VZCZCXRO3708
PP RUEHCN RUEHDT RUEHHM
DE RUEHCHI #0179/01 3350752
ZNR UUUUU ZZH
P R 010752Z DEC 09
FM AMCONSUL CHIANG MAI
TO RUEHC/SECSTATE WASHDC PRIORITY 1223
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHCHI/AMCONSUL CHIANG MAI 1315

UNCLAS SECTION 01 OF 02 CHIANG MAI 000179 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV PREL TH
SUBJECT: AMBASSADOR PROMOTES U.S.-THAI BUSINESS RELATIONS IN NORTHERN 
THAILAND 
 
REF: 08 CHIANG MAI 39 (HOLLYWOOD, BOLLYWOOD  . . . CNXWOOD?) 
 
CHIANG MAI 00000179  001.2 OF 002 
 
 
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Summary 
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¶1.    (SBU)  The Ambassador promoted U.S.-Thai economic 
relations during a November 18 visit to Chiang Mai.  His program 
included meetings with local government, press, and private 
industry.  At his call on the Provincial Governor, the topics 
discussed included the need to further IPR protection in 
Thailand as a means to support diversification of the economy, 
and concern with China's growing influence in the Mekong region, 
which the Governor believes the U.S. needs to counter.  At a 
round table discussion with local press, the Ambassador 
highlighted the strong trade that exists between Thailand and 
the U.S. and the increased engagement with Asia the Obama 
administration has shown.  Over lunch, a U.S. IT and 
entertainment firm described both the benefits and the hurdles 
of doing business in northern Thailand.  End Summary. 
 --------------------------------------------- ----------- 
Ambassador Meets with Chiang Mai Governor 
--------------------------------------------- ------------ 
 ¶2.    (SBU)  Ambassador and Mrs. John were in Chiang Mai 
November 15-17, working together with Jimmy and Rosalynn Carter 
on Habitat for Humanity's Mekong Build 2009 (see Embassy Bangkok 
website for details -- 
http://bangkok.usembassy.gov/embassy-activiti es/2009/nov/06 
.html).  On November 18, the Ambassador spent a full day promoting 
U.S.-Thai business relations in northern Thailand.  His first 
meeting, with Chiang Mai Governor Amonrapun Nimanandh, covered 
three topics:  northern Thailand's desire to diversify its 
economic base beyond agriculture and tourism to include 
"Creative Economy" industries; the need for Thailand to 
strengthen its intellectual property rights (IPR) enforcement to 
attract international investment in those industries; and 
Thailand's concern with China's growing trade influence in the 
Greater Mekong Subregion (GMS). 
 ¶3.    (SBU)  Ambassador reaffirmed the efforts that Consulate 
Chiang Mai has, and will continue to make, in support of the 
diversification of northern Thailand's economy.  The Governor 
confirmed his participation in the "Creative Economy IT 
Conference" the Consulate will host February 18-19 in Chiang 
Mai.  The event, which the Ambassador will open, will bring 
together U.S. and northern Thai IT professionals to generate new 
business partnerships, boost recruiting of the North's IT 
talent, and lay the groundwork for sales and investment 
opportunities in support of northern Thailand's efforts to 
become a cost-effective IT hub.  The Governor said northern 
Thailand needed to showcase itself better to "Creative Economy" 
businesses.  He commented that, while during the Thaksin 
Shinawatra administration (2001-06) the Government provided 
funding to northern Thailand to help develop its IT 
infrastructure, such government investment has slowed in recent 
years. 
 ¶4.    (SBU)  The Ambassador stated that strong IPR enforcement 
is a prerequisite for any country to attract international 
investment from "Creative Economy" businesses.  The Governor 
agreed and said the Thai government has already begun this 
process by requiring government employees to use licensed 
software.  Changing the public's behavior will be much more 
difficult, however.  Moreover, Thai law enforcement officials 
have limited resources and training in IPR.  He suggested that 
granting the Minister of Commerce more power to enforce IPR laws 
might be a good first step toward improving enforcement.  The 
Governor and Ambassador agreed that while Thais may not see the 
advantage to protecting IPR today, in the long run Thailand will 
benefit economically with stronger IPR protection. 
 ¶5.    (SBU)  The Ambassador noted how the Obama administration 
has demonstrated a renewed focus in relations with Asia.  He 
pointed to the Secretary's visit to the region in July, and the 
announcement of the Lower Mekong Initiative (LMI), as indicators 
of increased U.S. engagement in the region.  The initial focus 
of the LMI is environmental and health cooperation, which has 
the potential to establish a stronger base for economic 
development.  Programs like these, therefore, could bring 
greater foreign investment to the lower Mekong region.  The 
Governor replied that this would be in both our countries' 
interests considering China's recent investments to improve its 
trade routes from southern China into the GMS.  He expressed 
concern that China's influence in the region will grow unchecked 
unless the U.S. is there to counterbalance it. 
 --------------------------------------------- -------------- 
Round Table Discussion with Northern Thai Press 
--------------------------------------------- --------------- 
 ¶6.    (SBU)  The Ambassador began his meeting with members of 
the northern Thai press by pointing out that the bilateral 
relationship between the U.S. and Thailand extends beyond 
government to government.  While in the past 40 years the USG 
has invested one billion dollars in Thailand, during the same 
period U.S. businesses have invested over $23 billion.  This 
makes the U.S. one of the largest investors in Thailand, second 
only to Japan. 
 
