Focusing on BOI's new policies and Eco-car prohects

1. CONTENTS
January 2015
Volume 25
No. 1
Page
New Policies Unveiled to Investors 1
News Bites / BOI Net Applications 2
Thailand and World Bank Advance
Green Economy
4
Industry Focus: Eco-car Projects 5
BOI Supports Government Policy to
Promote Overseas Investment
7
BOI Celebrates Success 8
Ford Motor Company 9
BOI’s Missions and Events 11
Thailand Economy-At-A-Glance 12
Continued on P. 3
New Policies
Unveiled to Investors
The Board of Investment held a seminar “New Investment Promotion Strategies:
Towards Sustainable Growth” on 15 December 2014, in the Grand Diamond
Ballroom at Impact, Muang Thong Thani, to provide a dialogue with investors
that would explain the recently adopted BOI investment policy and answer any
questions that investors might have.
Starting with a video that gave a quick overview of the new policy and the reasons
for taking a new path to support the national development strategy, Acting
BOI Secretary General Hirunya Suchinai took the stage to give introductory
remarks to all of the dignitaries and private sector representatives who were
in attendance. She said that the decision to revise the BOI investment policy
was driven by both external and internal factors, which created a need to
change investment direction to address challenges and ensure sustainable
development. She noted that BOI had conducted a study back in 2011 of factors
that were impacting investment, in consultation with both public and private
sectors, to ensure the adoption of a successful sustainable investment plan for
the next 7 years.
Prime Minister Prayut Chan-o-cha told the 2,000 plus audience that the economy
was returning to normal and that the government needed to make economic
growth sustainable, with GDP growth for the current year forecast at 3.5% to
4.5%. He also noted that the target for BOI investment application had been
reached, at over 700 billion baht. Likewise, tourism was almost back to full

2. NEWS BITES BOI NET APPLICATIONS
Thai SMEs Improving
The situation of small and medium-sized
enterprises (SMEs) in Thailand is picking up,
as a result of positive signs from Thai exports.
The SME situation was discussed at a meeting
of the National Board of SMEs Promotion,
chaired by Prime Minister Prayut Chan-o-cha
at Government House on 4 December 2014.
The meeting heard a report that more SMEs
were starting operations, indicating that
entrepreneurs have become more confident
in the country’s economic situation. Apart
from the improvement of exports, the world
economy is also recovering and domestic
consumption is increasing.
The meeting approved a budget of 360 million
baht for a project to promote SME networks in
18 provincial clusters. The project is intended
to encourage SME operators to group into
clusters. Assistance will be provided to
various clusters in order to add value to
their products, reduce their production costs,
expand their markets, and strengthen their
networks.
Targets have been set to increase the GDP
of SMEs to 38 percent and the number of
SME operators by another 50,000. There
are currently more than two million SMEs in
Thailand.
ADB Recognizes Economic
Improvement
Thailand continued to strengthen its economic performance in
the latter half of 2014 and the New Year looks even brighter.
Recently, President of the Asian Development Bank (ADB)
Takehiko Nakao, met with Prime Minister Prayuth Chan-ocha,
Finance Minister Sommai Phasee, and Bank of Thailand
Governor Prasarn Trairatvorakul for discussions on Thailand’s
economy and possible areas of further cooperation with ADB.
The president of ADB noted that Thailand’s broad economic
outlook was encouraging heading into 2015. With restored
confidence, increased government spending, and expected
improvement of major industrial economies, ADB projects growth
to be about 4 percent in 2015.
“Due to Thailand’s strategic location in the GMS, broad industrial
base and rich natural resources for agribusiness and tourism,
it has the potential to reach high-income status through
continued reform efforts and appropriate policies,” said Mr.
Nakao. “Thailand’s economic performance is also crucial to the
prospects of GMS countries.”
Mr. Nakao highlighted challenges that Thailand must overcome
for strong and inclusive growth. Continued strong foreign direct
investment and improved infrastructure are also essential for
2013
(US$ = 31.57 THB)
2013 (Jan - Nov)
(US$ = 31.63 THB)
2014 (Jan - Nov)
(US$ = 32.78 THB)
Number of
projects
Value
Number of
projects
Value
Number of
projects
Value
Total Investment 2,237 35,172 1,627 26,272 1,388 23,374
Total Foreign Investment 1,132 16,622 1,015 12,225 816 13,250
By Sector
Agricultural Products 64 761 59 740 44 482
Minerals / Ceramics 28 1,172 29 1,191 29 647
Light Industries / Textiles 59 335 53 315 36 551
Automotive /
Metal Processing
378 7,855 349 5,970 214 5,793
Electrical / Electronics 207 2,852 184 1,132 160 1,555
Chemicals / Paper 124 740 111 680 104 2,484
Services 272 2,908 230 2,197 229 1,738
By Economy
Japan 562 8,959 528 7,098 365 4,518
Europe 132 996 113 827 111 2,647
Taiwan 53 221 43 197 40 429
USA 55 368 52 301 29 1,294
Hong Kong 39 639 35 613 27 343
Singapore 93 722 72 425 67 580
By Zone
Zone 1 366 3,421 327 1,475 251 1,258
Zone 2 586 8,090 529 7,353 420 10,566
Zone 3 180 5,112 159 3,396 145 1,426
Unit: US$ Million
Note: Investment projects with foreign equity participation from more than one country are
reported in the figures for both countries.
Thailand to realize its economic potential. Mr. Nakao said ADB is
ready to further support Thailand in key areas such as infrastructure
development, water resource management, education reform,
financial inclusion and literacy, renewable energy, and energy
efficiency. ADB’s partnership with Thailand also aims to advance its
links with neighboring countries through cross-border investments,
trade facilitation, and financial cooperation.
Thailand has been a member of ADB since its inception in 1966.
By the end of 2014, ADB has committed $6.4 billion to Thailand in
loans, grants, and technical assistance.
January 2015
Page 2

3. Continued from P. 1
Continued on P. 4
capacity with 25 million arrivals for the current year, 2.2 million
in October alone, and 27 million arrivals forecast for next year.
The prime minister recognized that there were still outstanding
issues that the government needed to address, that it was aware
of them and they may take some time but would be resolved.
