Shining a Spotlight on Thailand’s Dynamic

Investment Opportunities

Duangjai Asawachintachit,

Deputy Secretary General

Thai-Belgium Business Forum February 1, 2016

2 Investment Incentives and Cluster Policy

3 Sector of Opportunities

1 Thailand at a Glance

4 BOI Services

Contents

Sources: Economist 2015 Pocket World Figures

Thailand is a liberal market economy that welcomes and

nurtures foreign business investment.

Vietnam

Cambodia

Thailand

Myanmar

China

Laos Philippines

Malaysia

Singapore

Indonesia

Thailand

ASEAN’s

2nd Largest

Economy

12th Largest

Agriculture Output

16th Largest

Manufacturing Output

24th Biggest Economy

by purchasing power

27th

Biggest Exporter

33rd

Biggest Economy

35th

Largest Services Output

Brunei

Sources: NESDB as of Nov 2015

2015 Economic Projection

(% YOY) 2014 2015 (Q3)Projection Projection

2015 2016

GDP 0.7 2.9 2.9 3.0-4.0

Export of goods -0.3 -4.7 -5.0 3.0

Volume 0.7 -1.8 -3.0 2.0

Import of goods -8.5 -14.5 -9.8 5.4

Volume -6.8 -3.1 -0.1 3.9

Current Account to GDP

(%)3.8 6.8 6.3 5.7

Inflation 1.9 -1.1 -0.8 1.0-2.0

Unemployment rate 0.8 0.8 0.9 N/A

GDP[In 2014]

US$ 2.4 trillion

GDP Growth

4.9%

Population 633 million

FDI US$132 billion

Strategic Location

Gateway to ASEAN

ASEAN’s GDP to double to

US$3.7 trillion in 2020

Thailand: the Crossroads of ASEAN

New Transportation Development Strategies (2015 –

2022): 5 Key Programs

1. Inter-city

rail network

2. Capacity enhancement

for highway network to

link with key areas in the

country and with

neighboring countries

3. Public

transportation

network

development plan for

Bangkok

Metropolitan Region

4. Air

transport

capacity

enhancement

5. Maritime

transport

development

New Transportation Development Strategies 2015 – 2022

44 Billion Euro

• Upgrade rail infrastructure and overall system

• Build double-track in 6 main rails with their extension to respective borders

• Develop 4 lane-road networks linking Thailand’s key economic regions and borders areas

• Construct new motor ways • Develop facilities along the

main roads such as container yards

• Extend mass transit railway system in Bangkok and vicinity

• Improve quality of service and safety of mass transit bus as well as to enhance its environment standard

• Improve seaport on both Thai gulf and Andaman sea

• Enhance capacity of airports to be the regional center of air transportation

• Establish the aviation industrial estates

Railway

Road

Mass Transit

Water & Air

Rankings of Thailand around the world

UNCTAD ranks Thailand 8th as a top

prospective host economy 2013-2015

Country Rank

China 1

USA 2

Indonesia 3

India 4

Brazil 5

Germany 6

United Kingdom 7

Thailand 8

Vietnam 9

Russian Federation 10

2013 Global Manufacturing Competitiveness Index

Sources: 2013 Global Manufacturing Competitiveness Index by Deloitte Touche Tohmatsu Ltd. And the U.S. Council on Competitiveness as of April , 2013

5.81

5.87

5.94

6.17

6.21

6.6

6.64

7.13

7.24

7.57

7.59

7.65

7.84

7.98

10

UK

Poland

Malaysia

Maxico

Thailand

Japan

Singapore

Brazil

Canada

Taiwan

S.Korea

India

US

Germany

China

Index Score

[10=high, 1=low]

Sample of Belgian Investments

2 Investment Policies

3 Sector of Opportunities

1 Thailand at a Glance

4 BOI Services

Contents

BOI’s Liberal Investment Regime & Attractive Investment

Incentives

PolicyTax

IncentivesFacilitation

100% foreign ownership

No local content requirements

No export requirements

No restriction on foreign currency

Import duty exemptions/

reductions

Corporate income tax

exemption for 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

Land ownership rights

Work permit & visa facilitation

How Investment Incentives Are Granted

Activity-based Incentives

• Exemption of import

duties on machinery

• Up to 8 years of corporate

income tax exemption

A1

A2

A3

A4

B1

B2

Merit-based Incentives

Grant additional incentives

to encourage more

investment/expenditures

that benefit the country or

overall industry

1. Competitiveness

Enhancement

2. Decentralization

3. Industrial Area

Development

Additional CIT exemption will be granted in case of investment/ expenditure in

R&D: in-house

Donations & support to educational or research institutions,

government agencies in S&T field

IP acquisition/licensing fees

Advanced technology training

Development of local suppliers

Product & packaging Design

1

2

3

4

5

6

‘Merit on Competitiveness Enhancement’

