1

November, 2018

World Business Advisory Center

World Business Division

Investment Guide THAILAND

2

Country & Economic Overview

Key Industries & Opportunities

Doing Business in Thailand

Table of Contents

KASIKORNBANK’s Support

3

THAILAND

Bangkok

Thailand, the Gateway to ASEAN

2 Attractive Investment Policy for target industries, the new growth engines

3 Eastern Economic Corridor: the next major economic zone of ASEAN

4 Liberal trade & investment regime

5 Potential regional trading and high value manufacturing hub

1 Logistic Hub of ASEAN

Why Thailand?

4

Country & Economic Overview

Key Industries & Opportunities

Doing Business in Thailand

Table of Contents

KASIKORNBANK’s Support

5

-

2

4

6

8

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

f

20

18

f

20

19

f

20

20

f

USD

th

ou

san

d

Thailand’s GDP composition, as of 2017

agriculture 8%

industry 36%

services 56%

USD 455 billion

Middle class 53% of population

GDP per capita, 2010 - 2020f

Data Source: NESDB, IMF

Service sector

mainly tourism and wholesale & retails

Industry

mainly automobile, electrical & electronics

GDP per capita reach USD 7,000 by 2020

The service industry still dominated Thailand economy, driven by strong tourism sector. GDP per capital is still growing, which expects to out of middle income trap by 2037.

Economic Overview

6

Country Name: Kingdom of Thailand

Area: 513,115 sq.km.

Population: 66.2 million (2017)

Form of Government: A parliamentary democracy with the King as head of state

Currency: Thai Baht (THB)

GDP (Current Price): USD 455.3 billion (2017)

GDP per capita: USD 6,589 (2017)

1990

Timeline and Milestone:

Data Source: DOPA, NESDB, World Bank, IMF

1990: Financial liberalization policy

1995: Entry into WTO

1997-98: Tom Yum Kung crisis

2015

2015: Starting of ASEAN Economic Community

2020

2020: Enhance competitiveness to overcome the “middle income trap” with sustainable growth

1967: Bangkok Declaration signed, Starting of ASEAN community

The 2nd largest economy in ASEAN

2019: Election

Country Overview

Bangkok

7

Top Investors 2013-2017

Japan USD 65.6 billion 1

USA USD 23.5 billion 3

Singapore USD 20.0 billion 4

China USD 41.0 billion 2

USD 330 billion Foreign Direct Investment Inflow to Thailand

during 2013-2017

23.4

31.3 36.4

28.1

44.3

28.2

53.7

70.3

91.6

69.9

55.4 57.4 55.8

0

10

20

30

40

50

60

70

80

90

100

USD

Bill

ion

Thailand Foreign Direct Investment Inflow (unit: USD Billion)

Even though FDI inflow to Thailand can be fluctuated in the short run, in the past 10 years FDI inflow has been

growing gradually, with Japanese and Chinese as the key investors.

Source: Bank of Thailand

Foreign Direct Investment

8

USD 461 billion Thailand’s total trade value in 2017

Top trade

partners (2017)

China USD 74.1 billion 1

USA USD 41.7 billion 3

Malaysia USD 22.2 billion 4

Japan USD 54.6 billion 2

Indonesia USD 16.2 billion 5

Singapore USD 16.0 billion 6

2017 Total import value

USD 225 billion

2017 Total export value

USD 236 billion

Key Import products Its % of total export

Key Export products Its % of total export

Majority of Thailand’s imports concentrated on raw material using in manufacturing sector.

Data Source: Trademap, Ministry of Commerce

Thailand Trade Overview

Electrical & Electronic Products and Parts

31%

Electrical & Electronic Products and Parts

31%

Vehicle and Parts

12% Mineral fuels, oils

14%

Rubber

7% Iron and Steel

5%

Vehicle and Parts

4% Plastic

5%

9

Thailand-Cambodia Trade Value: USD 3.9 billion Major Customs: Aranyaprathet/Poi Pet

Data Source: KResearch, Department of Foreign Trade Thailand

1

Major official border customs

• Alcohol and non-Alcohol beverage

• Chemical products • Machinery & Parts

• Natural gas • Metal ore • Live animal

• Refine fuel • Motor car • Iron and Steel • Livestock products • Chemical products

• Fuel • Metal ore • Electrical machinery • Fruits

The import trend of CLMV countries has been slightly changed from agro industrial products to manufacturing products.

Thailand-Myanmar Trade Value: USD 5.7 billion Major Customs: Mae Sot/Myawaddy

Thailand-Malaysia Trade Value: USD 14.3 billion Major Customs: Songkhla/Kuala Perlis

Thailand-Laos Trade Value: USD 6.4 billion Major Customs: Nong Khai/Vientiane

Import Export

Import Export

• Fuel • Non-alcohol

beverage • Vehicles and parts • Plastic products

• Fruits & Vegetable • Metal • Standard wire & cable • Jewelry • Garment

Import Export

• Data processing machine

• Motor car • Rubber • Chemical Products

• Rubber • Computer & Parts • Rubber products • Wood products

Import Export

Thailand Border Trade Overview

2 3

4

10

Already well-established infrastructure, Thailand continues to push forward infrastructure development projects, especially in the railway sector, to enhance regional connection in AEC region.

