20 20 21 22 22 24 24 26 29 31 
Consumption bn cu m 22 25 27 29 30 33 33 35 37 39 
Reserves tn cu m 0.23         0.36 
Coal            
Production m tonnes 18 20 20 19 20 21 19 18 18 19 
Production equivalent m 
tonnes oil  5.1 5.6 5.7 5.3 5.6 5.9 5.3 5.1 5.0 5.3 
Consumption equivalent m 
tonnes oil  7.8 8.8 9.2 9.4 10.4 11.2 12.4 14.1 15.3 14.1 
Reserves m tonnes          1 354.0 
Source:  BP (2010), Statistical Review of World Energy , June.  Viewed at:  http://www.bp.com/liveassets/ 
 bp_internet/globalbp/globalbp_uk_english/reports_a nd_publications/statis tical_energy_review_2008/STAGING/lo
 cal_assets/2010_downloads/statistical_rev iew_of_world_energy_full_report_2010.pdf. 
43. PTT Public Company Limited, which replaced th e Petroleum Authority of Thailand in 2001, 
continues to play a role in oil production th rough joint ventures between PTT Exploration and 
Production (PTTEP) and international oil companies.  A significant amount of oil production is from 
condensates from natural gas wells.  The PTT was pa rtially privatized in 2001 and is listed on the 
Bangkok Stock Exchange, although the Ministry of Finance continues to hold 51.36% of shares. 
44. Gas production has also increased steadily si nce 2000, and reserves have increased due to 
new discoveries and better extracti on.  Production of gas and condensate includes the state-controlled 
PTTEP acting on its own and in joint ventures with other companies.  PTT also has a monopoly on the distribution and delivery of natural gas in Thailand. 
45. Within the Ministry of Energy, the Petrol eum Committee and Sub-Committee are responsible 
for preparing policy on oil and gas exploration and production while the Department of Mineral Fuels 
(DMF) is responsible for implementing it, incl uding inviting bids and awarding concessions for 
exploration, production, and sale of oil and gas.
28 
46. Government policy is to reduce fluctuations in  fuel prices by subjecting them to different 
types of controls (Chapter III(4)(iv)).  In the p ast this objective was achieved by subsidizing petrol, 
diesel, and natural gas through the Oil Fund, which is funded by levies on fuel production, budgetary 
support, and borrowing.  However, as the Oil Fund’ s loses increased, the petrol and diesel subsidies 
were ended in October 2004 and July 2005, respectively.   
47. Since then, prices have been controlled through ch anges in:  excise duties;   municipal taxes;  
contributions to the Oil Fund;  contributions to th e Conservation Fund;  and direct price controls.  
                                                      
28 Presentation by Bunboon S, Department of Mineral Fuels, to the 5th PPM Seminar, Bangkok, 2006. WT/TPR/S/255 Trade Policy Review 
Page 112 
  
Subsidies from the Oil Fund are reserved for higher alcohol content gasohol.  Liquefied petroleum gas 
(LPG) and compressed natural gas for vehicles (NGV)  continue to be subsidized through the PTT 
selling to consumers for less than the purchase price.  In January 2009, proposals by the Ministry of 
Energy to increase LPG prices were rejected by the National Energy Policy Council.29  In 2010, the 
PTT provided LPG at less than the world market price (US$333 per tonne compared with US$412 per 
tonne).  The PTT received B 2 per kg from the Go vernment for NGV sales to cover losses from 
selling at B 8.50 per kg compared with costs of B 14-15 per kg. 
48. The Government continues to promote biofuels using several measures to encourage their use 
and production.  Under the Alternative Energy Deve lopment Plan 2008-22, the objective is to increase 
the share of alternative energy to 20% of total en ergy used by 2022.  Ethanol and biodiesel production 
have increased considerably over the past fe w years, reaching over 400 million litres and 560 million 
litres respectively in 2009.  Ethanol is produced  from both sugar cane and tapioca while most 
biodiesel comes from palm oil.30 
49. In April 2010, excise duties on cars that can use gasohol were reduced by 5 percentage points 
for vehicles capable of using a 20:80 alcohol:petrol mix (E20), and by 8 percentage points for vehicles 
capable of using E85.  In October 2010, some car parts for hybrid-electric vehicles were exempted 
from import duties for three years (see Chapter III).  Furthermore, ethanol for blending with petrol to 
make gasohol qualifies for a B 7 per litre exemption from excise duties, and contributions to the Oil 
Fund from gasohol and biodiesel production are lo wer;  Gasohol95 E85 receives a subsidy of 
B 13.50 per litre from the Oil Fund. 
50. In 2007, the Government introduced a requirement  that all diesel oil contain 2% biodiesel (B2 
diesel).  The mandated level of biodiesel was increa sed to 3% in 2010.  In  May 2010, the mandated 
level of biodiesel was amended to allow 3% to 5%  biodiesel in order to give flexibility to oil 
producers and to be in accordance with the season-de pendent variation in palm oil production.  In 
order to encourage use of higher levels of biodi esel B5 diesel, excise duties, municipal tax, and VAT 
have been reduced and a subsidy from the Oil Fund pr ovided so that the retail price is about B 29 per 
litre compared with B 30 per litre for B2 diesel.  
51. The result of different funds and taxes on fuel is a complicated pricing structure with five 
different charges on fuels (VAT, excise duties, municipal tax, Oil Fund, and Conservation Fund) only one of which is ad valorem  (VAT) and the same for all fuel types. The other charges are in baht per 
litre (or kg for gas), vary according to the type of  fuel, and are changed from time to time as the 
authorities try to stabilize fuel prices (Table IV.5). 
Table IV.5 
Taxes and duties on fuel 
Bt/litre (except LPG Bt/kg) 
April 2007 April 2008 
 Excise 
Duty Municipal 
Tax Oil 
Fund Conservation 
Fund VAT Excise 
Duty Municipal 
Tax Oil 
Fund Conservation 
Fund VAT 
Unleaded 95 3.685 0.369 3.460 0.070 7% 3.685 0.369 3.450 0.750 7% 
Gasohol91 3.317 0.332 1.000 0.063 7% 3.317 0.332 -0.250 0.250 7% 
Gasohol95 
E20 3.317 0.332 -0.300 0.250 7% 
Gasohol95 E85 
Biodiesel B5 2.190 0.219 0.300 0.067 7% 2.190 0.219 -1.500 0.250 7% 
LPG 2.170 0.217 -1.251 0.000 7% 2.170 0.217 0.303 0.000 7% 
                                                      
29 Economist Intelligence Unit (2010b). 
30 PTT (2011). Thailand WT/TPR/S/255 
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        Table IV.5 (cont'd) 
April 2009 April 2010 
 Excise 
Duty Municipal 
Tax Oil 
Fund Conservation 
Fund VAT Excise 
Duty Municipal 
Tax Oil 
Fund Conservation 
Fund VAT 
Unleaded 
petrol 95 5.000 0.500 7.000 0.750 7% 7.000 0.700 7.500 0.250 7% 
Gasohol91 4.500 0.450 2.350 0.250 7% 6.300 0.630 1.400 0.250 7% 
Gasohol95 E20 4.000 0.400 -0.300 0.250 7% 5.600 0.560 -0.400 0.250 7% 
Gasohol95 E85 0.750 0.075 -5.700 0.250 7% 1.050 0.105 -
11.000 0.250 7% 
Biodiesel B5 2.190 0.219 -0.200 0.250 7% 5.040 0.504 -0.800 0.250 7% 
LPG 2.170 0.217 0.303 0.000 7% 2.170 0.217 0.435 0.000 7% 
April 2011 
Excise 
Duty Municipal 
Tax Oil 
Fund Conservation 
Fund VAT 
Unleaded 
petrol 95 7.000 0.700 7.500 0.250 7% 
Gasohol91 6.300 0.630 0.100 0.250 7% 
Gasohol95 E20 5.600 0.560 -1.300 0.250 7% 
Gasohol95 E85 1.050 0.105 -
13.500 0.250 7% 
Biodiesel B5 0.005 0.001 1.489 0.250 7% 
LPG 2.170 0.217 1.147 0.000 7% 
Source : EPPO. 
(iii) Electricity 
52. Demand for electricity in Thailand has been risi ng steadily over the past decade, and growth 
in electricity generation recovered sharply in 2010 to 163,668 GWh, after two years of low growth.  
Natural gas is the main fuel (72% of generation) , followed by coal and lignite (18%), and imports 
(4%) from Malaysia and the Lao People's Democratic Republic (Table IV.6).  The state enterprise, the 
Electricity Generating Authority Thailand (EGAT) is the main generator (47% of generating capacity) 
although large and small i ndependent power producers (39% and 7% respectively) are becoming more 
important.31 
Table IV.6 
Power generation by fuel type 
GWh 
 Natural gas Coal Oil Hydro Imported Other Total 
2003 85,688  19,301  2,510  7,208  2,473  1,231  118,408  
2004 90,289  20,404  5,701  5,896  3,378  1,842  127,511  
2005 94,468  20,614  7,817  5,671  4,372  1,857  134,798  
2006 94,398  24,468  7,885  7,950  5,152  2,065  141,919  
2007 98,148  30,881  2,995  7,961  4,488  2,553  147,026  
2008 104,386  30,838  1,013  6,951  2,784  2,250  148,221  
2009 105,930  29,808  493  6,966  2,451  2,710  148,364  
2010 117,941  29,764  600  5,347  7,254  2,763  163,668  
 
Source:  EPPO online information.  Viewed at:  ht tp://www.eppo.go.th/info/index.html [May 2011]. 
53. As well as being the main generator of electricity, EGAT is the only purchaser from the 
independent power producers and operates the tr ansmission network under the Enhanced Single 
                                                      
31 EPPO online information.  Viewed at:  http://www.eppo.go.th/info/5electricity_stat.htm [May 2011]. WT/TPR/S/255 Trade Policy Review 
Page 114 
  
Buyer (ESB) model used in Thailand.  The ESB m odel was originally intended to apply after the 
privatization of EGAT in 2001 and, when the privatization proposal was withdrawn, its corporatization in 2005.  However, EGAT was not corporatized and it remains a state-owned 
enterprise.  There are two distribution authorities,  both state-controlled enterprises: the Metropolitan 
Electricity Authority (MEA), which is responsible for distribution and sale of electricity in Bangkok 
and two neighbouring provinces;  and the Provincial El ectricity Authority (PEA), which is responsible 
for distribution and sale in the rest of the country. 
54. The Energy Industry Act B.E. 2551 (2007) established the Energy Regulatory Commission 
(ERC) as an independent regulator for electricity ge neration, transmission, distribution, and retail, and 
for gas transport and supply as well as for LPG terminals.
32   
55. The ERC is also responsible for operating the Power Development Fund, which collects 
contributions from power generators.  Contributions to the Fund depend on the type of fuel used to 
generate electricity and range from B 0.02 per kWh for coal and hydro to B 0.01 per kWh for wind 
and solar electricity.  According to the ERC, the fu nd is used to subsidize the Provincial Electricity 
Authority (PEA) by about B 10 billion per year; in addition, in 2009 the EGAT was required to 
support the PEA through a transfer of B 2.8 million.  A new subsidy arrangement is expected to be 
developed, based more on output in the manner of public service or universal service obligations, so 
that a uniform electricity tariff can continue to be applied to all consumers of electricity in Thailand.33   
56. Since 2008, licences have been awarded to EGAT  for generation, transmission, and systems 
operation and to the Metropolitan and Provincial Electricity Authorities for distribution, while 
9 licences for generation have been given for large powe r plants (including 2 for generators that have 
been separated from EGAT), 60 for small power pro ducers, and 118 for very small power producers. 
57. The ERC is also responsible for setting electric ity tariffs for consumption, subject to the 
approval of the National Energy Policy Council.  The total tariff is composed of a base tariff plus a 
fuel adjustment mechanism.  The base tariff depe nds on the category of consumer and, as of early 
2009, ranged from B 2.28 per kWh for water pumping for agriculture to B 3.26 per kWh for small 
general services.  For residential users, governme nt institutions and non- profit organizations, and 
water pumping for agriculture, the base tariff is less  than the marginal cost of providing electricity.  
The Fuel Adjustment Mechanism is added to the base tariff and reviewed every four months and 
adjusted to take account of fuel prices.  Sin ce early 2009, households using less than 90 kWh per 
month have been exempt from charges.34 
58. The Power Development Plan 2010-30 (PDP 2010) updated the 2008-21 Pl an to take account 
of the lower rates of growth in electricity de mand seen in 2008 and 2009, and to increase the emphasis 
on generation from renewable sources set out in the Alternative Energy Development Plan 2008-22.  
The PDP 2010 was approved by the NEPC and endorsed by the Cabinet in March 2010.  Under the PDP 2010, the planned capacity should more than double to 65.5 GW by end 2030 (from 29.2 GW in 
2009) with about 7% from renewable sources (excluding large hydro plants).
35 
                                                      
