CONTENTS

April 2014 Volume 24 No. 04

In the past couple of years, Japanese manufacturers and other domestic companies have been shifting their capital investments and operations from China to member states of the Association of Southeast Asian Nations (ASEAN), with the aim of developing new markets. Indeed, a new wave of Japanese investment is taking place in areas such as financial, retail, health, education and residential services. Actually, Japanese investment in Southeast Asia jumped 55% in the first six months of 2013 from the year before, to US$10.29 billion. A recent survey by the state-owned Japan Bank for International Cooperation (JBIC) found that 84% of responding companies planned to strengthen overseas operations within the next three years, compared with only 65.8% in 2009.

Prime Minister Shinzo Abe of Japan is enthusiastic about the renewed focus on ties with the ASEAN community. “ASEAN and Japan are twin engines,” Mr. Abe said in a speech in Singapore in July 2013, on one of his seven trips to Southeast Asia since taking office in December 2012. “ASEAN will play an enormously important role for the Japanese economy”. In fact, Japanese firms have looked to the region as a site for manufacturing since the 1960s. During the 1990s, China attracted a larger share of Japanese overseas investment but starting last year, Japanese investment into China began to decline. Today, a second wave of investors and businesses from Japan, especially small and medium-size enterprises (SMEs), are seeking to invest in the ASEAN region and believe that Thailand could be a trading hub for Southeast Asia despite the political turmoil affecting the Kingdom.

PageThailand: Investors’ Gateway to ASEAN 1

News Bites / BOI Net Applications 2Industry Focus: Thailand’s Expanding Bio-tech 5

Company Interview: BIOTEC: A Premier Research Institute 7

Women in Senior Management: Thailand Among Top 10 9

Thai SMEs: Foodex Japan and More 10Thailand’s Prosperity 11BOI’s Missions 11Thailand Economy-At-A-Glance 12

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Thailand: Investors’

Gateway to ASEAN

into fishery products. Pattani Bay is 116.4 kilometers long and suitable for marine fisheries and coastal aquaculture.

About 55 percent of Pattani’s halal canned seafood and frozen processed products are sold in the country, while 45 percent are exported. Major export markets include Canada, the United States, Syria, Lebanon, Malaysia, Singapore, Indonesia, Laos, Myanmar, European countries, and Middle East nations.

NEWS BITES BOI NET APPLICATIONSInfrastructure Continues to Improve

Don Mueang International Airport is reported to have had 16.4 million passengers passed through in 2013, while the airport’s total passenger handling capacity was 18.5 million a year.

From January to February 2014, the number of passengers at the airport was more than three million, accounting for an increase of 17.4 percent over that of the same period in 2013. The airport is in the process of restoring Terminal 2, along with fixing the south corridor building and Pier 5, in order to accommodate 30 million passengers a year. The development project will be completed by 2014.

In the next phase, scheduled for 2015 to 2016, Don Mueang Airport wi l l be further developed, so that it will be able to accommodate 39 million passengers each year. When combined with the potential of Suvarnabhumi International Airport, which is also in its second phase of development, Bangkok will be able to accommodate up to 90 million passengers annually in the next few years.

Airports of Thailand is considering building a monorail to Don Mueang Airport in Bangkok as part of its fourth phase development plan to cope with its increasing passenger flow. The monorail would link the airport’s two terminals and depot with both the red and dark green commuter rail system lines.

Collaboration under JTEPA

On February 28th, 2014, there was MOU signing between Thailand Automotive Institute (TAI) and National Metal and Materials Technology Center (MTEC), National Science and Technology Development Agency (NSTDA) for Automotive Human Resources Development Institute Project (AHRDIP), which is under Japan–Thailand Economic Partnership Agreement (JTEPA). Objectives of this project are to build up collaboration between 2 organizations in order to develop more capability of human resources in chemical testing analysis; including, exchange knowledge, experience and academic information about human resources.

Strategies for Halal Seafood

Pattani province has set strategies for provincial development from 2014 to 2017, with an emphasis on expanding its markets for halal products and services to Muslim communities at national and regional levels and to the niche market in various parts of the world.

Pattani will develop and promote agro-industry and the halal industry. The province is rich in marine resources to be processed

2012(US$ = 31.57 THB)

2013 (Jan - Feb)(US$ = 29.82 THB)

2014 (Jan - Feb)(US$ = 32.65 THB)

Number of projects Value Number of

projects Value Number of projects Value

Total Investment 2,237 34,335 353 5,073 188 1,932

Total Foreign Investment 1,132 16,622 204 2,791 121 1,448

By Sector

Agricultural Products 6 101 20 406 2 13

Minerals / Ceramics 1 19 6 115 4 48

Light Industries / Textiles 6 20 11 36 4 8

Automotive / Metal Processing 17 159 61 920 37 508

Electrical / Electronics 19 167 33 357 22 14

Chemicals / Paper 16 169 23 154 14 683

Services 15 157 50 800 38 173

By Economy

Japan 562 8,959 106 1,601 61 532

Europe 132 679 25 293 17 95

Taiwan 53 221 7 74 5 11

USA 55 368 12 26 3 299

Hong Kong 39 639 4 47 8 65

Singapore 93 722 11 37 11 67

By Zone

Zone 1 23 139 66 637 33 59

Zone 2 39 451 94 1,300 68 1,246

Zone 3 18 203 44 854 20 144

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

Subcon Thailand 2014 will be held from 15 - 17 May at the Bangkok In te rna t iona l Trade and Exhibition Centre, marking the 8th year the

country has held ASEAN’s most important subcontracting exhibition for procurement of industrial parts.

