ThailandThailandInvestment Opportunities inInvestment Opportunities in

Target Sectors and in Environmental Target Sectors and in Environmental and Alternative Energy Sectorand Alternative Energy Sector

Ms. Sudjit InthaiwongMs. Sudjit Inthaiwong

Deputy Secretary GeneralDeputy Secretary General

Board of InvestmentBoard of Investment

27 September 200727 September 2007

Augsburg, GermanyAugsburg, Germany

Outline of PresentationOutline of Presentation

Current Investment Environment

Target Sector Opportunities

Environmental and Alternative

Energy Sector

BOI Incentives & Support

Current Investment Current Investment EnvironmentEnvironment

Liberal Investment Regime Liberal Investment Regime

Approvals of land ownership Liberal tax policies and

exemptions Liberal entry for skilled

technicians, experts, and families

No local content requirements No location requirements in all

but 6 activities (for environmental protection)

Strong Net Applications ValueStrong Net Applications Value

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 Jan-July 2007

Billion Euro

As of August 16, 2007

€6.52€6.80

€13.12 €14.08

€10.82

€5.84

Value of Investment Promotion Applications By Value of Investment Promotion Applications By Industry 2003 – July 2007Industry 2003 – July 2007

36.6 53.5 40.6 6121.1

159.2131

26.419.2

12.314.7

16.8

60.4 145.7

55.466

8486.6

79.360.4

123.7109.5

153.354.7

162.9176.5

122

66

29.821.77.242.1

6145.1

60.7

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 Jan-July2007

Billion Baht

Services

Chemical

E&E

Auto

Fashion

Metal

Agro

As of August 16, 2007

€6.80

656.1

705.4 51

4.3

272.5

€13.12

319

€10.82

€14.10

€5.84

Value of Investment Application By Value of Investment Application By Industry Jan – July 2006:2007Industry Jan – July 2006:2007

Value of Investment

18.3 29.83.1

21.76.7

7.2

42.148.5

45.165.2

60.737.1

66

32.2

0

50

100

150

200

250

300

Jan -July 2006 Jan-July 2007

Billion Baht/Euro

By Project

98 109

16 1964 57

149

148 146

83 89

175187

144

0

100

200

300

400

500

600

700

800

Jan -July 2006 Jan-July 2007

Number of Projects

Services

Chemical

E&E

Auto

Fashion

Metal

Agro

As of August 16, 2007

211.1

272.5

728

756 €4.44

€5.84

European Investments European Investments 5-Year Totals by Country 2002-2006 5-Year Totals by Country 2002-2006

CountryCountry ProjectsProjects € € MillionMillion

United KingdomUnited Kingdom 9595 855.6855.6

NetherlandsNetherlands 7373 812.9 812.9

SwitzerlandSwitzerland 5757 641.1641.1

GermanyGermany 8383 246.4246.4

BelgiumBelgium 2525 209.5209.5

FranceFrance 5656 72.972.9

ItalyItaly 2626 42.942.9

TOTAL (THB 47.55 - TOTAL (THB 47.55 - €)€) 415415 2,881.32,881.3

SectorSector ProjectsProjects € € MillionMillion

AgricultureAgriculture 4242 139.7139.7

Minerals and CeramicsMinerals and Ceramics 1010 145.8145.8

Light IndustryLight Industry 7070 171.4171.4

Auto and Metal ProcessingAuto and Metal Processing 6464 192.9192.9

Electrical and ElectronicsElectrical and Electronics 8686 531.3531.3

Petrochemicals, ChemicalsPetrochemicals, Chemicals 4444 676.6676.6

Services and InfrastructureServices and Infrastructure 9797 599.1599.1

TOTALTOTAL 413413 2,456.82,456.8

EU Approved Applications EU Approved Applications 5-Year Totals by Sector: 2002-2006 5-Year Totals by Sector: 2002-2006

Trend of EU InvestmentTrend of EU InvestmentBOI Approved ProjectsBOI Approved Projects

24,913

7,550

27,18130,430

13,337

31,882

16,259

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2002 2003 2004 2005 2006 Jan-Aug2006

Jan-Aug2007

Mil

lion

bah

t

European Net ApplicationEuropean Net Applicationby Country 2006/2007 (Jan-Aug)by Country 2006/2007 (Jan-Aug)

