Focusing on Thailand's Pharmaceutical industry

1. CONTENTS
July 2015
Volume 25
No. 7
Page
Thailand Realigns for the Future with
IHQ/ITC/SEZ
1
News Bites / BOI Net Applications 2
Industry Focus: Thai Market is Large
and Growing Fast
4
The Automotive Summit 6
The 2015 IMD World Competitiveness
Scorecard
8
Business Strategy in the Era of
ASEAN Economic Community
8
Company Interview: Graeter Pharma 9
Global Prime Office Occupancy Costs 10
BOI’s Missions and Events 11
Thailand Economy-At-A-Glance 12
Continued on P. 3
Thailand Realigns for
the Future with IHQ/ITC/SEZ
In recent years investors have noticed an increase in wage labor in Thailand and
the shift of government policies towards attracting more modern industries;
industries that are both environmentally sustainable and which support the
drive to become an upper income country. While certain businesses, such as in
the garment industry, have found neighboring countries to be more competitive
and have opted to relocate labor intensive manufacturing facilities, it is true
that Thailand still offers them an ideal location for investment in International
Headquarters (IHQ) and International Trade Centers (ITC).
The new IHQ/ITC policy, adopted in the closing month of 2014, offers investors
in all industries a means of employing the comparative advantages of the sub-
region, capitalizing on the best each country has to offer. On 30 June 2015, the
Board of Investment held a seminar entitled “Thailand: a Regional Trading and
Modern Industry Hub” at the Centara Grand and Bangkok Convention Center
at Central World, Bangkok. In his opening remarks to this event and keynote
speech, Deputy Prime Minister M.R.Pridiyathorn outlined the evolution towards
the IHQ/ITC policy, from the former Regional Operating Headquarters and
International Procurement Office policy, and the expanded benefits and relaxed
conditions that investors can now enjoy. He underlined the commitment of the
new government to the IHQ/ITC policy, as well as the promotion of modern
industries, all of which aim to make Thailand an upper income country.

2. NEWS BITES BOI NET APPLICATIONS
Thai Agricultural Products for
Consumers Worldwide
The Ministry of Transport and the Ministry
of Agriculture and Cooperatives on 15 June
2015 signed a memorandum of cooperation
to promote Thai agricultural and processed
products for consumers worldwide.
Under this cooperation, fresh fruit and
vegetables, as well as processed products,
from farmers’ organizations and community
enterprises would be sent to Thai Airways
International for food preparation for
passengers. These farm products are
certified for their high quality by the Ministry
of Agriculture and Cooperatives.
Joint cooperation between the two agencies
would promote the strength of Thai food and
make Thai products better known among
international consumers. Moreover, it would
help empower farmers’ organizations and
community enterprises, and they would have
a new marketing channel. This will add value
to the production of Thai fruit and vegetables,
as well.
Thai fruit and vegetable exports bring in
more than 10 billion baht per year, of which
about eight billion baht comes from exports
of frozen and dried fruit, while more than
one billion baht comes from fresh and frozen
vegetables.
U-Tapao to Be Developed as a
Commercial Airport
U-Tapao – Rayong – Pattaya International Airport, commonly
known as U-Tapao Airport, located in Ban Chang district,
Rayong province, will be developed as a commercial airport.
It is about 140 kilometers southeast of Bangkok and about a
45-minute drive from Pattaya.
The development project also involves the construction of an
“airport link,” connecting Suvarnabhumi, Don Mueang, and
U-Tapao with the city of Bangkok in order to cope with the
growing air traffic in the future.
The development of U-Tapao Airport is divided into three
phases. In the first phase, to be carried out from 2015 to 2017,
a new passenger terminal will be constructed together with
other facilities. With the new building and the existing passenger
terminal, the airport will have the capacity to accommodate
three million passengers a year.
National Budget for the 2016 Fiscal Year
The national budget for the 2016 fiscal year has been set at
2.720 trillion baht, representing an increase of 145 billion baht,
or 5.6 percent, over that of 2015.
2014
(US$ = 32.90THB)
2014 (Jan-May)
(US$ = 32.52 THB)
2015 (Jan-May)
(US$ = 33.55 THB)
Number of
projects
Value
Number of
projects
Value
Number of
projects
Value
Total Investment 3,363 65,101 471 9,161 306 1,438
Total Foreign Investment 1,573 31,094 334 7,072 155 406
By Sector
Agricultural Products 789 8,158 57 391 31 121
Minerals / Ceramics 103 4,685 16 470 10 80
Light Industries / Textiles 120 1,274 14 90 7 22
Automotive /
Metal Processing
736 9,895 111 4,866 39 99
Electrical / Electronics 384 4,418 77 199 67 47
Chemicals / Paper 485 12,693 42 784 17 99
Services 746 23,980 154 2,362 135 971
By Economy
Japan 643 8,164 155 2.202 40 153
Europe 243 4,668 43 1,974 36 21
Taiwan 72 780 9 21 10 36
USA 70 3,858 11 812 7 3
Hong Kong 43 701 16 225 9 44
Singapore 121 1,279 18 102 26 90
By Location
Central 1,113 9,867 180 783 138 544
East 1,294 40,770 183 7,070 74 321
South 190 1,524 21 204 19 96
Unit: US$ Million
Note: Investment projects with foreign equity participation from more than one country are
reported in the figures for both countries / Statistics on net applications are adjusted whenever
applications are returned to applicants due to insufficient information.
Prime Minister General Prayut Chan-o-cha has stated that
more than 2.706 trillion baht would be set aside for the regular
expenditures of various government agencies and state
enterprises, while 13.5 billion baht would be allocated as
payments for the national reserves.
