Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
U.S. exporters interested in selling to the Thai government have opportunities in key fields such as aviation and defense, electrical power systems, renewable and alternative energy, petroleum refining and petrochemicals, telecommunications, transportation, information and communications technology, environmental technologies, health care, and commercial defense, among others.
The key to successful bidding on Thai government contracts and supply tenders is to have a reputable local representative with good access to the procuring agency and knowledge of specific procurement requirements. Without this intermediary, it is very difficult to win a government project – procurement is decentralized among more than 200 government agencies and state enterprises. Representatives are accepted as legitimate players in the bidding process. Agents often provide an early “heads up” to U.S. firms when they hear of attractive tenders. Before tenders are issued, agents help to ensure a principal’s product will meet the required tender specifications.
Companies bidding on government projects should note that technology transfer, training, and after-sales services on all equipment purchases are important features considered in the review of all proposals. U.S. companies should plan to build additional training costs and expenses into the bid. American firms may find it more cost-effective to send engineers or specialists to train larger groups of employees at a plant or specialized government facility, such as a military installation.
A specific set of rules, commonly referred to as the “Prime Minister’s Office’s Procurement Regulations,” governs public sector procurement. These regulations require that non-discriminatory treatment and open competition be accorded to all potential bidders; however, the system is not entirely transparent. The Thai government is not a signatory to the WTO Agreement on Government Procurement. Generally, the procuring government agency provides preferential treatment to some foreign suppliers, and domestic suppliers who, under a “Buy Thai” policy, receive an automatic price advantage of 3-7 percent rate (depending on the product) in the initial bid round evaluations. International companies may bid without an agent if the government agency or state enterprise in charge of the project allows. If the project is funded by foreign loans, then it will be treated as an international bid. The “two envelope” system is commonly used, with technical evaluations of bids conducted separately from cost evaluations. In some instances, a Request for Information (RFI) or a Request for Conceptual Model (RCM) may be issued to solicit interest from potential bidders ahead of an official tender announcement. The procuring government agency reserves the right to accept or reject any or all bids at any time and is not bound to approve the lowest bid. The procuring government agency may also modify the technical requirements during the bidding process, which can prove frustrating to bidders.
In 2005, in an effort to encourage greater transparency, the Ministry of Finance announced regulations creating electronic auctions for government procurement. An e-auction works like a reverse auction, with the purchasing agency announcing it wants to buy certain goods or services, and prospective suppliers bid via the Internet. The lowest qualified bidder wins. An e-auction must be used on procurements greater than 2 million baht (approximately $58,000) but agencies are free to use e-auctions for lesser value procurements if they wish.
The status and powers of the National Counter-Corruption Commission (NCCC) have been enhanced, giving it independence from all branches of government. The members of the Commission sit on the NCCC for a term of nine years with no renewal and report to their own chairperson. Individuals holding high political positions, and members of their immediate families, are now required to list their assets and liabilities prior to assuming and upon leaving office. It appears that there is an increasing will to enforce transparency in government procurements. However, the autonomy and transparency of the NCCC has not truly been tested: the appointment of individual commission members and accusations of conflicts of interest are still publicly questioned in the Thai media.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
Multilateral Development Banks and Financing Government Sales. Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks (PDF).
The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
Learn more by contacting the Commercial Liaison Office to the Asian Development Bank.
Export Finance and Export Credit Agency
U.S. EXPORT-IMPORT BANK (EX-IM): The U.S. Ex-Im Bank established its Project Finance Division in June 1994. As developing nations turn away from sovereign-guaranteed borrowing, the Bank’s project financing program will assist U.S. exporters in competing in new international growth industries such as the development of private power plants and other infrastructure projects. While such a financing structure has been used successfully in the past for oil and gas, mining, and power projects, the move toward “privatization” by sovereign entities has created new opportunities for U.S. exporters in telecommunication, transportation, and other sectors.
The Ex-Im Bank offers short-, medium-, and long-term programs to support U.S. exports to Thailand. The Ex-Im Bank’s short-term export credit insurance program will provide for the financing of exports or consumer goods, spare parts, raw materials (on terms up to 180 days), and bulk agricultural commodities and quasi-capital goods (on terms up to 360 days).
Export Development of Goods and Services & Project Preparation Agency
U.S. TRADE AND DEVELOPMENT AGENCY (USTDA): The U.S. Trade and Development Agency (www.ustda.gov) helps companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies. USTDA links U.S. businesses to export opportunities by funding project preparation and partnership building activities that develop sustainable infrastructure and foster economic growth in partner countries.
