BUSINESS OPPORTUNITIES IN THAILAND
Udom Wongviwatchai Secretary General
Thailand Board of Investment March 2013
TNCS’ TOP PROSPECTIVE HOST ECONOMIES FOR 2012–2014
(PERCENTAGE OF RESPONDENTS SELECTING ECONOMY AS A TOP DESTINATION)
1 China (1) 2 United States (2) 3 India (3) 4 Indonesia (6) 5 Brazil (4) 6 Australia (8) 6 United Kingdom (13) 8 Germany (8) 8 Russian Federation (5) 8 Thailand (12) 11 Viet Nam (11) 12 Mexico (10) 13 Japan (-) 14 Netherlands (-) 14 Poland (6) 14 South Africa (-) 17 Korea, Republic of (-) 17 Sweden (-) 19 France (19) 19 Italy (-) 19 Malaysia (19)
Developed economies
Developing and transition economies
Source: UNCTAD Top host economies for FDI 2012-2012 as of July 12, 2012
(x) = 2011 ranking
The World Bank Ranks Thailand among the easiest
places to do Business in Asia and 18th in the World
2013 2013
1 Singapore 11 Finland
2 Hong Kong 12 Malaysia
3 New Zealand 13 Sweden
4 United States 14 Iceland
5 Denmark 15 Ireland
6 Norway 16 Taiwan
7 United Kingdom 17 Canada
8 Korea, Rep 18 Thailand
9 Georgia 19 Mauritius
10 Australia 20 Germany
Source: Doing Business 2013, October 25, 2012
Value of Investment Promotion Applications By Industry, 2003 – 2012
0.9 1.3 1 1.5 1 1.8 1.7 1.8 2.4
4 3.30.7 0.7
0.5 0.7 0.81.5
0.5
0.30.4
0.5 0.4 0.2 0.3 0.41.1
1.5 3.6
1.4 1.9 1.4 1.73.3
6.4
2 1.7 2.1 1.6
2.2
4.2
1.5
3.12.7
3.81.3 0.6 1
2.2
6.1
1.4
4.14.4
3
4.3
4.1
9.4
4.2
6.2
15.3
1.10.5 0.80.3
4.31.5
2.22.1
1.7
1.9
3.2
0
5
10
15
20
25
30
35
40
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Euro billionAgro Minerals Fashion Auto E&E Chemical Services
7.98
16.42 17.63
12.82 15.88
11.17
15.97
11.20
Source: BOI, as of Jan 17, 2013
16.84
37.01
Exchange rate: €1 = Bt39.96 in 2012
ASEAN - EU Snapshot ASEAN’s Macro-Economy • GDP (2011): US$2,112.4
Bn* (€1,643 bn) • GDP per capita: US
$3,376 (€2,626 bn) • GDP Growth: 5.7% and
6.4% in 2011-2012 • Population: 600 million
EU’s Macro-Economy • GDP (2011): € 12,650 bn • GDP per capita: € 25,200 • GDP Growth: 1.5% and -0.3% in
2011-2012 • Population: 501 million
* IMF Forecast
Source: Tilleke and Gibbins & IMF Forecast as of Feb 27, 2013
Source: European Economic Forecast 2013 & Eurostat
Exchange rate: US$1=Bt31.08 and €1 = Bt39.96 in 2012
ASEAN Corporate Income Tax 2013
0%
5%
10%
15%
20%
25%
30%
Singapore Thailand Vietnam Malaysia Indonesia
Source: KPMG
Sectors of Opportunity
Target Industries
Agriculture and food processing
Automotive
Machinery
Mold & Die
Target Industries
Biotechnology
Alternative energy
E&E
Food Industry
“Thailand: Kitchen to the World”
THAILAND: 12th in total food exports
World’s # 6 Rice & Grains Exports
World’s # 1 Cassava Exports
2011 THAILAND’S TOP FOOD EXPORT CATEGORIES AND WORLD’S RANKING
Source: Na+onal Food Ins+tute 2012
World’s # 2 Sugar Exports
World’s Top 15 Fruit &Vegetable Exports
World’s $# 3 Fishery Exports
GMP and International Standard Good Manufacturing Practices is a
mandatory measure for 54 types of food products
Strengths of Thai Food Industry