The Government expects that it will be able to earn 2.439 trillion
baht in revenue in the 2016 fiscal year. It will also continue to
maintain strict fiscal discipline. Public debt now accounts for
only 46 percent of GDP.
About 6.4 billion baht has been allocated for developing special
economic zones, 70 billion baht for water resource management,
and 30.5 billion baht for the resolving of problems in the southern
border provinces.
July 2015
Page 2

3. Continued from P. 1
For one thing, companies that depend on low
margin low wage manufacturing can maintain their
HQ in Thailand, where Bangkok offers among the
lowest cost prime office space in the region, the
government offers IHQ/ITC incentives, and a host of
other benefits, while shifting their manufacturing to
countries with lower wages.
What then, specifically, constitutes an IHQ? It is a
company incorporated under Thai law that provides
management or technical services, financial
management, or supporting services such as general
management, business planning, and business
coordination, procurement of raw materials and
parts, research and development of products and
other similar activities. It can also include treasury
centers and international trading centers.
An investor locating in Thailand qualifies for both
BOI and Revenue Department incentives, with each
having the same definition of an IHQ. Investors
can now get from the Revenue Department,
among others, a corporate income tax exemption covering 15
accounting periods, inclusive of corporate income tax exemption
for incomes received from overseas affiliated entities; royalties
received from associated enterprises incorporated under
foreign laws; dividends received from associated enterprises
incorporated under foreign laws; capital gains received from
the sales of shares in associated enterprises incorporated
under foreign laws; income derived from the purchase and
sales of goods overseas on the condition that such goods
must not be imported into Thailand. In addition, companies
are also offered reduced corporate income tax at 10 percent
for incomes received from local affiliated entities; 15 percent
personal income tax for expatriates; a specific business tax
exemption for the gross receipts from lending to associated
enterprises; final tax exemption on the interest income on loans
to local and overseas affiliated entities, and a final tax exemption
on dividends paid to foreign entities. Investors also have the
choice to apply for incentives from the Revenue Department
alone, BOI’s incentives, or they may apply for both.
It will be recalled that previously Thailand offered attractive
benefits under its Regional Operating Headquarters promotion.
But the IHQ offers additional expanded incentives, such as the
expanded definition of an Associated Enterprise or the lower
qualifications that accompany the IHQ promotion. For instance,
to qualify for an IHQ a company must provide managerial,
technical, supporting services to at least one offshore associated
enterprise, not three as in the old plan. Also, under the new IHQ
plan if a company fails to meet the qualifications in a given year
it is only for that year that the incentive is lost.
An IHQ in Thailand and access to the region’s lower wage
emerging economies offers investors the opportunity to
capitalize on the best the AEC has to offer.
At the same time, the Thai government, in preparations leading up
the AEC, is undertaking a significant investment in infrastructure
that will strengthen connectivity and reduce logistics costs,
while also putting in place a plan to promote Special Economic
Zones along the border. Investments in one of these SEZs will
receive maximum incentives and permission to use unskilled
foreign labor.
As Deputy Prime Minister Pridiyathorn Devakula noted in his
keynote address, if we think beyond our boundary and look to
the sub-region of ASEAN, plus southern China, we have a bigger
production base and a greater variety of products. Trading
companies can be established to trade in high quality products
from Thailand to supply high income markets and lower quality
products from newly emerging economies to feed low income
countries.
Companies located in Thailand can easily import goods from
a neighboring country and sell them to another by utilizing
our infrastructure, particularly the road network. To boost this
potential, the government has a grand plan to improve the rail
network and facilitate cargo transportation
Thailand’s plan aims for 10 SEZs dotted along Thailand’s border
with Myanmar, Laos, Cambodia and Malaysia. Already border
trade currently accounts for 10 percent of the country’s total
exports and is projected to grow by 20-25 percent in 2015.
13 target industries have been identified for the Special Economic
Zones: agriculture and fisheries; ceramics; garments, textiles
and leather; furnishings and furniture; gems and jewellery;
medical equipment, automobiles and parts; electrical appliances
and electronics; plastics; pharmaceuticals; logistics; industrial
estates and tourism-related. Investments in these industries
will qualify for maximum incentives from the BOI including an
8-year corporate income tax exemption, import duty exemption
on machinery and raw materials, and an additional 50 per cent
reduction on corporate income tax for 5 years. Other incentives
include double deductions from the costs of transportation,
electricity and water supply for 10 years; an additional 25 per
cent cost deduction for installation or construction of facilities
and other non-tax incentives.
Thailand is working to ensure that investors can tap into the full
potential of the region, with Thailand as a manufacturing base
for modern industries and other high-tech manufacturing, while
moving less complex labor intensive manufacturing offshore
with headquarters remaining in Thailand.
The IHQ/ITC scheme is a bold move to meet the needs of
investors and to respond to the changing realities in the region,
leaving Thailand well positioned to use its strengths and its
geographic location, leaving Thailand still as the place to invest
in Southeast Asia.
July 2015
Page 3

4. INDUSTRY FOCUS
Thai Market is Large and
Growing Fast
According to the World Health Organization, the global
pharmaceuticals market is worth US$300 billion a year, a figure
expected to rise to US$400 billion within three years. The 10
largest drugs companies control over one-third of this market,
several with sales of more than US$10 billion a year and profit
margins of about 30%. Six are based in the United States and
four in Europe.
Nonetheless, there is rapid growth in the market and research
environment in emerging economies, leading to a gradual
migration of economic and research activities from Europe to
these fast-growing markets. Furthermore, Southeast Asia is a
growing pharmaceutical market. The member states of ASEAN
have taken initial steps towards seeking more harmonized
regulation of their respective pharmaceutical and medical-
device industries. With a population of more than 600 million,
this market represents another rapidly growing emerging market.
