Modern industrialization started in the early 1960s. Although the first Industrial Promotion Act was promulgated in 1954, it was only implement in 1960 with the establishment of the Board of Investment. The Act was revised in 1962 to promote investment in specific activities, mainly through tariff protection, tax holidays and reduction of taxes on imported raw materials and machinery. A new law was introduced in 1972 in accordance with the government’s shift in policy from an import-substitution to an export-oriented economy.

Growing at an average rate of approximately 10 percent per year since 1960, in 1993 manufacturing accounted for more than 24 percent of the national income; employed 10 percent of the entire labor force; and accounted for 64 percent of exports, making it the nation’s largest sector.

In 1960, industrial activity was concentrated on food processing, which accounted for over one-third of total manufactured products. Other significant products were beverages, tobacco, garments and chemical compounds. From 1960 to 1969, the fastest growing was the petroleum products industry, averaging 103.1 percent per year. However, between 1980-1989 the average growth rate declined to only 5 percent per year as a result of the diversification of the industrial sector.

Intermediate products, among them machinery, electrical machinery, iron and steel, metal products, and non-metallic products also expanded rapidly. As a result of the relatively high growth rates of these industries structural change took place in this sector. Instead of concentrating on a few industries, the manufacturing sector’s activities broadened to encompass several new groups of industries. Thus, in 1970 more intermediate products were manufactured, e.g. electrical machinery, transportation equipment, textiles and garments not only to substitute for imported products, but also for exported products.

Between 1986 and 1988, textiles and garments was the most important industry, accounting for 29.2 percent of principal export, while canned food accounted for 12.7 percent in 1988.

Between 1970 to 1993, the share of tobacco products in Gross Domestic Product declined from 8.5 percent to 0.85 percent, non-metallic mineral products decreased from 4 percent to 2 percent, and rubber and rubber products from 2.6 percent to 0.68 percent while general machinery and electrical machinery increased from 5 percent to 12 percent.

Viewing the past two decades of industrial development in Thailand, the following observations can be made:

* A high degree of diversification has taken place in the industrial sector. As a result, industrial activity in Thailand today has become more evenly distributed among many groups of industries and is more complex than in the 1960s. * The growth of manufacturing output during the 1960s was characterized by import substitution. Since the 1960s, the share of consumer and manufactured goods among Thailand’s total imports declined continuously, while that of intermediate and capital goods increased. By the 1970s, the Thai economy reached the stage where component parts and other intermediate capital goods could be produced locally. As a result, the imported content of many locally-made industrial products is decreasing. * In the early 1960s, Thai exports consisted almost entirely of primary commodities. A decade later the manufacturing sector had developed to the extent that locally-made products were competing on world markets. Thereafter export-oriented industries began to gain prominence. Part of this shift resulted from a widespread concern in the early 1970s over limited demand in the domestic market. Also conductive circumstances in the world market at that time called for a shift in policies from producing for domestic markets to producting for export. The textile boom which started in 1972 came basically in response to export potential. The import quota on Japanese goods imposed by the U.S. enabled Thai textiles to capture a larger share of that market. The sugar boom which began in 1974 was in response to the sudden increase in the world price. Production of other items such as food products, animal feed, chemical products, pharmaceuticals, iron and steel products, and electrical components also grew in response to domestic and foreign demands.

One important aspect of industrial development in Thailand has been the private sector’s rapid response to shifting market demands. This is reflected in the changing structure of manufactured imports and exports since the early 1960s.

In 1955, Thailand’s imports of manufactured goods accounted for about 75 percent of the total value of imports. By 1993 the proportion had declined to about 28 percent but capital goods such as machinery and transport equipment, increased from 28.9 to about 45.8 percent. Import of raw materials also incresed remarkably.

On the export side, Thailand’s manufactured exports contributed about 2.4 percent of total export earnings in 1957. This had risen to 64.45 percent by 1993. For the period 1983-1993. the share of basic manufactured goods rose from 17.8 percent to 18.23 percent, and machinery increased from 5.7 percent to 30.0 percent while the export of miscellaneous manufactured goods increased from 10.1 percent to 20.8 percent.

In the current phase of Thailand’s industrial development, dating from the realignment of the Japanese yen and other major currencies, the country is benefiting from a major regional restructuring of manufacturing. Production of a new range of intermediate manufactures is being fuelled by a wave of foreign investment and industrial relocation from Japan, Taiwan and other Asian NIEs, in addition to the U.S. and other countries.

On the whole, Thailand’s manufacturing sector’s performance has been impressive. With its ability to expand and adapt to world market conditions, the country can look forward to further diversification and growth and to resultant increased prosperity.

Taking into consideration the availability of resources and the potential of projects already underway, one may expect to following industries to grow in significance over the next decade.

