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by The Thailand Board of Investment

THAILANDINVESTMENTREVIEW

January 2008 • Volume 18 • No. 1

NEWS BITES / BOI NET APPLICATIONS P. 2

ECONOMIC NEWS: WORLD BANK ECONOMIC MONITOR P. 4

INDUSTRY FOCUS: THAILAND’S TOURISM INDUSTRY P. 6

COMPANY SPOTLIGHT: MITSUBISHI THAILAND P. 7ROLLY TASKER P. 8

TRADE ASSOCIATION: THAI MARINE BUSINESS ASSOCIATION P. 9

BOI INVESTMENT MISSION P. 10

INSIDE THE BOI P. 11

THAILAND ECONOMY-AT-A-GLANCE P. 12

Continued on P. 3

With some of the most spectacular coastline in the world, an investor friendly government and a socially stable environment that has attracted foreign investment for decades, Thailand is a natural location for investment in the vibrant and lucrative yachting industry. The country already boasts world class marinas at its luxurious island of Phuket, which was voted last year by the Christofle Asia Boating Awards to be “Asia’s Maritime Capital”. But more than that, industry growth has also led to an expansion of berthing space all along the country’s 1,000 mile coastline, which now offers yachting enthusiasts 600 excellent locations from the Andaman Sea all the way up through the Gulf of Thailand.

Several new marinas, including three that can accommodate more than 100 berths, are currently under construction, as Thailand rapidly moves towards becoming the Riviera of Asia. And the Board of Investment does offer investment promotion privileges for ocean marina services, under its tourism promotion services. In addition, tour boat or yacht renting investments can be eligible for a 50% import duty reduction on machinery and a 5-year corporate income tax exemption, regardless of the zone in which the investment is located.

The Kingdom offers extensive rental services for both bareboat charters and manned vessels, along with excellent maintenance and service facilities for yacht owners. There are more than 20 yacht charter operators in Thailand, including major yacht charter agencies such as Sunsail, Elite, Kata Marine, and Asia Marine, which was named the Best Asia-Based Charter Company in the 2007 Christofle Asia Boating Awards. And given Thailand’s location, it is also becoming a regional hub for yachting enthusiasts; an attraction that is facilitated by the ease of owning and maintaining a yacht in Thailand, and the ready access through the country’s several airports located in close proximity to marinas. The options are varied for both the short-term renter and owners alike.

In addition to its bountiful natural beauty and splendor, Thailand also offers investors an attraction that cannot be overlooked: tax benefits. In 2004 the government responded to calls from the investment community and from its own Thai Marine Business Association and took the important step of removing a tax burden that had long

Thailand’s Yachting Industry

THAILAND INVESTMENT REVIEWJanuary 2008

The Board of Investment of Thailand joins the government and people of Thailand in expressing condolences on the death of HRH Princess Galyani Vadhana.

Thailand’s Unemployment Rate Drops

Unemployment in Thailand has dropped to an all-time low. Labor Minister Apai Chanthaehulaka revealed that efforts to reduce the rate of unemployment throughout the year 2007 saw the unemployment rate drop to just 1.2 per cent. He thanked all agencies who co-operated with the Labor Ministry in providing justice to Thai laborers and contributing to the decline of unemployment, adding that the Ministry would continue with plans to resolve the problem throughout this year, where it would focus more on creating jobs and providing vocational training for people in the northeastern region. (Thailand Public Relations Department)

The New Ban for Smokers

Smoking will be banned in all air-conditioned entertainment venues throughout the country next month, according to the Ministry of Public Health. The new ban, expected to be imposed on February 17, will stop smokers from smoking in nightclubs, pubs, and open-air markets. Dr. Hatai Chitanond of the Ministry’s Health Promotion Institute expected some resistance from operators of nightclubs and pubs, but said it would be better for the health of their workers and their customers. Outdoor restaurants will be required to set up nonsmoking areas. Those breaking the restrictions will face a fine of 2,000 baht. (Thailand Public Relations Department)

NEWS BITES BOI NET APPLICATIONS

1US$ = 34.65 THB

2005 2006 2007

Number of

projectsValue

Number of

projectsValue

Number of

projectsValue

Total ForeignInvestment 849 14,397 823 8,879 845 14,500

By Sector

Agricultural Products 51 457 46 717 46 257

Minerals / Ceramics 21 3,622 32 743 27 795

Light Industries / Textiles 85 343 73 270 59 258

Automotive / Metal Processing 250 4,079 220 1,496 228 4,431

Electrical / Electronics 173 2,385 180 2,071 153 2,279

Chemicals / Paper 126 2,159 80 1,167 129 2,877

Services 143 1,352 192 2,415 203 3,602

By Country

Japan 387 5,059 335 3,188 330 4,302

Europe 120 1,030 126 881 139 2,140

Taiwan 54 330 67 355 44 170

United States 52 227 61 1,069 38 2,475

Hong Kong 25 323 16 113 24 169

Singapore 82 408 86 835 80 985

By Zone

Zone 1 236 1,923 262 1,476 298 1,290

Zone 2 459 11,128 393 5,613 415 11,370

Zone 3 154 1,345 168 1,790 132 1,840

Unit: US$ Million

Note: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries.

