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Mr. Satit SirirangkamanontSecretary General
Thailand Board of Investment
Expanding Opportunities for Expanding Opportunities for U.S. Investments in ThailandU.S. Investments in Thailand
30 November 2004American Chamber of Commerce in Thailand
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• Updates on U.S. Applications to the BOI
• Improving efficiency of policies to strengthen industrial competitiveness
– Focusing on critical success factors
– Strategic industries
• Improving BOI facilitation services
Thailand: An Investment Destination of Choice
33
BOI update:BOI update:
U.S. Investments in U.S. Investments in ThailandThailand
44
Net Applications for BOI PromotionNet Applications for BOI Promotion
2003 2004 Jan-Oct# of
ProjectsValue
(Million USD)# of
ProjectsValue
(Million USD)
Total Investment
961 $7,620 1,049 $12,065
Total Foreign 668 $6,217 617 $6,348Japan 316 $2,659 286 $2,180
USA 43 $1,186 33 $852EU 74 $911 71 $525Netherlands 9 $241 14 $270Singapore 62 $365 62 $378Taiwan 67 $198 52 $216
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6 Target Sectors
• Agro-Industry
• Fashion
• Automotive
• Electronics and ICT
• Energy
• High Value-Added Services
Designated a Target SectorNovember 29, 2004
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Total Foreign and Domestic Net ApplicationsTotal Foreign and Domestic Net Applications By Sector By Sector
SectorSector20032003 2004 Jan-Oct2004 Jan-Oct
##ProjectsProjects
ValueValue(Million USD(Million USD))
##ProjectsProjects
ValueValue(Million (Million USD)USD)
AgricultureAgriculture 181181 $855$855 226226 $1,112$1,112
Minerals and CeramicsMinerals and Ceramics 2828 $498$498 3131 $1,707$1,707
Light IndustryLight Industry 8282 $445$445 8484 $298$298
Automotive and Metal Automotive and Metal ProcessingProcessing
237237 $1,512$1,512 218218 $1,220$1,220
Electrical and Electrical and ElectronicsElectronics
151151 $1,570$1,570 173173 $1,920$1,920
Petrochemicals and Petrochemicals and ChemicalsChemicals
123123 $1,400$1,400 134134 $2,570$2,570
Services & Services & InfrastructureInfrastructure 159159 $1,340$1,340 183183 $3,238$3,238 TOTALTOTAL 961961 $7,620$7,620 1,0491,049 $12,065$12,065
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5-Year Totals by Sector: 1999-2003 5-Year Totals by Sector: 1999-2003 U.S. Investments Approved U.S. Investments Approved
SectorSector##
ProjectsProjects
Value Value
(Million (Million USDUSD))
AgricultureAgriculture 3030 $177$177
Minerals and CeramicsMinerals and Ceramics 55 $200$200
Light IndustryLight Industry 3434 $301$301
Auto and Metal ProcessingAuto and Metal Processing 3535 $255$255
Electrical and ElectronicsElectrical and Electronics 8484 $1,980$1,980
Petrochemicals, ChemicalsPetrochemicals, Chemicals 3131 $1,018$1,018
Services and InfrastructureServices and Infrastructure 2222 $64$64
TOTALTOTAL 241241 $3,995$3,995
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2004 Results of AmCham Outlook: Bullish on Thailand
““Expansion plans for Thailand Expansion plans for Thailand increased from 2003, whereas increased from 2003, whereas those for China, Vietnam and those for China, Vietnam and
India fell.”India fell.”
- - The Nation July 8, 2004
Six ASEAN American Chambers participated In the AmCham Outlook, an annual business confidence survey of members in the region.
Business expansion planned
2003 2004
Thailand 66% 83%
China 50% 47%
Vietnam 47% 25%
India 31% 19%
• 76% expect profits to increase
• 80% expect their businesses to expand
• Availability of trained personnel significant area of strength – More than 100% increase in satisfaction
• Increased satisfaction with– Personal security – Costs of labor, housing, and raw
materials
AmCham Thailand in 2004:
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Thailand Rated #4 FDI Location Thailand Rated #4 FDI Location for Inflows 2004-2007for Inflows 2004-2007
● Results of a 2004 survey of 87 international direct investment location experts.