One such problem is the need to utilize more machinery in the
agriculture sector and to make it less labor intensive. It was
important for there to be stability in this sector as it would benefit
society as a whole. His government is also tackling the difficult
issue of corruption. It should be noted here that Thailand’s
ranking on the global corruption index has significantly improved
this year.
Among the many issues his government was now addressing
is the strengthening of the digital system in Thailand, which
includes drafting legislation that would assist the sector, including
hardware and software, and improving management so that it
could meet the challenges of the global economy. Infrastructure
was being improved and this included upgrades to the rail system
and connecting mass transit in Bangkok, perhaps with a single
payer pass. Airport capacity needed to be increased, special
economic zones needed to be established across the country,
with adequate transportation connectivity, border trade needed to
be increased and supported and he noted all of this was integral
to the country’s sustainable development.
The prime minister went through a several of activities to improve
the Thai economy, including boosting alternative energy and the
need to turn waste in energy to ensure a better quality of life.
Factories need to adopt better standards and he underlined the
importance of supporting small and medium sized enterprises,
which make up about 90 percent of companies.
Hesaidtheremustbeabalance achieved amongsocial,economic
and political spheres to ensure sustainable development and
to attract the innovation necessary for this. All of this can be
achieved, but there needs to be cooperation.
Taking the stage after the prime minister concluded his remarks
was Deputy Prime Minister M.R. Pridiyathorn Devakula, who
went through the various stages of Thailand’s development,
which at times reached double-digit GDP growth. He spoke of
the development of upstream industries following the discovery
of oil and gas and the introduction of ethylene and propylene
into the mix. At times, private sector investment had reached as
much as 30 percent of GDP.
Following the financial crisis in Asia, growth had picked up
but Thailand had begun to experience labor shortages. Later,
demonstrations on the environment led to some investments
being curtailed. Thailand could not continue moving in this
direction and that is why change was needed and the profile
of industry had to be adjusted. Thai companies were now
beginning to invest overseas, with several examples being
offered, including some SMEs.
Thailand was now in the process of moving from being a
production country to a trading country. He spoke in detail of
investments in International Headquarters and said that revisions
were being made to the tax code that would include lowering the
tax to 10 percent for HQs in Bangkok that sell raw materials for
overseas production and lowering the income tax to 15 percent
in certain instances. This would be done in the near future,
as Thailand was committed to generating activity that would
enhance Thailand’s position as a trading hub.
Likewise under this category, the current 90 day address
reporting requirement would be extended to 2 years, and this
could be done by letter, no longer in person.
The BOI would be a starting point for all of this!
The deputy prime minister was followed by Acting BOI Secretary
General Hirunya Suchinai, who gave a presentation on “New
Investment Promotion Criteria and Policies.
In the afternoon, the seminar then broke into four sessions in
order to give investors additional detail on the various sectors
being promoted. These included session 1 on agriculture, agro-
processing, light industries and medical devices, which was led
January 2015
Page 3

4. Continued from P. 3
by Deputy Secretary General Duangjai Asawachintachit; session
2 on metal-working, mining, ceramics and automotive products,
led by Deputy Secretary General Chokedee Kaewsang; session
3 on electrical appliances and electronic products, led by Senior
Executive Investment Advisor Ajarin Pattanapanchai; and
session 4 on chemical products, paper, plastics, services and
infrastructure led by Acting Secretary General Hirunya Suchinai.
The sessions enabled investors to hear what changes were
occurring in their respective sectors, including what activities
would not be included in the new policies and those that have
been added such as creative product design. For example,
there were several activities included under light activities that
were no longer going to be on the list of promoted activities, but
upon consultations with the private sector, revisions were made
and those industries that filled in “missing-links” in the production
process were maintained. It was also made clear that the new
policy emphasizes high technology, designs or innovations,
which qualify for significant tax exemptions and other non-tax or
merit based incentives.
It was pointed out that the BOI does not have an incentive program
for companies looking to invest overseas but it can function as a
support center for such an endeavor and an interlocutor vis-à-vis
other Thai government agencies.
The BOI looks to direct investment and promote economic
development in Thailand’s Far South, especially the border
provinces of Pattani, Yala, and Narathiwat. Likewise, the BOI
will draw the attention of investors to the country’s 5 special
economic zones. These areas also have their own investment
incentives and privileges.
Presently, only one science and technology park exists in Thailand
and the BOI is keen to see other comparable sites established.
Moreover, mass transit systems and the transportation of bulk
goods were noted by the BOI panel as an activity that is both
essential for Thailand’s continued modernization and current,
with the Thai government already having approved a 2.4 trillion
baht infrastructure plan.
With the new policies now in place, Thailand has entered a new
phase of its national development and offers investors significant
incentives to invest in the country, which, when considered
along with the high rankings and low cost of living marks that the
country receives from international sources, make Thailand the
place to invest in Asia for the 21st century.
Thailand and World Bank
Advance Green Economy
Thailand, the second-largest producer of air conditioners and
foam in the world, manufactures approximately 12 million
air conditioners annually, 90 percent of which are for export.
Thailand is also one of the 10 largest importers and consumers
of hydro-chloro-fluorocarbon gases (HCFCs), importing more
than 18,000 metric tonnes of HCFCs in 2012. One of the central
goals of the new government is to introduce environment friendly
production into Thailand’s industries and to embrace the concept
of green industries.
In the latter part of 2014, Thailand signed a US$23 million grant
agreement with the World Bank Group to help make Thai air
conditioning and foam products more climate friendly. The funds
will help local manufacturers convert their production processes
to make air conditioning and foam products that destroy less
ozone, in line with international good practice.
The Ozone Projects Trust Fund of the Montreal Protocol will
provide the grant and provide Thailand with US$23.9 million or
approximately 760 million Thai Baht to reduce HCFCs used in
manufacturing processes. Funding will be provided to eligible
enterprises in Thailand including 12 air-conditioner manufacturers
and more than 120 foam enterprises.
