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ThaiLAND OF INVESTMENT

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ThaiLAND OF INVESTMENT Pannee Chengsuttha Director Thailand Board of Investment, Paris Office October 24, 2006, Vicenza, Italy Suvarnabhumi International Airport – PowerPoint PPT presentation

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Title: ThaiLAND OF INVESTMENT


1
ThaiLAND OF INVESTMENT
  • Pannee Chengsuttha
  • Director
  • Thailand Board of Investment,
  • Paris Office
  • October 24, 2006, Vicenza, Italy

Suvarnabhumi International Airport
2
Thailand in General
Key Data Region Southeast
Asia Population 65 million Area Total 514,000
km2 Area Land 511,770 km2 Religion
Buddhism (94) Capital Bangkok
3
The Macroeconomic Picture in Statistics (1 of 2)
2002 2003 2004 2005 2006f GDP
Growth () 5.4 6.8 7.1 4.5 4.25-5.251 GDP
(US Bil) 126.3 133.2 165.7
176.4 194.84 Inflation () 0.7 1.8 2.7 4.5
4-51 GDP Per Capita 1,966 2,198 2,631
2,825 2,9964 (US) Foreign Reserves 38.9
42.1 43.0 52.1 57.22 (US Bil.)


Source Bank of Thailand
Notes 1ThailandOutlook.com, 2As of April 30,
3 avg. Jan-April, 4NESDB
4
The Macroeconomic Picture in Statistics (2 of 2)
2002 2003 2004 2005 2006f Export Growth
() 5.8 14.0 22.0 15.0 11.0-13.01 Value
of Exports 66.9 77.6 97.7 109.2
125.94 (US Bil.) Current Account 5.5
5.6 3.1 -3.7 n.a. ( of
GDP) MPI 123.2 138.4 146.5
155.4 164.43 (Manufacturing Production
Index) Capacity Utilization 59.3 66.3 70.7
72.6 75.13
Source Bank of Thailand
Notes 1ThailandOutlook.com, 2As of April 30,
3 avg. Jan-April, 4NESDB
5
Thailand is committed to increase openness
  • as indicated by increase external trade and
    FDI, tariff reforms, FTAs

Indicators of Openness
Gross FDI
6
Major Foreign Investors (2001-2005)
(Applications for Investment Privileges)
400
Billion Euro with Thai Baht equivalent
10.4 Bn (THB 514.6)
300
TOP 3 Japan , USA , EU
200
2.9Bn (THB142.9)
2.4 Bn (THB117.7)
1.5 Bn (THB74.8)
100
0
Japan
EU
USA
Taiwan
7
European Investments 5-Year Totals by Country
2001-2005
Country Projects Million
United Kingdom 90 963.6
Netherlands 56 798.7
Switzerland 53 552.5
Germany 89 532.6
Belgium 29 204.9
France 58 95.7
Italy 19 48.2
TOTAL 239 3,196.2
8
Major Sources of EU Investment in
Thailand Applying for BOI Promotion in 2005-2006
Total Investment
No. of Projects
Italy
Netherlands
TOP 3 NL, UK, GER
Ex Rate 1 48.56 THB
9
The Board of Investment Basic Incentives and
Measures
  • Guarantees and Permissions
  • Guarantees against nationalization and price
    controls
  • Permission to own land and bring in foreign
    experts
  • Tax Incentives
  • Tax exemption /reduction on imported machinery
    and input
  • Income tax exemption
  • Support services
  • Advisory and information provision
  • Publications

10
Value of Investments Increasing
14.08
Unit Euro Billion
13.12
112
FDI increases 62 to 9.97 billion
6.80
6.52
25
44
Total investment applications
11
Basic BOI privileges and incentives
  • Tax Incentives
  • Corporate income tax holidays up to 8 years
  • Import duty reductions or exemptions on machinery
    and raw materials
  • Non-Tax Incentives
  • Land ownership rights for foreign investors
  • Permission to bring in foreign experts and
    technicians
  • Work permit/visa facilitation

12
Zones
Sector Matrix Incentives to strengthen competitiv
eness
Strategic or Priority Industries Maximum
incentives regardless of zone or location Example
Software Mould Die
  • Zone-Based Incentives
  • Low High
  • Zone 1 ? Zone 2 ? Zone 3