The 2014 show will have over 300 expert part-makers who will exhibit over 2,000 quality products from ASEAN and Japan and the show is set to attract more than 24,000 local and overseas buyers from 15 countries - the perfect platform for Thai and ASEAN supporting industries to present their capabilities to the world.

www.subconthailand.com

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The outward-looking economic policy of Prime Minister Shinzo Abe and Japan’s shrinking domestic market are driving local companies to look for ventures outside, and ASEAN is very attractive due to low production costs, high growth potential, the region’s large consumer market and the prospects of the ASEAN Economic Community (AEC). Plus, at a Japan-ASEAN summit held in Tokyo in December 2013, Prime Minister Abe pledged $20 billion of aid and loans to Southeast Asia, as he seeks to drive up exports and bolster friendships across the region. Much of the money, in the form of grants and loans, will go towards investment projects under the Greater Mekong Subregion (GMS) regional cooperation. ASEAN holds great strategic value for Japan.

On 6 March 2014 at the Plaza Athénée Hotel, an international conference brought together 500 leading business people, policymakers and experts from Japan and ASEAN to look at the different kind of investment entering the region with participation from the Thai government. Entitled “Japan’s New Wave of Overseas Investment: Thailand and ASEAN-Plus-One”, the symposium was organized by The Nation along with the Yomiuri Shimbun and Japan News. The Thailand Convention and Exhibition Bureau provided logistical support, while the hosts were Krungsri Bank and Ananda Development. Among the speakers were Hisamichi Koga, vice president of the Japanese Chamber of Commerce in Bangkok; Kanetsugu Mike, vice chairman of Bank of Ayudhya and senior managing executive officer of Bank of Tokyo-Mitsubishi UFJ; Setsuo Iuchi, president of JETRO Bangkok; and Shuichi Ikeda, chief representative of JICA Thailand. The keynote address was delivered by Heang Chhor, a senior partner of McKinsey & Company and author of the acclaimed book Reimaging Japan.

Notable Thai speakers included Chokedee Kaewsang, deputy secretary-general of the Board of Investment and former economic counsellor of the Board of Investment’s Tokyo office. Conference topics ranged from examining the significance of the ASEAN Economic Community for both Thailand and Japan to the impact from Abenomics, which is encouraging Japanese firms to go overseas, to the future prospect of Japanese business

activities in an increasingly integrated ASEAN region. Other issues discussed at the symposium were Japan’s initiatives for ASEAN and how Thailand and ASEAN are preparing for the new infusion of Japanese investment and enterprise.

Mr. Setsuo Iuchi, president of the Japan External Trade Organization (JETRO), when commenting on the ongoing political turbulence in Thailand and its impact on foreign investors, said Japanese firms wanted the conflict to be solved as soon as possible and in a peaceful manner. He reiterated that the policies of Prime Minister Abe promoting investment outside Japan had provided incentives for Japanese companies to look outward, and Thailand remains their favorite destination. However, he said, in order for Thailand to maintain its reputation and achieve sustainable growth it needs to invest in infrastructure, improve interconnectivity with its neighbors and upgrade its customs procedures.

Once the AEC is launched, Thailand will become a very important hub for manufacturing in this region, and in order to remain this way it needs to invest in transportation and improve interconnectivity with its neighbors,” Mr. Iuchi declared. He added that Thailand-based Japanese manufacturers remained largely unaffected by the turmoil and that large-scale investment deals had been signed before the protests began. Actually, Thailand has been a key focal point for Japanese investment and enterprise for the past 40 years. Furthermore, Mr. Iuchi’s comments reinforced the sentiment that the commercial and financial linkages between the two Asian countries are and will remain important for decades to come.

It is mentioned often by media outlets that the ASEAN Economic Community, which is slated to be inaugurated in 2015, promises a larger regional market with no trade barriers. The recent surge in Japanese investment across Southeast Asia, termed as ASEAN-Plus-One, is being propelled also by the economic recovery in Japan with firms there looking to expand their ASEAN base. According to the International Monetary Fund (IMF), the gross domestic product (GDP) of the “ASEAN 5” - Indonesia, Malaysia, Philippines, Vietnam and Thailand - is expected to grow by 5.1%.

Similarly, the vice president of the Japanese Chamber of Commerce (JCC), Mr. Hisamichi Koga, reinforced the message that Japan is committed to the development of ASEAN and of the Thai economy. Mr. Koga said the JCC in Bangkok had more than 1,500 members, a dramatic increase from 97 companies in the 1990s, adding that 80% of JCC members came from the automobile industry.

In terms of changing trends, Mr. Koga said that Thailand has been a favorite destination for investment in manufacturing for 40 years, and has grabbed now the attention of Japanese SMEs and non-manufacturing firms, especially those in the service sector. Mr. Koga added that non-manufacturing companies investing in Thailand have been overtaking manufacturers, as only 89 manufacturing firms registered in 2013 compared to 185 non-manufacturing firms registering in the same year. Citing information from the Japan Bank for International Cooperation (JBIC), he said Japanese firms are increasing investments abroad to cope with long-term appreciation of the yen and shrinking demand at home. “They are expanding in Asia, especially Thailand and ASEAN, where the population is big at 600 million people and still growing,” Mr Koga said.

Another speaker echoed this positive sentiment concerning the

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perception of the Kingdom on the part of Japanese government officials and corporate executives. “Thailand is a favorite venture destination because its geographical location puts it at the centre of a growing region,” said Kanetsugu Mike, vice chairman of Krungsri Bank and senior managing executive officer of the Bank of Tokyo-Mitsubishi UFJ (BTMU). Mr. Mike explained that the AEC would lift trade barriers and expand the market to 600 million people, offering large potential for market and GDP growth. In addition, the prospects of the Greater Mekong Sub-region (GMS) are attracting also Japanese investors. Likewise, Mr. Mike explained that an increase in Japanese businesses in Thailand had increased the demand for Japanese services, such as banking and food, which is why more and more SMEs and non-manufacturing firms are eyeing investment opportunities in the country.