Merit-based Incentives (1/2)

‘Merit on Decentralization’

The 20 Poorest Provinces

1. Kalasin

2. Chaiyaphum

3. Nakhon Phanom

4. Nan

5. Bueng Kan

6. Buri Ram

7. Phrae

8. Maha Sarakham

9. Mukdahan

10. Mae Hong Son

11. Yasothon

12. Roi Et

13. Si Sa Ket

14. Sakhon Nakhon

15. Sa Kaew

16. Sukhothai

17. Surin

18. Nong Bua Lamphu

19. Ubon Ratchatani

20. Amnatcharoen

‘Merit on Industrial Area Development’

• Projects located in industrial estates or promoted industrial zones

are granted 1 additional year of corporate income tax exemption.

• There are over 60 industrial estates/parks in Thailand.

Merit-based Incentives (2/2)

Cluster Development as Thailand’s

New Engines of Growth• Strengthening existing competitive industries/clusters e.g.

– Automotive

– Electrical and Electronics

– Agriculture

– Food

– Tourism

• Creating new clusters with strong growth potentials e.g.– Robotics and automation

– Aerospace

– Medical hub

– Digital

– Bio-based chemicals and fuels

25

Super Cluster

Automotive and parts

Electrical appliances, Electronics and Telecommunication equipment

eco-friendly petrochemical & chemical products

Digital Industry

Food Innopolis

Medical Hub

Robotics and automation

Aerospace

Other Clusters

Agro-Processing

Products

Textiles and

Garments

Activities

using

advancetechnologies,

eco-friendly

technologiesImportant

supporting services

e.g. logistics, R&D,

labs, training

centers

Targeted Clusters

Investment Incentives for Targeted Clusters Incentives Super Cluster Other Clusters

Tax 8-year corporate income tax exemption

and an additional 5-year reduction of

50%

For Future industries with significant

importance, the Ministry of Finance

will consider granting 10-15 years

corporate income tax exemption

Import duty exemption on machinery

Personal income tax exemption for

international specialists to work in the

specified area, both Thai and foreign

3– 8 year corporate

income tax exemption

and an additional 5-year

reduction of 50%

Import duty exemption

on machinery

Non-Tax Consideration of granting Permanent

Residence to the leading specialist

Permission for foreigners to own land

to implement the promoted activities

Same as Super Cluster

Approval Criteria for BOI Cluster Incentive Package

Activity classified under eligible BOI categories

Located in the designated provinces for each relevant cluster

Have cooperation with academic institutions/research

institutions/centers of excellence in the designated areas e.g.

Talent Mobility / Work-integrated Learning / Co-operative

Education / Dual systems

Cooperation in development of human resource or technology

as approved by the Board of Investment

Applications to be submitted by end of 2016 and production

to be started by end of 2017 (Extension may be possible if

deemed appropriate.)

Additional Temporary Measures

• Investment acceleration scheme (more tax

incentives for accelerated implementation of

committed investments submitted by June

2016) (BOI)

• Double tax deduction for investment made in

2016 (Min of Finance)

38

2 Investment Incentives and Cluster Policy

3 Sectors of Opportunities

1 Thailand at a Glance

4 BOI Services

Contents

Thailand’s Automotive Industry Current Situation

and Trends

Automotive

Industry

Thailand Ranked #12, 2014 Automobile Production

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

World’s Production: 89.7 Million (+2.6%)

THAILAND: 1.89 Million (-23.5%)

#12 in World’s Automotive Production

#1 in ASEAN for Automotive Production

[In Units]

Thailand is ranked

at No.12, with

1,880,007 units

produced

Sources: OICA as of Mars, 2015

Upstream Industry

Steel, Plastic, Rubber, Electronics, Glass,

Textile, Leather, Chemical, Oil, Coating and Gulvanize

Thai Automotive Cluster and Supply Chain Structure

Tier 2&3 Tier 1 Manufacturer

SME

(1,700 companies)

Stamping, plastics,

rubber, machining,

casting, forging,

function, electrical,

trimming

Vehicle Parts

(386 companies)

Vehicle & Motorcycle Parts

(122 companies)

Motorcycle Parts

(201 companies)

