Indian Ocean Rim Association for Regional Cooperation
(IOR-ARC)

Organisation Background

The Indian Ocean Rim Association for Regional Cooperation (IOR-ARC), launched in Mauritius in March 1997, is a grouping of nineteen Indian Ocean-rim states, whose aims are to facilitate trade and investment in the region. Member states include Australia, Bangladesh, India, Indonesia, Iran, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, the Seychelles, Singapore, South Africa, Sri Lanka, Tanzania, Thailand, the United Arab Emirates, and Yemen. China, Egypt, France, Japan and the United Kingdom are Dialogue Partners, while the Indian Ocean Tourism Organisation is an Observer.

IOR-ARC activities include several on-going topical projects and work programs conducted by member countries of shared interests, all of which under the umbrella of 3 separate working groups, namely the Working Group on Trade and Investment (WGTI), the Indian Ocean Rim Business Forum (IORBF), and the Indian Ocean Rim Academic Group (IORAG). The Association holds a Council of Ministers meeting once every two years.

Recent Developments

A notable outcome of the Oman meetings was the endorsement of the report of the IOR-ARC High Level Task Force (HLTF). The HLTF had been established in 2001 by the IOR-ARC Council of Ministers to consider the future directions of the IOR-ARC and ways to improve its operations. The final HLTF report includes recommendations which seek to ensure that the Association's work program is reflective of its key objectives of trade and investment facilitation as well as guidelines on the size and management structure of the secretariat. The HLTF report has already been passed to IOR-ARC Ministers for consideration at a meeting in the margins of the United Nations General Assembly meeting in New York on 18 September 2002, and will be further considered at the upcoming Council of Ministers meeting.

In 2003, the following meetings will be held in Colombo, Sri Lanka:
29 March 2003 IOR Academic Group Meeting
30 March 2003 IOR Business Forum Meeting
31 March 2003 Working Group on Trade and Investment Meeting
1-2 April 2003 Committee of Senior Officials Meeting
3 April 2003 Council of Ministers Meeting

More information on IOR-ARC can be obtained by visiting the IOR-ARC website at www.iornet.org or emailing the IOR-ARC Secretariat at iorarchq@intnet.mu

Thailand's participation in the IOR-ARC

Since becoming a member of IOR-ARC in 1999, Thailand has maintained representation at each of the IOR-ARC meetings, including the Council of Ministers, Committee of Senior Officials, and the working groups on Trade and Investment, Business Forum, and Academic Group, and emphasized on the importance of being able to produce some tangible results. Thailand has worked through several projects and work programs in order to achieve the IOR-ARC objectives compatible to Thai national interests, which are to facilitate trade and investment, as well as to promote sustainable growth and balanced development among its member countries.

For the past few years, we have productively involved in many different areas of mutual interests, particularly in fishery and academic cooperation.

As for fishery, Thailand has actively participated in the Group of Expert Meeting on Fisheries. Fortunately blessed with the abundance of natural resources in the Indian Ocean, we should aim to accomplish a more efficient utilization of these resources in a sustainable and environmentally sound fashion. The better cooperation in fishery sector will consequently benefit our people throughout the whole region.

At the first Group of Expert meeting in Muscat, Oman, Thailand presented a report on the regional fishery development. It provides an in-depth evaluation of the current situation in four specific geographical areas namely the Western, Northwestern, Northeastern and Eastern Rim areas of the Indian Ocean. The study attempts to give a clearer understanding of fishery situation and answers to what needs to be done in each sub-regional area in order to develop its capability to its full potential.

As regards the academic cooperation, Thailand has been a fervent supporter of the University Mobility in the Indian Ocean Region (UMIOR) program. So far, Thailand has granted more than 150 scholarships to students interested in pursuing bachelor's and master's degrees at one of its several fine educational institutions. Through university staff and student exchange program, we will gradually help build up the capacity of young generations in the Indian Ocean Rim region, who will better learn and understand the diverse cultural, economic, and social differences of the other countries within the same region.