32 EPPO online information.  Viewed (in English) at:  
http://www.eppo.go.th/admin/cab/law/energy_industry_act-2007.pdf [May 2011]. 
33 ECRC (2010). 
34 ECRC (2010). 
35 EGAT (2010). Thailand WT/TPR/S/255 
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(4) SERVICES  
(i) Main features and multilateral commitments  
59. Services still account for a large part of the Thai  economy.  However, their share in GDP has 
dropped slightly from 44.6% in 2007 to 42.9% in 2010, in contrast with the rising share of services in 
other Asia-Pacific economies.  On the other hand, the contribution of services to total employment in 
Thailand increased from 38.5% in 2007 to 40.2% in  2009 (Table I.1), and labour productivity in the 
sector remained practically unchanged.  The main service subsectors in 2010 were whole-sale and 
retail trade (13.1%);  transport and communication (6.8%);  hotels and restaurants (4.7%);  and 
financial intermediation (4.1%).  During 2007-10, the services sector grew at an average annual rate 
of 2.7% in real terms, lower than the growth rate for the economy as a whole (3.2%).  Services 
(mostly travel, communication, and transportation)  accounted for 15% of total exports in 2010.  
Thailand's services trade balance posted a surp lus during the review period (Chapter I). 
60. Thailand's Schedule of Specific Commitments covers 75 of the 160-odd service sectors under 
the GATS.36  In its horizontal commitments, Thailand  exempted mode 3 (commercial presence) from 
national treatment and scheduled ma rket access limitations on this mode, including the condition that 
commercial presence is allowed only through a limited  liability company registered in Thailand with 
foreign equity participation not exceeding 49%.  However, under the sector-specific commitments, 
foreign equity limitations on mode 3 vary by sect or, ranging from 20% to 49% for telecommunication 
services, 25% to 49% for most banking, insuran ce, and other financial services, and 49% for 
professional services (legal, accounting, engineering, and architectural services), as well as for certain 
construction services, distribution, educational, envi ronmental, tourism, recreational, and maritime, 
rail, and road transport services.  In general, the temporary movement of natu ral persons (mode 4) is 
unbound, except for business people, corporat e managers/executives, and specialists. 37 
61. Thailand accepted the GATS Fourth and Fifth Pr otocols, on basic telecommunications and 
financial services, respectively.38  In telecommunications, Thailand scheduled a general condition that 
a service provider must be a Thai registered comp any with foreign equity participation not exceeding 
20% and with foreign shareholders representing no mo re than 20% of the company's total number of 
shareholders (head-note to the telecommunication section);  however, a 40% limit on foreign equity 
was scheduled for specified telecommunicati on subsectors.  Conditional upon passage of the 
necessary laws, Thailand committed to introdu ce new market access and national treatment 
commitments on public telecommunication services into its Schedule, as well as elements of the 
Reference Paper on Regulatory Principles for Basic Telecommunication Services, as of 2006.39  In 
this connection, the authorities have indicated that the telecommunications sector has undergone a 
process of reform and restructuring over the past th ree years and a new regulatory body will be set up 
shortly to oversee the sector, with the Minist ry of Information and Communication Technology 
retaining responsibility for policy-making and mapping out the direction for further liberalization.  
The outcomes of this process will be reflecte d in Thailand's Schedule of Commitments upon 
completion.  
62. According to Thailand's commitments on fina ncial services, the establishment of new 
branches of foreign banks is subject to licensing, although foreign banks that had operated in Thailand 
before July 1995 were allowed to  open up to two additional branches.  Market access through locally 
                                                      
36 WTO Trade Profiles online informa tion.  Viewed at:  http://stat. wto.org/ServiceProfile/WSDBServi 
cePFView.aspx?Language=E&Country=TH [9 February 2011]. 
37 WTO document GATS/SC/85, 15 April 1994. 
38 WTO document GATS/SC/85/Suppl.2, 11 April 1997, and GATS/SC/85/Suppl.3, 26 February 1998. 
39 WTO document GATS/SC/85/Suppl.2, 11 April 1997. WT/TPR/S/255 Trade Policy Review 
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incorporated banks is limited to the acquisition of  shares of existing banks, where foreign equity 
participation is limited to 25% and at least three- fourths of the directors must be Thai citizens.  
However, these limits may be relaxed by the Mi nister of Finance, upon recommendation of the Bank 
of Thailand.  Similar limitations apply to finance companies.  For life and non-life insurance services, 
foreign equity participation is ca pped at 25% and new establishments  are subject to licence approved 
by the Minister of Finance with the consent of the Cabinet.40   There is a national treatment limitation 
concerning life insurance premiums, which are tax deductible up to a certain amount for holders of 
policies issued by locally  licensed companies.  
63. Thailand lodged MFN exemptions pertaining to computer reservation services and other 
business services, transport services (including intern ational maritime cargo, road transport, and 
aircraft repair and maintenance), banking and other financial services41, and the services stipulated in 
the relevant provisions of the Treaty of Amity  and Economic Relations with the United States.42 
64. In the framework of DDA negotiations on ser vices, Thailand submitted initial and revised 
offers, in August 2003 and October 2005, respectivel y.  Thailand offered to include a new category of 
mode 4 in its horizontal commitments and improve its sector-specific commitments in business 
services, distribution, education, tourism, recr eational, and maritime and air transport services.43 
65. At the regional level, Thailand has adopted  services liberalizati on commitments under the 
ASEAN Framework Agreem ent on Services (AFAS)44, and the ASEAN Economic Community 
Blueprint (signed in 2007);  the latter includes a co mmitment to substantially reduce all restrictions on 
trade in services by 2015 (Chapter II(6)(ii)).45   
66. Overall, the liberalization of Thailand's services sector is still an ongoing agenda.  Significant 
restrictions remain on market entry and foreign e quity participation in several subsectors, and the 
regulatory framework is burdensom e.  Rationalizing the regulatory regime and increasing competition 
in Thailand's services sector could help to enha nce innovation and productivity, and hence increase 
the competitiveness of the Thai economy as a whole. 
(ii) Financial services 
67. During the review period, Thailand continued th e implementation of its  long-term Financial 
Sector Master Plan Phase I (FSMP Phase I), initi ated in 2004 with the aim of creating a more 
efficient, inclusive, and internationally competitiv e financial sector.  The reform has led to the 
consolidation of Thaila nd's financial landscape46, helped increase competition in the sector, improved 
risk management, expanded the scope of banks' businesses, and developed mechanisms to protect 
consumers.  The financial regul atory framework has also undergone  substantial reform with the 
enactment of the new Financial Institutions Businesses Act B.E. 2551 (2008) (FIBA), which 
strengthened the Bank of Thailand supervisory an d enforcement powers, and the introduction of 
significant amendments to the insurance and securities regulations.   
                                                      
40 WTO document GATS/SC/85/Suppl.3, 26 February 1998. 
41 The MFN exemptions concerning banking and other financial services were eliminated in 1998.  
WTO document, GATS/EL/85, Suppl. 2, 26 February 1998.  
42 WTO document, GATS/EL/85, 15 April 1994. 
43 WTO (2008). 
44 Reportedly these commitments do not go much beyond GATS nor do they imply actual liberalization 
(Sally, 2007, pp. 1594-1620). 
45 ASEAN online information.  Viewed at:  http://www.aseansec.org/publications/AFAS-2009.pdf. 
46 The number of private financial institutions wa s reduced from 83 in 2003 (before the programme 
started) to 38 in 2010.   Thailand WT/TPR/S/255 
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68. The financial sector grew at an average annua l rate of 6.4% in real terms between 2007 and 
2010, the highest growth rate among economic sectors.  It contributed 4.1% to GDP in 2010, up from 3.6% in 2007, and 1% of total em ployment (Table I.2).  At end 2010, the financial sector's assets 
represented 344% of GDP (300% in 2007);  banks a ccounted for some 81% of the financial sector's 
assets (i.e. banks, specialized financial institutions, and insurance companies).
47   
(a) Banking and finance 
Market structure 
69. Thailand's banking sector comprises 32 commercia l banks, including 16 locally incorporated 
commercial banks, 15 foreign bank branch es, and 1 foreign bank subsidiary.48  There are also three 
finance companies and three credit foncier comp anies, as well as eight "specialized financial 
institutions" (SFIs) controlled by the Government.49   
70. As of December 2010, locally incorporated commercial banks (Thai commercial banks), 
accounted for 85.3% of the banking sector's assets a nd 88.2% of the liabilities, while the foreign bank 
branches and the foreign bank subsidiary represente d 14.7% of the banking sector's assets and 11.8% 
of the liabilities.50  Although there were no major changes in the structure of Thailand's banking sector 
during the review period, foreign ownership in Thai  commercial banks increased somewhat:  in 2010, 
four locally incorporated commercial banks had mo re than 49% foreign ownership, compared with 
only two in 2007 (Table IV.7).  The World Bank repor ts that foreign participation in the Thai banking 
system, either directly or indirectly, is on the rise, and it may contribute to improving competitiveness in the sector.
51  
Table IV.7  
Structure of the Thai banking system:  number of in stitutions and their respective market share, 2007-10 
Institution type 2007 2008 2009 2010a 
 No. Shareb No. Share No. Share No. Share 
Thai commercial banks 17 86.7 17 87.2 16 86.6 16 85.3 
 Locally incorporated, owned and controlled by Thai 15 78.8 14 79.3 13 79.9 12 78.4 
 Locally incorporated, with more than 49% foreign ownership 2 7.8 3 7.9 3 6.7 4 6.9 
Foreign bank branches and subsidiaries 17 13.3 17 12.8 16 13.4 16 14.7 
Total 34 100 34 100 32 100 32 100 
a December. 
b Market share in term of assets. 
Source: Information provided by the Thai authorities. 
                                                      
47 Information provided by the Thai authorities, sourced from the BOT's data base and the Office of the 
National Economic and Social Development Board. 
48 The Mega International Commercial Bank. 
49 The SFIs comprise six banks and two finance corporations:  the Bank of Agriculture and Agricultural 
Cooperatives (BAAC), the Government Savings Bank (GSB), the Government Housing Bank (GHB), the 
Small- and Medium- Sized Enterprises Bank (SME Bank), the Export-Import Bank of Thailand (Exim Bank), the Small Business Credit Guarantee Corporation (SBCG), the Secondary Mortgage Corporation (SMC), and 
the Islamic Bank of Thailand (I-Bank). 
50 Information provided by the Bank of Thailand.  See also Bank of Thailand online information.  
Viewed at:  http://www2.bot.or.th/ statistics/Download/FI_CB_001_S3_ENG_ALL.XLS [10 February 2011]. 
51 According to the World Bank, by August 2010, 9 out of 16 Thai commercial banks had more than 
49% foreign ownership, either directly or indirectly through the instruments issued by the Thai Non-Voting Depositary Receipts Company Ltd (World Bank, 2010c). WT/TPR/S/255 Trade Policy Review 
Page 118 
  
71. Although commercial banks continue to dominate the financial system, the role of SFIs has 
become increasingly important as they serve as instru ments of the Government's credit policies.  SFIs 
provide financial assistance to low-income house holds and specific economic sectors, such as 
agriculture, small businesses, housing, and export promoti on.  It has been estimated that SFIs' share of 
the financial system's total assets was 22% in 200952, and 19.6% in 2010.53  The Government also 
holds a majority equity stake (55.2%) in the Krung Thai Bank and minority shares in two other commercial banks.
54  In total, through its participa tion in commercial banks and SFIs, the 
Government's share in the banking sector  assets was 32% in 2009 and 29% in 2010.55  
72. Overall, Thai banks' fundamentals were fu rther strengthened during the review years, 
enabling the banking system to remain resilient to the global financial crisis  that emerged in 2008.  
Commercial banks have improved their balance shee ts, strengthened their capital base, and recorded 
profits.  The average capital adequacy ratio (cap ital-to-risk-assets ratio) rose from 15% in 2007 to 
16.2% at the end of 2010, well above the minimum regulatory requirement of 8.5%.56 This was the 
result of banks' capital increases and greater profita bility.  At the same time, non-performing loans 
(NPLs) continued to decline.  The ratio of gross NPLs to total loans decreased from 7.3% in 2007 to 
3.6% in 2010, while the ratio of NPLs net of  provision (net NPLs) fell from 3.9% to 1.9%.57  I n  
addition to strong fundamentals, little exposure to subprime-related and stru ctured products, strong 
reliance on domestic deposits for funding, and adeq uate domestic liquidity have enabled the Thai 
banking system to weather the effects of the recen t global financial crisis.  Improvements in risk 
management and more cautious business strategies ha ve also helped the banks to remain resilient.58    
73. The FSMP Phase I was concluded in 2008.  Some  of the key measures undertaken during 
Phase I included the promotion of voluntary merger s, the expansion of commercial banks' business 
scope so as to enable them to serve all client gr oups and perform most type s of financial operations, 
and the rationalization of the bank licensing regime.59  In addition, a "One Presence" policy was 
introduced to reduce duplication and limit financial conglomerates to a single licensed deposit-taking 
institution.  Consolidation was also encouraged th rough the reduction of taxes and land-transfer fees 
applicable to financial institution mergers.  
Legal framework  
74. A key aspect of the reform under the FSMP Ph ase I was the enactment of the 2008 FIBA, 
which unified the legal framework and strengthened the BOT's supervision and enforcement powers.  
The FIBA entered into force in August 2008, as a consolidated Act replacing the Commercial 
Banking Act B.E. 2505 (1962) and the Act on Finan ce Businesses, Securities Businesses and Credit 
Foncier Businesses B.E. 2522 (1979).  It regulat es the activities of commercial banks, finance 
companies, and credit foncier companies.  
75. Under the FIBA, the BOT may increase, on a case- by-case basis, the statutory cap on foreign 
ownership in commercial banks and other financial institutions from 25% to 49%, and the limit on the 
                                                      
