Value Of Farang Residents To Thai Economy?

[garyinthailand]

I'm trying to get an idea how much economic value is added by us farang residents. Greatly appreciate anyone who can point me to the appropriate source, and if it's been covered in the forums already, that's great too.

Some friends told me that permanent and seasonable residents bring Thailand something like 1% of it's foreign exchange earnings. Tourism 3-4%. But they didn't have the references.

Thanks for any help.

[samran]

Minimal.

Sure, tourism is one of its largest export earners, but exports does not an economy make. For instance, Saudi Arabia exports lots of oil, but its GDP has halved since 1980.

Productive factors inside of Thailand, the manufacturing base, human capital, increases in productivity and spending power of workers and consumers are the most likely drivers of Thai economy.

For stats, nothing probably exists from the RTG, but if you do a google search on General Equilibrium Economic models either produced by Chulalongkorn, or Monash University who tend to specialise in these things (ie building models which disaggregate the economy, sector by sector), then you might find something. Dr Peter Dixon at Monash also has done quite a few studies on the Thai economy.

Never fall for the old argument, 'if it wasn't for us farangs spending our money here Thailand would fall to its knee's'. That is complete and utter <deleted>.

[Pie Boy]

It would also be interesting to see what the Thai community abroad contribute to the wealth of the nation.I read that Filipino ex-pats sent somewhere in the region of $8 billion per annum back to the Philipines.Although admittedly I don't how the number of ex-pat filipons stacks up against ex-pat thais.

[garyinthailand]

Thanks. This is helpful.

I've tried a few searches based on Samran's recommendation. So far, what I get is a lot more technical than I can make use of (and I haven't seen specific references to expat input yet, either).

The particular reason I'm doing this is exactly to counter the belief, which I find held by way too many farang, that we're doing the Thais some huge favor by coming to live in their country.

The corollary to this belief is that farang are hence entitled to be disparaging of our hosts among ourselves, and rudely inconsiderate of them to their faces.

Appreciate the thoughts and references. Please keep it coming. I'm still hoping to come up with a few numbers to use as conversation stoppers.

[dr_Pat_Pong]

Thanks. This is helpful.

I've tried a few searches based on Samran's recommendation. So far, what I get is a lot more technical than I can make use of (and I haven't seen specific references to expat input yet, either).

The particular reason I'm doing this is exactly to counter the belief, which I find held by way too many farang, that we're doing the Thais some huge favor by coming to live in their country.

The corollary to this belief is that farang are hence entitled to be disparaging of our hosts among ourselves, and rudely inconsiderate of them to their faces.

Appreciate the thoughts and references. Please keep it coming. I'm still hoping to come up with a few numbers to use as conversation stoppers.

<{POST_SNAPBACK}>

A great project. I agree with you. The most vocal are the farang poverty packers. Good luck with it.

[steveromagnino]

I think you could do a few snap shot analyses which would provide some quick answers... TAT does a large survey each year ongoing by nationality, which measures spending by nationality and duration of stay.

n=10,000 so this is fairly meaningful stuff. In the business I work it, all their numbers bear out the results.

Japanese are highest spenders per day here, followed by Indians and Arabs. For almost all categories. Westerners tend to be somewhere near the lower end of the developed countries; then right at the bottom are Burmese, Cambodian, Laos, etc.

This is all annual data available from the TAT; interestingly, when calculated back it becomes clear that the value of tourism is perhaps not as great as expected, and throws some serious doubt on the value of western tourism being the "engine" behind the Thai economy (if there wasn't some doubt already ;-).

NESDB has done studies on the impact on certain villages of farang husband syndrome, for want of a better word, and this would provide some data to project on the possible impact of money coming in from brides abroad inc.

[samran]

Thanks. This is helpful.

I've tried a few searches based on Samran's recommendation. So far, what I get is a lot more technical than I can make use of (and I haven't seen specific references to expat input yet, either).

And there is your answer. Economic models need to look at the major inputs, and the researchers I have pointed you to go to great lengths to make sure that their models are generally reflective of the economy as a whole. Therefore, if there was a major ‘farang’ factor, it would have been found. It would be safe to assume that farang input would be less than the rounding error on the national accounts.

Their work has been used for major Australian government studies, and they have done some pretty good work on the reasons for the Baht meltdown in the 90’s, so they are pretty credible.

The basic thing to remember is that basis of any macro economic model is GDP=C+I+G+(EX-IM). That is, GDP is domestic consumption + Investement + Government Spending + the difference in Exports and Imports. Tourism would constitute an export and poverty packer spending (emphasis in the poverty) would be a very, very small part of that. Consumption, Investment and government spending combined would already outweigh any tourism spending by leaps and bounds.