In general, the market has become more attractive in recent
years as wages have risen and country governments have made
healthcare sector growth a priority.
Looking at Thailand specifically, the market is dominated by
generic drugss in terms of volume. The new medicines are
coming up and showing good efficacy over the old generics,
yet the country still needs to import a lot of products. There are
two main international contract manufacturers – OLIC (owned
by Fuji Pharma) and Zuellig Pharma – and multinationals engage
in re-packing or contract manufacture through these two main
companies. However, local manufacturers have been growing
very fast for the last 5 years as they can produce drugs much
cheaper and the market has started to shift in favor of any
company that gives the lowest price.
The Thai market is large and growing fast, with the government
remaining the biggest client for the industry. Previously, 60 % of
the market share used to go to hospitals and 40% to the OTC
(over-the-counter) or drugstore market. With the introduction
of the 30-baht scheme, it appears that market distribution has
shifted with 70% for hospitals and 30% for OTCs (drugstores).
In the past, contract manufacturing was not an area that
interested local manufacturers due to the propriety of know
how. Consequently, multinationals went directly to the two main
international contract manufacturers in Thailand. Today, the
situation is different and contract manufacturing is viewed as
an enormous opportunity with the looming inauguration of the
AEC and its attendant opening of the ASEAN market. It means
much more investment will flow into Thailand as pharmaceutical
companies can export throughout the ASEAN region. As a result,
interest in contract manufacturing has been expressed not only
by local pharmaceutical industry but also by multinationals
that are re-considering their own investments in ASEAN.
Opportunities are emerging, and the Board of Investment (BOI)
now is making an effort to invite pharmaceutical companies to
invest in Thailand.
Regarding the GMP standards, the local industry has learned
and improved greatly in the last five years. The Thai FDA applied
for PIC/S membership so the entire local industry now has to
comply with the PIC/S GMP. Moreover, the Thai Pharmaceutical
Manufacturers Association conducts PIC/S GMP training
sessions. Some 20 companies have entered the program and
10 of them has been approved by the Thai FDA. It is worth
mentioning that in Thailand, the market is based on government
tenders and with the newly implemented GMP standards; the
products of local manufacturers are not different from those of
the multinationals.
Thai products have been exported to neighboring countries for
decades. The market share of Thai pharmaceuticals is being
challenged more and more by emerging countries like Indonesia
and Malaysia. On the other hand, the Thai pharmaceutical
industry has been expanding every year when compared to
neighboring countries. When considering the country’s strengths,
Thailand is the best location for investment and its market is set
to experience more growth with the implementation of GMP
standards and ASEAN’s economic integration.
There are two main bodies of law applicable to drugs in
Thailand. The first, the law of patents, relates to the intellectual
property protection of new drugs, while the second body of
law, principally codified in the Drug Act 1967 (BE 2510) and
subsequent amendments, sets out a regulatory regime for the
supervision of drug production, importation, sale and marketing
of drugs in Thailand.
The sale of drugs and medicines in Thailand is supervised
by FDA, which functions under the Ministry of Public Health.
Part of the FDA’s mandate is to supervise pharmaceuticals
in accordance with the Drug Act. In fact, the Drug Control
Division of the Thai FDA has responsibility for drug licensing,
inspection, registration and post-market surveillance, in line
with the various rules and supplementary ministerial regulations
promulgated to govern the FDA approval process. New drugs
must be registered and approved before being sold on the open
market. The Trade Secrets Act also comes into play when it
involves the implementation of regulations that deal specifically
with confidential clinical safety data that has been submitted to
the FDA during the regulatory approval process.
Likewise, for new drug applications, the ASEAN Common
Technical Requirements and Dossier are accepted. At present,
licenses do not have an expiration date. What’s more, import
and manufacturing licenses are valid for one calendar year and
need to be renewed annually.
July 2015
Page 4

5. Continued on P. 6
Interestingly, Thailand has been part of the ASEAN Consultative
Committee on Standards and Quality (ACCSQ) since1992. Then
in 1999, the Pharmaceutical Product Working Group (PPWG)
was formed as part of the ACCSQ. Regulatory harmonization is
expected to benefit pharmaceutical companies that are looking
to launch a new product in several countries simultaneously, as
it reduces drug registration costs and approval times.
Since 1 January 2009, one of the main aims of the ACCSQ-
PPWG has been to create a harmonized scheme among ASEAN
member states to standardize and regulate the production and
distribution of pharmaceuticals. The convergence of standards
and regulations aims to ensure the free flow of cheap, quality,
safe medicinal drugs in the region, through the reduction
of trade barriers and an increase in cooperation between
ASEAN members. The ASEAN Common Technical Dossier
(ACTD) is another important legal instrument as it ensures the
homogenization of quality, safety and efficacy of administrative
data and product information for pharmaceuticals across the
ASEAN region.
Worth mentioning, Thailand has a universal health insurance
structure that provides at least basic care to all Thai citizens. This
system is divided into three programs. The Civil Servant Medical
Benefit Scheme gives approximately 7 million government
workers excellent healthcare benefits. The Social Security
Scheme covers about 10 million private sector workers and is
based on an employer contribution system. Finally, the Universal
Coverage Scheme provides free basic healthcare coverage to
the remaining 50 million Thais.
As a percentage of total government expenditures, the Thai
government spends 14% of the budget on healthcare, more
than many developed European countries. In addition, hospitals
purchase about 75% of all medicinal drugs fabricated and sold
locally in Thailand, usually on the basis of generic tenders or
negotiated contracts for brand name pharmaceuticals.