52 World Bank (2010b). 
53 Information provided by the Thai authorities. 
54 These are the Thai Military Bank (TMB) and the Siam Commercial Bank (SCB). 
55 Information provided by the Thai author ities.  See also World Bank (2010b). 
56 Bank of Thailand (undated a, b, and c). 
57 Information provided by the Thai authorities.  See also Bank of Thailand online information.  
Viewed at:  http://www2.bot.or.th/statistics/Download /FI_NP_001_ENG_ALL.XLS [15 February 2011]. 
58 IMF (2009). 
59 More details on the rationalization of the bank licensing system can be found in WTO (2008). Thailand WT/TPR/S/255 
 Page 119 
 
 
number of foreign directors from one quarter to one half of total directors.60  Moreover, the Finance 
Minister, with the advice of the BOT, has the author ity to allow foreign investors to hold more than 
49% of a commercial bank's shares, where this is deemed necessary to improve the financial 
performance or strengthen the security of any financia l institution, or the financial system as a whole.  
This authorization may be granted according to specifi ed rules and criteria and subject to a time-limit.  
The authorities indicated that these rules and criteri a are in the process of being defined.     
76. The FIBA makes the BOT the sole regulator of  commercial banks and provides it with broad 
supervisory powers to conduct cons olidated supervision of financia l conglomerates and take prompt 
corrective action.  The Act also permits regulat ors of SFIs to assign the supervision of these 
institutions to the BOT.  The Minister of Finan ce retains the authority to grant or revoke banking 
licences upon recommendation of the BOT.  An amendment to the Bank of Thailand Act, also introduced in 2008, further strengthened the autono my and operational independence of the central 
bank.
61   
77. Another important legal change  was the approval of the Deposit Protection Agency Act, 
which entered into force in August 2008.  Under this Act, the current blanket deposit guarantee 
system will be replaced by a limited deposit insurance.  From 11 August 2011, the insured amount 
will not exceed B 50 million (some US$ 1.5 million) and it will be reduced to a maximum of B 1 million (some US$30,000) by 11 August 2012.
62  The newly established Deposit Protection 
Agency (DPA) will administer the scheme and co llect a premium from all participating financial 
institutions.  The insured financial institutions are commercial banks (including foreign bank branches 
and subsidiaries), finance companies, and credit fonc ier companies.  The new scheme is expected to 
improve consumer confidence, reduc e the moral hazard of the blanke t guarantee system, and diminish 
the public cost of the deposit insurance.63       
78. A committee formed by the BOT to assess the results of FSMP Phase I found that the 
consolidation of financial institu tions had led to improve d operational and risk management practices, 
efficiency gains, a wider range of financial services,  and a more robust and resilient financial system 
in Thailand.64  However, in order to address persistent shortcomings, the committee recommended 
that the Financial Sector Master Plan Phase II (FSMP Phase II), covering 2010-14, be based on three 
pillars:  reducing operating costs, promoting competition and access to financial services, and 
strengthening financial infrastructure.65   
79. Proposed measures under the FSMP Phase II to improve competitiveness in the financial 
sector focus on allowing existing institutions to expand their business scope and branch networks.  
Upon assessment of the results of these measures, and s ubject to the need to fill in any remaining gaps 
in the financial system, the authorities will consider the possibility of allowing new entrants to the 
market.66  As an initial step, Thai commercial banks a nd foreign bank branches have been authorized 
to expand the scope of their activities in mutu al fund management and venture capital fund 
management.  Also, retail banks are now allowed to upgrade to commercial banks, if they have at 
                                                      
60 Section 16 of the FIBA.  The Bank of Thailand has granted exceptions to the 25% cap in several 
occasions. 
61 IMF (2009). 
62 The blanket deposit guarantee scheme was set to end in 2008 but was extended until 2011 to 
strengthen confidence in the Thai financial system during the global financial crisis. 
63 Federal Reserve Bank of San Francisco (2010). 
64 Bank of Thailand (2009). 
65 Bank of Thailand (2009). 
66 Bank of Thailand (2009). WT/TPR/S/255 Trade Policy Review 
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least B 10 billion of Tier 1 capital and demonstrat e good management, adequate risk management 
systems, and business viability. 
80. In order to foster greater participation of  foreign service suppliers, existing foreign bank 
branches will be given the option to upgrade to a subsidiary licence and henc e be permitted to have 
more branches.  Furthermore, from 2012 existing fore ign bank subsidiaries will be allowed to open up 
to 20 branches and 20 additional off-premises automa tic teller machines (ATMs) , provided they meet 
certain requirements, including a minimum paid- up capital of B 10 billion, good assessment ratings 
from the BOT, and an adequate risk management system.  Under current regulations, foreign bank 
subsidiaries are allowed to open only four branches in addition to their head office (with off-site 
ATMs being considered as a branch), and must have a minimum paid-up capital of B 4 billion.   
81. Since March 2010, existing foreign bank branch es have been permitted to open two additional 
branches67, in the form of physical branches, off-pre mise ATMs or currency exchange counters, 
without additional capital requirement.68  Foreign bank branches are not required to have paid-up 
capital, but they must maintain no less than B 3 million in assets in Thailand, as mandated by 
strengthened prudential regulati ons and in order to facilitate risk-based supervision.   
82. With the aim of improving access to financial services for small businesses and the public, the 
BOT will adopt measures to enhance efficiency in SF Is, encourage commercial banks to participate in 
micro-finance activities, and expand the types of assets permitted to be used as collaterals.  It is estimated that some 10% of the population lack access to mainstream financial services.
69 
83. Domestic banks are allowed to borrow forei gn currency cross-border from foreign banks and 
make cross-border deposits in foreign banks, subject  to prudential standards such as those related to 
their foreign exchange position.  Similarly, domes tic corporations and retail consumers are free to 
borrow from foreign banks.  In add ition, residents investing in secur ities abroad are allowed to make 
cross-border deposits in foreign banks  as part of their investment.  However, other residents making 
deposits abroad for purposes other than portfolio in vestment require prior approval from the BOT.  
The rationale of this measure, along with other app licable foreign exchange regulations, is to prevent 
excessive capital outflows and to ensure domestic financial stability.    
84. During the review period, the Thai financial sector's regulatory and supervisory framework 
has been enhanced in line with international standards.  The Basel II Accord is now fully 
implemented:  Pillar I (Minimum Capital Requireme nt) was implemented by end-2008, and Pillar III 
(Market Discipline) and Pillar II (Supervisory Review  Process) in 2009 and 2010, respectively.  For 
the implementation of Basel III, the BOT expects to follow the timeframe of the Basel Committee on 
Banking and Supervision.  Some key prudential measures introduced by the BOT in recent years 
include the consolidated supervision of financia l conglomerates, the calcu lation of risk-weighted 
assets according to the Internal-Rating Based A pproach, the revision of good governance rules to 
improve their practical implementation as regards the structure of boards of directors and their role 
and responsibility, and fit and proper criteria.70  As noted, under the 2008 FIBA the supervisory 
powers of the BOT have been strengthened, includ ing the legal authority to supervise financial 
                                                      
67 Previously, foreign banks were limited to a single branch.   
68 BOT Notification No. SorNorSor 1/2553, and WTO document WT/TPR/OV/13, 24 November 2010. 
69 Bangkok Post , "BOT pushes liberalization under new plan", 5 November 2009.  Viewed at:  
http://www.bangko kpost.com/business/economics/26870/bot- pushes-liberalization-under-new-plan 
[23 February 2011]. 
70 Bank of Thailand (undated c). Thailand WT/TPR/S/255 
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conglomerates and take prompt corrective action.  Th is is an important change  given the emergence of 
large banking conglomerates, with substantia l ownership of non-bank financial institutions.71   
85. Notwithstanding the above-mentioned reforms, th ere seems to be room for improvement in 
certain areas, such as the role of SFIs, which ope rate alongside commercial banks but are regulated 
under separate laws.  For example, SFIs are not subj ect to the BOT's rules governing provisioning and 
capital requirements, and, unlike commercial banks that have fully implemented the International 
Accounting Standards 39 (IAS 39) with respect to pr ovisions for bad loans since 2009, the SFIs were 
granted an extension for compliance until 2012.  In addition, SFIs are not required to prepare their 
accounts to meet with International Financial Re porting Standards and are instead audited by the 
Auditor General.72  While the Ministry of Finance has delegated authority to the BOT to examine 
SFIs, it retains overall supervision.  According to  the IMF, having a separate regulatory regime for 
SFIs and granting them special privileges can ra ise level-playing-field concerns and distort 
competition.  The IMF recommends, therefore, that SFI s be regulated and supervised in the same way 
as commercial banks.73  
86. The spread between commercial banks' lending a nd deposit rates remained substantial during 
the period under review (Chart IV.4), and among th e highest in the region at 4.57 percentage points 
by end-2010.  This is due, in part, to Thai commercial banks' increased attention on maintaining 
profitability in the difficult financial environment of the past few years.74  
(b) Insurance 
Market structure 
87. Thailand's insurance sector continued to de velop during the review period.  Insurance 
penetration (gross premium/GDP) was about 4.21% as of December 2010, compared with 3.57% in 2007.
75  Total insurance premiums amounted to B 421, 042 million.  The insurance sector accounted 
for 11% of the financial sector's overall assets in 2009 (10% in 2007).  At end 2010, there were 87 
locally incorporated insurance co mpanies (Thai insurance compani es), comprising 25 life insurance 
firms and 62 non-life insurance companies.  Ther e were also six licensed  branches of foreign 
insurance companies;  one company was a life insure r and five companies were non-life insurers.  In 
addition, there was one life reinsurer and one non-life reinsurer.  At end 2010, Thai insurance companies accounted for 77% of the market in pr emium terms (72% in 2007);  branches of foreign 
insurance companies had a 23% market share.
76    
88. The life-insurance sector is somewhat concen trated, with the top three companies holding 
53% of the market (by premium), while the non-life insurance sector remains fragmented, with only 
three companies holding a market share of more than 7% as of end 2010.77  Many Thai insurance 
companies have foreign shareholdings, and in recent years foreign insurance firms, including some of 
the larger international companies, have taken st akes or increased their participation in domestic 
insurance companies, partly as a result of legal am endments that have relaxed the limits on foreign 
                                                      
71 IMF (2009).  In general, a bank is allowed to invest in any company for an amount up to 10% of that 
company's sold shares;  prior appr oval from the BOT is required fo r investment exceeding this limit. 
72 World Bank (2010b). 
73 IMF (2009). 
74 World Bank (2010b).  The high interest rate spread does not take into account the deposit insurance 
premium (about 0.4% of deposit rates) that banks have to pay to the Deposit Protection Agency.  
75 Information provided by the Thai authorities. 
76 Information provided by the Thai authorities. 
77 Information provided by the Thai authorities. WT/TPR/S/255 Trade Policy Review 
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ownership.  Out of the 87 locally incorporated insurance companies, 15 life insurers and 34 non-life 
insurers have foreign participation.  
0.01.02.03.04.05.06.07.08.09.010.0
Source:     IMF, International Financial Statistics .Per centChart IV.4
Interest rate spread, 2007-10
Lending rate
Deposit rateInterest spread
 