Eco-car Project

Suzuki Motor Corporation (Japan) and Siam Nissan Automobile embrace the eco-car project. Suzuki is to invest 9,500 million baht in eco-car assembly and complete knock-down (CKD) assembly, for an annual production of 138,000 units per year, for export mainly to Asia, Australia and Africa. The Suzuki eco-car plant is to be located in Rayong, and is expected to start-up in 2010. Siam Nissan will invest 5,550 million baht to produce 120,000 units per year, for export mainly to Asia and Australia. The plant is to be located in Samutprakan and will also start operation in 2010.

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Continued from P. 1

stymied growth in the nation’s maritime development. The import duty on pleasure boats was reduced from a complicated formulation that tallied to an unsustainable rate of 245% to a more palatable rate of 0%, thus throwing wide open the doors for investment and growth. At the time the decision was taken to lower the import tax on yachts, there were a scant three foreign-owned large yacht manufacturers in Thailand, which has grown in the intervening years to a community of forty manufacturers. A validation of a rational fiscal policy!

The positive impact that the elimination of import duties has had on the industry has been astounding and is clearly reflected in the 157% growth in the pleasure boat market from 2005 to 2006. At the same time, the country has seen 1000% growth in the export of yachts during 2006, with the total exports of sail and motor craft that year valued at nearly US$ 5 million. Thailand’s Customs Department reports yachting and other pleasure craft exports of 179.7 million baht from January through November of 2007, or about US$5.6 million. And with Thailand a party to several free trade agreements, including as a member of the ASEAN trade agreement, and with Australia, New Zealand, and now Japan, yacht manufacturers have the added benefit of being able to enjoy FTA benefits for their regional exports.

While 70% of large yachts continue to be imported, taking advantage of the tropical locale and excellent marina services available for the most demanding of clientele, the smaller craft industry has taken a recognizable turn towards domestic production. Currently, more than 60% of the smaller speed boats sold in Thailand are produced by the more than 300 local manufacturers. With the continuing growth in both exports and in the attractiveness of Thailand as a regional yachting hub, there is certainly more room for growth and for additional investment.

Investors in Thailand’s yachting industry will find much more than an attractive tax policy and the miles of tropical coastline. The recent World Bank’s Ease of Doing Business 2008 rankings, for instance, have moved Thailand from 18th to 15th place in the world, which speaks well for a country that the Economist Pocket World in Figures ranks with the 20th largest manufacturing output. Adding even more attraction is the fact that the country offers one of the lowest costs of living in the world, having been ranked 127th by Mercer International, which in turn translates into competitive wage rates for a highly skilled workforce. The average minimum wage in Thailand is 194 Thai baht per day, or roughly $US 6 and the annual salary for a skilled engineer, according to a 2006 UBS Prices and Earnings Survey, is US$12,700. The nation boasts more than 30,000 licensed captains and crew members.

Manufacturers will find no lack of skilled shipwrights, riggers, engineers, mechanics and electronics specialists, as well as caretaking and management services. Since labor costs account for 30-40% of the cost of yacht production, excluding engine cost, building a yacht in Thailand rather than in the United States or Australia can save a manufacturer around half of the labor cost. “Thailand has laborers with highly-developed skills in welding, furnishing and decorating. The skills used in decorating five-star hotel rooms, in such abundance in Thailand, could also be applied to decorating the interiors of luxury yachts. Teak wood, silk and many exotic items, which are suitable for luxury yachts with an oriental feel, are reasonably priced here” says Corrie Lamprecht, managing director of Bakri Cono Marine. Indeed, in addition to building yachts, Thailand is also an excellent location for fitting them, skilled carpentry, upholstery, cabinetry and chandlery that is second to none.

Continued on P. 11

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The World Bank has once again released its biannual issue of the Thailand Economic Monitor reviewing the state of the Thai economy in the second half of the year. The report, which is prepared by the World Bank’s Bangkok office, offers up a wide range of information, including the economic outlook for 2008, the state of structural reforms in Thailand and statistics on a plethora of economic indices.