Without a doubt, Thailand’s pharmaceutical industry is one
of the largest and most developed in Southeast Asia, with
projections that it will have the eighth largest pharmaceutical
market in the Asia Pacific region in 2016. The country’s unique
universal medical scheme and its position as a hub of regional
distribution have formed a highly attractive market. As the Thai
population grows, urbanizes, becomes more affluent, ages
and is increasingly sedentary, demand for better healthcare
will increase. Equally significant, the Thai generic sector is
growing, especially in the public sector, where the government
has encouraged its use over patented drugs in order to cut
costs. For instance, Greater Pharma has recently launched
its first generic inhaler drug for the treatment of osteoporosis,
making it the first company in Southeast Asia to manufacture
successfully a generic version of this drug.
The number of Thai domestic drug companies has been growing
quickly over the past decade. The government is now funding
more R&D, encouraging the local drug industry to move up
the value chain. In 2014, pharmaceutical exports were valued
at 13.85 billion baht and were shipped primarily to other
Southeast Asian countries like Vietnam, Cambodia, Philippines
and Myanmar. The government, with the recent introduction
of biotech parks and attractive tax incentives, also promotes
biotechnology. Medical tourism is another priority for Thailand.
The country’s almost 1,500 hospitals see more than 2.1 million
foreign patients annually.
Although almost 80% of the drug companies operating in
Thailand are local firms, imported pharmaceuticals make up a
significant portion of the market by value. More than US$1.1
billion worth of drug products are imported each year. Actually,
in 2014, Thailand imported 62.93 billion baht in pharmaceutical
products. The major sources of these imports were companies
basedinSwitzerland,UnitedStates,France,Germany,Spain,and
India, which together accounted for about 44% of all imported
drug sales. Prominent foreign pharmaceutical manufacturers
and distributors operating in Thailand include Meji, Baxter,
Mega Lifesciences, Linaria, Otsuka,
Sanofi, Pfizer, Merck, Novartis and
GlaxoSmithKline.
Foreign pharmaceutical companies
generally employ several large Thai
contract manufacturers either to
re-package their imported drugs or
to produce locally. Industry experts
agree there is room for growth for
the Thai healthcare business when
the AEC opens. Apart from hospital
services having international
standards, Thailand is developing
biopharmaceutical products and
medical devices to reduce reliance
on imports.
Examining the production chain,
the sector is divided into upstream
industries, intermediate industries,
and downstream industries. For
the pharmaceutical market, the
upstream segment includes the
development of new medicinal
drugs or research for curing
July 2015
Page 5

6. Continued from P. 5
The Automotive Summit
The Automotive Summit is a major event for the automotive
industry in ASEAN by delivering knowledge on testing technology
and automotive and auto parts testing standards after the
inauguration of the ASEAN Economic Community (AEC). Many
leading auto parts manufacturers, operators, and engineers
from around the world attended this event to exchange ideas
and to network with government officials, company executives,
business leaders, and automakers. Furthermore,
insights were provided on the performance of the
ASEAN Consultative Committee for Standards and
Quality (ACCSQ) and on progress made on the ASEAN
Mutual Recognition Arrangement on Type Approval for
Automotive Products (ASEAN AP MRA).
Under the theme of “ASEAN…The Emerging
Automotive Hub of the World”, the Automotive Summit
took place on 24-25 June 2015 at BITEC, as part
of the “Automotive Manufacturing 2015” exhibition.
The Thailand Automotive Institute and Reed Tradex
organized the conference.
Motor vehicles are a technological invention that
is related directly to the welfare and safety of both
the driver and society in general. Accordingly, motor
vehicles and automotive parts must be produced in a
strictly measured manner thereby ensuring excellence
throughout the entire manufacturing process. In this
regard, automotive testing technology must develop
along with testing standards, in order to conform with
changes in the auto industry and consumer market.
In the past, national governments would create and implement
automotive and auto parts testing standards with varying degrees
of rigidity but with the same purpose: To control the quality of
products that are imported and sold in their respective countries
as well as to protect consumers. Nowadays, governments pursue
development and prosperity through economic integration as
emerging illnesses. Meanwhile, the midstream segment includes
production of active ingredients and requires the use of the latest
technology and the input of substantial capital investment. This
is done usually through a joint venture. Lastly, the downstream
segment includes the production of finished medicines.
With a robust chemicals industry and great biodiversity to
support pharmaceutical manufacturing, Thailand provides many
benefits for foreign companies looking to fabricate or source
their products in Thailand – including a skilled workforce, strong
medical training, a friendly regulatory environment and a well-
established infrastructure. Thailand has applied for membership
in the Pharmaceutical Inspection Cooperation Scheme (PICS),
so Good Manufacturing Practice (GMP) standards meet
international benchmarks. The government also offers incentives
like tax holidays and reduced import duties for equipment to
foreign pharmaceutical investors.
To be specific, the new seven-year BOI investment promotion
strategy (2015-2021) contains two industry-related activities.
First, there is 6.9 – Active pharmaceutical ingredients (APIs)
under Group A2. The condition for Activity 6.9 is that it must
be for production of active or raw materials of APIs. Group A2
activities carry an eight-year CIT exemption with cap as well as
an exemption of import duty on machinery/raw materials along
with other non-tax incentives.
Second, there is 7.12.2 – R&D activity and/or manufacturing of
biopharmaceutical agents using biotechnology under Group
A1. The conditions for Activity 7.12.2 are that the projects must
use modern biotechnology approved by the National Science
and Technology Development Agency (NSTDA) or the Thailand
Centre of Excellence for Life Sciences (TCELS). Furthermore,
projects located in a science and technology park promoted
by the BOI or one that is approved by the BOI will receive an
additional 50% reduction in corporate income tax for five years
after the end of its corporate tax exemption period. Group A1
activities carry an eight-year CIT exemption without cap as well
as an exemption of import duty on machinery/raw materials
along with other non-tax incentives.