Legal framework 
89. In order to engage in life or non-life insu rance businesses in Thailand, a company must be 
either a locally incorporated public limited comp any, or a foreign company branch with separate 
capital.  A licence must be obtained in all cases from the Minister of Finance, with the approval of the 
Cabinet.  Foreigners may acquire up to 25% equity  in an existing insurance firm, and this limit may 
be raised in certain circumstances (see below). 
90. Some important changes were introduced to the legal and regulatory framework of the 
insurance industry during the review period.  The Office of the Insurance Commission (OIC) was 
established as an independent sector regulator in  September 2007, under the Insurance Commission 
Act B.E. 2550 (2007), replacing the Department of In surance of the Ministry of Commerce.  The OIC 
is responsible for regulating and supervising th e activities of all licensed insurance companies 
(including re-insurance firms) and insurance interm ediaries in Thailand.  According to the Insurance 
Commission Act, its main mandate is to safeguard th e interests of policyholders against undue loss.  
The OIC has been placed under the Ministry of Finance. 
91. Amendments to the Life Insurance Act B.E.  2535 (1992) and the Non-Life Insurance Act 
B.E. 2535 (1992) entered into force in February 2 008.  The main changes included a relaxation of the 
limit on foreign ownership, the creation of two funds to protect policyholders, new rules for 
calculating capital funds and liquid assets, provisions on corporate governance, and the requirement that insurance businesses become  public companies.    Thailand WT/TPR/S/255 
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92. The amended Life Insurance Act (No. 2) B.E. 2551 (2008) and the amended Non-Life 
Insurance Act (No. 2) B.E. 2551 (2008) retain the 25% cap on foreign ownership in insurance 
companies and the limit on foreign directors at one-four th of the total number of directors.  However, 
if the OIC deems it appropriate, it may raise the fo reign equity limit up to 49% and permit the number 
of foreign directors to exceed one-fourth (but no mo re than one-half) of all directors.  Moreover, the 
Minister of Finance, upon recommendation of the OIC,  may further relax these limits if an insurance 
company faces financial trouble that might cause dama ge to the insured or to the public at large.78  
The relaxation of the limits on fore ign participation is considered as part of the second stage of the 
ongoing liberalization plan for the insurance sector;  th e authorities have indicated that the third stage 
(i.e., full market liberalization) will be implem ented once Thai insurers have enough capacity to 
compete internationally.  In practice, as of e nd 2010, three Thai insurance companies had been 
granted an exception to the limits on foreign ownershi p:  in two, the foreign equity limit was allowed 
to be increased to 49%, while the third compan y was authorized to have up to 99.9% foreign 
ownership.  The authorities have indicated that th e reason for allowing such increases was to enable 
all three companies to increase their capital in order to meet capital solvency requirements and 
strengthen their financial position amidst the recent global financial crisis.    
93. A new feature under the amended Acts is the creation of the Life Insurance Fund and the 
Non-Life Insurance Fund.  Both funds were establis hed in 2008 in order to protect policyholders, who 
are entitled to receive payment of debts arising from  the taking of insurance in the event that an 
insurance company goes bankrupt or has its licence re voked.  Insurance companies must contribute to 
the relevant fund up to 0.5% of their premiums.  The exact rates are determined by the OIC on the 
basis of the premiums earned during the previous six months and the size of the funds. 
94. Another change introduced by the amended Acts is that, before 2013, all limited liability life 
and non-life insurance companies must be registered as public companies, although they may choose whether to be listed on the Stock Exchange of Thaila nd.  The new public companies will be subject to 
relatively more stringent corporate governance rule s.  The branches of foreign insurance companies 
will not be required to become public companies and may keep their current status.  In addition, new 
rules that are being considered would facilitate  mergers and promote industry consolidation.  
However, there have been no chan ges in the insurance licensing regi me since the last Review of 
Thailand, and there seem to be no plans for issuing new licences in the near future. 
95. All licensed life insurance companies must have a minimum capital fund of B 500 million, 
whereas licensed non-life insurance companies mu st have a capital fund of no less than 
B 300 million.
79  In addition, a licensed life insurance co mpany must place a security deposit of at 
least B 20 million with the Registrar, and a licensed  non-life insurance company must place a security 
deposit of no less than B 3.5 million for each type of  non-life insurance inscribed with the Registrar.80  
As of end-April 2011, the total security deposit of the Thai insura nce market, including life and non-
life insurance, was about B 1,389 billion.81     
96. A foreign insurance company must obtain a licen ce from the Minister of Finance, with the 
approval of the Cabinet, in order to establish a bran ch office to engage in life or non-life insurance 
                                                      
78 Section 10 of the amended Life Insurance Act and section 9 of the amended Non-Life Insurance Act. 
79 Notification of the Ministry of Commerce on the Prescription of the Condition for Establishing a 
Limited Company or a Public Limited Company to Unde rtake Life Insurance Business or Non-Life Insurance 
Business B.E. 2538. 
80 Ministerial Regulation (Vol. 5) B.E. 2539 (1996) in accordance with the Life Insurance Act B.E. 
2535 (1992), and Ministerial Regulation (Vol. 5) B.E. 2539 (1996) in accordance with the Non-Life Insurance 
Act B.E. 2535 (1992), respectively.   
81 Information provided by the Thai authorities. WT/TPR/S/255 Trade Policy Review 
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businesses.  A foreign branch must place a security de posit in order to obtain a licence.  In addition, it 
must maintain a certain amount of assets in Thaila nd, as prescribed by OIC notifications, but in no 
case less than the amount of the capital fund it is re quired to maintain under the provisions of the Life 
Insurance Act or the Non-Life In surance Act.  A branch of a fo reign insurance company is not 
allowed to open additional branches.82   
97. An insurance company that h as been granted a life insurance licence is not permitted to 
engage in the non-life insurance business, and vice ve rsa.  This applies to both locally incorporated 
insurance companies and branches of  foreign insurance firms.  Premium rates must be approved by 
the OIC. 
98. Insurance companies in Thailand as well as domestic corporations and consumers are allowed 
to obtain cross-border insurance coverage from fo reign firms.  Cross-border trade in maritime, 
aviation, and land transport insurance is allowed,  and the foreign insurance firms are not required to 
establish in Thailand.  However, foreign insuran ce service providers are not allowed to offer or 
advertise their services directly in the local market. 
99. Foreign re-insurance companies may offer servi ces from abroad, without the need to set up 
locally or operate through a local broker.  While there is no legal requirement, the OIC has issued 
practical guidelines to encourage insurance companie s to maintain minimum domestic retention levels 
for re-insurance.  Although there is no mandatory pr ovision, insurance companies have agreed to re-
insure at least 10% of premiums on fire policies exceeding sums insured of B 30 million with the Thailand Fire Pool.   
100. Life insurance premiums of up to B 100,000 pe r year (raised from B 50,000 as part of the 
stimulus package introduced in March 2008) are ta x deductible for holders of policies issued by 
insurance companies operating in Thailand, including  locally licensed branches of foreign insurance 
firms.
83  Only life insurance policies with maturities over ten years are tax deductible.  Since 2009, 
premiums for health and accident insurance contr acts attached to life-insu rance policies are no longer 
deductible.   
(c) Capital market 
Market structure 
101. Overall, Thai capital markets continued to grow during the review period, albeit with 
important fluctuations.  After a sharp contraction in  2008 due to the global financial crisis, Thailand's 
main equity market, the Stock Exchange of Tha iland (SET), improved its performance significantly in 
2009 and 2010.  The SET Index increased from 449. 9 at end 2008 to 1,032.8 at end 2010.  The 
Market for Alternative Investment (MAI) Index, a secondary market for small and medium-sized 
enterprises, closed at 272.8 at end 2010.  To tal market capitalization (SET and MAI) was 
US$279.4 billion (up from US$103.3 billion at end 2 008).  Local retail investors accounted for 56% 
of total trading volume, foreign investors for 22%, proprietary trading for 14% , and local institutional 
investors for 8%.84     
                                                      
82 Section 8 of the amended Life Insurance Act and section 7 of the amended Non-Life Insurance Act. 
83 In its GATS Schedule, Thailand included this measure as a limitation to national treatment on 
mode 2 (consumption abroad).  WTO Document GATS/SC/85/Suppl.3, 26 February 1998.   
84 Information provided by the Thai authorities.  See also SEC online information at:  
http://www.sec.or.th/infocenter/repor t/Content_0000000135.jsp?categoryID=CAT0000122&lang=en;  and Asia 
Securities Forum (2010). Thailand WT/TPR/S/255 
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102. The SET represents an important source of funds  for local companies, in particular for 
financial institutions, telecommunication companies,  and energy groups.  In December 2010, there 
were a total of 540 listed companies (of which 66  were listed on the MAI); 41 securities companies 
were operating in Thailand, 22 asset management companies, and two venture capital management 
firms.  Securities companies have various owne rship structures and setups:  some are 100% Thai-
owned, some are fully foreign-owned, some have fo reign strategic partners, some are joint-ventures 
between Thai and foreign firms, and some are bank affiliates. 
Legal framework 
103. The Securities and Exchange Commission (SEC) is responsible for policy formulation and 
regulation of the capital market.  It is empowered to supervise and develop the primary and secondary 
markets of Thailand's capital market system as well as  securities-related particip ants and institutions.  
104. Currently, only locally incorporat ed securities companies may appl y for a licence to engage in 
brokerage services, but no new licences have been issued since 1992, making new entry only possible 
through the acquisition of equity in existing secur ities firms.  However, in 2008 the SEC announced 
the liberalization of the securities business licensi ng regime, which will become effective from 1 
January 2012 (see below).   
105. Foreign brokerage service providers may a pply to own 100% of a securities company.  
However, for other securities businesses, including securities underwriting, securities dealing, investment advisory, and asset management bus inesses, which are under List 3 of the Foreign 
Business Act B.E. 2542 (1999), foreign ownershi p exceeding 49% must be authorized by the 
Director-General of Business Development in the Ministry of Commerce, with the approval of the 
Foreign Business Committee.  In the case of asset ma nagement companies, foreign equity holding is 
restricted to 49% in the first five years of business or until 31 December 2011, whichever comes 
earlier.  Thereafter, foreign equity holdings exceeding 49% may be approved under the Foreign 
Business Act B.E. 2542 (1999).  Since early 2010, fo reign securities companies have been allowed to 
provide investment advice on foreign securities through local securities firms without the need to 
apply for a licence in the category of securities/de rivative investment advisor.  There are no legal 
nationality requirements for board s of directors of securities and asset management firms.  
Commercial banks may also engage in securities bus iness (except equity brokerage, equity dealing, 
and equity underwriting), and are s ubject to SEC and BOT regulations. 
106. The Securities and Exchange Act B.E. 2535 (199 2) was amended in February 2008 with the 
aim of ensuring effective implementation of cor porate governance principles, improving transparency 
and fairness in the capital market, and restructuring the SEC.  The amendments entered into effect in 
March 2008;  they include new provisions to protect shareholders' rights, and clearer rules on the duties and responsibilities of companies' board directors and managers.  Heavier penalties 
(imprisonment and fines) are prescribed for fraudulent practices, and employees are urged to inform 
the SEC of any illegal practices on the part of top management, while securities companies are 
prohibited from prosecuting whistle-blowers.  Ot her provisions include requiring securities company 
auditors to report to the company's audit committee any suspicion of activity violating the Securities 
and Exchange Act, and empowering the SEC to cooperate and provide in formation to foreign 
regulators.  The SEC has also been given the author ity to act in the event that a licensed broker fails, 
and to bar listed companies' directors and managers  that do not meet the required criteria and have 
"prohibited characteristics".  
107. In addition, under the amended Act, the structur e of the SEC has been modified with the aim 
of enhancing its operational efficien cy and supervisory functions.  Instead of the Minister of Finance, WT/TPR/S/255 Trade Policy Review 
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the Chairman of the SEC Board now has to be an  independent appointee.  A separate supervisory 
body, the Management Board, has been established to  focus on the issuance of rules and regulations 
governing operational matters, leaving policy making to the SEC Principal Board.   
108. In June 2009, the Capital Market Developmen t Committee (comprising the SEC, the Ministry 
of Finance, and other organizati ons related to the securities busin ess) issued its Capital Market 
Development Master Plan for 2010-2014, which was la ter approved by the Cabinet.  The Plan aims to 
promote the development of the Thai capital market through reforms in eight areas:  (i) abolishing the 
monopoly of the exchange business and enhancing the international competitiveness of the SET;  (ii) 
liberalizing the securities intermediary business;  (iii)  reforming the legal framework;  (iv) improving 
the tax system;  (v) promoting financial innovation to increase products and asset classes;  
(vi) establishing a national savings fund for informal-sector workers85;  (vii) promoting a "culture of 
savings and investments" through long-term saving schemes;  and (viii) further development of the 
bond market.  Regulators hope that the Plan will he lp expand the capital market's size to 130% of 
GDP by 2013 (from 86% in 2008), while increasing th e investor base and facilitating the use of the 
capital market as a funding source to support economic growth.86 
109. In order to promote competition, the authorities plan to end the official monopoly status of the 
SET, abolish rules that forbid members from tradi ng listed stock outside the Exchange, and withdraw 
the requirement that trading of listed stocks must be done by members only, so as to enable linkages with other markets.  The SET, which recently re organized its structure into two segments (i.e. 
exchange business and capital market development), pl ans to demutualize in 2012.  In addition, from 
1 January 2012, the SEC will liberalize the licen sing regime for the securities business and start 
issuing new licences.  To help prepare market part icipants for intensified competition, the SEC has 
given existing securities business licensees wishing to  engage in all types of securities-related 
activities the opportunity to upgrade their licences to a "full service" licence, while those who wish to 
engage in debt, derivatives or asset management  may upgrade their licences to a "boutique service" 
licence.  Moreover, those who chose to engage in a specific category of securities business (i.e. 
broker, dealer, and underwriter;  investment adviso r;  securities borrowing and lending;  or venture 
capital) may apply for a licence in each category separately.
87  Additionally, brokerage fees have been 
reduced gradually since 2010, and will be  fully negotiable in 2012.       
110. In September 2009, the SEC issued new regulations allowing the listing of foreign companies 
on the SET, provided that they are already listed on a foreign exchange that is a member of the World 
Federation of Exchanges and whose regulator is a member of the International Organization of 
Securities Commission (IOSCO).  During the review  period, the SEC took several measures to 
enhance product diversification and business flexib ility, including the launch of gold futures, 
expansion of the types of assets in which mutual and private funds may invest, new regulations on 
trustee businesses, and streamlined procedures for pr ivate placement issuance and offering of bonds to 
institutional investors.88  Also, the SEC has coordinated with the BOT to relax the regulations on 
investment in securities abroad and derivatives tran sactions undertaken by institutional and individual 
investors in Thailand.  As part of a plan for ASEAN capital market inte gration, in 2009 Thailand 
                                                      
