Thailand's Sustainable Investment Policies: Trends & Strategies

1. Duangjai Asawachintachit Deputy Secretary General Thailand Board of Investment (BOI) 5 July 2012 Thailand’s Investment Trends and Policies

2. Topics • FDI in Thailand • Policies Related to Sustainable Development • Thai Investment Overseas

3. 1.FDI in Thailand

4. Value of FDI Net Flow to Thailandby Sector (2005-2011) Source: Bank of Thailand

5. Ratio of FDI Inflow into Thailand to WorldFDI Source: UNCTAD

6. Ratio ofFDI inflow into Thailand to FDI inflow into ASEAN Source: UNCTAD

7. NET FOREIGN APPLICATIONS SUBMITTED (2003 – MAY 2012) Source: BOI, as of 13 June 2012

8. NET FOREIGN APPLICATIONS SUBMITTED 2003-2012 (JAN-MAY) BY SECTOR 502 499 397 351 307 308 298 249 236 206 Source: BOI, as of June 27, 2012

9. BOI INVESTMENT FOREIGN APPLICATION2003-2012 (JAN-MAY) BY SECTOR Source: BOI, as of June 27, 2012

10. Major Investors in Thailand is mostly from Asia Investment Applications Submitted to BOI Billion baht 396 2010 +68% 300 2011 +87% 236 194 200 104 100 50 28 25 25 13 8 8 11 11 5 4 4 Total FDI Singapore Taiwan Hong Kong China Korea Japan ที่มา: BOI สำนักความร่วมมือการลงทุนต่างประเทศ

11. Policies Related to Sustainable Development

12. BOI’s Vision Your Partner for Sustainable Investment

13. Application submission deadline: December 31, 2012 1. Special incentives for 3 groups of targeted activities Manufacture of eco-friendly material and product, e.g. bioplastics Energy saving and alternative energy High technology activities e.g. industrial electronics, electronic parts for vehicles, biotech, nano-tech, functional fiber etc. Incentives Exemption of import duties on machinery 8-year exemption of corporate income tax with no cap 5-year 50% reduction of corporate income tax on net profit 10-year double deduction of transportation, electricity and water supply costs deduction from net profit of 25% of investment in infrastructure installation and construction costs in addition to normal capital depreciation Policies for 2010-2012 “Investment for Sustainable Development” 13

14. 2) Measure to promote energy conservation and alternative-energy utilization Incentives Import duty exemption on machinery. 3-year corporate income tax exemption on the revenue of existing projects, accounting for 70% of the investment under this measure excluding cost of land and working capital. Eligibility BOI-promoted projects of which tax holidays have expired or those which are not granted tax holidays non-BOI projects Conditions Investment must be completed within 3 years after the issuance of the investment promotion certificate. Energy consumption must be reduced to the level determined or alternative energy must be utilized in the ration determined. Policies for 2010-2012 “Investment for Sustainable Development”

15. 3) Measure to promote the reduction of environmental impacts Incentives Import duty exemption on machinery. 8-year corporate income tax exemption on the revenue of existing projects, accounting for 100% of the investment under this measure excluding cost of land and working capital. Eligibility BOI-promoted projects of which tax holidays have expired or those which are not granted tax holidays non-BOI projects Conditions Investment must be completed within 3 years after the issuance of the investment promotion certificate. Impacts on the environment must be reduced according to the criteria determined. Policies for 2010-2012 “Investment for Sustainable Development”

16. Additional Incentive Package for STI: Skills Technology Innovation

17. External factors affecting investment in the next 5 years Shift in global economic power & economic integration esp. AEC Fragile global economy Major global crisis (energy, food, climate change, aging and epidemics) Faster technology development, shorter product cycles Continual changes in global business formation Fierce competition in attracting FDI 17 17

18. Domestic factors affecting investment in the next 5 years S&T development Highly dependent economy High income disparity Environmental and social responsibility Uncertainty of future heavy industries location Water and power supply for industrial expansion Labor quantity and quality sufficiency Fiscal pressure on tax incentives Political stability 18 18

19. BOI’s Future Policy Directions Strengthening country’s foundations that lead to long-term industrial development Creating economy-society-environmentbalance as well as agriculture-industry-service mix which leads to sustainable development Promoting diversified businessandGlobal Nicheusing country’s natural advantages Promoting new growth industries such as eco-friendly products, alternative energy, biotechnology, wellness products and services etc. Strengthening Thai companies’ competitiveness and business opportunities Continued decentralization Stronger emphasis on Thai investment overseas to enhance competitiveness

20. 3.Thai Overseas Investment

21. Thailand Overseas Investment The First Time that TOI SurpassedFDI ที่มา: ธนาคารแห่งประเทศไทย

22. Snapshot of Target Countries and Sectors for Thailand Overseas Investment

23. Examples of Thailand Overseas Investment Projects

24. Measures aimed at promoting Thai investment Overseas Approved by the Board of Investment on 13 September 2010 Reduce overseas investment risks Build good relationship with target recipient countries Use fiscal and financial measures to promote TOI Prepare Thai entrepreneurs for overseas investment Facilitate and solve investor’s problems

25. 1. Information Provision Investment guides/handbooks on target countries e.g. ASEAN Target sector opportunity study e.g. agriculture, textiles, auto parts, tourism, construction Investment opportunities seminars Website Consultancy 2.Business Development Missions to Target Countries 3. Entrepreneur capacity building - Thailand Overseas Investment Training for Entrepreneurs Current BOI Activities/Measures

26. THANK YOU WWW.BOI.GO.TH