Thailand-Chile FTA: Opportunity for Thai Entrepreneurs (Current Issue No. 2290 Full Ed.)

Chile is an interesting market for Thai businesses that seek to import high-quality natural resources, e.g., copper or other ores for use in production here, or those who are intent upon expanding their exports into South America, thanks to Chile's healthy economic fundamentals and purchasing power, plus their trade liberalization policies.

In addition, the Thailand-Chile FTA will likely be a major boost toward sending Thai exports to Chile at lower cost, thus enhancing Thai business potential in Chile and South America. Thai exports that will derive the most benefit from this FTA would include pickup trucks, electrical appliances, cement, plastic resins, rubber products, canned and instant food, farm produce, etc. It is expected that overall trade value should grow by 20-30 percent in the year that FTA takes effect.

Thailand-Chile FTA might not contribute to the significant import costs reduction as the current tariff rates imposed on Chilean imports are quite low at 6 percent on average. But one should note that the Thailand-Chile FTA is necessary in the sense that it could maintain Thailand's competitiveness in Chilean market as other Asian rivals, i.e., China, Japan, South Korea, and Malaysia already signed FTA with Chile. In addition, Thailand could use Chile as a gateway to other Latin America countries as there is a room for improvement when it comes to the figure of Thai exports to Latin America (only 2.0 percent of Thai total exports in 2011). And as the major trading partners like China, Japan, and the U.S. are facing stiff economic headwinds, export diversification should be seriously taken and Latin America may be another attractive choice for Thai exporters to get away with export dependence on troubled economies.

KResearch views that those interested in entering the Chile market should also study consumer behavior, culture, timing and business strategies to more precisely meet the needs of target segments there. For example, Chileans are friendly and very family-oriented. Attempts to make business contacts or schedule negotiations should avoid their summer vacation period between January to February. Those manners and etiquettes, albeit not strictly required but are sufficiently enough for Thai businesses to achieve success there.