Dr. Bonggot Anuroj Executive Director of Investment Marketing Bureau Thailand Board of Investment

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Dr. Bonggot AnurojDr. Bonggot Anuroj

Executive Director of Investment Marketing BureauExecutive Director of Investment Marketing Bureau

Thailand Board of InvestmentThailand Board of Investment

30 March 2011 30 March 2011 marketing@boi.go.thmarketing@boi.go.th

Thailand’s Investment Promotion PoliciesThailand’s Investment Promotion PoliciesThailand’s Investment Promotion PoliciesThailand’s Investment Promotion Policies

Outline of Presentation

-Investment Promotion Policy

- Investment Trend

- BOI Services

-Investment Promotion Policy

- Investment Trend

- BOI Services

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BOI Investment Policies

BOI Investment Policies

No Restrictions on Repatriation of ProfitsNo Restrictions on Repatriation of Profits

100% Foreign Ownership100% Foreign Ownership

No Export requirementsNo Export requirements

No local content requirementNo local content requirement

1

2

3

4*some restrictions apply

*

Liberal Investment PolicyLiberal Investment Policy

List of BOI activities eligible for Investment Promotion

129 sub-items are eligible for investment promotion129 sub-items are eligible for investment promotion

Criteria for Project Approval

• Minimum investment amount of at least 1 millionbaht (excluding land cost and working capital)

• Valued added for at least 20 percent of sales revenues

• A debt-equity ratio (D/E) of less than 3 to 1• Utilization of modern production processes and

new machinery (used machinery must be less than10 years old and certified by relevant parties)

• Adequate environmental protection systems

Criteria for Foreign Shareholding• Projects in agriculture, animal husbandry, fisheries,

mineral exploration and mining and service businesses under List One of the Foreign Business Act B.E. 2542: Thai nationals must hold shares totaling not less than 51 percent of the registered capital

• Manufacturing projects: there are no equity restrictions for foreign investors

• The Board may set the amount of shares eligible to be held by foreign investors on promoted projects when deemed appropriate

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Investment Incentives

NON-TAX IncentivesNON-TAX Incentives

• Land ownership rights for foreign investors

• Permission to bring in foreign experts and technicians

• Work permit & VISA facilitation

• Import duty reductions or exemptions on machinery and raw materials

• Corporate income tax holidays up to 8 years; additional 50% reductions for 5 years

• Double deduction of public utility costs

• Deductions for construction/installation costs infrastructure

TAX IncentivesTAX Incentives

Major BOI Incentives Schemes

• Decentralization – Incentives vary according to zones

• Priority activities– 8-year corporate income tax exemption and exemption of

import duties on machinery regardless of locations• Sector-specific policies• Optional incentive scheme– STI Scheme

• Special temporary measures: “Investment Promotion Policies for Sustainable Development”

BOI ZoningBOI ZoningZone-Based Zone-Based IncentivesIncentives Zone 1 includes Bangkok, Samut Prakan, Samut

Sakhon, Nakhon Pathom, Nonhtaburi and Pathum Thani

Zone 2 includes Ang Thong, Ayutthaya, Chachoengsao, Chon Buri, Kanchanaburi, Nakhon Nayok, Phuket, Ratchaburi, Rayong, Samut Songkhram, Saraburi, and Suphanburi

Zone 3 encompasses the remaining 58 provinces

Source: Thailand Board of Investment

Sector Matrix:Incentives to strengthen

competitiveness

Strategic or Priority Activities

• Maximum incentives regardless of location

• Customized packages

Zone-Based

Incentives:

• Zone 1

• Zone 2

• Zone 3

From Zone-Based to Sectoral Approach

Examples of Priority Activities

• Agriculture and agro-industries• R&D• Software development• Molds & Dies• Biotechnology• Alternative energy• Manufacture of hi-tech products e.g. advanced

ceramics

Privileges will be based on the project’s total investment in STI expenditures in any of the following 4 categories:

Additional Incentive Package for STI(Skill, Technology & Innovation)

R&DR&D Adv Tech Training

Adv Tech Training

SciTech FundingSciTech Funding

S&T S&T Dev Dev FundFund

Requirement and Additional Incentive for STI Activities

STI ExpenditureAdditional Incentives

1% of total sales for the first 3 years of operations or at least 150 million baht

1 year (uncapped)

2% of total sales for the first 3 years of operations or at least 300 million baht

2 years (uncapped)

3% of total sales for the first 3 years of operations or at least 450 million baht

3 years (uncapped)

Note: 1. Investment ceiling uncapped. Corporate income tax holiday may not exceed eight years.2. Exemption of import duty on machinery

Note: 1. Investment ceiling uncapped. Corporate income tax holiday may not exceed eight years.2. Exemption of import duty on machinery

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Application submission deadline: December 31, 2012

1. Special incentives for 3 groups of targeted activities1) Manufacture of eco-friendly material and product, e.g. bioplastics2) Energy saving and alternative energy3) High technology activities e.g. industrial electronics, electronic parts for

vehicles, biotech, nano-tech, functional fiber etc.