CHIANG MAI 00000179  002.2 OF 002 
 
 
 ¶7.    (SBU) The Ambassador noted that U.S. companies directly 
employ 250,000 Thais, and indirectly hundreds of thousands more 
through suppliers and other support companies.  U.S.-Thai 
bilateral trade exceeds $30 billion, with $23 billion of that 
being exports from Thailand to the U.S.  This makes the U.S. 
Thailand's largest export market.  The Ambassador emphasized his 
support for increasing economic activity between the U.S. and 
northern Thailand, which currently comprises a relatively small 
portion of overall U.S.-Thai commercial activity.  He announced 
that the U.S. Consulate will be hosting a "Creative Economy IT 
Conference" on February 18-19. 
 ¶8.    (SBU)  Press members asked about the USG's renewed 
interest in the Mekong region, and sought the Ambassadors 
opinion on what areas Thailand needs to concentrate on the most 
to improve its economic growth and standing in the world.  The 
Ambassador said the U.S. sees ASEAN as a strategic partner, and 
is the group's first Dialogue Partner to have appointed an 
Ambassador to ASEAN.  He added that the Obama administration's 
commitment to greater engagement with Asia will benefit 
Thailand.  As for improving Thailand's economic competitiveness, 
the Ambassador cited improved IPR protection, investment in 
communications/IT infrastructure, and stronger education as 
significant keys. 
--------------------------------------------- -------------- 
------------------------------- 
Creative Kingdom Inc. Trying to Create Opportunities in Northern 
Thailand 
--------------------------------------------- -------------- 
------------------------------- 
 ¶9.    (SBU)  The Ambassador visited the office of Creative 
Kingdom Animation (CKA), a subsidiary of Los Angeles-based 
Creative Kingdom Inc. (CKI), a multi-national architectural 
design firm involved in major resort and theme park projects. 
According to CKI CEO Eduardo Robles, CKI's Chiang Mai office is 
focused on digital animation and video game design, employing 
some 170 graphic designers, programmers, and architects among 
its 300 employees.  The firm has an international client base, 
ranging from broadcast and television companies to computer 
graphics and computer game design. 
 ¶10. (SBU) Over lunch, Robles (an American citizen) explained 
the opportunities and obstacles facing any foreign company 
wanting to do business in northern Thailand.  Since opening in 
Chiang Mai in 2004, CKA has experienced first-hand the political 
upheaval Thailand has been going through. With the repeated 
changes of government, and the resulting rapid turnover of 
leaders of government agencies, CKA must work without any sort 
of continuity needed for development/investment projects. 
Robles also expressed his frustration with Thailand's slow 
acceptance of tax breaks as a way to stimulate new investment. 
 ¶11. (SBU) In June, CKI announced its ambitious plans to build 
"CNXwood," a $220 million movie studio and theme park resort 
(Reftel).  If completed, the development is expected to create 
over 22,000 jobs, and - in Robles' vision - would position 
Chiang Mai to rival Hong Kong as the entertainment production 
hub of Asia.  CKI has already signed a MOU for the land (just 
outside of Chiang Mai) with a private landowner.  It has also 
secured a provisional commitment for the $60 million start-up 
cost from a multinational entertainment group, contingent on 
CKI's ability to secure from the RTG tax and non-tax incentives 
for foreign investment in the entertainment industry.  CKI has 
been lobbying the RTG for such measures, including exemption 
from tariffs on imported film equipment and a tax credit for 
foreign film producers. 
 ¶12. (SBU) Robles expressed frustration with the difficulty of 
navigating the Thai bureaucracy to secure the RTG's cooperation 
for a large-scale project like "CNXWood".  Robles asked the 
Ambassador how the Embassy might be able to help.  The 
Ambassador responded by describing the various ways the Embassy 
can engage in support of U.S. commercial interests, and as a 
starting point urged CKI to reach out to the American Chamber of 
Commerce in Bangkok, as well as the Embassy's U.S. Commercial 
Service office. 
MORROW