Executive Summary
In the current world of globalization, many businesses are looking for venturing into foreign lands with the aim of exploiting opportunities and resources which are not present locally. It has led governments to make their countries look more attractive for foreign investors. The report compares and contrasts four dimensions of country foreign direct attractiveness for Thailand and India for foreign investment. The factors include a detailed evaluation of comparison among further subfactors as well. The factors included are the political, regulatory, and legal factors, infrastructure and market access factors, and knowledge and innovation capacity factors, cost competitiveness factors. Under these factors, the rule of law, Political stability, government regulations is found to be better in India than in Thailand. The quality of transportation is found to be also better in India. The quality of broadband speed and costs associated with importing and exporting is better for Thailand. The quality of the education system, research, and percentage of scientific research is found to be in favor of Thailand as well. The cost competitiveness factors, average wages, corporate tax rate, and cost of starting a business are also found in favor of Thailand. Thus, complaining these results, Thailand has more factors in its favor than India. Thus, India is selected as the most favorable candidate for foreign direct investment. The risks, costs, and benefits associated with these factors are evaluated by the different known organizations like the World Bank and Government of India and Thailand. The statistics used for the sake of evaluation are majorly taken from these sources. The statistics used shows that Thailand is ranked higher regarding foreign direct investment attractiveness index. In the end, recommendation for investing in any of both companies is listed. These include major basic steps to establish a business in India or Thailand.
Introduction
Background
India is ranked 63rd on the FDI attractiveness website which ranks countries on a Global Foreign Direct Investment Country Attractiveness Index. Thailand is ranked as 46th in this list. The Index computes the rank by some factors. These factors include macro-stability factors like GDP growth, inflation rate, financial structure and development factors, institutional environment factors like the rule of law, control over corruption, market access and potential, HDI Index, Cost components, Logistics and competence, Telecom and ICT, Technological environment and differentiation. Based on scores in these factors, the GFCA Index score is ranked (GFICA Index, 2018).
Purpose:
This report will aid in selecting the best choice of country for foreign investment from India and Thailand.
Structure:
In this report, we will conduct empirical analysis of these two countries; Thailand, and India. We will analyze it on the basis of four broad factors. These factors include; Political, regulatory and legal Environment, Infrastructure and Market Access, Knowledge Capacity and Innovation, Cost Effectiveness. The comparison of both countries on the basis of these factors will show the most attractive country.
Critical Countries Analysis-India and Thailand
1. Political, Regulatory and Legal Environment-India and Thailand
In a suitable business environment, a transparent as well as stable regulatory, political and regulatory environment is needed for the reduction in the risk of losing investment for a country. The investors should be provided with a safe business environment. Over the last few years, the legal, political, and regulatory environment of a country has become an increasingly important factor for international investors. The following mentioned factors are important in analyzing the political, legal, and regulatory environment.
a-Rule of Law-India and Thailand
The rule of law is an important part of the political, economic, and legal system of a country. One of the important systems which uphold this responsibility is the judiciary system. The country Thailand after the introduction of the governmental system of the monarchy has been evolving in its democratic, political and judicial aspects. Corruption, fraud, and abuse of power are widespread in the country. However, recently, the judiciary has been encouraged to be more assertive in its handling. In a nutshell, there is not the ideal rule of law in Thailand; however, there is hope for improvement (Bunbongkarn, 2014). The Rule of Law Rank as percentile for Thailand has increased in last five years, and for India, it has decreased.
