d517a thailand biotech guide 2006-2007

7/31/2019 D517A Thailand Biotech Guide 2006-2007

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T H A I L A N D B I O T E C H G U I D E 2 0 0 6 / 2 0 0 78

hai land has long real ized the

importance of biotechnology and the

tremendous benefits of having a

strong biotechnology sector. Given its position

as a world leader in tropical medicine, health

services, agriculture and food production,

Thailand recognizes that the biotechnology

industry will help strengthen the countrys

capabilities in these areas and contribute to

future growth and competitiveness.

Since the early 80s, Thailand had already taken

steps to encourage and nurture a fledgling

biotechnology industry. Early initiatives such as

the establishment of the National Center for

Genetic Engineering and Biotechnology (BIOTEC)

provided the necessary impetus and laid a strong

foundation for biotechnology human resource

development and R&D activities. Setting up of

the National Science and Technology Development

Agency (NSTDA) in 1991 reaffi rmed the

belief in building S&T infrastructure to build

competitiveness and upgrading S&T capacity. In

addition, with the approval of the National

Biotechnology Policy Framework by the Thai

Cabinet in 2004, the industry can now work

towards a clear set of goals, namely in using

biotechnology to promote the development of

new bio-businesses, enhance the competitiveness

of the Thai food and agriculture industries, raise

the level of medical healthcare services in the

kingdom, conserve the environment and

produce clean energy, create a self-sufficient

economy and develop qualified human resource.

As a result, the local biotechnology industry has

grown. Thailand has already attracted a number

of multinational corporations to base their R&D

activities here. It is also home to a rapidly

growing international medical tourism industry

whose world-class hospitals and medical

professionals are bringing in more than a

million visitors a year from around the world.

Biotechnology is todays frontier of Science and

BIOTEC, which has since become a part of NSTDA,

has used various NSTDAs instruments in playing

a key role of creating a conducive research

environment, a critical pool of talents and

effective infrastructure and tools that will enable

biotechnology to benefit the country and the

well being of the people. Furthermore, we are

continually strengthening the industry by bringing

together multiple disciplines, synergizing with

key partners and promoting both local and

international collaborations.

Market-driven initiatives such as the Thailand

Biotech Guide which showcases the local industry

and provides access to important market

information, is evident of an industry that is

moving to the next level of development. I hope

the readers will gain insights into Thailands

biotechnology industry and come to appreciate

the many prospects and opportunities that

are abound here.

Sakarindr Bhumiratana, Ph.D.

President

National Science and Technology

Development Agency (NSTDA)

T


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T H A I L A N D B I O T E C H G U I D E 2 0 0 6 / 2 0 0 7 9

ver the years, with sustained

commitment from the government

and concerted efforts from the

relevant agencies, Thailand has focused on

developing a biotechnology base that will

bring its agriculture-dominant economy to

the next level.

Agencies such as BIOTEC, NSTDA and the

BOI have worked closely together to promote

the long-term growth and development of

Thailand's biotechnology sector. Through their

efforts, the creation of biotechnology

incentives, funding and other forms of

support were undertaken specifically to

provide an environment conducive for growth

in this important sector. And now we are

starting to see the emergence of a promising

industry that currently boasts a small but

increasing number of biotechnology companies.

The creation of the Thailand Biotech Guide

by an industry-driven consortium is another

indication that the sector has reached an

important milestone. The demand for key

industry information has now reached

critical mass.

I am confident that this new publication,

the Thailand Biotech Guide will become an

invaluable resource for the local biotechnology

industry, as well as foreign companies and

investors. My best wishes to the publishers,

and I look forward to seeing this publication

grow as Thailand's biotechnology industry

powers forward into the future.

Satit Chanjavanakul

Secretary General Board of Investment

O


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ince adopting the National Biotechnology Policy Framework in 2004, Thailand has made significant

progress in developing the necessary infrastructure and nurturing specific sectors in its growing biotech

industry. There has been increasing interest in the local biotech industry especially from potential foreign

investors that are keen to learn about the countrys focus and strengths in the biotech field.

The Thailand Biotech Guide is created to provide comprehensive coverage of the operational details related to the

establishment of a local biotech operation and enterprise. Our aim is to develop a publication that presents

relevant and practical information to all potential stakeholders and contributors to the Thailand biotech scene. We

envisage that the guide will become an important source of reference for the local biotech industry and will help

promote Thailands biotech sector to the world.

We will like to take this opportunity to thank our advertisers for their support, without which this guide will not

have been possible. We hope that you will find this guide useful and we look forward to your comments andfeedback to help us improve th is publ icat ion further. Please feel free to drop us an emai l at

[email protected].

Co-Editors

S

Derrick Tan, Ph.D.

Managing Consultant1st Phase Operations

Marvin Ng, MBA

Business Development ConsultantGreener Grass Communications


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Thailand Land ofInvestment Opportunities

Thailand is a key economy in South East Asia, with an

estimated population of 66 million and a gross domestic

product (GDP) of over 7,100 billion baht or US$ 186

billion in 2005. Having weathered the Asian financial crisis

in 1997, Thailand has undergone a remarkable economic

transformation which propelled the economy from about

minus 10% growth to almost 7% growth in 2003.

Although economic performance has slowed down in 2004

and 2005 due in part to rising oil prices, the 2004 tsunami

and the outbreak of avian flu, the economy has remained

robust, with 2005 GDP growing at 4.7%.

In 2005, Thailand was rated the third most attractive FDI

destination in Asia (behind India and China) by a UNCTAD

survey. The kingdom is host to a growing number of

MNCs operating out of Asia for a few reasons. Firstly,

Thailand has a sizeable and growing economy with a

substantial domestic market that represents significant

opportunities for companies interested in tapping into local

demands. Secondly, Thailand is committed to creating a

business-friendly and low-cost operating environment thatis conducive to foreign companies. Other key factors

contributing to Thailand's attractiveness as a preferred

investment destination include its young and educated

workforce, its geographical location and its excellent logistic

infrastructure.

Thailand has already established itself as a global base for

a number of industries such as the automotive, electronic

and education sectors. For instance, world-class automotive

players such as Honda and Toyota both have significant

manufacturing and R&D operations in Thailand that cater to

the global market. Similarly, Thailand is also the world's

largest hard disk drive producer with most of the leading

hard disk drive players such as Seagate, Western Digital

and Fujitsu, tapping on the unique strengths of Thailand

and investing in major manufacturing and developmentoperations in the country. In the same way, biotechnology

companies are discovering Thailand as a promising

investment destination. The country, which is a hot spot in

bio-diversity, has a large domestic and regional market, as

well as a ready supply of competent scientific workers and

scientists. Furthermore, it has developed dedicated

infrastructure and has put in place, attractive schemes and

incentives to support the industry.

The Thailand BioIndustry An Up andComing Sector

Thailand regards biotechnology as an important industry

sector that needs to be developed in order to strengthen its

global competitiveness. The Thai government has

recognized the tremendous value of biotechnology in

enhancing economic productivity, especially in the agriculture

and food sectors which are mainstays of the Thai economy.In particular, there is strong interest to use biotechnology

for a variety of act ivities including processing food,


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increasing value-add of products, improving the genetic

stock of plants and livestock, developing diagnostics,

enhancing aquaculture and developing biological control.

As early as the 1980s, initiatives such as the creation of the

National Center for Genetic Engineering and Biotechnology(BIOTEC) were launched to promote the development of

the local industry. More recently, the Thai government

developed the National Biotechnology Policy Framework

(2004-2009), which aims to bring about US$125 million in

R&D investments and the creation of more than 100 new

biotech-related companies in the next few years. To meet

these objectives, the government has provided significant

resources to create an environment conducive for the growth

of biotechnology industry including setting up a dedicatedBioPark for R&D, creating training and business activities

as well as establishing incentives and assistance programmes

aimed at promoting the industry.