Agro-based industries. At present Thailand has abundant supplies of farm produce. The advantage of establishing additional food processing industries is, therefore, apparent. Large-scale commercial livestock production offers unlimited growth potential. Other agro-based industries with good prospects include palm oil, vegetable oil, canned fruit, and paper pulp.

Non-ferrous construction materials. Thailand’s cement industry is reputedly the largest is Southeast Asia; prior to 1975, the country was a net exporter. But during the uncertain period following the oil crises, the Thai government took measures to control inflation by freezing the prices of major commodities including cement. As a result, investment in this industry was delayed, and the country became a net importer of cement. By mid-1979, however, with government encouragement, a massive expansion of capacity was underway which turned Thailand back into a net exporter of cement by 1982. Other construction materials with strong potential are aluminium, glass and ceramics. The economic boom of 1987-89 led to another surge in the construction sector.

Light machinery and equipment. Effective January1, 1987, the Thai government in July 1986, advised local passenger car assembly plants that they must use locally-produced components not less than 54 percent. This measure has helped to accelerate the production of automotive components. The prospect is further enhanced by the cooperation among ASEAN countries to expand intra-ASEAN trade which would enlarge the market for individual countries. Other activities include production of agricultural machinery, diesel engines, drilling and welding machines.

Chemical products. With current market demand, the chemical products industry is expected to expand rapidly over the next few years. Items in this group include herbicides, pesticides, acetylene black, glue gelatin and cellulose acetate.

Mineral processing industries. Developments in this sector point to future expansion of zinc, rock salt and gypsum processing facilities.

In summary, Thailand’s prospects for industrail exports in the near future appear bright. This assessment is based on five major factors: capable producers who now have a strong and flexible agricultural base; much closer contact with world markets than before; low-cost skilled labour capable of producing advanced industrail procucts; the dynamism of East Asian trade and investment growth, and a relatively well-functioning economic system free from distortion by high levels of protection or rapid inflation.

The world sugar shortage of the mid-1970s triggered a boom in Thai cane sugar production. In 1993 sugar had an export earning of 14,820 million baht. In addition to raw cane and granulated white sugar, molasses, a by-product of sugar manufacturing, has been gaining importance. World markets have been requiring molasses in increasing quantities as an ingredient in animal feed. Additional amounts are refined locally to produce ethyl alcohol. However, due to diversification in the economy since 1987, sugar was not ranked in the top ten export earners.

Cassava cultivation on a major scale was not resumed until 1958, when it was taken up by farmers in the Northeast. Foreign demand for tapioca then increased so dramatically that Thailand is now the world’s leading exporter. Local factories process it into flour, which is used industrially, and into the chips and pellets sold as animal feed.

Thailand is the world’s largest producer of natural rubber. Production in 1993 was 1,484,000 tons earning 29,183 million baht. This substantially higher output was due largely to higher world demand for rubber products. Rubber plantations occupied mainly in the South.

Also in demand abroad are Thailand’s numerous garden variety beans. These include mung beans, soya beans and black matpe beans-the source of the famed Far Eastern beansprouts associated throughout the world with oriental cooking. The soya bean is processed into vegetable oil by domestic factories. Other crops grown for their oils inculde coconuts, peanuts, castor seeds and mint.

Canned rambutan and longan have found ready markets overseas but by far the most important of the country’s fruit exports is canned pineapple, of which Thailand is the world’s leading exporter. In 1993 canned and processed food earned 42,605 million baht.

Flowers are also an important export item. Thailand is one of the world’s biggest suppliers of orchids. There are about 2,000 commercial growers, mostly in the Bangkok area. Major markets are Japan and European countries.

In the past, beef production was a profitable farming sideline but in recent years growing demand brought about by the increase in population and urbanization and by a rising standard of living has led to specialization in livestock breeding and commercial stockfarming using scientific methods. High-quality cattle, pigs and poultry have been imported to improve local breeds through cross-breeding. It has also been shown that cattle thrive on coconut plantations if the space between the trees is planted with suitable grass.

Thailand has export markets for beef in Singapore and Hong Kong and is trying to gain entrance into the potentially large Japanese market. Increased scientific beef cattle production will also be a boon to the fast-growing leather and tanning industry.

Thailand’s wide variety of hard and soft-wood forests has created a burgeoning wood industry. Tropical evergreens, hill evergreens, mangroves, deciduous dipterocarps and mixed deciduous are processed to produce firewood, stick lac, gum benzoin, rattan used in the manufacture of cane furniture, bamboo used both for furniture and paper, dyes, tanning bark and a huge variety of medicinal herbs, leaves and roots.

Thailand’s waters are every bit as bountiful as its fields and forests. Thailand is the world’s foremost exporter of frozen shrimp; squid and cuttlefish are also popular export items. According to the Fisheries Department, a fleet of more than 16,000 powered vessels plying the waters off the country’s roughly 3,000 km. coastline approximately 2.6 million tons of marine products a year.

