China-ASEAN Relations

1. China-ASEAN Relations : Thailand Perspective

2. Nisit Panthamit, Ph.D.Director of ASEAN Studies Chiang Mai University, Thailand • nisitp@gmail.com • Wechat id: nisitp9009

4. Nisit Panthamit, Ph.D.Director of ASEAN Studies Chiang Mai University, Thailand nisitp@gmail.com, nisit.p@cmu.ac.th Wechat id: nisitp9009

5. Outline Introduction of the talk Introduction of ASEAN Why Thailand? Q&A

6. 1.Introduction: WhyASEAN?

7. 2015 WHAT? • Single market and production base with the free movement of goods, services, investment, skilled labor and the freer flow of capital WHO? Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam WHY? • Increase competitiveness, narrow development gaps and improve resilience against external shocks

8. 1977 2003 2007 2008 1996 1993 2009 PTA 1997 AFTA ASEAN CHARTER AFAS • AEC 2015 in full steam: • ATIGA • AFAS –70% Equity Participation • ACIA BALICONCORD II ASEAN VISION 2020 Cebu Declaration on ASEAN Charter To achieve ASEAN Community by 2015 The Evolution of ASEAN NAFTA/EEC Tom Yum Kung crisis Regional conflicts Spread of communism China’s WTO accession ASEAN Community 2015 2001 1998 ASEAN 1967 AIA

12. ASEAN GDP per capita & Population(2013)

14. https://www.weforum.org/agenda/2017/01/asean-is-50-and-it-s-come-a-long-way-here-s-why-you-should-care/https://www.weforum.org/agenda/2017/01/asean-is-50-and-it-s-come-a-long-way-here-s-why-you-should-care/

15. http://www.straitstimes.com/sites/default/files/articles/2017/01/31/st_20170131_nnimpact_2907873.jpghttp://www.straitstimes.com/sites/default/files/articles/2017/01/31/st_20170131_nnimpact_2907873.jpg http://www.straitstimes.com/business/chinas-lower-target-signals-policy-shift-looking-ahead-to-growth-in-2017

16. 2.WhyThailand?

17. 2-3.WhyThailand?

19. Northern Thailand Economy on ASEAN context Thailand Stand Point More Good flow across country using cooperations and agreements provided Trade Prefer intra-regional trade Increase competition, services plays more an economic driver Tourism and health care services Services Competitive ability Loss make company moves out Invest outbound FDI Relaxing restriction for neighboring country Increase skill labor : language and International standard Labor Capital Movement More freely flow of capital, currency more votality Entrepreneurs need to accelerate the adjustment in management costs and exchange rate risks.

20. Thailand’sEconomicOverview泰国经济情况 国内生产总值421.0亿美元 GDPUSD421billion 增长率3.2% GDPgrowth:3.2% 人均6,056美元 GDPpercapitaUSD6,056 人口：6800万 Population:68 million China 1 Vietnam Myanmar Philippines Laos 出口额221.5亿美元 ExportValue USD221.5 billion 出口增长率4.45% ExportGrowthRate 4.45% 进口额 1845亿美元 ImportValueEUR184.5 billion Thailand 2 ThailandASEAN’s 2ndLargest Economy 泰国是东盟 Cambodia WorldBankranks Thailand5thforits easeofdoingbusiness amongEastAsia&Pacificcountriesfor 2017 世界银行将泰国列为东亚国家中第5大最 易启动商贸活动国 3 Malaysia 共同体国家中的第二大经济体 Brunei Singapore IMDWorldCompetitiveness ranksThailand27th out of 63 economiesinits globalcompetitiveness indexfor2017 2017年IMD世界竞争力排行榜中泰国在全 球63个参加评选的经济体中位列第27名 Indonesia 4 Source:NESDB,MinistryofCommerce ofThailand,WorldBank,IMD Note:Exchange rate(BOT,Jan4 2017):1 USD= 35.89 THB 6

21. TThhaailialandn:dt:hethCeroCssrrooasdssroofaAdSEsAoNf泰A国SE：A东N盟的十字路口TThhaailialandn:dt:hethCeroCssrrooasdssroofaAdSEsAoNf泰A国SE：A东N盟的十字路口 ASEANEconomic Community 亚洲经济共同体 633millionpopulation (9%ofworldpopulation) 6.33亿人口（占世界人口的9%） GDP: USD2.4trillion (2%ofworld’sGDP) 国内生产总值：2.4万亿美元（占 世界GDP的2%） RegionalComprehensive EconomicPartnership *(RCEP) 区域全面经济伙伴关系 3.3billionpopulation (50%ofworldpopulation) 33亿人口（占世界人口的50%） GDP: USD21trillion (28%ofworld’sGDP) 国内生产总值： 21万亿美元（占世界GDP的28%） StrategicLocationGatewaytoASEAN “We are surroundedby theworld’seconomicpowerhouses” 战略位置所带来的优势 “我们被世界经济强国包围着” Asia& Oceania 亚洲& 大洋洲 AEC 东盟经济 共同体 7