Japan and ASEAN should engage in “leapfrog” collaboration and move beyond traditional manufacturing and service industries to other areas such as Internet-based economy, agriculture and education, a senior partner of McKinsey & Company emphasized. Mr. Heang Chhor, in his keynote address to the conference, stated that the question was not so much about the presence of opportunity or whether there should be more collaboration between Japan and ASEAN, which he believed would become more intense over the next two decades. Those areas identified for productive “leapfrog” collaboration cannot be pursued by Japan alone; it requires the active participation of ASEAN as a single community.

Indeed, ASEAN has been envisioned to be the “second leg” of an Internet-based economy for Japan. For instance, top-notch Japanese IT companies can set up their operations in the region and capture a much larger customer base. Moreover, Japan can leverage the agriculture-based economies of ASEAN to shape a cutting-edge “agriculture 2.0” network, as nowadays consumers are no longer just satisfied with cheap and enough food, but also hunger for high quality and safe foods, that can be supplied to consumers worldwide. Finally, Mr. Chhor suggested that Japan assist ASEAN in building up energy-efficient “smart cities” as well as collaborate more on education, including sending out teachers, young people, and veteran executives to the region for the purpose of cultural exchange and knowledge transfer.

During the last session of the conference, Mr. Chokedee Kaewsang, deputy secretary-general of the Board of Investment (BOI), said improvement of regional infrastructure could

enhance “ASEAN connectivity” substantially more than cutting the remaining import tariffs. As a matter of fact, he pointed out in his presentation that the AEC will convert the ASEAN region to become a key investment destination thereby presenting more prospects for Thailand to invest overseas. Furthermore, the Thai government must take steps to achieve balanced and sustainable economic development, heighten global competitiveness, and overcome the “middle income trap”. Consequently, it is imperative for the Kingdom to focus on three core areas: 1. drafting a new investment promotion strategy; 2. improving Thailand’s investment environment; and 3. reinforcing intra-ASEAN linkages, particularly with Cambodia, Laos, Myanmar, and Vietnam (CLMVs). Adopting such an approach would boost and complement Japan’s current business model of “Thailand-Plus-One” in which Japanese companies operating in industrial clusters in Thailand transfer the labor-intensive parts of their production processes to special economic zones (SEZs) in neighboring countries.

Regarding the investment promotion direction for the Thai economy, Mr. Kaewsang indicated that the BOI already has a draft outline of a restructured investment policy that would shift the agency’s objectives (1) from broad-based investment promotion to focused and prioritized investment promotion, (2) from sector-based incentives to sector and merit-based incentives, (3) from zone-based incentives to promoting new regional clusters, (4) from tax incentives-oriented promotion to tax incentives and facilitation-oriented promotion, and (5) from promoting inbound investment to promoting both inbound and outbound investment. But these proposed policy targets are subject to approval from the new board members of the BOI.

Mr. Kaewsang concluded his presentation by remarking that ASEAN’s diversity and market are its strengths, providing openings for trade, investment, and economic growth. International supply chains can span the region to take advantage of each country’s comparative advantage. But without good connectivity, diversity may breed disparity rather than prosperity and opportunities. As tariff barriers to trade have fallen, infrastructure connectivity has become more relevant. Improving regional infrastructure then would do more to lower costs and increase trade and investment than would eliminating any remaining tariffs.

Over the years, Japan has remained one of Thailand’s premier trading partners. In 2013, Japan-Thailand trade value reached over US$63 billion. Not only is Japan the Kingdom’s chief trading partner, it is also Thailand’s largest foreign direct investor – with total BOI investment application value of over US$9 billion by the end of last year. Japan’s fiscal interests span a variety of industries that fuel the Thai economy, especially in the automotive, electronics and chemical manufacturing sectors. Presently, Japan has expressed an interest in joining the Thai government’s infrastructure projects, particularly the construction of a high-speed train network. For Japanese business executives and officials the new investment regime to be implemented by the Board of Investment would help Thailand move up the value chain and improve its competitiveness before the AEC is set up in late 2015. With the appropriate positioning in the region, the Kingdom will be able to attract more investments from Japan. According to the BOI, investment applications from Japan that were received by the BOI totaled US$33.6 billion over the last five years, mainly in the automotive, machinery, electrical appliances and electronics sectors. Clearly, the Japan-Thailand-ASEAN economic relationship is one that must be maintained and expanded.

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Thailand’s Expanding Bio-techAs the Kingdom of Thailand surges up the ladder of economic development, the country naturally has moved away from an over-reliance upon labor-intensive industries to a more tech-savvy, knowledge-based economy. Indeed, over the past two decades, the biotechnology industry has been a dynamic engine in Thailand’s push towards modernization, transforming the Kingdom into a high value-added economy. The country offers biotech investors a solid R&D and manufacturing infrastructure, and a skilled but affordable force of laboratory scientists, field technicians and facility support staff. Although still an embryonic industry with much room for growth, biotechnology is important to the future of the Kingdom, as each breakthrough enhances Thailand’s global competitiveness today and for the years ahead.

What is biotechnology? At its simplest, biotechnology is technology based on biology. Biotechnology harnesses cellular and biomolecular processes to develop technologies and products that help improve our lives and the health of our planet. Modern biotechnology provides breakthrough products and technologies to combat debilitating and rare diseases, reduce our environmental footprint, feed the hungry, use cleaner energy, and have greener and more efficient industrial manufacturing processes. Presently, there are hundreds of biotechnology health care products and vaccines available to patients, many for previously untreatable diseases. Plus, millions of farmers around the world use agricultural biotechnology to increase yields, prevent damage from insects and pests and reduce the impact of farming on the environment. Simply put, advances in biotechnology are helping humanity prepare for and meet society’s most pressing challenges.