Key clusters within the bioindustry in Thailand include the

Agri-biotech sector, the Medical sector and the Food sector.

Agri-Biotech Sector

Thailand is a major agriculture exporter, with more than a

third of its land being arable and about half of the country's

labour force involved in agriculture. In 2005, the country's

agriculture output contributes 8.7% to its GDP. Thus, the

Thai government has long realized that biotechnology,

applied to the country's agriculture base, can bring

tremendous benefits to the economy and people.

With a large industrial base, in-depth experience and expertise

in this area, Thailand possesses significant strengths inbiotechnology within the agricultural sector and is already

home to a number of international companies such as Bayer

Cropscience, Monsanto and Syngenta. The country is now

leveraging upon biotechnology advances to further develop

the field and grow the industry. For example, marker assisted

selective breeding has been used to develop disease resistant

crops such as rice. Similarly, recombinant DNA techniques

are used to produce more hardy transgenic plants including

tomato, papaya and pepper. Biotechnology is also finding itsway into other areas such disease (livestock and crops)

diagnostics and agricultural product traceability.

Within the same sector, biotechnology is playing anincreasingly important role in the production of biofuels and

materials from agricultural biomass. One specific example

is the government's active support for projects related to

the production of bioethanol from cassava, sugar cane and

other agricultural materials, in an effort to augment the

country's energy needs.

In the area of human resource development for the

agri-biotech sector, Thailand is not only focusing on its

own needs but also those of the region. It is establishing

itself as a regional hub for training and development. For

instance, the Asian Development Bank has sponsored

training initiatives that are based in Thailand which reach

out to participants from neighbouring countries. This aims

to strengthen the agriculture capaci ty and advanced

agricultural science and technology cooperation among

nations in the region.

Medical Sector

Thailand is poised to become the region's leading healthcare

hub with over a million medical tourists arriving each year

seeking treatments including cosmetic surgery, dental work,

hip and knee replacements and back surgery. Thai doctors

and other medical staff study abroad, speak international

languages and are among the best qualified in the region.

Many private hospitals have translators to facilitate

convenient communication with foreign visitors. The hospitalfacilities themselves offer spacious, luxurious accommodation

and in some ways seem more like five-star hotels, with in-house


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restaurants and food courts, spa and fitness facilities. Tourists

from the United States, Europe and increasingly the Middle

East are attracted to Thailand specifically because of its

high-quality, attractively packaged and very affordable medical

treatments. Furthermore, Thai land also offers medical

treatments that are sometimes unavailable to these medicaltourists back in their home countries, for example stem

cell therapies. In 2005 alone, medical tourism brought in

more than half a billion dollars for the Thai economy.

With its superb medical healthcare infrastructure, well-trained

medical personnel and a growing research base, the sector

is poised to become a major clinical development center in

the region. Thailand has established a number of initiatives

to make this happen. For example, it has undertaken theThai Pharmacogenomics Project with the aim of creating a

comprehensive clinical database that will ultimately facilitate

new drug discovery efforts with leading pharmaceutical

companies and reduce healthcare costs.

Thailand is also at the forefront in the application of stem

cell technology. There are already organizations in the

country that offers commercial applications such as cord

blood banking and stem cell therapies.

Food Sector

Thai food industry is the most dynamic and diverse in the

world. The sector contributes significantly to the country's

growth and prosperity. More than 11.72% of the country's

total exports originate from the food sector, and the industry,

together with the agriculture sector, employs almost 20

million people in 2003. There are about 10,000 food-related

manufacturing operations in Thailand and 80% of the raw

materials that go into production are harvested locally. Given

the importance of the sector, it is not surprising that the

industry is continuously looking to improve itself. This

presents further opportunities for companies to improve upon

existing production or add value to existing products through

the use of technologies including biotechnology.

In general, the sector is moving towards higher

value-added, functional foods and nutraceuticals. It is alsodeveloping a more robust value chain that incorporates

higher standards, better safety and strong regulations. For

instance, Thailand's shrimp industry has managed to raise

its productivity and stay ahead of other food exporting

countries through the effective deployment of biotechnology.

The industry has benefited from initiatives such as the

Shrimp Genome Project and the Shrimp Traceability Project

which have helped to improve the shrimp breeding and

cultivation as well as raise the quality and safety standards

of the industry respectively.

More details on opportunities in Thailand biotechnology

industry can be found online at the BIOTEC website at

h t t p : / / w ww . b i o t e c . o r . t h / b i o t e c h n o l o g y - e n /

newsdetail.asp?id=1420.

The National BiotechnologyPolicy Framework ProvidingClear Directions

The National Biotechnology Policy Framework was formallyestablished in 2003 with the aim of developing a

competitive and self-sufficient Thai biotechnology industry.

restaurants and food courts, spa and fitness facilities. Tourists

from the United States, Europe and increasingly the Middle

East are attracted to Thailand specifically because of its

high-quality, attractively packaged and very affordable medical

treatments. Furthermore, Thai land also offers medical

treatments that are sometimes unavailable to these medicaltourists back in their home countries, for example stem

cell therapies. In 2005 alone, medical tourism brought in

more than half a billion dollars for the Thai economy.

With its superb medical healthcare infrastructure, well-trained

medical personnel and a growing research base, the sector

is poised to become a major clinical development center in

the region. Thailand has established a number of initiatives

to make this happen. For example, it has undertaken theThai Pharmacogenomics Project with the aim of creating a

comprehensive clinical database that will ultimately facilitate

new drug discovery efforts with leading pharmaceutical

companies and reduce healthcare costs.

Thailand is also at the forefront in the application of stem

cell technology. There are already organizations in the

country that offers commercial applications such as cord

blood banking and stem cell therapies.

Food Sector

Thai food industry is the most dynamic and diverse in the

world. The sector contributes significantly to the country's

growth and prosperity. More than 11.72% of the country's

total exports originate from the food sector, and the industry,

together with the agriculture sector, employs almost 20

million people in 2003. There are about 10,000 food-related

manufacturing operations in Thailand and 80% of the raw

materials that go into production are harvested locally. Given

the importance of the sector, it is not surprising that the

industry is continuously looking to improve itself. This

presents further opportunities for companies to improve upon

existing production or add value to existing products through

the use of technologies including biotechnology.

In general, the sector is moving towards higher

value-added, functional foods and nutraceuticals. It is alsodeveloping a more robust value chain that incorporates

higher standards, better safety and strong regulations. For

instance, Thailand's shrimp industry has managed to raise

its productivity and stay ahead of other food exporting

countries through the effective deployment of biotechnology.

The industry has benefited from initiatives such as the

Shrimp Genome Project and the Shrimp Traceability Project

which have helped to improve the shrimp breeding and

cultivation as well as raise the quality and safety standards

of the industry respectively.

More details on opportunities in Thailand biotechnology

industry can be found online at the BIOTEC website at

h t t p : / / w ww . b i o t e c . o r . t h / b i o t e c h n o l o g y - e n /

newsdetail.asp?id=1420.

The National BiotechnologyPolicy Framework ProvidingClear Directions

The National Biotechnology Policy Framework was formallyestablished in 2003 with the aim of developing a

competitive and self-sufficient Thai biotechnology industry.


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The framework provides direction over a period of 6 years

(2004-2009), with 6 specific goals for the development of

the industry as follows:

Emergence and Development of New Bio-Business

To encourage investment in R&D and establish biotechnology

companies which can tap on new opportunities in both

high value-added manufacturing (e.g. production of medical

diagnostic kits and supplementary food) and services

(e.g. molecular-level detection and analysis for medical care,

public health, agriculture and biosafety).

Biotechnology Promotes Thailand as Kitchen of

the World -

To use biotechnology to enhance Thailand's competitiveness

in the agriculture and food industries. The goal is to

increase the export value of the country's raw and

processed agricultural products.