Road is the main transportation route. Thailand has well established road network in both urban and rural area with GMS connectivity. Hence, Thailand has high potential to be regional logistic hub.

Road

There are 8 international deep seaports and 3 major river ports in Thailand. The highest capacity sea-seaport, Lam Chabang, can handle 6.9 million TEU/yr. While, inland port, Bangkok Port, has capacity of 1.5 million TEU/yr.

Water Transport Aviation

Thailand has 6 main international airports, located in Bangkok, Samut Prakan, Chiang Mai, Chiang Rai, Phuket and Songkhla province. They have high capacity to cater passengers and parcels.

Railway

Thailand has railway lines, covering 47 provinces with a total distance of 4,043 km., about 93% of which is single-track. The Thai government attempts to plug Thailand into China's Belt and Road Initiative. It is expected to be one of the most important transportation methods.

Data Source: KResearch, BOI

Infrastructure Overview

11

The mega infrastructure projects are planned to upgrade the Thailand’s economy, which focused on all transportation modes with worth more than USD 27.4 billion.

High speed rail linked 3

airports

U-Tapao airport

Maintenance, Repair and

Overhaul (MRO)

Map Ta Phut Deep seaport

Laem Chabang

Deep seaport

EEC Digital

Project Value (Million Baht)

Over 220,000 290,000 10,588 47,900 84,361 N/A

TOR Jun 2018 Oct 2018 Aug 2018 Nov 2018 Oct 2018 Oct 2018

Proposal Nov 2018 Dec 2018 Oct 2018 Jan 2019 Jan 2019 Nov 2018

Bidding Feb 2019 Jan 2019 Nov 2018 Feb 2019 Feb 2019 Dec 2018

Sign contract Mar 2019 Feb 2019 Dec 2018 Mar 2019 Mar 2019 Jan 2019

Finish 2023 2023 2021 2024 2025 2022

Source: EEC Office

Infrastructure Projects

12

Road transport is the primary means of passenger and freight transport which can carries around 86% of freight traffic.

Road

Myanmar(MawLaMyine)-Thailand(East-Western)-Laos (Savannakhet)-Vietnam (Da Nang)

East West Economic Corridor (Dark brown) 1

China (Kunming) – Northern Laos/Myanmar – Thailand (North-Sourthern) - Malaysia

North-South Economic Corridor (Red) 2

China (Southern) – Laos (Northern) – Thailand (Bangkok)/(Eastern) – Cambodia

Central Corridor (Green) 3

China (Nanning) – Vietnam(Northern) – Laos (Northern) – Thailand (Bangkok/Laem Chabang)

North-eastern Corridor (Light brown) 4

“GMS Transport Sector Strategy (2030) full facilitates grater connectivity”

Thailand is located in the center of every route in the GMS road network; The nation has an advantage to be the hub of the region inland freight transport. However, some parts are still missing and on the developing process, which expected to fully completed by 2030.

Data Source: WB_Advisory, BOI

Myanmar (Dawei) –Thailand (Bangkok/Laem Chabang) – Cambodia (Phnom Penh) – Vietnam (Ho Chi Min City)

Southern Corridor (Lower Dark Brown) 5

Road Network: GMS Economic Corridors

13

Airport Development Plan

• Suvarnabhumi Begin the phase two extension project which will uplift passenger handling from 50 million passenger per year to 80 million. It is expected to complete by 2022

Thailand International Airport

Suvarnabhumi, Samut Prakarn

Don Mueang, Bangkok

Mae Fah Luang, Chiang Rai

Chiang Mai

Phuket

Hat Yai, Songkhla

Data Source: Airport council international, Airport of Thailand

Air Cargo Service Information 2017

• Don Mueang Approved a new budget for enhancing annual capacity to handle 40 million passengers and serve 40-50 flights/hr. It’s expected to finish in 2024

• Chiang Mai The second airport in Chiang Mai is planned to develop and expects to finish by 2025. It will increase the passenger capacity up to 20 million

Thailand is the second largest air cargo service provider in ASEAN, after Singapore with more than 830,000

flights in 2017.

Forecast of Thailand’s Air Traffic in 2027

2.1 Million Flights From 1 Million flights

307 Million Passengers From 140 Million passengers

3 Million Tons From 1.5Million tons

Aviation

Total air cargo 1.5 Million tons

Rank (in Global) 20

Additional service

One stop service basis such as Trading, Partial Import Clearance, and so on

14

Data Source: BOI,Transportation Institute Chulalongkorn University, Chaophaya Terminal International

With a coastline of 3,219 km, Thailand is located between Bay of Bengal and South China Sea, with high potential to be regional port center.

Chiang Sean

Bangkok

Leam Chabang

Map Ta Phut

Songkhla

INLAND PORT DEEP SEAPORT

Bangkok or Klong Toey Port

• This port can handle approximately 1.5 million TEU/year

Laem Chabang

• One of Asia’s leading ports and

the most important commercial deep-sea port of Thailand

• This port can handle approximately 6.9 million TEU/year

Map Ta Phut Industrial Port

• Map Ta Phut is primarily a petrochemical complex, gas, mining and heavy industrial related goods

Chiang Saen Port

• The biggest inland port of the northern region

• The strategic inland port for trading among GMS region.