Incentives • Exemption of import duties on machinery • 8-year exemption of corporate income tax with no cap • 5-year 50% reduction of corporate income tax on net profit• 10-year double deduction of transportation, electricity and water supply

costs• deduction from net profit of 25% of investment in infrastructure

installation and construction costs in addition to normal capital depreciation

New Policies for 2010-2012 “Investment for Sustainable Development”

2) Measure to promote energy conservation, alternative-energy utilization or reduction of environmental impacts

Incentives• Import duty exemption on machinery, regardless of

zone.

• 3-year corporate income tax exemption on the revenue of existing projects, accounting for 70% of the investment under this measure excluding cost of land and working capital.

New Policies for 2010-2012 “Investment for Sustainable Development”

3) Measure to promote production efficiency improvement by technology upgrade for manufacturing of new productsIncentives•Exemption from import duties on machinery, regardless of zone.•Exemption from corporate income tax for 3 years, regardless of zone. The benefit from this exemption may not exceed 100% of the project’s investment value.

3) Measure to promote production efficiency improvement by technology upgrade for manufacturing of new productsIncentives•Exemption from import duties on machinery, regardless of zone.•Exemption from corporate income tax for 3 years, regardless of zone. The benefit from this exemption may not exceed 100% of the project’s investment value.

New Policies for 2010-2012 “Investment for Sustainable Development”

Board of Investment Announcement Board of Investment Announcement

No.1/2553No.1/2553 (2010)(2010)

Subject: Measure to promote SMEs InvestmentSubject: Measure to promote SMEs Investment

Listed of Activities Eligible for SMEs investment Listed of Activities Eligible for SMEs investment PromotionPromotion

Agriculture and Agricultural Product (13 activities)Mining, Ceramics and Basic Metals (7 activities)Light Industry (11 activities)Metal Product, Machinery and Transport

Equipment ( 12 activities)Electronic Industry and Electrical Appliance

(5 activities)Chemicals, Paper and Plastics ( 3 activities)Service and Public Utilities ( 1 activities)

52 activities are eligible for promotion

Project with an investment of 500,000 baht or more

(excluding cost of land and working capital) Not less than 51 % of the registered capital must be

Thai sharesMust have a debt equity ratio of less than 3:1Used machinery which cost less than 10 million

baht are allowed to be used; investment on new machinery must cost more than 25% of used machine’s value

Conditions (1/2)Conditions (1/2)

Conditions (2/2)Conditions (2/2)

Investment amount of each project must be less than 80 million baht (excluding cost of land and working capital). Overall, total value of company’s net asset must be less than 200 million baht (excluding cost of land and working capital)

Applications must be submitted by December

31, 2011

BOI Announcement No. 1/2554 (2011)Granting of Rights and Benefits under section

36(1) and (2) to existing companies to alleviate the impact of the Strengthening of the Baht

Rights and Benefits (1/2) Application must be existing companies with investment

capital, excluding cost of land and working capital, of not less than one million baht in the following industries

- Production of ready-to-wear garments

- Production of leatherwear

- Production of footwear

- Production of furniture or decorative items

- Production of textiles

- Production of toys

- Production of sport equipment

- Gems and jewelry

- Production of lenses

- Printing

Rights and Benefits (2/2)

Applicants must be certified by an association or agency approved by BOI

Promoted project shall receive rights and benefits in accordance with section 36 (1) and (2) for period of1 year, and the renewal thereof shall be pursuant to criteria prescribed by BOI

Promoted project shall comply with regulations and procedures for the application of rights and benefits inaccordance with section 36(1) and (2), as set forth by BOI

Applicants must submit the application within 31 December 2011

Recent Investment Trend

166 198 26735

46 2134

5

87 73101

13

201

320

73

204

224

43

144117

213

34

359675

432

66

251

209

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2008 2009 2010 2011 (Jan-Feb)

