BOI’s Investment Policies for Thailand 4.0 Pannee Chengsuttha Executive Investment Advisor Thailand Board of Investment 7 June 2018
Outline 1 Why Thailand 2 Thailand 4.0 3 Introducing BOI 4 Current Investment Promotion Policy 5 5 Investment Incentives in the EEC 6 BOI Services + +
1 Why Thailand
Thailand’s Competitiveness 20% Corporate Income Tax Low Cost of Living THAILAND Low Cost Office Space Well-Equipped Industrial Estates Well- developed Infrastructure Source: Compiled from Ministry of Commerce, Center for Economic and Business Forecasting (UTCC) , Ministry of Finance and Thailand Board of Investment
Thailand Ranks High in International Surveys IMD World Competitiveness ranks Thailand 27th in its global Thailand was ranked at 3rd for Ease competitiveness index for of doing business among ASEAN 2017 countries and 26th globally in 2018. Country Rank Country Rank China Hong Kong 1 Singapore 1 Singapore 3 Malaysia 2 Taiwan 14 Thailand 3 China 18 Brunei Darussalam 4 Malaysia 24 Vietnam 5 … … Indonesia 6 Thailand 27 Philippines 7 South Korea 29 Cambodia 8 Philippines 41 Laos 9
2 Thailand 4.0
Thailand 4.0: a Next Step for Thailand’s Economy THAILAND 4.0 THAILAND 3.0 THAILAND High Income 2.0 THAILAND Middle-High Income Creativity + Innovation 1.0 Smart Thailand Middle Income Heavy Industry / Advanced Machinery Low Income Light Industry Agriculture 7
10 Targeted S-curve Industries 5 New S-Curve Biofuels Digital Economy Medical Hub Aviation Automation and Biochemical and Logistics and Robotics 5 First S-Curve Agricultural Smart Electronics Affluent Medical and Wellness Tourism Next-Generation Food for The Future and Biotechnology Automotive 8
3 Introducing BOI
BOI’s Core Functions Enhancing Competitiveness and Business Support Services Investment Facilitation Offers an attractive and Provides comprehensive competitive package of information and advice on tax incentives . establishing operations in Thailand. Imposes no foreign equity Arranges site visits . restrictions on manufacturing activities or on some service. Identifies potential Provide assistance in the suppliers , subcontractors, provision of visas and work joint-venture partners. permits to facilitate entry and Provides useful contacts subsequent operation for a foreign-owned business . with key public and private organizations. Waives restrictions on Coordinates between the land ownership by foreign entities. foreign business community and other public agencies
4 Current Investment Promotion Policy
BOI’s Investment Policy Framework Policy Tax Incentives Facilitation Sector-based Incentives 100% Exemption of import Land ownership rights Up to 8-yearTax holiday for duties on machinery / Foreign ownership targeted industries raw or essential in accordance with the materials imported for Work permit Seven-Year Investment No local content use in production for & Promotion Strategy requirements export and for R&D Visa facilitation (2015-2021) No export Corporate income tax Technology-based requirements exemption up Incentives to 13 years Up to 13 – year Tax holiday No restriction for core technologies or on foreign currency R&D projects 50% CIT reduction within 10 years
New Chapter of Investment Promotion Thailand 4.0 Investment 4.0 Core Technology Industrial Cluster From To Volume-based Value-based Bio-tech Agriculture & Food Capital-driven Innovation-driven Bio-Med Health & Wellness Physical capital Human capital Mechatronics Smart Devices & Robotics Manufacturing High value services Digital & IOT Embedded Technology Sector-based & Whole “ tailored ” Service Design & Creative, Culture and Standard Tax Incentive packages & negotiations Technology High Value Services Prioritizing human resources and technology Technology Human Targeted Investment - led Resource Industries Transformation Enterprise Infrastructure 13
BOI Investment Incentive Scheme Area-based • EEC 3 provinces Activity-based • SEZ 10 provinces • Southern Border (4 provinces, 4 districts) • Bio Industries • 20 Provinces with the Lowest per Capita Income • Creative & Digital Industries • Industrial Estates/Zones • High Value Business & Service • Science and Technology Parks • Advanced Manufacturing (Science Park, Food Innopolis, Space Krenovation Park: SKP) • Basic & Supporting Industries Merit-based • Research & Development (R&D) • Support academic/research institutes, or technology and human + resource development funds • IP licensing fee Technology-based • Advanced technology training • Development of Local suppliers • Biotechnology • Product and packaging design • Nanotechnology • Advanced Material Technology • Digital Technology Agenda-based • Productivity Enhancement • MAI Listing Support
