Transcript Standard Presentation

Thailand
Board of Investment
Mr. Somphong Wanapha
Secretary General
Thailand Board of Investment
January 2003
Outline of Presentation
Thailand
Board of Investment
• Macroeconomic Overview
• FDI in 2002/2003
• Thailand’s Competitive
Advantages
• Targeted Opportunities in
Thailand
Thailand
Board of Investment
The Macroeconomic
Picture in Statistics (1 of 2)
1998 1999
GDP Growth (%)
-9.4
4.4
2000
4.6
2001e* 2002e**
1.8
4.9
GDP (US$ Bil)
111.9 122.4 122.1 114.4
125.6
Inflation (%)
8.1
0.6
GDP Per Capita
0.3
1,820 1,980
1.6
1.6
1,957 1,830
1,990
-2.6
-2.8
(US$)
Fiscal Balance (US$ Bil) -2.6
-3.0
Sources: * = Bank of Thailand
** = ThailandOutlook.com (January 10, 2003)
-2.5
The Macroeconomic
Picture in Statistics (2 of 2)
Thailand
Board of Investment
Foreign Reserves
1998
1999
2000
29.5
34.8
32.7
2001e* 2002e**
33.0
38.7/***
(US$ Bil.)
Export Growth (%)
-6.6
7.4
19.5
-6.9
1.7
Value of Exports
54.5
56.8
67.9
63.2
64.3
12.6
10.1
7.6
5.3
3.6
96.5
108.6
112.1 113.5 130.1***
(US$ Bil.)
Current Account
(% of GDP)
MPI
(Manufacturing Production Index)
Sources:
* = Bank of Thailand
** = ThailandOutlook.com (January 10, 2003)
*** = As of January 3, 2003
Government Stimulus
Thailand
Board of Investment
• Restructuring Farm Debts
• Providing Million Baht Grants
to all 70,000 villages
• Thailand Asset Management
Corporation
• Supporting SMEs via State
Banks
Thailand
Board of Investment
Board of Investment Approved
Foreign Investment by Country
2000
Number
of
Projects
Total
Foreign
Value of
Investment
(mil. US$)
1,116 6,967
761 5,295
By Country
Japan
282
U.S.A.
73
Taiwan
120
Hong Kong 31
Singapore
84
E.U.
144
2,674
944
439
155
495
776
2001
2002
Number
of
Projects
Value of
Investment
(mil. US$)
Number Value of
of
Investment
Projects (mil. US$)
820
575
5,987
4,713
721
483
3,775
2,316
257
40
50
20
51
79
1,874
902
153
218
202
518
215
37
41
5
40
65
892
258
63
37
305
378
Note 1: Investment projects with foreign equity participation from more than one country are
reported in the figures for each country
Note 2: 2000 US$=40.16 baht; 2001 US$=44.48 baht; 2002 US$=43.00 baht
Investment from the US
Thailand
Board of Investment
• Approved projects in 2002
Honeywell — US$12 million to
produce plated thermal spreaders
Cargill — US$5 million in
agriculture (chicken)
Johnson Controls — US$8.5 million
for automotive seats
An International Procurement
Office from 3M
Regional Operating Headquarters
from ExxonMobil
Thailand
Board of Investment
Regional Operating
Headquarters (ROH)
• In August, the Government
Established Regulations Covering
Regional Operating Headquarters
• Companies must be incorporated
under Thai law and have paid-up
minimum capital of 10 million baht
They must service branches or affiliates
in at least 3 countries
Income must come from managerial,
administrative, technical, or other
prescribed supporting services for
branches/associated companies
ROH
Thailand
Board of Investment
• Benefits
Corporate income tax at 10% for:
Qualified services
Royalties from ROH in Thailand
Interest income on loans made to ROH
branches/associated enterprises
Tax exemption for dividends from
ROH branches/associated enterprises
Expats working for ROH are taxed
at 15% for 1st 2 years, instead of on
sliding scale
FDI in 2003
Thailand
Board of Investment
• Targeting Same Level of
Investment as 2002
• Quality is More Important Than
Quantity
• We are Looking for Projects to:
Enhance the competitiveness of
Thai industry
Upgrade human capital (i.e.
