One bright spot for Thai entrepreneurs

ASIA FOCUS

One bright spot for Thai entrepreneurs

With a new labour agreement and rising demand, the tourism sector Dubai emerges as an interesting choice in a tough year

UMESH PANDEY

Thailand has been trying harder to tap into new markets for the past few months amid fears that a slowing economy in the United States and other developed markets could scuttle Thailand's economic growth prospects.

So what are the top targets? Oil-rich countries like the United Arab Emirates.

As a sign of the increasingly cordial bilateral relations between the two countries, officials have signed a memorandum of understanding for importing and recruiting Thai workers for a period of four years. It would guarantee the protection of workers against exploitation or mistreatment.

"This is a landmark deal that would prove beneficial to both sides," Salim Zaabi, the UAE ambassador to Thailand, said in a recent interview.

Thailand's labour force has been instrumental in turning the desert land into one of the world's leading financial and economic hubs. The UAE boasts astonishing hotels, like the Bhurj Al Arab, as well as the ongoing construction of the world's tallest building.

"There are more than 12,000 Thai workers there and the MoU would give them the benefits equivalent to local employees," Mr Zaabi said.

The UAE, formed in 1971 after the British withdrew from the area, is a collection of seven sovereign sheikhdoms. It is home to famous cities such as Dubai, Abu Dhabi and Sharjah.

Mr Zaabi said the agreement covered all aspects of business, including hiring by Thai-AUE joint ventures.

"Say your strength is in the restaurant or spa business, you can actually go there, find a partner, open a joint venture and then hire chefs, masseuses and other staff from Thailand and take them there," Mr Zaabi said.

Demand for Thai hospitality is increasing, he added, and the new MoU would allow an unlimited number of Thais to work in the UAE. Thai companies in the UAE could also take advantage of this deal.

Thailand's strength in the hospitality sector is evident by the growth in the number of health spas and hospitals in the UAE, coupled with some hotels such as those managed by the Dusit Thani group.

"There is no doubt that Thai companies and Thai people have their inherent strength in areas such as hospitality, design and construction, and this is what is required in the UAE," said the diplomat, who has spent his last eight years in Thailand and expects to continue in the position for a few more years.

"There are lots of tourists, both medical and those coming on vacation, to Thailand from UAE," he said. "This has increased the demand for Thai products and services, including Thai food. And this is one reason why there are restaurants mushrooming in cities in the UAE, and it also offers a great opportunity for those looking to expand their operations outside Thailand."

The catch, though, is that entrepreneurs looking to invest in the UAE need a local partner that holds at least a 51% stake in the joint venture, a clause similar to that in Thailand which forbids foreigners from holding majority stakes in various businesses.

Tourism is yet another sector that is booming in the UAE. Thailand has become a favourite destination for Middle East tourists, particularly those in need of medical care.

"Thai hospitals are famous all over the region and this has helped create a vibrant medical tourism market," Mr Zaabi said, adding that more than 60,000 medical tourists from the UAE alone visit Thailand to seek treatment.

Medical tourism is so popular there that Bumrungrad Hospital has already set up an operation in Dubai and is in talks to manage another hospital in Abu Dhabi. The 120-bed operation in Dubai is expected to open some time this year. Bangkok General Hospital is looking to set up operations by 2008.

Apart from the services industry, the construction sector is gaining a foothold in the country as UAE uses its oil wealth to build itself into a financial hub.

"It is surprising but exports from Thailand have been increasing every year, especially the food, cement, garments, car spare parts and electronic goods," Mr Zaabi said. The UAE's consumption-driven economy is being driven by Thai producers, he added.

All this has helped increase two-way trade between the two countries to more than $3 billion, although Thailand continues to remain in deficit due to heavy oil imports from the UAE.

But this should not deter investors from putting money into the UAE as the country has one of the biggest trade free zones in the Middle East. The UAE also offers two-week business approval to help investors make a quick decision.

The biggest benefit, however, is that the country does not apply any kind of taxation on earnings, be it personal income tax or corporate taxes.

"We are a zero-tax country, meaning no taxes are applicable on you. The only tax we have is the 5% customs tax on imported goods," Mr Zaabi said.