Export to Thailand
Thailand is a clear exporter and, within the ASEAN framework, its main trading partners are neighboring countries such as China and Japan, although the United States is the main destination for Thai exports. Bilateral trade between the European Union and Thailand is relatively low and this is partly due to the fact that there is still no free trade agreement between the two parties.
The Kingdom of Thailand concentrates a population of nearly 70 million inhabitants in a little more than 513,000 km2. The country’s GDP stood in 2021 at about 506,000 USM and the per capita income at 8,233 US $.
As a member country and founder of ASEAN (Association of Southeast Asian Nations) since 1967, Thailand maintains very good relations with its member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore and Vietnam), but also with other neighboring countries, such as China (currently the first trading partner of its imports and second of its exports), Japan (third recipient country of Thai exports and second trading partner of imports), although the United States is the main destination of Thailand’s exports.
Other destination countries for Thai exports in Asia are: Vietnam (which received 4.6% of exports in 2021), Malaysia (4.5%), Hong Kong (4.3%), Australia (4%), Singapore (3.3%), Indonesia (3.3%) and India (3.2%).
Within ASEAN, Thailand is the second largest country by GDP (expected to grow between 2% and 3% in 2022), behind only Indonesia, and is also one of the most attractive and dynamic economies in the region, according to the OECD. The country has a good business environment, as reflected by its 21st position in the Doing Business ranking of 190 countries for its trade and business and investment facilities.
Thailand also participates in APEC (Asia Pacific Economic Cooperation), whose main objective is to promote and facilitate trade, investment, cooperation and economic development of Pacific Rim members.
European Union, awaiting trade agreement
Based on 2021 trade data, Thai exports to the European Union exceeded 17,600 USM, accounting for only 7.9% of total exports and giving it the fourth position as a trading partner.
As for Thailand’s imports from the European Union, these stood at over 13,1760 USM, representing 6.8% of the total and experiencing a decrease of almost two points compared to the 2020 data. In this case, the EU is Thailand’s third largest trading partner.
These low bilateral trade figures between Thailand and the EU are partly due to the fact that the European Union does not have a free trade agreement (FTA) with the Asian country. This has led to trade being diverted to other ASEAN countries. However, Spain has signed an agreement with Thailand to avoid double taxation, and the protocol has been in force since 1998.
Despite not having an FTA with the EU, Thailand benefits from certain access facilities to the European market. On the other hand, the Asian country applies tariffs and non-tariff barriers to various European products that make it difficult for them to enter the Thai market.
Spain has the potential to increase trade with Thailand
In the European context, Spanish exports to Thailand represented only 0.3% of the EU total, although this figure means that this country is the second destination in Southeast Asia, only behind Singapore, and is also the fourth origin of Spanish imports from this region, after Vietnam, Malaysia and Indonesia.
Although trade exchanges between Spain and Thailand are modest, in 2021 Spanish exports reached 551 M€, 0.20% of the total (in 2020 they were 502 M€) while imports from Thailand were 1,305 M€.
Mainly, Spain sends to Thailand machinery and mechanical appliances, pharmaceuticals, organic chemicals, electrical appliances and equipment and fish, crustaceans and mollusks, concentrating essentially on: chemicals (up +23.76% in 2021), pharmaceuticals (+20.81%) machinery (+1.29%), minerals (+44.05%) and metal products (+50.34%), among others.
On the other hand, Thai products related to machinery and mechanical appliances, rubber and rubber products, motor vehicles, precious stones and metals, and electrical appliances and equipment are arriving in Spain. Among these, air conditioning (+18.74% increase in 2021), rubber products (+10.11%) and rubber (+77.66%), automobiles, equipment and components (+28.75%) and motorcycles (+48.79%) stand out.
Thus, based on these bilateral trade data, Thailand presents opportunities for growth. One area in which Spain can increase its exports to this country is related to renewable energies, given that the Asian country is trying to reduce its dependence on foreign energy and is promoting the use and production of renewable energies. Another area is infrastructure, as Thailand has earmarked a budget of 84.5 billion euros for public-private railway projects. The Spanish automotive components sector also has good prospects for increasing its sales, given that Thailand exports more than 70% of its vehicle production. Other segments in which Spain can increase its exports to Thailand are agribusiness, because the country is one of the top five net food exporters worldwide and is increasingly dependent on equipment and technology to meet the health and quality requirements of its processes. The pharmaceutical and medical equipment sectors, among others, also present opportunities for growth.
Port of Barcelona business mission to increase traffic with Thailand
From October 22 to 28, the Port of Barcelona organized a business mission to Thailand with the aim of strengthening ties between logistics communities and presenting the Catalan infrastructure as a gateway to Europe for Thai exports.
The port has a strategic position as an entry and distribution hub for the Iberian Peninsula and Europe, as it is the only Spanish port with a direct rail connection to the rest of the continent, as well as to the countries on the Mediterranean coast, with which it connects through various maritime lines.
According to data provided by the Port Authority of Barcelona, this infrastructure is the first in Spain in trade exchanges with Thailand by value of goods. In 2021, trade exchanges between the Asian country and the port totaled almost 494 M€, reaching a market share of 42% in the exchanges of the Spanish port system with Thailand. In volume, this traffic grew to 173,358 tons, representing a market share of 35%.
Thailand has five ports serving different types of traffic. The most important in terms of container movement is Laem Chabang, located in the eastern part of the country, which has become the main deepwater port thanks to its container, ro-ro, general and multipurpose cargo and cruise terminals. In 2021, it ranked among the world’s major ports in terms of container traffic, specifically in 21st place in the ranking, totaling 8.4 million TEUs.
In terms of trade between Laem Chabang and Barcelona, the Thai port annually operates some 345 ship calls to or from Spain, 244 of which are concentrated in Barcelona. Between December 2021 and May 2022, 2,625 containers were moved between Laem Chabang and the Port of Barcelona, according to data from the Thai authorities. Of these, 1,527 were containers imported by the Asian country and 1,098 were exported by Thailand.
Although in trade exchanges between Spain and the Port of Laem Chabang the trade balance is positive for Thailand, exporting more than they import, in the case of the Port of Barcelona more export containers are sent to the Asian country than those received from imports, a fact that reinforces the role of the Catalan port as a priority option for companies when it comes to transporting their goods abroad.
On the opening day of the Port of Barcelona’s business mission held in Bangkok, the director general of the Port Authority of Thailand, Kriengkrai Chaisiriwongsuk, expressed his conviction that this commercial action is an exceptional opportunity to increase trade relations between Thailand and Spain through the Port of Barcelona.
Also the Spanish ambassador in the Asian country, Felipe de la Morena Casado, remarked that the business mission of the Port of Barcelona, the first to Thailand after the pandemic, will contribute to promote a greater bilateral relationship between the two countries. In this context, bilateral trade with Thailand is recovering rapidly and, foreseeably, the figures of 2021 will be exceeded because trade exchanges are experiencing a considerable increase.
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Image copyright 02: Ted McGrath
