Thailand: A Prime Destination for Doing Business in Southeast Asia
Ms. Ajarin Pattanapanchai Deputy Secretary General
Thailand Board of Investment
THAILAND is the world’s
• 17th largest manufacturer output
• 28rd largest exporter (US$225.4
billion in 2013)
• 2nd largest economy in ASEAN
(GDP US$385 billion in 2013)
Thailand’s Fast Facts
Thai population 67 million (2013)
Thailand’s GDP US$385 billion (2013)
US$5,647 per capita GDP
Thai GDP by sector
Agriculture: 12%
Industry: 45%
Services: 43%
Thai labor force 39.13 million(2013)
Thai exports US$225.4 billion (2013)
Thai imports US$219.0 billion (2013)
Source: NESDB as of Feb 17, 2014 and Pocket World in Figures 2014 Edition
2011 2012 2013 2014 (Jan-
May)
Motor cars, parts and accessories 16.98 22.91 24.40 9.91
Computer parts 17.06 19.06 17.76 7.30
Precious stones and jewelery 12.30 13.15 10.09 4.55
Refine fuels 10.09 12.88 12.73 4.29
Plastics resins 8.80 8.53 8.96 4.08
Chemical products 8.29 8.52 9.11 3.63
Rubber products 8.39 8.41 8.51 3.30
Machinery and parts 6.11 6.24 6.79 2.98
Rubber 12.70 8.75 8.23 2.93
Integrated circuits 7.91 6.69 7.21 2.81
Others 113.93 114.11 114.75 47.08
Total 222.58 229.24 228.53 92.86
Unit: US$ Billion
Top 10 Exports in 2011 – 2014 (Jan-May)
Source: www.moc.go.th as of June 27, 2014
WHY THAILAND
Highly Ranked
UNCTAD Ranks Thailand 8th as a top prospective host economy 2013-2015
World Bank Ranks Thailand among the easiest places to do Business in Asia and 18th in the World
“Over the past 6 years, Thailand has suffered
bouts of political unrest on top of the global
financial crisis and severe flooding. Nevertheless,
the economy maintains solid economic
fundamentals that support its resilience, with high
international reserves, relatively low inflation, a
moderate amount of government and external
debt, and a strong manufacturing base.”
Asian Development Bank Outlook 2014
213
128
106 105
74
55 51 4731
0
50
100
150
200
250
Prime Office Occupancy Costs US$/sq ft/annum
Source: Asia Pacific Office Market View, Q1, 2014 as of May 28, 2014
Wage Comparison 92.4
54.849.6
42.8
33.3
21.5 20.917 14.6
8.5 8 7.9 7.6
0
10
20
30
40
50
60
70
80
90
100
Tok
yo
Seou
l
Duba
i
Hon
g K
ong
Tai
pei
Kua
la lu
mpu
r
Shan
ghai
Beijing
Ban
gkok
Mum
bai
Man
ila
Jaka
rta
Delhi
Wa
ge L
ev
els
(U
S$
)
Gross
Net
4
Cities ranked according to gross value of index. New York = 100
Source: UBS/Prices & Earnings update September 2012
Construction Costs Description M2 Costs (THB) M2 Costs
(US$1=32THB)
Industrial Building
Standard Low Rise Factory 15,000-19,000 $469-$594
Electrical Power Systems 5,400 $189*
Office (Construction)
High Quality 28,000-33,000 $875 - $1031
Medium Quality 23,000-28,000 $719 - $875**
Notes:
*Includes transformer, Main DB and Sub DB for general factory & office electrics only. Excludes
production equipment/machinery power.
