Why Thailand - An Asian Hub, A World of Opportunities

Why Thailand - An Asian Hub, A World of Opportunities
“Why Thailand” An Asian Hub, a World of Opportunities March 1, 2016 Ms. Ajarin Pattanapanchai, Deputy Secretary General 1
2 2 Thailand as the ASEAN Hub 1 Thailand at a Glance Contents 3 Competitiveness 5 Investment Incentives for Super Cluster 4 Investment Promotion Policy 6 Incentives for International Headquarter and Trading center
Source: Economist 2015 Pocket World Figures Vietnam Cambodia Thailand Myanmar China Laos Philippines Malaysia Singapore Indonesia Thailand ASEAN’s 2nd Largest Economy 12th Largest Agriculture Output 16th Largest Manufacturing Output Population 68.0 Million, 97% literacy rate 27th Biggest Exporter Taxation Corporate: 10-20% Withholding: 1-10% VAT: 7% GDP US$405 billion, (per capita) US$5,736 Growth 3.0-4.0% Brunei 3 Thailand’s globally established position
4 2nd in HDD Exports Thailand Plays a Vital Role in the Global Supply Chain 7th Rubber Tire Exports 7th Computer Device Exports 12th Automotive Production
7 AEC Asia & Oceania “We are surrounded by the world’s economic powerhouses” 1 Strategic Location – right at the Center of Mainland ASEAN 2 Strategic Location – gateway to ASEAN Thailand’s Strategic Location Offers Many Advantages
Thailand: Well Developed Regional Connectivity
9 Sources: IMF as of 2014, Ministry of Foreign Affairs of March 2015 ASEAN Economic Community 633 million population (9% of world population) GDP: US$ 2.4 trillion (2% of world’s GDP) FLAGSHIP OF ASEAN • Emerging regional architecture • A new generation FTA • A high ambition agreement Regional Comprehensive Economic Partnership (RCEP) (ASEAN + China, Japan, Korea, India, Australia & NZ) 3.3 billion population (50% of world population) GDP: US$21 trillion (28% of world’s GDP) THE BIGGEST FTA • Market size (16 countries) • Regional supply chain • FDI (intra-extra region) Expanding Regional Integration Offers More Opportunities
11 UNCTAD ranks Thailand 8th as a top prospective host economy 2014-2016 Country Rank China 1 USA 2 Indonesia 3 India 4 Brazil 5 Germany 6 United Kingdom 7 Thailand 8 Vietnam 9 Malaysia 15 World Economic Forum ranks Thailand 32th out of 140 economies for global competitiveness index 2015-2016 Sources: UNCTAD, 2016; World Economic Forum, 2016 Country Rank Switzerland 1 Singapore 2 US 3 Germany 4 Netherlands 5 Japan 6 … … Thailand 32 Indonesia 37 Vietnam 56 Thailand Consistently Ranks High in International Surveys
5th Asia’s Financial Literacy Index MasterCard, 2014 The World’s Most Promising Emerging Economies Bloomberg Business, 2014 - 2016 11th Ease of Doing Business among Emerging Economies in East Asia World Bank, 2016 2nd Corruption Perception Index Transparency International, 201576th 12 Thailand Gains Global Recognition for its Promising Economy
23rd Best Countries for Quality of Life Best Countries to Invest In6th Best Countries to Start a Business1st Best Countries in the World (Overall)21st 13 Sources: Surveys Conducted by US News in Partnership with BAV and Wharton, 2016 Recent Rankings in 2016
14 Sources: 2016 Global Manufacturing Competitiveness Index by Deloitte Touche Tohmatsu Ltd. & U.S. Council on Competitiveness (as of December 2015) 5.57 5.58 5.65 5.9 5.9 5.91 6.04 6.21 6.36 6.72 6.84 6.87 6.95 7.29 7.58 7.67 8.04 9.39 9.95 10 Netherlands Indonesia Vietnam Turkey Malaysia Poland Thailand Sweden Switzerland India Singapore Canada Mexico Taiwan United Kingdom South Korea Japan Germany USA China Index Score [10=high, 1=low] 2016 Global Manufacturing Competitiveness Index # 14
Infrastructure • 7 international airports  Suvarnabhumi Airport – Capacity: 45 million passengers and 3 million tons of cargo per year • Over 70,000 km Highway Systems • 6 Deep Sea Ports & 2 International River Ports  Capacity over 10 million TEUs  Laem Chabang Sea Port – Capacity: 10.8 million TEUs, with additional 8 million TEUs expansion  e-Customs facilities • 4,346 km Rail links to Malaysia & Singapore • 60 Industrial Estates