According to the report, real GDP for 2007 is expected to grow by 4.3 percent this year, which is slightly lower than the 5 percent figure in 2006. This slowdown in growth has already been widely known due to a number of factors that placed strain on the economy last year. As noted by the World Bank, much of this was due to a weakening in domestic demand stemming from political uncertainties, a decrease in consumer and investor confidence from higher oil prices, and the reduction in the growth of export receipts in terms of baht because of the baht’s appreciation against the dollar. Comparatively, the report mentions that world real GDP is expected to be around 3.5 percent in 2007.

Throughout 2007, exports remained one of the key drivers of growth for the Thai economy and are expected to continue

to hold prominence in 2008 as well. The report points out that exports remained resilient despite the baht’s strength and a slowdown in the US economy, which is Thailand’s largest export market. The decrease in exports to the US was offset by strong growth in other markets, including Japan, the EU, ASEAN and China. Overall, manufactured exports remained solid, while agricultural exports slowed, mainly due to the affects of the baht’s appreciation. Total export growth, meanwhile, was expected to finish at around 14.5 percent for last year.

One thing that could potentially impact the state of Thailand’s exports this year is the Japan-Thailand Economic Partnership Agreement (JTEPA), which came into effect on 1 November 2007. The agreement is expected to have a profound effect on Thailand’s economy due to the fact that Japan is Thailand’s largest trading partner and source of foreign investment. The World Bank anticipates that JTEPA will strengthen both manufactured exports and agricultural export products to Japan, in addition to enhancing the potential of garments, textiles, jewelry and chemical products. The report further notes a study by the Thailand Development Research Institute (TDRI) that showed that value of tariff payments potentially

World Bank’s Economic Monitor

ECONOMIC NEWS

4


saved by Thailand this year from JTEPA could amount to US$418 million, or about 1.9 percent of Thailand’s total import value.

In addition to JTEPA, it was recently reported in the media that Thailand and South Korea have finally cleared up the last remaining hurdles for Thailand’s entry into the ASEAN-South Korea free trade agreement. After undergoing five rounds of negotiations, both sides struck a deal this past December that would enable Thailand to join the regional trade agreement that is estimated to be worth more than US$62 billion per year. Thailand’s entering into the FTA will entitle nearly all of its exports to South Korea to tariff cuts or revocation, including immediate reductions on electrical appliances, wood, frozen shrimp, tapioca flour and squid.

A f t e r r e c o r d h i g h s i n t h e gross inflows of foreign direct investment into Thailand in 2006, FDI contracted somewhat last year. The report notes, however, that these figures are likely to rebound once more this year as political uncertainties begin to clear and as

more Japanese companies invest in Thailand in the wake of the recent entry into force of JTEPA.

The report also makes mention of that fact that Thailand’s macroeconomic fundamentals remain strong. Headline inflation slowed to around 2 percent last year, marking a 2.7 percentage point decline from 2006. Additionally, the country’s current account has been in surplus since 2006 and is expected to reach 4.9 and 2.2 percent of GDP for last year and this year, respectively. This has helped raise international reserves to US$80 billion by October of last year. Furthermore, public debt has continued its descent, from 46.5 percent of GDP at the end of 2005 to 40.5 percent at the end of 2006 down to 38.0 percent as of August last year.

Although last year saw an interim government managing the country, the World Bank points out that a number of reform measures issued during its tenure “have laid the foundation for future growth.” The report goes on to say that the Cabinet “has endorsed many acts and regulations that would lead to great liberalization, competition and improved governance.” It goes on to specify a number of bills, such as the National Productivity Master Plan, which is aimed at

raising productivity at both the sectoral and aggregate levels. Likewise, it mentions the Intellectual Master Plan, which aims to promote knowledge creation, dissemination and innovation. The report also points to the latest 15-year Higher Education Development Plan, which it says should “help raise the skill levels of future Thai workers, increase innovation and move Thailand towards a knowledge economy.”

Last year also saw investment applications submitted to the Board of Investment hitting a record high, with a total application value of 655.8 billion baht (or close to US$19 billion). This impressive figure marked a 32 percent gain over the previous year. Project approvals from the BOI also shattered records last year, increasing twofold to 744.5 billion baht (about US$21.5 billion).

The BOI’s secretary-general, Satit Chanjavanakul, was obviously pleased by last year’s figures. “Even though the country has faced political turmoil,” Mr. Satit was quoted as saying, “investors have remained confident in the Thai economy and the availability of infrastructure to support their investments in Thailand.” Another positive sign mentioned by Mr. Satit was the number of industrial estate developers who have asked for BOI privileges. The interest of these developers is significant because no new industrial estates have been launched in Thailand since the economic crisis over a decade ago.