The Rule of Law Rank Table
| Country Name | Country Code | Series Name | 2013 [YR2013] | 2014 [YR2014] | 2015 [YR2015] | 2016 [YR2016] |
| India | IND | Rule of Law: Percentile Rank | 53.05 | 54.81 | 55.77 | 52.40 |
| Thailand | THA | Rule of Law: Percentile Rank | 51.64 | 48.56 | 50.96 | 55.29 |
The Rule of Law Rank Table Adapted by World Bank. (2016). DataBank: Worldwide Governance Indicators. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators#
India, on the other hand, has a strong democratic framework which depends on human rights. However, the country faces many challenges regarding its social and economic development. The country faces challenges regarding protection of human rights in practice. However, there are hope and room for improvement (UK Government, 2017).
b-Political Stability-India and Thailand
There have been demands for political reforms in both Thailand and India. Thailand society after the uprising of 1992 has been demanding reforms. The people of Thailand want to have ensured political stability and consolidation of the democracy. The country has witnessed plenty of events causing political and governmental instability. Coups and then counter coups have been common. Corruption and fraud have been witnessed. However, in the past two decades, the country has seen improvement in the political system. After Thaksin came into power, policies in favor of the poor, however, corruption has then also been evident. The loss of power of Thaksin by coup gave the country instability. The new constitution enacted in 2007 gave the judiciary power to rule aggressively against corruption and lack of political ethics (Bunbongkarn, 2014).
The political stability and absence of violence, rank as percentile shows that India has declined in its performance in this area and the area of control of corruption, it has improved. Thailand control of corruption has decreased, and political stability has improved from last year, but looking at five years has been quite unstable (World Bank, 2016).
Political Stability and Control of Corruption Rank Table
| Country Name | Country Code | Series Name | 2013 [YR2013] | 2014 [YR2014] | 2015 [YR2015] | 2016 [YR2016] |
| India | IND | Control of Corruption: Percentile Rank | 36.97 | 41.83 | 44.71 | 47.12 |
| India | IND | Political Stability and Absence of Violence/Terrorism: Percentile Rank | 12.32 | 13.81 | 17.14 | 14.29 |
| Thailand | THA | Control of Corruption: Percentile Rank | 45.97 | 38.94 | 37.02 | 40.87 |
| Thailand | THA | Political Stability and Absence of Violence/Terrorism: Percentile Rank | 9.95 | 16.19 | 14.76 | 15.71 |
Political Stability and Control of Corruption Rank Table Adapted by World Bank. (2016). DataBank: Worldwide Governance Indicators. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators#
The Indians were facing many challenges in the form of poor management, inefficiencies, higher costs, and import controls. The legislation in favor of industrialization enacted in 1991 gave improved opportunities in many sectors. The political environment of the country has improved after the liberalization. The political environment has been attracting foreign direct investment. However, as mentioned earlier, the rule of law has decreased (Giri & Debnath, 2016).
c-Government Regulations-India and Thailand
As per the World Bank, the government effectiveness of India has increased in last four years. Thailand government effectiveness has also improved. The regulatory quality of India has also improved, but the regulatory quality of Thailand has declined in 2016. The voice and accountability of India have improved and declined in Thailand (World Bank, 2016).
Government Effectiveness Table
| Country Name | Country Code | Series Name | 2013 [YR2013] | 2014 [YR2014] | 2015 [YR2015] | 2016 [YR2016] |
| India | IND | Government Effectiveness: Percentile Rank | 47.87 | 45.19 | 56.25 | 57.21 |
| India | IND | Regulatory Quality: Percentile Rank | 35.07 | 34.62 | 39.90 | 41.35 |
| India | IND | Voice and Accountability: Percentile Rank | 61.50 | 60.10 | 60.59 | 58.62 |
| Thailand | THA | Government Effectiveness: Percentile Rank | 62.09 | 65.38 | 65.87 | 66.35 |
| Thailand | THA | Regulatory Quality: Percentile Rank | 58.29 | 61.54 | 63.46 | 60.10 |
| Thailand | THA | Voice and Accountability: Percentile Rank | 34.27 | 23.15 | 22.17 | 20.69 |
Government Effectiveness Table Adapted by World Bank. (2016). DataBank: Worldwide Governance Indicators. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators#
The governing rules in Thailand, which affect the Foreign direct investment is subject to the Foreign Business Act of 1999 (Periera, Beckstead, & Supakijjanusorn, 2016). Despite the coups and continuum military government, the government is very pro-economic and market-oriented. The US has been given a special exception from many of the restrictions on foreign investor countries to attract more investors. Still, it welcomes all countries to be not dependent on one country only. The economic growth, which slowed in last years seems to have recovered somewhat. However, there are some structural challenges in the country which are challenging. It makes Thailand less competitive relative to the other regional countries (Thailand Country Commercial Guide, 2017).