Phuket Port

• The latest international port on the west coast of the South

• Capacity of 450,000 tons annually

Songkhla Port

Phuket

• The only international port on the Southeast coast

• Capacity of 160,000 TEU/year

Water Transportation

15

Data Source: BOI, Johomaps

Bangkok(Center Thailand) – Chiang Mai (Northern Thailand)

Northern Line (Blue)

1

Bangkok – Sugai Kolok(Southern Thailand)- Northern Malaysia

Southern (Red) 2

Bangkok – Aranyaprathet (Easthern Thailand )/ Map Ta Put (Thailand gulf)

Easthern (Green)

3

Bangkok – Ubon Ratchathai (Easthern Thailand) Nong Khai (Northeasthern Thailand)- Center/ South of Lao PDR

Northeasthern (Yellow)

4

Thailand has 4 main operating railway networks. These networks are under upgrading, transform single to dual track as well as high speed train project.

Domestic railway Development Plan

• Phase I (2010-2020) : Upgraded some part of existing line to dual track

• Phase II (2016-2020) : 1,025 km of railway network will be extended

• Phase III (2020-2025) : Railway tracks added

• High-Speed-Rail Project: This high-speed train project consists of four main lines: (1) Bangkok-Chiang Mai (finish in 2020) (2) Bangkok-Nong Khai (3) Bangkok-Rayong (4) Bangkok-Padang Besar.

Thailand current railway networks

Railway Network

Railway development master plan

Year spent: 2010-2025

Plan objectives:

• Upgraded to duel track • Railway networks extension • High-speed railway

16

Bangkok Metropolitan

Phuket

Ayutthaya

Chonburi

Rayong

Chiang Mai Bangkok Metropolitan Main business hub • Trade, Banking & Finance, Real estate, Transport &

communication, Tourism, etc

Chonburi, Rayong, Ayuthaya Industrial zone • Automobile & parts, Electrical & Electronics, Plastics,

Petrochemical, Food & Beverage

Chiang Mai & Phuket Tourism hub • Hotel & Restaurant, Transportation, Tourism

related business

Eastern Economic Corridor (EEC) Industrial zone • Smart Electronic, EV, Robotic, Digital City, Innovation

Food and Medical Hubs

Chacheongsao

Major Cities Economic Activities by Region

17

Country & Economic Overview

Key Industries & Opportunities

Doing Business in Thailand

Table of Contents

KASIKORNBANK’s Support

18

Thailand has been promoting an economic development scheme, called Thailand 4.0. There are 10 targeted industries divided into 2 segments; First S-Curve Industries and New S-Curve Industries. Moreover, setting up International Business Center (IBC) in Thailand also offers attractive investment/trade opportunities and incentives:

First S-Curve Industries New S-Curve Industries International Business Center

Key Industries and Opportunities

19

Source: Board of Investment

Since 2015, Thailand has brought in additional incentives under the S-Curved scheme to attract more FDI in higher technology base, which is aimed to enhance the nation’s competitiveness.

First S-Curve Industries New S-Curve Industries Ten Targeted S-Curve Industries

S- Curved Industry - Overview

Next-Generation Automotive

Biofuels and Biochemical

1 6

Smart Electronics Digital Economy 2 7

High-Income Tourism and Medical Tourism

Medical Hub 3 8

Food Innovation Automation and Robotics

4 9

Aviation and Logistics

Efficient Agriculture and Biotechnology

5 10

20

First S-Curve Industries

21

Key Disruptive innovations in Thailand’s Next-Generation Automotive

Connected mobility

Source: Thai Autoparts Manufacturer Associations

Domestic sales 44%

Export 56%

Production of Automotive in Thailand in 2017

1.98 million

cars produced 1.11 million car 0.87 million car

Thailand is the largest automotive producer in ASEAN, ranking 13th globally with deep and wide automotive supply chain thanks to FDI by Japanese automotive enterprises.

With 56% of car production used for export, Thailand is one of major car exporters in the world.

With its well established supply chain, Thailand is well portioned to be the ASEAN auto production hub for global car makers

By 2020, Thailand aims to manufacture over 3.5 million units of vehicles.

4

Electronic Vehicle

Autonomous driving

Shared mobility

Electronic Vehicle (EV) could be the most potential innovation that will happen soon.

NOTE:

1. Next-Generation Automotive – Overview

22

AUTO PARTS

MANUFACTURING

SUPPORTING

EV INDUSTRY

EV Charging

Station EV Charger

Manufacturing Electricity and

Alternative Energy Business

Battery Transmission

System

Electronics

System

High potential businesses are (1) automotive parts that need to be co-developed with EV e.g. battery, transmission system, and electronics system (eg. battery management system, drive control unit), as well as, (2) businesses related to charging infrastructure.

1. Next-Generation Automotive – Opportunity

23

Data Source: Kasikorn Research

Thailand is moving forward toward upstream industry by focusing on electronic system design of IC and PCB for end-product applications, especially for automotive and smart devices.