An economist for the World Bank, Dr. Kirida Bhaopichitr, was recently quoted as saying that new investment should grow in 2008. She also pointed out that 280 billion baht (approximately US$8.1 billion) in BOI approved projects from 2006 are expected to begin operations this year, noting the two year lag time between project approval and real investment. This sentiment was also echoed by the World Bank’s report. The report mentions a delay in the investment of a number of projects approved by the BOI in 2004 and 2005, saying that “as the investment climate improves next year [2008], these approvals will start to be translated into actual investments.”

With a new government on its way, it is anticipated that domestic uncertainties will begin to clear and domestic demand will regain some of its steam. The report notes that growth this year is expected to jump up to 4.6 percent. The fact that Thailand’s GDP will grow at all next year appears to be a positive sign, as the report mentions that the global economy is expected to slow down to a mere 3.4 percent growth rate this year, with real GDP growth in developing countries set to slow this year as well. In many ways then, this year certainly offers a lot of promise for investment in Thailand.

5


Thailand’s tourism industry continues to enjoy healthy growth and remains one of the shining sectors of the economy. Despite uncertainties raised over the past year, tourism confidence in Thailand remained high as the government’s estimate of 14.8 million people visiting the Kingdom in 2007 was expected to be reached, bringing about 547 billion baht in revenues. And, in fact, the Governor of the Tourism Authority of Thailand (TAT) notes that an estimated 60%of arrivals are repeat visitors. This represents a good increase over the previous year’s figure of 13.82 million visitors, and 487 billion baht tourism revenue.

The country continues to receive high praise with a Travel and Leisure Magazine survey listing Bangkok as the top city within Asia; three awards from the Chinese market, including “The Best Destination for Leisure - Short Haul” by readers of TravelWeekly China Magazine, and Travel News Magazine in Norway has awarded Thailand its Grand Travel Award 2008, naming Thailand as “the best tourist country in the world” for the fifth consecutive year. According the TAT, Chinese visitors to Thailand will cross the one million mark for 2007. And this year the Authority will open offices in Dubai, Moscow and Vietnam, while maintaining a focus on attracting quality visitors.

Thailand continues to command nearly one quarter of the regional market share and 0.7% of world market share in 2006, according to a report issued by the World Travel & Tourism Council, which also estimated 5.3% growth per annum, in real terms, from 2008 through 2017. That same report estimated that the travel and tourism industry would employ about 4 million people, or 11.3% of Thailand’s total workforce, a figure that would double within the next ten years.

In an effort to further enhance regional tourism, Thailand is set to join with Malaysia and Indonesia in a five-year plan to boost tourism among the three countries, under the framework of the Indonesia Malaysia Thailand Growth Triangle (IMT-GT). Under this program, Thailand will work to enhance tourism in fourteen southern provinces, drawing a 30% increase in tourism from Malaysia and Indonesia and improving the economies of the southern region.

In addition to Thailand’s traditional tourism attractions, such as the wonderful temples of Bangkok, Chiang Mai and many other cities, or the beautiful beaches of Phuket, Krabi and Pattaya, new areas have recently been added to the mix. Yachting for one has been made easier with the elimination of import taxes and the continuing expansion of marinas. A more recent newcomer to the industry is the surge of Thailand’s spa industry, which has met with great success and continues to expand at a healthy pace.

Meetings, Incentives, Conventions and Exhibitions (MICE) also proved to be a robust sector and contributor to tourism in Thailand. The industry continues to experience growth and according to the Director General of the Thailand Convention and Exhibition Bureau income from MICE could reach 100 billion baht, or 10% of total annual tourism revenue within the next three years. One big win and validation of the country as a premier MICE destination is the selection of Thailand to host the 91st Lions Clubs International Convention in early 2008. An event that will bring in 30,000 delegates! Thailand was also selected to again host ASEAN’s Tourism Forum 2008 (ATF 2008), which is an annual travel industry summit meeting, in early 2008. Thailand maintains its goal of becoming the ASEAN MICE hub within the year 2010

Thailand’s Tourism IndustryAn attractive venture

INDUSTRY FOCUS

Continued on P. 10

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COMPANY SPOTLIGHT

Mr. Fukuyiro Yamabe, President of Mitsubishi Company Thailand Limited, shares his views on the future of Japanese investment in Thailand.

Investment atmosphere Mr. Yamabe believes that Thailand should maintain its supportive investment policies in order to welcome foreign investors. The signing of free trade agreements (FTA) to reduce trade obstacles from both non-tariff and tariff barriers is a further sign of globalization’s leading us to a ‘borderless society’. These agreements lead to higher competition while decreasing the differentials in investment atmospheres.