According to the World Bank, the funding will help reduce
HCFC consumption in the air-conditioning and foam sectors
and significantly contribute to Thailand’s efforts to meet its
HCFC consumption phase-out obligations as agreed under
the international environmental treaty – The Montreal Protocol
on Substances that Deplete the Ozone Layer. Specifically, the
new grant will enable Thailand to reduce its consumption of
HCFCs by 15 percent; and achieve climate benefits by reducing
carbon emissions through the use of lower global warming
potential (GWP) refrigerant and foam blowing agents and through
improvement in energy efficiency of air-conditioning units.
“Energy efficiency and climate protection are priorities in
Thailand. In line with Thailand’s green growth policy, application
of new climate-friendly air conditioning and foam technologies
will enhance Thai industries’ competitiveness in markets that
increasingly demand climate friendly and energy efficient
products,” said Ulrich Zachau, Country Director for Thailand,
World Bank Group. “Business and technology investment using
these funds will protect the earth’s ozone layer and the climate,
and they will also promote sustained growth and jobs in one of
Thailand’s leading industries.”
January 2015
Page 4

5. Continued on P. 6
INDUSTRY FOCUS
Eco-car Projects to Spur
Demand for Thai Automotive
Parts and Components
The future already has arrived to Thailand and it is being built.
With an increasing global focus on environmental protection,
the vision of lower-emission vehicles has become a reality. In
many countries, eco-cars are found on the road and changing
how people view their use of automobiles in a world that is more
environmentally conscious. The defining feature of eco-cars is
that it releases less harmful contaminants into the atmosphere,
when compared to a vehicle that runs on a conventional internal
combustion engine, or uses certain alternative fuels, such as
biodiesel, ethanol, hydrogen, or propane.
Contributing 12% to the country’s GDP, auto manufacturing is
one of Thailand’s most vibrant sectors. Thailand’s automotive
industry ranks 9th in the world, with annual production capacity
of more than 2 million units per year, which makes it the largest
automotive manufacturer in Southeast Asia. These figures clearly
illustrate the robust nature and competitiveness of the Thai auto
industry on a global scale.
In 2007 Thailand was the first country in Southeast Asia to
introduce an eco-car scheme, attracting investment of 28.8 billion
baht. Five world-class OEMs (Honda, Toyota, Nissan, Mitsubishi
and Suzuki) applied for the Eco-Car Program Phase 1 by the end
of 2007, with total manufacturing volume anticipated to reach
585,000 units. Production commenced towards the end of 2009
or in 2010, with an output target of more than 100,000 units as
the Thai government stipulated that volume capacity needed to
arrive at 100,000 units in five years.
These investments naturally presented an opportunity for the
Thai automotive industry to integrate itself further with the global
production strategies of OEMs concerning mini-car and small car
segments, which then were expected to grow much faster than
light commercial vehicles or pickups in markets around the world.
All automakers planned to export at least 50% of their output,
especially Honda and Suzuki, which had been waiting a long
time to expand their manufacturing of small cars in Southeast
Asia. They seized the occasion to make their new
factory sites in Thailand the export base for the
region and for newly emerging markets.
TheEco-CarProgramPhase1wasregarded
widely not only as a value enhancer for
the Thai automotive sector, but also a
springboard for technological innovation.
Vehicles labeled as “Eco” needed to pass
stringent environmental and fuel economy
regulations. Eco-car projects, which met all
requirements set by the government, enjoyed
special incentives with the excise tax reduced from
30% to 17%.
Following the success of the Eco-Car Program Phase 1, the Thai
government announced in 2013 the Eco-Car Program Phase
2, which is expected to lift the country’s automotive production
volume to over three million units by the end of 2015.
Ten car manufacturers, including five existing eco-car producers,
applied for Phase 2 of the government’s eco-car program, with
total expected investment of 139 billion baht to manufacture 1.58
million vehicles. The five manufacturers that took part in Phase
1 have committed 86.8 billion baht for the production of 753,000
eco-cars, while the five newcomers will spend 52 billion to make
828,000 units. The success of the eco-car scheme in Thailand
has positioned the country as the eco-car hub for ASEAN.
Apart from the environmental protections, Eco-Car Program
Phase 2 is part of the country’s plan to increase annual car
production and further strengthen its leading position in Southeast
Asia. It will ensure that the eco-cars produced in Thailand match
the standards of developed markets such as the United States
and Europe.
For the second phase of the Eco-Car Program, the Ministry of
Industry mandated even more rigorous criteria. Automakers
have to develop eco-cars that satisfy certain requirements: Euro
5 emission standards, average fuel consumption of 4.3 liters/100
kilometers (a reduction from 5.0 liters/100 kilometers), an
average CO2 emission of 100 grams per kilometer (a reduction
from 120 grams per kilometer), and international crash safety
levels. Indeed, the principal aim of the Eco-Car Program Phase
2 is to turn Thailand into a production and export hub not only for
pickups but also for passenger cars.
Japan’s Mazda Motor Corporation, the first eco-car maker to
apply for the second phase under AutoAlliance (Thailand),
commenced its local eco-car production in November 2014 after
January 2015
Page 5

6. Continued from P. 5
winning BOI privileges in July of that same year. The Mazda2
is the first model manufactured under Phase 2, which offers
incentives and tax breaks for a minimum investment of 6.5
billion baht. Its 1.5-litre diesel version has been approved, while
the 1.3-litre petrol version is being considered as an additional
model. Mazda has invested 9.7 billion baht for its Phase 2
eco-car project at its assembly line plant in Rayong. There is
another 2.9 billion baht project by Mazda for the construction of
a factory designed especially for engine assembly and engine-
components production.
With capacity set at 158,000 units per year at AutoAlliance
(Thailand), the manufacture of eco-cars will elevate the technical
standards of the Thai automobile industry through collaboration
between the Japanese OEM and numerous local parts suppliers.
Moreover, since this eco-car is a highly competitive global model,
as an export it will make a big contribution to the growth of
Thailand’s automotive sector.
However, Nissan was the first OEM to launch eco-car varieties
in the Thai market, the March in 2010 and the Almera in 2011.