Freshwater fish abound. Besides the many varieties which breed naturally in rivers, lakes and streams, there are those raised by rice farmers in their flooded paddy fields and harvested together with the rice. In addition, the Fisheries Department is vigorously promoting freshwater aquaculture by farmers with large ponds. Freshwater prawns are also plentiful.

Mineral reserves in Thailand are rich and varied, with 1993 exports earning of 3,980 million baht. Tin, for centuries the biggest moneymaker among Thai minerals, remains so today, with the country ranking fourth behind Brazil, Indonesia, and Malaysia.

Gemstones, among them the legendary Siamese rubies and sapphires, have also long been mined in Thailand. Thailand’s coloured gems market is one of the world’s largest. Export of gems and jewelry in 1993 ranked third among exports, earning 40,921 million baht. In addition, many different minerals, ores and metals are being exported. The major minerals, exported, are fluorite, zinc, barite, gypsum, feldspar, antimony, lead one and dolomite.

Minerals mined but not exported include limestone, marl, lignite, potash, kaolinite, ball cay, quartz and tantalum, all of which are used by local manufacturers.

In recent years, the limelight has shifted to other modern buried treasures: natural gas and oil in the Gulf of Thailand. The country’s dependence on imported oil rose from 50 percent of the total energy consumption in 1962 to 75 percent in 1981. By producing and utilizing indigenous sources of energy for substitution, such as natural gas, lignite, hydro-power and non-conventional energy sources, Thailand has reduced her dependence on imported oil. Thus, dependence on foreign energy sources was down to 62 percent in 1993.

Natural gas and oil have been discovered in the North, Northeast, and in the Gulf of Thailand. The new Eastern Seaboard industrail centre comprises a gas separation plant, a petrochemical complex and other manufacturing facilities. Located in three eastern provinces – Chon Buri, Rayong and Chachoengsao – it covers 8.3 million hectares of land. After the successful laying of a 425 km. natural gas submarine transmission pipeline, from the Erawan gas field in the Gulf of Thailand to the onshore terminal and then to the Bang Pakong and south Bangkok power plants, the gas came on stream in 1981.

As a government-owned enterprise, the Petroleum Authority of Thailand (PTT) is engaged in the business of oil supply, oil refinery, gas pipeline operation, gas-processing plant operation and petroleum industry. With the cooperation of other government agencies, PTT has been responsible for the development and exploitation of fossil fuel resources in the country.

Customs

One of the most distinctive Thai customs is the wai, which is similar to the Indian namaste gesture. Showing greeting, farewell, or acknowledgment, it comes in several forms reflecting the relative status of those involved, but generally it involves a prayer-like gesture with the hands and a bow of the head.

Physical demonstrations of affection in public are common between friends, but less so between lovers. It is thus common to see friends walking together holding hands, but couples rarely do so except in westernized areas.

A notable social norm holds that touching someone on the head may be considered rude. It is also considered rude to place one’s feet at a level above someone else’s head, especially if that person is of higher social standing. This is because the Thai people consider the foot to be the dirtiest and lowest part of the body, and the head the most respected and highest part of the body. This also influences how Thais sit when on the ground — their feet always pointing away from others, tucked to the side or behind them. Pointing at or touching something with the feet is also considered rude.

It is also considered extremely rude to step on a Thai coin, because the king’s head appears on the coin. When sitting in a temple, one is expected to point one’s feet away from images of the Buddha. Shrines inside Thai residences are arranged so as to ensure that the feet are not pointed towards the religious icons — such as placing the shrine on the same wall as the head of a bed, if a house is too small to remove the shrine from the bedroom entirely.

It is also customary to remove one’s footwear before entering a home or a temple, and not to step on the threshold.

There are a number of Thai customs relating to the special status of monks in Thai society. Because of their religious discipline, Thai monks are forbidden physical contact with women. Women are therefore expected to make way for passing monks to ensure that accidental contact does not occur. A variety of methods are employed to ensure that no incidental contact (or the appearance of such contact) between women and monks occurs. Women making offerings to monks place their donation at the feet of the monk, or on a cloth laid on the ground or a table. Powders or ungents intended to carry a blessing are applied to Thai women by monks using the end of a candle or stick. Lay people are expected to sit or stand with their heads at a lower level than that of a monk. Within a temple, monks may sit on a raised platform during ceremonies to make this easier to achieve.

Cuisine

Thai cuisine is famous for the blending of four fundamental tastes:

* sweet (sugar, fruits, sweet peppers)
* spicy hot (chilies)
* sour (vinegar, lime juice, tamarind)
* salty (soy sauce, fish sauce)

Most of the dishes in Thai cuisine try to combine most, if not all, of these tastes. It is accomplished by using a host of herbs, spices and fruit, including: chili, cumin, garlic, ginger, basil, sweet basil, lime, lemongrass, coriander, pepper, turmeric and shallots.