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Thailand's economic growth rate was only 3.9% in 1972 and it was predicted to be lower in 1973. Reduced agricultural production, due to severe and extensive drought, a sharp rise in inflation, labor strikes, and political upheaval, contributed to the slower growth rate and unhealthy state of the economy. Government limitation of exports and food price controls failed to halt rising prices and relieve the consumers. Overall mineral output and exports increased in quantity and value, and helped to reduce the trade deficit. World trade markets were favorable, but Thailand was not able to capitalize fully on the favorable markets."

On October 15, 1973, the military-controlled Thai Government abdicated and a caretaker government was appointed by the King. Because of the political turmoil, very few new business enterprises were announced during the last quarter of 1973 and no changes were announced in the Royal Thai Government's (RTG) foreign policy. Action on construction of a sea level canal across the Isthmus of Kra was rejuvenated in September when a feasibility study on the project, prepared by Tippetts-Abbett McCarthy-Stratton and Nathan Associates Inc. was presented to the Thai Government. Then after the change of prime ministers, the new administration announced that the project would not be given precedence. However, the RTG National Energy Authority continued the route survey and feasibility studies on the project. Another proposal, to build a 95-mile pipeline across the Isthmus of Kra, was still seriously being considered.

Government Policies.-The RTG Alien Business Decree and Alien Occupation Decree, which was enacted near the close of 1972, had an adverse effect on foreign in

vestments during the first part of 1973. This decree required foreign-owned firms to convert to majority Thai ownership within 2 years, required all foreigners working in Thailand to obtain a work permit, and restricted employment of certain professions such as lawyers, architects, engineers, accountants, and brokers. However, these decrees did not apply to promoted (invited) firms or industries, leaving an open door for a large variety of industrial enterprises.3

In July 1973 the RTG announced privileges for mining, smelting, mineral ore dressing, and metal and alloy production industries. Mining and ore dressing priorities were listed in the following order: Tin, tungsten, fluorite, barite, antimony, zinc, copper, lead, manganese, iron, columbiumtantalum, rock salt, feldspar, marl, and other minerals. Foreign investors were required to make specific financial expenditures and complete specific performances.

The most positive development for foreign investors occurred near the close of the year when the RTG liberalized its policy toward foreign majority ownership of mining operations. The old mining law, which required operations north of the 11th parallel to be at least 51% Thai owned, has been a major stumbling block by preventing the development of large mining operations in the potentially mineral-rich North Thailand area along the Burmese border. It has been difficult to find Thai

Mining geologist, Division of Nonmetallic Minerals Mineral Supply.

2 Far Eastern Economic Review. Asia, 1974 Yearbook, pp. 308-316.

Hartley, William D. Thai Laws Restricting Business and Jobs of Foreigners are Causing Mass Confusion. Wall Street Journal, July 27, 1973, p. 30.

U.S. Embassy, Bangkok, Thailand. Investment Opportunity Mining Smelting, Mineral Ore Dressing and Metal and Alloy Production Industries are Eligible for Promotional Privileges in Thailand. Airgram A-202, July 13, 1973.

partners with adequate capital to join mining ventures. RTG authorities recognized that undercapitalized mining ventures are not likely to place the industry on a rational basis; therefore, a more liberal attitude was adopted, but the old mining law has not been rescinded.

On July 15, 1973, the RTG revalued the rate of exchange of the Thai baht (B). The rate was reduced from B20.8 to B20.5 per US$1.00, and from B54.3 to B49.235 per £1.00. By December the exchange rate was again reduced to B20.25 per US$1.00. For 1973, most of the exchange values were calculated at B20.5 per US$1.00.

In a move to curb rampant illegal mining of fluorite and tungsten, the Thai Government announced in April a plan which offered better incentives to informers. The Director General of Mineral Resources an

nounced that the reward for information leading to the arrest of illegal miners will now be 50% of the price received for the confiscated ore at public auction. Previously, informers received 50% of the fine levied on offenders. The Thai Fluorite Association estimated that 20% of Thailand's fluorite production is illegally mined. It was also estimated that about 50% as much tungsten is illegally smuggled out of Thailand as is legally exported."

The absence of any effective central gov ernment control to stop illegal mining and dredging has been for years a deterrent to mining development along the Burmese and Malaysian borders. Also, prospecting has been forbidden in national parks, forests, and wildlife preserves, whose boundaries are not well defined.

The production and exports of chemical and metallurgical grade manganese ore, lead and zinc ore, asbestos, barite, clays, feldspar, gypsum, quartz, and pyrophyllite increased notably. Production of antimony, tin, tungsten, cement and fluorspar continued at about the same rate. The export value of tin, antimony, and monazite increased. In particular the Japanese market for fluorspar and the United States

market for tin were unfavorable; consequently, exports decreased and production decreased. The oil embargo limited shipping facilities, and the domestic revolution deterred any new trade negotiations thereby further slowing production.

5 Engineering and Mining Journal. Thailand Cracks Down on Illegal Mining. V. 174, No. 5, May 1973, pp. 36, 40.

Historically Thai mineral trade has been with Japan, the United States, West Germany, and the United Kingdom, listed here in order of combined export and import volume. Thailand's overall exports to Japan increased 24% but imports from Japan decreased 3%. The trade gap with Japan, Thailand's leading trading partner, was 39% in favor of Japan. The possibility of reducing the trade gap in the near future is slim. Import and export trade with the United States decreased 13% and 23%, respectively. Imports from the United States were 40% higher than exports.

The increased cost of imported oil during 1973 was estimated by an importing oil

company official at $500 million. The Bank of Thailand estimated a $500 million increase in the value of Thai commodity exports, but it also estimated a 1973 loss of U.S. military expenditures in Thailand and a reduction in tourism, which together may total $100 million.

Tin, tungsten, cement, fluorspar, and gem stones were Thailand's best mineral foreign exchange earners. The major mineral imports have been unwrought and semimanufactured aluminum, gold, iron and steel as scrap, pig iron and semimanufactured steel, silver, unwrought zinc, industrial diamond, fertilizers, elemental sulfur, crude and partly refined petroleum.