AMBASSADOR PROMOTES U.S.-THAI BUSINESS RELATIONS IN NORTHERN

UNCLAS SECTION 01 OF 02 CHIANG MAI 000179

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EINV PREL TH
SUBJECT: AMBASSADOR PROMOTES U.S.-THAI BUSINESS RELATIONS IN NORTHERN
THAILAND

REF: 08 CHIANG MAI 39 (HOLLYWOOD, BOLLYWOOD . . . CNXWOOD?)

CHIANG MAI 00000179 001.2 OF 002


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Summary
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1. (SBU) The Ambassador promoted U.S.-Thai economic
relations during a November 18 visit to Chiang Mai. His program
included meetings with local government, press, and private
industry. At his call on the Provincial Governor, the topics
discussed included the need to further IPR protection in
Thailand as a means to support diversification of the economy,
and concern with China's growing influence in the Mekong region,
which the Governor believes the U.S. needs to counter. At a
round table discussion with local press, the Ambassador
highlighted the strong trade that exists between Thailand and
the U.S. and the increased engagement with Asia the Obama
administration has shown. Over lunch, a U.S. IT and
entertainment firm described both the benefits and the hurdles
of doing business in northern Thailand. End Summary.
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Ambassador Meets with Chiang Mai Governor
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2. (SBU) Ambassador and Mrs. John were in Chiang Mai
November 15-17, working together with Jimmy and Rosalynn Carter
on Habitat for Humanity's Mekong Build 2009 (see Embassy Bangkok
website for details --
http://bangkok.usembassy.gov/embassy-activiti es/2009/nov/06
.html). On November 18, the Ambassador spent a full day promoting
U.S.-Thai business relations in northern Thailand. His first
meeting, with Chiang Mai Governor Amonrapun Nimanandh, covered
three topics: northern Thailand's desire to diversify its
economic base beyond agriculture and tourism to include
"Creative Economy" industries; the need for Thailand to
strengthen its intellectual property rights (IPR) enforcement to
attract international investment in those industries; and
Thailand's concern with China's growing trade influence in the
Greater Mekong Subregion (GMS).

3. (SBU) Ambassador reaffirmed the efforts that Consulate
Chiang Mai has, and will continue to make, in support of the
diversification of northern Thailand's economy. The Governor
confirmed his participation in the "Creative Economy IT
Conference" the Consulate will host February 18-19 in Chiang
Mai. The event, which the Ambassador will open, will bring
together U.S. and northern Thai IT professionals to generate new
business partnerships, boost recruiting of the North's IT
talent, and lay the groundwork for sales and investment
opportunities in support of northern Thailand's efforts to
become a cost-effective IT hub. The Governor said northern
Thailand needed to showcase itself better to "Creative Economy"
businesses. He commented that, while during the Thaksin
Shinawatra administration (2001-06) the Government provided
funding to northern Thailand to help develop its IT
infrastructure, such government investment has slowed in recent
years.

4. (SBU) The Ambassador stated that strong IPR enforcement
is a prerequisite for any country to attract international
investment from "Creative Economy" businesses. The Governor
agreed and said the Thai government has already begun this
process by requiring government employees to use licensed
software. Changing the public's behavior will be much more
difficult, however. Moreover, Thai law enforcement officials
have limited resources and training in IPR. He suggested that
granting the Minister of Commerce more power to enforce IPR laws
might be a good first step toward improving enforcement. The
Governor and Ambassador agreed that while Thais may not see the
advantage to protecting IPR today, in the long run Thailand will
benefit economically with stronger IPR protection.