India has been opening its economy to foreign investment on a sector-by-sector basis. The Indian government has full authority to eliminate the limits on FDI by 100% without parliamentary approval in most of the sectors. However, currently, the FDI faces many challenges in the areas of civil aviation, railway, defense, medical devices, and construction. Many sectors need a long process of multi-steps for approval. In a nutshell, most of the sectors are open to the foreign investments, and foreign companies can engage and establish business activities (Export.Gov, 2017).
Analysis:
The data shows that the lack of rule of law in Thailand makes it risky and more costly for the Foreign Direct Investment. The investment made in Thailand has the risk of getting loss by the disruptions in business from the lack of rule of law in the country. Furthermore, the poor Rule of Law can cost higher in terms of labour costs, logistics and loss of clients.
The rule of law is also not very well established in India, however, the chances are that FDI can get lower risk in India as compared to Thailand. The “Invest in India” campaigns and the new government has provided better business environment which can benefit FDI. Because of the lower risk and lower cost due to better rule of law, the benefits in investing in India are greater.
The Political situation of Thailand as shown poses greater risk and cost due to the instability and frequent riots. The instability of the political system of the Thailand even with all the benefits can drastically affect the day-to-day operations, with business shutting down in riots. India, with its stabilized democratic system, even with other lacking’s provide a stable business environment for the FDI. This also provides much benefits because of the less risk and consequently less cost of operating in the country as compared to Thailand.
The Government Regulations in Thailand are quite strict for the foreign direct investors. The investors have to fulfill all the formalities and have restrictions on many activities. The business owned by foreigners is strictly regulated by the government. And in some sectors of Thailand business cannot be completely owned by a foreigner. These barriers pose higher costs of operating in Thailand. India, on the other hand, has lenient business environment for the FDIs. This enables the FDIs to invest in India with less cost and risk.
| India | Perceived Ratings | ||
| Key Factor1: Political, Regulatory & Legal | Risks | Costs | Benefits |
| Rule of Law | 6 | 6 | 5 |
| Political Stability | 6 | 6 | 5 |
| Government Regulations | 5 | 6 | 4 |
| Thailand | Perceived Ratings | ||
| Key Factor1: Political, Regulatory & Legal | Risks | Costs | Benefits |
| Rule of Law | 7 | 7 | 6 |
| Political Stability | 8 | 8 | 5 |
| Government Regulations | 7 | 8 | 4 |
2. Infrastructure & Market Access-India and Thailand
For multinationals, the investment made in developing countries comes with many challenges. Developing countries usually do not have the high-quality infrastructure regarding physical and digital infrastructure. The infrastructure is important in integrating a country with another world. It makes the country more attractive for multinationals. It is the reason the transportation and logistics infrastructure is ranked as this important location attractiveness factor for investors from foreign countries.
a-Quality of Transportation-India and Thailand
Trade and transportation infrastructure rank in the FDI Attractiveness index for India was 54th in 2016 which improved to 34th in 2017 (FDI Attractiveness Index, 2017). Thailand is ranked 28th in 2016, which lowered in 44th rank in 2017 (FDI attractiveness Index, 2017).
The increase in rank of the transportation infrastructure in India is due to the development in this sector (The Economist, 2017). The country is pacing with an exponential compounded growth rate of 5.9 percent in its transport sector. The roads, ports, and railways have gained substantial growth in the few years. It is one of the fastest growing sectors in the country (FICCI, 2018).
