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Services agreement likely with India as we expand FTA: Abhisit Vejjajiva, PM, Thailand

Economic Times, India

Services agreement likely with India as we expand FTA: Abhisit Vejjajiva, PM, Thailand

By Amiti Sen, ET Bureau

6 April 2011

Six years after India and Thailand executed a limited free-trade agreement involving just 82 products, the two countries are now ready to work on a full-fledged pact in goods, services and investments. In an exclusive interview to Amiti Sen, Thai Prime Minister Abhisit Vejjajiva talks about his country’s strengthening economic and strategic partnership with India even as it tries to fight political turmoil and put in place a stable democratic regime. Excerpts:

Thailand was one of the first countries in the Asean group to enter into an early harvest programme, or EHP, with India. Why has it taken so long to graduate to a full-fledged FTA?

We have been held back a little by internal procedures. According to our constitution, parliament has to approve the negotiating framework. But I don’t expect to see opposition to this. It is just a question of getting it through the political process which we hope to see completed in the next half of this year. We have already seen very good results from the EHP. The volume of trade has increased several folds over a short period of time.

Do you expect much from the bilateral FTA since you are already part of the India-Asean FTA?

The two FTAs are complementary. The FTA with Asean obviously gives you a greater coverage of the masses. But at the same time, when you are dealing with a whole region, you have to take into account the differences in the stages of development of various members in different sectors. So in that sense, the bilateral FTA has identified areas where you can go further.

India is keen on getting liberal openings in the Thai services market. Are you in a position to oblige?

Services is an area where there is likely to be an agreement as we expand the whole pact. The services sector in Thailand continues to be liberalised as we would like to see a greater share of services in our economy.

What are the areas that Thailand wants India to open up further?

Thai companies are very interested in the construction sector, given the massive investment programme you have, particulary in infrastructure. When you have companies coming here, they also want supporting services in other areas to facilitate these investments.

Where does the potential lie for Indian investors in Thailand?

Indian investors can build on some of the established industries there like pharmaceuticals, petrochemicals, electronics, vehicles, software and ICT. In all these areas you can expect further growth. Even in areas like agro-industry, and service-oriented industries, the Thai industry is outward looking and both sides could gain.

Tourism is a big revenue earner for you and is important to India as well. What are your expectations here?

We went through a difficult period last year during the protest, but ended the year with a record number of foreign visitors. We had 16 million tourists, with 8,00,000 from India. So tourism is actually continuing to grow at a very healthy pace. We need to look for further opportunities.

I have had discussions with the private sector here and told them that we want to see red flags in destinations other than Bangkok which is getting congested. On the other side, there are more Thai people coming here. We hope we will be able to get visa on arrival, which can boost numbers. I have raised this issue with the foreign minister.

Have the political protests over the years affected India-Thai ties?

Yes, we have been held back by the recent events. But we have shown how quickly we can recover and rebound from very difficult situations. We had record high exports last year. We turned around from a negative 2.3% growth in GDP in 2009 to close to 8% last year. And that momentum has not changed. People say that we have managed to sort of decouple economic process from political problems.

Surface and sea connectivity between India and the Asean region has been discussed for some time. How do you view developments there?

We want the East-West corridor to be fully implemented and our push for connectivity with the highway is continuous. Now we are also looking at some connections in terms of energy networks as well, like gas pipelines. We hope India will see the Asean single market worth $2.5 trillion as a big opportunity. Thailand is placed as a hub to a number of Asean countries. Therefore, we play a very important role.

With fresh elections later this year, could there be trouble for the proposed FTA and other economic plans?

I believe that there will be continuity. I think all political parties recognise the need to expand political ties and opportunities, particularly with economies like India. Since we are part of the Asean and would be involved in the integration process (of the Indo-Thai FTA) plus all the agreements that Asean has with its dialogue partners, it clearly means that there will be continuity. Obviously, there will be differences among various governments on the efficiencies and priorities, but the general direction will remain the same.

How do you think the troubling issues of narcotics trade and money laundering need to be dealt with?

Apart from strengthening the internal laws and enforcement, there has to be sharing of information and coordination. We hope that there will be agreements on these issues to help both sides.

Is there scope to expand security and defence cooperation?

On defence, we have exercises of joint patrol. We can look for further forms or channels in which the cooperation can be expanded. The important thing about security and defence is that we have to face new forms of challenges and new forms of security threats like piracy, terrorism and climate change. These are the areas where cooperation can be expanded. We hope that by energising the joint working group we can identify fresh channels and fresh ideas for cooperation.