As Thailand has developed into the medical hub of Asia, its
pharmaceutical market also has experienced significant growth.
Thailand’s cost-effective and high-quality manufacturing base
has been a key driver in attracting foreign pharmaceutical
companies. In recent years, the increasing numbers of medical
tourists, an aging population, and high levels of health awareness
among the Thai population have boosted the country’s
pharmaceutical image. Plus, Thailand currently produces 25
active pharmaceutical ingredients, including sodium chloride,
camphor, and menthol. Nevertheless, most active ingredients
are imported from manufacturers overseas, leaving sizable room
for new pharmaceutical investors.
July 2015
Page 6

7. clear targets and schedules for harmonization
of standards and align national standards
among ASEAN member states.
More relevant to the automotive industry
in Southeast Asia, there is the ASEAN AP
MRA. During the panel session, it was
mentioned that the burgeoning trend of eco-
car manufacturing possesses the potential
to advance the growth and expansion of the
entire enterprise in ASEAN. Nonetheless, for
this sunrise sector to flourish, both in a supply
and demand sense, product harmonization is
critical and this outcome can be actualized
through the acceptance of a compulsory
MRA. To streamline economic integration,
enhance overall productivity, and improve
supply chain efficiency, additional testing
must not take place after a product has
passed the testing standards of one ASEAN
member and exported to another ASEAN market.
A mutual recognition arrangement (MRA) is a policy instrument
that is designed to promote economic integration and increased
trade between participants, particularly between countries.
These goals are achieved by reducing regulatory impediments
to the movement of goods and services. In fact, MRAs facilitate
trade because they smooth the negotiation process between
governments. Each country has its own rules, standards, and
procedures. If trade is to flow freely between countries then
agreement has to be reached on synchronizing the various
national regulatory regimes. MRAs are the mechanism that is
used to reach such an agreement.
Additionally, the panel discussants pointed out that the ASEAN
automotive industry is geared towards customer satisfaction
and ready to engage in more innovation. Still, government
support at the national level, as demonstrated through market-
friendly policies, is essential. For instance, the inclusion of
“smart technologies” into automobiles has now become
standard practice but the industry is exploring ways to expand
this development. Such advances, however, require the
involvement of the public sector – government – to create the
most conducive business environment through the enactment
of suitable laws that facilitate investment as well as upgrade the
country’s human resource base.
Finally, raising ASEAN competitiveness is vital, so augmenting
the marketing profile of the region, as a whole, must be put into
action. ASEAN comprises a population greater than the European
Union, a young and tech-savvy public, and a marketplace with
plenty of room for growth, as motorization rates continue to
remain low. Yet there are certain policy challenges that both
ASEAN and individual national governments must confront and
address, like concentration on labor-intensive manufacturing
segments, and limited economies of scale and high cost bases.
the creation of a single large market increases competitiveness.
With the imminent launch of the AEC, steps have been taken
to review automotive and auto part testing standards of each
member state in order to settle by mutual agreement their
various regulatory differences and avoid unnecessary obstacles
to future economic activity.
From the onset of the seminar, there was a focus on the
importance of raising testing standards, inspection procedures,
quality systems, and R&D investment. Such a region-wide
approach would be beneficial to ASEAN members as it would
stimulate modernization of the industry, improve human
resource development, and foster market expansion. Likewise,
during the presentations, a number of issues were highlighted.
For instance, many parts of the world have formed regional
communities and common markets, hence obligating firms
to adapt to rapid technological changes in the industry and
consumer trends. At the moment, there exists a demand for cars
that are of higher performance and more fuel-efficient. With this
in mind, the integration of Southeast Asia’s automotive industry,
through the establishment of the AEC, will reduce manufacturing
costs and spur innovation.
Speaker after speaker stressed that harmonization of standards
– from national to regional and from regional to international
– was essential for the success of the AEC. The audience
was reminded that the key aspirations of the AEC revolve
around it becoming a single market and production base, a
highly competitive economic zone, a community of equitable
economic development, and a region fully integrated into the
global economy. Keep in mind that the AEC strives to further
the free flow of goods, services, and investments as well as
to boost the greater flow of capital and skilled labor within the
regional grouping. However, these targets will not be achieved
unless national laws that concern product standards and quality
are not synchronized. Enter the ACCSQ. Its purpose is to set
July 2015
Page 7

8. The 2015 IMD World
Competitiveness Scorecard
The 2015 IMD World Competitiveness Scorecard has been
released with Thailand ranking 30th, of 61 economies covered.
The most competitive this year is the United States and the
least is reported to be Venezuela. Among the ASEAN countries
included in the ranking, Thailand places 3rd, and ahead of
several industrialized countries within the European Union.
Thailand is reported to have improved in government efficiency,
business efficiency and infrastructure.
In its press release issued on releasing the 2015 results, IMD
notes that the ranking is “A question of business efficiency”
with a commonality that among the best ranked countries
“nine countries from the top 10 are also listed as top 10 of the
business efficiency factor.”
IMD goes on to say that “Business efficiency focuses on the
extent to which the national environment encourages enterprises
to perform in an innovative, profitable and responsible manner. It
is assessed through indicators related to productivity such as the
labor market, finance, management practices and the attitudes
and values that characterize the business environment.”
TIR would like to note here that the new BOI policies that went
into effect at the start of this year aim to achieve just that:
performance in an innovative, profitable and responsible manner.
Likewise, the new IHQ/ITC policy adopted by the government
further streamlines Thailand’s capacity to become a trading hub
within the forthcoming AEC.