Thailand transport infrastructure rank has declined, but the military government has big plans to move forward in this respect. The military government of Thailand has developed a plan which is not new and has been delayed because of the political and economic instability in the region (Sitthiyot, 2017; Trading Economics, 2017). The Masterplan for 2011 is pushed to promote connectivity and provide the foundation for social and economic development. Bangkok is one of the most visited cities in the world with many modes of transportations circulating the city (Siam, 2018).
b-Broadband Speed and Coverage-India and Thailand
The download speed of Thailand’s operators showed that both 3G and 4G operators speeds are below the quality of the world. The download speed of 7.6 Mbps for the DTAC, 10.9 Mbps for TrueMove and 8.9 Mbps for AIS is lower than the global download speed of 16.6 Mbps. The 3G networks download speed for Thailand operators are also below the average global speed of 4.4 Mbps. Thailand ranks 91th in the speed test global index (Open Signal.Com, 2017)
India, on the other hand, compared to the rest of the world, India comes at the rank of 109th (Speedtest Global Index, 2017). The broadband speed and coverage are getting faster and better in India with the passage of time.
c-Costs associated with Importing and Exporting-India and Thailand
| Country Name | Country Code | Series Name | 2014 [YR2014] | 2015 [YR2015] | 2016 [YR2016] | 2017 [YR2017] |
| India | IND | Trade: Cost to export (US$ per container) | 413.10 | 413.10 | 413.10 | 382.40 |
| India | IND | Trade: Time to export (day) | 109.30 | 109.30 | 106.10 | 106.10 |
| India | IND | Trade: Time to import (days) | 287.40 | 287.40 | 283.30 | 264.50 |
| Thailand | THA | Trade: Cost to export (US$ per container) | 223.00 | 223.00 | 223.00 | 223.00 |
| Thailand | THA | Trade: Time to export (day) | 51.00 | 51.00 | 51.00 | 51.00 |
| Thailand | THA | Trade: Time to import (days) | 50.00 | 50.00 | 50.00 | 50.00 |
Costs associated with Importing and Exporting Table Adapted by World Bank. (2016). DataBank: Worldwide Governance Indicators. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators#
The World Bank shows the costs associated with Export and Import in India and Thailand in the above table. The Trade costs to export per container in India have increased in 2017 significantly. The time to export and import has declined in India. The trade costs to export per container from Thailand have remained same. So has the time to export and import from Thailand in the last four years (World Bank, 2016).
Analysis:
As the data suggests, Thailand is better in this factor in terms of benefits for the FDI. The quality of transportation is better in Thailand which makes it less costly for the goods to be transported. The risk of loss of perishable products is also lower in Thailand with better transportation. The poor transportation in India makes it risky in terms of supply and delivery of goods for the FDI business. The benefits thus come more from Thailand.
The broadband speed and connectivity is also way better in Thailand than in India. This enables the FDI in Thailand to operate at lower costs and reap more benefits than in India.
The cost of importing and exporting will be an important part of the FDI business. The business would need to send and receive goods internationally. The duties on import and exports is lower in Thailand. This shows that the cost of operating FDI in Thailand is better as compared to in India.
| India | Perceived Ratings | ||
| Key Factor 2: Infrastructure & Market Access | Risks | Costs | Benefits |
| Quality of Transportation | 4 | 5 | 4 |
| Broadband Speed and Coverage | 5 | 6 | 5 |
| Costs associated with Importing & Exporting | 5 | 6 | 4 |
| Thailand | Perceived Ratings | ||
| Key Factor 2: Infrastructure & Market Access | Risks | Costs | Benefits |
| Quality of Transportation | 5 | 6 | 3 |
| Broadband Speed and Coverage | 4 | 5 | 6 |
| Costs associated with Importing & Exporting | 4 | 4 | 6 |
3. Knowledge and Innovation Capacity-India and Thailand
A qualified labor force having innovative skills and creative abilities is an important factor which attracts foreign companies towards countries with these labor pools. The countries rank higher in global markets while competing with other countries. The skills of the labor force and the industry and education institute collaboration constitute to the knowledge and innovation capacity of the country. The quality of scientific research and the expenditures of, it also gives insight into the educational quality of the country. It shows the innovative and educational skills of the labor of a country.
