1 Duangjai Asawachintachit Deputy Secretary General Thailand Board of Investment (BOI) 5 July 2012 Thailand’s Investment Trends and Policies.

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Duangjai AsawachintachitDeputy Secretary General

Thailand Board of Investment (BOI)

5 July 2012

Thailand’s Investment Trends and Policies

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1.FDI in Thailand

2. Policies Related to Sustainable Development

3.Thai Investment Overseas

Topics Topics

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1. FDI in Thailand 1. FDI in Thailand

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Value of FDI Net Flow to Thailandby Sector (2005-2011)

Source: Bank of Thailand Source: Bank of Thailand

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2005 2006 2007 2008 2009 2010 p 2011 p

Year

Billion Baht Others

Real estate activities

Financial and insurance activities

Accommodation and food service activities

Transportation and storage

Wholesale and retail trade; repair of motorvehicles and motorcycles

Construction

Electricity, gas, steam and air conditioningsupply

Manufacturing

Mining and quarrying

Agriculture, forestry and fishing

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Ratio of FDI Inflow into Thailand to World FDI

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2003 2004 2005 2006 2007 2008 2009 2010Year

Percent

Singapore

India

Indonesia

Malaysia

Viet Nam

Thailand

Philippines

Source: UNCTAD Source: UNCTAD

6

-5

0

5

10

15

20

25

30

35

40

45

50

55

60

2003 2004 2005 2006 2007 2008 2009 2010Year

Percent

Singapore

Indonesia

Malaysia

Viet Nam

Thailand

Philippines

Cambodia

Myanmar

Brunei

Laos

Ratio of FDI inflow into Thailand to FDI inflow into ASEAN

Source: UNCTAD Source: UNCTAD

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NET FOREIGN APPLICATIONS SUBMITTED (2003 – MAY 2012)

668749

849 823 845 832788

866

1,059

547

249

307

499

308

502

297

351

236

396

206

0

200

400

600

800

1000

1200

No.

of P

roje

ct

0

150

300

450

600

Bt B

illio

n

No. of ProjectBt Billion

Source: BOI, as of 13 June 2012

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NET FOREIGN APPLICATIONS SUBMITTED 2003-2012 (JAN-MAY) BY SECTOR

12 23 16 25 17 28 16 17 16

64

125

2620

3426 27

715

8

12

913

49 13

15

51

141

52 70 5059

121

62

72 6798

62

78

56

52

47

75

40 3817

23

43

24

32

34

47

84

125

73

121

41

97

24

92818

9

56

154

79

63

79

83 100

0

50

100

150

200

250

300

350

400

450

500

550

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(Jan-May)

Bt billionAgro Minerals Fashion Auto E&E Chemical Services

Source: BOI, as of June 27, 2012

249

307

499

308

502

298

351

236

397

206

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BOI INVESTMENT FOREIGN APPLICATION2003-2012 (JAN-MAY) BY SECTOR

Sector Projects Baht Billion

Agriculture 593 178

Minerals and Ceramics 233 376

Light Industry 627 107

Auto and Metal Processing 2,311 816

Electrical and Electronics 1,589 737

Petrochemicals, Chemicals 1,020 459

Services and Infrastructure 1,653 677

TOTAL 8,026 3,351

Source: BOI, as of June 27, 2012

10

236

396

200

Total FDI

25

50

104

194

Japan

100

Hong Kong

1311

Singapore

25

5

Korea

811

28

Billion baht2010

2011300

+87%

+68%

4

China Taiwan

84

Major Investors in Thailand is mostly from AsiaInvestment Applications Submitted to BOI

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Policies Related to Sustainable Development Policies Related to Sustainable Development

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BOI’s Vision

Your Partnerfor Sustainable Investment

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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

Policies for 2010-2012 “Investment for Sustainable Development”

2) Measure to promote energy conservation and alternative-energy utilization Incentives Import duty exemption on machinery. 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.

Eligibility BOI-promoted projects of which tax holidays have expired or those which are not

granted tax holidays non-BOI projects

Conditions Investment must be completed within 3 years after the issuance of the investment

promotion certificate. Energy consumption must be reduced to the level determined or alternative energy

must be utilized in the ration determined.

