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6 Dec 2022

Econ Digest

Post-APEC summit…France actively strengthens its relations with Thailand and ASEAN to open up trade and investment opportunities in new dimensions in Thailand’s target industries with France’s strengths


        During the 33rd Asia-Pacific Economic Cooperation (APEC) summit hosted by Thailand, French President Emmanuel Macron, the first French President to visit Thailand in 16 years, aimed to strengthen bilateral relations between Thailand and France in all areas, including attaching importance to economic partnership and efforts to advance the EU-Thailand Free Trade Agreement (FTA). This visit is considered a key step for further development of relations between the European Union (EU) and ASEAN, accordingly.

        Investment aspect: The EU, with similar potential as Asia and the US, is the ASEAN’s fourth- largest investment partner. Thanks to strong relations at present, all sectors should accelerate investment from France and the EU. This would be a key effort for Thailand to integrate manufacturing production into the EU value chain, on par with ASEAN competitors. Meanwhile, foreign direct investment (FDI) inflows from France to Thailand have been mainly for the technology product industry. New FDI inflows going forward would significantly support manufacturing connectivity between Thailand and Europe. Presently, there are about 280 French companies in the technology sector here, for instance those engaged in production of tires, automotive parts and industrial products.

        Trade aspect: Stronger ties with Thailand would bolster French trade opportunities in the region, although, France recorded a trade share of only 1% the total ASEAN trade value, but still enjoys opportunities for market expansion as French products – such as cosmetics, perfumes, bags, airplanes, aviation equipment and pharmaceuticals – are unique and can meet growing demand among ASEAN countries. Meanwhile, ASEAN’s electronic products can support production in France as well. As for Thailand, France is its third-largest trading partner among the EU members, after Germany and the Netherlands. Thailand has a trade deficit with France, as Thailand’s imports from France are mainly high value-added items and luxury goods. Meanwhile, Thai exports to France are quite small in volume; the products include air conditioners, lenses, natural rubber and aircraft parts.

        KResearch views that increased bilateral relations between Thailand and France would open up trade and investment opportunities in new dimensions. France’s strengths lie in electric vehicles, aerospace, transportation technology, renewable energy production and advanced electronics, which are in alignment with Thailand’s target industries. Meanwhile, promotion of ASEAN-EU FTAs, including a Thailand-EU pact, still needs more collaborative efforts from many other member economies.

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