In the past, Thailand had had outstanding advantages in terms of its investment atmosphere as compared to neighboring countries, however, recently that differentiation has become much less. This had made it more difficult for Japanese companies in choosing locations for investment.

On the other hand, the investment trend in Japan is now reversing. In recent years, there had been a hollowing of the state of production in Japan since a number of producers were investing outside of the country. Lately, however, there has been news that some companies have begun reversing their investments back to Japan as the value of the Yen continues to weaken. In addition to that, local Japanese governments have instituted policies to persuade investment through special privileges and benefits. Consequently, countries that would like Japanese investment must now also compete with local Japanese governments in addition to competing with other countries.

Thailand’s Distinctive PointsMitsubishi Group has invested in more than 100 companies in Thailand, which is a sign of high investment. They have done so because of the ease of starting and doing business in Thailand, which gives them assurance that once the investment is complete that the business will be able to run smoothly. Doing business in Thailand is also seen as reliable, and investors continue to have a good relationship with Thai workers.

Although there are some problems concerning the political stability, exchange rate and unclear regulations, for the most part those problems have already been anticipated and prepared for by companies. Furthermore, the Japanese and Thais find it easy to work together.

Mr. Yamabe comments that the automotive industry is still one of Thailand’s strengths, as there is a local market and

opportunities for the development of exports since Thailand has strong supporting industries for automotives. This is a strong point in terms of public relations as well. Furthermore, eliminating import tariffs and opening the country to more free

trade could prove to further enhance Thailand’s attractiveness as a automotive production base.

What sort of adjustments should Thailand make?Mr. Yamabe advises the Thailand government to adjust financial regulations to comfort foreign investment, in addition to increasing its communication with investors about the direction of regulations. Having clear policies will be a competitive advantage for Thailand within ASEAN in encouraging investment in certain industries.

The direction of the Thai baht’s value should depend on the market. Let the market be the judge. The baht’s value should not be suddenly changed since in some industries, imported raw materials are necessary. Overall, an increase in the Thai baht over the long term is not a bad thing. Rather than placing too much emphasis on the value of the baht, the government should look towards increasing the capacity of local industries. Thailand’s industries should develop to a level equal to that of Malaysia, South Korea, Taiwan and Singapore.

Thailand’s education system should also be improved, since the next generation of employees will be expected to have a high level of skills and knowledge. Mr. Yamabe believes that Thailand can still improve a lot in terms of quality.

Nowadays, technology is leading to a borderless world, which has made access to technology much easier than it had been in the past. Therefore, Thailand should improve its capacity in order to compete on a global level. Mr. Yamabe believes that Thailand has the sufficient potential to do so.

Thailand has high capacity in the agricultural industryMr. Yamabe deems that Thailand has a real capacity for competing in the agricultural industry. He adds that agricultural products should be value added and be sold as processed products. Therefore, the country’s agricultural research and development should be supported as well as related industries in the entire cluster. This can be considered one of Thailand’s strengths. This industry is mostly local, so it should be self-sufficient in terms of its development of both technology and value added products, without dependence on foreign investment.

Mitsubishi Company (Thailand) Limited

Continued on P. 11

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COMPANY SPOTLIGHT

For more than fifty-five years, Rolly Tasker has been making high quality and long lasting sails for use across the globe. The company is the namesake of Rolland “Rolly” Tasker, the Australian sailor who won the country’s first sailing medal at the 1956 Olympic Games in Melbourne. Furthermore, a total of thirty-seven world and Olympic sailing medals have since been won worldwide by yachts using sails by Rolly Tasker Sails.

The Thailand Investment Review spoke to Mike Tasker to learn more about the company and its operations in Thailand.

How did Rolly Tasker come to be located in Thailand and why Phuket?Rolly Tasker became located in Thailand because of the incentives being offered by BOI and the ready availability of a good skilled and unskilled labour force. We relocated to Phuket from Pattaya because it became increasing obvious that Phuket would soon dominate the area in the marine leisure business. Please describe your product line.First and foremost we are sail makers, one of the five or so largest in the world, operating from a new state of the art facility on Phuket Island. It is the largest purpose built sail loft in the world. Since relocating for the fourth time in Thailand we have extended our product line to making masts and rigging for yachts, architectural rigging (we are currently involved in a special project for the Intercontinental hotel in Dubai) rope making and using the latest Toshiba plastic injection moulding machines for the making of over 600 plastic marine hardware items, which we use in our sail production as well as selling all over the world. What is your target market?Our target market for all our production is international, selling in over 60 countries to date. Where do your source your raw materials?We source our raw materials internationally bearing in mind they have to stand up to the harsh conditions of blazing heat, freezing cold, sea water, wind and rain from flat calm days to hurricane conditions.