Thailand’s expanding biotech industry offers ample opportunity for investment, and there is no lack of support from the government. In fact, the Thai government is playing a vital role in the steady advancement of the industry, through research funding and encouraging developmental efforts by numerous agencies and

INDUSTRY FOCUS

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institutes. The National Biotechnology Policy Framework 2004-2011, endorsed by the National Biotechnology Policy Committee, laid a solid infrastructure for the progress now being seen in the industry.

Supplementing this trend, headway in other related industries is indeed helping to fortify Thailand’s emergence as a major biotech hub, with the country being a world leader in agriculture, food exports and medicine. The reverse also is true as local breakthroughs in biotechnology make industry and living standards better. The Thai food sector, for example, uses biotech advancements to continually improve plant and livestock breeding, rice, cassava and shrimp output, testing and product

quality.

These important breakthroughs are protected by a comprehensive legal structure, with seven intellectual property protection laws enforced in Thailand. These are the Copyright Act of 1994, Patent Act of 1979 (with amendment in 1999), Traditional Medicine and Practice Act of 1999, Trademark Act of 1991 (with amendment in 2000), Act for the Protection of Layout-Designs of Integrated Circuits in 2000, Trade Secret Act of 2002, and Protection of Geographical Indication Act in 2003. On 24 September 2009, Thailand also became a party to the Patent Cooperation Treaty, which offers inventors, researchers and exporters who seek patent protection in multiple countries a more user-friendly, cost-effective and efficient option.

What’s more, there are various public and private organizations that support the expansion and heightened competitiveness of the biotechnology industry in Thailand. These include the National

Science and Technology Development Agency (NSTDA), the Thailand Science Park (TSP), the KMUTT biopharmaceutical cGMP Pilot Plan, the Research and Development Certification Committee Secretariat (RDC), the Thailand Center of Excellence for Life Sciences (TCELS), the Thailand Institute of Scientific and Technological Research (TISTR). In addition, there is a long list of government agencies that also strive to continue strengthening this flourishing industry, which includes the Department of Agriculture, Food and Drug Administration, Ministry of Public Heath, Ministry of Natural Resources and Environment, and the Department of Intellectual Property under the Ministry of Commerce.

Nonetheless, the creation of the National Center for Genetic Engineering and Biotechnology (BIOTEC) in 1983 marked an important early milestone for Thailand’s biotechnology industry by laying a solid foundation for strong future development. In fact, BIOTEC allocates 70% of its R&D budget to local universities and institutes for the upbringing of researchers needed by the country to ensure continued breakthroughs and growth in this vibrant industry. The remaining 30% of the budget is used for in-house research projects. BIOTEC also operates specialized

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laboratories in several universities, including at Kasetsart University for plant genetic engineering and DNA fingerprinting, at Mahidol University for microbial genetic engineering and medical biotechnology, at Chulalongkorn University for marine biotechnology, and at King Mongkut’s University of Technology for biochemical engineering.

BIOTEC constantly monitors and assesses this impact of its output towards social and economic development. Every year, a number of technology transfer projects are selected for detailed impact study for the following few years. The impact is measured in the form of income generated by the clients out of such products and technologies, and also quantified from parameters such as import substitution and employment generation.

Additionally, the Thailand Science Park, which like BIOTEC is actually one of the centers under the NSTDA, covers 80 acres populated with laboratories, incubator units, pilot plants and greenhouses. Located 20 kilometers outside of Bangkok, the world-class facility mainly conducts R&D in biogenetic engineering. Some 4,000 personnel work in the park and range from researchers to maintenance. Among its features attractive to investors are long-term land leases for construction, multi-tenant buildings, and ready-made wet-labs for rent. At the moment, there are 60 companies in operation (70% Thai, 30% International) with approximately 10 companies in the pipeline.

Under its multibillion-baht Biotechnology Development Policy Framework 2012-2021, the Thai government is a driving force in stimulating growth. The program emphasizes enhancing R&D in the private sector and utilizing the intellectual capital created from the biotech revolution to fortify the country’s overall competitiveness. Across the Kingdom, a number of biotech firms have been established. These companies enjoy the protection of strict intellectual law enforcement, as well as benefits such as the country’s substantial supply of skilled technicians, well-developed infrastructure and generous investment incentives. Another key supportive national strategy is the 11th National Development Plan 2012-2016, which committed the government to biotechnology development.

The growth of the industry also is well sustained by new initiatives in a diverse range of areas, including drug discovery, agribusiness, stem cells, DNA and genomics. One of the most

notable public-private sector cooperation endeavors is the BIOTEC-Novartis Drug Discovery Partnership. Moreover, these efforts have resulted in almost 800 publications in international academic journals, the development of dedicated research infrastructure and resources, and the training of over 600 research scientists, benefiting both public and private sectors.

Furthermore, over 650 new species of organisms have since been discovered. These discoveries create new business and economic opportunities. For instance, a new species of Thai Fairy Shrimp, first discovered in Thailand in 1998, has been developed commercially for sale and export overseas.

Of equal significance, Open Lab is a new activity initiated in 2011 to promote collaboration between laboratories and industries by inviting companies to meet with BIOTEC scientists, be informed of BIOTEC expertise and potential of the biotechnology to make an improvement to industry, with expected results such as collaborative research, commissioned research or analytical service provision. Three laboratories were selected for three different events in 2011, based on the industrial application of the technology. A total of 35 companies and venture capitalists participated in the events, consisting of SMEs to major companies such as CP Group, Saha Farms, Mitr Phol Sugar Group, Agromed, Merck and Vnet

Capital. Such collaborative efforts are the driving force behind the rapid progress of the Thai biotechnology industry.