a-Quality of Educational System-India and Thailand
Quality of Educational System (Self Made Table)
| Country Code | Series | 2012 [YR2012] | 2013 [YR2013] | 2014 [YR2014] | 2015 [YR2015] |
| IND | Expenditure on education as % of total government expenditure (%) | 14.06 | 14.09 | .. | .. |
| THA | Current expenditure as % of total expenditure in public institutions (%) | 95.09 | 95.04 | 94.33 | .. |
| THA | Expenditure on education as % of total government expenditure (%) | 21.40 | 18.86 | .. | .. |
| THA | Literacy rate, population 25-64 years, both sexes (%) | .. | 95.19 | .. | 94.81 |
| THA | Labor force with advanced education (% of total) | 87.75 | 87.11 | .. | .. |
The data from the World Bank shows that India spends 14% of its total expenditure on education. Thailand, on the other hand, spends more than 20% of its education. The spending on education in Thailand decreased to 18% in 2013. Out of total expenditure on public institutions of more than 90% is spent on the education sector in Thailand. The literacy rate of Thailand had been more than 90% as well. The labor force with advanced education in the country of Thailand is more than 87%, which is quite high. The Human Development Index rank for India is 85 as per the FDI attractiveness Index (FDI Attractiveness Index, 2017). Thailand’s Human Development Index rank is 63 as per this index (FDI attractiveness Index, 2017).
b-Quality of Scientific Research-India and Thailand
The expenditure of the governments of the India and Thailand during the last decade on Research and Development as a percentage of GDP shows the capital expenditures on the public as well as private projects for driving knowledge in various areas.
India reported 0.62% in 2015 as per the World Bank statistics (Trading Economics, 2017). It was same for Thailand in 2015. However, the trend shown in the graph below shows that India has declined its expenditure on Research & development whereas, Thailand has increased its expenditure. The number of the researcher in per millions of people in Thailand is 874, which is only 216 in India. The quantity of journal articles, patents, trademark applications, is greater for India than for Thailand (Trading Economics, 2017).
Quality of Scientific Research Graph
Quality of Scientific Research Graph Adapted by Knoema. (2016). Thailand – Research and development expenditure as a share of GDP (%). Retrieved from Knoema: https://knoema.com/atlas/Thailand/RandD-expenditure?compareTo=IN
c-Percentage of Population with Territory Education-India and Thailand
| Country Name | Country Code | Series | 2012 [YR2012] | 2013 [YR2013] | 2014 [YR2014] | 2015 [YR2015] |
| India | IND | Gross enrolment ratio, tertiary, both sexes (%) | 24.37 | 23.89 | 25.54 | 26.87 |
| Thailand | THA | Gross enrolment ratio, tertiary, both sexes (%) | 51.57 | 51.38 | 52.51 | 48.86 |
Percentage of Population with Territoy Education Table Adapted by World Bank. (2016). DataBank: Worldwide Governance Indicators. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators#
The Gross Enrolment Ratio in the territory Education is higher in Thailand then for India. Thailand gross ratio declined in 2015 whereas in India it has increased. It shows the strong implementation and effect of greater expenditure on education in Thailand.
Gross Enrolment Ratio Graph
Gross Enrolment Ratio Graph Adapted by Knoema. (2016). Thailand – Research and development expenditure as a share of GDP (%). Retrieved from Knoema: https://knoema.com/atlas/Thailand/RandD-expenditure?compareTo=IN
Analysis:
Thailand is way up in terms of education as compared to India. India lags behind because of its lower quality of education and larger population. This gives Thailand the edge in terms of qualified and skilled labor. The FDI in Thailand will have more access to the skilled and qualified labor as Thailand has greater population covered by territory education. This will benefit FDI in Thailand as the greater supply of skilled labor will be in less cost than in India (because of less supply in India).