human resource development)
Help develop and transfer skills
and technology
Nurture Thai talent
FDI in 2003
Thailand
Board of Investment
• Objectives Include:
Encouraging Cluster Development
Particularly in automotive and
petrochemicals (Eastern Seaboard)
Targeting investment
By region and by industry
We have established 5 target
industries and will develop industryspecific measure to support them
Non-target industries
No changes in policy, no backtracking
Competitive Advantages
Thailand
Board of Investment
• ASEAN and AFTA
Progressively being implemented
• Location and Social Stability
Peaceful Buddhist country
Free from social unrest
Well-developed infrastructure
• Political System
Stable democracy
Reform-oriented government
• Workforce
Trainable and adaptable
Competitive Advantages
Thailand
Board of Investment
• Cost-effective Local Inputs
Least expensive office space in
Asia
Vibrant supporting industries
support subcontracting
Canon sources 70% of all parts
locally
Toyota is looking to source 100%
locally by 2006
More and more manufacturers and
assemblers acknowledge that Thai
local inputs are key to global
competitiveness
China
Thailand
Board of Investment
• Should You Put All Your Eggs in
the China Basket?
China has huge potential, but
investment landscape is a bit
uncertain
China
Thailand
Board of Investment
• JETRO Report Found That:
In 14 categories, Thailand was
ranked better than China in 11,
including:
Legal framework
Transparency
Infrastructure
Development of parts industry
• For Global Markets, Even
China Invests in Thailand
Target Industries
Thailand
Board of Investment
• We Have Identified 5 Groups of
Target Industries
Agro-Industry
Automotive
Fashion
Electronics and ICT
High-Value Services
Target Industries
Thailand
Board of Investment
• Specific Policies and Measures
Will Be Developed for Each
Target Industry, Based On
Competitiveness
Levels of technology
Market potential
• Non-target Industries
No change in policy
No backtracking
No reduction in incentives
Leading Agricultural Exports
Thailand
Board of Investment
Export
Value
------------------------------------------------------------------------------------
•
•
•
•
•
•
•
•
•
Rice
Canned Seafood
Shrimp
Rubber
Canned Tuna
Chicken
Canned Fruit
Sugar
Canned Pineapple
* #1 Exporter in the World
73,812*
65,957
48,696*
43,942*
21,886*
21,796
21,767
21,687
11,433*
Unit = Million Baht
Agricultural Priority Activities
Thailand
Board of Investment
• Under revised BOI policy (effective
August 1, 2000), 26 agricultural activities
have been classified as priority activities,
including 8 newly-promoted categories:
1.
2.
3.
4.
5.
6.
7.
8.
Manufacturing of alcohol or fuel through plants
Fertilizers produced through biotechnology
Manufacturing of products through herbs
Analysis of plant disease
Analysis and certification of agricultural products
Soil and water analysis for agriculture
Agricultural Trading Centers
Agricultural Processing Zones
Automotive Industry in 2001
Thailand
Board of Investment
• Assembly
Market
Export
Production
297,052 units
175,299 units
459,418 units
OEM
OESpare
REM
US$2.3 billion
US$0.5 billion
US$1.0 billion
+13.3%
+14.7%
+11.6%
• Total Component Industry – US$3.8
billion
• 500 Component Manufacturers
Employing 100,000 Workers
Thai Automotive Markets
Thailand
Board of Investment
700,000
600,000
Sales
Expor ts
175,000
150,000
125,000
400,000
100,000
300,000
75,000
200,000
100,000
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
0
50,000
25,000
0
Exports
Total Sales
500,000
200,000
Thailand
Board of Investment
Auto Parts & Components
Manufactured in Thailand
• Engines
 Diesels, Motorcycles
• Engine Components
 Starters, Alternators,
Pumps, Filters, Hoses,
Gears, Flywheels
• Body Parts
 Chassis, Bumpers,
Fenders, Hoods, Door
Panels
• Brake Systems
 Master Cylinders, Drums,
Discs, Pads, Linings,
• Steering Systems
 Steering Wheels, Gears,
Columns, Pumps,
Linkages
• Suspensions
 Shocks, Coils, Ball Joints
• Transmissions
 Gears, Casings, Rear
Axles, Drive Shafts,
Propellor Shafts
• Electrical/Electronics
 Alternators, Starters,
Speedometers, Lamps,
Motors, Flasher Relays
• Interiors/Exteriors
 Seats, Mats, Weather
Strips, Console Boxes
• Others
 Windshields, Seat Belts,
Radiators, Wheels,
Compressors
Components Not
Produced in Thailand
Thailand
Board of Investment