CountryCountryProjectsProjects € € MillionMillion

20062006 20072007 20062006 20072007

United United KingdomKingdom

1919 1515 129.70129.70 33.0333.03

NetherlandsNetherlands 1717 1111 110.77110.77 45.4745.47

SwitzerlandSwitzerland 88 66 77.8877.88 11.8411.84

GermanyGermany 1212 2222 8.038.03 40.9940.99BelgiumBelgium 22 22 2.782.78 .30.30

FranceFrance 1010 1212 16.9516.95 9.329.32

ItalyItaly 99 77 14.6814.68 25.7025.70

TOTALTOTAL 7777 7575 360.79360.79 166.65166.65

German Project Approvals German Project Approvals 5-Year Totals by Sector: 2002-20065-Year Totals by Sector: 2002-2006

SectorSector ProjectsProjects € € MillionMillion

AgricultureAgriculture 66 18.4918.49

Minerals and CeramicsMinerals and Ceramics 55 87.4287.42

Light Industry, TextilesLight Industry, Textiles 88 11.3511.35

Auto and Metal ProcessingAuto and Metal Processing 1414 3737

Electrical and ElectronicsElectrical and Electronics 1616 16.5216.52

Petrochemicals, ChemicalsPetrochemicals, Chemicals 1010 36.6936.69

Services and InfrastructureServices and Infrastructure 2424 38.9738.97

TOTALTOTAL 8383 246.44246.44

1 Singapore 11 Japan

2 New Zealand 18 ThailandThailand3 United States 23 Korea

4 Canada 25 Malaysia

5 Hong Kong 47 Taiwan

6 United Kingdom 93 China

7 Denmark 104 Vietnam

8 Australia 126 Philippines

9 Norway 135 Indonesia

10 Ireland 159 Laos PDR

Ease of Doing BusinessEase of Doing Business

Source: World Bank Study: Doing Business in 2007

CriteriaStarting a businessHiring and firing workers

Enforcing contracts

Access to credit

Closing a business

Registering property

Dealing with licenses

Paying taxes

Trading across borders

Investor protection

Efficient Logistics NetworkEfficient Logistics NetworkSeaport – Land Transport – AirportSeaport – Land Transport – Airport

Laem Chabang Seaport

Donmuang

International

Airport

Suvarnabhumi

International

Airport

Klong Toey :TEU 1.4 mn./yr

Laem Chabang:

TEU 3.8 mn. 10 mn.

Map Ta Phut: 21.4 Mn.Tank farms

Modern Industrial EstatesModern Industrial Estates

Thailand has over 50 Industrial estates, zones and parks nationwide

Taxes and Social Security ContributionsTaxes and Social Security Contributionsas a % of gross wagesas a % of gross wages

02468101214161820

KualaLumpur

Shanghai Singapore Delhi Mumbai HongKong

Jakarta Bangkok

Source: UBS Prices and Earnings 2006

International EducationInternational EducationThree Major education systems are offered:

1) The International Baccalaureate (IB)

2) The American Curriculum

3) The British Curriculum

Other National Systems available include Swiss, Japan, French and German

Tuition Costs range between 100k and 600k baht/academic year

“Thailand has led the way in providing an international option, with the number of international schools…soaring to 107 today”

- International Herald Tribune Oct. 16, 2006

E&E

Agro-Industry

Automotives

Investment OpportunitiesInvestment Opportunities

High Value Added

Fashion

Target Sectors

Alternative Energy

Biotechnology

Participate in Thailand’s successParticipate in Thailand’s success Agro-industry: US$10.22 billion in exports E&E: US $ 41.13 billion in exports Auto electronics: US$7 billion industry Jewelry: US$3.6 billion in exports Textiles: US$6.8 billion in exports Services: Account for about 50% of GDP Biotechnology

and much more…

New import and corporate tax waivers (up to 8years, regardless of zone) to develop smaller, morefuel efficient cars.

Excise tax of only 17% for vehicles with engines smaller than 1,300cc for petrol and 1,400cc for diesel

No more than 5 litres/100 km Emissions compliant with Euro4 specification or higher

Carbon dioxide emissions no more than 120 gm/km Full front and side impact protection based on UNECE Reg94

and Reg95 specifications Investment applications must be submitted by the end of

November 2007

New Eco-Car PromotionNew Eco-Car Promotion

Environmental and Environmental and Alternative EnergyAlternative Energy

CITIES in 1983 World Heritage in 1987 the Vienna Convention for the

Protection of the Ozone Layer. the Montreal Protocol on Substances

that deplete the ozone layer

Thailand is a Party toThailand is a Party to

Alternative Energy in ThailandAlternative Energy in Thailand

Solar Biogas Wind Bio Cluster

Garbage Water Bio Diesel Ethanol

Energy Policy and Development PlanEnergy Policy and Development PlanShort term:• Restructure and Improve Energy Industry Management• Procure Energy and Promote Conservation• Promote Alternative Energy and Establish Energy Price Structure• Establish Measures Pertaining to Clean Energy• Promote Private Sector and Public Participation in policy-making