Electronics System Design

Wafer Fabrication

IC Assembly PCB Fabrication PCB Assembly Electronics

Applications

Upstream Industry Midstream Industry Downstream

Industry

End Product Manufacturers

PCB and IC Value Chain

1 2 3 4 5 6

Competitive Activities

2. Smart Electronics – Overview

24

Electronic System Design

Hi-Tech IC Assembly

Hi- Tech PCB Fabrication

High Potential Activities for Investment in Thailand

With bright business outlook for serving automotive electronics and smart devices in the internet of things era, electronic system design, hi-tech IC assembly, and hi-tech PCB fabrication are high potential activities for investment in Thailand.

o Embedded system design o PCB design o IC design

o System In Package Technology(SIP) o Package on Package Technology

(PoP) o 3D – Integrated Circuit (3DIC)

o Multi-Layer PCB (9 layers + ) o Flexible PCB

2. Smart Electronics – Opportunity

25

Generate USD 1.8 trillion to

the country, up for 12% y-o-y

FACTS about Thailand’s Tourism Industry

35.4 Million Tourists come to visit Thailand in 2017

8.8% per annum growth in number of tourists

Thailand ranked 9th for world's most visited country in 2017. Ministry of Tourism sees 2018 tourist arrivals at

37.55 million people, up 6.%.

Number of Tourists Arrival to Thailand (Million)

22.4

26.5 24.8

29.9 32.6

35.4

2012 2013 2014 2015 2016 2017 F2017

International Tourist Arrival by Region in 2017

1. China (9.8 million)

2. ASEAN (9.1 million)

3. Korea (1.7 million)

4. Japan (1.5 million)

Source: Ministry of Tourism and Sports of Thailand

3. High-Income Tourism and Medical Tourism – Overview

26

Potential Opportunities in Tourism & Health Care

1 Medical Tourism Utilize international and Thai expertise to serve medical tourists in Thailand, targeting Chinese, ASEAN, and international patients

2 Wellness Tourism Utilize Thailand’s tourism resources as potential locations for relaxation and retreat for international tourists in Thailand.

3 Long Stay for the Elderly

Utilize know-how (especially from Japanese business) in providing elderly care services and managing elderly care business to target elderly people in Thailand.

With lucrative outlook in Thailand’s tourism & health care services, there are several potential opportunity for foreign businesses, especially tapping into medical expertise businesses and Thailand’s rich tourism resources.

3. High-Income Tourism and Medical Tourism – Opportunity

27

8%

16%

12%

7%

6%

ASEAN: beverage, wheat products, instant food

JAPAN: processed chicken, canned seafood

CHINA: Tapioca, chicken, canned seafood

EU: processed

meat, canned fruits, canned seafood

US: canned seafood, canned fruit, shrimp

Thailand’s Major Food Export Market

3 Largest exporter in Asia; 16th largest in the world

Thailand is the …

Established for over 60 years, Thai food manufacturers have been exporting various products globally.

Innovation Opportunities

Use Thailand as export hub - invest in export oriented food manufacturing and supply globally.

Thailand has proven track record as major exporter of food products, food manufacturers could leverage its solid

food supply chain and strategic location and use Thailand as its export hub.

Source: KResearch

rd

4. Food Innovation – Overview

28

In addition to food innovation clusters based on raw material

availabilities, other policies to support food innovation include

Food Innopolis and the EEC project.

Eastern Economic Corridor (EEC)

‘Food for the Future’ is listed as one of the 10 target

industries, investment in this area can enjoy highest level of investment incentives.

Location: Chacheangsao, Chonburi and Rayong

Food Innopolis

Encourage and attract investment in technology and

innovation for food production by offering facilities and other incentives. Location: Pathum Thani (Thailand Science Park)

North Eastern:

• Processed food/fruits • Healthy food • Organic product

Functional Food

• Processed food • Livestock

Processed Fruits

• Processed seafood • Halal food

Food Innovation Clusters 1. Ingredient Processing 2. Food Processing 3. Food Packaging

Key Opportunities for FDI:

3 Northern:

Central:

Eastern:

Southern:

Thailand’s Food Product Trends

Healthy Food

Healthy Fast Food

Ready to Eat / to Cook

Functional Food

4. Food Innovation – Opportunity

Source: KResearch

29

New S-Curve Industry

30

Source: Board of Investment, Office of Industrial Economics

Beyond the first S-Curve, Thailand introduces 5 New S-Curve industries which are aimed to develop five additional industries to enhance Thailand’s competitive advantage with advanced digital technology transformation.

Digital Economy Medical Hub Automation and Robotics

Aviation and Logistics

Focusing on IoT and Artificial Intelligence which could give opportunities for foreign investors in developing IoT solutions for manufacturing, logistics and agriculture industries within the country.

Demand for robotics and automation in the industrial and manufacturing industries has been rising. 50% of manufacturers in Thailand are to adopting automation systems within the next 1-3 years.

To be a logistics hub, Thailand demands technologies integration in airplane and carrier to efficiently connect throughout the country. These bring opportunities to IoT and blockchain technology solution providers.

Thailand aims to be a medical hub in ASEAN and several hospitals has started integrating service robotics. With strong demand, this would benefit to business in developing health related and medical technologies

New S- Curved Industry – Overview

Biofuels and Biochemical

The government has recently launched a 10 year plan to establish a bioeconomy hub. It plans to produce biofuel, biochemical and biopharmaceutical with the use of sugarcane and cassava products.

31

For investment in new S-curve industries, it might take a certain period of time for deregulation or completion of necessary infrastructure; In the medium term, investment in the new S curve industries could be lucrative.