85 Workers in the informal sector make up approximately 70% of total labour force in Thailand. 
86 Bangkok Post , "BoT pushes liberalization under new plan", 5 November 2009.  Viewed at:  
http://www.bangko kpost.com/business/economics/26870/bot- pushes-liberalization-under-new-plan 
[23 February 2011]. 
87 SEC, "Securities Business Licensing", Capital Thailand , Quarterly Newsletter, Issue No. 17, 
July 2008.  Viewed at:  http://www.sec.or.th/infocenter/report/Content_0000000906.jsp?categoryID 
=CAT0000294&lang=en [13 July 2011]. 
88 SEC online information.  Viewed at:  http://capita l.sec.or.th/webapp/webnews [23 February 2011]. Thailand WT/TPR/S/255 
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implemented the "ASEAN and Plus Standards Sche me", which harmonizes information disclosure 
standards for the offering of debt and equity  securities within the ASEAN region.      
(iii) Telecommunications 
111. Thailand's telecommunication industry continued to  expand during the review period, albeit at 
a slower pace.  After years of strong growth, dema nd for mobile services has been easing, with market 
penetration having exceeded 100%;  the broadband In ternet market has seen vigorous growth in 
recent years but from a relatively small base, while development in the fixed-line market has been 
insignificant.  Thailand has made progress toward s reforming its telecommunications regulatory 
regime, and the entrance of new operators has incr eased competition in some sectors of the market.  
However, delays in implementing reforms have created uncertainty for operators, and certain 
deregulation issues remain a major challenge, su ch as restructuring the state-owned telecom 
companies.  Under the Act on Organization to Assign Radio Frequency and Regulate Broadcasting 
and Telecommunication Services B.E. 2553 (2010) enacted in late 2010, a single regulator was 
created to oversee the broadcasting and telecommuni cation industries;  the commissioners of the new 
regulator were in the process of being selected at the time of writing this report.  
112. The two state-owned enterprises TOT Public Company Limited (TOT) and CAT Telecom 
Public Company Limited (CAT Telecom) cont inue to play a major role in Thailand's 
telecommunications sector.  Historically, TOT he ld a monopoly over domestic  telephony, while CAT 
had the monopoly over international gatewa y services.  Until the promulgation of the 
Telecommunications Business Act (B.E. 2544) in 2001, private sect or entry into the 
telecommunication market was possible only through build-transfer-operate (BTO) concessions 
awarded by the state-owned companies.89  While the Act terminated the statutory state monopolies by 
allowing for the issuance of telecommunication licen ces, it upheld the validity of the BTO agreements 
signed in the past.  In some cases, these agreemen ts stipulate terms and c onditions (such as access 
charges) that are not entirely in line with modern  regulatory rules, posing a challenge to the sector 
regulator to establish a level playing field.90  Phasing out the concession agreements is another 
unresolved issue.91  
(a) Market structure 
113. The entry of private operators has introduced  competition in the telecommunications market, 
but the degree of competition varies from sector to sector, owing in part to the legacy of the 
concession agreements. 
114. Fixed-line services are divided into two markets:  the Bangkok metropolitan area, and the 
provincial area.  TOT operates in both markets, wh ile its private concessionaires are only allowed to 
provide services in one market each:  True Corpor ation serves the metropolitan area and TT&T serves 
the provinces.  There are no other fixed-line operators .  At end 2010, TOT held a 48% market share in 
the metropolitan area and a 71% market share in the provincial area (46% and 64% in 2007).  Demand 
for fixed-line services has declined, and the overa ll teledensity dropped to 10.4% in 2010 (from 
10.6% in 2007), with significant differences between  the metropolitan area (37.3%) and the provincial 
                                                      
89 Under the BTO agreements, private concessionari es develop telecommunica tion infrastructure and 
then transfer ownership to the Government, in exchange for 25-30 years' exclusive operation of the network, while paying a percentage of revenue to the state operator.  
90 Thailand Development Research Institute (2009). 
91 The authorities have indicated that the current concessions of TOT and CAT will expire in 2018, and 
will not be renewed.  WT/TPR/S/255 Trade Policy Review 
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area (6%).92  The fact that fixed-line tariff rates have been set well below cost seems to have 
discouraged investment in the sector and no new fixed- line rollout is expected in the near future.   
115. The mobile-phone market has continued to grow, and competition among the major players 
has been quite intense, resulting in improved ser vices and lower tariffs.  In September 2010, the 
mobile market penetration rate was 104.1% (up from 80.2% in 2007), of which pre-paid subscriptions 
accounted for almost 94%.93  The three largest mobile-phone service providers are private 
concessionaires, i.e. Advance Info Services (AIS), Total Access Communication (DTAC), and True Corporation (True Move), which hold market sh ares of 42.5%, 32.7%, and 23.3%, respectively.
94  The 
other two mobile phone providers are Hutch, a CAT's joint-venture, wh ich holds a 1.1% market share, 
and TOT's Thai Mobile (0.4%), which is currently  the sole operator holding a 3G 2.1 GHz licence.95   
116. At present, private companies operate only second-generation mobile-phone services because 
the process of 3G licensing has been delayed repeat edly since 2005 due to legal complications.  A 
much-awaited 3G licence auction was to be held  in September 2010, but the process was suspended 
by the Supreme Administrative Court after CAT alleged that the National Telecommunications Commission (NTC) had no authority to allocate the 2.1 GHz frequency spectrum.
96  In the meantime, 
state-owned operators TOT and CAT have been allo wed to undertake "in-band migration" from 2G to 
3G using 900 and 850 MHz.97  The delay in auctioning 3G licences for private operators may 
constitute an impediment to the industry's development, making Tha iland one of the last countries in 
the region to fully deploy advance wireless technology .  The authorities have indicated that a licence 
auction for 3G (new 2.1 GHz frequency spectrum)  will be organized by the new independent 
regulator, the National Telecommunications and Broadcasting Commission (section (b) below).       
117. The internet market is growing rapidly, albeit from a low base.  Increasing demand for 
broadband services and the significant number of new licences issued by the regulator over the past 
years largely explain this trend.  Also, the abo lition of CAT's monopoly over the international internet 
gateway (IIG) in 2006 provided a significant boost to  the industry.  New entrants in the broadband 
market are guaranteed access to the local loop.  As of December 2010, there were 86 internet service 
providers (ISPs), and 16 licences had been issued for the provision of IIG services.  In mid-2010 there 
were around 17.4 million internet subscribers ( up from 8.4 million in 2007), equivalent to a 
penetration rate of 26.3%.98  As regards broadband services, the penetration rate was 3.9% in the 
third-quarter of 2010.99  The broadband market is mainly based on ADSL technology, although 
wireless services are increasing rapidly.  TOT hol ds a 39.1% market share in broadband services, 
followed by True Internet (29.9%), 3BB (26.8%), and others (4.1%).100    
                                                      
92 Information provided by the Office of the National Broadcasting and Telecommunications 
Commission (NBTC). 
93 Information provided by the NBTC. 
94 Information provided by the NBTC.  
95 Thai Mobile was a joint venture between TOT and CAT Telecom until mid-2008 when TOT 
acquired the entire equity stake of the company. 
96 Under Thailand's Constitution (2007), the allocation and assignment of frequencies are to be 
managed by a new independent body, the National Telecommunications and Broadcasting Commission.  The Act establishing the new regulator entere d into force on 20 December 2010.     
97 TOT is currently providing 3G services through the mobile virtual network operator (MVNO) 
business model, and during 2011-12 it plans to roll out 3G network nationwide with 5,320 base stations to support 7.7 million subscribers. 
98 ITU data.  Viewed at:  http://internetwor ldstats.com/asia/th.htm [1 March 2011]. 
99 Information provided by the NBTC. 
100 Information provided by the NBTC. Thailand WT/TPR/S/255 
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(b) Regulatory framework 
118. During the review period, Thailand continued to modernize and strengthen its regulatory 
framework on telecommunications, but there have been long delays and other problems in implementation.  The main legal instruments governin g the sector are Article 47 of the Constitution of 
Thailand B.E. 2550 (2007) , the Telecommunications Business Ac t (TBA) B.E. 2544 (2001), the Act 
on Organization to Assign Radio Frequency a nd Regulate Broadcasting and Telecommunication 
Services B.E. 2553 (2010)
101, and numerous regulations and noti fications issued by the former 
National Telecommunications Commission (NTC), which are in conformity with the 2010 Act.  The 
Act on Organization to Assign Radio Frequency and Regulate Broadcasting and Telecommunication 
Services B.E. 2553, effective 20 December 2010, rep ealed the NTC and mandated the creation of the 
National Broadcasting and Telecommunications Co mmission (NBTC), as the sole regulatory body 
responsible for overseeing the broadcasting and telecommunication industries.  The Commissioners from the former NTC will remain in office acting as the NBTC until such time as this new body is 
appointed.   
119. Under the TBA, there are three types of licences for the provision of telecommunication 
services.  Type 1 licenses are granted to service providers that do not own their own network (e.g., 
providers of internet services and resale services)
102;  Type 2 licences are issued to 
telecommunications operators, whether or not they possess their own networks, who provide services for a limited group of people or services with no significant impact on market competition, the public 
interest or consumers (i.e. specific radio-comm unication services such as aeronautical services, and 
trunk services);  and Type 3 licences are granted to telecommunications operators who use their own 
networks to provide telecommunication services  for the general public, or services having a 
significant impact on competition, the public interest , or requiring special consumer protection (i.e. 
public network telecommunication services).
103  In order to operate mobile services commercially, a 
Type 3 licence as well as a spectrum licence must be obtained.104   
120. The TBA sets out the criteria for obtaining the diffe rent types of licences.  An applicant for a 
Type I licence must submit a notification of inten tion to operate the business for which it has applied 
for the licence;  and must be a juridical person re gistered under Thai law.  An automatic licensing 
scheme exists for Type 1 licences for services such as internet, resal e, international calling card, and 
store-and-retrieve, as well as for Type 2 licences for international internet gateway (IIG) and national 
internet exchange (NIX) services.  More stringent  conditions apply in the case of other Type 2 and 
Type 3 licences, including restrictions on the participation of foreign services providers.105  A t  
end 2010, the NTC had granted 86 Type 1 licences for internet services, as well as 107 Type 1 
licences, 16 Type 2 licences, and 19 Type 3 licences for other telecommunication services.106   
121. There is no limit on foreign ownership in T ype 1 telecommunication businesses.  As regards 
Type 2 and Type 3 businesses, as a result of amendm ents made to the TBA in January 2006, the limits 
                                                      
101 This Act replaced the Act on Organization to Assign Radio Frequency and to Regulate Broadcasting 
and Telecommunication Serv ices B.E. 2543 (2000). 
102 In turn, Type 1 licences can be divided into two main categories:  (1) Type 1 Telecommunications 
business licence, which includes:  international calling card, electronic fax, store and retrieve value-added services, video conference, and forward calls;  and (2) Ty pe I internet service licence, which is granted only to 
internet service providers, including VoIP providers.    
103 Section 7 of the Telecommunications Business Act B.E. 2544 (2001). 
104 Notification on Criteria and Procedure for Spectrum Licensing for IMT Mobile Phone Services in 
the Frequency Band of 2.1GHz. 
105 Section 8 of the Telecommunications Business Act B.E. 2544 (2001). 
106 Information provided by the NBTC. WT/TPR/S/255 Trade Policy Review 
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on foreign ownership were increased from 25% to less than 50%, in accord ance with the Foreign 
Business Act B.E. 2542 (1999).   
122. These changes as well as other regulatory improvements appear to be in line with Thailand's 
intention to liberalize the telecommunication sector , as indicated in its multilateral commitments.  
However, such changes have not yet been incor porated in Thailand's GATS Schedule as indicated by 
its commitment that upon the passage and entry in to force of the necessary new communication acts 
"...commencing in the year of 2006, Thailand will in troduce the market access elements as contained 
in those acts into the relevant parts of its Schedule of Specific Commitments relating to the supply of public telecommunication services."
107  In this regard, the authorities have noted that the Thai 
telecommunication sector has undergone significant re forms over the past three years in order to 
respond to increased demand, technological developm ent, and to enhance administrative efficiency 
and regulation of the sector.  In this context, the Government, through the Ministry of Information and 
Communication Technology, will be responsible for mapping out the direction for further liberalization of telecommunication services, the resu lts of which will be reflected in Thailand's 
GATS Schedule.  
123. The TBA stipulates that interconnection is mandatory for all licensees who own 
telecommunication networks, and that  interconnection charges, which are negotiated privately, must 
be transparent, reasonable, fair, and non-discr iminatory.  The Regulation on the Access and 
Interconnection of the Telecommunication Networks B.E. 2549 (2006) codified such principles, set 
criteria and procedures for access to and use of telecommunication networks, and established a 
committee specifically dedicated to resolve dis putes arising from interconnection issues.  The 
authorities have indicated that since 2007 the commi ttee has accepted 15 disputes for consideration;  
in one instance the dispute led to a petition before the Administrative Court.   
124. A major cause of interconnection disputes relates to  the concession contracts.  This is because 
mobile private operators who have a contract with  CAT Telecom (the international gateway operator 
without domestic network) have to pay access char ges (B 200 per month per post-paid subscriber and 
18% of revenue for pre-paid users) to TOT (own er of its fixed-line network), while TOT's own 
concessionaires pay no access charges.  According to some, this creates an uneven playing field and 
calls for a revision of the conditions set in the c oncession contracts to bring them in line with the 
Interconnection Regulation.
108  The NTC has the authority to determine interconnection rates in 
dispute cases;  accordingly, it has determined such ra tes in several instances by applying the long-run 
average incremental cost model (LRAIC) in line with the Notification on Interconnection Rate 
Calculation Standard (2009).  The rates determin ed by the NTC were 50% to 70% lower than the 
operators' rates.  In addition, the NTC determined  reference rates for fixed and mobile services that 
will apply to all dispute cases submitted to it, with validity until July 2012, unless the new regulator 
announces otherwise.     
125. During the review period, the NTC set interim retail tariff ceilings for all major voice services 
(fixed-line, mobile, and public phone services) based on a previous cabinet resolution.  Reportedly, 
for some fixed-line services the ceiling rate set w as well below cost, a situation that may have 
discouraged much needed investment in the fixed-line network.109  The authorities have indicated that 
the new NBTC may announce the deregulation of the fi xed-line tariff in the near future.  For mobile 
services, the rate has not been binding as it accomm odates the rates charged by the various service 
providers.  Recently, the NTC decided to apply a ne w tariff ceiling rate for domestic mobile services 
based on the rate-of-return method (ROR), which may be introduced in the second half of 2011.  The 
                                                      