•
•
•
•
•
•
•
•
Passenger Car Engines
Fuel Injection Pumps
Transmissions
Differential Gears
Final Gears
Injection Nozzles
Electronic Systems
Electronic Control Units
Thai Automotive Trends
Thailand
Board of Investment
• Gradual Recovery of Automotive
Market
• Expanding Exports
• Continued Investment in Parts &
Components
• Continued Investment in
Assembly
• Thailand is Hub of Auto Industry
in Region
Fashion
Thailand
Board of Investment
• Develop Thailand as Fashion Center
for Southeast Asia
Leather
Opportunities lie in technical cooperation
and quality improvement, particularly in
design and branding
Jewelry
Thai gold, silver, and costume jewelry in
high demand , due to Thai artisanship
Opportunities to bring in high-tech
equipment and to help with design
Garments
Provide training institute to produce
international-standard fashion graduates
Provide consistent supply of high-quality
raw materials
High Value Added Services
Thailand
Board of Investment
• High-Value Services
Regional Operating Headquarters
Attractive package of tax incentives
(comparable to any in the region)
Non-tax incentives from the BOI
Long-Stay Tourism
Retirement homes
“Snowbirds”
ICT-Related Services
E-Commerce Application Service
Providers
E-Commerce Users
Thailand
Board of Investment
Electronics & Electrical
Appliances in Thailand
•
•
•
•
•
•
Consumer Electronics
Computers & Peripherals
Telecom & Office Equipment
Electronic Components & Parts
Electrical Products & Parts
The Industry
750 Companies
300,000 –350,000 Employees
US$17.2 Billion Investment
Export US$21 billion annually
Thailand
Board of Investment
Electronics Exports
• Consumer Electronics
 2000 Exports – US$3.3 Billion (+17%)
 2001 Exports – US$2.9 Billion (-12%)
• Computers and Peripherals
 2000 Exports – US$7.8 Billion (+3%)
 2001 Exports – US$6.8 Billion (-12%)
• Telecoms and Office Equipment
 2000 Exports – US$1.2 Billion (+10%)
 2001 Exports – US$1.0 Billion (-17%)
• Electronic Components and Parts
 2000 Exports – US$9.3 Billion (+23%)
 2001 Exports – US$7.8 Billion (-15%)
• Electrical Products and Parts
 2000 Exports – US$1.9 Billion (+17%)
 2001 Exports – US$2.1 Billion (+11%)
Thailand
Thailand
Board
BoardofofInvestment
Investment
BOI on the Internet
http://www.boi.go.th
For the past two years, the BOI web site
was ranked #5 Investment Promotion Agency
website in the world by Corporate Location
Email: [email protected]
• Up-to-date Info on BOI
Policies, Procedures,
Incentives and Services
• Links to Business News
About Thailand
• What’s New at the BOI
• Links to Important
Business Sites
• Cost of Doing Business
in Thailand
• Database of Promoted
Companies
• Comprehensive
Information From Other
Government Agencies
• BOI Statistics
• Trade Statistics
• Demographic Data
• Industrial Estates
Thailand
Board of Investment
EXTRA
SLIDES
The Road Ahead
Thailand
Board of Investment
• Seven Key Strategies to Keep
Thailand Competitive
Remove obstacles to investment
Proactive marketing of Thailand
Improve overseas networking
Improve competitiveness
Market community enterprises
Monitor global trends
Cut through “red tape”
Removing Obstacles
Thailand
Board of Investment
• The BOI Wants to be Your
Business Partner
We constantly meet with investors
to find out what we can do to
improve investment climate
We are committed to playing a
coordinating role with other
government agencies
We have set up an investment
facilitation unit to work with
investors to help solve problems
Proactive Marketing
Thailand
Board of Investment
• Target Three Key Regions
Europe (EU)
Asia (Japan, China, Singapore,
Hong Kong, Korea)
North America (U.S. and Canada)
• Plans to Open New Offices in:
Shanghai
San Francisco
Osaka
• Promote Target Industries
Improve Networking
Thailand
Board of Investment
• Develop Linkages, Networks,
Partnerships With:
Banks
Investment Promotion Agencies
Provincial Governments
• Develop Sister City/Sister
Province Relationships
• Work With Chambers of
Commerce
Both in Thailand and overseas
Thailand
Board of Investment
Improving Thai
Competitiveness
• Send a “Wake-Up Call” to Thai
Industry, Particularly SMEs
Inform them of changes in global
marketplace
Make them aware of need to
adopt “industry best” practices
and technology
Help them coordinate skills
transfer through training
Thailand
Board of Investment
