Thailand still strong as food processing location
Former British Prime Minister Tony Blair spoke about the challenges and opportunities facing the Thai economy at the Thailand Board of Investment CEO Forum in Bangkok in late January. Speaking to 500 business and government leaders from Thailand and abroad, he acknowledged the problems the country is still facing in recovering from some of the worst flooding in recent history. Blair expressed confidence in how Thailand is managing the crisis, and stated British companies are still very interested in setting up their regional ASEAN headquarters in Thailand because of the country’s economic and political stability, good infrastructure, skilled workforce and business-friendly environment.
The UK is the largest European Union exporter to Thailand, amounting to $3.47 billion US in 2010. Imports from Thailand to the UK were $1.89 billion US. UK companies and those from other countries are looking to Thailand not only as a thriving market in its own right, but also as a regional base for doing business more widely within ASEAN.
There are many examples of foreign companies that have planted roots in Thailand. One of them is Jelly Belly, a California-based manufacturer of gourmet confectioneries. In 2006, the company needed to expand to continue meeting US demands along with growing international orders. Of the many countries considered, Thailand’s immigration and investment-friendly policies placed it at the top of the sites considered. Thailand’s Board of Investment, for instance, offers an eight-year corporate tax exemption to qualifying companies along with other major incentives not offered by most other Southeast Asia nations. Jelly Belly decided to build a 50,000-square-foot plant in the free-trade zone in Rayong Province, which is located about an hour’s drive south of Bangkok and has a major international seaport at its doorstep.
“Jelly Belly’s primary reason for investing in Thailand is the availability of raw materials, including GMO-free products,” says Herman G. Rowland, Jr., managing director of Jelly Belly Candy Company (Thailand) Ltd. “Additionally, Thailand has competitive labor costs and a central geographic position in Southeast Asia.”
Jelly Belly was careful to assure its customers that producing candy in Thailand would not impact North American distribution, manufacturing or jobs. Instead, the Thailand facility supplies customers in 43 countries outside the US. The facility has helped Jelly Belly better serve Europe and reach emerging growth markets in China, India and the Middle East.
Dole Food Company has operated a growing processed fruit business in Thailand for more than 35 years. “We currently have three manufacturing facilities and employ more than 8,000 associates,” says Dole President Mark McKinney. “Dole has invested several million dollars over the past few years to upgrade and expand our production facilities in Thailand. The policies of the Thai government and the incentives offered by the Board of Investment have been beneficial to us as investors and have helped to ensure that we earn a reasonable rate of return on our investments in the Kingdom.”
Visy Industries of Melbourne, Australia opened a $12 million thermoformed barrier plastic cup factory in Thailand in 2009. The company has grown to become one of the world’s largest privately owned paper recycling and packaging companies. “We decided to open a plant in Thailand to be closer to our major customer, Dole,” says Visy Company Director Simon Shale. More than two-thirds of output is sold to clients in Thailand, mainly to Dole for fruit salads, with exports going mainly to the US and China markets.
Visit www.boi.go.th for more information on the Thailand Board of Investment.