Thailand Represents Healthy Community and

Healthcare Center of Asia -

To utilize biotechnology to improve the medical healthcare

of the nation and to establish Thailand as a lead hub for

healthcare services in Asia.

Utilization of Biotechnology to Conserve the

Environment and to Produce Clean Energy -

To apply biotechnology to the conservation and management

of the environment including energy production from waste,

improvement of soil quality, recycling as well as the inspection,

surveillance, treatment and rehabilitation of the environment.

Biotechnology as the Key Factor for Self-Sufficient

Economy -

To conserve and optimize the use of biological resources

that are important to, or specific in, various local communities.

The goal is to use biotechnology to extend the usefulness

of traditional know-how, expand the diversity and value of

local resources and resource-based products and to improve

the quality of these products.

Development of Qualified Human Resource -

To put in place infrastructure, resources and manpower

development programmes to create a quality workforce that

will support the growth of the industry.

More details on the NBPF can be found online at BIOTEC

website at http://www.biotec.or.th/biotechnology-en/policy.asp.

Strong Infrastructure to Support theDeveloping Industry

To support the development of the biotechnology industry,

Thailand has been putting in place critical infrastructure

necessary for industrial growth. The following sectiondescribes some of these in detail.

The Thailand Science Park

Located at the northern outskirt of Bangkok, the Thailand

Science Park represents the nation's first key infrastructure

development to promote its science and technology

research and development. The 80 acre park was completed

in 2002 and is currently managed by the team from theTechnology Management Center under the purview of the

National Science and Technology Development Agency

(NSTDA). The Park is currently undergoing Phase 2

expansion, while planning for Phase 3 development is

already in progress.


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The Park aims to be a fully integrated R&D hub to promote

the translation of innovative public R&D to the private sector,

as well as to provide training to advance the country's

critical mass of R&D professionals. To show its resolve to

make the Park the focus point of Thailand's science andtechnology activities, NSTDA houses its central administration

and various centers of excellence here. These include:

National Center for Genetic Engineering and

Biotechnology (BIOTEC),

National Electronics and Computer Technology

Center (NECTEC),

National Metal and Materials Technology Center

(MTEC), and

National Nanotechnology Center (NANOTEC)

In addition to these national centers, the Park provides

ready built research, pilot plant and business incubation

space for rental and long-term leasehold lands for companies

to construct their own research facilities. The Park management

also provides its tenants with one-stop services in the areas

of technology and technical, financial, human resource,

business and juristic support. Other benefits include access

to government research grants, soft loans, joint investment

by NSTDA and eligibility for Thailand Board of Investment'stax incentives (BOI Zone 3 incentives).

In the area of biotechnology, the abundance of state-of-the-

art research activities in agriculture, food and medical biotech

R&D have drawn an increasing number of companies to

set up shop within the Park. The Park currently houses

over 50 private companies, of which one third are active in

biotechnology. Some of the notable companies include

TV SD PSB (Thailand) Ltd., Betagro Group and the Shrimp

Biotechnology Business Unit. Over the years, there is also a

growing culture of scientific collaboration among BIOTEC,

the universities in the vicinity and private companies

located within the Park. BIOTEC also provides access to its

many core resources to private tenants at the Park, such as

the BioService Unit and DNA Technology Laboratory. An

ecosystem of biotech activities is taking shape at the

Thailand Science Park. More information about the Thailand

Science Park may be found at www.sciencepark.or.th.

With an aim of further developing the biotechnology sector,

the National Biotechnology Policy Committee recently

approved the expansion of the current biotech cluster

infrastructure at the Thailand Science Park into a full-fledged

BioPark. A sum of US$16.5 million has been allocated to

create an additional 40,000 sqm biotechnology lab space

by 2009, some of which will be BSL-3 level bio-containmentfacilities for use by private companies and public institutions.


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When completed, the BioPark will be Thailand's first biotech

hub to promote the advancement of life sciences research

and new bio-businesses.

The Industrial Estate Authority of Thailand

Established in 1972, the Industrial Estate Authority of

Thailand (IEAT) under the Ministry of Industry is tasked to

oversee the country's industrial development policies. In

addition, the state enterprise implements guidelines and

control measures to protect the country's environment against

harmful industrial pollution.

IEAT has developed more than 30 Industrial Estates across

the country, either on its own or jointly with privatedevelopers. These estates are generally equipped with many

of the essential infrastructure needed for a successful

industrial operation. As such, many biotech companies have

chosen to locate themselves within such estates to enjoy

the many privileges and incentives offered by IEAT. For

example, the agency provides a one-stop service to grant

licenses and permits necessary for operation initiation. It

also allows foreign investors to purchase the land they

occupy within certain estates. Additional information on the

various IEAT Industrial Estates and the privilege schemes

available may be found at www.ieat.go.th.

Other than these industrial estates, private developers alsooffer ready spaces or leasehold lands at various Industrial

Parks to potential investors. However, tenants in such

Industrial Parks are not eligible for IEAT incentives. In addition,

they do not have access to IEAT's business licenses and

permits facilitation services.

Investment Zones

Thailand's Board of Investment (BOI), through the

enactment of the Investment Promotion Act, divides the

country into several economic zones based on the regions

infrastructure availability and the local citizens income

levels. These zones serve as a guide for the agency to

direct different investment opportunities to the various

regions and to provide added incentives to promote

investment into the lesser developed provinces.


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Different tax and duty incentives and privileges are offered

by BOI at each of the zone. Details on these incentives may

be found at the BOI website at www.boi.go.th/english/about/

boi_privileges_by_location.asp.

Public R&D Focusing on Thailand'sStrengths

Much of the biotechnology R&D activities in Thailand are

concentrated in public research institutes and university

research centers. These organizations conduct a range of

research from publicly-funded upstream R&D to

commercially-driven collaborations with companies. With

Thailand's long history and experience in agriculture, aquaculture

and food production, strong biotechnology expertise can befound in areas including tropical disease, immunology, food

science and technology, fermentation and certain areas of

plant biotechnology. Furthermore, given the country's rich

biodiversity, Thailand has established large germbanks and

natural products libraries for use in agriculture research

and screening for bioactive compounds.

One of the leading biotechnology research institutes in

Thailand is the BIOTEC Central Research Unit, which wasestablished in 1996. It is the largest in-house research unit

under BIOTEC and NSTDA and conducts basic and applied

research as well as provides technical services to the industry.

Private R&D Activities CommerciallyDriven and Close to Market

Although biotechnology R&D activities are concentrated mostly

in public institutions, private sector R&D activities are alsogrowing. Increasingly, companies are working closely with

public R&D institutes and the universities to develop new

products and innovations. Some of the established local

firms in the agriculture and food industries collaborate with

the local inst itut ions in areas such as agricultural

biotechnology. One example is the Betagro Science Center,

initiated and funded by Betagro Group (one of Thailand's

largest agricultural and animal husbandry companies), which

is the nation's latest private advanced agro-based R&D

institute. The institute focuses on food safety - detecting

bacterial, viral or chemical contamination in products; this

includes the detection of emerging animal diseases, such

as the Avian flu.

In addition, Thailand is gradually being considered by global

firms as a base for R&D activities. It has attracted a number

of foreign investors that have established R&D activities and

research collaborations with local R&D organizations. Leading

international companies such as Shiseido and Novartis

currently work closely with NSTDA research centers. For

example, in 2005, Novartis established a three-year

partnership with BIOTEC aimed at developing new

medicines based on natural products found in Thailand.

Human Resource Development ACritical Component

Thailand recognizes that it must have a good pool of

scientists, doctors and other biotechnology professionals to

support the nation's developing biotechnology industry. At

present, there are a total of 24 public and private

universities that offer a program in biotechnology. Of these,

14 offer the program at post-graduate level i.e. Masters

or PhD.