How many employees do you presently have?We currently have 137 employees, all Thai, except for 4 foreign nationals. Do you use a lot of skilled workers and have you had any problems finding local workers to fill those positions?We like to believe, as I’m sure our work force does, that they are all skilled workers. We have never had a problem in finding local skilled personal. They are intelligent keen hard working and willing to learn new skills. How do you see the overall yachting industry in Thailand today and prospects for the future?With the proper support from the government of the day the prospects for the marine industry in Thailand is boundless. Phuket already does dominate in Thailand’s waters in the marine leisure market and with the superb infrastructure on the island, most of which is already in place, plus the healthy attitude and growing awareness towards the international yachting community, there seems to be a limitless future. What are your present growth plans for the future?We will continue increasing our sales in the international sail making market, ably supported by our growing presence in manufacturing plastic parts using our injection moulding machines and rope making. In addition we wish to run the largest mast and rigging division in South East Asia, to which end we have a new 2,000m2 machine shop and storage area, and have recruited a specialist to take us there. How has your experience been with the BOI, their investment incentives and their staff?BOI have been a delight to work with. They have given us full support, in investment incentives and their staff beyond expectations.

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TRADE ASSOCIATION

Several years ago, a group of companies involved in the yachting industry formed an informal association known as the Marine Alliance of Thailand. After continued dialogue with the Thai government on a number of issues vital to the industry, it became clear that a more formal status was required for the association. The group soon realized that in order to continue properly representing the views of its members and to effectively lobby the government, it would need to establish itself as a legal association within Thailand. Hence, after applying for official status under the Trade Association Act of 1966, the Marine Alliance of Thailand was reborn as the Thai Marine Business Association (TMBA) in October 2006.

Today, the TMBA represents all aspects of the marine and yachting industry, including tour operators, boat manufacturers, and marine & yachting publishers. The association is presently comprised of more than thirty member companies of both Thai and foreign ownership.

Although the association might still be comparatively young compared to other industry associations in Thailand, it has already enjoyed its fair share of noteworthy achievements. It played a crucial role in persuading the Thai government to reduce the tax rate on yachts and clarify the operating laws for the marine leisure industry. Additionally, the TMBA was instrumental in changes to the legal classifications of privately owned yachts, which had previously been governed by regulations for commercial vessels. Furthermore, the TMBA has worked closely with the Tourism Authority of Thailand to produce a brochure on yachting in Thailand, as well as on other marketing activities.

The efforts of the TMBA were also influential in waving a couple of other regulations that had previously proved somewhat inhibitive to small sailing vessels. Those included a requirement that a licensed Thai captain and engineer be on board when sailing and a requirement for all chartered boats to have a captain or crew. The latter of these two changes allowed for the initiation of “bareboat charters” in Thailand, a concept that initially gained popularity in the mid-1990s. It differs from normal yacht chartering in that bareback charters do not come with a crew or provisions. A fee is paid simply for the rental of the yacht without any of the services generally associated with yacht chartering.

The opening up of the yachting industry over the past few years has added to Thailand’s potential as a yachting and marine destination. According to Vincent Tabuteau, one of the TMBA’s vice presidents, there is huge potential for yachting in Southeast Asia. “Thailand and Asia in general,”

Mr. Tabuteau says, “is an amazing, unknown destination for yachting.” Although at the moment, Thailand only has two developed yachting centers—one in Phuket and one on the eastern seaboard—Mr. Tabuteau points out that a survey done by TMBA and the Harbor Department found twenty-three locations across the country that have the potential to be centers for yacht chartering.

Compared to mature destinations in the Mediterranean or the Caribbean, which might have somewhere between fifteen hundred and three thousand yachts operating in their waters, Thailand’s approximately one hundred and fifty professional charter yachts is still relatively small. Mr. Tabuteau points out, however, that it is only a matter of time before Thailand fully realizes its potential. He believes that Thailand will develop into a fully matured destination within the next ten years, with the speed contingent on the level of support and collaboration the industry receives from the government.

As far as the TMBA is concerned, it plans to continue its work to develop and strengthen the yachting industry in a number of key areas. For one, it plans to continue expanding its membership and working with government agencies to further market the industry and to clarify and amend regulations related to the industry. In addition, the association plans to focus on trainings for workers in the industry. Mr. Tabuteau explains that most of the workers in the yacht industry in Thailand come from either the hotel industry or the shipping/fishing industry. He notes that since yacht charters are basically “floating hotels”, employees must be trained to have the skills necessary for both.