USTDA facilitates U.S. business participation in the preparation and execution of infrastructure development projects. The Agency helps build the infrastructure for trade, match U.S. expertise with overseas development needs, and facilitate business partnerships between U.S. industry and emerging markets. These partnerships allow the Agency to target its investments toward projects that are most likely to be implemented using U.S. goods and services.
The Agency funds early-stage project preparation activities such as feasibility studies, technical assistance, and pilot projects, which provide the analysis needed for projects to attract financing and reach implementation.
Additionally, USTDA creates market access for U.S. companies, connecting them with key decision-makers in emerging economies by hosting reverse trade missions, conferences, workshops, and training. The Agency’s reverse trade missions bring overseas decision-makers to the United States to introduce them to the design, manufacture, and operation of U.S. goods and services that can help advance their infrastructure development goals.
USTDA prioritizes support for sustainable development and U.S. commercial opportunities in major infrastructure sectors, including energy, transportation, ICT, healthcare, and agribusiness.
USTDA achieves an incredible rate of return on U.S. taxpayer dollars, generating $112 of U.S. exports for every $1 programmed. The Agency has generated over $74 billion in U.S. exports since its inception, including over $4.1 billion new exports identified in FY 2020 alone.
USTDA’s regional office, covering Southeast Asia and the Pacific, is located at the U.S. Embassy in Bangkok, Thailand. USTDA’s regional staff members can be contacted either in the Washington, D.C.-area headquarters or in Bangkok. Information on accessing USTDA tools and upcoming program activities is available via the Agency’s website: www.ustda.gov.
- Brandon Megorden, Regional Manager for Asia, email@example.com
- Sithisakdi Apichatthanapath, Deputy Regional Manager for Asia, firstname.lastname@example.org
In Washington, DC:
- Verinda Fike, Regional Director, Indo-Pacific Region, email@example.com
- Alissa Lee, Senior Indo-Pacific Manager (Aviation, Agribusiness, Healthcare), firstname.lastname@example.org
- Tanvi Madhusudanan, Indo-Pacific Manager (Energy, Environment & Water), email@example.com
- Katrien Hinderdael, Indo-Pacific Manager (ICT & Smart Cities), firstname.lastname@example.org
- Kevin Toohers, Indo-Pacific Manager (Surface Transport), email@example.com
- Jennifer Walters, Indo-Pacific Events Coordinator, firstname.lastname@example.org
Development Finance Agency
U.S. INTERNATIONAL DEVELOPMENT FINANCE CORPORATION (DFC): DFC, formerly the Overseas Private Investment Corporation (OPIC), is the U.S. Government’s development finance institution. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world today. DFC investments adhere to high standards and respect the environment, human rights, and worker rights. DFC focuses its development finance support in Low Income and Lower Middle-Income countries. DFC invests across sectors including clean energy, healthcare, inclusive growth, critical infrastructure, and technology.
DFC invests in development of the private sector in 150 emerging markets by providing debt financing, equity investments, political risk insurance, investment funds to support private equity capital, and technical assistance development for project’s already benefiting from DFC capital, made possible by a bilateral agreement with Thailand. DFC can provide debt financing in the form of direct loans and guarantees of up to $1 billion for tenures as long as 25 years, with specific programs targeting small and medium U.S. businesses. DFC political risk insurance for currency inconvertibility, expropriation, and political violence is also available for investments including equity, loans and loan guarantees, technical assistance, leases, and consigned inventory or equipment.
In all cases DFC support is available only where sufficient or appropriate investment support is not available from local or other private sector financial institutions. As the Thai financial and insurance markets are quite developed and liquid, and the World Bank categorizes Thailand as Upper Middle Income, there is limited need for DFC support. For more information on DFC’s development finance project eligibility criteria please visit the website at: https://www.dfc.gov/what-we-offer/eligibility.
DFC’s regional office, covering the Mekong (Cambodia, Laos, Myanmar, Vietnam, and Thailand), is located at the U.S. Embassy in Bangkok, Thailand. DFC’s Mekong staff members can be contacted either in the Washington, D.C.-area headquarters or in Bangkok.
- Maria Goravanchi, Regional Managing Director for the Mekong, Maria.Goravanchi@dfc.gov
In Washington, DC:
- Erin Murphy, Director for Indo-Pacific, Erin.Murphy@dfc.gov