It must be pointed out that applications of biotechnology in Thailand include Agriculture (Green Biotechnology), Medicine (Red Biotechnology), Industry (White Biotechnology) and Marine/Aquatics (Blue Biotechnology). Indeed, the use of biotechnology will improve food and agriculture product yields and quality, reduce costs and also increase product value to support the country’s competitiveness in the food industry. Moreover, Thailand has developed several biotechnology programs to support the medical sector especially in alternative disease solutions for emerging diseases, re-emerging diseases, and tropical diseases.

Many government bodies have joined hands to strengthen the biotech industry in Thailand. Among them, the Board of Investment (BOI), the principal government agency for encouraging investment, under the Ministry of Industry, has been active in granting incentives to promote biotech projects.

To be specific, the BOI provides special incentives to activities that involve high-level R&D and production in six main areas. These are seed and plant improvement; biopharmaceutical agents; diagnostic kits for health, agriculture, food and environmental applications; biomolecule and bioactive compounds using microorganisms, plant and animal cells; raw materials and/or essential materials used in molecular biological experimentation/testing; and biological substances analysis and/or synthesis services. The Thailand Board of Investment offers a wide range of fiscal and non-tax incentives for biotech investments. Tax-based incentives include exemption or reduction of import duties on equipment and raw materials, and corporate income tax exemptions and reductions. Non-tax incentives include permission to bring in foreign workers, own land and take or remit foreign currency abroad. Additionally, foreign businesses are entitled to 100% ownership.

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According to BOI Announcement No.2/2553, on 23 April 2010, the BOI offers promotional privileges to projects in biotechnology to support the country’s national biotechnology policy and encourage more investment in the industry’s research and development. The incentives are granted to R&D and manufacturing activities in a number of biotechnology areas, provided that applicants use modern biotechnology as approved by the National Science and Technology Development Agency (NSTDA) or the Thailand Center of Excellence for Life Sciences (TCELS), which are public organizations under the supervision of the Ministry of Science and Technology. These projects are considered as a priority activity that has special importance and benefits to the country, which grants exemption of import duty on machinery for all zones, an 8-year corporate income tax exemption (uncapped) and other relevant location-based incentives.

Cur ren t l y, the re a re approx imate ly 200 biotechnology firms in Thailand with a total market value over US$2 billion. The majority of the biotech companies in Thailand are small firms with registered capital of less than 50 million baht. Those considered medium-sized firms, with registered capital, make up 21% of the market. Large firms with over 200 million in registered capital, make up 7% of the market. Thailand’s biotech market is divided into four segments, namely, agriculture/food (agro-business, medical/health, environmental, and others. The agro-business segment is the largest and accounts for 51% of the total market. Through strong and supportive governmental policy and the establishment of alliances between universities and industry these biotechnology companies have flourished. By bringing the appropriate stakeholders together, Thailand has linked science to business and is able to deliver biotechnological research and innovation that is applied in the industrial sector.

Across the board commitments are being made by the Government of Thailand to embrace the opportunities of modern technology and to capitalize on the industries of the future. Savvy entrepreneurs are already benefiting from the incentives offered by the Board of Investment, which helps lower the costs incurred in such capital intensive sectors. Equally important, investors and industry experts worldwide are impressed by the Kingdom’s increasing number of biotech accomplishments. For example, a strong indication that the global community recognizes Thailand’s

biotech capability came when the World Health Organization (WHO) approved the country as a manufacturer of the H1N1 flu vaccine. For those interested in modern research facilities equipped with skilled staff and within one of the world’s least expensive environments, Thailand is the place to invest.

COMPANY INTERVIEW

A Premier Research InstituteIn order to gain an insider’s perspective of the vision, mission, strategy and work of BIOTEC, the Thailand Investment Review newsletter team interviewed at length Dr. Kanyawim Kirtikara, Executive Director of the Center. A number of questions were posed that not only dealt with BIOTEC specifically, but also with the field of biotechnology in Thailand.

Trained as a biochemist in Thailand, Dr. Kirtikara completed both a master’s degree and a PhD in the US at the University of Connecticut. Furthermore, she did two post-doctorates, one at Rutgers University and one at Tennessee University, after which

Dr. Kirtikara returned to Thailand to start ‘real’ work at BIOTEC, starting out as a research scientist. Back then, BIOTEC was a small government outlet under the umbrella of NSTDA. At that time, the role of BIOTEC was to promote R&D in Thailand, to conduct research and to transfer technology. Nonetheless, according to Dr. Kirtikara, the BIOTEC mission has remained the same: quality R&D, infrastructure improvement, and human resources development. Indeed, each national center within the scope of NSTDA has the duty to advance a platform for technology.

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As a premier research institute in Thailand and Asia, BIOTEC operates research units located at Thailand Science Park and specialized laboratories hosted by various universities, employing 400 staff, of which 157 are PhD researchers and 151 research assistants and lab technicians (as of September 2013). BIOTEC research covers a wide spectrum from agricultural science to biomedical science a n d e n v i r o n m e n t a l sc ience . Apar t f rom research laboratories, BIOTEC activities also include policy research, an outreach program, training and multinational collaboration. Moreover, B I O T E C i n c o m e i s sourced from government funding and revenues from providing services/commercialization and non-government entities such as in ternat ional funding agencies and private foundations.

Dr. Kirtikara highlighted that BIOTEC has four thematic research programs, namely Agriculture and Food, Health and Medicine, Energy and Environment and Bio-resource Conservation and Utilization. Platform technologies have been created to strengthen capacity in certain technologies and subsequently provide knowledge platforms for the thematic research programs, such as Genomics Technology, Microbial Biotechnology, and Agro-Biotechnology. BIOTEC spends 75 percent of the revenue allotted to it on R&D. For the fiscal year 2011, its budget was approximately $24.5 million (753 million Baht) and the total expenditure was approximately $21 million (643.73 million Baht).

