Apart from having experienced a considerable downturn in connection to the Asian financial crisis in the late 1990s, Thailand has traditionally displayed high economic growth rates (6-8%) since the 1960s. However, the global financial crisis, coupled with effects of the political tensions, have slowed economic growth in Thailand. While 2010 figures from the Thai economy show the emergence of the country from recession, businesses continue to worry about the political prospects of the country causing foreign investors to divert their interest from Thailand, as reported in a February 2011 article by BBC News Business. Moreover, poorly enforced laws and unclear policies caused by political instability remain a source of frustration to the business sector. Khun Smith Jingkaojai, a former Morgan Stanley banker, explains in the April 2011 Business Report Thailand that political unrest lies behind the reasons why Thailand´s economy is unable to adequately engage itself in the capital markets. According to the World Economic Forum's Global Competitiveness Report 2011-2012, companies also consider corruption and government instability as well as inefficient bureaucracy to constitute a substantial barrier to doing business in Thailand. Moreover, 41% of companies surveyed by the Word Bank & IFC Enterprise Surveys 2006 consider corruption to be a major constraint to their operations. Bribery is particularly concentrated in a few government sectors in charge of large financial transactions: the Land Department, Tax and Customs Department, the Transport Department and the Police Department.

Corruption is reportedly a significant problem in Thailand both within the private and public sectors, but it is mainly found in the intersection between business and government where illicit payments are widespread. Companies are actively engaged in bribery to obtain business and officials often engage in rent-seeking opportunities by selling favours. Those with political connections and administrative authority have been able to create possibilities for corruption, particularly with regard to securing monopolies, protecting against foreign competition and giving protection to illegal companies. These practices secure the flow of money into politics and have resulted in a high degree of interconnectedness between the business sector and the political system. The close personal connections between politicians, civil servants and businesspeople reach from the heights of the central government down to local government bodies. Generally, the board memberships of Thai corporations are still characterised by an emphasis on personal connections over professional competence. Despite being illegal for civil servants to be board members of private companies, high-ranking bureaucrats are commonly found on the boards of Thai companies, which is indicative of Thailand's patronage systems and problems concerning law enforcement.

Public procurement is an area in which risks of corruption are particularly pronounced. An estimate made by the then National Counter Corruption Commission (now renamed National Anti-Corruption Commission) calculated that up to 30% of the government procurement budget vanishes due to corrupt practices. However, the US Department of State 2010 reports that the government has publicly pledged to improve transparency in the bidding process and in the rewarding of contracts. Nonetheless, Deputy Secretary of the Ministry of Finance, Mrs Saowanee states that 5% of the project´s value is often paid in kickbacks by private companies that are awarded contracts on state projects. She further states that businessmen working with the state claim that facilitation payments and corruption commonly used amongst the police, Custom Department officers and politicians. According to the Bertelsmann Foundation 2010, an antitrust policy was set out under the Trade Competition Act 1999 (TCA) to reduce monopolies. Despite the fact that the TCA is considered rather advanced, it is being enforced unequally since certain parties, such as state-owned companies and public agencies are exempted from the Act, and the fact that several high-ranking individuals frequently receive exceptions from the Act. In order to enhance fairness and a competitive public procurement market, the competition law has to be further developed and enforcement improved. In order to best reduce the risk of extortion and demands for bribes in the procurement process, foreign investors considering bidding on public tenders are therefore advised to use a specialised due diligence tool on public procurement. Moreover, companies are generally recommended to develop, implement and strengthen integrity systems and to conduct extensive due diligence when considering doing and when already doing business in Thailand.

Thailand is generally considered to be a business-friendly economy and has for several years been able to offer favourable investment incentives to foreign companies (e.g. tax exemptions, especially if the investment includes new technology or is located in a less developed area) and good investment protection compared to many other countries in the region. Thailand has several bilateral free trade agreements, including agreements with Australia, New Zealand, Peru and other countries. Foreign investment in Thailand must adhere to the Foreign Business Act 1999 unless exempted by a bilateral treaty or agreement. The Foreign Business Act lists a number of sectors in which non-Thais are not allowed to invest. Foreign ownership is limited to 49% in most service sectors, but majority foreign ownership is permitted in the manufacturing sector. According to the US Department of State 2010, non-Thai companies and citizens are only allowed to own land in government-approved industrial estates. Consequently, many foreign companies opt for long-term land leases instead of buying land.

According to the World Bank & IFC Doing Business 2012, starting a company in Thailand takes an average of 5 procedures and 29 days at a cost of 6.2% of GNI per capita, which is relatively easy and cheap compared to the East Asia & Pacific region's corresponding averages. Despite this relative ease, the US Department of State 2010 recommends that companies seek qualified legal advice when entering the Thai market because Thai business regulations are governed by criminal law rather than civil law. Furthermore, one should note that Thailand does not recognise decisions by foreign courts. As a means to remedy the inefficiencies of the court system, companies may set up their own arbitration agreements. Thailand has signed, but not ratified, the Washington Convention 1965. It is also a member of the New York Convention 1958, and has enacted its own rules and procedures for conciliation and arbitration. Contact the Arbitration Institute under the Ministry of Justice for information on these rules and procedures.

Enforcing a contract is relatively cheap, but trying to do so through the Thai judicial system is also time-consuming. However, Thailand's business regulatory environment has, in general and in relation to other countries, significantly improved since 2007-2008, particularly in the areas of registering property, paying taxes and trading across borders. Still, however, World Economic Forum Global Competitiveness Report 2011-2012 describes the burden of government regulation and inefficient bureaucracy as a competitive disadvantage in doing business in Thailand. This is further illustrated by UN ESCAP Press Release 2009, which reports that hidden costs related to red tape is estimated to add up to 15% of the value of traded goods. The UN ESCAP suggests that a reduction in bureaucratic burdens is needed in order to increase trade competitiveness in Thailand. The enforcement of bankruptcy and reconstructing judgments has also been eased since 2004. A reform of the Civil Procedure Code on Execution of Judgments has limited debtors' use of frivolous appeals as a means to stop the enforcement of those judgments. Thailand´s 30 foreign chambers of commerce have criticised the heavy governmental bureaucracy that hinders effective reform initiatives. Criticism from the chambers is also directed towards the political instability of the country and the lack of executive power which has made it impossible for the chambers representing thousands of companies to keep track of important governmental policy formulations. However, that criticism on the part of the chambers would only strengthen resistance and entrenchment on the part of Thai officials. The same criticism is adopted by Mrs Saowanee, Deputy Permanent Secretary in the Ministry of Finance. She declared that these were the dominant reasons why corruption persists.