TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

THAILAND
Trends and impacts of foreign investment in
developing country agriculture
TABLE 3
Foreign investment in the food processing sector classified by shareholders
Source: Report Of the 1997 and 2007 Industrial Censuses, Whole Kingdom, Thailand’s National Statistical Office, Office of the Prime
Minister
their products (BOI, 2006). Since then, foreign
investors’ confidence has improved as shown by
their continuous increased investments in this
sector up to the present.
Although foreign investment in the agricultural
sector promoted by the BOI has increased
markedly to date, it has a relatively small share
in total foreign investment compared with other
sectors. Foreign direct investment in agriculture
and agricultural products has concentrated in
export-oriented activities, particularly in food
processing and the agro-industry. Investors have
largely operated in the form of joint ventures.
Major investing countries have come from Asia,
notably Japan. A more detailed discussion of the
extent and nature of foreign investment in the
agricultural sector is provided below.
Facts and figures
Over the period of 1970-2006, the value of
foreign investment in agriculture and agricultural
products was 291 901.7 million Baht; accounting
for 5.3 percent of the total BOI’s promoted
foreign investment. The number of approved
projects in this sector is 1 625 projects,
accounting for 11.4 percent of the total number
of approved foreign projects. The proportion of
numbers of agricultural projects (11.4 percent)
is not markedly different from other sectors but
its investment value is quite small (5.3 percent).
Most of the projects are small-scale with less
than 50 million Baht of investment. As a result,
the sector’s share in total foreign investment is
108
1996 Share in total 2006 Share in total
Total Foreign Investment (no. of establishments) 2 672 3 160
> 50% Foreign (no. of establishments) 894 33.5 1 428 45.2
≤50% Foreign (no. of establishments)
Total Foreign Investment in food processing sector
1 778 66.5 1 732 54.8
(no. of establishments) 286 217
> 50% Foreign (no. of establishments) 62 21.7 48 22.1
≤50% Foreign (no. of establishments) 224 78.3 169 77.9
relatively small, ranking sixth out of seven BOIpromoted
sectors (Table 4).
The value of foreign investment in the
agriculture and agricultural products sector
has generally increased over time despite some
fluctuations, as shown by the bar chart in
Figure 5. Although the sector’s share in total
foreign investment is relatively small, the average
annual growth rate of its real investment value
during 1974-2009 was 69.57 percent. Similarly,
the number of approved projects has also risen
with a sharp peak in 1988 (as shown by the solid
line in Figure 3) which coincided with the overall
FDI inflows and Thailand’s economic boom (Warr,
2005). The average growth rate of the number
of projects was 30.71 percent per annum, much
less than its investment value. Thai employment
generated by these foreign investments also
shared an upward trend with an average growth
rate of 79.74 percent per annum. Note that there
was no foreign investment in the agricultural
sector prior to 1974 8 .
When considering foreign investment in the
agricultural sector as a percentage share of total
foreign investment, Figure 4 shows that its share
(both in terms of investment value and number
of project) has declined markedly since 1975.
During 1974-1976, the agricultural sector has
dominated with more than 60 percentage share
8 This is perhaps due to fact that with regard to the
agricultural sector during the early 1970s it was not in
the interests of FDI to apply for BOI’s privileges.