The scientific research quality is not bad in India. However, Thailand is better in this respect as well. The number of publishments, and journals and research conducted each year in Indonesia is more as compared to India even with larger population in India. This is because of the larger population entering in universities in Thailand as compared to in India. This will benefit FDI with more skilled labor in access in Thailand than in India with less cost.
| India | Perceived Ratings | ||
| Key Factor 3: Knowledge & Innovation Capacity | Risks | Costs | Benefits |
| Quality of Educational System | 5 | 5 | 5 |
| Quality of Scientific Research | 5 | 5 | 5 |
| % of Pop. With Territory Education | 5 | 5 | 5 |
| Thailand | Perceived Ratings | ||
| Key Factor 3: Knowledge & Innovation Capacity | Risks | Costs | Benefits |
| Quality of Educational System | 2 | 2 | 8 |
| Quality of Scientific Research | 3 | 2 | 8 |
| % of Pop. With Territory Education | 2 | 2 | 9 |
4. Cost Competitiveness-India and Thailand
It is another major factor which is important for foreign investors regarding investing in countries which seem attractive. The cost-effectiveness of a country business environment includes the tax rates imposed no corporations, and average wages. These costs are borne by multinationals and companies who invest in other countries.
a-Average Wages-India and Thailand
Wages in India have increased from 255 INR per day in 2013 to 272 INR per day in 2014 (Trading Economics, 2017). The average monthly wage of Thailand has also increased. The highest monthly wage has been recorded in the year of 2017.
India Average Daily Wage Rate Graph
Trading Economics. (2017). India Average Daily Wage Rate – Forecast. Retrieved from https://tradingeconomics.com/india/wages/forecast
b-Corporation Tax Rate-India and Thailand
The corporate tax rate in Thailand is at 20%. The tax rate was lowered in 2013 to 20%, which then has remained at this rate by now. The Indian corporate tax rate is standing at 34.61% at present. The higher tax rate of 38.9% is at 2001. The Indian corporate tax rate has been at 34.61%. The higher corporate tax rate currently in India makes it unfavorable for investment by foreign companies.
c-The cost to Start a Business-India and Thailand
The cost to Start a Business
| Country Name | Country Code | Series Name | 2007 [YR2007] | 2008 [YR2008] | 2009 [YR2009] | 2010 [YR2010] | 2011 [YR2011] |
| India | IND | The cost to start a business (% of income per capita) | 74.60 | 70.10 | 66.10 | 50.50 | 42.00 |
| Thailand | THA | The cost to start a business (% of income per capita) | 16.20 | 14.70 | 17.10 | 7.70 | 7.00 |
The cost to Start a Business Table Adapted by World Bank. (2016). DataBank: Worldwide Governance Indicators. Retrieved from http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators
The cost of stating business in Thailand as a percentage of income per capita is lower as compared to India as per the statistics by World Bank (World Bank, 2016). It makes Thailand more favorable regarding foreign investment.
Analysis:
The cost competitiveness of the Thailand is also better than India. The subfactors analyzed in terms of the costs, risks and benefits shows that the average wages in Thailand is higher than in India. India is considered a lower-middle income level country whereas Thailand is considered as an upper-middle level income country. FDI in Thailand will cause higher cost for the business as higher average wages are given in Thailand. India, comparatively has lower average income which makes it less costly for the FDI. The corporation tax rate is however higher in India, making Thailand the better choice. The cost of starting business is also lower in Thailand than in India. This will benefit the FDI’s in Thailand and will be costly to the FDI’s in India.
| India | Perceived Ratings | ||
| Key Factor 4: Cost Competitiveness | Risks | Costs | Benefits |
| Average Wages | 5 | 6 | 4 |
| Corporation Tax Rate | 5 | 7 | 3 |
| Cost of Starting Business | 6 | 7 | 3 |
| Thailand | Perceived Ratings | ||
| Key Factor 4: Cost Competitiveness | Risks | Costs | Benefits |
| Average Wages | 6 | 6 | 3 |
| Corporation Tax Rate | 3 | 3 | 7 |
| Cost of Starting Business | 3 | 3 | 8 |
Comparative Analysis-India and Thailand
a-Summary
The comparative analysis of both countries regarding its various economic, social, and demographic factors reveals that Thailand is better regarding investment opportunities, costs, risks, and challenges. Thailand provides better opportunities and business environment for the foreign investment inflows. The companies from international zones are encouraged more by lower corporate tax rate, higher education expenditures, higher wages, lower cost of doing business, lower costs of import and export makes Thailand more attractive than India.