Being a member of NSTDA, BIOTEC is a key partner in developing Thailand into a knowledge-based society through science and technology. In addition to funding and conducting research, strong emphasis is placed on promoting industrial applications of biotechnology by both local and global companies. The following activities are examples of ways which the Center collaborates with various organizations: Technology Licensing, Joint and Contract Research and Development, Business Development, and Consulting and Technical Services. Equally important, the BIOTEC International Cooperation Program aims to capitalize on international linkages to make BIOTEC and Thailand a regional leader in this field. In doing so, the Center has developed close linkages with overseas organizations at the bilateral, multilateral and regional levels. These include compatible research laboratories and academic institutes, as well as private sector partnerships.

Dr. Kirtikara noted that BIOTEC is an active participant in regional and global activities. At the regional level, the most prominent inter-government body is the Association of South East Asian Nations (ASEAN), whose members are made up of 10 countries, namely Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. BIOTEC is the national focal point for the ASEAN Sub Committee on Biotechnology and the UNESCO Regional Network for Microbiology and Microbial Biotechnology in Southeast Asia.

ASEAN 2015

The organization also collaborates with various companies and industries from Thailand and abroad, and the year 2012 has been fruitful for the organization. For instance, BIOTEC

and Novartis, a leading mult inational, decided to ex tend the i r 2005 partnership for another three years in April 2012. In 2005, Novart is and BIOTEC collaborated to decipher the potential use of microorganisms and natural compounds as sources of new medicines to treat diseases such as cancer, diabetes, heart diseases and tropical diseases.

One of the many success s t o r i e s f o r B I O T E C has been the launch of KEEEN in 2010 by Hi-Grimm Environmental and

Research, a Thai company that has been supported by NSTDA and BIOTEC. KEEEN is an environmental-friendly bioremediation agent that uses microorganisms to eliminate hydrocarbons, fat, oil, grease and organic substances from contaminated areas. The product is a result of two-year collaborative research project between BIOTEC and Hi-Grimm on selecting oil-degrading bacteria for the commercial bioremediation products.

BIOTEC also worked with King Mongkut’s University of Technology to establish National Biopharmaceutical Facility (NBF), which is the first cGMP pilot plant in Thailand, for producing therapeutic proteins. Additionally, BIOTEC Medical Biotechnology Research Unit, Chiang Mai University and Mahidol University jointly developed four serotypes of dengue vaccine candidate. The team successfully engineered a vaccine for four serotypes of dengue virus. On 21 February 2011, the NSTDA, Chiang Mai University, Mahidol University and BioNet Asia announced a licensing agreement for this vaccine. The agreement enables BioNet Asia to further develop and produce the vaccine for testing in pre-clinical and clinical stages. This collaboration is expected to commercialize the dengue vaccine in Thailand and eventually expand to the ASEAN market and beyond.

Thailand was well represented at the BIO 2013 convention in Chicago, the major global event for networking and partnering in biotechnology. With the strong support of the Board of Investment, BIOTEC presented the potential of the country’s life sciences industry to the world and invited companies to explore the possibilities and act on the opportunities. Indeed, the Thailand pavilion received more than 800 visitors, many of whom connected with BIOTEC. Among the many topics discussed were business investments, research collaboration, business partnering, matching in the pharmaceutical sector, biopharmaceutical products, medical devices, drugs development, contract research organizations, cell and gene therapy, and natural products for cosmetics.

With such a promising future, the Thai government is stepping up efforts to encourage the industry. R&D spending, which has so far been 0.25 percent of the GDP, is expected to be increased to one percent in the next three years. Dr Kirtikara said the industry

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Women in Senior Management: Thailand Among Top 10

The Grant Thornton International Business Report 2014 Women in business: from classroom to boardroom has been released. The IBR has tracked proportion of women in senior management since 2004. This year’s report notes the finding that that the proportion “has stagnated at 24% -the same as the result in 2012, 2009 and 2007.”

With 865 million women entering the workforce by 2020, the under-utilization of human resources is a concern. “However, Booz Allen estimates that of the 865 million women due to enter the global economy by the end of this decade, just 17% will have received a sufficient education.”

Thailand can count itself among the world’s top ten for women in senior management. In fact, the number of women in executive roles in Thailand continues to grow from 36% last year to 38%. Investors can take some comfort in knowing that Thailand is working to ensure equality of treatment, recognition of skills and knowledge, and an efficient utilization of human resources.

too needs to play a bigger role. “So far, majority of the funding for research has been coming from the government, but this can’t be the case if we want to achieve the one percent target. The industry has a much bigger role to play and now the platform is in place for the industry to step in,” she pointed out.

Economic development during the past decades led to the establishment of a diverse range of industries in the country. Most conventional industries are based on the rich agricultural resources of the Kingdom, in addition to the well-established automobile, electronics, petrochemical, and textile industries together with the emerging biotechnology-based industries. Presently, several industries have turned their attention to the development of “cleaner” processes with “greener” technology. Blessed with rich microbial resources, these provide the country the diversity of microbes and enzymes for bio-based process development. Application of microbes and enzymes, especially from indigenous sources is being expanded and implemented in a range of industries.

The Government of Thailand considers the biotechnology sector an important opportunity for the Thai economy. This focus was driven by a domestic need for biotechnology products as well as a goal to be competitive in this field. In fact, the biotech sector in Thailand has received substantial R&D funding from the government to build up a support infrastructure for researchers and to promote foreign investment in Thailand. Currently, Thai research focuses on agriculture, food-handling and tropical diseases, including malaria and dengue fever. Despite being relatively new to biotechnology, the Land of Smiles can become a major biotech research location. With modern and low-priced facilities, and an educated but affordable workforce, Thailand has the potential to be a prime destination for scientists seeking lower costs while maintaining the high research standards found in Western countries. And BIOTEC is the place to start.