A great project. I agree with you. The most vocal are the farang poverty packers.

I have a theory on this. You know when you were younger and you managed to get a (free) shag the night before, well the next morning you often think that the gods gift to the world (a feeling which quickly dissipates). The poverty packer (who is most likely getting off with his minger of choice on a nightly basis) will be walking around with this delusion perpetually ingrained in his mind. While with all things, the Marginal Utility of Consumption decreases as you consume more, the average poverty packer with go from thinking he is gods gift to the world on night one, to gods gift to Thailand by night 10 or 11. Extrapolate a bit more, and a couple of years later, he will still think he is at least gods gift to his local village.

[Boo]

I have a theory on this. You know when you were younger and you managed to get a (free) shag the night before, well the next morning you often think that the gods gift to the world (a feeling which quickly dissipates). The poverty packer (who is most likely getting off with his minger of choice on a nightly basis) will be walking around with this delusion perpetually ingrained in his mind. While with all things, the Marginal Utility of Consumption decreases as you consume more, the average poverty packer with go from thinking he is gods gift to the world on night one, to gods gift to Thailand by night 10 or 11. Extrapolate a bit more, and a couple of years later, he will still think he is at least gods gift to his local village.

samran is quickly becoming my favorite poster

[samran]

I have a theory on this. You know when you were younger and you managed to get a (free) shag the night before, well the next morning you often think that the gods gift to the world (a feeling which quickly dissipates). The poverty packer (who is most likely getting off with his minger of choice on a nightly basis) will be walking around with this delusion perpetually ingrained in his mind. While with all things, the Marginal Utility of Consumption decreases as you consume more, the average poverty packer with go from thinking he is gods gift to the world on night one, to gods gift to Thailand by night 10 or 11. Extrapolate a bit more, and a couple of years later, he will still think he is at least gods gift to his local village.

samran is quickly becoming my favorite poster

<{POST_SNAPBACK}>

[garyinthailand]

I think you could do a few snap shot analyses which would provide some quick answers... TAT does a large survey each year ongoing by nationality, which measures spending by nationality and duration of stay.

<{POST_SNAPBACK}>

Thanks, Steve. Combining TAT's figures for overall tourism revenue (circa $11 billion US) with CIA Factbook's figure for Thai GDP ($525 billion US), tourism represents around 2% of the Thai economy. Close enough for jazz.

I'm still lacking any figures for non-tourist foreign residents (I'll happily combine non-farang and farang for my purpose). Does anyone know of an estimate or actual number for year-round and seasonal residents? More directly economic data would be even better

[samran]

OK

Educated guessitmate.

Something like 80,000 work permits issued last year to foreigners (this is off the top of my head, you’ll have to check with the DOL for actual figures). Assume THB 50K per month salary for each (i.e. the average salary requirement for most foreigners from developed nations to get a WP).

80,000 x (50,000x12months) = THB 48,000,000,000 potentially which could be spent by them.

This is USD$1,200,000,000 ($1.2 billion?)

So, 1.2/525 = 0.22%

i.e, the legal foreign expat community generates perhaps 0.22% to the Thai GDP for a year, assuming they spend all their money here, which they won’t be if they save and spend any of their cash on imported items.

Someone please check my sums please, but to put that in perspective, a bad crop year in Australia (which has a primary industry based economy like Thailand) can wipe 1 or 2% off the country’s GDP growth.

[WhiteShiva]

OK

Educated guessitmate.

Something like 80,000 work permits issued last year to foreigners (this is off the top of my head, you’ll have to check with the DOL for actual figures). Assume THB 50K per month salary for each (i.e. the average salary requirement for most foreigners from developed nations to get a WP).

80,000 x (50,000x12months) = THB 48,000,000,000 potentially which could be spent by them.

This is USD$1,200,000,000 ($1.2 billion?)

So, 1.2/525 = 0.22%

i.e, the legal foreign expat community generates perhaps 0.22% to the Thai GDP for a year, assuming they spend all their money here, which they won’t be if they save and spend any of their cash on imported items.

Someone please check my sums please, but to put that in perspective, a bad crop year in Australia (which has a primary industry based economy like Thailand) can wipe 1 or 2% off the country’s GDP growth.

<{POST_SNAPBACK}>

I believe there are more expats than myself earning more than the minimum salary requirement. In addition, some expats here are running multi-million dollar businesses. I think your figure is off by about a decimal point. At least.