The Board of Investment has also played a vital role in supporting the industry by offering a number of incentives for yachting businesses. In fact, most of the members of the TMBA have received BOI privileges. Kevin Quilty, another of the association’s vice presidents, remarks that the TMBA “would encourage any potential foreign investor to speak to the BOI to see what benefits they may be entitled to.” He goes on to add that “the BOI is very approachable and understand the challenges that foreign companies face in setting up a business in Thailand.”

With Thailand’s central location within Southeast Asia and its already famous cruising grounds off both of its shores, it seems certain that it is only a matter of time before its yachting industry attains world-class status.

Thai Marine Business Association

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Tourism Industry, Continued from P. 6

Deputy Prime Minister and Industry Minister Kosit Panpiemras, and Secretary General of the Board of Investment of Thailand Satit Chanjavanakul, were accompanied by BOI investment officials to Germany, Switzerland and Slovakia, from 8 – 16 December 2007.

Senior Investment Advisor Ms. Ajarin Pattanapanchai led an investment mission to Osaka, Japan, from 10-15 December 2007 where the team attended the Thailand Investment Seminar Osaka 2007 and also engaged in door-knocking among potential investors in the service sector.

Deputy Secretary General Mr. Chitaworn Worasak led a BOI delegation to Henan, China, where he met with prospective investors and discussed investment opportunities in Thailand.

BOI INVESTMENT MISSION

and with the Kingdom’s reputation for service, hospitality, excellence and safety there is optimism that this goal will readily be reached.

Another sector of the burgeoning tourism industry is the attraction of Thailand as a medical hub of Asia and a steady influx of medical tourists who are able to combine excellent health at low costs and all of the amenities that the Kingdom offers. Over one million foreign patients come the Thailand each year.

The Tourism Authority of Thailand has a worldwide marketing package under the banner “Seven Amazing Wonders”, with which it hopes to surpass the 2007 level of international arrivals to reach 15.7 million in 2008, and to increase domestic tourism by one million to reach 83 million trips. The seven wonders range from experiencing the art of Thai living to enjoying the fun factor of the country, which includes events such as the annual Phuket Regatta and even elephant polo.

As indicated by TAT, a key part of that campaign is the “nine Royal Discovery Initiative projects, which were conceptualized and created by His Majesty the King and members of the Royal Family as part of Thailand’s “sufficiency economy” practice.” TAT Governor Mrs Phornsiri noted, “This year, we are commemorating His Majesty the King’s 80th Birthday Anniversary. His Majesty is now the world’s longest reigning monarch and within two years, will become the longest reigning monarch in world history. This will be another cause for glorious celebration.”

The Board of Investment offers investment promotion incentive to a wide range of tourism projects, including construction of convention halls and international exhibition centers, but also to hotels, to aquarium construction, amusement parks and cultural centers. With wide government support, and with so much beauty and majesty to offer, it is little wonder that Thailand remains a destination of choice for millions of travelers, foreign and domestic alike.

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Mitsubishi Thailand, Continued from P. 7

Yachting Industry, Continued from P. 3

Mr. Sakchai Luangsathitkul (center left), senior investment promotion officer, welcomed Mr. Gu Hai, vice general manager, Overseas Business Department, Beiqi Foton Motor Co., Ltd., for discussions on investment opportunities in Thailand, on 7 December 2007.

Mr. Linsey Siede, Honorary Investment Advisor to the Board of Investment, met with senior BOI officials on 13 December 2007 to discuss investment policy and other matters of interest for attracting investment into Thailand.

INSIDE THE BOI

The impact of East Asia’s economic agglomerationAlthough East Asia is difficult to agglomerate, it generally trends in the same direction. By reducing barriers among countries, investment, technology, and human resource movement will be made easier. If there is regional economic integration, there would be less differentiation between countries, which would make it harder to attract foreign investment. Therefore, Thailand needs to have clearer policies for attracting foreign businesses.

For Southeast Asia, economic development is still ongoing. Japanese companies who have just started to invest abroad would consider this region before others. It is also expected that companies that do not want to depend only on China will decide to invest in Southeast Asia as well.

Will Thailand still have further Japanese investment? Foreign investment through the Board of Investment should not decrease and investment trends should remain. In today’s world of globalization, as rules and regulations are decreased, the attractiveness of other countries tends to increase. Thailand should, therefore, develop attractive policies to catch the interest of foreign investors. The difference between countries is lessening and the investment atmosphere is similar in many countries, although Thailand remains to be strong in food and agriculture. Consequently, deciding upon an investment location is not as easy as it once was, especially when the value of the Yen is taken into consideration.

