TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

THAILAND
Trends and impacts of foreign investment in
developing country agriculture
TABLE 8
Promoted FDI classified by major investing countries, 1970–2009 (million Baht)
Source: International Affairs Bureau, BOI
countries have slowed down their investment
during 2000-2009; for example, the United
States of America, the Netherlands and Australia.
This is in line with the declining trend of FDI in
the agricultural sector. 10 It is worth noting that
Japanese FDI has increased remarkably over
time; furthermore, Japan is not only the largest
investor in the agricultural sector but also in other
manufacturing sectors, notably automotive and
electronic products.
Decomposition of BOI’s Promoted Foreign
Investment
Disaggregating the agricultural sector’s
investment, BOI statistics (Table 9) reveal that
foreign investment in primary agricultural
production (including crops, livestock, fisheries
and forestry) accounts for only 8 percent of the
sector’s investment value whereas the share of
food processing accounts for 36.4 percent. More
than 50 percent of the foreign investment value
is concentrated in the manufacturing of other
agricultural products and agricultural services. In
terms of number of projects, primary agriculture
10 Because of time and data constraints, this study was not
able to identify the particular reasons for the decline in
these countries’ investments.
112
1970s 1980s 1990s 2000s
Japan 12.4 664.1 2 220.0 10 158.2
Taiwan 6.1 1 187.1 1 018.0 1 970.5
Malaysia - 309.0 1 752.0 2 059.4
USA 2.2 644.4 1 932.3 1 401.7
Netherlands - 351.4 1 174.8 184.1
Singapore 10.0 237.9 557.2 779.5
Hong Kong - 658.9 154.9 589.5
Australia - 224.9 749.7 107.3
China 1.2 344.3 309.2 322.5
Luxembourg - 748.9 - -
UK 7.3 155.9 195.3 281.2
accounts for about 10 percent and those of food
processing and other agricultural products and
services are about 35 percent and 55 percent,
respectively.
The above findings suggest that international
investments in the agricultural sector have
concentrated in food processing and the
manufacture of agricultural products. This is
in line with the fact that Thailand has become
industrialized with more emphasis on agroindustry
and that the BOI is the government
agency that principally promotes FDI in the
manufacturing and service sectors. However,
BOI-offered incentives and privileges may not
be directly relevant to primary agriculture; in
particular, primary agricultural production is
under List One of the Foreign Business Act B.E.
2542 (1999), in which Thai nationals must hold
shares totalling not less than 51 percent of the
registered capital. This regulation more or less
prevents foreign involvement in the agricultural
sector. Moreover, the majority of FDI in this
sector is export-oriented thereby investing in
value-added agricultural products, using primary
agricultural output as raw materials, to serve the
world market.
Within primary agriculture, crops occupy the
largest share in terms of number of projects,