why thailand - an asian hub, a world of opportunities

“Why Thailand”An Asian Hub, a World of Opportunities

March 1, 2016

Ms. Ajarin Pattanapanchai,

Deputy Secretary General 1

2

2 Thailand as the ASEAN Hub

1 Thailand at a Glance

Contents

3 Competitiveness

5 Investment Incentives for Super Cluster

4 Investment Promotion Policy

6 Incentives for International Headquarter and Trading center

Source: Economist 2015 Pocket World Figures

Vietnam

Cambodia

Thailand

Myanmar

China

Laos Philippines

Malaysia

Singapore

Indonesia

Thailand

ASEAN’s

2nd Largest

Economy

12th Largest

Agriculture Output

16th Largest

Manufacturing Output

Population 68.0 Million,

97% literacy rate

27th

Biggest Exporter

Taxation

Corporate: 10-20%

Withholding: 1-10%

VAT: 7%

GDP US$405 billion,

(per capita) US$5,736

Growth 3.0-4.0%

Brunei

3

Thailand’s globally established position

4

2nd in HDD Exports

Thailand Plays a Vital Role in the Global Supply Chain

7th Rubber Tire Exports

7th Computer Device Exports

12th Automotive Production

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Contents

3 Competitiveness




7

AEC

Asia &

Oceania

“We are surrounded by the

world’s economic powerhouses”

1 Strategic Location – right at the

Center of Mainland ASEAN

2 Strategic Location – gateway to

ASEAN

Thailand’s Strategic Location Offers Many Advantages

Thailand: Well Developed Regional Connectivity

9

Sources: IMF as of 2014, Ministry of Foreign Affairs of March 2015

ASEAN

Economic

Community

633 million population

(9% of world population)

GDP: US$ 2.4 trillion

(2% of world’s GDP)

FLAGSHIP OF ASEAN

• Emerging regional architecture

• A new generation FTA

• A high ambition agreement

Regional Comprehensive

Economic Partnership (RCEP)

(ASEAN + China, Japan, Korea, India,

Australia & NZ)

3.3 billion population

(50% of world

population)

GDP: US$21 trillion

(28% of world’s GDP)

THE BIGGEST FTA

• Market size (16 countries)

• Regional supply chain

• FDI (intra-extra region)

Expanding Regional Integration Offers More Opportunities

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Contents

3 Competitiveness




11

UNCTAD ranks Thailand

8th as a top prospective

host economy 2014-2016

Country Rank

China 1

USA 2

Indonesia 3

India 4

Brazil 5

Germany 6

United Kingdom 7

Thailand 8

Vietnam 9

Malaysia 15

World Economic Forum

ranks Thailand 32th out of

140 economies for global

competitiveness index

2015-2016

Sources: UNCTAD, 2016; World Economic Forum, 2016

Country Rank

Switzerland 1

Singapore 2

US 3

Germany 4

Netherlands 5

Japan 6

… …

Thailand 32

Indonesia 37

Vietnam 56

Thailand Consistently Ranks High in International Surveys

5th Asia’s Financial Literacy IndexMasterCard, 2014

The World’s Most Promising

Emerging Economies Bloomberg Business, 2014 - 2016

11th

Ease of Doing Business among

Emerging Economies in East Asia World Bank, 2016

2nd

Corruption Perception IndexTransparency International, 201576th

12

Thailand Gains Global Recognition for its Promising

Economy

23rd Best Countries for Quality of Life

Best Countries to Invest In6th

Best Countries to Start a Business 1st

Best Countries in the World (Overall)21st

13

Sources: Surveys Conducted by US News in Partnership with BAV and Wharton, 2016

Recent Rankings in 2016

14

Sources: 2016 Global Manufacturing Competitiveness Index by Deloitte Touche Tohmatsu Ltd. & U.S. Council on Competitiveness

(as of December 2015)

5.57

5.58

5.65

5.9

5.9

5.91

6.04

6.21

6.36

6.72

6.84

6.87

6.95

7.29

7.58

7.67

8.04

9.39

9.95

10

Netherlands

Indonesia

Vietnam

Turkey

Malaysia

Poland

Thailand

Sweden

Switzerland

India

Singapore

Canada

Mexico

Taiwan

United Kingdom

South Korea

Japan

Germany

USA

China

Index Score

[10=high, 1=low]

2016 Global Manufacturing Competitiveness Index

# 14

Infrastructure

• 7 international airports Suvarnabhumi Airport – Capacity: 45

million passengers and 3 million tons of 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

