Thailand: An Asian Hub, a World of Opportunities

Ms. Ajarin PattanapanchaiDeputy Secretary General

Thailand Board of Investment

OutlineThailand in Brief

Competitive

BOI Policy & Services

Investment Opportunities

Thailand is the World’s• 16th largest manufacturer• 12rd largest agriculture output• 24th biggest economy by

purchasing power• 27th biggest exporter (as %

of total world goods)

2nd largest economy in ASEAN (GDP US$385 billion in 2013)

Competitive

Highly Ranked

UNCTADThailand 8th top prospective host economy 2014-2016

World Bank26th easiest place to do business in the world and 2nd among emerging economies of East Asia

“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

Thailand: (Baa1 stable) ratings

Very strong government financial position, well-diversified economy and high foreign reserves

"Thailand's low funding costs and favorable debt structure, which stem from prudent monetary policy and debt

management, are a core strength in the government's debt carrying capacity" says Steffen Dyck,

a Vice President and Senior Analyst at Moody's.

Source: Moody's as of 28 May 2015

Thailand’s Cost AdvantagesOffice Space• Grade A CBD $26.37 per square metre per month• Grade B non-CBD rent of $17.50 per square metre per month

Construction Costs• Standard Low Rise Factory $473 - $598• Office, High Quality: $882 - $1,039

Corporate tax rate 20%

Sources: CBRE, Tractus-Asia Exchange rate: US$1=Bt32.48

Wage Comparison92.4

54.849.6

42.833.3

21.5 20.9 17 14.68.5 8 7.9 7.6

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Cities ranked according to gross value of index. New York = 100Source: UBS/Prices & Earnings update September 2012

Top Destinations for Expat Experience 2013

by HSBC

1.Thailand

Source: Expat Explorer Survey 2013, HSBC

Thailand offers Best Expat Experienceand a Low Cost of Living

Thailand has been chosen as the best country in the

world forOverall 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

GMS InfrastructureDevelopment

North-South Corridor

North-Eastern Corridor

East-West Corridor

Southern Corridor

Central Corridor

Southern Coastal Corridor

Government Policy on S&T(12 September 2014)

1. Reform STI administration system to increase effectiveness of public-private linkage and partnership. Increase R&D expenditures to 1% of GDP with private/public sector ratio = 70:30 by 2021

2. Accelerate support for STI manpower development through STEM education, work-integrated learning, talent mobility, technological assistance to SMEs

3. Reform incentive systems, regulations and laws to enable commercialization of R&D and IP

4. Use public mega investment projects and government procurement to stimulate innovation in strategic areas.

5. Develop STI infrastructure & services to effectively support technology and R&D commercialization

Source: Ministry Science and Technology

Investment PromotionPolicies and Services

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.

17Overseas 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

18

US Investment

Success Stories of US Companies

Investor Testimonials

“We are not low-cost manufacturing but we are high-tech manufacturing. Human resources here are professional with a good

cost structure.”

--Jeff Nygaard, Senior VP and Global Head of Operations, Seagate Technology

“We relocated nine senior executives from Singapore to Thailand resulting in significant cost of living and operational savings.”

--Roger Nesti, Director of International Real Estate, Kellogg Company

THAILAND

INNOVATIONHIGH VALUE-ADDEDGREEN TECHNOLOGYRESEARCH & DEVELOPMENT

Sustainable Development, More Competitive Economy

New Investment Promotion Strategy Direction

22

New Approach to Granting Investment Incentives

Activity-based Incentives Merit-based Incentives

+

Classified incentives based on the importance of activities

Grant additional incentives to encourage more investment/expenditures that

benefit the country or overall industry

A1

A2

A3

A4

B1

B2

1. Competitiveness Enhancement

2. Decentralization

3. Industrial Area Development

Group Example Activities

A18-year CIT exemption

with no ceiling

• Biotechnology • R&D, Lab service• Micro electronics design, embedded software/system design• Data center, Cloud service• Training center• Aerospace

A28-year CIT exemption

• Bio-Fuel, waste to energy• Active Pharmaceutical Ingredients• Advance Materials, Nano-material • High-risk Medical Devices• Telecommunication device, control and measurement device• Solar cell, Electricity from renewable energy • Aerospace parts and equipment• Automation machinery & equipment with design

Examples of GROUP A Activities (1/2)

Group Example Activities

A35-year CIT exemption

• HDD, Semiconductor, flat panel display, thin film• Digital content, multimedia software• Product from Bio-Plastics• Machinery with design or part forming process• Manufacture of automobile engines• Functional fiber

A43-year CIT exemption

• Manufacture of products from agricultural by-products or agricultural waste

• Heat Treatment• Audio visual, LED, Office automation• Assembling of machinery• Manufacture of fashion products with conditions on product

development and design• Paper product

Examples of GROUP A Activities (2/2)

BOI Promotion Statistics in Life Science Business

2010-2014 Jan - May 2015

Product # of Project

Value Million Baht

# of Project

Value Million Baht

Product from Herbs/natural extracts

7 100.6 - -

Medical Food 4 842.8 - -Medical Devices/equipment 93 19,877.3 16 7,112.3Pharmaceutical 35 11,694.1 Actives Ingredient 16 3,633.4Research & Development 65 5,418.8 4 326.4