● Subsequent survey of transnational corporations ranked Thailand #3 in Asia for FDI inflows.
GLOBAL RANKINGTop 1 China
Top 2 India
Top 3 USA
Top 4Top 4 THAILANDTHAILAND
Top 5 Poland/Czech Republic
Top 7 Mexico/Malaysia
Top 9 UK/Singapore/S. Korea
Source: Prospects for FDI flows, TNC Strategies and Promotion Policies: 2004-2007, UNCTAD & Corporate Location
1010
BOI direction:BOI direction:
Strengthening Thailand’s Strengthening Thailand’s Industrial CompetitivenessIndustrial Competitiveness
Focusing on value-added, Focusing on value-added, Focusing on sustainabilityFocusing on sustainability
Tandem FDI and DDI investments to ensure Tandem FDI and DDI investments to ensure balanced development and sustainabilitybalanced development and sustainability
EconomicEconomicGrowthGrowth PovertyPoverty
EradicationEradication Production
Employment
Income
Provincial Clusters
Community
Enterprises
DDIDomestic Direct
Investment
FDIForeign Direct
Investment
ThailandThailandCompetitivenessCompetitiveness Productivity
Skills, Technology, Innovation
Higher value-added industries
Industrial clusters
1212
New Policies in 2004New Policies in 2004
Alternative energy
Semi-conductor
Hard Disk Drive (HDD)
Energy-saving machinery or equipment for existing projects
New policies for the 3 Southern Provinces
Bleaching, dyeing and finishing
Carbon black
Film-making and entertainment
Long-stay tourism
1313
Regional Development
Sustainable CompetitivenessSustainable Competitiveness
Focusing on Strategic Industries
Attracting foreign and domestic investments in tandem
.
Incentives based on Zones and Sectors
. .
Meeting needs of investors and the nationMeeting needs of investors and the nation
. .
1414
ZonesZones Zone and Sector Matrix:Incentives to strengthen
COMPETITIVENESS
Proactive efforts to build up and attract investments in
Strategic or Priority Industries
Maximum incentives regardless of zone or
location.
Example: mould and die production
Zone-Based Incentives:• Zone 1• Zone 2• Zone 3
Higher incentives
Lower incentives
1515
Focus on critical success factors Focus on critical success factors to develop industry competitivenessto develop industry competitiveness• Industry competitiveness and productivity:
a different approach for each sector– Supply chain management– Manufacturing processes– Microelectronic design
• Energy and renewable energy– Gasoline, diesel, natural gas, electricity– Ethanol, biofuel, biogas, biomass– Energy-co-generation, independent power plants for
industry clusters
• Logistics– Infrastructure, oil & gas pipelines– Low-cost airlines, shipping– Logistics providers– Distribution Centers– Supply chain management systems
1616
Examples of Strategic Industries:
• High-tech electronics
• Biotechnology
Mission:
Proactively build up new growth and highgrowth industries and fill in the missing links and create backward and forward linkages.
