Thai Dairy Industry Pe Analysis

Political environment

Despite the power shifted from ex-prime minister, Yingluck Shinawatra, to the hands of the current Prime Minister, General Prayuth Chan-ocha, who is the 12th military strongman to hold the government. Thailand continue to have relatively high ranking of 26 out of worldwide on ease of doing business (World Bank, 2014). Such accomplishment could attribute to open investment policies and substantial business environment reforms since the early 2000s.

Volatile political system has been becoming a trait of government of Thailand since the 1932 coup. After the advent of constitutional monarchy, there have been ten successful coups, nine unsuccessful coup attempts (Reference for Business, 2014). However, the stability of the Thai legal courts and the national respect to the King of Thailand constitutionally retained Thai economic stability and political consistency on the day-to-day level.

Theoretically, according to constitution, the king only holds direct power to appoint the members of the Supreme Court and gives advises in ceremonial events, however, in reality the influence of royal household is far stronger than any other constitutional monarchy in the world. The king and the royal family are revered by the vast majority of Thailand's people, who view the monarch as a sort of demigod, which enables the royal family to contain the Thai army.

Although starting a new business in Thailand is time-consuming, it ranks 75th among 186 countries, requiring 27.5 days, far longer than the average 11.1 days required in the OECD countries. Contrarily, with comparison to other members of ASEAN, Thailand is ranked as the third most favorable country for doing business after Singapore (1st globally) and Malaysia (18th), far higher than Vietnam (28th), Philippines (95th), Indonesia (114th) and Myanmar (177th) (World Bank, 2014). Due to the membership of ASEAN, Thailand has been part of The ASEAN Free Trade Area (AFTA) from 2010, provides investors in Thailand with zero-duty on imports from some of the other ASEAN members. Duties on imports from Cambodia, Laos, Myanmar and Vietnam will also become zero from 2015. Meanwhile, businesses from the USA can benefit from the 1966 iteration of the U.S.-Thai Treaty of Amity and Economic Relations (AER), under which US companies are provided with the same treatment as domestic companies. (Euro Monitor, 2014) In addition, it has free trade agreements with Australia, New Zealand , India, Japan, China, Peru, and Chile and is in the process of negotiating free trade agreements with the European Union.

In terms of protecting investors, Thailand ranks 5th in the world. Meanwhile, Thailand has strong disclosure laws and provides greater rights to shareholders by making directors liable for transactions that could adversely affect the company (Euro Monitor, 2014). To attract Foreign Direct Investment (FDI), Thailand adopts an open trade