Recently Scott Murray sat down with Jaap Th. C. Mol, Trade Commissioner, Deputy Head of Mission and Deputy Permanent ESCAP-Representative for the Dutch Embassy in Thailand. Here are some transcripts from their interview.  

Please tell us about the balance of trade between Thailand and the Netherlands?

“Looking at the bilateral trade development between our two countries over the last few years, there is definitely a structural imbalance. For every Euro exported to Thailand, the Netherlands imported four Euros. But this imbalance isn’t a reason for great concern because on a global scale the Netherlands still enjoys a trade surplus. We don’t focus so much on deficits with specific trading partners. Dutch companies are quite eager to buy high quality goods and components from Thailand and other Asian countries and re-export them all over the world after they are integrated into our own export products.

“Apart from that I’m not a great believer in trade statistics as an effective tool for trade policy. Products cited in trade statistics can accumulate more and more value added depending on how many different countries they pass through and this can distort bilateral trade. Except for agricultural products, most traded goods consist of components made in a number of countries. And at each border crossing the total value of these goods enters each individual country’s trade statistics. What really matters bilaterally is the value exclusively added in Thailand and in the Netherlands. This creates wealth and employment.

“The Netherlands is the home base for many large multinational conglomerates like Philips, Akzo, DSM, SHV, Shell, Unilever, Heineken, Ahold, KLM, Martinair, ABN-AMRO bank, ING, RABO, you name it. These multinationals follow their own company policies. The majority of their exports and imports are related to in-house deliveries to their establishments and affiliates in other countries. This often biases statistics. The success of government policies in the field of export promotion can best be measured by success-indicators in the field of cooperation between small and medium sized companies. And I can tell you that Thailand, as a priority country in the field of Dutch trade promotion, has an overall positive score in this field.”

Which types of goods are moving between your countries?

“In 2002, in terms of actual figures, Dutch companies exported to Thailand USD496 million in goods and imported USD1,890 million. Industrial products accounted for 62% of Dutch imports from Thailand; agricultural products accounted for 17% and manufactured products 12%. Going the other way, industrial products and machinery make up 62% agriculture of Dutch exports to Thailand, petrochemical products make up 16% and agricultural and chemical products make up 10% each.

“The Netherlands as a member state of the European Union is heavily dependent on foreign trade. By sheer necessity the Netherlands is in favor of open and liberal trade with a minimum of obstacles and restrictions. But internationalization of trade requires rules and guarantees because nowadays we are all interconnected not only by telecommunications but also in the field of say food consumption for instance. A Thai consumer eating noodles made of Russian grain or nourishing her baby with milk from a Dutch cow requires an optimal degree of food safety. Consumer confidence is a sensitive issue.

“Every exporting country must respond to these consumer requirements and try to solve upcoming trade problems on a bilateral level. Recently, Thai shrimps and chicken meat faced problems entering the EU through the Netherlands because forbidden substances were found in them and according to EU regulations food safety was at stake. Timely bilateral consultations and action prevented the problem from growing out of control. In October 2003, the Netherlands Thai Chamber of Commerce, in close co-operation with the Netherlands Embassy, organized a food safety seminar at BITEC in order to inform Thai food exporters about new regulations in the EU and how to prepare for them. So now Thai food inspectors inspect Thai food products before they are exported. And they use European testing equipment to make sure Thai food is not stopped at EU borders.”

In what areas can the Dutch help the Thais?

“First, in agricultural cooperation, the Netherlands is one of the world’s largest agricultural exporters and this is an area with opportunities for closer co-operation because Thailand is strongly dependent on food exports and can take advantage of Dutch expertise and technical cooperation. Food processing, packaging, food control and logistics are all important areas for future cooperation.

“Transportation and transport logistics is another area where we can assist Thailand. The Netherlands has developed a multi-modal transport logistics system linking water, rail, road and air transportation in a profitable network. The flower auction close to Amsterdam is an example of this. Flowers are flown in from many countries and leave the Netherlands within hours after being priced by the Dutch auction system. In the evening, flower shop owners in Paris send a fax with their purchases for the next day and during the night Dutch truck drivers enter Paris and deliver the flowers right into the shops, having received the keys in advance. In May 2002, the Netherlands Chamber of Commerce and the Royal Netherlands Embassy organized a successful transportation seminar in Bangkok. Views on optimal transport systems, government regulations and private companies prerequisites were exchanged and everyone benefited.

“And we can also help Thailand with water management and coastal protection. A large portion of the Netherlands is below sea level. The sea and also the water level of main European rivers flowing out in the North Sea are a constant threat for us. So we have developed advanced technology and integrated water management to survive. In some places in the Netherlands you can even see waterways crossing over highways. Coastal protection, reclaiming land from the sea, are also areas where we have specialized technology. Problems with water are not new to Thailand and Dutch experts are keen to assist.”

Please tell us about the history of trade between your two countries?

“The Dutch East Indian Trading Company (VOC) first came to Ayutthaya around 1604, looking for a shortcut to China. The Dutch had a well-developed trading system at that time, so our trade with Thailand was part of a strong regional trading system. We traded goods we had obtained along the way: goods from Sri Lanka, Japan, Taiwan and Indonesia. And The VOC continued its trade with Thailand for two more centuries.

