Discusses the legal requirements for selling to the host government, including whether the government has agreed to abide by the WTO Government Procurement Agreement or is a party to a government procurement chapter in a U.S. FTA. Specifies areas where there are opportunities.
U.S. exporters interested in selling to the Thai government have opportunities in key fields such as 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 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 bigger 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 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. Some feel the Thai Government does not always provide a level playing field for foreign bidders. 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% 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. This flexibility can prove frustrating to bidders. In the past, charges have been issued so that changes are made for special considerations.
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 US $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.
Many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to the “Project Financing” sub-section in “Trade & Project Financing” section below for more information.