Thailand's trade relations within the IOR-ARC region

Within the IOR-ARC region, Thailand currently has trade agreements with seven countries; namely, Australia, Bangladesh, India, Iran, Kenya, Malaysia, and South Africa. Thailand has also set up Joint Trade Committees with five of those seven countries (excluding Iran and Kenya) which have met occasionally in the past years.

At present, total trade volume between Thailand and IOR-ARC members accounts for approximately 20 percent of Thailand's total trade. The principle items that Thailand has exported to IOR-ARC countries include computers and parts, automotive and parts, sugar, electrical circuits, and rice. On the other hand, Thailand's major imports from IOR-ARC are crude oil, chemical products, electrical machine and parts, computers and parts, gems and jewelry, silver bar, and gold.

In addition, Thailand maintains a Bilateral Agreement for the Promotion and Protection of Investments with Bahrain, Egypt, India, Indonesia, and Sri Lanka; and a Bilateral Agreement for the Avoidance of Double Taxation with Australia, Bangladesh, India, Indonesia, Malaysia, Mauritius, Singapore, South Africa, Sri Lanka, and UAE.

The investment opportunities in Thailand for other IOR-ARC member states

Investment opportunities in Thailand have been identified as five sets of target industries. The Board of Investment (BOI) have identified the five groups of target industries based on either: offer high long-term growth potential, need to be strengthened in order to compete in the global marketplace; or need to be expanded to take advantage of their competitiveness. The five target industries that offer real opportunities for investors are;

1. Agro-Industry

Thailand is the world's largest exporter of rice, canned tuna, rubber, and canned pineapples. The country is well endowed with various natural resources, cost-effective labor, and proven production capabilities. These fundamental strengths have allowed the improvements on product quality, yields and sustainability, which provide a sound basis for the industries' ongoing transition into higher-value-added agro-processing.

2. Automotive Industry

Thai automotive industry hosts almost every major auto assembler, who has been impressed and attracted into Thailand by the combination of its cost-effective skilled labor and the abundant existence of suppliers of high quality parts and components, as well as its strategic location providing a convenient access to the vast regional market. Assemblers such as Toyota and Fiat have shifted their production into Thailand, not only for domestic but also for regional consumption. Thai auto exports more than tripled over the past five years. This growth of exports is expected to continue, and hence opens up investment opportunities for parts and components manufacturers.

3. Fashion Industry

Thailand's garment industry has been one of the country's top export earners since 1985, placing the textile industry second in the top 10 export earners. The industry will be proactively promoted in tandem with other initiatives, such as the leather and jewelry sectors, where Bangkok is being promoted to be the "Fashion Center of the Region" by 2005 and "Bangkok: Fashion City of the World" by 2012. While Thai craftspeople are well respected for their artisanship, inward FDI will bring in an augmentation of product design improvement and the better establishment of Thai brands and products. Research and development to upgrade design and branding, technology and machinery modernization will be encouraged so that the industry can be transformed from being highly labour intensive to one that is highly innovative.

4. ICT (including Electronics)

Electronics, including information and communication technology, is regarded as key to Thai competitiveness and to its transition toward a knowledge-based economy. Thai electronic goods have long been widely accepted in global markets. The challenge lies in stepping up from simple assembly to higher-value-added processing.

5. High-value-added Services

The BOI targets investments on high-value-added services, including software services, printing, and long-stay tourism, or industries that require a high degree of expertise and specialty, as potentials for further development.

Incentives/concessions to offer for businesses

Thailand Board of Investment provides tax and non-tax incentives, equally granted to both Thai and foreign investors, no matter what nationalities, as follows:

However, these incentives will be offered only to businesses in 7 BOI-promoted industries as follows:

  1. Agriculture and Agricultural Products
  2. Mining, Ceramics, and Basic Metals
  3. Light Industry (including garments, apparels, gems and jewelry, etc.)
  4. Metal Products, Machinery, and Transport Equipment
  5. Electronic Industry and Electrical Appliances
  6. Chemical, Paper, and Plastic
  7. Services and Public Utilities

For further information on investment incentives in Thailand, please check the BOI website at www.boi.go.th

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Department of International Economic Affairs
Ministry of Foreign Affairs, Thailand
January 2003