**Includes cost of communal air conditioning, general electrics and sanitary.
Source: Tractus-Asia Updated May 2014
Electricity rate in Thailand is competitive
(US$/KWH)
Source: JETRO 23rd Comparative Survey of Investment-Related Costs
Comparison in Major Cities and Regions in Asia and Oceania, as of May 2013
Water rate in Thailand is lower
than the regional average rate
(US$/M3)
Source: JETRO 23rd Comparative Survey of Investment-Related Costs
Comparison in Major Cities and Regions in Asia and Oceania, as of May 2013
Thailand’s corporate income tax is the 2nd
lowest in SE Asia
Source: Bank Of Thailand as of August 2012
Corporate Income Tax Rates
Top Destinations for
Expat Experience 2013
by HSBC
1.Thailand
Source: Expat Explorer Survey 2013, HSBC
Thailand offers Best Expat Experience
and a Low Cost of Living
Thailand has been chosen
as the best country in the
world for
Overall Expat Experience
& Overall Quality of Life
Infrastructure • 7 international airports In 2009, 53.9 million passengers, 1.1 million
tons of cargoes Suvarnabhumi Airport – Capacity: 45
million passengers and 3 million tons if cargo per year
• Over 70,000 km Highway Systems • 6 Deep Sea Ports & 2 International River Ports
Capacity over 10 million TEUs Laem Chabang Sea Port – Capacity: 10.8
million TEUs, with additional 8 million TEUs expansion
e-Customs facilities • 4,346 km Rail links to Malaysia & Singapore • 60 Industrial Estates
(18)
High stability and
security of electricity
Supply from both
public and private
sources
Promote
participation of the
private sector in
power generation
EGAT 14,998 MW 48%
IPP 12,081 MW
38%
SPP 2,174 MW 7%
Import & Exchange 2,185MW 7%
Total Capacity 31,451 MW
Peak Demand 26,774 MW
Load Factor (Max) 83%
Load Factor (Avg.) 75%
Source: Energy Planning and Policy Office
Security of Energy Supply
2012
(19)
Efficient Logistics Network
Seaport - Land Transport – Airport
Laem Chabang
Seaport
Donmuang
International
Airport
Suvarnabhumi
International
Airport
Map Ta Put Deep Seaport
Bangkok
GMS Infrastructure Development
Source: NESDB as of Jan 20,2009
North-South Corridor North-Eastern Corridor East-West Corridor Southern Corridor Central Corridor Southern Coastal Corridor
Free Trade Agreement
Note: * Thailand, Malaysia, Indonesia, Philippines, Singapore and Brunei only.
ASEAN
•+570 million pop.
•US$1.3 trillion GDP (2007)
ASEAN+3
•+2 billion pop.
(1/3 world pop.)
•US$9trillion GDP
(16% of world GDP)
ASEAN+6
•3.3 billion pop.
(>50% world pop.)
•US$12.25 trillion GDP
Thai-Peru
Thai-Chile
ASEAN Economic Community(AEC) 2015
AEC A Single Market &
Production base
Source: Reaping the benefits of AEC & ,www.asean.org, as of December 2009
• Free flow of goods
• Free flow of services
• Free flow of investment
• Free flow of capital
• Free flow of skilled labor
Transform ASEAN into a
stable, prosperous and
highly competitive region
with equitable economic
development, and reduced
poverty and socio-economic
disparities
23
• Thailand has 8 intellectual property-related laws, all of which are consistent with international standards:
• Copyright Act of 1994
• Patent Act of 1979, as amended by the Patent Act (No.3) of 1999
• Trademark Act of 1991, as amended by the Trademark Act (No.2) of 2000)
• Act for the Protection of Layout-Designs of Integrated Circuits 2000
• Trade Secret Act of 2002
• Protection of Geographical Indication Act of 2003
• Plant Varieties Protection Act of 1999
• Traditional Medicine and Practice Act of 1999
IPR Framework
24
Investment Promotion Policy
BOI’s Liberal Investment Regime & Attractive Investment Incentives
Policy
100% foreign ownership
No local content requirements
No export requirements
No restriction on foreign currency
Tax
Import duty exemptions/ reductions
Corporate Income Tax/ Exemption up to 8 years
50% reduction of corporate income tax for up to 5 years
Double deduction on utility costs
Deductions for qualifying infrastructure costs
Non-Tax
Land ownership rights
Work permit & visa facilitation with in 3 hrs.
