The Hindu Business Line : Indo-Thailand trade pact to go live from September

THE Free Trade Agreement (FTA) between India and Thailand will go live from September 1, 2004, Thailand's Minister for Science & Technology, Mr Korn Thapparansi, has said.

Eighty-two items are there in the `early harvest' scheme. From September, the customs duty on either country on these 82 items will be reduced by 50 per cent of the current levels. From September 2005, the duties will be 25 per cent of what they are today. Come September 2006, all the 82 items will be traded duty-free.

Disclosing this at a meeting organised here by the Federation of Indian Chambers of Commerce and Industry (FICCI), Mr Thapparansi (who has changed his name from `Dabbaransi') noted that Thailand was "the only country on this planet" to have signed FTAs with both India and China.

Since Thailand had FTAs going (or under negotiations) with several countries, Indian companies would have a greater market access if they set up shop in Thailand, Mr Thapparansi said.

Many Indian companies seem to have realised this. "Since last August, I have received 41 Indian companies in my office, who wanted Thai partners," he said.

Later, speaking to Business Line, Mr Parnpree Bahiddha-Nukara, Vice-Minister for Commerce and the person in-charge of FTA negotiations with India, said that both the countries had agreed upon a set of rules of origin. If any one of the 82 items met with even one of the rules, it would become eligible for the concessional customs duty rate, he said.

He said that the second phase of negotiations would begin soon. Some 5,000 items are likely to be included.FTA will benefit both, says the Thai Minister :

(Excerpts from a recent interview with Mr Korn Thapparansi)

There is a view in India that Thailand will benefit from the FTA at India's expense. India has a big market to offer, but will get little in return. Reactions?

I don't even know who is gaining, who is losing. As long as we pursue our joint actions together leading up to our mutual benefit, it is fine. Because the days have long gone when we look at the trade volume and look for who is plus, who is minus. You know why? Don't ever allow statistics to mislead you. If Thailand is selling a lot of things to India, it means that we have the trade advantage/ trade surplus, okay? But do you know that there are 640 companies owned by Indians in Thailand? Think about that.

It is not a question of ownership of companies, but a question of where economic value addition happens. Even if companies exporting from Thailand to India are Indian-owned, development still happens in Thailand, right?

Not necessarily. It depends on where the natural resources are. Where they are let's go there. We happen to be rich in natural resources for food products and you come to Thailand. You are rich in many other natural resources and we will come to India. You have to be aware that your market is much more attractive than Thailand (for investment). Your market of one billion consumers is more attractive for investment than Thailand, which has 62 million people. So in economies of scale you have much higher advantage to attract investors, than Thailand. Then you have the very strong 250 million `new-rich.' So the population statistics speak for themselves and that's why investment opportunities are more attractive in India.

When is Thai investment happening ?

We did conclude several investments. I think one of them is in software, another in automotive parts. Already concluded, signed in front of my eyes. I think there are several others on food products as well. But large investments are yet to happen.

That is because of the bureaucracy of your government. I think India has one aspect, on which I have my own observations. The provincial administration is very strong. We don't have that in Thailand. We have the Central government, period. In India, you have the Central Government plus - then things start to get more complicated. So overseas visitors from Thailand keep telling me, "Hey, the local administration ! Very strong !" Delhi-Mumbai, Delhi-Bangalore, Delhi-Chennai - we are not used to that kind of administrative bureaucracy. We have the Board of Investment, Bangkok. You have BOI, Delhi, BOI, Bombay, BOI, Bangalore.

But the attraction - the market there - will never go away. The one billion people will never go away. And the spending power is increasing everyday - you can see by the higher percentage of the middle-upper class of the Indian community: highly educated, very sophisticated and very smart brand new generation of Indians - their number is growing up everyday. This symbolises the market demand.

Will you support India in its efforts to get into ASEAN?

I don't even know whether Indian wants to be a part of the ASEAN. I have to confess I don't know so much about this particular subject. But I think it is the other way around. Every country of ASEAN wants to be a part of India because of the market. All of ASEAN is 350 million people, which is one third of your country. Why would you want to become a part of the one-third. Every part of the one-third wants to become a part of you.

If I were Indian Prime Minister, I would rather establish bilateral relationships - Singapore-India, Thailand-India and Malaysia-India. It would be much better.

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