Fox arrived in Thailand on Wednesday on a visit aimed at boosting trade relations between the two countries.

In the meeting yesterday, Somkid told Fox that he wants the UK to invest more in Thailand in those areas where British investors have expertise, such as the services sector, software, and the development of educational institutions in Thailand.

British investors were invited to invest in the Eastern Economic Corridor (EEC), which covers the provinces of Chachoengsao, Chon Buri and Rayong, he said.

The UK sent a clear signal that it needs to seek alliances in many areas after it leaves the European Union, said Somkid, adding that Fox told him that the UK economy has improved.

His visit to Thailand is aimed at further strengthening bilateral ties with Thailand and the trade and investment flows between the two countries – under the shadow of Brexit, a process that is resetting Britain’s international outlook.

Somkid said he would lead the ministers at the helms of the commerce, digital economy and society, and education ministries – as well as leading business figures – on a delegation to the UK in the near future.

Thailand is the second-largest economy in Southeast Asia and bilateral trade with the UK increased by 2.8 per cent to 5.6 billion euros (Bt246 billion) in 2015-16. Machinery, vehicles and mechanical appliances account for the bulk of Britain’s exports to Thailand.

On Wednesday, Fox met Digital Economy and Society Minister Pichet Durongkaveroj and they discussed possible collaboration to develop human resources in the digital sector.

The British minister also had talks with Commerce Minister Sontirat Sontijirawong.

The first UK trade minister to visit Thailand in 15 years, Fox was expected to raise the subject of the national election that has been promised for Thailand by early next year.

“The UK’s trade with Thailand is growing steadily, but there is still huge untapped demand for British goods and services across the Thai economy, which is growing strongly and has a large middle class,” Fox said in a press statement.

“The IMF (International Monetary Fund) predicts 90 per cent of global growth in the coming years will come from outside the EU, and this government is putting the UK in a position to benefit, particularly by boosting export finance and showcasing British companies to the Asian market.”

Thailand is implementing its Thailand 4.0 industrial strategy, with an emphasis on moving towards a digital economy, from initiatives such as rolling out high-speed Internet access for all villages to setting up a Big Data analytics centre. Fox will highlight how the UK’s world-class digital sector can support this strategy.

The trade minister’s arrival follows a recent visit by representatives of Thai digital technology companies to the UK.

On his trip, Fox will also promote the capability of UK companies in areas such as financial services, and transport, the statement said.

But for the time being, it looks like the priority is more economic-driven than political. The Asia-Pacific region is without question becoming an increasingly important market for its oil and gas in the face of tightening Western sanctions. And Thailand, looking to diversify its energy sources, certainly sees great opportunities in Russia’s eastward move.

Executives of PTT Public Co Ltd visiting Moscow recently were reassured by representatives of Russia’s major energy companies that countries in this region have always been in their sights. Executives of Rosneft, one of Russia’s biggest global energy companies, pointed to the dramatic increase in Russian oil exports to the region – by 140 per cent – over the past five years.

Thailand has already taken modest steps in responding to Russia’s eastward policy in the field of energy. PTT has signed memorandums of understanding (MOUs) with three of Russia’s leading oil and gas companies – Gazprom Neft, Rosneft and Novatek – aimed at cooperation in the field of LNG supplies, upstream operations, crude and oil products trading, refining and petrochemical projects.

But cooperation so far is limited to purchases of liquefied natural gas from Gazprom. Tevin Vongvanich, the chief executive officer of PTT, admitted that Russia, despite its geopolitical role and vast economic potential, still needs to be better understood before Thai businessmen can really make an inroad into the Russian market.

“We look at this as an opening of the door to a better understanding of Russia,” said Tevin, referring to the MOUs that PTT signed with the Russian energy firms. Tevin late last month led a delegation of PTT executives and senior Thai journalists to Moscow and St Petersburg for a series of meetings with key players in Russia’s energy companies, including Rosneft, Gazprom Neft and the Ministry of Energy.

As Thai businessmen are still trying to find their way in Russia, Tevin believes that their Russian counterparts seem to have better and more specific ideas as to what they want to do in Thailand. This was clearly demonstrated during a recent visit to Bangkok by a Russian business delegation, described as the biggest to Thailand so far, led by Deputy Minister of Economic Development Alexei Gruzdev.

The Russian minister singled out transport, logistics, energy, biotechnology, pharmaceuticals, medical equipment, robotics and Internet technology as being among the areas that Russian businessmen are interested in and raised the prospects of Thailand being a hub for Asean.

One thing was made clear during the recent PTT executives’ visit to Russia. Asia and the Pacific are becoming an increasingly important market for Russian energy export. But what is also clear is that while Russia has an eye on Southeast Asia, China remains its priority. Russia last year became China’s biggest oil supplier. An extension of the East Siberia-Pacific Ocean oil pipeline between the two countries completed in January has doubled crude oil exports from 15 to 30 million tonnes annually.