1. Expansion of the

inter-city rail

network(USD 13.8 billion)

2. Highway capacity

enhancement

(USD 14.6 billion)

3. Development of

mass transit

systems in Bangkok

Metropolitan Region

(USD 20.8 billion)

4. Air transport

capacity

enhancement

(USD 1.4 billion)

5. Development of

the maritime

transport network

(USD 2.8 billion)

Infrastructure development programs for 2015-2022 (USD 53.4 billion*)

5 Key Programs: to reduce logistics and transportation costs

Improve the competitiveness of the economy

• Upgrade railway networks

• Increase double-track railways

• Build 1.435-meter standard gauge

• Expand highways to 4 or more traffic lanes

• Develop facilities along the main roads such as container yards

• Extend mass transit railwaysystem in Bangkok and vicinity

• Acquire 3,183 natural gas vehicle (NGV) buses

• Enhance sea ports capacity

• Enhance airport capacity

• Establish aviation industrial estates with Thailand as a regional center of the MRO** industry

Railway

Road

Mass Transit

Water & Air

Source: Office of Transport and Traffic Policy and Planning, Ministry of Transport, as of 21 December 2015

Note: *1 USD = 35.84 THB **Maintenance Repair and Overhaul

Thailand’s Infrastructure Development Strategy (2015-2022)

17

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Contents

3 Competitiveness



6 Incentives for International Headquarter and Trading Center

PolicyTax

Incentives Facilitation

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

Within 3 hrs

19

BOI’s Attractive Investment Incentives

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

20

How Investment Incentives Are Granted

Success Stories of Canadian Companies

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Contents

3 Competitiveness




Latest Investment Promotion policy : Super Cluster

Super Cluster Automotive and Parts Cluster

Electrical Appliances, Electronic and Telecommunication Cluster

Digital Cluster

Aviation & Aerospace Cluster

Automations and Robotics Cluster

Medical Hub

Eco-Friendly Chemical and Plastics cluster

27

8-year corporate income tax exemption and an additional 5-year reduction of 50%

Import duty exemption on machinery

For future industries with significant importance, the Ministry of

Finance will consider granting 10-15 years corporate income tax exemption

Personal income tax exemption for renowned specialists who work in the specified areas, both Thais and foreigners

Consideration of granting Permanent Residence to leading specialists

Permission for foreigners to own land to implement promoted

businesses

Tax

Non

Tax

Investment Incentives for Super Clusters

Matching grant to encourage and support investors in the high-value

added activities in Super Cluster such as such R&D, training, etc.** Remark: The cabinet has approved in principle the Ministry of Finance proposal

to set up a 10-billion-baht ($279-million-USD) fund to promote the targeted sector

$279

Million

Fund

Obligatory Conditions to Receive Cluster Incentives

28

Must have cooperation with academic institution / research institution / Center of Excellence in the cluster to develop human resource and improve the level of technology e.g.

• Cooperation in the 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

Must apply for investment promotion within 2016 and must start operation within 2017 to accelerate investment, unless under necessity i.e. large-scale project, the BOI will consider relaxation as deemed appropriate.

Automotive and Parts Super Cluster

29

7 Provinces : Ayuddhaya, Patumthani, Chon Buri,Rayong, Chacheongsao, Prachinburi,

Nakorn Ratchasrima

Target Activities

Manufacture of Motorcycle with engine size > 248 CC. (only for projects with forming of engine parts)

Manufacture of Automobile Engines

Manufacture of Important Parts that are not locally produced or are few i.e.

- Parts using advance technology - Safety and Energy Efficient System - Equipment for Hybrid, EV, PHEV cars - Fuel injection parts/ Transmission/ Engine System

Manufacture of Automobile Tires

9

Electrical Appliances, Electronic and Telecommunication Cluster

7 Provinces : Ayuddhaya, Patumthani, Chon Buri,Rayong, Chachoengsao, Prachinburi, Nakorn

Ratchasrima

Target Activities

Electronic DesignMicroelectronics Design, Embedded System Design

Electronic / telecommunication products and parts e.g. telecommunication equipment, electronic control and measurement, security control equipment, Solid State Drive, Hard Disk Drive, solar cells, Semiconductor, Flat panel display, Photonics

Internet of Things Appliance/ Smart devicesTest Lab, R&D, Training center

Target Activities

- Software (Embedded Software, Enterprise Software, Digital Content, BigData, Data Analytic, Business Process Management, Cyber security, Controlling, Industrial Software)