With the appropriate government policies now in place and a
government committed to improving the business environment,
the future competitiveness of Thailand remains right.
Business Strategy in the Era of
ASEAN Economic Community
On July 6, 2015, Nikkei Inc. and Thailand Board of Investment
jointly hosted the Bangkok Nikkei Forum 2015: “Business
Strategy in the era of ASEAN Economic Community Thailand,
major manufacturing hub for Japan”. Prime Minister Prayut Chan-
o-cha presided over the forum and mentioned that the ASEAN
Economic Community (AEC) will lead to cooperation in various
aspects. Business opportunities will widen and the Thai cabinet
has given priority to strengthening the nation’s infrastructure,
regulations and systems to support and facilitate business
operations. Also, the government will proceed with the digital
economy and promote Thailand to be an International Business
Center to enhance the competitive capacity and strengthen
the country. Recently, the cabinet made an announcement to
promote Special Economic Zones (SEZs) along the border with
neighboring countries. The Prime Minister expects that trade
and investment between Thailand and its neighbors will become
more robust due to the SEZ policy and with the transportation
and logistics system plan, including road, rail, water, and air,
which will increase the competitive capacity and reduce logistics
costs from 2016 on.
BOI Secretary-General Mrs. Hirunya Sujinai also stated that SEZs
policy will build new business opportunities for the Japanese
investors. With its strategic location, Japanese investors can
easily access production inputs from various locations through
the Greater Mekong Subregion Economic Corridors (GMS). She
also mentioned that entrepreneurs who invest in Thailand are
eligible for the highest BOI activity-based incentives, including
an 8-year CIT exemption, and additional benefits for projects
creating value added, or through merit-based Incentives such
as research and development, product and packaging design,
advanced technology training, development of local suppliers.
Moreover, projects located in 20 provinces with lowest per
capita income and projects located in industrial estates or
promoted industrial zones are eligible for more privileges.
There were over 400 Japanese attendants at the forum,
mostly senior executives. Presently, Japanese entrepreneurs
in industries such as automotive, electronics and electrical
appliances, finance, insurance, wholesale and retail trade are
the major investors in Thailand and ASEAN.
Thailand, at the crossroads of the AEC, is prepared for the
changing economic environment and continues to offer investors
the place to invest.
July 2015
Page 8

9. Continued on P. 10
COMPANY INTERVIEW
Greater Pharma
Established in 1967, Greater
Pharma manufactures quality
pharmaceutical products and
makes available affordable
medicine to Thai consumers. Since
then, it has evolved into one of
Thailand’s premier pharmaceutical
manufacturers with capabilities in
drug research and development.
The company is GMP compliant and
also has been awarded ISO 9001
and ISO/IEC 17025 certification.
It currently manufactures mostly
generic pharmaceutical products
and is moving into increasingly
complex manufacturing processes.
The history of Greater Pharma Co., Ltd. spans back to 1932 with
the founding of a modest grocery shop by Mr. Lieng Tengamnuay
on Maharaj Road in the Tha Prachan area of Bangkok. It became
a fully-fledged drugstore in 1956. Adapting to world market
trends, Greater Pharma during the mid-1960s started to engage
in the production of generic products as well as the repackaging
of imported pharmaceutical products and medicinal consumer
products.
Not long ago, the Thailand Investment Review newsletter team
had the chance to visit Greater Pharma’s facility in Bangkok Noi
and interview Mr. Chernporn Tengamnuay, managing director.
A number of questions and topics were covered that provided
an in-depth look into the operations and future plans of the
company.
Greater Pharma is a pioneering Thai pharmaceutical business.
According to Mr. Tengamnuay, the company’s overriding
goal is to manufacture quality products at an affordable price
for consumers in Thailand. Its strict quality standards and
modern techniques and equipment ensure product safety
and manufacturing efficiency. A leader in the production of
pharmaceuticals, herbal food supplements and cosmetics, it
was reported in August 2014 that Greater Pharma set up a joint
venture with Laos-based Viengthong Pharma for the creation of
an herbal products facility in Vientiane, Laos. Interestingly, the
project receives grant funding from the Dutch government within
the context of its Private Sector Investment program.
The company concentrates on the Thai market but also engages
in exports, particularly in the ASEAN region. As Mr. Tengamnuay
pointed out, imports comprise of 90% of the raw material for
the production of pharmaceuticals. If raw materials were to
be manufactured locally then costs could be reduced and
productivity rates improved. For Mr. Tengamnuay, his aspiration
for the company is to turn out a finished product that consists
of 60-70% local content within a decade. Its product coverage
encompasses allergy care, herbal/traditional products, OTCs
(over-the-counter), pediatric consumer health, sports nutrition,
vitamins and dietary supplements, and weight management.
Having received a BOI license for general herbal products and
pharmaceuticals and biotechnology, Greater Pharma always
is searching for new markets and opportunities to explore. To
illustrate the company’s reach and progress within the industry,
Mr. Tengamnuay commented on cooperation with Siriraj Hospital
in the development of an allergy vaccine (house dust mite).
This is an example of technology transfer and this partnership
has been ongoing for more than five years already. Yet the
project required intensive investment and product marketing.
Nonetheless, he indicated that such collaboration is necessary
for Greater Pharma to remain ahead of the curve, as it is the
first company in Thailand that applied and received a license for
biopharmaceuticals. As a result, Greater Pharma must broaden
its horizons regarding product research and development as
well as product commercialization.
Mr. Tengamnuay remarked that the industry is growing with
a consumer base that comprises ever more of an ageing
population and the inclusion of not only the rural/urban poor but
also the working class. Consequently, there is market expansion
potential across ASEAN. In order to enhance the competitiveness
of the company, Greater Pharma is pursuing joint research with
institutes and universities on biopharmaceuticals, which he
opines is the next level, particularly nanomedicine or the medical
application of nanotechnology.