In addition, there are joint research centers between BIOTEC

and leading local universities that provide research

programs which contributes to human resource

development. The Center of Excellence for Shrimp

Molecular Biology and Biotechnology at Mahidol University

and the Rice Gene Discovery Research Unit at Kasetsart

University are examples of such successful collaborations.

Besides the universities and joint research centers, a new

breed of problem-based learning institutes have also been

set up. These institutes focus on R&D training that

addresses the specific needs of the private sector. The

Chemical Engineering Practice School (ChEPS) and Food

Engineering Practice School (FEPS) which were developed

in collaboration with King Mongkut's University of Technology

Thonburi (KMUTT), are successful examples which have

produced graduates with skills and knowledge sought after

by the industry.


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The BIOTEC and NSTDA has committed to 244 national

and international scholarships/fellowships per year in order

to strengthen and develop capabilities to cope with technology

changes and future manpower demand.

In all, these programs help ensure a steady supply ofquality manpower that will meet the raising demands and

requirements of research institutes and new biotechnology

companies setting up in Thailand.

Thailand is also building up biotechnology research

capacities for the region. In 2001, Thailand, through BIOTEC,

initiated the Human Resource Development Program in

Biotechnology for Neighbouring Countries. The program

which is funded by the ASEAN Foundation and the NewZealand UNESCO Commission has trained a steady stream

of researchers from ASEAN countries and also provides a

networking platform for ASEAN researchers.

Support Schemes and GovernmentIncentives Promoting the Industry

There are a variety of assistance schemes and incentives

from government agencies to assist and attract biotechnologycompanies to set up presence in Thailand. The BOI is the

main government agency offering privileges and incentives

to investors. Companies that invest in biotechnology or

biotechnology-related businesses in Thailand may receive

tax or non-tax privileges if their projects receive approval

from the BOI. Tax privileges comprise of corporate income

tax exemption for up to 8 years, import duty reductions or

exemptions on machinery and raw materials. Non-tax

privileges include land ownership rights for foreign

investors, permission to bring in foreign experts and

technicians, and rapid processing of visa and work permit

applications. Companies with R&D activities can also apply

for 200% tax credit on R&D activities from the Thai

Revenue Department.

Biotechnology investors may qualify for financial support

packages from several other organizations. For example,

the Technology Management Center (TMC) offers grants

and soft loans for R&D or to upgrade manufacturing

processes for up to 75 percent of the project budget for

technology development projects (not exceeding US$750,000)

at a competitive interest rate. Various other programs are

available from the TMC including the Industrial Technology

Assistance Program (to provide financial support tocompanies seeking external experts from Thailand and

overseas) and the Support for Technology Acquisition and

Mastery Program (to facilitate technology transfer).

The National Innovation Agency (NIA) under the Ministry of

Science and Technology can also offer financial support

and technical services for innovators seeking marketing

assistance. NIA can award soft loans of up to US$125,000

for marketing and feasibility studies. In addition, NIA canalso enter into joint ventures (with less than 25% equity)

with companies and other investment organizations if such

arrangement can result in significant innovation.

Moving Forward

Thailand will continue to establish itself as a major

biotechnology player in the region. With a clear focus that

leverages upon the nation's advantages, Thailand willconcentrate its efforts on key areas of biotechnology R&D.

It will also continue to enhance its supporting infrastructure

and boost the quality and quantity of its human resource.

The establishment of the 40,000 sqm BioPark by 2009

which will accommodate Agro-business, life sciences

research, an incubation center and a pilot plant, will

enhance the country's competitiveness in the bioIndustry.

Thailand's new Suvarnabhumi International Airport, which

has the largest terminal building in the world (563,000

sqm) with a capacity to handle 45 million passengers and

3 million tonnes of cargo per year, will enhance the country's

global logistic network. Finally, the setting up of a

regional training center in biotechnology with the support

from UNESCO, FAO and the Rockefeller Foundation will

help develop strong research capabilities in the region to

meet future demand for qualified manpower from industry.

These and various developments are set to make Thailand

a preferred location for foreign Biobusiness in Asia.


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Forms of Doing Business

Types of Companies

A Thai or foreigner may engage in business in the form of

a partnership, limited company, a joint venture, a branch of

a foreign corporation, or a representative/regional office.

Partnerships

There are 3 types of partnerships and they differ principally

in the liability attached to each:

An unregistered ordinary partnership has partners who

are all jointly liable, without any limitation on the

partnership's total obligations. This type of partnershipis not a legal entity and is subject to taxation as if it

were an individual.

While there are many advantages to using the ordinary

partnership business organization, its use by foreigners is

limited by the Foreign Business Act (FBA), if it engages in a

business that is restricted under the FBA. An ordinary

partnership owned by Americans may apply for treaty

protection under the Treaty of Amity and Economic Relations. A registered ordinary partnership is a juridical entity

having a separate and distinct personality from each

of the partners by virtue of its registration with the

Commercial Registrar. It is treated as a corporate

entity for income tax purposes.

Generally, the registered ordinary partnership form of business

organization is not very popular, since it offers little or no apparent

tax advantages and little or no protection against liability.

A limited partnership is a form of registered partnership,

in which there are one or more managing partners who

manage the business and who are personally liable forthe partnership's debts, and one or more partners who

are not normally personally liable for the partnership's

debts, except for their undelivered or withdrawn capital

contributions. The partnership agreement, including the

details of capital contribution, management and objects,

must be filed with the Ministry of Commerce, in the

same manner as a registered ordinary partnership.

Limited partnerships are a popular form of business

organization, since they provide an aspect of limited liability

with fewer formalities than are required of limited companies.


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Private Limited Companies

The private company is the form of business organization that

is most popular with foreign businessmen, because there is

flexibility, especially in joint venture situations, in formulating

how the company may be controlled and managed. Thecompany may be wholly owned by foreigners. However, in

those business activities reserved for Thai nationals, foreign

participation is generally allowed up to 49%.

The liability of the shareholders is limited to the par value

of the authorized capital. The liability of the directors,

however, may be unlimited if so provided in the company's

memorandum of association or the articles of incorporation.

The limited company is managed by a board of directorsaccording to the company's memorandum and by laws.

Although there is no established minimum level of

capitalization, the private limited company's capital must be

sufficient to accomplish its objectives. All of the shares

must be subscribed to, and at least 25% of the subscribed

shares must be paid up.

Thai corporate law has some features, which may be

unfamiliar to foreign businessman. Limited companies are

subject to corporate income tax at the general rate of 30%.

Private limited company's shareholders must never be fewer

than seven at all times.

Joint Ventures

The term "joint venture" refers to unregistered partnership,

in which at least one of the partners is a juristic person and

which carries on business whereby the parties maintain

joint accounts and share profits. A significant aspect of a

joint venture is that it is taxed as a juristic person at the

general rate of 30%.

Consortiums

A consortium is similar to a joint venture, in that the parties

to a limited degree act together in a business enterprise.

However, unlike a joint venture, they maintain separate

accounts and do not share profits. A consortium does not

pay income tax as such, but the parties to the consortium

pay their own taxes.

Branch offices

A foreign juristic person may do business in Thailand by

establishing a branch office and also complying with any

relevant laws relating to its business. If the branch office

intends to engage in a business that is restricted under the

Foreign Business Act, then it must apply for a license.

If the company establishing a branch is an American

company and can comply with the provisions of the Treaty

of Amity and Economic Relations, the branch office may

apply for a treaty protection letter from the Ministry of

Commerce and thereafter engage in any business, except

those excluded by the treaty. If the treaty is applicable, the

American company must apply for a certificate, but need

not apply for a license under the Foreign Business Act.

Since a branch office is for legal purposes a part of theparent company, the parent is liable under civil and criminal

law for all the acts and omissions of the branch office.