1. Expansion of the inter-city rail network (USD 13.8 billion) 2. Highway capacity enhancement (USD 14.6 billion) 3. Development of mass transit systems in Bangkok Metropolitan Region (USD 20.8 billion) 4. Air transport capacity enhancement (USD 1.4 billion) 5. Development of the maritime transport network (USD 2.8 billion) Infrastructure development programs for 2015-2022 (USD 53.4 billion*) 5 Key Programs: to reduce logistics and transportation costs Improve the competitiveness of the economy • Upgrade railway networks • Increase double-track railways • Build 1.435-meter standard gauge • Expand highways to 4 or more traffic lanes • Develop facilities along the main roads such as container yards • Extend mass transit railway system in Bangkok and vicinity • Acquire 3,183 natural gas vehicle (NGV) buses • Enhance sea ports capacity • Enhance airport capacity • Establish aviation industrial estates with Thailand as a regional center of the MRO** industry Railway Road Mass Transit Water & Air Source: Office of Transport and Traffic Policy and Planning, Ministry of Transport, as of 21 December 2015 Note: *1 USD = 35.84 THB **Maintenance Repair and Overhaul Thailand’s Infrastructure Development Strategy (2015-2022) 17
18 2 Thailand as the ASEAN Hub 1 Thailand at a Glance Contents 3 Competitiveness 5 Investment Incentives for Super Cluster 4 Investment Promotion Policy 6 Incentives for International Headquarter and Trading Center
Policy Tax Incentives Facilitation 100% foreign ownership No local content requirements No export requirements No restriction on foreign currency Import duty exemptions/ reductions Corporate income tax exemption for up to 8 years 50% reduction of corporate income tax for up to 5 years Double deduction on utility costs Deductions for qualifying infrastructure costs Land ownership rights Work permit & visa facilitation Within 3 hrs 19 BOI’s Attractive Investment Incentives
Activity-based Incentives • Exemption of import duties on machinery • Up to 8 years of corporate income tax exemption A1 A2 A3 A4 B1 B2 Merit-based Incentives Grant additional incentives to encourage more investment/expenditures that benefit the country or overall industry 1. Competitiveness Enhancement 2. Decentralization 3. Industrial Area Development 20 How Investment Incentives Are Granted
Success Stories of Canadian Companies
Latest Investment Promotion policy : Super Cluster Super Cluster  Automotive and Parts Cluster  Electrical Appliances, Electronic and Telecommunication Cluster  Digital Cluster  Aviation & Aerospace Cluster  Automations and Robotics Cluster  Medical Hub  Eco-Friendly Chemical and Plastics cluster
27  8-year corporate income tax exemption and an additional 5-year reduction of 50%  Import duty exemption on machinery  For future industries with significant importance, the Ministry of Finance will consider granting 10-15 years corporate income tax exemption  Personal income tax exemption for renowned specialists who work in the specified areas, both Thais and foreigners  Consideration of granting Permanent Residence to leading specialists  Permission for foreigners to own land to implement promoted businesses Tax Non Tax Investment Incentives for Super Clusters  Matching grant to encourage and support investors in the high-value added activities in Super Cluster such as such R&D, training, etc. ** Remark: The cabinet has approved in principle the Ministry of Finance proposal to set up a 10-billion-baht ($279-million-USD) fund to promote the targeted sector $279 Million Fund
Obligatory Conditions to Receive Cluster Incentives 28  Must have cooperation with academic institution / research institution / Center of Excellence in the cluster to develop human resource and improve the level of technology e.g. • Cooperation in the Talent Mobility / Work-integrated Learning / Co-operative Education / Dual systems • Cooperation in development of human resource or technology as approved by the Board of Investment  Must apply for investment promotion within 2016 and must start operation within 2017 to accelerate investment, unless under necessity i.e. large-scale project, the BOI will consider relaxation as deemed appropriate.