22. GMS EconomicCorridors GMS经济走廊 Thereare4MajorEconomicCorridors inThailand泰国四大经济走廊 SouthernEconomicCorridorThailand-Cambodia–Vietnam南部经济走廊：泰 -缅 -越 East-WestEconomicCorridor R1 R3 Myanmar-Thailand-Laos–Vietnam 东西经济走廊：缅-泰-老-越 North-SouthEconomicCorridorChiangRai-Kunming-Myanmar-Laos 南北经济走廊：清莱-昆明-缅甸-老挝 SouthernCoastalCorridor Thailand-Cambodia–Vietnam R2 南部海岸经济走廊：泰-柬-越 R10 R1 Source:NESDB 8

23. Thailand’sBilateralFTAs Thailand-EFTA Thailand-Japan:JTEPA Thailand-IndiaFTA Thailand-PakistanFTA Thailand-PeruFTA Thailand-ChileFTA Thailand-Australia:TAFTA Thailand-New Zealand:TNZCEP Pending Source:DepartmentofTradeNegotiations,Ministry ofCommerce Note:*BIMSTEC: BayofBengalInitiativeforMulti- SectoralTechnicaland EconomicCooperation 6

24. CompetitiveCorporateIncomeTax [Unit:%] Competitive CorporateIncomeTax 3rd Source:DeloitteCorporateTaxRates2017

25. CompetitiveInfrastructure • 12internationalairports • SuvarnabhumiAirport – Capacity: 45million passengersand 3milliontons ofcargoperyear • 6DeepSeaPorts&2InternationalRiverPorts • LaemChabangSea Port– Capacity: 10.8 million TEUs, with additional8millionTEUs expansion • e-Customs facilities • Over70,000kminHighways • 4,346kminRaillinkstoMalaysia&Singapore • Morethan70IndustrialEstates

26. Thailand’sInfrastructure Development Program (2015-2022) 5KeyPrograms:toreducelogisticsandtransportationcostsandimprovecompetitivenessintheeconomy Infrastructure developmentprogramsfor2015-2022(AUD74.5billion) 3.Developmentofmasstransit systemsinthe Bangkok Metropolitan Region (AUD29billion) 1.Expansionof theinter-cityrailnetwork (AUD19.2billion) 2.Highway capacityenhancements (AUD20.4billion) 4.Airtransport capacityenhancements (AUD2billion) 5.Developmentof themaritime transportnetwork (AUD3.9billion) • Extendingthemasstransit railwaysystem • Acquiring3,000NGVbuses • Upgradingrailwaynetworks • Increasingdouble-trackrailways Railway MassTransit • Enhancingseaportcapacity • Enhancingairportcapacity • Establishingaviationindustrial estates • Expandinghighwaysto4 ormore trafficlanes • Developingfacilitiesalongthe • mainroads,e.g.containeryards Road Water&Air Source:OfficeofTransportandTrafficPolicyandPlanning,Ministry ofTransport,asof 21December2015 11 Note:*Exchangerate (BOT,June12017): 1AUD=25.70THB**MaintenanceRepairandOverhaul

27. InvestmentIncentives

28. AttractiveInvestmentIncentives InvestmentIncentives Non-taxIncentives TaxIncentives Exemptionofimportdutieson machinery/rawmaterials importedforuseinproductionforexportsandforR&D Landownershiprights Corporateincometaxexemption Workpermit&visa facilitation Competitiveness EnhancementMeasures Activity-basedIncentives Upto8-yeartaxholiday fortargetedindustriesinthe BOIlist Technology-basedIncentives 10to13-yeartaxholiday forcoretechnologies developmentprojects 15-yeartaxholiday fornewtechnologiesand high-impactinvestment +GrantsforR&D, Innovationandhuman resourcesdevelopment InvestmentPolicies 100%foreign ownership Nolocalcontent requirements Noexport requirements Norestrictionon foreigncurrency

29. InvestmentPromotionPolicies Activity-based Merit-based Area-based • AgricultureIndustry • Mineral,CeramicsandBasicMetals • LightIndustry • MetalProducts,Machineryand TransportEquipment • ElectronicandElectricalAppliances • Chemicals,PlasticsandPaper • ServicesandPublicUtilities • R&D • AdvancedTechnology Training • LocalSuppliers Development • Product&Packaging Design • IPLicensingFee • Technology&HRD • FundDonations • EasternEconomic • Corridor(EEC)3 provinces • 10 SpecialEconomicZones • Southernborderprovinces • 20provinceswith lowest per • capitaincome • Industrialestates/zones • Scienceandtechnology parkse.g.Science Park, Food Innopolis,Space KrenovationPark Technology-based • Biotechnology • Nanotechnology • Advanced Materials • Technology • DigitalTechnology

