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Dr. Bonggot Anuroj Executive Director of Investment Marketing Bureau Thailand Board of Investment

Thailand’s Investment Promotion Policies. Dr. Bonggot Anuroj Executive Director of Investment Marketing Bureau Thailand Board of Investment 30 March 2011 marketing@boi.go.th. 1. Outline of Presentation. Investment Promotion Policy - Investment Trend - BOI Services.

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Dr. Bonggot Anuroj Executive Director of Investment Marketing Bureau Thailand Board of Investment

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  1. Thailand’s Investment Promotion Policies Dr. Bonggot Anuroj Executive Director of Investment Marketing Bureau Thailand Board of Investment 30 March 2011 marketing@boi.go.th 1

  2. Outline of Presentation • Investment Promotion Policy • -Investment Trend • - BOI Services

  3. BOI Investment Policies 3

  4. Liberal Investment Policy 1 No Restrictions on Repatriation of Profits 2 100% Foreign Ownership * 3 No Export requirements 4 No local content requirement *some restrictions apply

  5. List of BOI activities eligible for Investment Promotion 129 sub-items are eligible for investment promotion

  6. Criteria for Project Approval • Minimum investment amount of at least 1 million baht (excluding land cost and working capital) • Valued added for at least 20 percent of sales revenues • A debt-equity ratio (D/E) of less than 3 to 1 • Utilization of modern production processes and new machinery (used machinery must be less than 10 years old and certified by relevant parties) • Adequate environmental protection systems

  7. Criteria for Foreign Shareholding • Projects in agriculture, animal husbandry, fisheries, mineral exploration and mining and service businesses under List One of the Foreign Business Act B.E. 2542: Thai nationals must hold shares totaling not less than 51 percent of the registered capital • Manufacturing projects: there are no equity restrictions for foreign investors • The Board may set the amount of shares eligible to be held by foreign investors on promoted projects when deemed appropriate

  8. Investment Incentives TAX Incentives NON-TAX Incentives • Import duty reductions or exemptions on machinery and raw materials • Corporate income tax holidays up to 8 years; additional 50% reductions for 5 years • Double deduction of public utility costs • Deductions for construction/installation costs infrastructure • Land ownership rights for foreign investors • Permission to bring in foreign experts and technicians • Work permit & VISA facilitation 8

  9. Major BOI Incentives Schemes Decentralization Incentives vary according to zones Priority activities 8-year corporate income tax exemption and exemption of import duties on machinery regardless of locations Sector-specific policies Optional incentive scheme STI Scheme Special temporary measures: “Investment Promotion Policies for Sustainable Development”

  10. BOI Zoning Zone-Based Incentives • Zone 1 includes Bangkok, Samut Prakan, Samut Sakhon, Nakhon Pathom, Nonhtaburi and Pathum Thani • Zone 2 includes Ang Thong, Ayutthaya, Chachoengsao, Chon Buri, Kanchanaburi, Nakhon Nayok, Phuket, Ratchaburi, Rayong, Samut Songkhram, Saraburi, and Suphanburi • Zone 3encompasses the remaining 58 provinces Source: Thailand Board of Investment

  11. Zone-Based Incentives: Zone 1 Zone 2 Zone 3 From Zone-Based to Sectoral Approach Sector Matrix: Incentives to strengthen competitiveness • Strategic or Priority Activities • Maximum incentives regardless of location • Customized packages

  12. Examples of Priority Activities Agriculture and agro-industries R&D Software development Molds & Dies Biotechnology Alternative energy Manufacture of hi-tech products e.g. advanced ceramics

  13. Privileges will be based on the project’s total investment in STI expenditures in any of the following 4 categories: Additional Incentive Package for STI(Skill, Technology & Innovation) Adv Tech Training R&D SciTech Funding S&T Dev Fund

  14. Requirement and Additional Incentive for STI Activities Note: 1. Investment ceiling uncapped. Corporate income tax holiday may not exceed eight years. 2. Exemption of import duty on machinery

  15. 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 New Policies for 2010-2012 “Investment for Sustainable Development” 15

  16. 2) Measure to promote energy conservation, alternative-energy utilization or reduction of environmental impacts Incentives Import duty exemption on machinery, regardless of zone. 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. New Policies for 2010-2012 “Investment for Sustainable Development”

  17. New Policies for 2010-2012 “Investment for Sustainable Development” • 3) Measure to promote production efficiency improvement by technology upgrade for manufacturing of new products • Incentives • Exemption from import duties on machinery, regardless • of zone. • Exemption from corporate income tax for 3 years, • regardless of zone. The benefit from this exemption may • not exceed 100% of the project’s investment value.