26 Overseas offices
Country desks
1-Stop for visas & work permits:
work permits in 3 hours
Interaction with other govt. agencies
on behalf of investors
Industrial Subcontracting Services
Global Sourcing program
(BUILD Unit)
Intensive information
ASEAN Supporting Industry Database
BOI SUPPORT
SERVICES
27
US Investment
U.S Investment Applications
Totals by Sector: 2005 – 2014 (Q1)
Sector Projects US$ Million
Agriculture 35 257
Minerals and Ceramics 4 57
Light Industry 42 64
Auto and Metal Processing 82 3,142
Electrical and Electronics 101 1,601
Petrochemicals, Chemicals 73 2,774
Services and Infrastructure 94 224
TOTAL 431 8,119
Source: BOI, as of Apr 10, 2014 Note: US$1=Bt32.66 in Q1, 2014
Success Stories of US Companies
Sectors of Opportunity
Target Industries
Agriculture and food processing
Automotive
Machinery
Aerospace
Target Industries
Biotechnology
Alternative energy
E&E
• Manufacture & repair aircraft parts and equipment
or onboard, or conversion of aircraft
• Machinery and equipment, mold & die, jig & fixture
• Medical devices
• Selected auto parts
• Selected electronics devices
• Software
• Renewable energy
• Biotechnology
• Food processing
• R&D
Priorities Activities with Max. Incentives:
Duty-free machinery and 8 years income tax exemption
32
Thailand: Automotive Hub of Asia
Thailand’s Automotive Industry Overview
Source: TAI
(2013 produced
2.46 mil.units
exports 1.13
mil.units to 150
countries)
World’s Automotive Production 2013
(Units of production) World’s Production: 87.24 Million (+3.6%)
Thailand : 2.53 Million (+4.3%)
#9 in Worlds’ Automotive Production
#1 in ASEAN for Automotive Production
Source: OICA as of Mars, 2014
Brand 2012 Add Capacity 2015
Toyota 700,000 200,000 900,000
Ford & Mazda 500,000 - 500,000
Mitsubishi 400,000 100,000 500,000
Isuzu 220,000 100,000 320,000
Honda 240,000 180,000 420,000
Nissan 220,000 150,000 370,000
Suzuki 135,000 - 135,000
GM 160,000 - 160,000
Others 80,000 - 80,000
TOTAL 2,675,000 730,000 3,405,000
Estimate Production Capacity
Forecasted by TAI
Company Sale Office Brand Capacity
(Unit)
Size
(Ton)
1 Hino Motors
Manufacturing (Thailand)
Hino Motors Sales
(Thailand)
Hino 20,024 15 - 50.5
2 Isuzu Motors (Thailand) Tri-Petch Isuzu Sales Isuzu 29,000 4.2 – 50.5
3 Thai-Swedish Assembly Volvo Group (Thailand) Volvo 4,500 > 10
UD Trucks 15,500 n.a.
4 Scania (Thailand) Scania Siam Scania 240 n.a.
5 Fuso Truck (Thailand) Fuso Truck (Thailand) Fuso 2,000 n.a.
Nissan Diesel
(Thailand)
UD Trucks n.a. n.a.
Foton Truck (Thailand) Foton n.a. n.a.
6 CIMC Vehicle (Thailand) CIMC Vehicle
(Thailand)
CIMC 6,450 (Trailer)
Total 77,714
Truck Manufacturers and Capacity in Thailand
Reference: Thailand Automotive Institute (April 2013)
44. Federal-Mogul 47. Michelin 50. GKN Driveline
52. Goodyear 56. Grupo Antolin 58. Bayer 59. TI Automotive 65. Draexlmaier 67. American Axle 73. Rieter Auto. 84. F-Tech 86. Hayes Lammerz 93. 3M
38
2. Denso 4. Aisin Seiki 13. Yazaki 15. Sumitomo 16. Toyota Boshoku 18. Calsonic Kansei 19. JTEKT 20. Hitachi 28. Toyoda Gosei 33. NTN 34. NSK 35. Mitsubishi 39. NHK Spring 40. Koito 41. TS Tech 43. Takata
46. Bridgestone
49. Tokai Rika
57. Showa
61. Mitsuba
66. Asahi Glass
72. Stanley
74. Akebono Brake
82. Sanden
84. F-Tech
92. Alpine
94. Pioneer
98. Omron
Japanese Global Suppliers
28/29 Companies 29/71 Companies
Other Global Suppliers 1. Robert Bosch 3. Continental 6. Faurecia 7. Johnson Control 8. ZF 11. TRW 12. Delphi 14. Lear 17. BASF 21. Valeo 22. Visteon 23. Autoliv 25. Mahle 27. Dana 31. BorgWarner 36. Teneco
Top 100 Global Suppliers Active in Thai Automotive Industry
Strength of Thai Automotive Industry
Thailand Aerospace Industry
Thailand Aerospace Industry
Asia overtook North America as the largest aviation
market in 2009 and will account for 30% of air traffic by
2014, while North America will slip to 23% of the total.
Full support from the government: Maximum tax
incentives from BOI
A capable and efficient skilled work force.