Abundant Raw
Material
Skilled & hard working
Workforce
Good Quality & Safety
> 80% of raw materials used by the food industry are locally sourced at
low prices
Size of workforce now > 39.5 million Minimum Daily Wage Bt300 (€7.5)
Source: Thailand Food Industry Outlook, Commercial Section, Royal Danish Embassy Mar 2011
Automotive Industry “Thailand: Automotive Hub of Asia”
As of Feb 14, 2013
Thailand: 9th largest automobile producer in the world in
2012*
Target:
To manufacture 3,000,000
units in 2017
Output:
14 assemblers
with a combined production
of more than
2,000,000 in 2012
High local content :
80-90% for pick-up and 30-70% for passenger
car
Source: OICA and TAI
Thailand’s Automotive Industry Overview
2012 Thailand’s Automotive Industry VEHICLE MOTORCYCLE
December Jan.-Dec. Growth YOY %
Growth YTD % December Jan.-Dec. Growth
YOY % Growth YTD %
Production (Units) 221,353 2,453,717 123 68.32 183,384 2,606,161 21.30 27.56
Domestic Wholesale (Units)
144,676 1,436,335 161 80.71 152,894 2,130,067 24.94 6.11
Export (CBU) (Units)
86,297 1,026,671 146 39.56 85,959 856,935 -29 -24.37
Source: Thailand Automotive Institute as of Jan 28, 2013
2. Denso 4. Aisin Seiki 13.Yazaki 15.Sumitomo 16.Toyota Boshoku 18.CalsonicKansei 19.JTEKT 20.Hitachi 28.Toyoda Gosei 33.NTN 34.NSK 35.Mitsubishi 39.NHK Spring 40.Koito 41.TS Tech 43.Takata
46.Bridgestone 49.Tokai Rika 57.Showa 61.Mitsuba 66.Asahi Glass 72.Stanley 74. Akebono
Brake 82.Sanden 84. F-Tech 92.Alpine 94.Pioneer 98. Omron 28/29 Companies
1. Robert Bosch 3. Continental 6. Faurecia 7. Johnson
Control 8. ZF 11. TRW 12. Delphi 14. Lear 17. BASF 21. Valeo 22. Visteon 23. Autoliv 25. Mahle 27. Dana 31. BorgWarner 36.Teneco
44. Federal-Mogul 47. Michelin 50. GKN Driveline 52. Goodyear 56. Grupo Antolin 58. Bayer 59. TI Automotive 65. Draexlmaier 67.American Axle 73. Rieter Auto. 84. F-Tech 86. Hayes Lammerz 93. 3M 29/71 companies
Japanese Global Suppliers Other Global Suppliers
Top 100 Global Suppliers 2010 Present in Thailand
Renewable Energy
Thailand’s Energy Policy 1
• Enhancing energy related industries & business to be next generation value-creator.
2 • Securing country’s energy supply.
3 • Pricing energy right.
4 • Up-scaling RE mix to 25% in 10 years.
5 • Targeting energy intensity reduction by 25%
(based on 2010 level) within 20 years.
Source: DEDE (Renewable Energy Asia 2012), as of Sept 12, 2012.
Alternative Energy Development Plan (AEDP) 2012-2021
Renewable Energy ( 9,198 MW) Solar power 2,000 MW
Wind power 1,200 MW
Hydro power 1,608 MW
MSW 160 MW
Biomass 3,630 MW
Biogas 600 MW
New forms of RE (3 MW)
Geothermal energy
1 MW
Wave and Tides
2 MW
AEDP 2012-2021, targeting to replace 25% of total fossil-fuel consumption with RE at the end of 2021.
Source: Ministry of Energy, as of April 2012
Economic transition from labor intensive to
knowledge-based is creating great demand
As of Mar 4, 2013
• Thailand continues to industrialize, but is dependent on foreign industrial machinery for immediate future.