With all of what Thailand has to offer, it is little wonder that Thailand is host to more regattas than any other country in the region. The premier event is the annual Phuket King’s Cup Regatta, which began in 1987 to celebrate the 60th anniversary of His Majesty the King. It should be recalled that in 1967 His Majesty sailed for Thailand in the fourth South East Asia Peninsular Games, which have since become the SEA Games, and won a gold medal and set the stage for what would become one of the Kingdom’s newest growth industries. Now in its twentieth year, this weeklong event was reported to be the largest of all with 103 boats. A fitting tribute for His Majesty’s 80th birthday celebration! Other annual regattas also include such events as the Andaman Sea Rally, the Phang Nga Bay Regatta, Phuket Race Week and many others.

11


THAILAND ECONOMY-AT-A-GLANCE

Head Office, Office of the Board of Investment555 Vibhavadi-Rangsit Road, Chatuchak Bangkok 10900, Thailand. Tel: +66 (0) 2537 8111, +66 (0) 2537 8555 Fax: +66 (0) 2537 8177 Website: www.boi.go.th E-mail: [email protected]

NEW YORKThailand Board of InvestmentNew York Office61 Broadway, Suite 2810New York, N.Y. 10006, U.S.A.Tel: +1 (0) 212 422 9009Fax: +1 (0) 212 422 9119E-mail: [email protected],[email protected]

LOS ANGELESThailand Board of InvestmentLos Angeles Office611 North Larchmont Boulevard, 3rd Floor, Los Angeles CA 90004, U.S.A.Tel: +1 (0) 323 960 1199Fax: +1 (0) 323 960 1190E-mail: [email protected]

PARISThailand Board of InvestmentParis OfficeAmbassade Royale de Thaïlande8, Rue Greuze, 75116 Paris, FranceTel: +33 (0) 1 5690 2600, +33 (0) 1 5690 2601Fax: +33 (0) 1 5690 2602E-mail: [email protected]

SHANGHAIThailand Board of InvestmentShanghai OfficeRoyal Thai Consulate-General15F, Crystal Century Tower567 Weihai Road, Shanghai 200041, P.R.C.Tel: (86-21) 62889728, (86-21) 62889729Fax: (86-21) 62889730E-mail: [email protected]

FRANKFURTThailand Board of InvestmentFrankfurt OfficeRoyal Thai EmbassyBethmannstr. 58, 5.OG60311 Frankfurt am Main, GermanyTel: +49 (0) 69 9291 230Fax: +49 (0) 69 9291 2320E-mail: [email protected]

TOKYOOffice of Economic andInvestment AffairsRoyal Thai Embassy8th Floor, Fukuda Building West, 2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 JapanTel: +81 (0) 3 3582 1806Fax: +81 (0) 3 3589 5176E-mail: [email protected],[email protected]

OSAKAThailand Board of InvestmentOsaka OfficeRoyal Thai Consulate-GeneralBangkok Bank Bldg, 7th Floor1-9-16 Kyutaro Machi, Chuo-Ku, Osaka 541-0056, JapanTel: +81 (0) 6 6271 1395Fax: +81 (0) 6 6271 1394E-mail: [email protected]

Facts about Thailand

Population (2006) 65 millionASEAN population 570 millionLiteracy Rate 96%Minimum Wage (1 Jan 08, Bangkok) 194 baht/day

GDP (2006) US $206.1 billionGDP per Capita (2006) US $3,176GDP Growth (2007) Projected 4.5%GDP Growth (2008) Projected 4.0-5.0%Export Growth (2006) 16.5%

Trade Balance (2006) US $2.2 billionCurrent Account Balance (2006) US $3.2 billionInternational Reserves (2006) US $67 billionCapacity Utilization (2006) 74.2%Manufacturing Production Index (2006) 167.1Consumer Price Index (December 2007) 119.0 (2002 = 100)

Corporate Income Tax 10-30%Withholding Tax 10-15%Value Added Tax 7%

December Average Exchange Rates

US$ 1 = 33.66 baht€1 = 48.94 baht£1 = 67.96 baht100¥ = 29.93 baht

Top 10 Exports 2007 (Jan-Nov)

Product Proportion%(y-o-y)

Value(US$ bn)

1. Automatic data processing machines and accessories2. Motor cars, parts and accessories3. Electronic integrated circuits4. Rubber5. Precious stones and jewellery6. Polymers of ethylene, propylene, etc7. Iron and steel and their products8. Machinery and parts thereof9. Refines fuels10. Chemical products

11.227.945.323.633.543.443.072.922.572.57

15.6211.067.415.064.934.794.274.073.583.58

Total 10 itemsGrand Total

46.22100

64.36139.21

Source: Stock Exchange of Thailand

Source:Bank of Thailand



SET Monthly Closing Values

International Reserves / Short-term Debt (%)

Exchange Rate Trends

Industrial Capacity Utilization (%)

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