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Representative office

A representative office may be established by a foreign

company. Normally, a representative office is limited to acting

as a buying office, carrying out market research and engaging

in quality control. It may not engage in trading activities inThailand. Representative offices require a license under the

Foreign Business Act, since they are regarded as service

businesses under Schedule 3 of the Act.

A representative office is normally required to remit into

Thailand for its operating expenditure, a total of Baht 5

million over a period of five years, with Baht 2 million being

remitted within the first year. These funds may not later be

remitted out. The capital may be used for normal workingcapital requirements, e.g. to pay operating expenditure such

as salaries and office rent.

Regional offices

The government promotes Regional Offices in a manner

similar to Representative Offices. Regional Offices supervise

and control their affiliates and subsidiaries in Thailand and

elsewhere in the region. They are not permitted to have

income but are reimbursed for expenditure.

International trade and support office

A foreign company may establish an International Trade

and Support office. Application is made to the Ministry of

Commerce under the provisions of Schedule 3 of the

Foreign Business Act. Such an office may only engage in

limited activities, to collect marketing and other information

and pass it to the parent company. It must not engage in

income generating activities.

The parent company must transfer into Thailand at least 5

million Baht as operating capital, of which at least 2 million

Baht must be transferred in the first year, and at least 1

million Baht per year after that.

Regional operating headquarters

Foreign companies can establish a regional operatingheadquarters in Thailand. Attractive tax incentives are

available to a regional operating headquarters.

Tax concessions are offered to regional operating

headquarters, for instance, 10% corporate tax will be charged,

instead of the usual rate of 30%, on: (1) on its general

income; (2) on net profits from royalties derived from

research and development in Thailand; and (3) on interest

from loans made to branches or subsidiaries.

Restricted business activities

The Foreign Business Act places restrictions on the

businesses that may be carried on by an Alien in Thailand.

The definition of Alien ncludes a company or partnership

which has at least half its shares owned by foreigners, a

foreign company or a foreign individual. Accordingly, a Thai

company which has only a minority of its shares owned byforeigners is not an Alien for the purposes of the Act. The

Act imposes restrictions on 43 categories of business

activity divided into three Schedules, Schedule 1, Schedule

2 and Schedule 3 (see below).

For businesses listed in Schedule 1, only minority

foreign ownership is permitted and there is no right

to apply for majority foreign ownership.

For businesses listed in Schedule 2, minority foreign

ownership is possible without permission. Up to 60%

(with a possibility of applying for up to 75%) foreign

ownership is possible with ministerial approval. At

least 40% of the directors must be Thai nationals.

For businesses listed under Schedule 3, minority foreign

ownership is possible without permission. Majority

foreign ownership is possible with permission of the

Commercial Registration Department and approval of

the Alien Business Board.

To obtain approval for majority foreign ownership of a Schedule

2 or 3 business, a foreign investor will have to demonstrate

that the nature of the business contributes to a number of

matters, including: national safety and security; economic and

social development; natural resources and energy conservation;

environmental protection and consumer protection. Other matters

that will be taken into account include: the size of the business;

the creation of employment, the transfer of technology, and

research and development.

The most significant achievement of the Act is that manufacturing

is now almost completely de-restricted, with the exception of a


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small number of sensitive industries or products. However,

services are still generally restricted to minority foreign

ownership. In addition, the Act partially de-restricts certain

services, including; construction; trading; wholesaling;

distribution and retailing, subject to minimum investment

and other requirements.

As to any activity that is listed in the three Schedules,

provided foreign ownership is maintained at less than 50%,

then no license is required under the Act. If the particular

business activity is not restricted under any of the three

Schedules or under any other law, then there are no

limitations on foreign ownership.

The United States - Thailand Treaty of Amity. Under this Treaty, American and Thai citizens and corporations are

granted special preferential rights concerning the ownership of businesses in each others countries.

The foreign ownership restrictions discussed above are summarised in the table below:

The Australian-Thailand Free Trade Agreement (TAFTA) contains a section that also grants preferential rights to

Australian investors and companies in a number of different industries in Thailand, but subject to detailed conditions. Such

rights may be greater than the rights available under the Foreign Business Act or other applicable laws (see above).

Accordingly, when an Australian individual or company is considering setting up company in Thailand, it may be necessary to

refer to TAFTA, to ascertain whether Australian investors have any special rights to own such a business.

The enhanced rights of business ownership enjoyed by Australian investors with relevance to biotechnology sector

are summarised in the table below.

ExceptionsBusiness and

relevant law

Minority foreign

ownershipMajority foreign ownership

FBA Schedule 1businesses

FBA Schedule 2

Businesses

FBA Schedule 3

businesses

USA - Thailand

Treaty of Amity -

any businesses

No permissionrequired

No permission

required

No permission

required

No permission

required

Not possible

With permission of the Cabinet, up

to 60% and possibly up to 75%

but three fifths of directors must

be Thai.1

With permission of the Foreign

Business Registrar, up to 100%

foreign ownership no nationality

requirement for directors.2

No permission required

BOI may also grant

permission subject to 1

BOI may also grant

permission subject to 2

Businesses excluded from

the Treaty: exploitation of

land or natural resources,

domestic trade in indig-

enous agricultural products.

Nature of businessNew foreign ownership

limit under TAFTA

Previous foreign

ownership limit

Tertiary education institutions

specialising in science andtechnology

49% (a service business under

FBA Schedule 3)

60% but must be located outside

Bangkok


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Promoted investment

The Government relies on a number of instruments to

support private business investment. Investment promotion

by the Board of Investment (BOI) is one such instrument.

The BOI operates in accordance with the powers contained inthe Investment Promotion Act 1977 in order to administer a

program of incentives for both Thai and foreign businessmen

who wish to establish or expand suitable businesses in

Thailand. In appropriate cases and in accordance with the

guidelines listed below, the BOI grants special privileges to

those who invest in approved projects. The BOIs current

policy is to promote life science business in Thailand through

the grant of special incentives and tax privileges.

Whilst the BOI provides valuable incentives, many Thai and

foreign businessmen establish businesses without BOI

assistance. Accordingly, investors should carefully consider

the pros and cons of seeking BOI incentives before making

an application. For instance, foreign investors often desire

to own all or at least a majority interest in their manufacturing

subsidiaries established abroad. Where such a subsidiary in

Thailand seeks BOI privileges, the BOI will allow it to be

majority or 100% foreign owned, subject to conditions.

The most important privileges available are summarized as

follows:

Permission for majority foreign ownership of a promoted

business which would otherwise be restricted under

Schedule 2 or 3 of the Foreign Business Act;

Permission for the enterprise to own land for use in

the promoted business;

Exemption from various taxes imposed on the business,

including exemption from the requirement to withhold

tax on dividends and royalty payments;

Permission to remit capital, profits, interest and principal

on foreign loans, royalties, fees or other obligations in

foreign currency;

Permission to employ foreign experts and technicians

on more advantageous terms than permitted by the

Ministry of Labour;

Exemption from import duties for machinery imported

for use in the business; Exemption from import duty, or reduction of duty

on raw or essential materials used in the business;

Exemption from corporate income tax for a period of 3,

5 or 8 fiscal years respectively in Zones 1, 2, and 3 (see

below), depending on the size of investment or number

of full time employees. An extended tax holiday may be

granted to businesses located in certain provinces in

Zone 3 for an additional 5 years, subject to furtherrequirements;

Dividends may be exempted from tax for a period

equal to the period of exemption from corporate

income tax;

Exemption from tax on payments of royalties and

fees for up to five years;

Zone 1: Bangkok, Samut Prakan, Samut Sakhon, Pathum

Thani, Nonthaburi and Nakhon Pathom

Zone 2: Samut Songkhram, Ratchaburi, Kanchanaburi,

Suphanburi, Ang Thong, Ayutthaya, Saraburi, Nakhon Nayok,

Chachoengsao, Chon Buri, Rayong and Phuket

Zone 3: The remaining 58 provinces.