Cloud ServicesData Center, Innovation Incubation Center

IT Services (Software Platform, Managed Service, Digital Architecture Design Service, FinTech, DigiTech, MedTech)

Digital Cluster

Automation & Robotics ClusterTarget Activities

Manufacture or Assembly of Robots & Automation equipment and parts- Machinery /Equipment with engineering design- Machinery, Equipment & parts / Repair of Mould- Assembling of Automation Machinery/Equipment, Robots & parts*Service and Public Utilities- Research & Development- Engineering Design- Scientific Laboratories- Calibration Services- Vocational Training Centers- Innovation Incubation Centers*

Target ActivitiesSoftware Development and Systems Integration- Systems Integration Design - Electronic Design- Installing automated or robotic systems- Embedded Software, Big Data Analytics

SW, Controlling and Commanding SW, Business Process management, IoT,

*under the approval process

Aviation & Aerospace ClusterChiang Rai

Phitsanulok

Nakhon

RatchasimaNakhon Sawan

Lopburi

Nakhon Pathom

Pathum Thani

Bangkok

Samut Prakan

Chachoengsao

Chonburi

Rayong

Surat Thani

Songkhla

14 Provinces : Bangkok, Samut Prakan, Nakhon Pathom, Pathum Thani, Chachoengsao, Chonburi, Rayong, Chiang rai, Phitsanulok, Nakhon Sawan, Lopburi,

Nakhon Ratchasima, Surat Thani, SongkhlaTarget Activities

Manufacture or MRO- Airframe, Airframe parts- Critical parts e.g. Engine and parts, Propeller- Appliance e.g. Flight recorder, Radar - Telecommunication/Electronic products- Electronic Design- Embedded Software, High Value – Added SoftwareManufacture of space devices - Parts or equipment of Rocket, Space craft, Space vehicle, Propulsion unit part and Auxiliary equipment

- Search, Detection, Navigation, Guidance, Aeronautical, Nautical system and instrument

Training Center for pilot and technician

Companies in the aircraft industry tend to look for lower cost parts

for their manufacturing and repair plants. Thailand can offer this

price advantage when compared with neighboring countries.

Other regional locations, such as Singapore, may have a

limitation regarding the ability to facilitate the expansion of aircraft part manufacturing investment.

Major aircraft and parts manufacturers

24 companies have been

promoted under aircraft part

manufacturing activity

12 companies have been

promoted under aircraft and part maintenance and repair activity

BOI promoted activities

34

Investment Opportunities for Aviation Industry

Thailand Digital Economy Policy:

National broadband : Expand hi-speed internet systems

Cover areas

nationwide to

facilitate domestic

economic

development

1

2

3

4

5

Local employment (at least USD 47 million)

Procurement of domestic materials

(approximately USD 112 million)

Growth in telecommunications

industry

Promotion of local products via e-commerce

Support the gaining of household

income, both in the local agricultural

and industrial sectors

12 months

(100%)

30,000 villages

Exchange rate (BOT, Feb 1 2016): 1 USD = 35.84 THB

37

Hub for ASEAN regional internet connectivity

International Internet Gateway : Enhance the efficiency of

international internet systems to become the ASEAN regional

internet connectivity hub

Internet services

become cheaper

Citizens/

Customers

Expenses for

transactional

circuits become

cheaper

Service

Providers

Decrease

dependency on

connectivity

through

neighboring

countries

Risk

Management

Promote digital

economy which

will help enhance

business

performance of

other sectors and

improve the

country’s

competency

Digital

Economy

Help develop the

Digital Cluster

that will stimulate

innovation and

investment in new

industries,

increasing the

country’s GDP

Private

Companies

38

39

International Internet Gateway: ASEAN Regional Internet

Connectivity Hub

Route

Expand the total capacity of transnational submarine cable

networks to 4 Tbps, and domestic networks to 2 Tbps

DWDM 100 Gbps

Action Plan

Delivery of the 1st task

Capacity Submarine Cable

200 GbpsJune 2016

September

2016

Delivery of the 2nd task


200 Gbps

December

2016

Delivery of the 3rd task


400 Gbps

September

2017

Delivery of the 4th task


3,750 Gbps and Domestic

Backhaul 2,000 Gbps

Fast and smooth internet connection in Thailand

Thailand becomes the ASEAN Regional Internet

Connectivity Hub

World-class content providers invest in Thailand

Route

Technology

39

43



Contents

3 Competitiveness




Corporate income tax exemption on income derived from

dividends and capital gain

Corporate income tax exemption on income derived from

services to associated enterprises; such as

Human resources management and training

Technical support

Financial management

Corporate income tax exemption on income derived from the

purchase and sales of goods overseas (OUT-OUT trading)