107 WTO document GATS/SC/85/Suppl.2, 11 April 1997. 
108 Thailand Development Research Institute (2009). 
109 Thailand Development Research Institute (2009). Thailand WT/TPR/S/255 
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authorities have indicated that when the mobile ma rket becomes more competitive, they may consider 
moving towards price cap regulation instead.  Over all, average telecommunication tariffs to the 
end-user show a decreasing trend;  in particular, the price of broadband internet services declined by 
about 34% between the first-quarter of 2008 and the f ourth-quarter of 2010.  During the same period, 
the price of mobile services decreased on average by 7% to B 0.56 per minute, and the price of the 
fixed-line service, measured as average revenue per user per month (ARPU), was B 281 in the fourth-
quarter of 2010.110 
126. Under the TBA, the sector's regulator is empow ered to take measures to prevent operators 
from engaging in acts that have the effect of rest ricting competition in the telecommunication market.  
The Notification on Measures for the Prevention of Monopoly or Unfair Competition in the 
Telecommunication Business (2006) stipulates that al l licensees and concessionaires are subject to the 
general competition law, the Trade Competition Act (1999).  The Notification also contains provisions that restrict cross-equity holding among telecommunication businesses, prohibit cross-
subsidization (except for universal service), and sp ecify trade practices that are considered anti-
competitive.  According to the competition rules, dominant service providers are those with a market 
share greater than 25% or tho se that the NTC declares to be  dominant according to specified 
criteria.
111  A licensee holding more than a 40% market  share will be deemed to have significant 
market power.112  
127. In order to foster competition in the tel ecommunication market, the NTC has issued 
notifications on:  market definition and relevant market (December 2008);  criteria and procedures on 
the rights of licensees to erect poles, lay lines, pl ace ducts or install any other equipment for the 
supply of telecommunication services (March 2009);  mergers and acquisitions and cross-
subsidization (May 2010);  and local loop unbundling (September 2010).   
128. During the review period, the NTC established Criteria for the Allocation and Administration 
of Telecommunication Numbers (October 2008), a nd Criteria for Mobile Number Portability 
(August 2009 and December 2010).  In December 2010, mobile number portability (MNP) services 
were launched.113  The authorities plan to publish a new Telecommunications Numbering Plan, 
covering numbers for new telecommunication technologies (e.g., ENUM IPV6), numbers for short message services (e.g. SMS), and numbers for tec hnical use (e.g., Engineering Service Centre) in 
order to prevent resource scarcity.    
129. The sector's regulator has the authority to re quire a licence holder to provide universal 
service, provided that this obligation does not pose an undue investment burden on the licensee and is 
the same for operators providing the same type of services.
114  According to the regulations governing 
                                                      
110 Information provided by the Thai authorities. 
111 The criteria used for determining dominant service providers are:  overall business size; control of 
necessary infrastructure;  technological advantages or superiority;  buyer's bargaining power;  constraints on 
market expansion;  product an d service diversification;  ease of access to sources of funds;  eco nomies of scope;  
economies of scale;  ease of market entry of new entrants;  competitiveness;  and degree of vertical integration.  
These factors are taken into consideration when  a licensee holds 25% to 40% market share. 
112 The telecommunication company AIS has been d eclared as having significant market power; 
whereas DTAC has been declared to have a significant market share. 
113 Each mobile operator was allowed to provide MNP services on customers' request (not exceeding 
300 ported numbers per day per operator, as of August 2011) in limited areas (5 in Bangkok and 10 in major 
provinces).  
114 Section 17 of the TBA and Act on Organization to Assign Radio Frequency and Regulate the 
Broadcasting and Telecommunication Services B.E. 2553 (2010). WT/TPR/S/255 Trade Policy Review 
Page 132 
  
the universal service obligation (USO)115, Type 2 licensees having their own network and all Type 3 
licensees are required to contribute to USO by providing services (e.g. installation of fixed lines, internet services networks or public phones in rura l areas and public institutions, such as schools and 
hospitals), or otherwise contribute 4% of their gross revenue.  The Act on Organization to Assign 
Radio Frequency and Regulate th e Broadcasting and Telecommunication Services B.E. 2553 (2010) 
mandates the regulator to develop a USO plan in accordance with government policy.  The Act also 
sets the purpose of the Telecommunications Devel opment Fund, the sources of its budget and the 
duties of the Fund Management Committee.  To de termine the percentage amount of the USO levy, 
the regulator considers criteria such as the objectives and targets for the universal service policy, their 
anticipated costs, and the earnings of network ca rriers.  Traditionally, TOT and CAT Telecom have 
been the only operators providing USO instead of paying the 4% contribution.
116  
130. The regulator is responsible for the administ ration of the Telecommunications Development 
Fund.  Rules for the management and allocati on of the Fund's resources were published in 2006117, 
and the Office of the Telecommunications Developm ent Fund was established in 2009.  The Fund is 
financed from three sources:  the USO fees paid  by the telecommunication operators (74.5%), 
allocations from the NBTC's income (18.2%), and the Fund's interest income (7.1%).  In 2010, the 
Fund's resources amounted to B 547 million, most of  which were allocated to R&D projects (49.5%), 
followed by projects related to public service obligations (PSOs) (20.8%),118 USO projects (17.7%), 
and human resources development (12.1%).119 Under the Act on Organization to Assign Radio 
Frequency and Regulate Broadcasting and Te lecommunications B.E. 2553 (2010), the 
Telecommunications Development Fund was transf ormed into the Public Fund for Research and 
Development in Broadcasti ng and Telecommunication. 
131. Satellite communications are deemed a priority ac tivity under the Board of Investment, and as 
such are eligible for tax and non-tax incentives in ac cordance with the relevant laws and regulations 
of related government agencies.  
(iv) Transport 
132. During the past decade Thailand has made impor tant investments to improve and expand its 
transport networks and internationa l links in order to become a regional transport hub.  In the air 
transport sector, the Suvarnabhumi Airport serving Bangkok, with a capacity of 45 million passengers 
per year, was completed in 2006.  In terms of ma ritime transport and port services, the Laem Chabang 
deep-sea port has been expanded and there are plans for further expansion in order to lift its capacity 
to 18 million TEUs and transform it into the main  gateway port of the Greater Mekong Sub Region.  
Plans for large-scale road and rail projects are also  being considered to expand the land transport 
network.   
                                                      
115 Notification on Criteria and Procedures for the Provision of Universal Basic Telecommunications 
and Social Services B.E. 2548 (2005), Notification on Criteria and Procedures for the Provision of Universal 
Basic Telecommunications and Social Services (No. 2) B.E. 2552 (2009), and Notification on the Operating 
Plan 2010 for the Provision of Universal Basic Telecommunications and Social Services B.E. 2553 (2010). 
116 For example, TOT offers free internet access to all schools, allowing them to log on for the cost of 
local telephone connection (Economist Intelligence Unit, 2010c). 
117 Regulation on the Management and Allocation of the Telecommunications Development Fund 
B.E. 2549 (2006). 
118 PSOs are projects for public telecommunication access for disadvan tage people or people with 
disabilities, which are undertaken in cooperation with no n-telecommunication-related organizations, such as 
universities and hospitals.  
119 Information provided by the Thai authorities. Thailand WT/TPR/S/255 
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133. The overall quality of Thailand's transport infr astructure has been upgraded during the review 
period, but there is still room for improving logist ics efficiency.  Accordi ng to the World Bank's 
Logistic Performance Index (LPI), which is a comp rehensive measure of a country's trade logistic 
performance120, in 2010 Thailand ranked 35th (out of 155 countries), behind Singapore (2nd) and 
Malaysia (29th), but ahead of all other ASEAN countries.121  In terms of the quality of transport 
infrastructure (ports, railways, and roads)  and logistic services, Thailand ranked 36th and 39th, 
respectively.  Although the Government's policy is  to encourage private sector participation in 
infrastructure development, the regulatory framework for the provision and management of infrastructure services is complex and significant restrictions on foreign investment remain in all 
transport subsectors.  
(a) Air transport 
134. During the period under review, Thailand's ai r transportation industry faced several 
challenges, including the global financial crisis, oil price and exchange rate fluctuations, and domestic 
political unrest, all of which negatively affected  air traffic volume and passenger movements.  
However, supported by the recovery of the global economy, particularly in Asia's emerging countries, 
the implementation of liberal air services agre ements with other ASEAN countries, and the 
Government's proactive air transport policies, the Thai  aviation industry started to recover in 2010.    
135. At present (mid-2011), there are ten airline companies providing domestic and international 
scheduled air transport services in Thailand.  These are Thai Airways International Public Company 
Limited, in which the Government holds a 51% share;   Bangkok Airways;  Orient Thai Airline;  Thai 
Air Asia (a Thai-Malaysian joint ve nture);  Nok Air (a subsidiary of Thai Airways);  K-Mile Air;  
Siam General Aviation;  Business Air Centre;  Jet Asia Airways;  and Happy Air Traveller.  A total of 52 companies have been granted a licence by the Mini stry of Transport to provide domestic transport 
services:  21 operate scheduled air services a nd 31 operate charter services.  Thai Airways 
International continues to benefit from the regula tions that require civil servants and officers from 
governmental agencies to use its services, provided th at its ticket price does not exceed the ticket price 
of other airlines by more than 25%.  During the review period, this figure was reduced from 30%.     
136. The Ministry of Transport (MOT) is responsib le for formulating policies for the transport 
system, including air, sea, and road transport services .  The Ministry's policy on air transport focuses 
on the development of airports and the promotion of  the aviation industry in order to make Thailand a 
regional aviation hub and aircraft repair centre, seeking to benefit from the rapid growth in air 
passengers and cargo traffic in the Asia-Pacific regi on.  The Department of Civil Aviation of the 
Ministry of Transport is the industry's regulator ;  its functions include  implementing sectoral 
regulations, promoting and develo ping national civil aviation, c oordinating with domestic and 
international organizations, overseei ng the national airports under its jurisdiction, and operating 
28 regional airports.  The public company Airports of Thailand (AOT), in which the Ministry of 
Finance holds a 70% stake, manages and operates the six main international airports (see below).    
137. The main legal instruments governing the air transport sector are the Air Navigation Act 
B.E. 2497 (1954) and its amendments, the Fore ign Business Act B.E. 2542 (1999), and the 
Declaration of the Revolutionary Council No. 58 B. E. 2515 (1972).  The latter empowers the Minister 
of Transport to impose any conditions necessary to  ensure safety in relation to air navigation 
                                                      
120 The LPI encompasses a range of trade logistics ac tivities, including transport, warehousing, cargo 
consolidation, border clearance, in-country distribution and payment systems by public and private agents. 
121 The Philippines ranked 44th, VietNam 53rd, Indonesia 75th, Lao PDR 118th, Cambodia 129th and 
Myanmar 133rd.  World Bank (2010a). WT/TPR/S/255 Trade Policy Review 
Page 134 
  
activities.  Under the Air Navigation Act, in order to register a commercial aircraft and obtain an 
operating licence, a company must be registered under Thai law and have its main office in Thailand, 
at least 51% of its shares must belong to Thai na tionals, and the majority of the board of directors 
must be of Thai nationality.122  In addition, the company must comply with safety conditions (i.e. 
obtain a certificate of airworthiness), meet minimu m insurance requirements, and submit a feasibility 
study showing that the proposed services will bene fit the public and respond to market demand.   
138. Under the Foreign Business Act, foreigners ar e prohibited from operating domestic air routes.  
However, foreign carriers are allowed to operate international air services in Thailand subject to 
reciprocity.  Thailand implements a "gradual open-ski es policy".  At present, it maintains 99 bilateral 
air services agreements, most of which offer 5th freedom traffic rights, allowing for unrestricted flights 
between Thailand and the contracting partner.  Thaila nd is also a signatory of a number of regional air 
services agreements through which air traffic rights have been liberalized, notably the ASEAN Multilateral Agreement on Air Services (effec tive 13 October 2009), the ASEAN Multilateral 
Agreement on the Full Liberalisation of Air Frei ght Services (13 Octobe r 2009), and the ASEAN 
Multilateral Agreement on the Full Liberalisation of  Passenger Air Services, signed on 12 November 
2010 (not yet in force as of June 2011).   
139. There are 38 airports and aerodromes in Thaila nd.  The Civil Aviation Department manages 
28 public airports, mostly serving domestic routes.   The AOT operates the six main international 
airports, which are responsible for over 90% of Thailand's air traffic.
123  There are also three private 
airports owned and operated by Bangkok Airways, one of which, the Samui airport, opened for 
international flights in September 2007.  In fiscal year 2010, AOT's six international airports handled 
385,769 flights, serving 57.4 milli on passengers and 1.33 million tonnes of cargo and postal parcels.  
The Suvarnabhumi Airport, the country's main airport in Bangkok, accounted for 74% of total 
passenger movements and 95% of the total cargo and postal parcels.  In 2010, it served 98 scheduled 
airlines (92 foreign airlines and 6 Thai airlines), including 85 mixed passenger-cargo carriers and 13 cargo carriers.
124  AOT holds stakes in a number of companies that conduct airport-related 
activities, such as warehouse services, aviation refu elling services, air catering, duty-free shops, and 
hotels.   
140. Travel agencies and airline companies are free to  use the computer reservations system (CRS) 
of their choice.  Currently, there are three CRS pr oviders operating in Thailand, i.e. Amadeus, Abacus 
and Galileo.  Sabre distributes airline tickets through Abacus. 
141. The authorities have indicated that there are no regulations obtaining national airlines to have 
their planes repaired and maintained in domestic f acilities.  However, restrictions apply in certain 
cases for the establishment of foreign maintenance, repair, and overhaul (MRO) providers in Thailand 
under the Air Navigation B.E. 2497 (1954).  Manufacture and repair of aircraft are deemed priority 
activities and therefore benefit from the BOI's tax and non-tax incentives.125 
142. Airline companies and commercial airports may ap ply to the Board of Investment for tax and 
non-tax investment incentives.  Under BOI Announce ment No. 10/2552 (2009), air transport services 
are among the "priority activities" for investment promo tion, and thus eligible for tax benefits such as 
                                                      