All Zone 3 provinces are designated as Investment Promotion

Zones.

Laboratory accreditation

The Bureau of Laboratory Quality Standards serves as the

national accreditation agency to certify health products analysis

and clinical laboratories in accordance with ISO/IEC 17025.

Such certification is necessary for the laboratories to

perform laboratory services for the purpose of health product

registration with the Food and Drug Administration (FDA).

The Bureau also conducts proficiency testing and technical

consultancy and training services to clinical laboratories.

Permits for Doing Business

Factory establishment and operating licences

The Factory Act B.E. 2535 (1992) stipulates regulations for

factory construction and operation, factory expansion and

safety requirements. The Act is enforced by the Departmentof Industrial Works at the Ministry of Industry.


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A factory is defined as any premise, that uses machinery

equivalent to 5 horsepower or more, or that employs 7 or

more workers, with or without any machine, for manufacturing,

producing, assembling, packing, repairing, maintaining, testing,

improving, processing, conveying, storing or destroying

anything included in the classes or types of factories presently

listed in the ministerial regulations.

A factory may include a laboratory while workers may

include researchers.

Under the Factory Act B.E. 2535 (1992), factories are

separated into three groups according to the gravity of

impact of the factory operations to the public or the

environment, as follows:

Group 1 - Factories that can operate immediately

without prior government permission.

Group 2 - Factories that require prior notification of the

pertinent government authority before the business starts

operations. Group 3 - Factories that require the application for a

factory license before the establishment of the factory.

The Factories Act also regulates the standards and

procedures for control of waste, pollution and any activity

that may harm the environment as a result of business

operations, and necessary documentation and data which

must be kept by factories to ensure compliance with the

Act and its regulations. Violators of the Act are liable to fines

ranging from $8,000 to $16,000 and/or prison sentences.

An application to establish a factory must be submitted to

the Ministry of Industry in Bangkok, or if the factory is

outside Bangkok, it may be submitted to the provincialoffice. Full plans and details concerning the construction

and proposed purpose of the factory must be submitted.

Where required, an Environmental Impact Study must be

submitted as well and approved before a Factory Establishment

License may be granted.

After the construction of the factory, the manufacturer must

apply for a Factory Operating License. If on inspection it

appears that the factory and its machinery conform to theFactory Establishment License, a Factory Operating License

will be issued.


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Before the construction of a factory classified under Group 3,

the operator must obtain a factory license from the

Department of Industrial Works, Ministry of Industry. Application

for a license entails completing an official form, submitting

drawings and particulars of the factory, machinery, and

acceptable effluent treatment system, and attaching thedocuments stipulated on the form.

The operator of a Group 3 factory must notify the competent

authority at least 15 days before a factory test-run

commences, and again 15 days before actual manufacturing

operations start. The factory license is valid up to the last

day of the fifth calendar year from the year of commencement

and is renewable. An application for renewal of the factory

license must be filed prior to the expiration of that license.

Licensees must also obtain prior permission from the

Ministry of Industry for any factory expansion, transfer of

machinery to other sites, or transfer of factory site. Permission

is likewise required in order to transfer, lease, assign, or

sell a factory operation.

Import and export controls

There are regulations on the import and export of goods

into and out of Thailand. Trade in certain items is restricted

through outright prohibition, imposition of duties or licensing

requirements.

Import controls

The Ministry of Commerce designates classes of goods

that are subject to import controls, which usually take the

form of permission and licensing. Although these controls

are being liberalized, at present more than 50 classes of

goods require import licenses from the Ministry of Commerce.

These categories are frequently changed through notifications

from the ministry. A license to import any of the specified

items must be secured from the Ministry of Commerce. In

addition to the Act imposing the above controls, a

number of goods are subject to import controls under

other laws. With relevance to biotechnology, these include:

The import of modern drugs requires prior licensingfrom the Food and Drug Administration under the

Ministry of Health;

The Minerals Act stipulates that without appropriate

permission, an importer is prohibited from importing

tungsten oxide and tin ores and metallic tin in

quantities exceeding two kilograms;

The Cosmetic Act stipulates that for the purpose of

protection of public health, any importer of controlledcosmetics must provide the name and location of

the office and the place of manufacture or storage of

the cosmetics, the name category, or kind of

cosmetics to be imported, and the major components

of the cosmetics.

Biotech hardware and chemicals and live specimens for

research are regulated by the Thai Customs Department.

The taxes for biotech hardware and chemicals are 5 % ofthe total cost whereas those for live specimens are 10 %

of the total cost. Hazardous and exotic organisms are

quarantined by the Department of Medical Sciences,

Ministry of Public Health.

Export Controls

The Act Controlling the Importation and Exportation of Goods

authorizes the Ministry of Commerce to subject products to

export control. At present, close to 50 items require such

control. Certain goods require export licenses under other

laws, such as seeds, trees, and leaves of tobacco.

Import, export and possession of hazardous

substances in Thailand

The Act includes ten categories of hazardous chemicals as

follows:

Explosives

Flammable substance

Oxidizing agent and peroxide

Toxic substance

Substances causing diseases

Radioactive substance

Mutant causing substance

Corrosive substance

Irritating substance

Other substance either chemicals or otherwisewhich may cause injury to the persons, animals,

plants, property or environments.


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Hazardous substances are classified into four groups:

Category I hazardous chemicals for which the production,

import, export must be in compliance with the principles

and procedures promulgated. Category II hazardous chemicals

for which the production, import, export or being in

possession must be informed to the authorities. Category

III hazardous chemicals for which the production, import,

export or being in possession must be permitted. Category

IV hazardous chemicals for which the production, import,

export or their possession are legally forbidden.

No registration is necessary for chemicals of category I

while categories II and III need to be registered before

manufacture and/or import.

Importation, handling and disposal of radioactive

materials

The importation, handling and disposal of radioactive

materials is strictly regulated under the Atomic Energy for

Peace Act and radiation safety regulation. The Act and

regulations are enforced by the Office of Atomic Energy for

Peace of the Ministry of Science Technology and Environment

as well as the Department of Medical Science at the

Ministry of Public Health. The Office of Atomic Energy for

Peace looks after the utilization of radioactive materials and

other radiation sources, while the Department of MedicalScience looks after X-ray machines.

The Office of Atomic Energy for Peace is responsible for

licensing the utilization of radiation sources other than X-ray

machines. The responsibilities include authorization and

inspection, waste management and the information exchange.

Applications for importation, handling and disposal ofradioactive materials shall be submitted to Office of Atomic

Energy for Peace for approval according to sections 12 &

13 of the Atomic Energy for Peace Act B.E 2504.

Environmental legislation

The Enhancement and Conservat ion of National

Environmental Quality Act B.E. 2535 (A.D 1992) is the

most significant environmental legislation. The Act continuesand expands the responsibilit ies of the National

Environment Board (NEB) and created incentives for

environmental promotion and preservation, prescribes

penalties for polluters for the establishment of a fund for

promotion and preservation of environment quality and gives

the public a greater participation role in addressing

environmental problems.

The Act for the Cleanliness and Orderliness of the Country

B.E. 2535 (A.D. 1992) regulates and controls offences to

the environment deemed dangerous or unsightly. The Act

specifically prohibits the dumping of waste and waste

by-products into bodies of water.

Minister notifications and regulations issued under the

Factories Act B.E. 2512 (A.D. 1969) control the level of

effluent discharged by factories and restrict concentration

levels of chemical and/or metal pollutants to defined

parameters.