Final tax (similar to withholding tax) exemption on dividends

paid by the IHQ to corporate shareholders overseas

15

International Headquarter (IHQ) Incentives

International Headquarters (IHQ)-Eligibility 1/2

• A juristic company incorporated in Thailand providing the following services to IHQ’s foreign branches or associated enterprises

Org. admin. and mgt. & business planning

Sourcing of goods

R&D

Technical support

Mkt. and sales promo.

HR & training and dev.

Business advisory

services

Econ. and inv. analysis

and research

Credit mgt. and control

Treasury center

International Trading Centers (ITC)

• A juristic company incorporated in Thailand providing purchase and

sale services as well as other related services to juristic companies

incorporated in oversea.

• The paid-up registered capital must not be less than 10 million baht.

• Have total ITC business spending of at least 15 million baht per year in Thailand

Warehousing and

inventory services

Goods delivery

services

Advisory, Technical and

Training services about trading

Sourcing of

goods

Packaging

activities

Goods

insurance

Other services as in Notification of the

Director General of Revenue Department

Examples of IHQ / ROH in Thailand

http://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://brandingsource.blogspot.com/2013/11/new-logo-philips.html&ei=dSbYVKW1Jo6DuwTdwYDoDw&bvm=bv.85464276,d.c2E&psig=AFQjCNFrqUMKdmuo-dwGMXtlytr-FbuDTQ&ust=1423538164872337

http://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://brandingsource.blogspot.com/2013/11/new-logo-philips.html&ei=dSbYVKW1Jo6DuwTdwYDoDw&bvm=bv.85464276,d.c2E&psig=AFQjCNFrqUMKdmuo-dwGMXtlytr-FbuDTQ&ust=1423538164872337

http://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.9carthai.com/toyota-%E0%B8%A3%E0%B8%B2%E0%B8%84%E0%B8%B2%E0%B8%A3%E0%B8%96-%E0%B9%82%E0%B8%95%E0%B9%82%E0%B8%A2%E0%B8%95%E0%B9%89%E0%B8%B2/&ei=qSbYVODOJoeIuASuhYAQ&bvm=bv.85464276,d.c2E&psig=AFQjCNGCml3oApFCSe8HVuj2hvT4zJG92Q&ust=1423538211806614

http://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.9carthai.com/toyota-%E0%B8%A3%E0%B8%B2%E0%B8%84%E0%B8%B2%E0%B8%A3%E0%B8%96-%E0%B9%82%E0%B8%95%E0%B9%82%E0%B8%A2%E0%B8%95%E0%B9%89%E0%B8%B2/&ei=qSbYVODOJoeIuASuhYAQ&bvm=bv.85464276,d.c2E&psig=AFQjCNGCml3oApFCSe8HVuj2hvT4zJG92Q&ust=1423538211806614

http://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.leapfrogtechnologies.co.uk/about-us/&ei=YCfYVP7IGNLkuQTvmoEQ&bvm=bv.85464276,d.c2E&psig=AFQjCNFfjva6nrgqkASLrx2LRKtd1xMyWw&ust=1423538376818659

http://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.leapfrogtechnologies.co.uk/about-us/&ei=YCfYVP7IGNLkuQTvmoEQ&bvm=bv.85464276,d.c2E&psig=AFQjCNFfjva6nrgqkASLrx2LRKtd1xMyWw&ust=1423538376818659

https://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://twitter.com/chevron&ei=hizYVMfQO9HjuQSmvYD4Dw&bvm=bv.85464276,d.c2E&psig=AFQjCNEaYQS9lrDCG9EVEGGcgziw32B5bw&ust=1423539716229675

https://www.google.co.th/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://twitter.com/chevron&ei=hizYVMfQO9HjuQSmvYD4Dw&bvm=bv.85464276,d.c2E&psig=AFQjCNEaYQS9lrDCG9EVEGGcgziw32B5bw&ust=1423539716229675

BOI SUPPORT

SERVICES

49Overseas offices

Country desks

1-Stop for visas & work permits:work permits in 3 hours

Interaction with other govt. agencies

on behalf of investors

Subcontracting Development

Program by BUILD Unit

Investment Matchmaking Program

ASEAN Supporting Industry Database

Thank you

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]