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Thai SMEs: Foodex Japan and More

In March 2014, The BOI Regional Investment and Economic Center 1 (Chiangmai) accompanied Thai SMEs and companies from the food and food related industries from the northern and north eastern part of Thailand to the 39th International Food and Beverage Exhibition, or FOODEX JAPAN 2014, at the Makuhari Messe.

FOODEX JAPAN is the largest annual food and beverage tradeshow in Asia and has been a highly successful trade event since its debut in 1976, serving not only Japan’s $700 billion food market but many lucrative Asian markets. Over 75,000 visitors attended FOODEX 2013, including over 6,500 from Korea, Taiwan, China, Thailand, and Hong Kong. This year, 2,808 exhibitors with 3,480 booths from 78 countries & regions participated in FOODEX JAPAN 2014; there were 2 Thai pavilions organized by the Department of International Trade Promotion, Ministry of Commerce and the Thai National Food Institute, Ministry of Industry to demonstrate and introduce Thai food products.

Apart from visit ing FOODEX JAPAN 2014, the delegation also had opportunities to hear success stories of some of the more famous Japanese food companies. Kikkoman Soy Sauce Museum in the city of Noda was the delegation’s very first stop for a factory visit. Kikkoman has expanded its production to factories across the world, but the procedures used in these factories follow the guidelines developed in Noda over the last 300 years. Naturally brewed soy sauce is made from the four basic ingredients such as soybeans, wheat, water, and salt transformed through fermentation which are similar to the wine making process.

Lotte Co. Ltd., one of the largest confectionery companies in Japan, was another interesting factory visit that the delegation enjoyed visiting. “It made us felt as if we were in the Charlie and the chocolate factory movie,” said one of the participants. The company showed the delegation the full process of the Koala’s March chocolate biscuits production line as well as the Mona Ou waffle ice-cream production line. The delegation witnessed the production of high quality confectionery products, the cleanliness, and the well-organized production process of Lotte Japan. Lotte also has production facilities in Thailand, promoted by the Thailand Board of Investment. The factory is locating in Amata Nakorn industrial estate in Chonburi province to firstly produce Koala’s March chocolate biscuits and has just recently expanded their project to produce Toppo chocolate biscuits to meet the demands of the South East Asia market.

The Japanese food innovation learning trip continued with another impressive visit to the Cup noodles Museum in Yokohama city. The delegation was able to learn about Mr. Momofuku Ando’s creative thinking. He was the founder of Nissin food products and an inventor of the chicken ramen instant noodle as well as an inventor of the world’s first cup noodle.

Apart from several food company visits, the Kawasaki EcoLife Museum for the Future was another educational stop during this trip. Kawasaki eco-town was established because waste emissions were increasing due to population growth and economic development. Kawasaki suffered serious environmental pollution problems which increased the awareness of citizens, private companies, and local government about environmental protection. Kawasaki city government together with many factories in diverse industries in the area collaborated to consider possible combinations of production solutions and technologies for recycling waste and by-products. Alternative energy such as solar power plant and wind farm are other important elements of the Kawasaki eco-town. 38,000 cells of solar panels have produced electricity to over 3,000 households in the area.

The outcome of this trip turned out to be very educational and successful. The delegation appreciated the opportunity to observe the rich history of innovative manufacturing techniques which are hallmarks of Japanese tradition and philosophy.

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Mr. Boonrux Saphyakhajon, Executive Director of Investment Promotion Bureau 2, led a BOI team to the Republic of Korea from 10-14 March 2014. The delegation visited manufacturers of automotive parts and electronics, and discussed opportunities to invest in Thailand.

BOI’S MISSIONS

Ms. Duangjai Asawachintachit, BOI Deputy Secretary General, attended “Introducing Team Norway” on Tuesday 25 February at the Four Seasons Hotel, where she gave an update on BOI policy and the visa/work permit system in Thailand. This event was organized by the Norwegian Embassy, Thai-Norwegian Chambers of Commerce and Innovation Norway.

Ms. Chitra Kulvanich, Executive Director of the General Administration Bureau, together with the BOI Mumbai Office, and the Confederation of Indian Industry, organized an interactive session with Indian investors in Panaji Goa, India, on 26 February 2014.

Thailand’s ProsperityThe 2013 Legatum Prosperi ty Index, an annual ranking of 142 countries by the Legatum Institute, has been released with Norway topping the Index which measures such factors as wealth, economic growth and quality of life. “Traditionally, a nation’s prosperity has been based solely on macroeconomic indicators such as a country’s income, represented either by GDP or by average income per person (GDP per capita). However, most people would agree that prosperity is more than just the accumulation of material wealth, it is also the joy of everyday life and the prospect of being able to build an even better life in the future. The Prosperity Index is distinctive in that it is the only global measurement of prosperity based on both income and wellbeing.”

The index notes that since the mid-20th century, countries in Asia have seen rapid economic growth. In this year’s report, Thailand, Malaysia, and Sri Lanka, are noted for experiencing big improvements in their Economy scores. Thailand has improved its ranking this year by five places to 52nd in overall Prosperity since 2009. Since that time, it has also improved by eighteen places to 16th in the Social Capital sub-index. In ranking the economy, Thailand scores a 12, which is up from 18 in the 2012 ranking.