30. Thailand’sEasternEconomicCorridor(EEC) NewGrowthHubforThailandandtheAEC 1 StrategicLocation InfrastructureLinks InvestmentZone Chachoengsao 2 3 Chonburi SouthKoreaJapanChina ToUS India CLMV ASEAN Rayong ToEU ToOceania Source:Ministry ofIndustry 15

31. ExistinginfrastructureandindustrialestatesintheEEC 2 Deepseaports LaemChabangand MapTaPhutports Industrialestates morethan160sq.km. Chachoengsao Leading petrochemical complexinAEC U-Tapaoairport 3 millionpassengers per year Chonburi 1Motorway 8 Highways Leadingautomotive manufacturingbase Rayong Double-trackrailway Ladkrabang(BKK)– LaemChabang Tourism Pattaya– morethan 10millionvisitors

32. InvestmentPlanin theEasternEconomicCorridor CombinedPublicand Private Investmentsatleast 1.5Trillionbaht (AUD55Billion)inthenext5years Target U-Tapaointernationalairport New Cities/Hospitals 400,000millionbaht(AUD14.7billion) Tourism 200,000millionbaht (AUD7.4billion) 200,000millionbaht (AUD7.4billion) MapTaPhut port 10,150millionbaht (AUD0.37billion) Industry EEC 500,000millionbaht (AUD18.4billion) LaemChabang port 88,000millionbaht (AUD3.2billion) Motorway 35,300millionbaht (AUD1.3billion) Dual-trackrailway 64,300millionbaht(AUD2.4billion) High-speedtrain 158,000millionbaht (AUD5.8billion) Source:Ministry ofIndustryofThailand

33. ForeignEducationalInstitutionintheEEC Thegovernmenthasderegulatedthelaw allowingforeigneducationalinstitutions tosetupin theEEC.

34. SectorsofOpportunities • Biotechnology • Agriculture& FoodProcessing • MedicalIndustry • MachineryandAutomation • IHQ&ITC

35. CompetitiveFactors forBio-industry Wellestablishedmajor brandproducersof personal,homecare andhygieneproducts withsizablecapacities forbothdomestic marketandexports 2ndLargestExporter ofSugar (8.2milliontons/years) (73milliontons/yearcan equivalent) BiggestExporter ofTapioca (34milliontons/yearfresh tapiocaequivalent) Largestnumberof plasticproduct convertersinASEAN (morethan3,000 converters) ASEAN’sleading plasticresinsproducer (6.6milliontons/year) Largestbiofuelproducer inASEAN (Ethanol3.5million liters/day) AndBiodiesel3.3million liters/day) Source:PetroleumInstituteofThailand

36. BiotechnologyEducationalInstitutes ChulalongkornUniversity (MarineBiotechnologyLaboratory) King Mongkut'sUniversityofTechnology (BiochemicalEngineeringandPilotPlantUnit) KasetsartUniversity (PlantGeneticEngineeringUnit,DNA FingerprintingUnit,andtheBio-serviceUnit, whichprovidesbio-molecularresourcesfor researchersfromboththepublicandprivate sectors) MahidolUniversity (MicrobialGeneticEngineeringUnitandMedical BiotechnologyCenteratSirirajHospital)

37. OpportunitiesinAgricultureandFoodIndustry PERFORMANCE Thailandistheworld’s #1 EXPORTER incassava starch,canned tuna, canned pineapple THAILANDWORLD’S TOTAL FOODEXPORTS #1 #1 #1 CassavaStarch CannedTuna CannedPineapple Thereare approximately 9,000food processing companies inThailand #2 #2 Rice Sugar #6 #4 #6 FrozenChicken FrozenShrimp Seasoning Source:MinistryofScience &Technology,2016

38. ThailandaStrategicLocationfortheFoodIndustry STRENGTHS Thereductionoftariffandnon-tariff barriersarticulatedinfreetrade agreementsbetweenThailandand India,China,Australia, withinASEAN • ABUNDANT RAWMATERIALS • >80%ofrawmaterials usedbythefoodindustry are locallysourcedatlow prices • SKILLED&PRODUCTIVE WORKFORCE • Approximately660,000workers • • inThailand’sfoodindustrywith aminimum dailywageTHB300 (AUD11) GOODQUALITY&SAFETY STANDARDS TheGMPinternational standardisusedasa mandatorymeasurefor54 typesoffoodproducts • SUPPORTING INFRASTRUCTURE • Thegovernment’snumeroustraining organizationsandsupportfacilities • TAXSAVINGSFROMFREE • TRADEAGREEMENTS • Thereductionoftariffandnon- tariffbarriersarticulatedinFTAs with Japan,India,Australia,New ensurearobustandtechnically-equipped workforcethatisreadytogo Zealand,Peru,andChile