Activity-based Incentives Incentives are largely based on several key factors i.e. level of technology, role in supply chain 8 years Bio-based & Medical A1 Advanced Manufacturing A2 CIT exemption Basic & Supporting A3 High Value Business & Service A4 B1 Creative & Digital B2 0 Incentives year
Dashboard of Activity-Based Basic Incentives Exemption Exemption of Exemption of import duty on of Corporate Import Duty raw material imported for use Non-tax Income Tax on Machinery in production for export 8 years A1 (w/ Cap) + Merit 8 years + Merit A2 5 years + Merit A3 3 years + Merit A4 0 year + Merit* B1 - - B2 * Tax exemption will depend on the investment amount/ expenditure for enhancing competitiveness
Technology-Based Incentives (1/2) Additional incentives for investment in the development of Core Technologies in which Thailand has potential to enhance the country’s overall competitiveness and industries. Projects must be engaged in technology transfer by cooperating with educational/research institutions as stipulated by the Board, e.g. Technology Research Consortium CIT Exemption for 10 years + Merit (1 - 3 years) = Maximum of 13 years Targeted Core Technologies Nanotechnology Advanced Material Digital Technology Biotechnology Technology For 2-6, only projects that utilize advanced technology, Enabling Services as approved by the Board 1.Research and Development (R&D) 4.Engineering Design 2.Vocational Training Centers (only in S&T) 5.Scientific Laboratories 3.Electronics Design 6.Calibration Services
Productivity Enhancement Measure Replace or upgrade Replace or upgrade machinery for energy machinery for efficiency conservation, alternative enhancement, e.g. energy utilization, reduction Automation, of environmental impacts Digitalization Invest or spend in R&D / Upgrade production advanced engineering line to acquire designs international agricultural industrial standard 18
Productivity Enhancement Measure Eligibility • Applicants must be existing businesses, whether BOI or non-BOI promoted (except certain businesses). - In the case of non-BOI status, the company must conduct a BOI-eligible activity. - In case of BOI status, CIT exemption must have already expired or has never been granted. • Minimum investment of 1 million Baht (excluding cost of land and working capital) or 0.5 million for SMEs Incentives • Exemption of import duties for machinery • 3-year CIT exemption on the revenue of an existing project with the total tax exemption amount capped at 50% of investment in productivity enhancement (In case of investment in automation, the cap will be raised to 100% if minimum 30% local industrial linkages are reached.) • Corporate income tax exemption period starts from the date of investment promotion certificate. Requirements • Investment must be completed within 3 years from the date the promotion certificate is issued. • Required KPIs include such productivity indicators as reduced unit direct costs, reduced processing time, reduced waste and reduced cycle time. • Applications must be submitted by the end of 2020 19
List of Activities Eligible for Promotion Metal Products, Agriculture and Mineral, Ceramics and Machinery and Light Industry Agricultural Products Basic Metals Transport Equipment Technology and Electronic and Electrical Chemicals, Plastics and Services and Public Innovation Appliances Industry Paper Utilities Development
5 Investment Incentives in the EEC
Enhancing Investment in the EEC • Application deadline for 30 th December 2019. • Must collaborate with education and research institutions to develop technology or personnel. Area 1. Area to encourage specialist businesses such as area of innovation for specialist economy ( Eastern Economic Corridor of Innovation: EECi ) , area to encourage industry growth and digital innovation ( Digital Park Thailand: EECd ), Cities for Eastern Thailand Flights (EEC Aerotropolis: EEC-A) 2. Area to enhance business industry targets Currently 21 Industrial Estates. 3. Estates / industrial area within EEC including areas which the EEC committee has not announced as enhanced areas, according to provision 2. Please note: Businesses which benefit from this measure cannot receive further benefits from project 3, in which a business is established in a development area. 22
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