Marketing Community
Enterprises
• BOI Will Play a Coordinating
Role With Thai SMEs
Working with other Ministries to
ensure SMEs receive maximum
government support
Encourage foreign SMEs to partner
with Thai SMEs to provide
Technical assistance
Foreign market access
Assistance in adapting Thai products
for foreign markets
Thailand
Board of Investment
Monitoring International
Investment Trends
• Separate Unit at BOI to
Monitor Global Investment
Environment
Provide both the Thai
government and the Thai
investment community early
warnings about legislative and
procedural changes in the
international investment arena
Improve the BOI
Thailand
Board of Investment
• The BOI is Always Looking to
Improve the Way We Do
Business
Already ISO 9002 certified,
ensuring all investors receive fair
and transparent treatment
We will continue to improve
range of services
We will look to streamline
procedure to cut through “red
tape”
The Board of Investment
Organization Chart
Thailand
Thailand
Board
BoardofofInvestment
Investment
Board of Investment
Office of the Prime
Minister
Policy
Administrative
Office of the Board of
Investment
Thailand
Board of Investment
Office of the Board of Investment
Sectoral Divisions
BOI Sectoral Divisions
Division 1
Agriculture and Agricultural Products
Division 2
Mining, Ceramics, and Basic Metal Industries
Division 3
Light Industries
Division 4
Metal-working, Machinery, and Transport Equipment
Division 5
Electronics and Electrical Industries
Division 6
Chemical Industries, Paper, Platic Products
Division 7
Services and Infrastructure Services
Thailand
Board of Investment
MIDA
EDB
EDB
MIDA
EDB
MIDA
MIDA
EDB
EDB
EDB
MIDA
BOI
EDB
MIDA
Thailand
Board of Investment
EDBMIDA
MIDA
EDB
EDB
MIDA
BOI
BOI
EDB
MIDA
EDB
BOI
MIDA
MIDA
สำนักงำนส่ งเสริ มกำรลงทุนในญี่ปุ่น
Thailand
Board of Investment
EDB
MIDA
MIDA
EDB
EDB
MIDA
Thailand
Board of Investment
BOI Policy
Priority Activities (1 of 2)
• Agriculture – Backbone of the Country
• Technological and human resource
development
• Infrastructure, public utilities and basic
services
• Environmental protection/conservation
• Targeted Industries - such as:
Steel casting using induction furnace
Forged steel parts
Electronic design
Software and software park
Thailand
Board of Investment
BOI Policy
Priority Activities
(2 of 2)
• These five categories of priority
activities are eligible for special
incentives:
Import duty exemption on
machinery
Eight-year corporate income tax
holiday, regardless of zone
Services of the BOI
Thailand
Board of Investment
• The BOI offers :
Investment Matchmaker Program
Support around the world – 4 overseas offices
(New York, Paris, Frankfurt, Tokyo)
One-Stop Shop for Visas and Work Permits –
Work Permits within 3 hours
Services of BUILD Unit to promote industrial
subcontracting – Vendors Meet Customers
Program
ASEAN Supporting Industry Database (ASID)
Comprehensive, world-class website
Help with work and residency permits
Interaction with other government agencies on
behalf of investors
Asia’s Most
Affordable Office Space
Thailand
Board of Investment
140
Tokyo (Inner
Central)
Hong Kong
136
Mumbai
120
Seoul
Taipei
100
Beijing
Singapore
80
Shanghai (Puxi)
61
60
Guangzhou
58
Manila
44
40
20
42
Jakarta
37
Kuala Lumpur
51
Bangkok
26
16
11
14
0
14
13
Cost Per Square Foot - US$/year Source: CB Richard Ellis -- July 2002
Big Mac Index
Thailand
Board of Investment
3.00
2.54
2.50
1.89
2.00
2.25
1.27
1.28
1.27
China
1.50
P hilippines
1.67
1.40
1.19
1.00
Bahr ein
J apan
H ong
Kong
M alaysia
I ndonesia
Singapor e
0.00
Thailand
0.50
US
(US$)
2.01
Source: The Economist, April 2002
Thailand
Board of Investment
New Activities Eligible
for Promotion
• E-Commerce Application Service
Provider
• E-Commerce User
• Regional Headquarters
• International Distribution Centers
• International Procurement Offices
• Retirement Homes
• Dedicated Health Centers
• Waste Recycling
Thailand
Board of Investment
Supporting Industries
in ASEAN
• ASEAN Supporting Industry
Database
Expands the scope of ASEAN’s
supporting industries by serving as the
region’s industrial yellow pages
The ASID home page (www.asidnet.org)
contains information about more than
11,000 supporting industry companies
throughout ASEAN
Provides communication links to
facilitate electronic commerce between
ASEAN suppliers and foreign
purchasers.
