Thailand Board of Investment Prepares for the Future
As Board of Investment of Thailand (BOI) draws up a new 5-year plan on investment promotion strategies, BOI’s Secretary General points toward the trend of moving away from labour-intensive to knowledge-based industry.
June 2013 is supposed to be the milestone for Thailand’s investment policy, as BOI is poised to announce its 5-year investment promotion plan (2013-2017), which should come into effect in Q3.
Under the guidance of the new Head, Mr. Udom Wongviwatchai, who had worked at Office of Industrial Economics (OIE) and Thailand International Standards Institute (TISI), before joining BOI as Secretary General in November 2012, the BOI plan will be more focused on environment-friendly and sustainable growth.
In January, Minister of Industry, big boss of BOI, inaugurated the first of the nation-wide series of public hearing and opinion sharing with private sectors on what the country should aim for in the new 5-year blueprint under the theme “A New Investment Promotion Strategy to Drive Thailand’s Sustainable Growth”.
The Minister emphasized the importance of clear and assessable targets for investment promotion plan as well as the focus on ‘industries of the future’ such as R&D, creative industry, alternative energy, green industry, and value-added agro industry.
In his statement on BOI’s website, BOI Secretary General also stressed that “in keeping with the government's goal of transitioning Thailand's economy from labor intensive to knowledge-based, the BOI will give more weight to high-tech and high-value industries. This will include, among others, alternative energy projects, medical equipment, and logistics businesses, which are an important aspect of Thailand becoming a logistics and transportation hub of ASEAN.”
This reaffirms the commitment to head the country to a more responsible path to growth from the very top policy level to the operational agency.
New investment promotion strategy and new business opportunities
The new 5-year investment plan as proposed by BOI is a more focused and sustainable affair. The aim is to add value to agricultural sector, which is the backbone of the country, and more importantly for Thailand to be able to be self-reliant and more robust against external risks.
This shift in paradigm includes measures 1) reduction of income tax to promote investment, 2) promotion of investment in R&D, 3) realignment of development concept from zoning to cluster industry, 4) turning away from tariff incentives to comprehensive investment facilitation, and 5) promotion of outbound investment.
As the Thai economy continues to grow, new business opportunities emerge, said BOI chief. Under the new policy, BOI will focus on promoting 10 industries (source: www.boi.go.th):
1) Basic infrastructure and logistics (e.g. industrial zone, power generation from natural gas, tap water or water resources for industrial purposes, transportation and mass transit, commercial airport and logistics center);
2.) Basic industries (e.g. steel, petrochemicals, pulp and paper, machinery);
3.) Medical device and scientific equipment (e.g. medical services, medicine, medical food, scientific equipment);
4.) Alternative energy and environmental services (e.g. power generation from renewable energy sources, bio-fuel, recycling, wastewater treatment and industrial waste disposal services, Energy Services Companies: ESCO);
5.) Services that support the industrial sector (e.g. R&D, HRD, engineering design, software, calibration services, ROH, trade and investment support office);
6.) Advanced core technology (e.g. biotechnology, nanotechnology, advanced material technology);
7.) Food and agricultural processing industry (e.g. processed food, food additives, herbal extracts, plant propagation and development, products from natural rubber);
8.) Hospitality & wellness (e.g. tourism and sports promotion activities, Thai motion picture production and related supporting services, dedicated health centers, retirement homes and care centers);
9.) Automotive and other transportation equipment (e.g. cars, motorcycles, trains, electric trains, aircraft, shipbuilding and maintenance); and
10.) Electronic and electrical appliances (e.g. electronic design, organics & printed electronics, HDD & SSD and parts, solar cells, white goods)
In response to the private sectors’ fear that the new plan may introduce new and more cumbersome rules to foreign investors, and actually makes it more difficult to invest in Thailand, BOI Secretary General argues that not only will the new shift in strategy help raise the standard of doing businesses in Thailand, it will also present investors with new opportunities and more comprehensive incentives.
Investment in above sectors will enjoy exemption from corporate income tax and some will get the tax exemption on import duties on machinery and raw material imports, as well as other non-tax-related incentives such as permits to own land and permits to bring into the kingdom skilled workers and experts to work in investment-promoted activities.
However, the new plan will not be retroactive i.e. will only apply to investments approved after the effective date of the plan.
India, a focused target
As far as India is concerned, Thailand is continuing its effort to foster closer trade and investment ties with India.
In the new investment plan, India is one of the major targets for both inbound and outbound investment. For this reason, BOI is preparing to open its first investment office in Mumbai to facilitate both Indian investors to Thailand and vice versa.
The BOI Head is aware that investors are anxiously waiting for the finalization of the new investment policy. For this reason, it will be going around the country in the next few months to hold similar seminars in Chonburi, Chiang Mai, Nakorn Ratchasima, and Surat Thani in order to make sure that the new plan will reflect what Thailand needs and what investors will most be happy to hear.
Praphan Samphaiworakit
Reports from New Delhi
6 March 2013