Engines ,Drivetrains, Steering, Suspension,

Brake Wheel, Tire, Bodyworks,

Interiors, Electronics and Elec Systems

Passenger &

Pick-up

(18 companies,

23 factories)

Motorcycle

(8 companies,

8 factories)

Supporting Industry

MACHINERY, EQUIPMENT&DEVICE, MOLD & DIE, JIG & FIXTURE

Service

Industry

• Distribution

(W/H)

• Finance

• Testing

• Consulting

• Logistic

• Banking/Leasing

Parts Manufacturers 450,000 persons

Supporting Industries 100,000 persons

*Vehicles 100,000 persons

•Dealer, Service center 200,000 persons

Associations / InstitutesUniversities /

Technical Colleges Government

Policy & Supporting Body

Aerospace Sector

Thailand Aerospace Supply Chain

Cabin Interiors

• Cabin interiors, galleys, aircraft seats

parts, seats electrical harness

Aerostructures

• Composites, Sheet metal, machining,

Electrical harness

Equipment

• PCBs

ADVANTAGE OF AEROSPACE INDUSTRY

IN THAILAND

• Linkage industries such as automotives and electronics

• Competitive wage compared with Singapore and

Malaysia.

• Lower aircraft landing/takeoff/parking fees than some

countries, such as Singapore

• Strategic location among AEC

• Government policy to promote Thailand as an aircraft

maintenance and manufacturing center

• A Development of Aviation Industrial Area

Thailand’s Food Industry

Strengths of Thai Food Industry

GMP and International Standard

Good Manufacturing Practices is a

mandatory measure for 54 types of food products

Abundant

Raw

Material

Skilled &

hard working

Workforce

Good

Quality & Safety

> 80% of raw materials used by the food industry are locally sourced at low prices

Size of workforce now > 38.3 million

Sugar

Seafood

Canned tuna

Canned

pineapple

Cassava

Natural &

synthetic rubber

Rice

Thailand’s world top export products

#1 Cassava

Exporter

#1 Rice

Exporter

#2 Pineapple

Exporter#2 Sugar

Exporter

Thailand is world’s 12th largest agricultural output

52%48%Processed foods

Others

Thailand was the first country in Southeast Asia to adopt agriculture biotechnology.

The 2014 export value of agricultural products was Bt719.56 billion

(or US$22.38 billion)

There are approximately 9,000 food processing companies in Thailand producing annual earnings of about US$25 billion.

The processed food sector accounts for nearly 15% of the national manufacturing output and contributes 52% of food exports, Bt934 billion in 2014.[billions Euros]

Total Food Exports Value in 2014

Thailand’s Agro Industry

23.6

Source: National Food Institutes and MOC, as of Feb 17, 2015

Thailand: World’s Leader in Agro-Based Products

#6 Rubber Tires

#1 Rubber Exporter

Source: THE THAI RUBBER ASSOCIATION as of August 2015

Note : Thailand is world’s 12th largest agricultural output

1

3

2

4

Biotechnology Sector

About 165 biotech companies in Thailand

7 Intellectual property laws

Science Parks and industrial estates

Thailand is the 8th most bio-diverse country

in the world

BIOTEC Infrastructure

BIOTEC Research Units at TSP/Translational

Research Facilities

Thailand Science Park (TSP)

BIOTEC Research Units at TSP

• Bio resources Technology Unit

• Agricultural Biotechnology Research Unit

• Food Biotechnology Research Unit

• Medical Molecular Biology Research Unit

• Genome Institute

Thailand’s BIOTEC’s Collaborative Research

Units

Chulalongkorn University (Marine Biotechnology Laboratory/Molecular Biology

and Genomics of Shrimp)

King Mongkut's University of Technology(Biochemical Engineering and Pilot Plant Unit/Waste

Utilization and Management )

Kasetsart University (Plant Genetic Engineering Unit, DNA Fingerprinting

Unit, the Bio-service Unit, Cassava and Starch

Technology Research Unit, Rice Gene Discovery Unit)

Mahidol University (Microbial Genetic Engineering Unit and Medical

Biotechnology Center at Siriraj Hospital)

Biotechnology: BOI Eligible Activities

Seed & Plant R&D

Biopharmaceutical agents R&D

Diagnostic kits for health,

agriculture, food and environment R&D

Biomolecule & bioactive compounds using

microorganisms, plant cells and animal cells R&D

Manufacture of raw materials and/or essential materials

used in molecular biological experiment

Biological substances analysis and/or synthesis services

Quality control and product validation services

Biotechnology

(7.12)

A1 Incentives

Medical Device Industry

Thailand’s Strengths for Medical Devices Industry

• The world’s largest medical tourism

• Strong supply chain in supporting industry (automotive & electronics)

• Abundance of raw materials (especially natural rubber)

• Medical devices market growth potential in domestic and ASEAN

• World-class medical facilities, first in Asia to be JCI accredited

• Strong government support in S&T /R&D

• Attractive Investment Incentive

Examples of Medical Device Manufacturers in Thailand

Org. admin. and mgt. &

business planning

HR & training and dev.