[steveromagnino]

I believe there are more expats than myself earning more than the minimum salary requirement. In addition, some expats here are running multi-million dollar businesses. I think your figure is off by about a decimal point. At least.

<{POST_SNAPBACK}>

Difficult to say if this is true or not; certainly there are expats here without work permits; retired expats and so on.... the number earning 10 times the 50k per month estimate... well I can think of the hundred expats I know (all business people) and probably 10% are earning the 10 times number, the rest are clustered around the 50k mark. There are a number of retired people here; each contributing something to the economy.

If we get into the next step of analysis....value to the economy.... well that is where the big variations and difficulty in measurement begin.

The key value that some expats may add is in doing businesses that would otherwise not be here; e.g. a windsurfing brand (2 here I know of); some IT outsourcing; some consulting; manufacturing boats - things that perhaps employ many workers yet would not be here were it not for 1 or several expats' specialist knowledge/drive to create that industry here... this is probably where there is perhaps a more sizeable effect on the economy; how you would measure it I am not sure. How can you say for instance, that Minor Group is XZ% the result of some expat working there, and XY% the result of Bill & and the Thais working there? For sure, the business succeeds at least in part as a result of Bill, but he is no longer an expat, he is now a Thai...and what about companies like say McKinsey who are indeed foreigner expats working here? Do we say they are adding points to the GDP when they do consulting - even though their staff in the office are mostly Thai?>...this gets tough; I cannot see that you could easily do a bottom up, because the data is too hard to get; better to just guestimate.

We can then also calculate the "drain effect" of so many expats' businesses here; for instance Louis Vuitton which is a forex drain, as money flows away from Thailand to France.... and this is where the majority of expats probably work. I always forget; GDP and GNP will be different for this right?

And the other drain is the money that expats take out of the country; a sizeable proportion of income of companies and personal income ends up going offshore; so while earned here, it in fact flows to some other country.... I suppose the offset would be the considerable amount of money sent back here which is generated overseas; however I would not count that as foreigners sending money here so much as the industry of a selected group of men and women providing a service to foreigners with the income then being generated and sent back to Thailand, and often provincial Thailand.

Whiteshiva; if you are not an American, then your company here is perhaps 49% foreign and 51% Thai? So.... how much of the success is the result of you, and would there be a Thai equivalent if you weren't here? If not, then the marginal benefit of your input to the economy is arguably the returns you make yourself and also provide to your workers above the average wage; if your business was not here, they would be doing something else which might not be so beneficial to the economy.... of course if it is an import business (as pretty much so many of the expat businesses here are) then it may be a drain on the economy if it is a non essential good (wine, imported food, luxury fashion, etc); or it could be a massive boost to the economy if it is a factor of production of something....

The mind boggles at how you can calculate this all out! Good luck with that, would love to hear the answer!

[WhiteShiva]

Whiteshiva; if you are not an American, then your company here is perhaps 49% foreign and 51% Thai?  So.... how much of the success is the result of you, and would there be a Thai equivalent if you weren't here? 

<{POST_SNAPBACK}>

Steve,

I am not an American, and I work for a large Thai company. Only been in this job for 7 months, and there are thousands of employees, so I alone cannot take the credit (or blame) for any success or lack of such. And belive me, if there was a Thai equivalent available, I would probably be history in a heartbeat. As would most other non-selfemployed expats......

I also think focusing on the salaries of expats misses the impact foreign companies have on the Thai ecconomy. They generate jobs (directly and indirectly), foreign currency (either directly or by doing jobs that would otherwise have to be outsourced, help improving the skill level of local staff, thus making them more competitive, etc, etc.

Even defining how to measure the financial impact of expats would be daunting.

Oh, yeah - one more thing - it may very well be that there are many (some) western expats that are willing to work for only 50,000 baht a month, but don't forget all the Asian expats here (Japanese, Malaysian, Singaporean, Korean) - don;t think many of them would be here if they were only paid the equivalent of 1250 US$ a month.......

[Khun Jean]

In the spirit of a creditcard commercial.

The average contribution to the economy

by a holidaying farang: minimal

The avarage contribution to the economy

by a western foreigner living and working in Thailand: nothing

The image given to western foreigners by a farang

holidaying/living/working in Thailand: unrepairable.

[steveromagnino]

Even defining how to measure the financial impact of expats would be daunting.

Whiteshiva

You have succintly summed up my thoughts; the impact on the economy from the expertise, rather than direct financial impact of earnings..... I am a little skeptical how much value some of the expats I run into actually add; in the business I work in most seem to be thumb twiddlers who are just there to deal with the other thumb twiddlers, while their poorly paid Thai staff do all the work and they actually have little idea what goes on.