Besides the Siriraj Medical School of Mahidol University,
other partners include the National Science and Technology
Development Agency (NSTDA), National Innovation Agency
(NIA), National Center for Genetic Engineering and Biotechnology
(BIOTEC), National Nanotechnology Center (NANOTEC), and
Thailand Institute of Scientific and Technological Research
(TISTR). Greater Pharma also has membership in several
associations such as the Thai Pharmaceutical Manufacturers
Association (TPMA), Franco-Thai Chamber of Commerce
(FTCC), Federation of Thai Industries (FTI), and the International
Society of Pharmaceutical Engineering (ISPE).
“Greater Pharma’s key success factors are our continuous
commitment and enthusiasm to transform the company into the
lead Thai pharmaceutical manufacturer of high quality drugs and
healthcare products”, declared Mr. Tengamnuay. He added that
Greater Pharma aims to compete in the global market and looks
to achieve this through the training of its people, adherence
to international standards (e.g. PIC/S), and the acquisition of
modern manufacturing techniques.
The Pharmaceutical Inspection Convention and Pharmaceutical
Inspection Co-operation Scheme (jointly referred to as
PIC/S) are two international instruments between countries
and pharmaceutical inspection authorities that deal with the
observance and enforcement of Good Manufacturing Practices.
Greater Pharma aims to invest heavily in the advancement of
its current manufacturing capacity to facilitate the production
of consumer goods in addition to its pharmaceutical products.
This initiative is to prepare itself in response to the larger market
size created by free trade agreements in Southeast Asia as
the competitive landscape is predicted to become fierce. In
addition, a considerable new online marketing campaign on
Facebook will be developed to enhance its existing profile within
the industry.
As the world changes, new technology is always introduced
July 2015
Page 9

10. Continued from P. 9
and developed, similarly so is the production process. Greater
Pharma always implements new modern machinery and
manufacturing technology. A team of highly qualified and well-
experienced personnel staffs the facility, and quality is built-in
into its products by design. Starting with vendor approval,
analysis of raw materials, in-process checks and finished
product analysis, the company’s stringent approach to quality
ensures that its products meet international specifications.
Greater Pharma manufactures almost all drug dosage forms,
covering tablets, capsules, liquid orals, powders, creams and
ointments. Separate sections have been established for the
manufacture of penicillin groups, non-penicillin groups and
steroids, to ensure against cross contamination.
Even though production for its own sales is the primary activity,
Greater Pharma also manufactures licensed products for other
international enterprises and this is testament to the high quality
standard of drugs manufactured by the company.
Greater Pharma has a well-equipped Quality Control Laboratory
for thorough testing of its products at all stages of manufacturing
and the performing of stability studies to ensure quality during
storage. Awarded a GMP Certificate by the Thai Food and Drug
Administration, its modern manufacturing methods and strict
quality control regime comply fully with WHO standards.
Turning to the topic of the company’s workforce, Mr.
Tengamnuay stated that his team possesses the necessary
skills and qualifications to compete in the market. With 600
employees, Greater Pharma always has been at the forefront
of the local pharmaceutical industry. His staff revolves a core
of pharmacists, engineers, chemists, and lab technicians. In
order to keep up with the competition training courses, which
meet the criteria set up by the ISO system, are provided to all
personnel to upgrade their skills and knowledge. Universities,
machine suppliers, and government agencies (e.g. TFDA) offer
additional training sessions. More universities in Thailand have
opened programs/majors in pharmacy. Still, the Thai university
system overall requires further development with regards to the
technical aspect of the industry. “We can develop our human
resources step-by-step and to meet the labor demands of the
industry”. From labor-intensive to knowledge-intensive, the
pharmaceutical industry obligates companies to become R&D-
oriented.
When asked about the AEC, Mr. Tengamnuay was quick to
reply, “ASEAN is our market already”. Thai pharmaceutical
firms, in general, and Greater Pharma, specifically, adhere to
the guidelines set forth by the ASEAN Consultative Committee
on Standards and Quality as it deals with the same format of
registration. Similarly, the Thai government has embraced the
ASEAN standard. However, Mr. Tengamnuay mentioned that
the BOI must support the local pharmaceutical industry. It is
essential to attract MNCs to invest and establish themselves
in Thailand as pharmaceuticals are a high technology product,
a comprehensive, long-term strategy is required. Still, the
launching of the AEC will result in increased competition and
Greater Pharma will have to deal with the obstacles placed by
regional protectionism. Nonetheless, the company’s relationship
with the BOI is strong and goes back years, in fact, Greater
Pharma has been a BOI-promoted company since 2006. With all
the challenges evident on the horizon, the industry needs more
BOI privileges to progress.
Greater Pharma has strived to establish itself as the leading
healthcare provider in Thailand. Under the guidance of Mr.
Tengamnuay, the company has played an important role in the
development of both the Thai pharmaceutical and healthcare
industries, with a product line that ranges from generic drugs,
OTCs, functioning food supplements, to anti-aging products. It
uses the latest manufacturing and laboratory testing technology,
and it follows standard quality management systems such as
ISO 9001:2008, GMP, and ISO/IEC 17025. Greater Pharma
has continued to improve and develop its products to meet
international standards in order to provide the best quality
products at an affordable price both in Thailand and in the global
marketplace.
Global Prime Office
Occupancy Costs
CBRE has issued its report on the Global Prime Office Occupancy
Costs, listing the top three most expensive locations being in
London, Hong Kong and Beijing, in that order. In Asia, 12 of 31
locations listed in the report had an increase in costs of more
than 1 percent.