Opportunity

Potential Location

• Logistic Park • International

distribution center • Air transportation

services

Chacheongsao (Suvarnabhumi) or Eastern Aviation City

• Active pharmaceutical ingredients’ production

• Drug manufacturing • R&D using

biotechnology

Medical Special Promotion Zone e.g. Smart Park

• Digital Services • Fin Tech • Med Tech

• Cloud Services • Data Center • Software Development

Digital Special Promotion Zone e.g. Digital Park Thailand

Robotic Special Promotion Zone e.g. Amata, Pinthong, Hemaraj

• Robots or Automation Equipment’s Assembly

• Manufacture of automation equipment with engineering design

Biofuels & Biochemical and

Medical Hub Digital Economy

Automation and Robotics

Aviation and Logistics

• Most workforce still lack of Research & Development (R&D) experience, hence firms may have challenges finding sufficient skilled labors to fulfill all new S-Curve industries

• Infrastructure is being developed in some potential areas. Challenge

New S- Curved Industry – Challenge and Opportunity

32

International Business Center (IBC)

33

On 9 October 2018, the Cabinet approved International Business Center (IBC) to replace existing ROH, IHQ, ITC and TC regimes. This is to comply with an Inclusive Framework on BEPS which Thailand is one of their members.

Source: The Revenue Department of Thailand and EY Corporate Services Limited

Comparison of incentives for old schemes and new IBC

“Companies under the IBC scheme are no longer received corporate income tax exemption on income including service fees, royalties and capital gains.”

Main tax incentives and conditions

Old IHQ/ITC/TC New IBC

Corporate income tax

- Qualifying service, TC and royalty incomes

0% (overseas) / 10% (local) 8%, 5% or 3% for minimum annual local spending requirements of THB 60 million, THB 300 million or THB 600 million, respectively.

- Dividend income from local and overseas

Exempt (only dividends from overseas) Exempt

- capital gains Exempt Not mentioned

- Trading income Exempt Not mentioned

Withholding tax

- Dividend distribution overseas Exempt Exempt

- Interest payment overseas Exempt Exempt

Specific business tax

- Qualifying TC income Exempt Exempt

Personal income tax

- Qualifying expatriates 15% 15%

Minimum paid-up capital THB 10 million THB 10 million

Minimum annual local spending THB 15 million THB 60 million

Minimum number of employees None 10 persons (5 persons for TC)

International Business Center – Overview (1/2)

What is the definition of IBC?

[TENTATIVE] It still not disclosed by the cabinet but IBC comes to replace the old International Headquarter (IHQ), International Trade Center (ITC) and Treasury Center (TC).

What are conditions for IBC ?

• Minimum registered capital of THB 10 million

• Minimum local spending requirement of THB 60 million

• Minimum employee requirement of 10 persons (5 persons for a Treasury Center)

34

Bangkok

Phnom Penh

Vientiane

Hanoi Naypyidaw

Avg 1 hr. by flight

Thailand is one of the attractive location to place IBC of GMS region as the high growth in FDI inflow, either decent or established infrastructure and standard of skilled labor.

Tax incentive

IBC receives exemption of

Corporate income tax

Withholding tax

Specific business tax

Strategic location

Thailand is located in center of GMS region, with an easy access to its border countries through all channel (air, water, and land).

Infrastructure

Thailand provides decent infrastructure that suitable for setting up IHQ and ITC , such as utility and telecommunication.

Skilled labor

With long development in education sector and experienced in trading with CLMV, Thailand is ready to provide the decent skilled labor for IHQ and ITC.

Source: roedl.com, asean.org

Livability for expats

Within GMS region, Thailand is the most livable country for expats and their families, with an easy access for mass transportation, education with numerous of international schools, high standard of health care, various types of amenities.

International Business Center – Overview (2/2)

35

Foreign investors can use Thailand as a gateway to expand their business into the Greater Mekong Subregion and establish support services, R&D center, sale office, and other marketing events or exhibition.

Sale office 3 1 Support services

Call center

Maintenance/ Technical support

Training

center

Others 4

Marketing events

International

meetings

Exhibition

Research and development center 2

International Business Center – Opportunity

36

Country & Economic Overview

Key Industries & Opportunities

Doing Business in Thailand

Table of Contents

KASIKORNBANK’s Support

37

Register “company limited” at Department of Business Development (DBD)

Apply for “investment promotion incentives” at Board of Investment (BOI)

For exporter, apply for “certificate of origin” to utilize Thailand’s trade privilege.

“One Start One Stop Investment Center” can coordinate and organize all legal applications for foreign investors.

How to start a business in Thailand

Major cost of Investment

Labor Electricity/ Water supply Tax

Overview of Doing Business in Thailand

38

Salaries of English Speaking Worker in 2017

Position Average Monthly Pay (USD)

Office staff 430 – 720

Technician 430 – 1,000

Junior Engineer 660 – 1,200

Senior Engineer 1,300 – 2,300

IT Position 875 – 4,300

Middle Level Manager 2,000 – 4,000

Director and Top Management 4,000 – 8,000

Data Source: ADECCO Compiled by: KASIKORNBANK, WB advisory center

Labor: Minimum monthly wage in ASEAN 2018, USD

Note: Some countries, the minimum wage rates are vary on geographic areas.

