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Viewing cable 07BANGKOK4796, THAILAND AND MALAYSIA SEEK DEEPER TRADE AND

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Reference ID Created Released Classification Origin
07BANGKOK4796 2007-09-06 02:08 2011-08-25 00:00 UNCLASSIFIED Embassy Bangkok
VZCZCXRO9241
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #4796/01 2490208
ZNR UUUUU ZZH
R 060208Z SEP 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 9449
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHCHI/AMCONSUL CHIANG MAI 4065
UNCLAS SECTION 01 OF 02 BANGKOK 004796 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/MLS AND EB 
STATE PASS TO USTR 
TREASURY FOR OASIA 
COMMERCE FOR EAP/MAC/OKSA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV TH MY
SUBJECT: THAILAND AND MALAYSIA SEEK DEEPER TRADE AND 
INVESTMENT TIES 
 
BANGKOK 00004796  001.2 OF 002 
 
 
1. Summary.  In recent months Thailand and Malaysia have 
sought to expand trade and investment links.  Thai Prime 
Minister Surayud Chulanont went to Malaysia last month on an 
official visit and traveled there again on August 31 with 
Crown Prince Vajiralongkorn for Malaysia's 50th anniversary 
of independence celebrations.  Officials from both countries 
have expressed the desire to work jointly on the economic 
development of the troubled border region of five southern 
provinces of Thailand and four northern states of Malaysia. 
One Thai political leader, Dr. Kriengsak Chareonwongsak, 
strongly criticized Malaysia's non-tariff barriers toward 
Thailand during a recent forum in Bangkok.  Despite efforts 
from both sides, direct investment between the two countries 
remains very low and is unlikely to increase significantly 
any time soon.  End summary. 
 
2. Following Thai PM Surayud's official visit to Malaysia, 
the Embassy of Malaysia in Bangkok and the Malaysian-Thai 
Chamber of Commerce organized the Malaysia-Thailand Business 
Forum to showcase and promote economic ties between the two 
countries.  High-level participation included the Malaysian 
Foreign Minister Seri Syed Hamid Albar, the Malaysian 
Minister of Agriculture Haji Muhyiddin bin Haji Mohd Yassin, 
and the Thai Deputy Foreign Minister Sawanit Kongsiri.  Forum 
attendees were mostly Thai and Malaysian business leaders.  A 
few embassies sent representatives, including the Embassy of 
Iran. 
 
3. Malaysian FM Hamid noted that although Thailand and 
Malaysia are major trade partners, the level of foreign 
direct investment is paltry and for the most part one-sided. 
Malaysian investment in Thailand during 2007 so far has 
totaled $324 million but Thai investment in Malaysia has 
totaled only $16 million.  FM Hamid called for more Thai 
investment in Malaysia, especially in tourism, agriculture 
and food processing sectors.  He stated Malaysia's commitment 
to work toward greater economic development in the five 
southern border provinces of Thailand and in the neighboring 
four northern states of Malaysia.  Finally, FM Hamid 
reiterated Malaysia's interest in the idea of an 
"Indonesia-Malaysia-Thailand Growth Triangle" focusing on the 
areas of all three countries that were affected by the 
tsunami. 
 
SIPDIS 
 
4. Thai Deputy FM Sawanit cited trade figures that show that 
Malaysia is Thailand's fourth largest trade partner and that 
Thailand is Malaysia's fifth largest trade partner.  Sawanit 
stated that the RTG would like to see trade and investment 
between both countries increase, especially in the border 
areas of southern Thailand and northern Malaysia.  He noted 
that soon a "friendship bridge" connecting Narathiwat in 
Thailand with Kelantan in Malaysia will open as part of joint 
infrastructure development efforts.  Sawanit was one of 
several conference participants to mention halal products and 
services as an area of great potential for trade and 
investment between Thailand and Malaysia and in the ASEAN 
region.  He called on ASEAN to promulgate ASEAN-wide halal 
standards to promote trade and investment and reduce 
non-tariff barriers. 
 
5. Malaysian Agriculture Minister Haji Muhyiddin bin Haji 
Mohd Yassin echoed Sawanit on halal food.  He said that 
Thailand is one of the largest exporters of halal food and 
that he sees the agricultural sector as an engine of growth. 
Yassin furthermore called for ASEAN-wide guidelines on halal 
food, biotechnology and GMOs.  Calling on Thailand to adopt 
Malaysian halal standards, he said that he would like to see 
Malaysian halal standards become the global halal standard, 
akin to ISO. 
 
6. Professor Kriengsak Chareonwongsak, Chairman of the 
Success Group of Companies and a member of the Executive 
Board of the Democrat Party of Thailand called on Malaysia to 
eliminate non-tariff barriers (NTB).  According to Kriengsak, 
for example, Malaysia presently does not allow Thai trucks to 
drive directly into Malaysia unless the driver is Malaysian. 
Another example of Malaysian NTBs, Kriengsak said, is a rule 
that allows imports from Thai fisheries only when enclosed in 
Malaysian-made plastic bins.  Kriengsak promised that if his 
party is elected later this year, he would work toward 
service sector, financial, and labor market liberalization in 
Thailand and called on Malaysia to do the same. 
 
7. After the forum, econoff had lunch with one of the forum 
 
BANGKOK 00004796  002.2 OF 002 
 
 
speakers, Kelvin Ng, a partner in a major Kuala Lumpur-based 
law firm with many clients who are foreign investors in 
Thailand, and other Thai and Malaysian business leaders who 
were present at the forum.  They echoed the sentiment of FM 
Hamid that FDI is for the most part one-sided and likely to 
stay that way due in part to the fact that Malaysian wages 
are higher than Thai wages.  Ng also explained that his 
clients are mostly in sectors not covered by the proposed 
changes to the Thai Foreign Business Act (FBA) and thus would 
not dissuade Malaysian businesses from investing in Thailand. 
 
 
8. Comment.  Despite all of the good will expressed by 
leaders from both countries, the sentiment on the ground was 
that Thai investment in Malaysia will likely remain low. 
Thailand is not even among the top twenty foreign investors 
in Malaysia.  Moreover, political uncertainty in Thailand at 
present may well have dampened Malaysian enthusiasm for 
investment in their neighbor to the north. 
BOYCE