122 Section 31 of the Air Navigation Act B.E. 2497 (1954), as amended by the Air Navigation Act 
(No. 10) B.E. 2542 (1999).  
123 The six main international airports are:  Don Mueang, Chiang Mai, Hat Yai, Phuket, Chiang Rai, 
and Suvarnabhumi.  Other international airports are U-Tapao, Krabi, Samui and Udon Thani. 
124 AOT (2010). 
125 Economist Intelligence Unit online information.  Viewed at:  
http://country.eiu.com/article.aspx?articleid=1027808 487 &Country=Thailand&topic [11 March 2011].  Thailand WT/TPR/S/255 
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an exemption of import duty on machinery and an eight-year corporate income tax exemption, 
regardless of location, as well as other privileges that  might apply on a zone ba sis.  Non-tax benefits 
include permission to bring in foreign workers, own land, and take or remit foreign currency abroad.   
(b) Maritime transport and ports 
143. About 89% of Thailand's international trade in volume terms is carried by maritime transport. 
(65.9% in value terms).126  In 2009, the value of import and export cargoes carried by sea amounted to 
B 6,456 billion, and their volume was equivalent to 182.4 million tonnes.127 
144. According to the Thai authorities there were 483 Thai-flagged vessels with a total capacity of 
4.4 million deadweight tonnes (DWT) in 2010 (497 vessels with a capacity of 3.69 million DWT in 
2007).128  In 2010, UNCTAD ranked Thailand's maritime fleet 35th among the countries with the 
largest controlled fleet in terms of tonnage (both under national flag and foreign flag), accounting for 
0.33% of world tonnage.129  Thailand's merchant fleet is privately owned, with the exception of the 
Thai Maritime Navigation Company Ltd. (TMN), a 100% government-owned shipping company.  In turn, TMN has a 30% equity stake in TMN Line , which runs its business with two ocean-going 
vessels.  The Ministry of Transport is consider ing cessation of TMN business operations due to its 
unsatisfactory performance.      
145. The main laws governing maritime transport ar e the Thai Vessels Act B.E. 2481 (as amended 
by the Act B.E. 2540), the Navigation in Thai  Waters Act B.E. 2456 (as amended by the Act 
B.E. 2540), the Maritime Promotion Act B.E.  2521 (as amended in 2005), and the Multimodal 
Transport Act B.E. 2548 (2005).  The Marine Depa rtment, under the Ministry of Transport, is 
responsible for the promotion and development of ma ritime transport;  it is also in charge of law 
enforcement, navigation safety, ship registration a nd inspection, maintenance of navigation channels, 
providing pilot services for seagoing vessels, and minimizing the environmental impact caused by navigation and port activity.  
146. According to the Thai Vessels Act B.E. 248 1 (1938), two categories of ships may be 
registered under the Thai flag:  international ship ping, and domestic shipping.  International shipping 
is open to Thai and foreign mariti me transport operators.  In order to provide international shipping 
services under the Thai flag, operators must:  be at least 51% Thai-owned;  be registered for flying the 
Thai flag;  meet national safety and marine envi ronmental requirements;  and be registered as a 
maritime transport operator with the Marine Depart ment.  Thai-flagged international shipping vessels 
are not allowed to engage in domestic shipping with in Thai territorial waters, unless at least 70% of 
their shares are in Thai hands. 
147. For national security reasons, domestic shipping is restricted to Thai vessels owned by Thai 
nationals or companies incorporated under Thai law with at least 70% Thai equity (Thai Vessels Act).  All vessels engaged in domestic shipping must be registered under the Thai flag at the Marine 
Department;  they may also engage in internationa l shipping provided they meet the relevant safety 
and international standards.  Foreign vessels may be allowed to provide domestic shipping services 
for a period of one year under certain conditions (e.g. when the number of domestic vessels is 
insufficient to meet demand and cannot be efficiently  replaced by other transport means) and subject 
                                                      
126 Information provided by the Thai authorities. 
127 Information provided by the Thai authorities.  
128 Information provided by the Thai authorities. 
129 According to UNCTAD data, Thailand's maritime fleet comprised 298 Thai-flagged vessels (over 
1,000 gross tonnes) and 45 vessels under foreign flag, with a combined tonnage of 3.8 million DWT.  UNCTAD (2010a).   WT/TPR/S/255 Trade Policy Review 
Page 136 
  
to case-by-case approval by the Minister of Transport (Thai Vessels Act).  The number of foreign 
vessels authorized to provide domestic shipping  services dropped from 15 in 2007 to 8 in 2010.130 
148. Although there are generally no restrictions on access to cargoes to and from Thailand, the 
domestic shipping industry continues to receive protection through a cargo reservation policy.  A 
Ministerial Notification of the Ministry of Tran sport requires that goods imported directly or 
indirectly by government agencies or public enterp rises must be transported by Thai-flagged vessels 
on designated shipping routes where su ch vessels are available for services.131   
149. The Government actively promotes the mariti me transport industry through fiscal and 
financial incentives.  Maritime transport services are classified as a priority ac tivity and eligible for 
tax and non-tax benefits under the BOI.  Additionally, for companies incorporated in Thailand and 
engaging in international maritime transport the fo llowing items are not included in the calculation of 
their taxable income:  (i) revenue from ocean freight using Thai vessels; (ii) revenue from selling old vessels in order to purchase new vessels within a year ;  and (iii) dividends from Thai companies that 
provide shipping services with Thai vessels.   
150. Import duties were reduced in 2006 from 10% to  1% on tankers (of 1,000 GRT or less), and 
from 35% to 10% on cargo vessels.  The authoriti es are also considering extending import duties 
exemptions to machinery and materials.   Moreover, the EXIM Bank provides import financing with 
competitive-interest-rate loans (for a total of B 18,000  million) to Thai ship owners for the acquisition 
of new or second-hand vessels engaging in international trade.      
151. Under the Thai vessels Act, the Government a pplies minimum national crew requirements in 
order to provide work opportunities for Thai nati onals.  In the case of Thai vessels engaged in 
international shipping, the require d proportion of Thai seafarers was reduced from 75% to 50% during 
the review period.  With regard to domestic  shipping, all crew must be Thai nationals. 
152. The Multimodal Transport Act (2005) requires a ll multimodal transport operators (MTOs) to 
register in Thailand in order to provide services.  Th ere are three types of registration:  (i) a limited 
company or public limited company incorporated under Thai law with its head office in Thailand;  
(ii) an MTO registered in a foreign country recognized by Thailand under a treaty or international 
agreement, who must appoint an agent or set up a br anch office in Thailand;  and (iii) a foreign MTO 
who must appoint a Type 1 MTO to be its agent, ev en if it already has a branch office in Thailand.  
Alleged lack of clarity in the law on the treatment  of foreign shipping firms and severe penalties for 
non-compliance reportedly caused uncertainty a nd led international shipping companies to 
incorporate in Thailand or appoint an agent so as to avoid risks.
132    
153. Thailand is not a party to the United Nations  Liner Code of Conduct.  The cargo-sharing 
clauses in the maritime transport agreements betw een Thailand and the Peop le's Republic of China 
and between Thailand and VietNam were a bolished in 1995 and 1999, respectively. 
154. The Port Authority of Thailand (PAT), a state enterprise under the supervision of the Ministry 
of Transport, manages Thailand's five main public ports located in Bangkok and the provinces.133  
                                                      
130 Information provided by the Thai authorities. 
131 Information provided by the Thai authorities.  See also Marine Department online information.  
Viewed at:  http://www.md.go.th/eng_page/int_af f/APEC%20IAP%20Transport_Services_Maritime.pdf 
[14 March 2011].   
132 USTR (2010a).  See also Ministry  of Commerce of China (undated). 
133 These are Bangkok port, Laem Chabang port, Ch iang Saen port, Chiang Khong port and Ranong 
port. In addition, the Map Ta Put industrial port is managed by the Estate Authority of Thailand.  The ports of Thailand WT/TPR/S/255 
 Page 137 
 
 
Under the Port Authority of Thailand Act B.E. 24 94 (1951), as amended by the Act B.E. 2543 (2000), 
the PAT is empowered to manage and monitor the oper ation of the ports under its control.  It is also 
responsible for promoting port development, mainta ining cooperation and coor dination with relevant 
government agencies and international ports, and pr oviding a full range of port services, including 
dredging and maintenance of the bar channels and basins, supervising stevedoring, handling, moving, 
storage, and delivery of cargoes to consignees.   
155. Ships of all nationalities calling at Thailand's ports receive MFN treatment and port access on 
a first-come first-served basis.  A 0% VAT rate applies to domestic and foreign shipping companies 
providing maritime transport services to and from Th ailand.  Generally, port fees on export cargo are 
collected at lower rates than those applied on impor t cargo.  The authorities have indicated that the 
reason for this is that export cargo usually involves less use of port facilities and services.   
156. For years, the Thai's Government stated po licy has been to promote private domestic and 
foreign participation in port services, either by operating existing facilities or  by investing in and 
operating new or additional port facilities.134  Under the Foreign Business Act B.E. 2542, a port 
operator must be either a Thai national or a juridi cal person incorporated under the Thai law with at 
least 51% Thai equity.  Private port operators are also required to obtain the relevant permits from the 
Marine Department for the construction, safety, a nd operation of the port, according to the Navigation 
in Thai Waters Act and ot her regulations.  The authorities have i ndicated that 121 ope rators have been 
authorized to operate ports or terminals that can accommodate vessels of 500 GRT or more.  The privatization of the PAT itself has also been under c onsideration for some years, but there has been no 
breakthrough during the period under review.   
157. In line with the Government's privatization policy, in 2004 a 30-year concession was awarded 
to a private consortium to operate container term inals at Thailand's main deep-sea port in Laem 
Chabang (some 110 km south-east of Bangkok).  The Government is keen to promote the use of Laem Chabang port in order to reduce congestion at Bangkok port.  In 2010, 5.06 million TEUs
135 went 
through Laem Chabang (a 10% increase from 2009), while traffic at Bangkok port was 1.45 million 
TEUs.  For 2011, the Laem Chabang port is e xpected to handle 5.5 million TEUs and the Bangkok 
port 1.34 TEUs.136  The PAT authorities have recently contracted out a study on the development of 
phase III of the Laem Chabang port, with the ai m of raising its capacity to 18 million TEUs and 
transforming it into the main gateway port of the Greater Mekong Sub-Region.  The PAT is also preparing the launch of the single rail transfer ope rator (SRTO) at Laem Chabang port.  The SRTO 
will enable the transport of containers by rail between Laem Chabang a nd Lad Krabang in Bangkok, 
with a single operator providing ha ndling and lifting services.  A rail transfer terminal with a capacity 
of 2 million TEUs per year is also being constructe d at Laem Chabang.  The aim is to have an 
efficient railway connection to replace truc king services and decrease logistic costs.  
158. Investment in certain port-related facilities and services, such as loading and unloading 
facilities for sea transport, container yards or inland container depots, and tug boat services are 
classified as priority activities and may receive tax and other benefits under the BOI scheme.    
                                                                                                                                                                     
Trang, Satun and Surat, which were built by the Marine De partment, have been transferred to the Department of 
Treasury to conduct a bidding process for the selection of a port management operator. 
134 APEC (2010);  and Marine Department online information.  Viewed at:  
http://www.md.go.th/eng_page/int_aff/APEC%20IAP%20Tra nsport_Services_Maritime.pdf [14 March 2011].   
135 TEU means twenty-foot equivalent unit. 
136 Information provided by the Thai authorities.  WT/TPR/S/255 Trade Policy Review 
Page 138 
  