• Fill in missing links in industrial clusters
• Build up local supply chains
• Strengthen linkages
Strategic IndustriesStrategic Industries
• Materials science
• Nanotechnology
1717 Example:
Development ofDevelopment of Local Supply ChainsLocal Supply Chains
Downstream Electronics Products
Wafers
ForwardLinkages
BackwardLinkages
Integrated Circuits
• Work together with industry, associations• Work to develop Thai suppliers• Work to attract new foreign suppliers• BOI Unit for Industrial Linkage Development
(BUILD), linkages with SMEs
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Development of LinkagesDevelopment of Linkages in in Strategic IndustriesStrategic Industries
Industry
UniversitiesTechnologyResearch centers
ProductionR&D
Provide incentives
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Example: Example: MekTec ManufacturingMekTec Manufacturing
R&D Projects of MekTec and Chulalongkorn University
Project 1: Organic solubility preservative to prevent copper oxidation, assist in soldering processes
Period: 2004-2007
Result: Increase in product quality and reduced manufacturing costs
Project 2: Development of liquid polyamide to strengthen the coating of flexible printed circuits
Investment: 25 million baht
Period: 2004-2007
Result: Increase in product quality and reduced manufacturing costs
Project 3:Nanotechnology development for manufacturing of new flexible printed circuits
Investment: 50 million baht
Period: 2004-2009
Result: New product development
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Example of Priority Activity: Example of Priority Activity: International Procurement Offices (IPOs)International Procurement Offices (IPOs)Criteria: Warehouse(s) and computerized inventory
system
Procurement activities, quality control and packaging
Several sources of procurement, including a domestic source
Incentives: Exemption of import duties on machinery
Exemption of import duties on raw materials and essential materials
No foreign ownership restriction
Example:Example: Isuzu Isuzu (Thailand) Co., Ltd.(Thailand) Co., Ltd.Joint Venture: Singapore and Thai
Investment: 1.7 Billion Baht
2121
Example of Priority Activity: Example of Priority Activity: Regional Operating Headquarters (ROH)Regional Operating Headquarters (ROH)
Criteria: • Service branches/affiliates in 3 countries
• Majority or totally foreign-owned
• Income derived from managerial, technical, administrative, or prescribed support services for branches/associated companies
Incentives: Corporate income tax of 10% for:• Qualified services• Royalties from ROH in Thailand• Interest income on loans made to ROH branches/ associated enterprises
Tax exemption for dividends from ROH branches/associated enterprises
Personal income tax of 15% for expatriate employees for 2 years
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Example: ExxonMobil Ltd.Example: ExxonMobil Ltd.ROH of Exxon Mobil Corporation since February 2003
Reasons Thailand Chosen:
• Cost of operations• Efficient, competitive business support center• Available relevant skills, language proficiency, ability to work in multicultural environment• Telecommunications infrastructure• Expatriate living: friendly Thai hospitality, quality housing, international schools
• BOI facilitation with government agencies
Functions Accounting, information systems, financial analysis, payroll, payables, credit, customer service and sales support
Employment: Thai 584, Foreign 41; more when fully functional
7 countries supported: Singapore, Japan, Malaysia, Australia, U.S., Hong Kong, Thailand
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Example:Example: Reuters Software Reuters Software (Thailand) Co., Ltd.(Thailand) Co., Ltd.
A global software development centers for ReutersCurrently employs 470 people
Sample of clients: Merrill Lynch, ABN AMRO, Hong Kong Bank
Reasons for investing in Thailand:
• Lower operating costs compared to Singapore• Teamwork• Strong software skills• Thai employees work well with offices in other countries
BOI Promotion:
5-year corporate income tax exemption
2424
BOI update:BOI update:
Improving BOI Improving BOI Facilitation ServicesFacilitation Services
2525
Investment policy and incentive provider
Investment Projects Administration
Facilitation Services
Investment and industry monitoring
Role of the BOI
2626
Continuous improvement in streamlining and efficiency One Portal One Database, Increasing ease of information access for
investors Online Applications and Raw Materials &
Machinery Tracking System: January 1, 2005
More after care services
More focus on getting feedback to improve BOI policies and services
Backed by ISO 9001:2000 CertificationBacked by ISO 9001:2000 Certification
Creating an Enabling Environment for Investments
2727
Increasing responsiveness to investorsIncreasing responsiveness to investors
Strengthening Country Desks at BOI HQ:
• United States • Europe
• Japan + Korea
• China + Hong Kong + Chinese Taipei
• ASEAN + India
2828
BOI Offices in the U.S.BOI Offices in the U.S.
New York:
61 Broadway, Suite 2810New York, NY 10008
[email protected] (212) 422-9009
(moved from WTC)San Francisco:
Coming Soon!