5. (SBU) The Ambassador noted how the Obama administration
has demonstrated a renewed focus in relations with Asia. He
pointed to the Secretary's visit to the region in July, and the
announcement of the Lower Mekong Initiative (LMI),as indicators
of increased U.S. engagement in the region. The initial focus
of the LMI is environmental and health cooperation, which has
the potential to establish a stronger base for economic
development. Programs like these, therefore, could bring
greater foreign investment to the lower Mekong region. The
Governor replied that this would be in both our countries'
interests considering China's recent investments to improve its
trade routes from southern China into the GMS. He expressed
concern that China's influence in the region will grow unchecked
unless the U.S. is there to counterbalance it.
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Round Table Discussion with Northern Thai Press
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6. (SBU) The Ambassador began his meeting with members of
the northern Thai press by pointing out that the bilateral
relationship between the U.S. and Thailand extends beyond
government to government. While in the past 40 years the USG
has invested one billion dollars in Thailand, during the same
period U.S. businesses have invested over $23 billion. This
makes the U.S. one of the largest investors in Thailand, second
only to Japan.

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7. (SBU) The Ambassador noted that U.S. companies directly
employ 250,000 Thais, and indirectly hundreds of thousands more
through suppliers and other support companies. U.S.-Thai
bilateral trade exceeds $30 billion, with $23 billion of that
being exports from Thailand to the U.S. This makes the U.S.
Thailand's largest export market. The Ambassador emphasized his
support for increasing economic activity between the U.S. and
northern Thailand, which currently comprises a relatively small
portion of overall U.S.-Thai commercial activity. He announced
that the U.S. Consulate will be hosting a "Creative Economy IT
Conference" on February 18-19.

8. (SBU) Press members asked about the USG's renewed
interest in the Mekong region, and sought the Ambassadors
opinion on what areas Thailand needs to concentrate on the most
to improve its economic growth and standing in the world. The
Ambassador said the U.S. sees ASEAN as a strategic partner, and
is the group's first Dialogue Partner to have appointed an
Ambassador to ASEAN. He added that the Obama administration's
commitment to greater engagement with Asia will benefit
Thailand. As for improving Thailand's economic competitiveness,
the Ambassador cited improved IPR protection, investment in
communications/IT infrastructure, and stronger education as
significant keys.
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Creative Kingdom Inc. Trying to Create Opportunities in Northern
Thailand
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9. (SBU) The Ambassador visited the office of Creative
Kingdom Animation (CKA),a subsidiary of Los Angeles-based
Creative Kingdom Inc. (CKI),a multi-national architectural
design firm involved in major resort and theme park projects.
According to CKI CEO Eduardo Robles, CKI's Chiang Mai office is
focused on digital animation and video game design, employing
some 170 graphic designers, programmers, and architects among
its 300 employees. The firm has an international client base,
ranging from broadcast and television companies to computer
graphics and computer game design.

10. (SBU) Over lunch, Robles (an American citizen) explained
the opportunities and obstacles facing any foreign company
wanting to do business in northern Thailand. Since opening in
Chiang Mai in 2004, CKA has experienced first-hand the political
upheaval Thailand has been going through. With the repeated
changes of government, and the resulting rapid turnover of
leaders of government agencies, CKA must work without any sort
of continuity needed for development/investment projects.
Robles also expressed his frustration with Thailand's slow
acceptance of tax breaks as a way to stimulate new investment.

11. (SBU) In June, CKI announced its ambitious plans to build
"CNXwood," a $220 million movie studio and theme park resort
(Reftel). If completed, the development is expected to create
over 22,000 jobs, and - in Robles' vision - would position
Chiang Mai to rival Hong Kong as the entertainment production
hub of Asia. CKI has already signed a MOU for the land (just
outside of Chiang Mai) with a private landowner. It has also
secured a provisional commitment for the $60 million start-up
cost from a multinational entertainment group, contingent on
CKI's ability to secure from the RTG tax and non-tax incentives
for foreign investment in the entertainment industry. CKI has
been lobbying the RTG for such measures, including exemption
from tariffs on imported film equipment and a tax credit for
foreign film producers.

12. (SBU) Robles expressed frustration with the difficulty of
navigating the Thai bureaucracy to secure the RTG's cooperation
for a large-scale project like "CNXWood". Robles asked the
Ambassador how the Embassy might be able to help. The
Ambassador responded by describing the various ways the Embassy
can engage in support of U.S. commercial interests, and as a
starting point urged CKI to reach out to the American Chamber of
Commerce in Bangkok, as well as the Embassy's U.S. Commercial
Service office.
MORROW