As of October 2014, the Japanese company was responsible
for 53.6% of the accumulated production of 712,292 eco-cars in
Thailand and 54.1% of accumulated domestic sales of 369,509
vehicles. For Phase 2, Nissan plans to spend another 6.86 billion
baht to make 123,000 eco-cars and 2 million auto parts a year
at its Bang Na-Trat Road facility. Furthermore, the company
will commit 3.11 billion baht on continuing the manufacture of
13,400 Phase 1 vehicles. Meanwhile, Mitsubishi Motors has
invested 12.6 billion baht (for new and expanded projects) to
make 268,000 eco-cars a year.
The Thai government has stated that all automakers should
focus on new eco-car models since there will be a new vehicle
excise tax structure in 2016. Under this new tax regime, all eco-
cars must have average CO2 emission below 100 grams per
kilometer and safety systems including ABS (anti-lock braking
system) and ESP (electronic stability program).
By the end of 2014, the Board of Investment (BOI) had approved
investment applications from ten automobile manufacturers
under Phase 2 of the eco-car program.
The investments from the ten assemblers whose projects have
been approved to date include investments for both the eco-car
2 project and expansion of eco-car 1 projects. To give some
examples of approved eco-car phase 2 projects, Ford Thailand
(see company interview on page 9) is making an investment of
18.18 billion baht with annual production capacity of 180,000
vehicles and 2,000 engines. Likewise, General Motors will invest
13.1 billion baht to make 158,000 vehicles annually. Toyota also
will commit 10.4 billion baht to make 100,000 vehicles a year
under Phase 2, and another 1.0 billion baht to produce a further
60,000 Phase 1 eco-cars.
Furthermore, the BOI has put together a set of incentives
regarding the manufacture of automobile parts for eco-cars
that meet international standards. For instance, on offer is an
exemption from import duty on machinery regardless of zone, a
corporate income tax exemption regardless of zone for the first
eight years of operation, and an exemption from import duty on
the import of raw materials and ready-made auto-parts for up to
90%.
To qualify for tax breaks under the Eco-Car Program Phase 2,
automakers were required to invest a minimum of 6.5 billion
baht (US$199.5 million) on a new plant with annual production
capacity of 100,000 units within four years of operation and meet
the rigorous environmental standards mandated by the Ministry
of Industry. In return, participating automakers will pay an excise
tax as low as 14% and eco-cars that can run on E85-compatible
fuel will be taxed at just 12%.
Phase 2 of the government’s Eco-Car Program calls for
participating automakers to build an all-new vehicle that is fuel-
efficient, environmentally friendly, safe, and low cost, for sale
throughout the ASEAN region by 2020. Currently, four Japanese
carmakers construct seven eco-car models, namely Nissan
(March and Almera), Honda (Brio and Brio Amaze), Mitsubishi
(Mirage and Attrage), and Suzuki (Swift).
In addition, Ford introduced its newly-developed EcoBoost,
the 1.0-liter, three-cylinder turbocharged engine, at the 34th
Bangkok International Motor Show (25 March – 7 April 2013).
The Mini SUV Ford EcoSport, which was launched towards
the end of 2013, and the 2014 Ford Fiesta, which was made
available to the US market last year, both use the state-of-the-art
EcoBoost technology.
The Ministry of Industry expects the second phase to boost
annual eco-car production in Thailand almost 60% to 935,000
units within five years. Launched in 2007, the first phase
attracted combined investment of 28.8 billion baht (US$884
million) by Mitsubishi, Honda, Toyota, Nissan and Suzuki. The
five automakers built 712,292 eco-cars between 2010 and 2013.
Nonetheless, according to the Thailand Automotive Institute, the
country’s car production is estimated to rise by 500,000 vehicles
in 2015, propelled by the second phase of the eco-car scheme.
Overall output is thus likely to hit 3.35 million units in 2015.
The Thai automobile sector, thus, is ready for a banner year in
2015.After its good run in the production of pickup trucks, Thailand
is now focused on becoming a major nexus for economical, eco-
friendly cars through its two phases of the Eco-Car Program.
Indeed, OEMs consider Thailand’s better infrastructure and
extensive supplier network as key advantages for establishing
themselves in the country. More importantly, despite the changing
political landscape, Thai investment guidelines have been largely
unaffected. Subsequent governments have realized that policy
consistency is a winning formula and changing it would be bad
for business.
Plus, as BOI deputy secretary-general Chokedee Kaewsang
mentioned in a recent Bangkok Post article, “The Thai automotive
production trend needs to change in line with the new strategy”.
He further elaborated the point by stating, “Fuel efficiency, safety
and environmental friendliness with electric vehicles and plug-in
hybrids will be the next milestones for Thailand’s automotive
industry”.
January 2015
Page 6

7. BOI Supports Government
Policy to Promote Overseas
Investment
Shortly after taking office in August 2014, Prime Minister Prayuth
Chan-ocha announced that Thai overseas investment was one of
his government’s national priorities. The government recognizes
that to overcome domestic resource limitations and to seek
new business horizons Thai entrepreneurs need to branch out
overseas.
Indeed, the target industries for Thailand’s Outbound Foreign
Direct Investment (OFDI) are predominantly labor intensive,
such as textiles and garments, shoes and leather, agriculture,
food preparation, metal processing, auto parts and accessories,
construction materials and real estate development.
Thailand’s OFDI has steadily increased since 2007, reaching
US$15 billion in 2013, with the largest shares going to the
manufacturing sector of ASEAN member states.
With overseas investment now regarded as a national priority,
the BOI has been tasked with stepping up its efforts to assist
Thai entrepreneurs who want to invest abroad. The BOI originally
approved the establishment of its Thai Overseas Investment (TOI)
Plan in August 2012. ASEAN member states, mainly Indonesia,
Vietnam and Myanmar, were the original target
destinations, while India and China too came to
be identified as markets of opportunity for Thai
investors. Worth highlighting is that the TOI also
includes support measures, like tax and financial
incentives.
Functioning as a facilitator, the BOI has
implemented and at this time provides support
to Thai companies seeking opportunities with
business potential overseas. One successful
mechanism utilized by the BOI is its incubation
program, administered by the Thai Overseas
Investment Services Center (TOISC). Over the
last two years (2012-2014), TOISC has organized
seven classes for training Thai businessmen
before going abroad. Some 192 executives
have enrolled and completed TOISC modules. A
number of them already have invested overseas,
whereas others are preparing or planning to head
abroad within 1 to 2 years.