Policies for 2010-2012 “Investment for Sustainable Development”

3) Measure to promote the reduction of environmental impactsIncentives Import duty exemption on machinery. 8-year corporate income tax exemption on the revenue of existing

projects, accounting for 100% of the investment under this measure excluding cost of land and working capital.

Eligibility BOI-promoted projects of which tax holidays have expired or those

which are not granted tax holidays non-BOI projects

Conditions Investment must be completed within 3 years after the issuance of the

investment promotion certificate. Impacts on the environment must be reduced according to the criteria

determined.

Policies for 2010-2012 “Investment for Sustainable Development”

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Additional Incentive Package for STI:SkillsTechnologyInnovation

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External factors affecting investment in the next 5 years

Shift in global economic power & economic integration esp. AEC

Fragile global economy

Major global crisis (energy, food, climate change, aging and epidemics)

Faster technology development, shorter product cycles

Continual changes in global business formation

Fierce competition in attracting FDI

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S&T developmentHighly dependent economy High income disparity

Environmental and social responsibility

Uncertainty of future heavy industries location

Water and power supply for industrial expansion

Labor quantity and quality sufficiency

Fiscal pressure on tax incentives

Political stability

Domestic factors affecting investment in the next 5 years

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BOI’s Future Policy Directions

1. Strengthening country’s foundations that lead to long-term industrial

development

2. Creating economy-society-environment balance as well as agriculture-

industry-service mix which leads to sustainable development

3. Promoting diversified business and Global Niche using country’s natural

advantages

4. Promoting new growth industries such as eco-friendly products, alternative

energy, biotechnology, wellness products and services etc.

5. Strengthening Thai companies’ competitiveness and business opportunities

6. Continued decentralization

7. Stronger emphasis on Thai investment overseas to enhance competitiveness

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3. Thai Overseas Investment3. Thai Overseas Investment

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Thailand Overseas Investment The First Time that TOI Surpassed

FDI

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0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2005 2006 2007 2008 2009 2010 p 2011 pYear

Billion Baht FDI in Thailand Thai Direct Investment Abroad

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Snapshot of Target Countries and Sectors for Thailand Overseas Investment

Myanmar • Resource-seeking - Natural gas - Agriculture - Food processing

Vietnam • Labor-seeking - Garment - Textile - Footwear - Furniture

Indonesia • Resource-seeking - Coal • Market-seeking - Consumer products

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Examples of Thailand Overseas Investment Projects Company Name Project (Country)

PTTEP Petroleum Exploration and Production (Myanmar, Vietnam, Cambodia, Indonesia, Oman, Algeria, Egypt, Bahrain, Australia and New Zealand)

BANPU Coal mining (Indonesia, China, Mongolia, Australia)

MITR PHOL Sugar, Plantation, Renewable Energy, Paper (China, Laos, Australia)

MINOR Hotel & Restaurants (Vietnam, Maldives, Sri Lanka, Australia)

THAI UNION GROUP Food (MW Brands Holding—France)

SAHAVIRIYA STEEL Steel mill (UK)

THAI BEVERAGE Hotel (Australia)

LANDMARK Hotel (UK)

ITAL-THAI Construction (India, Indonesia, Vietnam, Malaysia, Bangladesh, Madagascar)

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Reduce overseas investment risks Build good relationship with target recipient countries

Use fiscal and financial measures to promote TOI

Prepare Thai entrepreneurs for overseas investment

Facilitate and solve investor’s problems

Measures aimed at promoting Thai investment Overseas

Approved by the Board of Investment on 13 September 2010Approved by the Board of Investment on 13 September 2010

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1. Information Provision Investment guides/handbooks on target countries e.g.

ASEAN Target sector opportunity study e.g. agriculture, textiles,

auto parts, tourism, construction Investment opportunities seminars Website Consultancy2. Business Development Missions to Target Countries

3. Entrepreneur capacity building - Thailand Overseas Investment Training for

Entrepreneurs

Current BOI Activities/Measures

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THANK YOU

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