Major Costs - Labor

USD

284

197

95

144

170

118

128

107

0 50 100 150 200 250 300 350

Thailand

Malaysia

Indonesia

Philippines

Cambodia

Vietnam

Lao PDR

Myanmar

304

247

237

174

170

39

Water Rate: for business and Industrial usage

Note: minimum usage fee is 2.57 USD

Usage: USD/m³

0 to 10 m3 0.28

11 to 100 m3 0.31 – 0.42

101 to 200 m3 0.43 – 0.45

Over 200 m3 0.46

Electricity rate: each size of business has 2 options

Size of business Option A Option B

Small firm Normal rate Time of Use rate

Medium firm Normal rate Time of Use rate

Large firm Time of Day rate Time of Use rate

Note: size of business is determined by a maximum 15-minute integrated demand of electricity.

Data Source: Metropolitan Waterworks Authority Compiled by: KASIKORNBANK, WB advisory center

Major Costs - Utility

40

Data Source: mea.or.th

Normal rate Time of Use rate (TOU)

Category Electricity price

(USD/Unit) Service

(USD/ month)

1. Voltage 12-24 kV 0.11 9.11

2. Voltage < 12 kV 1.35

2.1 First 150 unit (kV/hr)

0.09

2.2 151-400 unit 0.12

2.3 401 unit and above

0.13

Category Electricity price (USD/Unit) Service

(USD/month) On Peak Off Peak

1. Voltage 12-24 kV 0.15 0.08 9.11

2. Voltage < 12 kV 0.17 0.08 1.35

Note: On Peak: 9.00 – 22.00 Monday – Friday Off Peak: 22.00 – 9.00 Monday – Friday : 00.00 – 24.00 Saturday – Sunday : Public Holiday *The prices may vary across region – depending on the source cost of utility.

TOU is a rate calculated from the weight average between electricity used in On Peak and Off Peak period

Major Costs – Electricity Rate for Small Firm (S)

41

Category

Demand Charge

(USD/kW) Electricity price

(USD/Unit) Service (USD/month)

On Peak Off Peak On Peak Off Peak

1. Voltage > 69 kV 2.16 0 0.12 0.08 9.11

2. Voltage 12-24 kV 3.88 0 0.12 0.08 9.11

3. Voltage < 12 kV 6.13 0 0.13 0.08 9.11

Normal rate

Time of Use rate (TOU)

Category Demand Charge

(USD/kW)

Electricity price

(USD/Unit)

Service (USD/month)

1. Voltage > 69 kV 5.13 0.09 9.11

2. Voltage 12-24 kV 5.73 0.09 9.11

3. Voltage < 12 kV 6.46 0.09 9.11

Demand Charge

is an extra electricity charge for the firm, required to use massive electricity

TOU is a rate calculated from the weight average between electricity used in On Peak and Off Peak period

Major Costs – Electricity Rate for Medium Firm (M)

Data Source: mea.or.th

42

Time of Day rate (TOD)

Time of Used rate (TOU)

Category

Demand Charge

(USD/kW)

Price per unit Service

(USD/month) (USD/Unit)

On Peak Off Peak On Peak Off Peak

1. Voltage > 69 kV 2.16 0 0.12 0.08 9.11

2. Voltage 12-24 kV 3.88 0 0.12 0.08 9.11

3. Voltage < 12 kV 6.13 0 0.13 0.08 9.11

TOD is similar to TOU with more detailed categories including on peak, partial peak, and off peak.

Note: TOD On Peak: 18.30 – 21.30 Everyday Partial Peak: 08.00 – 18.30 Everyday Off Peak: 21.30 – 08.00 Monday – Friday

Major Costs – Electricity Rate for Medium Firm (L)

Category Demand Charge (USD/kW)

Price per unit

Service (USD/month)

(USD/Unit)

On Peak Partial Peak Off Peak All-Day

1. Voltage > 69 kV 6.54 0.87 0 0.09 9.11

2. Voltage 12-24 kV 8.32 1.72 0 0.09 9.11

3. Voltage < 12 kV 9.71 1.99 0 0.09 9.11

Data Source: mea.or.th

43

1) Sole Proprietorship 2) Ordinary Partnership

Non-Juristic Business

Juristic Business

1) Juristic Ordinary Partnership 2) Limited Partnership 3) Limited Company 4) Public Limited Company

Types of Business Organization in Thailand

Limited company is the most common type of business

organization, in which business registration procedures are as following;

• Reserve the Corporate Name

• Submit the Memorandum of Association (MOA), convening a statutory meeting and depositing paid in capital

• Register the company within 3 months from date of convening a statutory meeting

Limited Company: Business Registration Procedure

Register Limited Company

44

Monthly Income (THB) Tax Rate

0 – 150,000 0%

150,001 – 300,000 5%

300,001 – 500,000 10%

500,001– 750,000 15%

750,001 – 1,000,000 20%

1,000,001 – 2,000,000 25%

2,000,001 – 5,000,000 30%

Above 5,000,000 35%

Types of Tax Tax rate

Corporate Tax 20%

Value Added Tax (VAT) 7%

Property and Land Rent Tax 12.5%

Source: KPMG ASEAN Tax Guide, PwC

Personal Income Tax Corporate Taxes

Corporate Taxes Rate for SME

Net Income (THB) Tax rate

Less than 300,000 0%

300,000 – 1,000,000 15%

Above 1,000,000 20%

Tax System

45

Before register a business in Thailand,

There are some restrictions for foreigners operating business in Thailand.

