Thai Government Pushes ahead with 5 Pilot SEZs

On July 2014, the Special Economic Development Zone Policy Committee chaired by Head of the National Council for Peace and Order (NCPO) General Prayut Chan-o-cha recognized five areas to be developed as Special Economic Development Zones.

Click to EnlargeThese five pilot areas comprised of Mae Sot district in Tak, Aranyaprathet district in Sa Kaeo, Khlong Yai district in Trat, Mueang district in Mukdahan, and Sadao district in Songkhla. Recently, General Prayut added Nong Khai district which lies in North East of Thailand to the list of special economic zones.  At the initial phase, these six special economic development zones areas will be developed with a twofold purpose.  First, it will aim to increase, improve and enhance Thailand’s border trade and secondly, it will help to prepare for the arrival of the ASEAN Community in late 2015.

General Prayut’s stated that through the creation of the special economic development zones, emphasis will be directed towards economic development and national stability. Additionally, these zones will serves as an essential platform to improve Thailand’s economic competitiveness, generate employment, and improve the people’s living conditions. Furthermore, the formation of the special economic development zones will ease congestion at border checkpoints and help tackle the smuggling of migrant workers and goods from neighboring countries.

The criteria, modules and methods to support the establishment of these special zones were also approved by General Prayut. These include investment promotional privileges, one-stop services, measures to support the use of migrant workers, and infrastructure development for regional connectivity. Moreover, three subcommittees were approved to address challenges and ensure effectiveness of investment and promotional privileges, employment of migrant workers and skill development, and infrastructure development and the improvement of border checkpoints. 

In order to improve operations through effective implementation of policies, the Office of the National Economic and Social Development Board has been entrusted with the role to conduct assessments on functions in accordance with the policy on special economic development zones, economic viability, economic, social, environmental, and security impacts, satisfaction of various sectors of society, and guidelines to improve operations.

General Prayut indicated that the export sector of Thailand had immense potential as the demands for Thai products have been strong over the years, especially from the neighboring nations. He went on further to state that the sector will play a key role in Thailand’s economy due to certain advantages such as in terms of distance, transport routes, and prices. Nevertheless, he also shed light on the constraints in the nation’s economy particularly the ones that exists at border customs checkpoints.

In order to effectively address this challenge, he instructed the Customs Department, the Ministry of Transport and other relevant agencies to create better conditions to enhance operations.  NCPO also advocates to the install skill development centers in the selected provinces. Furthermore, measures have been taken to introduce and develop seven more provinces as the special economic development zones in the next phase.

INCENTIVES OFFERED:

       The areas recognized as Special Economic Development Zones will hold certain benefits those who wish to conduct business:

• Corporate Income Tax: Tax exemption for 8 years accounting for 100% of investment excluding land coast and working capital. Furthermore, 50% reduction on net profit available from investment from normal rate for five years after expiry of the exemption
• Import Duty: Exemption for machinery. Five year exemption for raw or essential materials for use in production for export depreciation costs.
• Foreign workers: Permit employment of unskilled foreign workers at promoted projects.

Other Privileges: Double deductions for the cost of transport, electricity and water supply for 30 years from the date of generating revenue. Additional 25% deduction for the cost of installation or construction of facilities in addition to normal depreciation costs. 

By Harsha Hazarika
Team Thaiindia.net
21 January 2015