Yet the work of the TOISC is a part of something
much larger in scope and purpose. Together
with the TOISC, the Thai Overseas Investment
Information Center (TOIIC) was established by
the BOI under the TOI scheme. The TOIIC not
only provides market data for investors but also
guides Thai businessmen on how best to invest
abroad through the use of consulting teams.
In fact, the TOIIC conducts in-depth studies on
investment prospects in ASEAN and arranges
seminars on many investment-related issues, like
laws and regulations on doing business overseas
and identifying opportunities in growth industries. Similarly, the
TOIIC disseminates information collected by BOI’s local experts
and consultants (mobile units) in target countries, such as
Myanmar, Vietnam, Cambodia, Laos and Indonesia. Additionally,
the TOIIC can act as an intermediary with foreign government
agencies, can coordinate with other Thai departments to facilitate
investment overseas, and can negotiate G2G contracts in key
market destinations to enhance business prospects.
It is due to the TOI Plan that the BOI today offers investment
matchmaking assistance to both Thai and foreign companies
seeking cooperation in the areas of technology, management
and marketing to facilitate entry into ASEAN markets.
January 2015
Page 7

8. BOI Celebrates Success
The year 2014 ended on a positive note for the Board of
Investment (BOI). By mid-December, the number of projects
that had applied for BOI privileges reached Bt1 trillion in value,
surpassing its target of Bt800 billion for the entire year. In fact,
the BOI expected the value of total applications to hit the Bt1.3
trillion mark. Such a robust figure is a clear demonstration of
Thailand’s economic rebound from a crisis and its continuing
appeal to investors.
At its meeting on 25 December, which was chaired by Prime
Minister Prayuth Chan-ocha, the BOI approved 13 projects
worth Bt21.15 billion, mostly alternative energy enterprises,
electricity generation from waste, biomass energy firms, and
Mazda’s increased investment in Phase 2 of the eco-car
scheme. Ms. Hirunya Suchinai, acting secretary general of the
BOI, was reported to have declared, “The number of approved
BOI projects is quite high and is enough to support economic
expansion”. Keep in mind that Thailand is engaged in a transition
and industries that utilize new technology are a major draw.
Japanese firms remained at the top of the list among foreign
investors applying for tax breaks, followed by those from the
United States and the European Union. Even so, the amount of
US and EU approved projects has continued to grow in recent
times. This trend relates to the realization by both American and
European companies that Thailand can function perfectly as a
springboard for further business expansion in the Asia-Pacific.
When examining individually some of the investment projects
endorsed by the BOI, it is interesting to see that eco-friendly
activities dominated. For instance, Mazda Powertrain
Manufacturing (Thailand) Co., Ltd. is set to produce engines for
its Eco-car Phase 2 model in Chonburi (approximate capacity of
75,000 units per year) worth a total of Bt2.91 billion. This project
will employ modern machinery and will involve human resource
development, the utilization of locally procured raw materials
(with a value of Bt260 million per year), and the manufacture
of automotive parts by Thai businesses in order to upgrade
production methods and the use of advanced technology.
Likewise, four ethanol manufactures were given
the green light by the BOI. These enterprises not
only will support the generation and the utilization
of alternative energy from agricultural raw materials,
such as home-produced molasses, but also will
reduce fuel imports from abroad. Moreover, Earth
Tech Environment Co., Ltd. in Saraburi and Mitr Phol
Bio-Power Co., Ltd. in Chaiyaphum will stimulate
the consumption of alternative energy, as it relates
to Thailand’s development plan, which specifies the
use of 25% of renewable energy and alternative
energy sources over a 10-year period (2012-2022).
Equally significant, the BOI is aiming for at least
30% of approved projects in 2015 to be businesses
applying under its new seven-year investment policy
with activities that are considered to be beneficial to
the Thai industrial sector and the country’s overall
economic development. The strategy promotes high-
tech, creative and service industries that support the
advancement of Thailand’s “digital economy”, and
industries that use local resources.
Also, the BOI is promoting the creation of distribution
centers in special economic development zones
to position Thailand as an inland container depot for products
from neighboring countries. “That would encourage other trade
and economic activities in the areas but the remaining issues to
discuss right now are how to make these SEZs into a truly free
zones in terms of taxes”, according to the BOI’s acting secretary
general. Indeed, Prime Minister Prayuth Chan-ocha has said that
at least one of the new special economic development zones will
commence operations in 2015. Tak’s Mae Sot district appears to
be the logical candidate, since it is well-suited for such an activity
and already hosts a booming cross-border market that links
Thailand and Myanmar.
There are several incentives available for setting up shop in
a SEZ, such as tax privileges and the relative ease of doing
business that entails financial transactions, warehousing, logistics
and facilities. Also worth highlighting is that the BOI will offer a
further three-year exemption of corporate income tax, starting
this year (2015), to projects located in five SEZs - Tak, Trat, Sa
Kaew, Songkhla and Mukdahan. In fact, the prime minister has
stated that his administration was looking to increase foreign
investment through a variety of stratagems. The establishment
of five special economic areas along key border areas, and the
creation of seven more in the next phase, are meant to promote
transport connectivity with Thailand’s ASEAN neighbors and
to assist foreign investors expand their investments across the
region.
Another important point to note is that the new BOI investment
promotion scheme has shifted away from the previous zone-
based approach towards investment promotion areas to attract
investment into less developed provinces, as seen in the attached
chart.
It does appear that 2015 will be a promising year for both the Board
of Investment and Thailand. The economy has strengthened and
the push to become an upper income country is underway. Even
more, the country now is preparing itself for the inauguration of
the ASEAN Economic Community and increasing prosperity.
Investment Promotion Areas
January 2015
Page 8

9. Continued on P. 10
COMPANY INTERVIEW
Ford Motor Company
The Ford Motor Company is an American multinational
automaker headquartered in Dearborn, Michigan. Founded
in 1903 by Henry Ford, the company has become one of the
largest producers of trucks and cars in the world. Today Ford has
operations in more than 30 countries, and employs more than
180,000 employees around the globe. Additionally, thousands of
enterprises worldwide supply Ford Motor Company with goods
and services. Indeed, the company’s annual sales figures exceed
the GDP of many countries.