Content of Foreign Business Act

Alien is defined as entities who do not possess Thai nationality. Companies are considered aliens if 50% or more of their share of capital belongs to foreign individuals or juristic entities

The Foreign Business Act has identified 3 lists of activities controlling foreigners doing business in Thailand.

3 lists of restricted activities of foreign-controlled business

1

2

3

Businesses that foreigners are not permitted to engage in for special reasons such as newspaper, radio, and television business.

Businesses concerning national security, safety, art and culture, native handicrafts, the environment, which require permission granted by the cabinet via Minister of Commerce.

Businesses in which Thais are not adequately prepared to compete on an equal footing with foreigners, which require permission granted by the Director-General of the Department of Business Development and endorsement by the Foreign Business Committee.

For more details, www. boi.go.th

Foreign Business Act B.E. 2542 (1999)

46

In 2017, to encourage investment in advanced and high-technology toward Thailand 4.0 era, the new investment promotion policy has

been launched with additional incentives, focusing on high technology investment in the Eastern Economic Corridor (EEC).

1) Sector Based Incentives 2) Technology Based Incentives

High Incentive Sectors Advanced Manufacturing High Value Added

Businesses & Services

Maximum 8-year Corporate Income Tax Exemption

Low Incentive Sectors Basic Industries Supporting Industries

10-year Corporate Income Tax Exemption

Biotechnology Advanced Material

Technology

Nanotechnology Digital Technology

5) Special Incentives 4) Area Based Incentives

• Eastern Economic Corridor (EEC) • Special Economic Zones (SEZs) • Others

Additional incentives depending on location of investment

3) Merit Based Incentives

Additional incentives granted activities that enhance competitiveness

• Research & Development • Advanced Technology Training • Others

Additional incentives for specific purposes

• SME Supporting Incentives • Measure to Promote

Productivity • Others

CORE INCENTIVES

Overview of Investment Promotion Incentives

Investment Promotion Incentives -Overview

47

Group

A activities

Advanced & high technology activities

Environmental friendly activities Activities that utilize local

abundant resources

Group

B activities

Low technology activities that are important as supporting activities in the value chain

Definition of Group A & B Activities Incentive scheme A1 A2 A3 A4 B1 B2

Corporate Income Tax exemption

Import duty on machinery

Import duty on raw

materials

Non-tax incentives

8-year 100% cap

3-year 100% cap

5-year 100% cap

NONE

Exemption of import duty on new machines NONE

Exemption of import duty on raw materials used in manufacturing of exports products for 1 year (can be extended)

Permission to own land, to employ foreign skilled workers, remit money abroad in foreign currency, etc.

Approximately 250 activities across various sectors are eligible for investment promotion incentives; In each sector, activities

are classified into group A and B, in which group A activities are eligible for higher incentives with corporate income tax

exemption.

Investment Promotion Incentives –(1) Sector Based Incentives

8-year Without cap

48

Biotechnology Nanotechnology Advanced Material Technology

Digital Technology

o Cell Culture/ Tissue Engineering Technology

o Gene and Molecular Technology o Genetic Engineering Technology o Omics Technology o Biodegradable Materials

Technology o Bioinformatics o Advanced Bioprocessing

Technology o Bio-Analytical Technology o Biomaterial Production

Technology

o Drug Delivery System o Nano-Encapsulation o Nanofiber Technology o Omics Technology o Nanomaterials Syntheses o Membrane Technology o Adsorption Technology o Nano-characterization and

Testing o Nanostructure Fabrication o Surface Coating/Engineering

Technology

o Advanced Catalyst Technology o Composite Material Technology o Functional Materials Technology o Photonics & Optical Technology o Printed Electronics and Organic

Electronics o Advanced Materials Forming

Process o Materials Characterization

Technology o Energy Storage

o Big Data Analytics Technology o Decentralized Sequential

Transaction Database o Human Computer Interaction

Technology/Brain Computer Interface

o Internet of Things Technology o Natural Language Processing

Technology o Virtual & Augmented Reality

Technology o Digital Engineering and

Manufacturing Technology o Software Testing Technology o Embedded Technology o Smart Grid o Wearable Technology o Artificial Intelligence Technology o Sensor Technology o Automation Technology o Robotics Technology

Under the technology based incentives, all technologies that can be classified into 4 main core technologies (the below list) are eligible for 10

year corporate income tax exemption.

Investment Promotion Incentives –(2) Technology Based Incentives

49

Type of activities

eligible for this incentive Number of years receiving a CIT exemption

depends on a percentage of investment to combined revenue of the first 3 years.

Research and Development

Donation to Technology and Human

Resources Development Funds

IP acquisition/ license fees for commercializing technology

developed in Thailand

Advanced technology training

Product & Package design

Percentage of investment to combined revenue of the first 3 years

Additional CIT Exemption (with additional cap)

1% or ≥ 200 million baht 1 year

2% or ≥ 400 million baht

3% or ≥ 600 million baht

2 years

3 years

Merit based incentives are additional incentives with 1-3 year corporate income tax exemption; An investment project must apply for

either sector based incentives or technology based incentives to be able to eligible for merit based incentives.