  18. Board of Investment Announcement No.1/2553(2010) Subject: Measure to promote SMEs Investment

  19. Listed of Activities Eligible for SMEs investment Promotion 52 activities are eligible for promotion • Agriculture and Agricultural Product(13activities) • Mining, Ceramics and Basic Metals(7 activities) • Light Industry(11 activities) • Metal Product, Machinery and Transport Equipment( 12 activities) • Electronic Industry and Electrical Appliance (5 activities) • Chemicals, Paper and Plastics( 3 activities) • Service and Public Utilities( 1 activities)

  20. Conditions (1/2) • Project with an investment of 500,000baht or more (excluding cost of land and working capital) • Not less than 51 % of the registered capital must be Thai shares • Must have a debt equity ratio of less than 3:1 • Used machinery which cost less than 10 million baht are allowed to be used; investment on new machinery must cost more than 25% of used machine’s value

  21. Conditions (2/2) • Investment amount of each project must be less than 80 million baht (excluding cost of land and working capital). Overall, total value of company’s net asset must be less than 200 million baht (excluding cost of land and working capital) • Applications must be submitted by December 31, 2011

  22. BOI Announcement No. 1/2554 (2011)Granting of Rights and Benefits under section 36(1) and (2) to existing companies to alleviate the impact of the Strengthening of the Baht

  23. Rights and Benefits (1/2) • Application must be existing companies with investment capital, excluding cost of land and working capital, of not less than one million baht in the following industries - Production of ready-to-wear garments - Production of leatherwear - Production of footwear - Production of furniture or decorative items - Production of textiles - Production of toys - Production of sport equipment - Gems and jewelry - Production of lenses - Printing

  24. Rights and Benefits (2/2) • Applicants must be certified by an association or agency approved by BOI • Promoted project shall receive rights and benefits in accordance with section 36 (1) and (2) for period of 1 year, and the renewal thereof shall be pursuant to criteria prescribed by BOI • Promoted project shall comply with regulations and procedures for the application of rights and benefits in accordance with section 36(1) and (2), as set forth by BOI • Applicants must submit the application within 31 December 2011

  25. Recent Investment Trend

  26. Comparison of All Net Applications for Investment Promotion 2008 – Feb 2011 (Includes Foreign and Domestic Projects) Number of Projects Amount Invested +7% Bt Billion 638.1 -30% 1,591 1,489 1,262 446.3 447.4 269 69.3 Source: BOI, as of 15 March 2011

  27. Japan Remains No. 1Investor in ThailandForeign Direct Investment Applications -32.7% Source: BOI, as of Jan 17, 2011

  28. BOI Approved SMEs Projects (Jan 2003-Feb 2011)

  29. BOI Approved SMEs Projects Jan 2003- Feb 2011

  30. BOI Services

  31. BOI Support Services Investment Matchmaking 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 32

  32. BOI Unit for Industrial Linkage Development (BUILD)15 years of service

  33. BUILD Activities • Provide information on subcontracting opportunities in Thailand via database web applications • Assist foreign buyers wishing to source from Thai manufacturers • Match buyers and subcontractors in related businesses • Arrange participation of Thai manufacturers in trade shows and exhibitions abroad

  34. ASEAN Supporting Industry Database (ASID) • Information and profiles of companies in supporting industries and manufacturers of parts and components in 10 ASEAN countries • ASID can be easily accessed via the internet at www.asidnet.org

  35. 19-21 May 2011 at BITEC Bangna

  36. More Convenience, less time, more efficiency! One Start One Stop Investment Center 18th Floor, Chamchuri Square Building 319 Phayathai Road, Pathumwan Bangkok 10330, Thailand Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100 Email: osos@boi.go.th 37

  37. Services at OSOS Staff from relevant agencies will also be available for consultations on a range of topics. Help investors with applications to make sure investors know what is required to: Register a company Apply for investment promotion privileges Obtain a foreign business license Tax registration Complete an environmental impact assessment Obtain utilities, etc. OSOS staff will also accept applications for things such as corporate name registration, corporate tax ID numbers, VAT registration, foreign business licenses, investment promotion incentives, etc.

  38. 10 - 25 November2011 IMPACT Exhibition and Convention Center Organized by Thailand Board of Investment

  39. Objectives To celebrate the auspicious occasion of the 84th birthday of His Majesty the King. To highlight the achievements of Thai industry in the areas of technology and innovation, as these will greatly enhance efficiency and industrial competitiveness and result in new, environment-friendly production. To build confidence in the Thai economy, while also improving the country’s image; BOI Fair 2011 will give wide exposure to the Thai industrial sector’s commitment to serving society and preserving the natural environment. To provide an opportunity for members of the industrial community to meet, conduct business, and network.

  40. Theme “Going Green for the Future” โลกสดใส ไทยยั่งยืน

  41. General Information Show date:10 - 25 November 2011 (16 Days) Venue:IMPACTExhibition and Convention Center (237,000 sq.m) - Outdoor : Lakeside 166,000 sq.m - Challenger 1-3 60,000 sq.m - Hall 9 11,000 sq.m Exhibitors:84 Outdoor Pavilions and morethan 3,000 Indoor Booths Visitors: More than 5 million visitors expected

  42. Thank You! www.boi.go.th

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