Ford’s presence in Thailand dates to 1960 when the Thai Motor
Industry Company, a joint venture between Anglo-Thai Motors
and Ford U.K., began assembly operations. In 1973, the joint
venture was incorporated as a wholly owned subsidiary, Ford
Thailand, but closed in 1976. Almost two decades later, Ford re-
entered the Thai market in 1995 with the formation ofAutoAlliance
Co. Ltd. Located in Rayong province, AutoAlliance is a 50-50
joint venture between Ford and Mazda. The facility produces
Ford Ranger pickup trucks and Mazda Fighter B-series, and
represents a total investment of $1.85 billion. .
Ford Motor Company established its ASEAN regional
headquarters in Bangkok in 2003, from where it manages the
production, distribution, sales and servicing of Ford brand vehicles
for all ASEAN markets. In 2010, with its Thailand operations
leading the way, Ford began a product-led transformation of
its business across the ASEAN region with the launch of the
all-new Ford Fiesta subcompact. Soon thereafter, a newer Ford
Ranger pickup model was launched in 2011, followed by the third
generation Ford Focus compact in 2012.
Since 2011, Ford has been one of the fastest growing automotive
brands in Thailand, and has outpacing overall industry sales
and gaining market share. The company is supporting its
extraordinary growth in Thailand with an aggressive expansion
of its nationwide Ford dealer network, which had totaled 140
locations by the start of 2014. Moreover, in January 2014 Ford
Motor Company celebrated the official start of production for the
all-new Ford EcoSport urban SUV at its advanced Ford Thailand
Manufacturing (FTM) plant in Rayong.
FTM became the fourth plant globally to build the EcoSport,
joining Ford facilities in Chennai, India, Chonqing, China and
Camcari, Brazil, thereby reinforcing the strategic role of Thailand
as a volume production and export hub in the region. Initially, the
Thai-built models will be for domestic sale and export to ASEAN
markets; later, the EcoSport will be sold worldwide. Similarly,
in March 2014, Ford revealed the Ford Everest Concept at the
Bangkok motor show, and the manufacturer confirmed it will build
the production variant in Thailand for global export.
Recently, the Thailand Investment Review team had the
opportunity to meet and speak with Mr. Matt Bradley, president of
Ford ASEAN, a position he assumed in August 2012. Mr. Bradley
is responsible for managing and growing Ford’s integrated
operations across the ASEAN region – including Thailand, the
Philippines, Indonesia, Malaysia and Vietnam – as well as the
company’s Asia Pacific Emerging Markets unit. He also oversees
Ford’s ASEAN manufacturing operations, which includes two
plants in Thailand – the new, US$450 million state-of-the-art Ford
Thailand Manufacturing, and AutoAlliance Thailand joint-venture
facility – as well as a plant in Vietnam.
A number of questions were posed to Mr. Bradley in order to put
together a comprehensive picture of Ford’s business operations
in Thailand.
From the onset of the interview, Mr. Bradley accentuated that
Thailand is Ford’s ASEAN hub and will continue to serve in
this capacity. During the mid-1990s Ford undertook its first
large-scale investment in Thailand regarding sales and service
and was involved intimately with the creation of AutoAlliance
Thailand. These were momentous chapters for Ford, but Mr.
Bradley highlighted 2010 as being a “turning point”, where
there occurred additional investment in Thailand as there was a
recognition of the various opportunities offered by ASEAN. Then
in 2012 Ford Thailand Manufacturing was established, close to
its joint venture facility in the Eastern Seaboard.
January 2015
Page 9

10. Continued from P. 9
Presently, Ford has 10,000 employees between its wholly-owned
and joint-venture facilities in Thailand, of which 9,600 fall under the
category of manufacturing staff in Rayong and another 400 staff
in the Bangkok office that serve the Thailand/ASEAN markets.
Most of the company’s employees are Thai nationals, with
expatriates comprising a single digit percentage, predominantly
at the executive level. However, Mr. Bradley did stress that the
aim of Ford is knowledge transfer to Thai employees. Indeed,
Ford invests substantially in improving the skills set of its local
staff. For instance, overseas training is provided and such a
program of “continuing education” enhances Ford’s ability to
attract talent and to retain employees. Equally important, the
company’s workforce reflects well the Thai consumer base that
Ford is targeting with its marketing campaigns.
Ford (Thailand) is a BOI-promoted company.Affiliated companies
of Ford Motor Company in Thailand include Ford Sales and
Service (Thailand), as well as Ford Motor Company (Thailand),
and its AutoAlliance (Thailand) joint venture.
Since 1995, Ford has invested approximately US$2 billion in
Thailand. Mr. Bradley reiterated that regulations implemented by
successive Thai governments have been very supportive towards
the expansion of Ford’s operations. To be precise, Thailand is a
country where “consumers can purchase and manufacturers can
produce”. An illustration of this positive trajectory is that Ford’s
retail sales growth tripled in volume from 13,636 units in 2010
to 51,223 units in 2013, and more than doubled in market share
from 1.7% in 2010 to 4.4% this year. It is difficult to find or to beat
such a business-friendly environment.
Regarding the Board of Investment, Mr. Bradley was quick
to declare that it is open and transparent as well as being
stable and consistent in its approach to dealing with foreign
enterprises. These qualities engender business confidence not
only in Thailand but also in the BOI. He expanded by saying
that there are regular meetings between Ford and BOI and that
the channels of communication between the two are good. For
Mr. Bradley and Ford, the BOI is a reliable partner and a strong
advocate of proposals involving Ford Thailand Manufacturing.
Essentially, Thailand functions as a volume center and a regional
operating headquarters for Ford. It also is the manufacturing hub
of the Ranger pickup, Everest, Fiesta, Focus, and EcoSport.
Mr. Bradley pointed out that ASEAN as a consumer market is
attractive. The region possesses a rising middle class, higher
disposable personal income levels, lifestyle changes, greater
mobility, more reliance on vehicular transportation, and relatively
healthy economies. As such, Ford has a long-term commitment
to ASEAN with investment in manufacturing, retail, human
capacity. One of the primary appeals of the region is that ASEAN
has one of the lowest vehicle densities in the world. However,
this feature has triggered increased competition in the ASEAN
market, which, in turn, has spurred innovation and efficiency
within the auto industry.