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THAILAND ECONOMY-AT-A-GLANCE

Source: Stock Exchange of Thailand

Source: Bank of ThailandSET Monthly Closing Values

International Reserves / Short-term Debt (%)

Exchange Rate Trends

Industrial Capacity Utilization (%)

Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, ThailandTel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8222 Website: www.boi.go.th E-mail: head@boi.go.thBEIJINGThailand Board of Investment, Beijing Office Royal Thai Embassy No.40 Guang Hua Road, Beijing, 100600, P.R.China Tel: (86-10) 6532-4510 Fax: (86-10) 6532-1620 E-mail: beijing@boi.go.th

FRANKFURTThailand Board of Investment, Frankfurt OfficeBethmannstr. 58, 5.OG60311 Frankfurt am Main Federal Republic of Germany Tel: (49 69) 92 91 230Fax: (49 69) 92 91 2320E-mail: fra@boi.go.th

GUANGZHOUThailand Board of Investment, Guangzhou Office Royal Thai Consulate-General, Guangzhou, Room 1216-1218, Garden Tower, 368 Huanshi Dong Road, Guangzhou, 510064 P.R.C. Tel: (86-20) 833-38999 Ext: 1216 to 18 (86-20) 838-77770Fax: (86-20) 838-72700 E-mail: guangzhou@boi.go.th

LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General 611 North Larchmont Boulevard, 3rd Floor, Los Angeles, CA 90004 USA Tel: (1-323) 960 1199Fax: (1-323) 960 1190E-mail: boila@boi.go.th

MUMBAIThailand Board of Investment, Mumbai OfficeRoyal Thai Consulate-General, 1st Floor, Dalalmal House, Jamnalal Bajaj Marg, Nariman Point, Mumbai400 021 Republic of India Tel: (9122) 2204 1589-90 Fax: (9122) 2282 1071E-mail: mumbai@boi.go.th

NEW YORKThailand Board of Investment, New York Office 7 World Trade Center, 34th Floor, Suite F, 250 Greenwich Street, New York, NY 10007Tel: (1-212) 422 9009Fax: (1-212) 422 9119E-mail: nyc@boi.go.th

OSAKAThailand Board of Investment, Osaka Office Royal Thai Consulate-General, Osaka, Bangkok Bank Bldg. 7th Floor , 1-9-16 Kyutaro-Machi, Chuo-Ku, Osaka 541-0056 Japan Tel: (81-6) 6271-1395 Fax: (81-6) 6271-1394E-mail: osaka@boi.go.th

PARISThailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze75116 Paris, FranceTel: (33 1) 5690 2600 (33 1) 5690 2601Fax: (33 1) 5690 2602E-mail: par@boi.go.th

SEOULThailand Board of Investment, Seoul Office 1104, 18th Floor, KoryoDaeyeongak Center, 97 Toegye-ro, Jung-gu Seoul, 100-706, Korea Tel: (822) 319-9998 Fax: (822) 319-9997E-mail: seoul@boi.go.th

SHANGHAIThailand Board of Investment, Shanghai OfficeRoyal Thai Consulate-General15 F., Crystal Century Tower, 567 Weihai Road, Shanghai, 200041, P.R.China Tel: (86-21) 6288-9728, (86-21) 6288-9729 Fax: (86-21) 6288-9730E-mail: shanghai@boi.go.th

STOCKHOLMThailand Board of Investment, Stockholm OfficeStureplan 4C 4th Floor 114 35 Stockholm, Sweden Tel: +46 (0)8 463 1158 +46 (0)8 463 1172 +46 (0)8 463 1174 to 75 Fax: +46 (0)8 463 1160 E-mail: stockholm@boi.go.th

SYDNEYThailand Board of Investment, Sydney Office Suite 101, Level 1, 234 George Street, NSW 2000, Australia Tel: (+61) 2 9252 4884 Fax: (+61) 2 9252 2883 E-mail: sydney@boi.go.th

TAIPEIThailand Board of Investment, Taipei Office Taipei World Trade Center 3rd Floor, Room 3E39-40, No.5, Xin-Yi Road, Sec.5Taipei 110, Taiwan, R.O.C. Tel: (886) 2-23456663Fax: (886) 2-23459223 E-mail: taipei@boi.go.th

TOKYOThailand Board of Investment, Tokyo Office Royal Thai Embassy8th Fl., Fukuda Building West,2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 JapanTel: (81 3) 3582 1806Fax: (81 3) 3589 5176E-mail: tyo@boi.go.th

Facts about ThailandPopulation (2010) 66 millionASEAN Population (2012) 616.6 millionLiteracy Rate 96%Minimum Wage 300 Baht/day

GDP (2013) US$ 385 billionGDP per Capita (2013) US$5,647GDP Growth (2013) 2.9%GDP Growth (2014, projected) 3.0-4.0%Export Growth (2013) -0.2%Export Growth (2014, projected) 5.0-7.0%

Trade Balance (2013) US$ 6.4 billionCurrent Account Balance (2013) US$ -2.8 billionInternational Reserves (2013) US$ 167.23 billionCapacity Utilization (2013) 64.36%Manufacturing Production Index (2013) 175.80Core Inflation (2014, projected) 0.7-1.7Headline Inflation (2014, projected) 1.9-2.9Consumer Price Index (Feb 2014) 106.71 (2011=100)

Corporate Income Tax 10-20%Withholding Tax 0-15%Value Added Tax 7%

Mar Average Exchange RatesUS$1 = 32.39 baht€1 = 44.77 baht£1 = 53.83 baht100 ¥ = 31.68 bahtCNY1 = 5.26 baht

Top 10 Exports 2014 (Jan-Feb)

Product ShareValue

(US$ bn)1 Motor cars, parts and accessories 10.72 3.89 2 Automatic data processing machines

and parts thereof8.09 2.93

3 Precious stones and jewellery 5.14 1.86 4 Refine fuels 4.59 1.67 5 Polymers of ethylene, propylene, etc

in primary forms4.32 1.57

6 Chemical products 3.94 1.43 7 Rubber 3.86 1.40 8 Rubber products 3.74 1.36 9 Machinery and parts thereof 2.99 1.08

10 Electronic integrated circuits 2.81 1.02 Total 36.27

Source: Ministry of Commerce

Source: Bank of Thailand

Source: Bank of Thailand BOI

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