The comparative analysis of both countries in each key factors show that the political, legal and regulatory environment of both countries are quite similar. But the unstable government system in Thailand gives India the competitive edge. The infrastructure in Thailand is also good as compared to India. Goods are needed to be supplied and delivered through these transportation and infrastructure facilities. Any weakness in this sector has negative effects on the FDIs as well.
In terms of cost competitiveness, Thailand is better in terms of its lower cost of doing business, and lower tax rates. The knowledge and innovation capacity of Thailand is also way better than India with its higher education and literacy rate, healthier scientific research and larger supply of qualified and skilled labor. Thus, Thailand is recommended as the best country for Foreign Direct Investment.
b-Suggestions
The in-depth analysis conducted above shows that Thailand is the most suitable country in terms of lenient export, and import costs. The cost of starting business in Thailand is way lower than in India, making it an attractive choice for foreign investors. The low tax rate and higher pool of educated labor in Thailand makes it more attractive against India. The education is one of the most important factors making Thailand more attractive. Furthermore, the government is also very pro-investment right now, facilitating foreign investors in starting business in Thailand. Summarizing all the factors, the foreign direct investment index makes it almost clear which country is most attractive. The higher rank of Thailand is because of the pro-investment factors enabling the country to earn this position.
c-Findings
The findings of the comparative analysis shows that Thailand is better for the FDIs in terms of its offered benefits, costs and posed risks to business environment and foreign investors. The Political, Legal and Regulatory factors are in more favor for India with higher benefits scores, and lower scores for risks and costs. Thailand has higher costs than India in this factors, and lower benefits. The infrastructure and market access factors is shows to be more in favor of Thailand with its lower risks and costs ranks as compared to the higher benefits. The Knowledge and innovation capacity is in similar way ranked higher for Thailand with its lower costs and risks and higher benefits. The cost competitiveness of Thailand is shown to be higher with lower cost than India and higher relative benefits. These all ranks are self-perceived based on the analysis done above.
| India | Perceived Ratings | |||
| Key Factor1: Political, Regulatory & Legal | Risks | Costs | Benefits | |
| Rule of Law | 6 | 6 | 5 | |
| Political Stability | 6 | 6 | 5 | |
| Government Regulations | 5 | 6 | 4 | |
| Thailand | Perceived Ratings | |||
| Key Factor1: Political, Regulatory & Legal | Risks | Costs | Benefits | |
| Rule of Law | 7 | 7 | 6 | |
| Political Stability | 8 | 8 | 5 | |
| Government Regulations | 7 | 8 | 4 | |
| India | Perceived Ratings | |||
| Key Factor 2: Infrastructure & Market Access | Risks | Costs | Benefits | |
| Quality of Transportation | 4 | 5 | 4 | |
| Broadband Speed and Coverage | 5 | 6 | 5 | |
| Costs associated with Importing & Exporting | 5 | 6 | 4 | |
| Thailand | Perceived Ratings | |||
| Key Factor 2: Infrastructure & Market Access | Risks | Costs | Benefits | |
| Quality of Transportation | 5 | 6 | 3 | |
| Broadband Speed and Coverage | 4 | 5 | 6 | |
| Costs associated with Importing & Exporting | 4 | 4 | 6 | |
| India | Perceived Ratings | |||
| Key Factor 3: Knowledge & Innovation Capacity | Risks | Costs | Benefits | |
| Quality of Educational System | 5 | 5 | 5 | |
| Quality of Scientific Research | 5 | 5 | 5 | |
| % of Pop. With Territory Education | 5 | 5 | 5 | |
| Thailand | Perceived Ratings | |||
| Key Factor 3: Knowledge & Innovation Capacity | Risks | Costs | Benefits | |
| Quality of Educational System | 2 | 2 | 8 | |
| Quality of Scientific Research | 3 | 2 | 8 | |
| % of Pop. With Territory Education | 2 | 2 | 9 | |
| India | Perceived Ratings | |||
| Key Factor 4: Cost Competitiveness | Risks | Costs | Benefits | |
| Average Wages | 5 | 6 | 4 | |
| Corporation Tax Rate | 5 | 7 | 3 | |
| Cost of Starting Business | 6 | 7 | 3 | |