But then I think of some of the entreprenuers I know, some with 100+ staff all doing something well beyond the imagination of any local before them....

Interestingly, I do know a lot of Japanese expats here, benefits of a Japanese girlfriend and all that. Compared to westerners it would seem they are actually pretty poorly paid; most that I know earn somewhat less than 100k a month for quite senior positions that an American, Brit or Aussie would probably be expecting 150-200k expat package.

However, I think they make up in total package; entertainment budget, housing that sort of thing.

Salary 50k

Membership at Resort 20k

License to entertain clients whenever they are in town priceless

[WhiteShiva]

In the spirit of a creditcard commercial.

The average contribution to the economy

by a holidaying farang:  minimal

The avarage contribution to the economy

by a western foreigner living and working in Thailand: nothing

<{POST_SNAPBACK}>

The avarage (sic) contribution to the economy

by a Thai living and working in Thailand: nothing

Simply becasue we are not talking about individuals, but groups of individuals.

The image given to western foreigners by a farang

holidaying/living/working in Thailand: unrepairable.

<{POST_SNAPBACK}>

I am personally more concerned about the image given to the Thais, because I have to live with the consequnces.......

[Thaipwriter]

Would anybody like to try and represent the following farang money that flows into Thailand each day as a % of GDP

1. cash for real estate, condo's, houses, land.

2, cash for new cars which are assembled in Thailand

3. western union etc cash for tilac/sick buffalo

Would the above add up to as much as 0.5 % GDP??

[richard10365]

Don't forget to include everyone retired in your numbers. Over 500 retired military. If all retired at the paygrade E7 their pay would equal to 326,196,000 baht a year just from US military retiries.

I am sure there are other retiries in Thailand who did not retire from the military.

[ray23]

Don't forget to include everyone retired in your numbers. Over 500 retired military. If all retired at the paygrade E7 their pay would equal to 326,196,000 baht a year just from US military retiries.

I am sure there are other retiries in Thailand who did not retire from the military.

<{POST_SNAPBACK}>

Oh there are a lot us who are not miltary retired, I don't know what effect we have on GDP, but locally we do have an effect. I am just one of many who live in Udon, not a tourist area, yet. I bring in a spend over one million year after year. I derive no income from Thailand whatsoever and provide fulltime employment to a single widowed Thai mother and I help with her childrens education. There are many more retirees here that are not military retirees. Even more non Americans living here, most of them in the same situation that I am in.

Do we have an effect locally you bet we do, Bangkok not at all and overall Thailand I would believe very little.

How many of you heard the Queens speech last Saturday, I was amazed she said to be nice to Farrangs as we contribute large amounts of money to Thailand. I believe the comments were based on Tourism, but yet it was nice to hear that someone recognizes the value.

We buy cars, motorcycle, furniture, aircons, Tv's, expensive foods, Houses, you name the list goes on and on. we don't do that for a couple of weeks and pack our suitcases we do it day after day for years. In many cases we pay more and soemtimes are not treated fairly, just the cost of living here.

Udon has even started a Farrang appreciation day with a parade.

So you can not judge all of Thailand by Bangkok, anymore then you could judge all of California by Los Angeles.

So anyway there is my lame sung Baht worth

[dr_Pat_Pong]

Well said

[mijan24]

I second the Dr, Ray23 you omitted to say " And Loving It"

[Heng]

Wow.... TVs, cars, and refrigerators. You guys fishing for those 6th place participation ribbons they used to hand out to the 'special kids' back in grade school on sports day?

[richard10365]

Wow.... TVs, cars, and refrigerators.  You guys fishing for those 6th place participation ribbons they used to hand out to the 'special kids' back in grade school on sports day?

<{POST_SNAPBACK}>

I wonder what would happen to Thailand if all of a sudden farang money was gone?

[WhiteShiva]

Wow.... TVs, cars, and refrigerators.   You guys fishing for those 6th place participation ribbons they used to hand out to the 'special kids' back in grade school on sports day?

<{POST_SNAPBACK}>

I wonder what would happen to Thailand if all of a sudden farang money was gone?

<{POST_SNAPBACK}>

I think Heng was referring to the fact that a few thousand farangs buying some cars & Tvs don't make much impact. You seem to thingk the country would collapse if the resident farangs left.

The truth is probably somewhere in the middle, although I personally think Heng has a point.