Automotive and Parts Super Cluster 29 7 Provinces : Ayuddhaya, Patumthani, Chon Buri, Rayong, Chacheongsao, Prachinburi, Nakorn Ratchasrima Target Activities Manufacture of Motorcycle with engine size > 248 CC. (only for projects with forming of engine parts) Manufacture of Automobile Engines Manufacture of Important Parts that are not locally produced or are few i.e. - Parts using advance technology - Safety and Energy Efficient System - Equipment for Hybrid, EV, PHEV cars - Fuel injection parts/ Transmission/ Engine System Manufacture of Automobile Tires
9 Electrical Appliances, Electronic and Telecommunication Cluster 7 Provinces : Ayuddhaya, Patumthani, Chon Buri, Rayong, Chachoengsao, Prachinburi, Nakorn Ratchasrima Target Activities Electronic Design Microelectronics Design, Embedded System Design Electronic / telecommunication products and parts e.g. telecommunication equipment, electronic control and measurement, security control equipment, Solid State Drive, Hard Disk Drive, solar cells, Semiconductor, Flat panel display, Photonics Internet of Things Appliance/ Smart devices Test Lab, R&D, Training center Target Activities - Software (Embedded Software, Enterprise Software, Digital Content, Big Data, Data Analytic, Business Process Management, Cyber security, Controlling, Industrial Software) Cloud Services Data Center, Innovation Incubation Center IT Services (Software Platform, Managed Service, Digital Architecture Design Service, FinTech, DigiTech, MedTech) Digital Cluster
Automation & Robotics Cluster Target Activities Manufacture or Assembly of Robots & Automation equipment and parts - Machinery /Equipment with engineering design - Machinery, Equipment & parts / Repair of Mould - Assembling of Automation Machinery/Equipment, Robots & parts* Service and Public Utilities - Research & Development - Engineering Design - Scientific Laboratories - Calibration Services - Vocational Training Centers - Innovation Incubation Centers* Target Activities Software Development and Systems Integration - Systems Integration Design - Electronic Design - Installing automated or robotic systems - Embedded Software, Big Data Analytics SW, Controlling and Commanding SW, Business Process management, IoT, *under the approval process
Aviation & Aerospace Cluster Chiang Rai Phitsanulok Nakhon Ratchasima Nakhon Sawan Lopburi Nakhon Pathom Pathum Thani Bangkok Samut Prakan Chachoengsao Chonburi Rayong Surat Thani Songkhla 14 Provinces : Bangkok, Samut Prakan, Nakhon Pathom, Pathum Thani, Chachoengsao, Chonburi, Rayong, Chiang rai, Phitsanulok, Nakhon Sawan, Lopburi, Nakhon Ratchasima, Surat Thani, Songkhla Target Activities Manufacture or MRO - Airframe, Airframe parts - Critical parts e.g. Engine and parts, Propeller - Appliance e.g. Flight recorder, Radar - Telecommunication/Electronic products - Electronic Design - Embedded Software, High Value – Added Software Manufacture of space devices - Parts or equipment of Rocket, Space craft, Space vehicle, Propulsion unit part and Auxiliary equipment - Search, Detection, Navigation, Guidance, Aeronautical, Nautical system and instrument Training Center for pilot and technician
Companies in the aircraft industry tend to look for lower cost parts for their manufacturing and repair plants. Thailand can offer this price advantage when compared with neighboring countries. Other regional locations, such as Singapore, may have a limitation regarding the ability to facilitate the expansion of aircraft part manufacturing investment. Major aircraft and parts manufacturers  24 companies have been promoted under aircraft part manufacturing activity  12 companies have been promoted under aircraft and part maintenance and repair activity BOI promoted activities 34 Investment Opportunities for Aviation Industry