About the Author

Rouse & Co International provides a full range of intellectual

property services world-wide. We help manage patent

portfolios and advise on strategies that will enable the full

potential of the patents to be realized. Fabrice Mattei is a

partner and has been working in Thailand in the fields of

patent and biotechnology for the last 12 years.


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Human Resources

A key success factor for Thailand's biotech industry is the

development and management of its biotech human resources.

Many initiatives are now in place to grow the local talent pool.

Thai professionals abroad are encouraged to return home to

contribute towards the growth of the local biotech scene.

Specifically, the National Science and Technology Development

Agency (NSTDA) has initiated a "Reverse Brain Drain Project"

to encourage Thai professionals with backgrounds in science,

engineering or medicine to return to share their technical

skills with their fellow countrymen. More information on the

project can be found at the NSTDA's website at www.nstda.or.th/

rbd (note: the information is written in Thai). In addition,

universities across the nation are beginning to offer morerelevant courses and degrees in the areas of science and

engineering. Both private companies and the Thai government

are offering scholarships to increase accessibility of education

in this exciting area.

To succeed in Thailand, companies starting up should have

a good understanding of the legal framework surrounding

labour issues and an appreciation of Thailand's cultural

perspective. There should also be a thorough planningprocess to address common HR issues such as salaries

and benefits, employee relations, HR practices and termination

concerns prior to initiation of operation. Some of the

common employment laws and issues are detailed below:

Labour Laws

Designed to protect workers and preserve their rights, the

following legislations govern labour issues in Thailand: Labour Protection Act

Labour Relations Act

The Act Establishing the Labour Court and Labour

Court Procedure

Provident Fund Act

Social Security Act

Workmen's Compensation Act

Thai Civil and Commercial Code

The Labour Protection Act underlines the minimum

employment condition requirements for an employee in the

private sector, including minimum and maximum working

hours, holidays, minimum wages, child and woman labor,

leaves (sick, maternity, military and business) and severance

pay. The Labour Relations Act provides the guidelines for

the estab lishment of unions and the negot iation ofemployment contracts. The minimum age of employment

in Thailand is 15 years for standard jobs and 18 years for

dangerous or hazardous jobs.

Under the current labour laws, some of the benefits

that all employees are entitled to include:

13 national holidays per year.

1 day off per week (usually Sunday).

Minimum of 6 working days of annual paidvacation upon completion of 1 year of employment.


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Up to 30 days of paid sick leave.

90 days of maternity leave. Pregnant employees are prohibited from working overtime, on holidays, or

between 10 p.m. and 6 a.m.

Maximum of 48 and 42 work hours a week for non-hazardous and hazardous works respectively.

Paid overtime compensation for extra hours but limited to maximum of 36 hours a week.

1 hour of rest after every 5 consecutive hours of work or a total of 1 hour of rest per work day.

Access to welfare facilities at the workplace, including medical and sanitary facilities.

Severance pay entitlement for employees with minimum of 120 days of service. Pay amount is dependent on

duration of service.

Duration of service Severance pay amount

120 days to less than 1 year 30 days of wage

1 - 3 years 90 days of wage

3 - 6 years 6 months wage

6 - 10 years 8 months of wage

> 10 years 10 months of wage

There is an on-going effort to translate the various Acts of Parliament from Thai into English. Translated versions of

some of these Acts can currently be found at the Thai Law Reform Commission (TLRC) website at www.lawreform.go.th

or the website of the Office of the Council of State at www.krisdika.go.th.

Guidelines on the criteria and rate of compensation benefits payment are stipulated in the Act. The general provisions

are as follow:

Category Range of Compensation Benefits

Cash compensation 2,000 to 9,000 baht

Medical expenses Up to 35,000 baht for normal case

Up to 50,000 baht for serious injury

Work rehabilitation expenses Up to 20,000 baht

Funeral expenses Up to 100 times of minimum daily wage rate

Workmen's Compensation Fund

In accordance with the Workmen's Compensation Act,

employers in Thailand are required to make annual

contributions to the Workmen's Compensation Fund.

The contribution rate varies from 0.2 1% of the employees'

annual wages and is dependent on the categorized risk rating

of the company and the companies prior work related

accident record. This fund is used to provide compensation

benefits to employees or their next-of-kins for injuries,

illnesses or deaths resulted from work related accidents.

Compensation benefits are categorized into 4 groups:

Cash compensation

Medical expenses

Work rehabilitation expenses

Funeral expenses

More details on the Workmen's Compensation Fund and

the various benefit entitlements may be found at the Social

Security Office website at www.sso.go.th/eng/index_en.html.

Minimum wages

Different minimum wages are applicable to businesses

located in the different provinces. The minimum wage per

day (effective January 1, 2006) ranges from 140 Baht in

the northern provinces of Phayao and Phrae to 184 Baht in

the capital, Bangkok.


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Social Security Fund

The Social Security Act provides for the creation of the

Social Security Fund, which provides benefits to the

employee and his dependents for loss of work due to

non-work related injury, illness, maternity, disability, death,

or retirement. The fund is financed through monthly

contributions by the employers and employees (including

foreigners). Currently, each party contributes 4.5% of the

employee's monthly wage to the fund, up to a monthly

wage ceiling of 15,000 Baht. More details on the Social

Security Fund and the various benefit entitlements may be

found at the Social Security Office website at www.sso.go.th/

eng/index_en.html.

Provident Fund

Under the Labour Protection Act, employers with 10 or

more employees, and their employees, are required to

contribute to an employee welfare fund. This fund will be

used for lump sum or periodical payments to workers who

resign or are laid off. It also serves as compensation to the

dependents of employees who died in service.

Hiring Foreigners

Foreigners may not work in a number of occupations, including

the following, which are related to the biotechnology industry:

Agriculture, animal husbandry, forestry, fisheries, except

for work requiring special expertise, farm supervision

or labour in fisheries especially marine fisheries

Engineering in civil engineering concerning design and

calculation systemization analysis, planning, testing,construction supervision or consulting services,

excluding work requiring specialized techniques

Work Permit

A foreigner who intends to work in Thailand will need to first

obtain a non-immigrant visa (usually business - category B)

to enter the country. Such a visa will entitle the holder to stay

in Thailand for a maximum period of 90 days. Non-immigrantvisas may be obtained from a Royal Thai embassy or

consulate by producing several documents, including an

employment letter from a company registered in Thailand. More

information on the visa application process may be found at the

Thai Ministry of Foreign Affairs' website at www.mfa.go.th.

With the aim of facilitating employment and immigration needs

of foreign investors, the Thailand's Board of Investmentestablished a One-Stop Service Center jointly with the Immigration

Bureau and the Department of Employment. The Center is

tasked to provide quick turnaround for visas and work permits

applications and renewals, usually within 3 hours upon receipt

of the complete and accurate documentations. In addition, the

center handles other transactions such as the issuance of multiple

re-entry stamps, changes in visa class and payment of fines.

It should be noted that the services offered by the One StopService Center are only available to foreign investors, experts

and executives who have met certain criteria. Investors are

advised to contact the One Service Center for additional

information to see if they qualify for the Center's services.

The Center's contact info is as follow:

One Stop Service Center for Visas and Work Permits Office

of the Board of Investment

207 Glas Haus Building Ratchada, 3rd floor, Ratchadapisek

Road Din Daeng, Din Daeng, Bangkok 10400

Tel: 0-2693-9333-38 Fax: 0-2693-9352

E-mail: [email protected]

The following sections have been extracted from the

website of the Board of Investment

http://www.boi.go.th./english/how/labor_issues_and_

important_addresses.asp

Legal Implications of LabourManagement

Thai labour laws provide for considerable freedom in

managing labour. As in many countries, it is not legal to

discriminate on the basis of age or sex. However, personnel

ads in Thai newspapers show employers narrowly defining

their needs: "The successful candidate will be male, under35 years of age, not a member of a labour union, and at

least 150 cm in height, etc."