Rosneft has also invested in oil refineries and service stations in India and in 2016 established a US$13.8-billion joint venture with Indonesia’s Pertamina to develop a new oil refinery in East Java.

In his meeting with the Thai delegation, Deputy Minister of Energy Molodtsov Kirill Valentinovich said that to support Russia’s move towards Asia, Russia will intensify its exploration and drilling of oil in eastern Siberia for the Asia-Pacific markets and Russian oil companies will work with countries in the region to discover new energy sources.

He believes that the recent re-election of President Vladimir Putin reflected the Russian people’s support for his policies, including that on energy, which he said has been crucial to the country’s economic well-being. “President Putin has a strong interest in the energy sector and is most likely to continue with the present policy,” he said, adding that there will be a stronger drive for more efficiency and lower costs with the help of modern technology and artificial intelligence in energy production.

Under its energy strategy until 2035 is a plan to develop 2,000 new oil fields and at the same time to find ways to balance its dependency on oil and gas. And if Western countries think they can disrupt Russia’s energy sector with their sanctions, they are wrong.

“The sanctions are not a major problem. We know what we are doing and nobody can stop us except ourselves,” Valentinovich said.

Russia is now the world’s biggest exporter of oil and second-biggest producer of natural gas. And with its increasingly assertive geopolitical role, critics in the West believe it shouldn’t be a surprise if Russia were to aim to become a global energy superpower wielding its vast reserves of oil and gas as a foreign policy tool. But such a notion is quickly dismissed by those running one of the country’s leading oil companies.

“That is something far from reality,” said Pavel Baluta, project manager of the investor relations department of Rosneft, referring to what he described as distorted Western news reports about how Russia under Putin has been using oil to augment its diplomacy.

He insisted that Rosneft, which is 50-per cent government-owned, conducted energy sales transactions based on economic calculations without political interference. He said that although government representatives sit on its board of directors, Rosneft is independent in its day-to-day management and decision-making.

He admitted that sanctions imposed by Western countries may have a direct effect on deep-water oil exploration and drilling and certain aspects of financing, but do not interfere with on-shore operations.

Tevin said PTT’s cooperation with Russian energy firms is in its initial stage, involving purchases of the country’s liquefied natural gas, but this would gradually be expanded to include joint ventures in surveys and exploration in the future.

The Committee of Sponsoring Organisations of the Treadway Commission (COSO), that launched the Enterprise Risk Management – Integrated Framework in 2004, released an updated framework in September 2017. COSO engaged PwC as the principal author of the update.

The new framework, now titled Enterprise Risk Management – Integrating with Strategy and Performance, focuses on the role of risk management in strategic planning. While the framework maintains the strengths of its original version ie the key concepts of risk management, it gives more detailed guidance on the integration of risk and strategy.

To enhance the risk management practices in an organisation, it’s important for all parties to understand their roles. T

he three lines of defense model can be a very useful tool to enable effective Enterprise Risk Management (ERM), from the strategy-setting level to the business process or day-to-day operations level.

Then, internal control comes into play. For example, once a particular strategy is set, you will have an idea what direction the company should go. The controls then need to be put in place in order to support the execution of that strategy.

If your strategy is to reduce the delivery time of the finished product to your end-customers, and you decide to outsource some of the delivery operations to a local logistics service provider, you will need to put in place a rigorous process to oversee the performance of that vendor.

When we apply the three lines of defense model to our example, the first line is the process owner who oversees the vendor’s performance, who should be able to identify potential risks relating to that process and then design the key controls necessary to manage those risks. The second line is normally the risk management unit, which provides education and advice about risk and control to the first line, as well as putting in place the framework to manage the risk.

The third line is an internal audit function which is an independent party that will review the risk and control of the business processes to ensure they’re efficient and effective.

By adopting the updated COSO ERM Framework, all three lines of defense will result in the organisation being in a better position to identify and respond to key risks associated with its strategy.

Risk and control are two sides of the same coin. In order to make a meaningful risk assessment and implement a risk response, we need to understand internal controls. Controls help to give confidence to the management that things are going in the way they should be ie that business processes are being carried out to achieve the objectives through the efficiency of operations, the reliability of reporting, and compliance with relevant laws and regulations.

When implementing a risk response, control activities help to ensure that response is executed properly. Risk management is also a process, like any other process, where controls need to be in place to ensure that operations are performed as intended.

So, you need to ask yourself, is your organisation ready to link strategy to risk management and set up good internal controls?

Contributed by VARUNEE PRIDANONDA, Partner – Governance, risk and internal audit services at varunee.pridanonda@th.pwc.com