According to CBRE, Bangkok is ranked 105 of 127 cities
surveyed in the first quarter for overall occupancy costs for
Grade A office space, with the average Grade A CBD rents in
the city increasing by 3.2 percent year-over-year to THB 859 per
sq.m. per month.
CBRE tracks occupancy costs for Grade A or prime office space
in 127 markets around the globe. Of the top 50 ‘most expensive’
markets, Asia Pacific had the most number of markets featured,
with 20 markets ranked.
July 2015
Page 10

11. BOI Secretary General Hirunya Suchinai gave a speech on
“Business Strategy in the Era of ASEAN Economic Community
(AEC) – Thailand, major manufacturing hub for Japan” at the
“Seminar: Bangkok Nikkei Forum” which was held on 6 July
2015 at Conrad Hotel Bangkok.
Mr. Dean Matlack, Commercial Attaché at the U.S. Embassy
(Bangkok) and Ms. Christine Brown, Director for Southeast Asia
& Pacific Affairs, Office of the United States Trade Representative
from Washington D.C. visited OSOS on 8 July 2015 to discuss
with Ms. Ajarin Pattanapanchai, Senior Executive Investment
Advisor of BOI, the investment promotion policy for International
Headquarters (IHQ), International Trading Center (ITC) and
Special Economic Zones (SEZs).
H.E. M.R. Pridiyathorn Devakula, Deputy Prime Minister of
the Kingdom of Thailand and Mr. Gregory So, Secretary for
Commerce and Economic Development of the Hong Kong
Special Administrative Region, witnessed an MOU signing
between BOI and Invest Hong Kong at the roadshow trip to
Hong Kong during which BOI organized signing ceremony and a
seminar on “Thailand: A Regional Trading and Modern Industry
Hub”, 25 June 2015 at Shangri-la hotel.
H.E. M.R. Pridiyathorn Devakula, Deputy Prime Minister of the
Kingdom of Thailand, presided over the opening ceremony
for the expansion of OSOS services to cover information and
consultation services for investors interested in investing in
International Headquarters (IHQ), International Trading Centers
(ITC), and in Special Economic Zones (SEZs), on 9 July 2015 at
Chamchuri Square Building, Bangkok.
Mr. Jesada Sornsurk, Executive Director of Investment
Development Assistance Bureau, together with Ms. Sonklin
Ploymee, Director of BOI Unit for Industrial Linkages
Development, and Mr. Salil Wisalswadi, BOI Tokyo Director,
led a business delegation from 22 -28 June 2015 to the M-Tech
Tokyo 2015 Exhibition. The mission included business matching
with companies from Yokohama and Shimane in Automotive,
Electronic & Electrical, and Machinery Industries.
BOI Executive Director of Regional Investment and Economic
Centre, Eastern Region, Mr. Chanin Khaochan, together with Ms.
Kanokporn Chotipal, BOI Mumbai Director, gave a presentation
on “Investing in Thailand and using Thailand as a base for
ASEAN business” to the BOI seminar conducted on 24 June
2015 at S.L. Kirloskar International Convention Centre Complex,
Pune, during an investment promotion mission to India from 22-
26 June 2015.
BOI’S MISSIONS AND EVENTS
July 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 Boule-
vard, 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,
Express Tower, 12th
Fl.,
Barrister Rajni Patel Marg,
Nariman Point, Mumbai,
Maharashtra 400021
Republic of India
Tel: (9122) 2204 1589-90
Fax: (9122) 2282 1071
E-mail: mumbai@boi.go.th
NEW YORK
Thailand Board of Investment,
New York Office
7 World Trade Center,
34th
Floor, Suite F, 250 Green-
wich 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
234 George Street, Sydney,
Suite 101, Level 1,
New South Wales 2000,
Australia
Tel: +61-2-9252-4884
Fax: +61-2-9252-4882
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 (2014) 65 million
ASEAN Population 625 million
Literacy Rate 96%
Minimum Wage 300 Baht/day
GDP (2014) US$ 404.8 billion
GDP per Capita (2014) US$ 6,041.1
GDP Growth (2014) 0.9%
GDP Growth (2015, projected) 3.0-4.0 %
Export Growth (2014) -0.3%
Export Growth (2015, projected) 0.2%
Trade Balance (2014) US$ 24.6 billion
Current Account Balance (2014) US$ 13.1 billion
International Reserves (2014) US$ 157.1 billion
Capacity Utilization (2014) 60.48%
Manufacturing Production Index (2014) 168.2
Core Inflation (2015, projected) 1.59
Headline Inflation (2015, projected) 1.89
Consumer Price Index (June 2015) 106.64
(2011=100)
Corporate Income Tax 10-20%
Withholding Tax 0-15%
Value Added Tax 7%
June Average Exchange Rates
US$1 = 33.73 baht
€1 = 37.86 baht
£1 = 52.52 baht
100 ¥ = 27.28 baht
CNY1 = 5.44 baht
Top 10 Exports 2015 (Jan-May)
Product Share
Value
(US$ bn)
1 Motor cars, parts and accessories 11.74 10.42
2 Automatic data processing machines
and parts thereof
8.17 7.25
3 Precious stones and jewellery 5.04 4.47
4 Polymers of ethylene, propylene, etc
in primary forms
3.89 3.45
5 Refine fuels 3.64 3.23
6 Rubber products 3.40 3.01
7 Electronic integrated circuits 3.34 2.96
8 Chemical products 3.21 2.84
9 Machinery and parts thereof 3.13 2.78
10 Iron and steel and their products 2.54 2.25
Total 88.69
Source: Ministry of Commerce
Source: Bank of Thailand
Source: Bank of Thailand BOI
July 2015
Page 12