PRIME MINISTER ABHISIT ENGAGES WITH AMERICAN BUSINESS

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E.O. 12958:N/A
TAGS: ECON EAGR ETRD PREL KIPR TH
SUBJECT: PRIME MINISTER ABHISIT ENGAGES WITH AMERICAN BUSINESS

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1. (SBU) SUMMARY: Prime Minister Abhisit Vejjajiva assured a U.S.
ASEAN Business Council (USABC) delegation on March 4 that his
administration would continue to be "pro-business," even in these
difficult economic times. Abhisit also announced the creation of a
"one-start shop" within the Prime Minister's office to answer
business concerns and coordinate the resolutions among the various
ministries. As part of an ASEAN regional outreach mission, 37
American business representatives met with ten government ministers,
in addition to the Prime Minister himself, during their visit to
Bangkok, March 2-4. The delegation also met with Ambassador John
and said how pleased they were with the engagement and
responsiveness of Abhisit's new government on business issues. This
year's delegation consisted of U.S. companies: Abbott, AIG, APCO,
Caterpillar, Chevron, Coca-Cola, ConocoPhillips, Ford, GE, Guardian,
JHPIEGO, Johnson & Johnson, Merck, Microsoft, Monsanto, Pfizer,
Philip Morris, Rockwell Collins, Time Warner and UPS. END SUMMARY.


2. (SBU) COMMENT: The Abhisit administration has placed a priority
on reaching out to the business community to identify and address
longstanding concerns raised by both domestic and international
companies, and the American business community has been very pleased
with Abhisit's engagement and responsiveness to their concerns.
While no outstanding commercial issues have been resolved yet as a
result of this engagement, the business community is optimistic that
the government is sincere in wanting to address their concerns. END
COMMENT.

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Prime Minister's "One-Start Shop"
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3. (SBU) In a candid and open exchange with Ambassador John and 37
members of the U.S. ASEAN Business Council mission to Thailand on
March 2-4, Prime Minister Abhisit Vejjajiva stressed that his
government is "pro-business." Ambassador John introduced the group
to the Prime Minister and described the extensive investments and
long-standing commitments of these companies in Thailand. The
Ambassador noted that U.S. businesses employ more than 250,000 Thai
nationals, significantly contribute to the more than $32 billion in
bilateral trade each year, and over the years, have invested an
estimated $35 billion in Thailand. He explained that the mission of
the ASEAN Business Council's trip was to engage with Abhisit's
newly-elected government to seek ways to improve the business
climate in Thailand.


4. (SBU) In welcoming the group, Abhisit made it clear that he was
aware of Thailand's outdated business laws and regulations and how
these rules often slow down business operations rather than support
business development. He acknowledged that it will take time and
effort to amend the laws and regulations of concern, and proposed,
as an interim solution, the creation of a "one-start shop," which
would house various ministry representatives in the Prime Minister's
Office to address specific business concerns and coordinate the
government's response to business issues that cut across ministry
lines.


5. (SBU) The Prime Minister joked with the delegation that most
"one-stop shops usually do exactly that, 'stop' or prevent a
solution rather than find one." He, therefore, wants to call his
version a "one-start shop," where businesses can seek immediate
assistance from his government to resolve outstanding issues.
Abhisit explained that the ministry representatives would then
liaise with one another to seek solutions to the outstanding issues
raised by the business community, presumably where legislative fixes
would not be required. The Prime Minister's overture was welcomed
by the group. In the energy sector, for example, companies such as
Chevron and ConocoPhillips have complained about lack of
coordination between the Ministry of Finance, Ministry of Industry
and the Ministry of Energy to address issues such as access to
resources, alternative energy, and diversification of Thailand's
energy resources.


6. (SBU) Some business issues are caught up in foreign policy
challenges. ConocoPhillips raised the long standing issue of
overlapping claims between Thailand and Cambodia over the 27,000 sq.
km fossil fuel reserve in the Gulf of Thailand. The Prime Minister
noted that the Joint Technical Committee needs to be re-activated to
address this issue.

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Ambassador Stresses the Rule of Law
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7. (SBU) Ambassador John met with the delegation separately to
provide an overview of the extensive services that the Embassy
provides to U.S. businesses and the advocacy that we regularly
perform on their behalf. He also provided an assessment of the
current political, economic, and commercial situation in Thailand.
The Ambassador noted the Abhisit administration's efforts to improve
Thailand's business climate, while simultaneously managing a
relatively fragile government coalition. Nevertheless, he also
stressed that many observers may have been making too much of
Thailand's political uncertainties as politics rarely affects
business as usual (the airport closures last year being a striking
exception). Rather, U.S. companies should focus on rule of law
issues, such as contract enforcement, IPR, and tax manipulation,
that have a more significant effect on the business environment.
During an extensive question and answer session, company
representatives explained that they continue to be confronted with
serious issues of corruption, a lack of transparency in government
decision-making, and a lack of coordination among ministries.

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Customs Issues Top the Agenda
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8. (SBU) Speaking on behalf of the express mail delivery industry,
UPS explained that the industry wants to engage the Thai government
in a discussion on the logistics industry as a whole. The express
delivery component is simply a piece of the industry, and a more
comprehensive government plan could help make Bangkok a regional
logistics hub. In follow-on consultations with the Embassy, UPS and
FedEx expressed an interest in hosting a logistics forum in Thailand
to highlight the possibilities that could be derived from true
express delivery systems and modernized customs processing. With
customs laws over eighty years old, Thailand's customs regime is
years behind the express customs regimes in neighboring Singapore,
Hong Kong and Taiwan.


9. (SBU) Philip Morris also expressed its frustrations dealing with
Thai Customs. The company continues to struggle with a lack of
transparency and consistency in customs valuation and a lack of
coordination between the various ministries. According to Philip
Morris representatives, from August 2006 until March 2008, Thai
Customs systematically rejected the transaction value declared as
the basis for valuation and arbitrarily imposed values that were
higher than the declared transaction values to all entries of
imported cigarettes.

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Pharmaceutical Industry Remains Concerned About CLs
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10. (SBU) In response to an Abbott inquiry on the future use of
compulsory licenses, Abhisit clearly stated that any future
consideration of compulsory licenses would be undertaken as a
measure of last resort and this government would only do so in a
consultative manner with the rights holders. Abhisit cautioned that
if the U.S. continued to place more pressure on Thailand with
regards to this issue, that there could be backlash and increased
political pressure from health care activists and NGOs to issue more
CLs. Abhisit expressed dismay to learn that the pharmaceutical
industry had recommended that Thailand be downgraded to Priority
Foreign Country (PFC),despite his administration's good faith
efforts to improve Thailand's IPR regime.