• High demand for: – Food and farm machinery – Alternative energy/energy conservation
machinery – Textile machinery – Automotive production machinery – Mould & Die Industry
Opportunities in Machinery
Investment Incentives: Metal Products &Parts Manufacturing General
• 50% reduction of machinery duty • Corporate income tax exemption: In IE-3 years
• 50% reduction of machinery duty • Corporate income tax exemption: – In IE-7 years – Outside IE-3 years
• Exempt from machinery Duty • 8 years corporate income tax exemption
Exempt from machinery import duties
Exempt from corporate income tax for 8 years
Examples: Sintered products, mold & die parts
Priority
Zone 1 Zone 2 Zone 3
As of Jan 31, 2013
Biodiversity in Thailand is ranked as the eighth most bio-diverse region in the world.
Thailand is the world’s highest biodiversity per unit area-hosting several forests types and aquatic habitats.
Thailand supports up to 10,000 species of plants, • 980 species of birds, • 300 species of mammals, • 490 species of reptiles and amphibians, • 2,800 species of fishes and • 150,000 species of microbes – accounting for
about 10% of all species of living organisms in the world.
Source: Thailand BIOTEC Guide 2011/2012 as of July 17, 2012
Biodiversity in Thailand
Seed & Plant R&D
Biopharmaceutical agents
Diagnostic kits for health, agriculture, food and environment
Biomolecule & bioactive compounds using microorganisms, plant cells and animal cells
Raw materials and/or essential materials used in molecular biological experiment
Biological substances analysis and/or synthesis services
Biotechnology
Source: A Guide to BOI 2010
Biotechnology: BoI Eligible Activities
Exemption of import duty on machinery
Exemption of 8-year-CIT without being subject to CIT exemption cap
50% reduction of CIT on the net profit generated from investment for 5 years after the exemption period
Double deductions for transportation, electricity and water costs for 10 years from the date of
first income derivation from promoted activity
Biotechnology
Deduction of infrastructure installation or construction costs from net profit in addition to normal depreciation of
not more than 25% of the project.
Note: Applications must be submitted to the BOI within Dec 31, 2012
Incentives for Biotechnology
As of Feb 18, 2013
Policy to Support Hi-Tech Industry
Tax Incentives • Exemption of import duties on machinery • Corporate income 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
Eligible • Any Locations except Bangkok • Applicable to designated activities only • Application submission deadlines: Dec 31, 2012
Source: BoI Announcement No.2/2553, April 23, 2010.
Customized incentives for
Higher Value investment projects
Projects with investment value at least Bt 30 billion baht (excluding cost of land and working capital) will be eligible for a customized tax incentive package
Source: BOI E&E Industries Division as of Feb 5, 2010
Roles of the BOI • Facilitating market entry—100% foreign ownership
in manufacturing and most services eligible for BOI promotion
• Reducing initial investment costs through provision of tax incentives
• Providing business-related services – Information – Site visits – Subcontracting development
• Facilitating business operations – Right to own land – Visas and work permits – Help Desk
No restrictions on foreign currency
100% foreign ownership
No export requirements
No local content requirements
LIBERAL INVESTMENT REGIME
Thailand and the BOI offer:
• Facilitating market entry—100% foreign ownership in manufacturing and most services eligible for BOI promotion
• Reducing initial investment costs through provision of tax incentives
• Providing business-related services – Information – Site visits – Subcontracting development
• Facilitating business operations – Right to own land – Visas and work permits – Help Desk
Roles of the BOI
Tax Incentives