Many universities provide aerospace engineering degree
Civil Aviation Training Center provide training for high skill
personnel of aircraft maintenance and repair services
Other support industries are widely available: stainless
steel and aluminum fabrication, fiberglass and polymer
supply
40
Major Companies in Thailand For parts manufacturing & MRO
• Thailand is the 13th Export Rank in the World
• Thailand is the world’s largest producer of HDDs,
# 2 for Air conditioner
• A leading country in the manufacture of Integrated
Circuits and White Goods
• Strong supporting industries for electrical appliances
Compressors, motors, plastic and metal parts
Source:*E&E Intelligence Unit, as of Mar 10
Electronics & Electrical Industry
Major Industrial Sector of Thailand
Thailand’s E&E Exports 2012
19,387
6,9833,450
2,2791,987
1,4621,2331,1661,025
981924894893
780607
0 5,000 10,000 15,000 20,000 25,000
PCB
Washing Machine
Motor
Wire & Cable
Part of Telephone
Compressor
Power Supply
Colour TV
Teleprinter & Telephone
Refrigerator
Circuit Breaker
Radio Broadcast Product
Air Conditioner
IC
Computer & HDD
US$
Million
Source : MOC
Alternative Energy in Thailand
Solar Biogas Wind Biomass
Garbage Water Bio Diesel Ethanol
National Policy to Promote Alternative Energy
Target : To increase share to 25% by 2022
Incentives for Software Development
Animation Cartoons and characters Computer-generated
imagery Web-based applications Interactive applications Games
Wireless location based service content
Visual effects
Multimedia video conferencing applications
E-learning content via broadband & multimedia & computer-aided instruction
1. Enterprise Software (transaction processing, business solutions)
2. Embedded Software (mobile phones, microchips)
3. Digital content, including:
Software Content
• Thailand continues to industrialize, but is dependent on foreign industrial machinery for immediate future.
• High demand for:
• Metal forming
• Food and farm machinery
• Alternative energy/energy conservation machinery
• Textile machinery
• Automotive machinery
• Mould & Die
Opportunities in Machinery
Machinery and Parts:
Imports and Exports, 2004 – 2013 (Jan-Jul)
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(Jan-
Jul)
Import 386 441 434 426 496 432 529 605 794 397
Export 143 179 201 288 303 274 364 383 414 240
Bt Billion
Source: Ministry of Commerce, Sept 2, 2013
Exchange rate = 32 Bt/ 1USD
Import of Machinery& Equipment in Thailand
866.2
1,124.4
576.7
1,072.6
1,211.3
653.5
743.7
669.8 652.7
780.7
1,054.2
865.7
966.8965.4
0
200
400
600
800
1,000
1,200
1,400
2007 2008 2009 2010 2011 2012 2013 (Jan-
Jul)
Boiler, Nuclear plant, etc. (HS Code 84) Electrical machine (HS Code 85)
Billion Baht
Source: Ministry of Commerce, Sept 2, 2013
Benefit
- In 1st fiscal year, have one operating company in another country; a second within 3rd year; a third within 5th year
- Have annual expenses in Thailand of Bt15 million, or have invested at least Bt30 million in Thailand
- By end of 3rd year, 75% of ROH personnel to be qualified staff, and 5 persons earning at least Bt2.5 million annual salary and benefits per person
- All companies must be real operating companies with a physical presence and staff
For portion of income from OVERSEAS OPERATIONS
0% CORPORATE
INCOME TAX
for 15 years
Key Conditions
Benefit
For portion of income from LOCAL OPERATIONS
10% CORPORATE
INCOME TAX
for 15 years
Regional Operating Headquarters
Benefit
In addition to conditions
for income from
overseas and local
operations:
- Income generated from
services to overseas
companies must be at
least 50% of total
revenues
For income of EXPATRIATE EMPLOYEES
15% PERSONAL
INCOME TAX
for 8 years
Key Conditions
(52)
Support for US Investors BOI Office New York
61 Broadway, Suite 2810,
New York NY 10008 USA
Tel: (212) 422 9009
Fax: (212) 422 9119
E-mail: [email protected]
BOI Office Los Angeles
611 North Larchmont Blv.
3rd Floor
Los Angeles, CA 90004 USA
Tel: (323) 960 1199
Fax: (323) 960 1190
Email: [email protected]
U.S. Desk @ BOI Headquarters
555 Vibhavadi-Rangsit Rd.
Chatuchak, Bangkok 10900 Thailand
Tel: (66 2) 537-8111 Fax: (66 2) 537-8098
E-mail: [email protected]
Thank you