Investment Promotion Incentives –(3) Merit Based Incentives

50

Eastern Economic Corridor (EEC) Incentives

Projects in target industries that eligible for sector or technology-based incentives Additional 50% CIT

reduction for 5 years

Strategic Investment Projects Max 15 year CIT

exemption Eligible to apply for a

grant for R&D and HR development

*Strategic investment projects must be in target industries that in line with Thailand 4.0, but cannot be attracted by other incentives

Bangkok

Chachoengsao

Rayong Chonburi

EEC

Existing Industrial Clusters in EEC Target Industries in EEC

Automotive Cluster Key Players: Toyota, Isuzu, Mazda, Mitsubishi, Ford, BMW

Electrical and Electronics Cluster Key Players: Samsung, Hitachi, Fujitsu, LG, Mitsubishi

Petrochemical & Chemical Cluster Key Players: PTT and SCG

Food Cluster Key Players: Ajinomoto

Next-Generation Automotive Aviation

Smart Electronics Automation and Robotics Digital

Eco Friendly Petrochemical & Chemical

Food for the Future

Medical Hub Medical & Wellness Tourism

Medical Cluster Key Players: Cardinal Health, Nikkiso

Among several area based incentives, the Eastern Economic Corridor (EEC) has lucrative investment potential; Investment projects in target industries are eligible for maximum 15 years corporate income tax exemption.

Investment Promotion Incentives –(4) Area Based Incentives

51

Eligible Investment

Improvement in production efficiency e.g. automation

• Investment in machinery replacement for

Energy conservation

Use of renewable energy

Reduction of environmental impacts

Conditions

• R&D activities or engineering design

Existing investment promotion projects with no CIT exemption left

Applicant

Investment Minimum THB 1 million For SME minimum THB 0.5 million

Deadline

December 31,2017

Incentives

3-year corporate income tax (CIT) exemption

Exemption on import duty on machinery

Among several special incentives, measure to promote productivity has high potential; Firms are eligible for 3-year corporate income tax exemption for investing in machinery replacement to promote productivity and cut production cost.

Investment Promotion Incentives –(5) Special Incentives

52

Thailand introduces Smart Visa with the purpose to attract highly-talented people involved in emerging technologies. These include

experts in science and technology, tech company executives, investors, and startup entrepreneurs to work in S-Curve industries.

Eligible from February 1, 2018, There are 4 types of SMART Visa

SMART T Visa SMART I Visa SMART E Visa SMART S Visa

Targeted Expat

Science & Tech Talent Investors High Level Executives Startups/Entrepreneurs

Conditions • Science and Technology experts

• Salary at least 200,000 baht per month

• Employment contract for at least 1 year

• Employing Thai company certified by government

• Minimum investment of 20 million baht

• Investing in technology-based companies

• Investment must be maintained for length of visa

• For high-level executive positions (MD, CEO)

• 10+ years of work experience • Salary at least 200,000 baht per

month • Employment contract for at least 1

year • Working for technology-based Thai

project/company

• Fixed bank deposit of 600,000 baht

• Health insurance policy for entire stay

• Participating in an endorsed incubation, accelerator program

• Must set up a company in Thailand within 1 year

Benefits Maximum 4 year visa 1-year visa for the first time, renewable for maximum 2 years

• No work permit required • No 90 day reporting • No re-entry permit required • Spouses and children granted permission to stay in Thailand • Spouses granted permission to work with no work permit required

Investment Promotion Incentives – (6) Smart Visa

53

Multilateral trade liberalization

• ASEAN • WTO • GSP (with the below countries)

Bilateral trade liberalization

• Australia • Chile • China • India • Japan • Peru • New Zealand

o Canada o Japan o Norway o Switzerland o Turkey o USA

Certificate of Origin for Free Trade Agreement

To utilize all trade privileges, exporter must apply for “Certificate of Origin for Free Trade Agreement (C/O for FTA)”. In Thailand, Department of Foreign Trade, Ministry of Commerce is authorized agency to issue C/O for FTA.

For more information, www.dft.go.th Sample of Certificate of Origin for FTA

Trade Privileges

54

Country & Economic Overview

Key Industries & Opportunities

Doing Business in Thailand

Table of Contents

KASIKORNBANK’s Support

55

Business Insight and Recent Update for Investment in Thailand & EEC

Visit

www.kasikornbank.com/advisory

Advisory Services for Investment in Thailand & EEC

Tailor-made advisory services

Our international and local expert teams offer customized advisory services to meet investors’ requirement to enter Thailand and EEC markets.

Business Trips

Our team collaborates with our partners to organize business trips in Thailand and EEC

KASIKORNBANK’s Support

56

Wilairat Chaivipas, Ph.D. Senior World Business Intelligence Advisory E-mail : wilairat.ch@kasikornbank.com

Prepared by:

About AEC+ Business Advisory The AEC+ Business Advisory is set up by KASIKORNBANK to support businesses in their regional expansion across the ASEAN+3 market by providing local market intelligence and strategic business advice.

What we do: • Offer customized and tailor-made advisory services • Publish investment guides and industry reports • Deliver in-depth insights via seminars • Organize business trips to bring first-hand experience

Follow Us: Visit our website at:

www.kasikornbank.com/advisory

Jedtika Thanathattanon Senior World Business Intelligence Advisory E-mail : jedtika.t@kasikornbank.com

AEC+ BUSINESS ADVISORY

57