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Current Situation and BOI Promotion Policy of

Current Situation and BOI Promotion Policy of. E&E Industry in Thailand. Mr. Seksan Ruangwohan. Director. Investment Promotion Bureau 3 Thailand Board of Investment May 2012. 1. Presentation Outline. Current World Economy and Current Situation of E&E Industry in Thailand Why Thailand

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Current Situation and BOI Promotion Policy of

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  1. Current Situation and BOI Promotion Policy of E&E Industry in Thailand Mr. Seksan Ruangwohan Director Investment Promotion Bureau 3 Thailand Board of Investment May 2012 1

  2. Presentation Outline • Current World Economy and Current Situation of E&E Industry in Thailand • Why Thailand • BOI E&E Investment Policies • Investment Promotion Policy for Sustainable Development (Hi-Tech Industry) • New Measures for affected by flood projects • BOI and BOI Services • Investment Opportunities

  3. Current World Economics and Current Situation of E&E Industry in Thailand

  4. World Economy Status World GDP : 3.5% in 2013(p) Source: IMF, Jan 2013

  5. Source: IMF, Jan 2013

  6. Overall Thailand GDP Growth GDP growth from 1999 - 2011 QGDP 2001 – Q1, 2012 Q2,12 Q2,11 Q3,11 Q4,11 Q1,12 1999 2001 2003 2005 2007 2009 2011 Adapted from: NESDB (2012) and Index Mundi (2012)

  7. EXPORTING STATUS of E&E Goods of the ASEAN-5 Source: GTIS, Oct 2012

  8. World Electrical and Electronics industrial statusTop 15 country based on the export in 2011 Source: Global Trade Atlas, April 2012

  9. Thailand E&E Export & Import 2008-2012 Source: EEI, Feb, 2013

  10. Projected E&E export-import in 2013 Source: IEE, FEB, 2013

  11. Top E&E Export Top E&E Import Electrical Products 1. Air-conditioner 2. Circuit breaker, switches, plugs 3. VDO camera 4. Refrigerator 5. Color TV Electrical Products 1. Circuit breakers, switches, plugs 2. VDO tape, CD, DVD 3. TV parts, components 4. Wiring harness 5. VDO cameras Electronics 1. Computer parts2. IC 3. PCB, PCBA 4. Diode, transistors, semiconductors. 5. Equipments used for telephone or telegraphs Electronics IC Computer parts Mobile phones Computers, notebook, Palm Printed circuit Source: IEE, Thailand

  12. Thailand’s Markets for E&E Export2012 Source: IEE, FEB, 2013

  13. Thailand E&E Production Index Source: IEE, Feb, 2013

  14. Net BOI Application for E&E Projects

  15. Current E&E export and BOI net application investment Status

  16. Foreign Direct Investment (BOI Project) in Thailand +63.8%

  17. WHY THAILAND

  18. Importance of the Manufacturing Sector Share Export Value by Sector Share GDP by Sector

  19. We Have Something to Boast About • Ease of Doing Business - #17 in the world, #3 in Asia • Most Attractive FDI Locations - #11 in the World • Most Efficient in Public Sector - #3 in the Asia • Corporate Governance - #4 in the Asia • Thailand is the world largestproducer of HDDs • Source: World Bank Study, 2011 / World investment Prospects Survey, 2010-2012 / JBIC Survey Result, 2010

  20. Infrastructure • 7 international airports • In 2011, 66 million passengers, 1.1 million tons of cargoes • 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 • LaemChabang 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

  21. 2011 Cost of Living Survey • Source: World Cost of Living Survey 2011, Mercer Human Resource Consulting as of Aug 29, 2011

  22. Efficient Logistics NetworkSeaport - Land Transport – Airport Suvarnabhumi International Airport Donmuang International Airport Laem Chabang Seaport Map Ta Put Deep Seaport (22)

  23. Free Trade Agreement • Entering into force • AFTA • AEC in 2015 Note: ASEAN are Thailand, Malaysia, Indonesia, the Philippines, Singapore and Brunei only. Source: BOI International Affairs & www.thaifta.com, as of Feb 05, 2010

  24. Second Stimulus Package (2010-2012) The cabinet approved an investment framework featuring 618 projects worth 35.74 billion USD for the second stimulus package, covering 2010-2012. Source: Royal Thai Government, PDMO as of 2010

  25. BOI E&E Investment Policies

  26. Tax Incentives Import duty reductions or exemptions on machinery and raw materials Corporate income tax holidays up to 8 years Additional 50% reductions of corporate income tax for 5 years Double deduction of public utility costs Deductions for infrastructure construction/installation costs Basic BOI Privileges and Measures • Non-Tax Incentives • Land ownership rights for foreign investors • Permission to bring in foreign experts and technicians • Work permit & visa facilitation • One-Stop-Shop: Visas & Work Permits are issued in 3 hours

  27. BOI Zoning and E&E Basic Incentives Corporate Income Tax Exemption Zone-Based Incentives: • Zone 1 • Zone 2 • Zone 3 Lower incentives Higher incentives * Laem Chabang IE and Rayong IE receive 8 years

  28. Objectives of E&E Investment Policies • To enhance competitiveness of E&E industry • To promote investments along the entire value chain • To attract high value long-term investments • To encourage development of Skills, Technology and Innovation (STI)

  29. E&E Investment Incentives Investment projects are categorized as follows: • General Investment Projects • Priority Activity Projects • Special Priority Activity Projects • High Value Long-term E&E Investment Projects • Existing Projects

  30. General Investment Projects(1/2) • General investment projects: • Incentives = Basic Incentives • + • STI Incentive (Optional) • *Additional tax holidays • *No limit on tax exemptions

  31. Additional STI Incentives (Optional) • Investment and Expenditures on: • Research and development or design • Advanced technology training • Funding of educational and research institutes • Donation to Tech&HRD Fund Note: Corporate income tax holiday may not exceed eight years.