Longer term:• Support and promote alternative energy, and R&D• Sustainable Energy Development• Energy Efficiency• Promotion of Competition in the Energy Business

Competition encourages efficiency and fairness

Target of Power Generation usingTarget of Power Generation usingRenewable Energy in 2011Renewable Energy in 2011

Energy type

Current RE Generation (MW)

Target of RE Generation (MW)

Amount of Increased Capacity (MW)

Biomass 1,977 2,800 823

MSW 4 100 96

Biogas 5 30 25

Hydro 44 156 112

Wind 1 115 114

Solar 30 45 15

Total 2,061 3,246 1,185

RE Power Generation Situation (Mid-2006)RE Power Generation Situation (Mid-2006)

100 MW(4.25 MW)

4343 MW(0.55 MW)

10 MW(4.60 MW)

85 MW(25.48

MW)

2,8002,800 MW(1,761.29 MW)

200200 MW(44.33 MW)

Biogas in livestock farm and Agro-industry

- Bangkok - Municipality- Industry estate

- Remote area- Roof top- Industry

- Wind farm in south area of Thailand- Hybrid with diesel

-Sugarcane Industry-Biomass power plant-Community power plant

- mini/micro hydro plant

BiomassBiomass WindWind

Biogas BiogasHydroHydro

PhotovoltaicPhotovoltaicMSWMSW

Share of Final Energy Consumption by Share of Final Energy Consumption by Fuel 2006Fuel 2006

Natural gas

3.3%

Electricity

17.2%

New & Renewable

energy17.4%

Petroleum

Products50.0%

Coal & its

products12.1%

Source: Department of Alternative Energy Development and Efficiency, MOE

Energy Situation in Thailand 2006Energy Situation in Thailand 2006Energy Situation in Thailand 2006Energy Situation in Thailand 2006

Oil 47%

Natural gas 32%

Coal 1 3 % Hydro 2%

Primary energy consumption

Transportation3 6%

Agriculture 5%Industrial

3 8%

Resident & Commercial 2 1 %

Consumption by Sector

9 0 % import

Source: MOE

Electricity Generation by Fuel Type 2006Electricity Generation by Fuel Type 2006(including off-grid)(including off-grid)

Neighboring

Countries3.38%

Coal&Lignite

16.04%

Hydro

5.21% Diesel

0.05%

Natural Gas

64.83%

Fuel Oil

5.37%

Renewable Energy

5.37%

CDM Projects in ThailandCDM Projects in ThailandClassified by type of projectClassified by type of project

Ethanol & BiodieselBiogasBiomassLandfillEnergy EfficiencyThermal

47%

27%

8%

8%

5% 5%

Source: DEDE 2006

MOE ProjectsMOE Projects• Renewable energy-fuel producers (SPPs and VSPPs)

will receive fixed adders and the adder bidding. • MOE provides 7-year low-interest rate loans.

In 2006, there were 167 projects within the amount of 4 billion baht.

• Energy Ministry fund invests in energy service companies (ESCO) to manage energy-saving for industrial plants to produce gas for resale. BOI provides investment incentives.

• Kyoto protocol: producers are able to sell carbon credits to developed countries. In 2007 there are 7 Clean Development Mechanism (CDM) approved projects and 8 CDM projects under consideration.

Promotion of Power Generation Using Promotion of Power Generation Using Renewable EnergyRenewable Energy

2007: MEA and PEA announce fixed-rate “Adders”

categorized by RE technologies and provided in addition to the normal purchasing rate under the Regulations for Power Purchase from VSPPs

Source: Energy Planning and Policy Office

Adder Rates for Renewable EnergyAdder Rates for Renewable Energy

VSPPs

Fuel/Type Adder (Baht/kWh)

Biomass, Biogas 0.30

Mini Hydro (50-200 kW) 0.40

Micro Hydro (<50 kW) 0.80

MSW 2.50

Wind 2.50

Solar 8.00

SPPs

Fuel/Type Adder (Baht/kWh)

MSW 2.50

Wind 2.50

Solar 8.00

Other RE types 0.30 (Bidding)

