BOI Webinar: Thailand's Investment Outlook

Ms. Ajarin Pattanapanchai, Deputy Secretary General 1

Thailand’s Investment Outlook

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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

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Sources: World Bank, NESDB, Ministry of Commerce, The Revenue Department

Thailand

Thai Economic Overview in 2016F

GDP US$389.8 billion, (per capita) US$5,779Growth 3.0-3.5%

1

Total Export Value US$208.4 billion Trade Balance $39.1 billion

2

Taxation• Corporate: 20%• Withholding: 1-10%• VAT: 7%

4

Population 68 Million,97% literacy rate

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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




6

AECAsia &

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

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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)

ASEAN : Expanding Regional Integration offers More Opportunities

Thailand: Well Developed Regional Connectivity

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Contents

3 Competitiveness




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

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Global Recognition for Promising Economy

4th Best Countries for Mover (High Flexibility and Resilience)

Millennial Pick: Best Countries for Economic Potential1st

Best Countries to Start a Business 1st

Best Countries in the World (Overall)21st

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Source: World Economic Forum, 2016

World Economic Forum Ranks Thailand as:

6th Best Countries to Invest In

10th Open for Business

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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

NetherlandsIndonesia

VietnamTurkey

MalaysiaPoland

ThailandSweden

SwitzerlandIndia

SingaporeCanadaMexicoTaiwan

United KingdomSouth Korea

JapanGermany

USAChina

Index Score[10=high, 1=low]

2016 Global Manufacturing Competitiveness Index

# 14

233

144

116 99 90

67 46 38 28

-

50

100

150

200

250

Hong Kong New Delhi,India

Shanghai,China

Singapore Seoul,SouthKorea

Jakartar,Indonesia

Hanoi,Vietnam

Manila,Philippines

Bangkok,Thailand

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Affordable Office Spaces

Total Occupancy Cost of Prime Office[Unit: EUR/squarefoot/annum]

1st The Most Affordable Grade A Office Space in Asia-Pacific

(Bangkok)

Source: Colliers International, 2015, CBRE’s Prime Office Occupancy Costs, 2015

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Utilities price is very competitive against neighboring countries

Source: JETRO 23rd comparative Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia & Oceania

Electricity Rate Water Rate

0.21

0.10 0.10 0.08 0.08

-

0.05

0.10

0.15

0.20

0.25

Singapore KualaLumpur

Bangkok Hanoi Jakarta

(Unit: EUR/Kwh)1.65

0.93

0.39 0.34 0.29

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

Singapore Jakarta KualaLumpur

Bangkok Hanoi

(Unit: EUR/m3)

Competitive Electricity Rate

Lower than Regional Rate

Competitive Corporate Income Tax

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Competitive Corporate Income Tax

30%

25%

25%

25%

24%

22%

20%

20%

20%

17%

Phillippines

Malaysia

Indonesia

Myanmar

Laos

Vietnam

Cambodia

Brunei

Thailand

Singapore

Source: 1Deloitte’s Taxation of AEC, as of 2015

2nd

[Unit: %]

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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

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BOI’s Attractive Investment Incentives

Group Example Activities

A18-year CIT exemption

with no ceiling

• Micro electronics design, Embedded software & system design• Software for Big data, Data Analytics, Cyber Security, etc.• Data center, Cloud service, Training center• Biotechnology, Lab test, R&D, Calibration services • Manufacture & MRO of aerospace major parts• Waste to energy, Energy services company, Engineering design


• Telecommunication devices, Electronics control and measurement, Security control equipment, Solid state drives, Solar cell, OLED

• Hi-tech auto parts, Automation machinery, • High risked medical device • Medical food, Active pharmaceutical ingredient• Bio plastics, Bio fuel, Electricity from renewable source• Advanced or Nano material, Technical fiber, • Power plant, Waste treatment,

Example of Promoted Activities (1/2)

Group Example Activities


• Enterprise software, Digital content, Digital Services e.g. Platform service, FinTech, DigiTech, MedTech, AgriTech

• Electrical appliances with Internet of Things• HDD, Semiconductor, Flat panel display, Photonics• Selected Auto parts, Machinery, Mold & Die• Forging, Casting of iron or steel• Food processing, Tanneries, Oil from plant or animal


• Audio visual, LED, PCBA, Electromagnetic products• Textile & Garment, non woven fabric, leather products• Heat treatment, Ferro alloy, • Paper and plastic packaging • Jewelry, furniture • Airlines, International distribution center• Tourism related business

B 2 • E-commerce

Examples of Promoted Activities (2/2)

Success Stories of US Companies

http://www.techwellplastic.com/wp-content/uploads/microchip-logo.jpg

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Contents

3 Competitiveness




Cluster for businesses using advanced technology and future-driven industries, e.g. Automotive and Parts Electrical Appliances and

Electronics and Telecommunication Equipment

Bioplastic/Chemicals, Specialty Chemicals

Digital Aerospace Automation and Robotics Medical Hub Food Innopolis

Super ClusterChiang Mai

Phuket

Ayutthaya

Patumtahani

Prachinburi

Nakhon Ratchasima

Chachoengsao

ChonburiChonburi

Super Cluster Investment PromotionPolicy

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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

NonTax

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

$279MillionFund

Obligatory Conditions to Receive Cluster Incentives

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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.

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Contents

3 Competitiveness




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

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

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

Goods insurance

Advisory, Technical and Training services

about trading

Other services

Sourcing of goods

Warehousing and inventory services

Packaging activities

Goods delivery services

As in notification of the Director General of Revenue

Department

ITC

International Trading Centers (ITC): Scope of Activities

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

A company incorporated in Thailand providing purchase and sale services as well as other related services to juristic companies incorporated in oversea.

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

Examples of IHQ / ROH in Thailand

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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.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

Thank you

U.S. Desk @ BOI Headquarters555 Vibhavadi-Rangsit Rd.Chatuchak, Bangkok 10900 ThailandTel: (66 2) 537-8111 Fax: (66 2) 537-8098E-mail: [email protected]