[richard10365]

Wow.... TVs, cars, and refrigerators.   You guys fishing for those 6th place participation ribbons they used to hand out to the 'special kids' back in grade school on sports day?

<{POST_SNAPBACK}>

I wonder what would happen to Thailand if all of a sudden farang money was gone?

<{POST_SNAPBACK}>

I think Heng was referring to the fact that a few thousand farangs buying some cars & Tvs don't make much impact. You seem to thingk the country would collapse if the resident farangs left.

The truth is probably somewhere in the middle, although I personally think Heng has a point.

<{POST_SNAPBACK}>

It might not collapse but I do believe it would have a crisis. Look at the impact the tsunami had on tourism in Phuket. If all the farang money was gone in all of Thialand I do believe it would have a great impact.

And refering to what I said earlier, 326,196,000 baht a year just from US military retiries is a lot of money. 326,196,000 baht/year is the minimum US military retiries are bringing in. That estimate was based on the paygrade of E7. I am sure there are other US military retiries with higher paygrades than E7 with more years retired here. US military retiries get cost of living increases every year so their pay does goes up.

What ray23 was talking about is in adition to 326,196,000 baht/year there is at least that many retiries who are not retired from the US military. In fact, if you add up all the retiries money in Thailand it might be over one billion baht/year.

Now add 1 billion baht a year to everyone with a work permit and see what it adds up to. Thats still probably a very conservative estimate.

Now take all that money out of Thailand and what happens?

[LivinLOS]

I wouldnt say Thailand as a whole but Phukets ecomonmy would collapse without farangs.. No question..

Its not just the diret tourism or direct expenditure its the 1000's of Thais that depend indirectly on the farangs and in turn thais benefiting from the first tier thais..

Who do you think is buying these 20 mil per rai plots of land ??

I am retired young 30's spending probably 2 mil per year here.. I am not a tourist contriution.. I am not officially retired.. That money coming on to this smal island supports a whole food chain of Thais..

[steveromagnino]

I wouldnt say Thailand as a whole but Phukets ecomonmy would collapse without farangs.. No question..

Its not just the diret tourism or direct expenditure its the 1000's of Thais that depend indirectly on the farangs and in turn thais benefiting from the first tier thais..

Ah.... I think the reason Phuket has collapsed is because of lack of Japanese and Asian tourists; the spending statistics and visitor statistics indicate that higehst of the spending per person is from Japanese for almost every category.... so I think when you say "farang".... well the average stats of visitors from Australia, England, USA etc are not that high in terms of spending, and in fact the transfer of Asian visitors to western visitors for many businesses has been the problem thjis year; package western tourists don't spend that much.

Besides which we weren't talking about tourism, which is well documented in terms of total projected spending and impact, we are talking about residents.

For western (farang) residents alone; my guess is if they all exited en mass; many parts of the Thai economy would be completely unaffected. Some parts would not, off hand:

- many areas in Isaan which are propped up through subsidies from farang husbands and donations to people who are otherwise not working

- NEP, PP, Soi Cowboy

- Pattaya would really tank

- Parts of Phuket

- import based businesses that rely on specialist expertise such as fine western food imports, luxury goods

- BKK & Pattaya condo market would tank

- less competitive business environment in some industries, with some reduction in skills, strategic planning especially

- school teaching english business would struggle on with higher prices and worse teachers from India/Philipines etc

- western restuarant/club business would collapse

Long term what might happen? I would hope you might see a development of self reliance in the poorer parts of Isaan and a lower dependance on the beggar/sell yourself/mooch off someone else mentality that some people have there perhaps more than the other provinces...however this might be a poor vs. rich issue; however I've seen the study from the NESDB and I just can't see the poor people in the south fronting up at NEP in quite the same way with quite the same indifference....

However, really no idea.... easier to imagine what would happen with no tourists than no residents. So hard to measure the long term benefits/detriment to the economy of residents.

[ray23]

Wow.... TVs, cars, and refrigerators.  You guys fishing for those 6th place participation ribbons they used to hand out to the 'special kids' back in grade school on sports day?

<{POST_SNAPBACK}>

Yes loving it here and no I don't need a ribbon to understand my value. A simple business principal applies repeat business is a good thing, not a bad thing. The question was asked and I answered, want to read more into then that Up 2 U

[Thaipwriter]

Wow.... TVs, cars, and refrigerators.  You guys fishing for those 6th place participation ribbons they used to hand out to the 'special kids' back in grade school on sports day?

I dont think so, anyway yesterday I was reading that you are building 170 properties near Pattaya?

Selling them ALL to Thai's?

Or do you make a living off a bit of farang money too?