Ford’s Thai operations are export-oriented, primarily serving
the ASEAN region, as well as Australia and New Zealand.
Mr. Bradley stated that the reasons for Thailand to be Ford’s
manufacturing hub revolved around some key elements. For
example, the auto output of the country and its robust supply
chain, particularly its logistics network. The port facilities of
Laem Chabang are an excellent case in point. Furthermore, the
Government’s investment policies have been consistent and
supportive not only of the industry in general but also of individual
companies engaged in auto manufacturing. Additionally, the
available workforce is skilled and educated, which is a benefit
for Ford. Likewise, Thailand has had healthy GDP growth since
2000, has in place ample infrastructure, and its geographical
location is superb.
When looking at future trends for the industry, Mr. Bradley
explained that there are different ways to analyze the issue. From
a consumer-related perspective, the auto sector in Thailand is
very diverse, productive and constantly evolving. It is dominated
by the manufacture of pickups but it is now on the cusp of
launching eco-cars onto the global market. With a low carbon
footprint, these “Green” vehicles are practical, comfortable, safe,
cost effective and have high fuel efficiency. Indeed, the eco-car
project has been possible because of Thailand’s appropriate tax
structure and investment incentives.
Still, there are challenges. At the moment, there exist a number
of competing eco-car schemes in Southeast Asia. According to
Mr. Bradley, there is no uniform ASEAN model, no harmonization
of ASEAN auto and emission standards, and no ASEAN policy
support for expanding consumer demand across the region.
However, in Thailand, there is access to goods and services as
well as large-scale operations that drive efficiency and output.
As such, consumers, especially Thais, will benefit from the wide
range of vehicles that are produced by Ford.
Overall, Ford is one of the largest automotive investors inThailand,
with cumulative investments totaling more than US$2 billion
since 1995. This includes US$450 million for the state-of-the-art
passenger car facility in Rayong. With initial annual capacity of
160,000 units, manufacturing at the plant commenced in 2012
for the Focus, and has since added the EcoSport and Fiesta –
all for sale in the domestic market and export across ASEAN.
Ford investments also include an additional US$377 million to
upgrade and expand output of its pickup truck line at AutoAlliance
Thailand for the all-new Ranger. AAT, which produces the Ford
Everest SUV, has an annual capacity of 295,000 units. Along with
the Focus, EcoSport and Fiesta, both vehicles are built for sale in
the Thai market and export throughout ASEAN.
Today, Ford has become a major force in the automotive industry
in Thailand and Ford intends to boost production further to
augment its business operations and to achieve maximum
customer satisfaction. Mr. Bradley observed that it is because
of the maturity of the Thai auto sector that Ford finds itself firmly
placed in this country. Thailand has so much to offer to OEMs.
But Ford has invested long-term in Thailand with the expectation
of a return and the decision to be in Thailand has been the right
one for Ford.
January 2015
Page 10

11. H.E. M.R. Pridiyathorn Devakula, deputy prime minister of
Thailand, welcomed a delegation from the People’s Republic
of China, led by H.E. Mr. Gao Hucheng, minister of Commerce,
to the “China – Thailand Business Forum and Luncheon”. The
event was held on 19 December 2014 at The Peninsula Bangkok
Hotel.
H.E. M.R. Pridiyathorn Devakula, deputy prime minister of
Thailand, together with BOI executives, presided over the “New
Investment Promotion Strategies: Towards Sustainable Growth”
on January 12, 2015 at The Heritage, Chonburi, to announce
the new BOI investment promotion strategies to investors in the
Eastern Region.
Ms.Hirunya Suchinai, acting secretary general of BOI,
accompanied by BOI executives, Mr. Masayasu Hosumi,
president of JETRO (Bangkok), and Mr.Tomoyoshi Harada,
Thai-Japan investment adviser, presided over the seminar “New
Investment Promotion Strategies: Towards Sustainable Growth”.
The event was organized by BOI, JETRO (Bangkok), The Shoko
Chukin Bank, Ltd., and JCC (Bangkok). It took place on 22
December 2014 at the Plaza Athénée hotel, Bangkok.
Ms. Ajarin Pattanapanchai, BOI senior executive investment
advisor, was invited to speak at the Pacific Rim Summit on
Industrial Biotechnology and Bioenergy regarding the topic
of Feed Stocks: A Global Comparison. She joined the BOI
marketing team during its trip to both Los Angeles and San
Diego, USA, from 4 to 13 December 2014.
BOI’S MISSIONS AND EVENTS
Dr. Ratchanee Wattanawisitporn, director of the BOI Frankfurt
Office, together with Dr. Nattapol Rangsitpol, director of the
Bureau of Sectoral Industrial Policy 1, Office of Industrial
Economics, spoke at a seminar on the Thai automotive industry
in Stuttgart, Germany, on 3 December 2014. The event was
organized by the Chamber of Commerce and Industry, Stuttgart
Region, and the LBBW-Landesbank Baden-Wurttemberg.
Mr. Werapong Siriwon, director of the Regional Investment and
Economic Center 2, gave a presentation entitled “Thailand’s
Electrical and Electronics Investment Opportunities” at
BOI seminar for Chinese investors on 16 December 2014.
Representatives of local companies in the electronics sector
attended his talk. The BOI organized a series of “door knocking”
sessions in Shenzhen, Guangzhou, China from 15 to 18
December 2014.