(c) Road and rail transport 
159. Thailand's highway network is fairly extens ive, with 51,750 km (including 450 km of 
motorways and expressways), most of which are asphalt roads.  There are also some 150,000 km of rural roads.
137  The Department of Highways of the Ministry  of Transport is responsible for promoting 
the development of the national highways netw ork, as well as carrying out construction and 
maintenance.  In order to reduce logistic costs, which have been  estimated at 20% of GDP, and 
increase Thailand's regional competitiveness, in  2007 the Government programmed large-scale 
investments in the country's road network, in cluding constructing intercity motorways, widening 
highways to four lanes, and strengthening ro ad connections with neighbouring countries.  
Nevertheless, the process of upgrading the national hi ghway network has been slow due to budgetary 
constraints and lack of private sector interest;  it has been suggested that an improved policy 
environment would be needed to enhance pr ivate investment in road infrastructure.138    
160. The main laws regulating road transport are the Land Transport Act B.E. 2522 (1979), the 
Motor Vehicle Act B.E. 2522 (1979), and the Fore ign Business Act B.E. 2542 (1999).  Thailand is 
also a signatory of bilateral road transport agre ements concerning perishable goods in transit with 
Laos and Malaysia, and of regi onal agreements, such as the ASEAN Framework Agreement on the 
Facilitation of Goods in Transit (1998) and the A SEAN Framework Agreement for the Facilitation of 
Inter-State Transport (2008).    
161. Under the Land Transport Act B.E. 2522 and th e Ministerial Regulation on International 
Transport Operation B.E. 2549 (2006), an applican t for a licence to provide international road 
transport services must have a domestic transport licen ce, and be a registered ordinary partnership, a 
limited company, or a public limited company.  If the company headquarters of the applicant is 
located outside Thailand, the applicant must have a branch office or a representative office registered 
under Thai law and located in Thailand.  Foreign op erators wishing to apply for a licence to provide 
international transport services must also comply with  the Foreign Business Act.  Capacity and routes 
available for Thai and foreign operators are dete rmined on the basis of international agreements.139   
162. An applicant for a licence to provide domestic road transport services must either be a Thai 
national or a company incorporated under Thai la w with its head office located in Thailand.  
Moreover, not less than half of the directors of th e company must be Thai nationals and at least 51% 
of the capital must belong to Thai nationals in the cases of a limited company and 50% for a public company.  The Government may grant permission fo r specific foreign investment in road transport 
prior authorization by the Minister of Comme rce with the approval of the Cabinet.   
163. Thailand is actively engaged in the Gr eater Mekong Subregion (GMS) Cooperation 
Programme, which aims at improving physical in frastructure and transport connectivity among the 
countries of the subregion.
140  The GMS Plan of Action (2008-12) includes projects to upgrade 
subregional economic corridors and the GMS Highw ay Expansion Project.  The Government of 
Thailand plans to improve the sections of the East-West Economic Corridor and the Southern 
Economic Corridor that lie within Thailand. 
                                                      
137 ADB online information, "Thailand Country Report on the 13th Meeting of the GMS Subregional 
Transport Forum", 27 October 2009.  Viewed at:  http://www.adb.org/Documents/Events/Mekong/Proceedings 
/STF13-Appendix3.5.pdf. 
138 ADB (2010b). 
139 APEC (2010), "Transport Services:  Road". 
140 Cambodia, the People's Republic of China, Lao People's Democratic Republic (Lao PDR), 
Myanmar, Thailand, and VietNam. Thailand WT/TPR/S/255 
 Page 139 
 
 
164. Thailand's railway network comprises 4,042 km of lines, stretching from Bangkok to the 
north, northeast, east, and south of the country.  The State Railway of Thailand (SRT), a state enterprise, is in charge of the operation, develo pment, and maintenance of the national railways.  
Within the framework of its 30-year Master Plan  (2002-31), the SRT has completed a track-upgrading 
programme on 1,539 km, increasing speed and axel load s.  Another 586 are to be upgraded in the next 
phase.  There are plans to expand the length of doubl e tracking, developing high-speed train lines, and 
constructing new lines, some of which could link to the Lao PDR and Viet Nam.  The Government 
also intends to implement measures aimed at  encouraging a shift from road to rail.
141    
165. Interconnecting GMS countries' railway netw orks is another objective of the GMS 
Cooperation Programme.  A strategic framework for connecting and integrating the national railway 
systems was endorsed by the GMS Ministerial Conference in August 2010.  The GMS countries have also concluded a Cross-border Transport Agreemen t (CBTA) to streamline regulations and reduce 
non-physical barriers to the cross-border transpor t of goods and people within the GMS.  
(v) Tourism 
166. Tourism continues to play a crucial role in Thailand's socio-economic development, 
accounting for about 7% of GDP.
142  It is a major source of foreign exchange, investment, job 
creation, wages, and government revenue.  Despite serious setbacks due to the global economic crisis 
(2008-09) and internal political tensions (Nove mber 2008 and April-May 2010), the hotels and 
restaurants subsector grew at an average annual rate of 3.5% between 2007 and 2010, and contributed 
4.7% to GDP in 2010 (4.9% in 2007).  In terms of job creation, hotels and restaurants accounted for 
6.9% of total employment in 2009 (Table I.2) .  Travel and passenger transportation services 
represented 68.4% of Thailand's trade services receipts in 2010, slightly above the 67.9% registered in 
2007 (Table I.4).   
167. International tourist arrivals totalled 15.9 million in 2010 (13.8 million in 2006).  By origin, 
51.2% of tourists were from East Asia (with Mala ysia and China providing most visitors), followed 
by Europe (27.8%), South Asia (6.2%), the Ameri cas (5.3%), Oceania (4.9%), and the Middle East 
(3.5%).143  The hotel room occupancy rate, which had picked up to around 65% in early 2010, fell to 
35% in May 2010 as a result of domestic political unrest .  Tourist arrivals recovered as of July 2010, 
and the average room occupancy ra te increased to 50% at end 2010.144 
168. The main laws governing the tourism sector are the Tourism Authority of Thailand Act 
B.E. 2522 (1979);  the Foreign Business Act B. E. 2542 (1999);  the Tourism Industry Council of 
Thailand Act B.E. 2544 (2001);  the National Tour ism Policy Act B.E. 2551 (2008);  the Tourism 
Business and  Guides Act B.E. 2551 (2008);  the Hotel Act B.E. 2547 (2004);  and other laws and regulations regarding the operation of restaura nt, hotels, and other tourism-related services. 
169. The Committee for National Tourism Policy, chaire d by the Prime Minister, is responsible for 
formulating tourism policies and plans, including th e designation of areas for tourism development.  
The main objective of the National Tourism Development Plan 2012-2016, approved in 
February 2011, is to place Thailand among the top five destinations in Asia, by increasing the 
international competitiveness of its tourism industry,  thus generating more income and distributing 
wealth on a sustainable basis.  The Plan seeks to increase  tourism income by at least 5% in five years.  
                                                      
141 Asian Development Bank (2010).  
142 World Bank (2010b). 
143 Department of Tourism online information.  Viewed at:  
http://www.tourism.go.th/2010/th/statistics/tourism.php [June 2011]. 
144 Information provided by the Thai authorities. WT/TPR/S/255 Trade Policy Review 
Page 140 
  
In order to achieve this aim, five strategies have  been set out:  (i) to develop infrastructure and 
logistics for domestic and international tourism;  ( ii) to develop and rehabilitate tourist sites in a 
sustainable manner;  (iii) to develop new tourism products and services;  (iv) to improve Thailand's 
international image as a tourist destination;  and (v) to encourage participation of the public sector, the 
civil society, and local organizations in tourism management.145      
170. The Ministry of Tourism and Sports (MOTS)  is the main agency responsible for the 
promotion, support, and developmen t of Thailand's tourism industry.  The Department of Tourism of 
the MOTS is in charge of setting standards for to urist attractions, tourism products, and services;  
issuing permits for tourism business operators a nd guides;  inspecting and controlling tourism 
businesses;  and compiling statistics on the tourism i ndustry.  The Thai Tourism Development Fund, 
created under the National Tourism Policy Act B. E. 2551 (2008) to provide funds for tourism 
development, capacity building, development of ma nagement skills, marketing, and tourism resource 
conservation, is managed by a committee chaired by the Permanent Secretary of the MOTS.  The 
Tourism Council of Thailand represents the tourism industry and acts as a coordinator between the 
public and private sectors.  Its aims include the promotion of the tourism industry and the 
standardization of its products a nd services, the conservation of Thai cultural, historical, and tourist 
attractions, and the dissemination of tourist information (Tourism C ouncil of Thailand Act 
B.E. 2544).    
171. The Tourism Authority of Thailand (TAT) is responsible for marketing strategies, 
campaigning, and promotional schemes.  TAT has prioritized promoting long-term sustainable 
tourism, by seeking a balance between economic, soci al, and environmental goals.  In recent years, 
the TAT has actively promoted Thailand as a high- quality destination, targeting new markets and 
offering new niche products, such as health and medi cal tourism, agri-tourism, Thai cookery courses, 
and international conventions and exhibitions.  Health tourism has been particularly successful:  
Thailand is emerging as a major destination for medical and health care tourism (especially for 
Middle East countries) due to its well established medical industry, which provides high quality and 
cost-effective treatment.  The country  is also becoming better known for its spas and other well-being 
services.  Currently, Thailand holds 38% of the world market share of patients travelling internationally for medical and wellness care, with over 920,000 medical tourists annually.
146  
172. Among the new markets deemed to have strong growth potential for inbound tourism are 
Indonesia, the Philippines and VietNam, as well as  Russia, Eastern Europe, and the Middle East.147  
China, which was Thailand's second tourist source in 2010, after Malaysia, is expected to become the 
top source of visitor arrivals in the coming years.   Thailand is also seeking to become a hub for 
tourists travelling to other countries in the subregio n.  Hence, the TAT has signed an agreement with 
the national tourism boards of Laos, Cambodia, and Myanmar to promote tourism jointly in overseas 
markets.  Implementation of this agreement is cu rrently under the responsibility of the MOTS.     
173. The BOI provides tax and non-tax incentives to hot els with more than 100 rooms.  However, 
projects located in zones 1 and 2 are only eligible  for non-tax incentives, whereas those located in 
zone 3 (except 18 least developed provinces) r eceive only import-duty exemption on machinery.  
Other tourism-related projects such as convention halls, exhibition centres, dedicated health centres, 
retirement homes, ocean marina services, amusement pa rks, cultural centres, aquariums, and tour boat 
renting services are also eligible for different types of tax and non-tax investment incentives under the 
                                                      
145 Foreign Office (2011).   
146 Press release, United Arab Emirates, "Tourism Au thority of Thailand to launch inaugural Medical 
Health and Wellness Road Show", 21 September 2010 .  Viewed at:  http://www .ameinfo.com/242532.html 
[23 March 2011].  
147 Tourist arrivals form the Middle East grew by 23% in 2009-10. Thailand WT/TPR/S/255 
 Page 141 
 
 
BOI.148  Incentives apply to domestic and foreign investor s.  In addition to these incentives, efforts to 
promote tourism have been backed by Government  investment in infrastructure projects such as 
airports and roads (section (iv) above).    
174. Under the Hotel Act B.E. 2547, the operation of a hotel business requires a licence and 
business registration issued by the district office res ponsible for the area where the hotel is located.  
Foreigners wishing to establish a hotel business in Thailand must abide by the Foreign Business Act 
B.E. 2542 (1999).  The limit on foreign equity par ticipation in hotels is set at 49%.  However, 
majority foreign ownership is possible, upon approva l under the Foreign Business Act.  So far, many 
international hotel chains have set  up operations in Thailand.   
175. Under the Tourism Business and Guides Act B.E. 2551 (2008), in order to provide travel 
agency and tour operator services, a licence must be  obtained from the Bureau of Tourism Business 
and Guide Registration, at the department of Touris m of the MOTS.  Companies must be incorporated 
under Thai law, have no less than 51% Thai capital, a nd half of the board of directors must be Thai 
nationals, in order to apply for a tourism business licence. 
176. The provision of tourist guide services is reserved for Thai nationals under the Tourism 
Business and Guides Act B.E. 2551 (2008).  The pers on must be trained and pass the exam conducted 
by universities providing tourism and tour guide traini ng courses, and register as a tour guide with the 
Bureau of Tourism Business and Guide Registration at the Department of Tourism.  Due to the 
shortages of guides speaking foreign languages, th e MOTS is considering the possibility of allowing 
foreign language speaking tour lead ers to work as interpreters in Th ai territory in the company of 
local guides.  According to the authorities, ther e is no discrimination between domestic and foreign 
service suppliers as long as foreigners wishing to  undertake tourism business in Thailand obtain a 
licence from the Bureau of Tourism Business and Guide Registration.149 
177. Under the Immigration Control Act 1979 and Ann ouncements of the Interior Ministry (dated 
1 October 2002, 20 December 2002, 18 October 2004 and 6 May 2005), nationals from 42 designated 
countries or territories may travel to Thailand for tourism purposes without a visa and are allowed to 
stay for a maximum of 30 days on each visit.150 
                                                      
148 BOI online information.  Viewed at:  http://w ww.boi.go.th/english/about/eligible_activities.asp 
[23 March 2011]. 
149 APEC (2010), "Tourism and Travel Related Services". 
150 For the list of countries see MFA online information.  Viewed at:  http://www.mfa.go.th. Thailand WT/TPR/S/255 
 Page 143 
 
 
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