Thailand Digital Economy Policy: National broadband : Expand hi-speed internet systems Cover areas nationwide to facilitate domestic economic development 1 2 3 4 5 Local employment (at least USD 47 million) Procurement of domestic materials (approximately USD 112 million) Growth in telecommunications industry Promotion of local products via e-commerce Support the gaining of household income, both in the local agricultural and industrial sectors 12 months (100%) 30,000 villages Exchange rate (BOT, Feb 1 2016): 1 USD = 35.84 THB 37
Hub for ASEAN regional internet connectivity International Internet Gateway : Enhance the efficiency of international internet systems to become the ASEAN regional internet connectivity hub Internet services become cheaper Citizens/ Customers Expenses for transactional circuits become cheaper Service Providers Decrease dependency on connectivity through neighboring countries Risk Management Promote digital economy which will help enhance business performance of other sectors and improve the country’s competency Digital Economy Help develop the Digital Cluster that will stimulate innovation and investment in new industries, increasing the country’s GDP Private Companies 38
39 International Internet Gateway: ASEAN Regional Internet Connectivity Hub Route Expand the total capacity of transnational submarine cable networks to 4 Tbps, and domestic networks to 2 Tbps DWDM 100 Gbps Action Plan Delivery of the 1st task Capacity Submarine Cable 200 Gbps June 2016 September 2016 Delivery of the 2nd task Capacity Submarine Cable 200 Gbps December 2016 Delivery of the 3rd task Capacity Submarine Cable 400 Gbps September 2017 Delivery of the 4th task Capacity Submarine Cable 3,750 Gbps and Domestic Backhaul 2,000 Gbps  Fast and smooth internet connection in Thailand  Thailand becomes the ASEAN Regional Internet Connectivity Hub  World-class content providers invest in Thailand Route Technology 39
 Corporate income tax exemption on income derived from dividends and capital gain  Corporate income tax exemption on income derived from services to associated enterprises; such as  Human resources management and training  Technical support  Financial management  Corporate income tax exemption on income derived from the purchase and sales of goods overseas (OUT-OUT trading)  Final tax (similar to withholding tax) exemption on dividends paid by the IHQ to corporate shareholders overseas 15 International Headquarter (IHQ) Incentives
International Headquarters (IHQ)-Eligibility 1/2 • A juristic company incorporated in Thailand providing the following services to IHQ’s foreign branches or associated enterprises Org. admin. and mgt. & business planning Sourcing of goods R&D Technical support Mkt. and sales promo. HR & training and dev. Business advisory services Econ. and inv. analysis and research Credit mgt. and control Treasury center
International Trading Centers (ITC) • A juristic company incorporated in Thailand providing purchase and sale services as well as other related services to juristic companies incorporated in oversea. • The paid-up registered capital must not be less than 10 million baht. • Have total ITC business spending of at least 15 million baht per year in Thailand Warehousing and inventory services Goods delivery services Advisory, Technical and Training services about trading Sourcing of goods Packaging activities Goods insurance Other services as in Notification of the Director General of Revenue Department
Examples of IHQ / ROH in Thailand
BOI SUPPORT SERVICES 49Overseas offices Country desks 1-Stop for visas & work permits: work permits in 3 hours Interaction with other govt. agencies on behalf of investors Subcontracting Development Program by BUILD Unit Investment Matchmaking Program ASEAN Supporting Industry Database
Thank you U.S. Desk @ BOI Headquarters 555 Vibhavadi-Rangsit Rd. Chatuchak, Bangkok 10900 Thailand Tel: (66 2) 537-8111 Fax: (66 2) 537-8098 E-mail: head@boi.go.th

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