ü Corporate income tax holidays up to 8 yrs § Additional 50% reductions of corporate income tax for 5 years
ü Import duty reductions or exemptions on machinery and raw materials
ü Double deduction of public utility costs ü Deductions for infrastructure
construction/installation costs
BOI ZONING AND INCENTIVES
Zone: 1 2 3 Incentives: Lower Higher Import Duty
Privileges Outside I.E Inside I.E
Zone 1 50% Reduction
50% Reduction
Zone 2 50% Reduction Exempt
Zone 3 Exempt Exempt
Corporate Income Tax
Outside I.E
Inside I.E
Zone 1 No Privilege 3 years
Zone 2 3 years 7 years
Zone 3 8 years 8 years
Sector Matrix: Incentives to strengthen
competitiveness
Strategic or Priority Activities
• Maximum incentives regardless of location
• Customized packages
Zone-Based Incentives: • Zone 1 • Zone 2 • Zone 3
From Zone-Based to Sectoral Approach
Investments and expenditures on: • Research and development or design • Advanced technology training • Funding educational and research institutions • Contribution to Science and Technology Development Fund
Criteria
STI Incentives (Optional)
Required STI Investment & Expenditures
Additional Year of Corporate Income Tax Exemption
Exemption of Import
Duties on Machinery
Removal of Corporate Income
Tax Exemption Cap
1% of the first 3 years’ sale or at least Bt150 million, whichever is less
1 ü ü
2% of the first 3 years’ sale or at least Bt300 million, whichever is less
2 ü
ü
3% of the first 3 years’ sale or at least Bt450 million, whichever is less
3 ü
ü
BOI SERVICES
Roles of the BOI • Facilitating market entry—100% foreign ownership in
manufacturing and most services eligible for BOI promotion
• Reducing initial investment costs through provision of tax incentives
• Providing business-related services – Information – Site visits – Sourcing
• Facilitating business operations – Right to own land – Visas and work permits – Help Desk
• Information and profiles of companies in supporting industries and manufacturers of parts and components in 10 ASEAN countries
ASEAN SUPPORTING INDUSTRY DATABASE (ASID)
www.asidnet.org
38
18th Floor, Chamchuri Square Building 319 Phayathai Road, Pathumwan Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100 Email: [email protected]
More Convenience, less time, more efficiency!
One Start One Stop Investment Center
• Facilitating market entry—100% foreign ownership in manufacturing and most services eligible for BOI promotion
• Reducing initial investment costs through provision of tax incentives
• Providing business-related services – Information – Site visits – Subcontracting development
• Facilitating business operations – Right to own land – Visas and work permits – Help Desk
Roles of the BOI
Belgian Investment
Foreign Direct Investment Applications
0.6 0.30.6 0.8
0.20.03
9.9
4.9
1.21.3
9.4
16.2
0
4
8
12
16
20
Total Japan EU ASEAN USA. Australia
Eur
o B
illio
n
2011 2012+63.5%
Source: BOI, as of January 17, 2013
Exchange rate: €1 = Bt39.96 in 2012
Belgium applications in
2012: €11.9 million
Trend of Belgium Applications
2.4
94.3
127.8
1.5
60.3
12.4
59.4
8.1
116.8
0.1
11.92
8 8
4
6
5
11
6
7
2
9
0
30
60
90
120
150
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Euro
Mill
ion
0
3
6
9
12
No. o
f Pro
ject
s
ValueNo.of Projects
Source: BOI, as of Feb 28, 2013 Exchange rate: €1 = Bt39.96 in 2012
Belgium Investment Applications
Totals by Sector: 2002 – 2012
Sector Projects € Million Agricultural Products 7 25.0 Minerals and Ceramics 4 66.3 Light Industries/Textiles 16 18.2 Metal Products and Machinery 5 55.7 Electric and Electronic Products 11 0.9 Chemicals and Paper 8 217.2 Services 17 111.7 TOTAL 68 494.9
Source: BOI, as of Feb 28, 2013 Exchange rate: €1 = Bt39.96 in 2012
Belgium Investments in Thailand
45 45
Mr. Chanin Khaochan Director Thailand Board of Investment, Frankfurt Office Bethmannstrasse 58, 60311 Frankfurt am Main, Germany Tel.: +49 69 929 1230 Fax: +49 69 929 123 20 Email: [email protected] Website: www.boi.go.th
BOI OFFICE IN GERMANY