  32. General Investment Projects (2/2) • Exemption from import tariffs on machinery without time limit • For ICs, HDDs andparts, Material for Micro Electronics (Wafer or Thin Film Technology), upgraded existing machinery can be utilized in new investment projects

  33. Priority Activity Projects Priority Activity Projects • Priority activity projects: • Manufacture of:Semiconductor , HDD and parts, Telecom equipments and parts, Medical electronic parts, Agritronics products and parts, Industrial automation equipments, Automotive electronic parts, Flexible Printed Circuit and multi-layer PCB • Incentives = 8 years corporate income tax exemption • regardless of location • + • STI Incentive (Optional) • *No cap on tax exemptions

  34. Special Priority Activity Projects Special Priority Activity Projects • Special priority activity projects: • ● Manufacture of: Solar cell and its raw materials, Media/Platter for HDD, Flat panel display, Wafers and thin film technology (production process must be approved by the BOI) • ● Electronic Design, Software • Incentives = 8 years corporate income tax exemption • without cap(regardless of location)

  35. Incentives for Software Development Software Group 1. Enterprise Software (transaction processing, business solutions) 2. Embedded Software (mobile phones, microchips) 3. Digital content, including: • Animation • Cartoons and characters • Computer-generated imagery • Web-based applications • Cloud Computing • Interactive applications • Games • Wireless location based service content • Visual effects • Multimedia video conferencing applications • E-learning content via broadband and multimedia Incentives: Duty-free machinery 8 years income tax exemption without cap

  36. Specific Software Procedure 1. Modeling 2. Requirement Analysis 3. Design 4. Implementation 5. Program and System Testing 6. Deployment 7. Configuration and Change Management 8. Professional Training

  37. Privilegesfor high value long-term E&E Investment projects (15,000 M ฿) Extended duration of corporate income tax holidays Companies may choose to consolidate into oneproject or keep asseparate projects Project 1 Project 2 Project Final Project 5 Yrs 8 Yrs Duration of Privileges (yrs) 62 62

  38. Compulsory STI expenditures for high value long-term E&E investments All high value long-term investment projects must meet the following STI criteria during operation of final project: STI requirements Zone 1 Zone 2 Zone 3 • 2% • 1.5% of total 1st • 1% of total 1st of total 1st • R&D 3-yearsales or at least 500 million bahtwhichever is less 3-yearsales or at least 400 million bahtwhichever is less 3-yearsales or at least 300 million Bahtwhichever is less Advanced Technology Training • Funding • educational/ Required total STI expenditures are calculated from the first 3-year sales of the final project and previous projects combined. research institutions

  39. Privilegesfor Higher value long-term E&E Investment projects(30,000 M ฿) Extended duration of corporate income tax holidays Companies may choose to consolidate into oneproject or keep asseparate projects Project 1 Project 2 Project Final Project 8 Yrs 8 Yrs Duration of Privileges (yrs) 62 62

  40. Incentives for Existing projects • Existing projectscan import machinery and equipment with duty exemption in order to enhance efficiency and technological capabilities

  41. Investment Promotion Policy for Sustainable Development

  42. Policy to Support Hi-Tech Industry Tax Incentives • Exemption of import Duties on machinery • Corporate Tax exemption 8 years with No Cap • 50% Reduction of corporate income tax for 5 years from the expiry date • Double deduction of public utility costs for 10 years • Deduction from net profit of 25% of the investment in infrastructure installation and construction cost in addition to normal capital depreciation for 10 years

  43. Policy to Support Hi-Tech Industry Eligibility • Any Location except Bangkok • Applicable to designated activities only • Application submission deadline: Dec 31, 2012

  44. Policy to Support Hi-Tech Industry Hi-Tech E&E Products • 5.4 Telecom Products, Industrial Automation Equipment • 5.5 Semiconductor, Solar Cell, HDD & SSD & Parts, Telecom Parts, Flat Panel Display, Automotive Electronic Parts, Agritronic Parts, Medical Electronic Parts • 5.6 Material for Micro Electronics • 5.7 Electronic Design

  45. New Measures for affected by flood projects

  46. New measure for affected by flood projects (2012) • Existing projects with existing capacity corporate tax exemption of the investment • Existing projects with existing non-capacity corporate tax exemption of the investment

  47. New measure for affected by flood projects (2012) • New projects to be invested in the affected by flood provinces • Exemption from importing duty on new and less than 10 year-old machineries • Projects eligible for sustainable development still receives the same incentives • Application submission deadline is December 31, 2012

  48. BOI & BOI Services

  49. Liberal Investment Policy No foreign equity restrictions in manufacturing sectors 100% foreign ownership possible in many services No restrictions on foreign currency remittances No export requirement No local content requirement

  50. BOI Support Services Investment Matchmaker Program 1-Stop for visas & work permits: work permits in 3 hours Industrial Subcontracting Services Vendors meet customers program (BUILD Unit) ASEAN Supporting Industry Database Interaction with other govt. agencies on behalf of investors Country desks Overseas offices Sectional divisions to guide you through the process

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