But, as an exception to broader regional attitudes toward Thailand, Australian business has largely failed to recognise the importance of the Thai economy to international commerce. Instead Thailand is seen through the narrow prism of beaches and bars. The US, China, Japan and Korea — among others — have all moved past this perception, and for them Thailand is now a serious business destination.

While the worst of the Thai floods has passed — and putting aside the tragic human toll — the disaster’s economic impact is becoming clearer. The central bank slashed economic growth expectations for 2011 from 4.1 percent to 2.6 percent. Despite frantic efforts to protect the many purpose-built industrial parks dotted around the country (which are largely the product of Thailand’s highly effective Board of Investment promotion activities), many remain inundated. An estimated 1,000 factories are submerged in a quagmire the size of Australia’s island state, Tasmania, or otherwise shut down due to supply-chain shortages, labour absences, transport roadblocks or other flood-related factors. Approximately 20,000 businesses and 780,000 jobs within Thailand are said to be affected. And there are many top-tier multinationals among them, highlighting Thailand’s quiet emergence into the word economy. Overseas, big-name buyers from Thai factories have been hit by supply shut-downs, including Hewlett Packard, Dell and Apple. Global output of hard drives, for example, is projected to fall by 30 per cent.

Equally, with Thailand manufacturing over 1.6 million vehicles in 2010, the floods are expected to induce a production drop of between 6,000 and 10,000 units per day — not to mention dramatic shortages of auto component parts for export. The latter has seen production delays in Japan, the United States, the United Kingdom, the Philippines, and elsewhere. For both Thailand’s export-dependent economy and in the current international economic climate this latest blow to the region is an unwelcome setback. And that some analysts are comparing the Thai floods’ economic impact with that of the Japanese tsunami is hardly surprising.

Australia will celebrate its 60th anniversary of diplomatic relations with Thailand next year, a feat which underscores the relative stability of Thailand’s place in the region and relations with its allies. But while the Australian diplomatic presence in Thailand is one of the largest globally, the same cannot be said for the business relationship with its Southeast Asian partner. Merchandise trade is strong — Thailand is Australia’s sixth-most-important merchandise trading partner — but investment tells a different story. Thailand’s A$4.99 billion of investment in Australia in 2010 was almost two and half times greater than the A$1.9 billion flowing the other way. The disparity can partly be explained by several large one-off Thai investments, but this tells only part of the story.

Each year there are over 700,000 Australian visits to Thailand. Yet some estimates put the Australian business community’s visits there at less than 3,000. To be fair, Thailand’s protectionist tendencies — particularly the Foreign Business Act — stymie participation in areas where countries like Australia excel, such as professional services and mining. And corruption, political instability and graphic scenes of violence in Bangkok do not help investor confidence. But many other nations have chosen to focus instead on Thailand’s strengths. As a place to do business Thailand offers a strategic location, world-class infrastructure, cheap business inputs and a cost-competitive labour force with good skills potential. And the World Bank has positioned Thailand 17th in ease of doing business — only Singapore ranks higher in Southeast Asia.

The US, China, Japan, Korea and increasingly others have identified Thailand’s commercial potential. They have invested significantly and — despite the floods’ heavy toll — stand to make a very positive return.

Thailand’s economic fundamentals remain strong despite suggestions that the floods reveal an infrastructural weakness. But such suggestions ignore the fact that these floods are a one in 50 year event. And given the huge amount of water this year, the fact that Thailand’s infrastructure — and logistics — has stood up so well says a great deal. Also, the eastern seaboard, where much of the heavy manufacturing occurs, has not been affected by water at all. Any shut-downs or reductions in that area have been because of supply shortages from factories up north. Some of the major roads are also designed to be flood barriers and have worked very effectively. Other major highways are raised completely.

Thailand’s role as a production base is certain to increase, and bold infrastructure projects (largely financed by overseas interests) are set to take advantage of Thailand’s central geography. It has great potential as a transport and logistics hub for goods moving south from China into Southeast Asia and the Pacific. And with modest Burmese overtures to normalisation there is increased potential for an East-West economic corridor through Thailand.

Australian companies have been slow to identify the business prospects in Thailand, and for them the receded floodwaters should reveal a new terrain of opportunity.

Mark Carroll is Executive Director of the Australian-Thai Chamber of Commerce, Bangkok.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Where is Thailand Headed’.