January 2015
Page 11

12. THAILAND ECONOMY-AT-A-GLANCE
Source: Stock Exchange of Thailand
Source: Bank of Thailand
SET Monthly Closing Values
International Reserves / Short-term Debt (%)
Exchange Rate Trends
Industrial Capacity Utilization (%)
Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, Thailand
Tel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8316 Website: www.boi.go.th E-mail: head@boi.go.th
BEIJING
Thailand Board of Investment,
Beijing Office
Royal Thai Embassy
No.40 Guang Hua Road,
Beijing, 100600, P.R.China
Tel: (86-10) 6532-4510
Fax: (86-10) 6532-1620
E-mail: beijing@boi.go.th
FRANKFURT
Thailand Board of Investment,
Frankfurt Office
Bethmannstr. 58, 5.OG
60311 Frankfurt am Main
Federal Republic of Germany
Tel: (49 69) 92 91 230
Fax: (49 69) 92 91 2320
E-mail: fra@boi.go.th
GUANGZHOU
Thailand Board of Investment,
Guangzhou Office
Royal Thai Consulate-General
Guangzhou
No.36 Youhe Road, Haizhu
District, Guangzhou, P.R.C
510310
Tel: +8620 8385 8988
Ext. 220-225
+8620 8387 7770 (Direct Line)
Fax: +8620 8387 2700
E-mail: guangzhou@boi.go.th
LOS ANGELES
Thailand Board of Investment,
Los Angeles Office
Royal Thai Consulate-General
611 North Larchmont Boulevard,
3rd Floor, Los Angeles, CA
90004 USA
Tel: (1-323) 960 1199
Fax: (1-323) 960 1190
E-mail: boila@boi.go.th
MUMBAI
Thailand Board of Investment,
Mumbai Office
Royal Thai Consulate-General,
1st Floor, Dalalmal House,
Jamnalal Bajaj Marg,
Nariman Point, Mumbai
400 021 Republic of India
Tel: (9122) 2204 1589-90
Fax: (9122) 2282 1525
E-mail: mumbai@boi.go.th
NEW YORK
Thailand Board of Investment,
New York Office
7 World Trade Center,
34th Floor, Suite F, 250
Greenwich Street,
New York, NY 10007
Tel: (1-212) 422 9009
Fax: (1-212) 422 9119
E-mail: nyc@boi.go.th
OSAKA
Thailand Board of Investment,
Osaka Office
Royal Thai Consulate-General,
Osaka, Bangkok Bank Bldg.
7th Floor , 1-9-16 Kyutaro-
Machi, Chuo-Ku, Osaka
541-0056 Japan
Tel: (81-6) 6271-1395
Fax: (81-6) 6271-1394
E-mail: osaka@boi.go.th
PARIS
Thailand Board of Investment,
Paris Office
Ambassade Royale de
Thailande, 8, Rue Greuze
75116 Paris, France
Tel: (33 1) 5690 2600
(33 1) 5690 2601
Fax: (33 1) 5690 2602
E-mail: par@boi.go.th
SEOUL
Thailand Board of Investment,
Seoul Office
#1804, 18th Floor, Koryo
Daeyeongak Center,
97 Toegye-ro, Jung-gu, Seoul,
100-706, Korea
Tel: (822) 319-9998
Fax: (822) 319-9997
E-mail: seoul@boi.go.th
SHANGHAI
Thailand Board of Investment,
Shanghai Office
Royal Thai Consulate-General
15 F., Crystal Century Tower,
567 Weihai Road, Shanghai,
200041, P.R.China
Tel: (86-21) 6288-9728,
(86-21) 6288-9729
Fax: (86-21) 6288-9730
E-mail: shanghai@boi.go.th
STOCKHOLM
Thailand Board of Investment,
Stockholm Office
Stureplan 4C 4th Floor
114 35 Stockholm, Sweden
Tel: +46 (0)8 463 1158
+46 (0)8 463 1172
+46 (0)8 463 1174 to 75
Fax: +46 (0)8 463 1160
E-mail: stockholm@boi.go.th
SYDNEY
Thailand Board of Investment,
Sydney Office
Suite 101, Level 1, 234
George Street, NSW 2000,
Australia
Tel: (+61) 2 9252 4884
Fax: (+61) 2 9252 2883
E-mail: sydney@boi.go.th
TAIPEI
Thailand Board of Investment,
Taipei Office
Taipei World Trade Center
3rd Floor, Room 3E39-40,
No.5, Xin-Yi Road, Sec.5
Taipei 110, Taiwan, R.O.C.
Tel: (886) 2-23456663
Fax: (886) 2-23459223
E-mail: taipei@boi.go.th
TOKYO
Thailand Board of Investment,
Tokyo Office
Royal Thai Embassy
8th Fl., Fukuda Building West,
2-11-3 Akasaka, Minato-ku,
Tokyo 107-0052 Japan
Tel: (81 3) 3582 1806
Fax: (81 3) 3589 5176
E-mail: tyo@boi.go.th
Facts about Thailand
Population (2010) 66 million
ASEAN Population 625 million
Literacy Rate 96%
Minimum Wage 300 Baht/day
GDP (2013) US$ 387 billion
GDP per Capita (2013) US$5,673
GDP Growth (2013) 2.9%
GDP Growth (2014, projected) 1.0%
Export Growth (2013) -0.2%
Export Growth (2014, projected) 0.0%
Trade Balance (2013) US$ 6.7 billion
Current Account Balance (2013) US$ -2.5 billion
International Reserves (2013) US$ 167.23 billion
Capacity Utilization (2013) 64.36%
Manufacturing Production Index (2013) 175.80
Core Inflation (2014, projected) 1.9-2.9
Headline Inflation (2014, projected) 1.9-2.9
Consumer Price Index (Nov 2014) 107.19
(2011=100)
Corporate Income Tax 10-20%
Withholding Tax 0-15%
Value Added Tax 7%
Nov Average Exchange Rates
US$1 = 32.78 baht
€1 = 40.89 baht
£1 = 51.47 baht
100 ¥ = 28.25 baht
CNY1 = 5.36 baht
Top 10 Exports 2014 (Jan-Oct)
Product Share
Value
(US$ bn)
1 Motor cars, parts and accessories 10.81 20.61
2 Automatic data processing machines
and parts thereof
7.93 15.12
3 Refine fuels 5.01 9.55
4 Precious stones and jewellery 4.45 8.48
5 Polymers of ethylene, propylene, etc
in primary forms
4.29 8.17
6 Chemical products 3.84 7.33
7 Rubber products 3.55 6.77
8 Electronic integrated circuits 3.25 6.19
9 Machinery and parts thereof 3.16 6.02
10 Rubber 2.67 5.10
Total 190.62
Source: Ministry of Commerce
Source: Bank of Thailand
Source: Bank of Thailand BOI
January 2015
Page 12