13
Ease of Doing Business
1 New Zealand 11 Ireland
2 Singapore 12 Iceland
3 United States 13 Finland
4 Canada 14 Sweden
5 Norway 15 Lithuania
6 Australia 16 Estonia
7 Hong Kong 17 Switzerland
8 Denmark 18 Belgium
9 United Kingdom 19 Germany
10 Japan 20 Thailand
Criteria
Starting a business
Hiring and firing workers
Enforcing contracts
Access to credit
Closing a business
Registering property
Dealing with licenses
Paying taxes
Trading across borders
Investor protection
Source World Bank Study Doing Business in 2006
14
Promising Countries for Overseas Business
Operations
Long-Term Long-Term
Rank Country
1 China
2 India
3 Thailand
4 Vietnam
5 U.S.
6 Russia
7 Indonesia
8 Brazil
9 Korea
10 Taiwan
Includes production, sales, RD, outsourced operations Includes production, sales, RD, outsourced operations
Medium-Term (2005-2008) Medium-Term (2005-2008)
Rank Country
1 China
2 Thailand
3 India
4 Vietnam
5 U.S.
6 Russia
7 Indonesia
8 Korea
9 Taiwan
10 Malaysia
Includes production, sales, RD, outsourced operations Includes production, sales, RD, outsourced operations
Source 16th Annual JBIC Survey Outlook for
Japanese Foreign Direct Investment , Nov. 2004
15
Key Factors Supporting Thailands Rankings
  • 1. Market growth potential
  • 2. Labor costs
  • 3. Political and social stability
  • 4. Supply base for assemblers
  • 5. Base for exports
  • 6. Developed local infrastructure
  • 7. Tax incentives for investment
  • 8. Industrial clusters
  • 9. Domestic market size
  • 10. Policies to attract foreign capital

Source 16th Annual JBIC Survey Outlook for
Japanese Foreign Direct Investment, Nov. 2004
16
Developed Infrastructure
Highway system 64,000 km connects all 76
provinces
Mobile phones growing 6 million/yr 24 million
users in 2003.
7 international airports 700,000 tons cargo. 25
million passengers per year
World-class Wi-Fi and inexpensive broadband
widely available
Rail system 4,000 km linking to Malaysia
Singapore
8 deep sea ports
57 industrial estates in 21 provinces
17
Suvarnabhumi International Airport Worlds
Newest Airport Worlds Biggest Single
Terminal Open September 28, 2006 in THAILAND
1st Phase 76 flights/hour 45 million
passengers/year
State-of-the-Art Cargo Systems
18
Low Rent Costs for Grade-A Office Space in Asian
CBDs
Source Colliers International. 2Q 2004. Asia
Pacific News
Bangkok Central Business District 10/sq.
ft./year
19
Comparative Business Costs
Thailand Singapore China India Taiwan
Electricity cost for industry (Euro per kwh, 2004) 0.045 0.058 0.026 (2002) 0.064 0.044
Corporate income tax rate (Jan 2004) 30 20 33 35.9 25
Office costs (Euro/meter/year, Jan 2005) 33.36 Euro 80.40 Euro 95.76 Euro 123.84 Euro 88.56 Euro
Sources Electricity IMD Corp. income tax
KPMG Office costs DTZ
Ex Rate 1 50 THB
20
Lowest Cost of Living in Asian Cities
Global Rank City Index
1 Tokyo 130.7
5 Hong Kong 109.5
7 Seoul 104.1
11 Beijing 101.1
16 Shanghai 95.3
29 Hanoi 85.6
36 Ho Chi Minh City 84.5
45 Jakarta 83.9
46 Singapore 83.6
104 Kuala Lumpur 67.7
109 Mumbai 66.8
119 BANGKOK 63.5
Note New York is base city for index, with
score of 100.0 Source Mercer Human Resource
Consulting, 2004
21
Strategic Location to World Markets
Double Taxation Agreement with 52 countries
including Italy Since 31 May 1980
22
Investment Opportunities in Thailand
  • ? Auto parts
  • ? Machinery and parts
  • ? Fashion and Jewelry
  • ? Electronic and Electrical products
  • ? Value Added Services

23
Auto Autoparts Industry Geared for Excellence
24
Thailand Automotive Hub of ASEAN
  • 2005 production 1.125 million units (Worlds
    14th largest)
  • Export 440,000 units
  • Largest in Southeast Asia
  • Capacity of 2.0 million units in 2008
  • Worlds largest production of one-ton pickup
    trucks
  • 820,000 units in 2005

25
Automotive Industry in Thailand
26
Thailand Automotive and Parts Trade Balance
Country Country Country Country Country Country Country
Country Australia Japan India Malaysia Indonesia USA China
Thailand Export To 632.80 636.90 79.30 253.40 477.20 330.80 36.30
Thailand Import From 7.20 1,929.20 2.10 65.80 115.90 50.90 25.80
Balance Of Trade 625.60 -1,292.30 77.20 187.60 361.30 279.90 10.50
Export Ranking 2 1 6 5 3 4 7
Unit Mil US lt Current Rate 1 US 41
Bath
As of Year, 2003
Australia
Malaysia
Indonesia
USA
China
India
Japan
Source The Customs Department of Thailand