Business advisory

services

Econ. and inv. analysis

and research

Credit mgt. and controlTreasury center

Sourcing of goods

R&D

Technical support

Mkt. and sales promo.

IHQ

International Headquarters (IHQ)

Scope of Activities

Corporate Income Tax Personal Income Tax

Specific Business Tax

Withholding Tax

• CIT exemption(only services provided to

foreign branches or AE)

• 10% of CIT (only income derived from

its branches or AE in

Thailand)

• Tax exemption of NP from revenue from

purchase and sale of goods

to its foreign branches or

AE and such goods are not

imported to TH (OUT-

OUT)

Tax rate at the

rate of 15% for

expatriates in

specialist or

executive level

working in IHQ.

Tax exemption

on loan taken out

by IHQ to relend

to its branches or

AE in TH and

abroad.

Tax exemption

on interest received from its

branches or AE in

TH and abroad for

loans granted in

accordance with

BOI regulations

Note: NP = Net profits, AE = associated enterprises

International Headquarters (IHQ)

Special Tax Regime

Goods insurance

Advisory, Technical and

Training services about

trading

Other services

Sourcing of goods

Warehousing and

inventory services

Packaging activities

Goods delivery servicesAs in notification of the Director

General of Revenue Department

International Trading Centers (ITC)

Scope of Activities

ITC

Corporate Income Tax

CIT exemption of net profits

from revenue from purchase and

sale of goods to its foreign

branches or associated

enterprises and such goods are

not imported to Thailand (OUT-

OUT), including revenue from

marketing and logistics abroad.

The tax rate of 15% for

expatriates in specialist or

executive level working in

ITC.

Personal Income Tax

International Trading Centers (ITC)

Special Tax Regime

2 Investment Incentives and Cluster Policy

3 Sector of Opportunities

1 Thailand at a Glance

4 BOI Services

Contents

BOI Support Services

BOI Support Services

Investment Matchmaking Program

1-Stop for visas & work permits:

work permits in 3 hours

Subcontracting Development

Program by BUILD Unit

ASEAN Supporting Industry

Database

Interaction with other govt. agencies

on behalf of investors

Country desks

Overseas offices

18th Floor, Chamchuri Square Building

319 Phayathai Road, Pathumwan

Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100

Email: osos@boi.go.th

More Convenience,

less time,

more efficiency!

One Start One Stop Investment Center (OSOS)

One Start One Stop Investment Center (OSOS)

Easing & speeding

procedures for new investors

Assist investors with

various applications;

Visa & Work permit renewal across the hall

• Register a company

• Obtain investment

promotion privileges

• Obtain a foreign

business license

• Complete an EIA report

• Permission to use land

for industrial operations

• Utilities, etc.

1 2

3

38 Government agencies under One-roof

Supply Chain Development

Vendors

Meet

Customers

Sourcing

Program(sourcing@boi.go.th)

Business

Matching

Seminar

ASID

BUILD; BOI Unit for Industrial Linkage Development

ASEAN Supporting

Industry Database (ASID)

• Information and profiles of companies in

supporting industries and manufacturers of

parts and components in 10 ASEAN countries

• ASID can be easily accessed via the internet at

www.asidnet.org

• Contact: BOI Unit for Industrial Linkage

Development (BUILD)

Email: build@boi.go.th

Tel: + 66 553 8111 ext. 7

Supply Chain Development

ASEAN Supporting Industry Database (ASID)

Bethmann Strasse 58, 5.OG

60311 Frankfurt am Main,

Germany

Telephone: +49 (0) 69 9291 230

Fax: +49 (0) 69 9291 2320

Email: fra@boi.go.th

Ambassade Royale de Thailande, 8 Rue

Greuze, 75116 Paris, France

Telephone: +33 (1) 5690-2600-1

Fax: +33 (1) 5690-2602

Email: par@boi.go.th

Stureplan 4C 4F 114 35 Stockholm,

Sweden

Telephone: +46 (8) 463-1158

Fax: +46 (8) 463-1160

Email: fra@boi.go.th

Where to contact BOI in Europe

Paris

Frankfurt Stockholm