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Furthermore, the government does not interfere with a

company's retrenchment policies when economic condi-

tions necessitate cutbacks. There is no "first in, last out"

requirement in Thailand.

Similarly, Thai employers have the right to transferemployees to other work locations, provided the transfer is

not ordered with the exclusive intent to create hardship for

them. Refusal to transfer is legal cause for dismissal.

Employee records

An employer with 10 or more regular employees is

required to establish written rules and regulations in Thai

governing work performance. The regulations must bedisplayed at the work premises within 15 days of the date

from which the number of employees reached 10 or more.

An employer with 10 or more regular employees is also

required to maintain an employee register in Thai with

documents pertaining to the payment of wages, overtime,

holiday work etc.

Tips on Recruiting and Developing Staff

The ability of a company to attract and retain staff is

enhanced by tailoring compensation packages to meet the

needs of individual employees. Increasingly, factors such as

work environment, organizational policies, relationships with

superiors, and defined career path influence decisions whether

to join or remain with a company. In a challenging living

environment such as Bangkok, these "quality of life"

factors are important.

Organizing training programs to upgrade skills helps to

motivate staff and demonstrates a company's commitment

to its employees. Admission to such programs can be seen

both as a reward for good performance and as part of the

total compensation package.

Recruiting Technically-skilled Manpower

There are two main English language daily newspapers

which support advertisements, both in English and in Thai.

Both the Bangkok Post and The Nation boast circulation

figures of close to 60,000 copies per day, and their

advertising rates are similar. In addition to these

mass-market dailies, there is an English-language daily, the

Business Day, which claims a daily circulation of

approximately 10,000. Prospective employees can be reachedthrough the print editions of these newspapers as well as

online classified advertisements on their websites.

The Department of Employment, Ministry of Labor and

Social Welfare also has a website which list job fairs and

employment opportunities. It is found at http://www.doe.go.th/

eng/index/html.

Several domestic and international personnel recruitmentfirms operate in Bangkok. These companies also offer

services such as advice on issues of organizational

structure, labour relations, and the cultural implications of

managing labour in Thailand.

It is also recommended that companies develop contacts

with educational institutes to identify and court potential

candidates as early as possible. For companies with

ongoing manpower needs, establishing a network of

contacts can be especially valuable.

Besides tailoring compensation packages to individual needs

and emphasizing long-term and organizational benefits,

companies need to give high-end technical employees, such

scientists and engineers, work that are commensurate with

their skills. Given greater challenges and expanded roles in

areas like systems design and management, technical

personnel can become more productive and are more likely

to view themselves as an integral part of the company.

Concrete, long-term benefits are an effective retention tool.

Long-term benefits motivate personnel to work through

problems and to identify self-interest with company

interest. Committing resources to long-term benefits also

ensures that companies are able to realize increased

production levels from staff as they gain experience.


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Withholding Tax

Certain types of income paid to companies are subject to

withholding tax at source. The withholding tax rates depend

on the types of income and the tax status of the recipient.

The following table shows some of the prevailing withholding

tax rates:

Types of income Withholding tax rate

1. Dividends 10 %

2. Interest 10 % if paid to associations

or foundations

15 % in other case

3. Royalties 10 % if paid to associations

or foundations 3 % in other case4. Advertising Fees 2 %

5. Service and 3 % if paid to Thai company

professional fees or foreign company having

permanent branch in Thailand

5% if paid to foreign company

not having permanent branch

in Thailand

6. Prizes 5 %

It should be noted that government agencies are required

to withhold tax at the rate of 1% on all types of income

paid to companies.

The payer of income is required to file the return and

submit the amount of tax withheld to the District Revenue

Offices within seven days of the following month in which

the payment is made. The tax withheld will be credited

against final tax liability of the taxpayer.

Details of tax regime can be found at the Thai Revenue

Department website at www.rd.go.th. The website provides

comprehensive coverage on tax matters and is a valuable

online resource. Some of the more relevant sections are

summarized below:

Corporate Income Tax

Generally, companies are taxed on net profit derived from

business in Thailand at 30%. Various rate reductions are

available depending on the category of the company.

Personal Income Tax

Foreigners are considered Thai tax residents if they spend

180 days or more in Thailand during the calendar or tax

year. A tax resident is liable to pay tax on income from

sources in Thailand on a cash basis, regardless of where

the money is paid, as well as on the portion of income

from foreign sources that is brought into Thailand. Tax

rates for residents depend on their total taxable income

during the calendar year and range from 0% to 37%.

A non-resident is, however, subject to tax only on incomefrom sources in Thailand.

Value Added Tax (VAT)

The Value Added Tax (VAT) was implemented in Thailand

in 1992 as an indirect tax imposed on the value added of

each stage of production and distribution. Any person or

entity that regularly supplies goods or provides services in

Thailand and has an annual turnover exceeding 1.2 millionBaht is subject to the VAT. The current VAT is set at 7%.


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An Overview of Bio-IP Legal Frameworkin Thailand

In order to create a supportive infrastructure for biotechnology

industry development, the Thai Government has been

actively seeking to improve the laws governing the industry.

In particular, it is upgrading laws to provide a more favourable

environment for the protection and enforcement of

intellectual property, a vital element for the growth of

biotechnology.

There are five forms of intellectual property protection

relevant to the biotech industry, namely, patents, trade

secrets, plant variety, trademarks and copyrights.

However, the most used and relevant protection for thebiotechnology industry is patent.

Patents, utility models and designs1

Patent for invention

Having an appropriate patent portfolio helps attract

investment and assures investors that when products and

services are finally marketed, exclusivity will be assured to

the company. A patent gives the patentee exclusive rights,

empowering him/her to prevent another from using,

making, selling or offering for sale, importing or exporting

the invention claimed in a patent. The right is territorial and

limited to the country where the patent is granted.

Biotechnological inventions are generally protected through

patents, which can include composition of matter claims

for instance on isolated nucleotide or amino acid sequences.

It is not permissible to claim methods of medical treatment

of humans and animals, or methods of diagnosis in relation

to humans or animals. However, a method for preventing a

disease can be patented.

The Patent Act does not allow for patents on plants and

animals. Patents on micro-organisms are only granted ifthe organisms are modified. It further excludes patents on

plant varieties, which are protected under the Plant Variety

Protection. The law protects pharmaceutical products through

patent. Methods for the production of transgenic animals,

plants and micro organisms can also be patented as can

the organisms themselves as long as a discernable new

function or trait can be documented. For example, modified

Bt gene, isolated strains, purified strains etc.

What is the test for an invention to be capable of

patent protection? Are there separate tests for

biotechnology, medical device inventions?

The answer is no, the test is uniform. In order to obtain a

valid patent in Thailand, the subject invention must be

novel (that is, not known) and inventive at the date of filing

the patent application. A further requirement for a valid

patent is that the invention must be capable of industrial

application or be useful.

1Patent Act B.E. 2522 as amended by the Patent Act (No.2) B.E 2535 and the Patent Act (No.3) B.E. 2542.


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The novelty requirement can be troublesome. The invention

must not have existed somewhere (in or outside of

Thailand) in the form in which it is claimed. In the context

of biotechnology, the most obvious concern is the

patentability of natural products, which, at first glance,

appear to have pre-existed. However, if these materials canbe claimed in a manner, which distinguishes them from

their status as they occur in nature, there is no barrier to

patentability in properly constructed claims. For instance,

patents have been issued on DNA encoding erythropoietin,

pure TPA, DNA encoding TPA, and so forth.

The exclusive rights to the patentee are:

in the case of product patent, the right tomanufacture, use, sell, possess for sale, offer for

sale or import the patented products;

in the case of a process patent, the right to use the

patented process, manufacture, use, sell, possess

for sale, offer for sale or im

d517a thailand biotech guide 2006-2007

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