27
Investment Opportunities in Automotive Industries
  • Auto assembly for local and export markets under
    AFTA and other FTA arrangements
  • Auto part manufacturing to serve domestic and
    export markets
  • Potential small car hub -- low fuel consumption
  • NGV target 120,000 NGVs by 2008

28
Fashion Industry Designing the Future Leather,
Gems Jewelry, Textiles Garments
29
Fashion Industry
  • Objective Becoming SE Asias Fashion Center
  • Gem Jewelry Capital of Southeast Asia
  • Renowned expertise in diamond cutting
  • Bangkok Fashion City
  • Major government push for the industry
  • Many renowned - branded garments, produced in
    Thailand for USA EU Markets
  • Brunet, Triumph, Victoria Secret, Saint Michael,
    Marks Spencer

30
Gems and Jewelry Investment Opportunities in
Thailand
  • BOI Incentives outside GIE
  • Imported Duty
  • exemption/reduction on
  • machinery raw
  • materials
  • Up to 8 years corporate
  • income tax holiday
  • Addition incentives if
  • locate in BOI Zone 3
  • Non-tax incentives
  • Incentives in GIE
  • Import Duty exemption/
  • reduction on machinery
  • raw materials
  • 5- 8 years tax holiday
  • VAT exemption on
  • imported duty on Raw
  • Material
  • VAT exemption on sales to
  • BOI promoted companies
  • and within GIE
  • Non-tax incentives

31
Textile Industry Cluster
  • 1. Integrated Textile Industrial Zones/Estate
    Developers
  • 8 years corporate income tax holiday
  • Duty-free machinery
  • 2. Textile-Related Activities
  • BLEACHING DYEING FINISHING PROJECTS
  • Locating in Textile IE
  • 8 years corporate income tax holiday
  • Duty-free machinery
  • Locating outside Textile IE Standard incentives
    according to zone
  • OTHER TEXTILE-RELATED PROJECTS locating on
    Textile IE
  • Duty-free machinery
  • Corporate income tax exemptions
  • Zone 1 5 years
  • Zone 2 7 years
  • Zone 3 8 years

32
Machinery and Equipment Toward Regional
Manufacturing and Distribution Hub in the Region
33
Opportunities in Machinery
  • Thailand continues to industrialize, but is
    dependent on foreign industrial machinery for
    immediate future.
  • Industries in Thailand developed over the past
    decade with parallel increases in demand for
    machinery imports.
  • High demand for
  • Food and farm machinery
  • Alternative energy/energy conservation machinery
  • Textile machinery
  • Automotive machinery

34
Machinery and Equipment Investment Opportunities
in Thailand
  • Machine tools
  • Plastic injection machinery
  • Plastic extrusion machinery
  • Packaging machinery
  • Material handling equipment
  • Robotics and factory automation equipment
  • Specialized/process machinery or equipment for
    specific industries

35
Machinery Tooling Zone 1 Zone 2 Zone 3
Manufacturers Manufacturers Manufacturers Manufacturers
General Machinery Duty 50 reduction Machinery Duty 50 reduction Exemption in IE. Machinery Duty Exemption
General Corporate income tax exemption In IE - 3 years Corporate income tax exemption In IE - 7years, Outside IE. - 3 year Corporate income tax exemption 8 years
Targeted Products Exempt from machinery import duties Exempt from machinery import duties Exempt from machinery import duties
Targeted Products Exempt from corporate income tax for 8 years Exempt from corporate income tax for 8 years Exempt from corporate income tax for 8 years
Targeted Products Examples CNC Machines as in BOI Lists, Farm and Food Processing Machine. Examples CNC Machines as in BOI Lists, Farm and Food Processing Machine. Examples CNC Machines as in BOI Lists, Farm and Food Processing Machine.
36
Recent Political Incident
  • Peaceful Political change
  • More stable than in recent months
  • No Real Negative Impact on investment
  • Business as normal
  • IMF, World Bank have confidence
  • on Thai economy after the incident
  • BOIs Policy has never changed

37
BOI and SIMEST
  • Memorandum of Understanding signed in 2005
  • Promotes cooperation in investment, organizing
    investment promotion activities, exchange of
    information
  • Auto parts, Machinery and parts, Jewelry and
    Textile

38
Where to contact us
Royal Thai Embassy, Rome BOI Office in
Paris
Address Ambassade Royale de Thaïlande
8, Rue Greuze, 75116 Paris, France Tel
33 1 5690 2600 Fax 33 1 5690 2602
E-mail par_at_boi.go.th
BOI on the Internet www.boi.go.th
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