Biotechnology 17 6,532.8 2 2,278.0

Lab Services 57 7,614.8 2 62.3278 52,081.2 40 13,412.4

Sectors of Opportunity

Target Industries

Agriculture and food processing

Automotive

Machinery

Target Industries

Biotechnology

Alternative energy

E&E

High Value Added

As of May 1, 2014

YOURS COULD BE THE NEXT SUCCESS STORY

Biotechnology Sector

Thailand is ranked 8th most bio-diverse country in the world

About 165 biotech companies in Thailand

7 Intellectual property laws

Good infrastructure: Science Parks and industrial estates

EXCELLENT SUPPORTING UNITS• Thailand’s Science Park (TSP) was established as a one-stop

service center to assist companies engaged in scientific and technological research.

• National Science and Technology Development Agency (NSTDA)

• National Science Technology and Innovation Policy Office (STI)

• The National Center for Genetic Engineering and Biotechnology (BIOTEC)

• Thailand Center of Excellence for Life Sciences (TCELS)• Food and Drug Administration (FDA)• Ministry of Public Health (MoPH)• Ministry of Science and Technology (MOST)• National Innovation Agency• Health Systems Research Institute

Biodiversity in ThailandBiodiversity in Thailand is ranked as the eighth most bio-diverse region in the world.

Thailand is the world’s highest biodiversity per unit area-hosting several forests types and aquatic habitats.

Thailand supports up to 10,000 species of plants, • 980 species of birds, • 300 species of mammals, • 490 species of reptiles and amphibians, • 2,800 species of fishes and• 50,000 strains of bacteria, fungi and yeasts collected• 200,000 species of microbes-world’s largest and most

diverse collection of micro organisms

Source: Thailand BIOTEC Guide 2013 as of Mar 24, 2014

Biotech Business in Thailand

Source: Private Sector R&D in Thailand’s Bioindustry, Thailand Biotech Guide 2009/2010

Agriculture/Food (51%)

Medical/Health (35%)

Others (4%)

Seed & Plant R&D

Biopharmaceutical agents R&D

Diagnostic kits for health, agriculture, food and environment

Biomolecule & bioactive compounds using microorganisms, plant cells and animal cells

Raw materials and/or essential materialsused in molecular biological experiment

Biotechnology: BOI Eligible Activities

Exemption of import dutyon machinery for all zones

Exemption of 8-year-CIT

A1 Incentives

Projects located in Science Parks shall

receive 5 year additional 50% corporate income

tax reduction

Biological substances analysis and/or synthesis services Quality control and product validation services

33

Company Product/Services

I- med Laboratory Thalassemia / Lymphocyte test kit

Baxter Thailand Continuous Ambulatory Peritoneal Dialysis

International Drug Development Aclires Bangkok

Clinical Trial

MBS Asia Antibody testing

Bio-Innova and SynchronInternational Bio Service

Bioequivalence

Bionet Asia R&D for Vaccine

Pacific Time Microbial testing/DNA testing

Greater Pharma Manufacturing Vaccine and Allergy Testing Agent

Siam Bioscience Therapeutic Biopharmaceutical

Apsalagen Biological Reagent from Bacteria &Animal Cells

Example of Promoted Projects in Life Science

Bioplastics Industry: Activities of special importance andbenefits to the country

• Manufacture of eco-friendly chemicals• Manufacture of eco-friendly products

Incentives• Exemption of import duties on machinery

for all zones.• 8-year exemption of corporate income tax

with no cap for all zones.• Other relevant location-based incentives.

Incentives for Bio Industry

Source: A Guide to BOI as of March 2014

Bio Plastics: Why Thailand

Bioplastics’ Investment

Opportunities

Potentially abundant at competitive price of sugar and starch based feedstock

Trend of monomers’ cost reduction from agricultural

wastes as cellulosic glucose from cassava pulp and bagasse

Good strategic location near China and Japan with low

logistics cost

High R&D capabilities for technology development to support the existing

bioplastics industrySource: Progress in Implementation of Thailand’s National Bioplstics Roadmap Inno Bioplast 2013 seminar by NESDB as of Jan 26, 2013

Source: MOST

Support for US InvestorsBOI Office Los Angeles611 North Larchmont Blv. 3rd Floor Los Angeles, CA 90004 USATel: (323) 960 1199 Fax: (323) 960 1190Email: boila@sbcglobal.net

BOI Office New York7 World Trade Center, 34th Fl., Suite F250 Greenwich St. New York NY 10007 USATel: (212) 422 9009 Fax: (212) 422 9119E-mail: nyc@boi.go.th

U.S. Desk @ BOI Headquarters555 Vibhavadi-Rangsit Rd.Chatuchak, Bangkok 10900 ThailandTel: (66 2) 537-8111 Fax: (66 2) 537-8098E-mail: head@boi.go.th

Thank you