| Thailand | Perceived Ratings | |||
| Key Factor 4: Cost Competitiveness | Risks | Costs | Benefits | |
| Average Wages | 4 | 4 | 7 | |
| Corporation Tax Rate | 3 | 3 | 7 | |
| Cost of Starting Business | 3 | 3 | 8 | |
Comparison Table (Self Made)
The table below shows the best country for FDI in terms of the mentioned factor;
| Dimensions | Better Country |
| Political, Regulatory and Legal Environment | India |
| Rule of Law | India |
| Political Stability | India |
| Government Regulations | India |
| Infrastructure & Market Access | Thailand |
| Quality of Transportation | India |
| Broadband Speed and Coverage | Thailand |
| Costs associated with Importing and Exporting | Thailand |
| Knowledge and Innovation Capacity | Thailand |
| Quality of Educational System | Thailand |
| Quality of Scientific Research | Thailand |
| Percentage of Population with Territory Education | Thailand |
| Cost Competitiveness | Thailand |
| Average Wages | Thailand |
| Corporation Tax Rate | Thailand |
| Cost of starting Business |
Thailand |
| Attractive Country for FDI | Thailand |
Recommendations
a-Actionable Suggestion
The main inference of the analysis shows that Thailand is more attractive choice for foreign investment in terms of its knowledge and innovation capacity. Furthermore, the education and cost effectiveness of the country is also better than India.
b-Recommendation to Invest in a Country
The foreign investor looking for better international business opportunities in India or Thailand should look thoroughly for following recommendations;
- Look for the laws which govern setting up business in Thailand and India.
- Look for all the prohibitions and restrictions which are imposed on foreign investments and be aware of it.
- Get educated about the types of companies a foreign investor can start
- Get aware of terms like Nominee shareholder and Majority Shareholder
- Know the limitation of the minimum capital requirement in the country
- Get information on what assets are part of the company a businessperson can own in the country
- What type of Visa would be required to start the process of initiating business in the desired country?
- Can foreigners be hired as employees, be informed about that?
- How to open the bank account in the country, get informed
- Get educated about the tax rates imposed on the company
- Know about the costs of starting a business in the desired country
Conclusion
a-Implication of Findings
In the end, it can be concluded that the critical country comparison of Thailand and India shows that both are very competitive in many factors. India is competitive and very strong in Political, and legal aspects. Whereas, Thailand is better in Education.
b-More Attractive Country
The high-quality education delivering knowledge, labor pool and quality, lower corporate tax rate, quality research, higher wages, lower cost of doing business, lower costs of import and export makes Thailand more attractive than India. The political, legal and regulatory environment of India is better than Thailand, and so is the transportation infrastructure.
We have discussed earlier that the political, legal and regulatory environment of both countries are somewhat similar. However, with the more unstable government system in Thailand and stable democratic system in India, India wins the competitive position. In terms of cost competitiveness, however, Thailand is way ahead with its lower cost of doing business, and lower cost of import and export transportation. The knowledge and innovation capacity of Thailand is also better than India with its better education, better scientific research and larger pool of qualified and skilled labor. India lags behind because of its higher cost of doing business and lower education level.
The infrastructure and transportation in Thailand is also better than India. This is a very important aspect of doing business for foreign investors as goods are needed to be supplied and delivered through these transportation and infrastructure facilities. Any defect or lacking in this sector drastically affects the business as well.
This summed up shows that Thailand is much better in terms of its higher benefits, less costs, and lower risks to the FDIs than India.
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