The strong development of our bilateral trade really started after World War II with major investment from Dutch companies like Philips, Unilever, AKZO, ABN AMRO, SHV and KLM, which paved the way for our bilateral trade today.

“Next year Thailand and the Netherlands will celebrate four centuries of relations. Thai and Dutch committees are preparing a number of events that will bring Dutch and Thai companies together in the field of trade, investment and technology transfer. And of course historic and cultural relations will be a prominent part of those events as well.”   

Please tell us about the SME project between your two countries?

“The Netherlands is the home base for many multinational companies and also one of the largest European investors in Thailand. In order to expand and stimulate investment in Thailand by Dutch small and medium sized companies both countries signed an agreement in December 2001 called, ‘The Program for Cooperation in Emerging Markets.’ Dutch companies, which agreed on a new investment in Thailand, together with their Thai partners, were eligible to receive a substantial financial contribution from the Dutch government. This program turned out to be so successful, that a new agreement is in preparation and hopefully will be signed this year. And in the field of technological cooperation similar financial facilities have been set up.”

What more can the Thai government do to entice further Dutch and foreign investment?

“It’s essential for Thailand to have an open and good investment climate. Investments bring in the latest technology, create employment and boost exports. Sometimes I hear Thai authorities stressing the need for 100% value added investment in Thailand. Foreign companies bringing only a small added value to Thailand seem to be less welcome. But in my opinion every country should be open to any investment that presents itself – especially smaller investments - because smaller companies are often pioneers in their fields.  Protection of intellectual property should also be enforced; otherwise prospective investors will go elsewhere.

“Education is another very important factor, because today, more than ever, intellectual capital is a prerequisite for economic growth. It’s essential the Thai government make its labor force more skilled in the field of computers and the English language. The current level of English comprehension is below average and if you want to open up to the outside world and compete globally, good language skills are essential.”

Putting on your economist’s hat for a second, what are your thoughts on the Thai economy?

“Before arriving in Thailand I was posted for a period of five years in Japan, an over-organized country without much flexibility and a stagnant economy, where Dutch companies weren’t making much money. So one of the nicest things I’ve experienced here is the enormous flexibility of the Thai people and the Thai economy. And that is what I hear from Dutch captains of industry when they compare Thailand with other countries in the region. The level and quality of their representatives here underscores their interest in Thailand. The Thai economic growth is strongly supported by domestic demand. And although people have had doubts about it, the baht is doing pretty well against the US dollar. Prosperous economic development helps investment come to Thailand and helps it stay here.

“Doing business in Thailand is often complicated by the lack of transparency. Even if there is legislation, enforcement is not always guaranteed. As a result, some companies may choose not to rely on the law, but on people who'll assist them in getting them what they need and that’s not the way it should be. An ethical business environment is essential if you want your economy to grow and to be respected. A strong and transparent banking system is also essential for sustained economic growth.”                

What are your thoughts on this looming conflict between the U.S. and Iraq?

“A war, and even a threat of war, has an enormous impact on all the economies of the world. Just look at the how the international stock markets have been affected the last few years. But who really pays the price? The poor countries do because they are always at the end of the line due to their limited reserves. I’ve been to countries like Cambodia and Indonesia and it would be the worst signal we could send these people if the Western world, with all our technology and high quality education, cannot be resourceful enough to find a solution to this problem through diplomacy instead of going to war.”   

Parting thoughts?

“As I already indicated the Netherlands is one of the most important investors in Thailand. During the financial crisis in 1997, Dutch companies, instead of limiting their investment, looked for ways to expand it proving the Dutch are here to stay. This Dutch approach is also reflected in the active and creative Netherlands Thai Chamber of Commerce (NTCC) with its President Jan de Kam, and its Executive Director, Charles Schwietert. Our strong relationship with them, especially in organizing all kinds of trade promotion activities, is very productive.”

Background

After serving in the Dutch military as a first lieutenant from 1963-65, Mr. Mol studied at the University of Amsterdam from 1965-71 gaining a Masters Degree in Economics and a Bachelor’s Degree in Russian language and literature. He then tried to get a job whereby he could combine both degrees. That wasn’t easy, but after graduating he landed a job in the Hague as a Dutch government official within the PM’s cabinet, his role being to act as a liaison between the cabinet and the various departments concerned with current political affairs.

He stayed in that position until 1976 when he landed the position as Head of the East European Division for the Ministry of Economic Affairs (he has studied centrally planned economies at university). In 1979, the Ministry of Economic Affairs made him Head of the European Division, and then in 1982, promoted him further making him Head of its Asia/Africa Division (the year he made his first trip to Bangkok). Then from 1986-88, he was the Ministry’s Deputy Director of Bilateral Economic Relations before starting his diplomatic life as the Minister Plenipotentiary of Economy for the Royal Dutch Embassy in Washington D.C. from 1988-92.

From 1992-96, he took his first posting in Asia serving as the Director of the Netherlands Trade & Development Office in Taipei. From there he moved to Tokyo, where from 1996-2001 he was the Minister Plenipotentiary of Economy & Finance for the Royal Dutch Embassy in Japan. Then in 2001, he came to Bangkok as Deputy Head of Mission. Interestingly, although most Dutch diplomats are paid by and report to the Ministry of Foreign Affairs, in a special interdepartmental arrangement Mr. Mol is paid by and reports to the Ministry of Economic Affairs.

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