39. Thailand’sFirstInnovativeParkfor theFoodIndustry Source:ThailandSciencePark

40. Thailand’sMedicalIndustry Thailand’sHealthcare Expendituresasa %ofGDP [Unitin %] 20 17.1 15 11.3 9.7 9.1 10 7.2 5.6 4.6 4.6 4 5 3.1 0 USA Germany Sweden Source:WorldBank,asof 2015. UK S.Korea China Thailand Singapore India Indonesia Medical Services Medical Devices Pharmaceutical Sectors Opportunities inThailand

41. OpportunitiesinMedicalServices MedicalTourismHubofAsia ForeignPatientsatThaiHospitals: 2010-2016 [In MillionPersons] 11.0% Source:DepartmentofInternationalTradePromotion,Ministry ofCommerce(Thailand),ThaiMedicalDevicesTechnology IndustryAssociation(THAIMED)

42. OpportunitiesinMedicalDevicesandPharmaceutical Thailand’sMedicalDeviceMarket [In Million AUD] 10.4% ExportsofPharmaceuticalProducts 6.0% [InMillionAUD] MajorInternationalCompanies MajorInternationalCompanies

43. Thailand’sMachineryIndustryOverview Highest ExportValue MachineryProducts Thailand’sMachineryExport 2016 1 Airpumpandcompressor(15.4%) 2 Liquidpump(7.7%) 7.66 Billion USD 3 Printer(7.6%) 4 Liquidandgasfiltermachine(7.4%) 5 Landconstructionmachine(6.2%) Source:MachineryIntelligentUnit, Exchangerate(BOT, June1 2017):1USD =34.28THB

44. OpportunitiesinThailand’sMachineryMarket OpportunitiesinMachinery TextileMachinery Highdemandfor: Highdemandfor: Textile machinery Automotive machinery Production machinery Control equipment Food machinery Packaging machinery AlternativeEnergy/ EnergyConservationMachine Agro-machinery Highdemandforcooling/purifyingmachinery Highdemandfor: Fruitand vegetable Energy saving machinery Machines using alternativeenergy Animal feed Cereal processing Source:BOI

45. IHQ &ITC

46. Scope ofActivitiesof InternationalHeadquarters(IHQ) and International TradingCenters (ITC) ITC IHQ SourcingofGoods GoodsInsurance Organizational Management& BusinessPlanning R&D Advisory,Technical andTrainingServices aboutTrading Warehousing &InventoryServices Economicand InvestmentAnalysis & Research TechnicalSupport PackagingActivities Marketingand SalesPromotion HRTraining & Development OtherServices GoodsDelivery Services BusinessAdvisory Services TreasuryCenter CreditManagement & Control Note: onlyactivitiesrelatedto purchasesandsellsof goods

47. InternationalHeadquarters(IHQ): Incentives&SpecialTaxRegime Incentivesoffered bytheRevenueDepartment BOI Incentives: Majorityor 100%foreign CorporateIncomeTax PersonalIncomeTax ownership 15%forexpatriatesatthe specialistorexecutive levelworkingatanIHQ. • CITexemption15yrs. (onlyservicesprovided to foreignbranchesorAE) Permissiontobringskilled workersandexperts to workinpromotedactivities • 10%ofCIT • (onlyincomederived fromitsbranchesorAE inThailand) • TaxexemptionofNP fromrevenue fromthe purchaseandsaleof goodstoforeign branchesorAEand suchgoodsare not importedtoTH (OUT- OUT) SpecificBusinessTax Taxexemptiononloans takenoutbyanIHQto relendtoitsbranchesor AEinTH andabroad. Permissiontoownland Repatriationofforeign currency WithholdingTax Taxexemptiononinterest receivedfromitsbranchesor AE inTHandabroadforloans grantedinaccordancewith BOIregulations. Exemption of import duties onmachinery (onlyforR&D andTrainingactivities) Note:NP=Netprofits,AE=associatedenterprises 32

48. InternationalTradingCenters(ITC): Incentives&SpecialTaxRegime BOI Incentives: Incentivesoffered bytheRevenue Department Majorityor 100%foreignownership Permissiontobringskilledworkersandexpertsto workinpromotedactivities Permissiontoownland Repatriationofforeign currency PersonalIncomeTax CorporateIncomeTax CITexemption15yrs.ofnetprofits fromrevenuefrom thepurchaseand saleofgoodstoits foreignbranchesor AEs andwheresuch goodsarenot importedtoThailand(OUT-OUT),including revenuefrom marketingand logisticsabroad. Thetaxrateof15% forexpatriatesatthe specialistor executivelevelworkingatanITC. Exemption ofimport dutiesonmachinery 33

49. ExamplesofIHQinThailand