Solar PowerSolar Power

Geography

Yearly average photometry

(Mega June/ m2 per day)Energy Capacity

(1,000 ton equivalent to oil)

Over all country 18.2 554,070.6

Photometry and solar energy capacity of Photometry and solar energy capacity of countrycountry

Region Amount (System) Installation Size (Kilowatt)

Central 107 286.675

North 521 1,255.241

North East 52 164.75

South 128 510.95

Total 808 2,217.616

Solar power development by DEDEEnergy Installation from 1993-2005

BOI Solar Energy PromotionsBOI Solar Energy Promotions

Product/Service InvestmentSolar Cells

7,000,000 units

€39.33 million

Solar Cell 12 MW €21.07 million

Solar Cell Modules 750,000 Sheets €37.33 million

Solar Cell Module 400,000 Sets €10.30 million

Solar Cell Module 195,000 Pieces

Solar Cell 7,000,000 Pieces

€29.02 million

Solar Grade Silicon 600k Kilograms

Mono Crystalline Silicone Ingot 345,600 Kilograms

Solar Cell Modules 110,000 Sets

€12.54 million

BOI InvestmentBOI Investment

Incentives and SupportIncentives and Support

BOI Investment ServicesBOI Investment Services

BOI is a Full Service Investment Center We provide comprehensive information on opportunities

in Thailand We work with you in obtaining permits, visas and work

permitsOne stop shop for visas and work permits in 3-hours

or lessIndustrial Subcontracting assistance (BUILD)

Free sourcing assistance to your specifications International standards

Investment Facilitation Unit We assist you with other government agencies

The Board of Investment The Board of Investment Basic Incentives and MeasuresBasic Incentives and Measures

The Board of Investment The Board of Investment Basic Incentives and MeasuresBasic Incentives and Measures

Land ownership: A promoted company 50% or more foreign owned may apply, per section 27 Investment Promotion Act

Permission to bring in technicians and experts Corporate Tax exemption: 3 to 8 years Import duty exemption/reduction on machinery and

raw materials Subsequent 50% reduction of corporate income tax

after expiration of exemption Double deductionDouble deduction of public utility costs Deductions for infrastructure construction/installation

costs

BOI Fiscal IncentivesBOI Fiscal Incentives BOI OFFERS BOI OFFERS

corporate corporate income tax income tax exemptions exemptions of up to 8 of up to 8 yearsyears

-depending on -depending on activity and activity and ZoneZone

Tax on Corporate ProfitsOrdinary Company 30%Small Co.paid up capital<5M baht

-net profit not over 1Mbaht 15%-Net profit over 1M>3M baht 25%-Net profit over 3M baht 30%Company listing on SET 30%

Regional Operating HQ 10%(No exemption)

New Incentives in High Standard New Incentives in High Standard Environmental Conservation ProjectsEnvironmental Conservation Projects

• Exemption on import duty on machinery and equipment

• Maximum corporate income tax deduction of 3 years, valued at not more than 70% of the capital expenditure for the project

Announced 18 July 2007 by BOI

Investment Opportunities Investment Opportunities in Alternative Energy in Alternative Energy

The BOI Offers an 8-year Corporate Income Tax Exemption, Regardless of Zone:Production of Solar Cells Manufacture of energy-saving

machinery/equipment or machinery/equipment using alternative energy

Energy Service Consulting Companies (ESCO), with approval of the Ministry of Industry

Energy-saving machinery or equipment for existing BOI projects can be imported duty-free

BOI Basic BOI Basic Promotion Promotion PackagesPackages

• 3 Investment Promotion Zones to promote industrial decentralization

Zone: 1 2 3Incentives: Lower Higher Incentives

% of First Three Years’ Sales Add. Income Tax Exemption, No cap

1% or at least 150 million baht 1 year

2% or at least 300 million baht 2 years3% or at least 450 million baht 3 years

Additional incentives for skills, technology, and innovation (Optional)

Investment and Expenditures on:•Research and development or design•Advanced technology training•Funding of educational and research institutes

Note: Corporate income tax holiday may not exceed eight years.

BOI Office Frankfurt: Bethmannstr 58, 5.OG

60311 Frankfurt am Main

Tel: (49 69) 92 91 230

Fax: (49 69) 92 91 232

E-mail: fra@boi.go.th

Europe Desk : BOI HeadquartersBangkok, Thailand Tel: (66) 2 537 8111

Thailand—Each Piece Fits Perfectly.Thailand—Each Piece Fits Perfectly.