No. of Projects Services

Chemical

E&E

Auto

Fashion

Minerals

Agro

Source: BOI, as of 15 March 2011

Number of Projects Amount Invested

38 71.3 66.17.5

26.619.5 29.3

1

17.911.3

0.3

56.8 67

14.9

68.6 84.5 65.6

6.8

52.4 23 41.2

19.2

165.8

376.2

167

19.56.7

77

0

100

200

300

400

500

600

700

2008 2009 2010 2011 (Jan-Feb)

1,262

1,489

Bt Billion

446.3

638.1+7%

-30%1,591

447.4

Comparison of All Net Applications for Investment Promotion 2008 – Feb 2011

(Includes Foreign and Domestic Projects)

26969.3

351

236

77

104

80

3834

1143

1135

75 2

0

60

120

180

240

300

360

Bt

Bill

ion

Total Japan EU Singapore China USA India

2009 2010

Source: BOI, as of Jan 17, 2011

-32.7%

Japan Remains No. 1 Investor in ThailandForeign Direct Investment Applications

BOI Approved SMEs Projects (Jan 2003-Feb 2011)

Type of Activities

1. Agriculture and

Agricultural Product

Number of Project

177

Value (Million baht)

9,269

2. Mining, Ceramics

and Basic Metals 4 85

3. Light Industry 23 3244. Metal Product, Machinery and Transport Equipment

35 677

BOI Approved SMEs Projects Jan 2003- Feb 2011

Type of Activities

5. Electronic Industry and Electrical Appliance

Number of Project

13

Value (Million baht)

176

6. Chemicals, Paper and Plastics

48 754

7. Service and Public Utilities

2 32

Total 302 11,319

BOI Services

32Overseas offices

Country desks

1-Stop for visas & work permits:work permits in 3 hours

Interaction with other govt. agencies on behalf of investors

Industrial Subcontracting Services Vendors meet customers program

(BUILD Unit)

Investment Matchmaking Program

ASEAN Supporting Industry Database

BOI Support Services

BOI Unit for Industrial Linkage Development (BUILD)

15 years of service

BUILD Activities• Provide information on subcontracting opportunities in Thailand via database web

applications• Assist foreign buyers wishing to source from

Thai manufacturers• Match buyers and subcontractors in related

businesses• Arrange participation of Thai manufacturers in

trade shows and exhibitions abroad

ASEAN Supporting Industry Database (ASID)

• Information and profiles of companies in supporting industries and manufacturers of parts and components in 10 ASEAN countries

• ASID can be easily accessed via the internet at www.asidnet.org

19-21 May 2011 at BITEC Bangna19-21 May 2011 at BITEC Bangna

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One Start One Stop Investment Center18th Floor, Chamchuri Square Building319 Phayathai Road, PathumwanBangkok 10330, ThailandDomestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100Email: osos@boi.go.th

More Convenience, less time,more efficiency!

More Convenience, less time,more efficiency!

Services at OSOS– Staff from relevant agencies will also be available

for consultations on a range of topics. – Help investors with applications to make sure

investors know what is required to:• Register a company• Apply for investment promotion privileges• Obtain a foreign business license• Tax registration• Complete an environmental impact assessment• Obtain utilities, etc.

– OSOS staff will also accept applications for things such as corporate name registration, corporate tax ID numbers, VAT registration, foreign business licenses, investment promotion incentives, etc.

10 - 25 November 2011

IMPACT Exhibition and

Convention Center

Organized by Thailand

Board of Investment

Objectives

1. To celebrate the auspicious occasion of the 84th birthday of His Majesty the King.

2. To highlight the achievements of Thai industry in the areas of technology and innovation, as these will greatly enhance

efficiency and industrial competitiveness and result in new, environment-friendly production.

3. To build confidence in the Thai economy, while also improving the country’s image; BOI Fair 2011 will give wide

exposure to the Thai industrial sector’s commitment to serving society and preserving the natural environment.

4. To provide an opportunity for members of the industrial community to meet, conduct business, and network.

“Going Green for the Future”โลกสดใส ไทยย��งย�น

Theme

Show date : 10 - 25 November 2011 (16 Days)

Venue : IMPACT Exhibition and Convention Center (237,000 sq.m)

- Outdoor : Lakeside 166,000 sq.m

- Challenger 1-3 60,000 sq.m

- Hall 9 11,000 sq.m

Exhibitors:84 Outdoor Pavilions and more than 3,000 Indoor Booths

Visitors : More than 5 million visitors expected

General Information

Thank You!

www.boi.go.thwww.boi.go.th