Liberal Investment Regime
Thailand
Board of Investment
• No Export Requirements
• No Foreign Equity Restrictions
in Manufacturing Sectors
• No Local-Content
Requirements
• No Location Requirement in
All But 6 Activities
BOI Policy Objectives
Thailand
Board of Investment
• Attract Investment to Speed Recovery
Quality more important than quantity
• Continue Decentralization
Maximum incentives for least developed
provinces
• Strengthen Competitiveness
Require international-standard
certification (e.g. ISO 9002)
• Develop New Activities and Industries
• Good Governance
Transparent policies
Performance-based incentives
Thailand
Thailand
Board
BoardofofInvestment
Investment
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
Thailand
Board of Investment
The Board of Investment
Basic Incentives and Measures
• To reduce initial investment
costs:
Tax exemption or reduction on
imported machinery
Tax exemption or reduction on
imported inputs
Exemptions from corporate
income tax for 3-8 years
Zones of Opportunity
Thailand
Board of Investment
Import Duty on Machinery
Thailand
Board of Investment
Zone
1
Reduce 50%
2
Reduce 50%
3
Exempt
Thailand
Board of Investment
Import Duty on
Raw Materials
Zone
1
1 Year Exemption
2
1 Year Exemption
3
5 Year Exemption
Thailand
Board of Investment
Corporate Income
Tax Exemption
The Amount of a Project’s Corporate Income Tax
Holiday is Capped at 100% of Investment Capital
Zone
Zone 1
Zone 2
Zone 3
Inside
Outside
Industrial Industrial
Estate
Estate
3 Years Not Exempt
5 Years
3 Years
8 Years
8 Years
Additional Zone 3 Incentives
Thailand
Board of Investment
40 provinces
50% reduction of
income tax for 5
years
Double deduction
of water, electricity,
transport costs for
10 years
25% deduction of
infrastructure
installation or
construction costs
Inside
Industrial
Estate
Outside
Industrial
Estate



Additional Zone 3 Incentives
Thailand
Board of Investment
18 leastdeveloped
provinces
50% reduction of
income tax for 5 years
Double deduction of
water, electricity,
transport costs for 10
years
25% deduction of
infrastructure
installation or
construction costs
Inside
Outside
Industrial Industrial
Estate
Estate






Criteria and Conditions
Thailand
Board of Investment
•
•
•
•
Criteria
Conditions
Value added
D/E ratio
Modern technology
Environmental
protection
• ISO 9000
• Performance
based
• Cap on corporate
income tax
exemption (equal
to investment
capital)
Why Thailand?
Thailand
Board of Investment
• Reform-oriented Economic Policy
• Favorable Approach to the Private
Sector: Government As Supporter
Not Regulator
• Consistently Positive Attitude
Toward Foreign Investment
• Steady Moves to Liberalize Business
Environment and Privatize Stateowned Enterprises
Why Thailand?
Thailand
Board of Investment
• Resilient, Diversified Economy,
Supporting Industries Growing
• Abundant Natural Resources
• Large and Highly-productive Labor
Force
• Domestic Market of 63 Million
• Strategic Location at the Heart of
Southeast Asia
Thailand
Board of Investment
Board of Investment Approved
Foreign Investment by Country
2000
Number
of
Projects
2001
2002 (Jan.-Oct.)
Value of
Investment
(mil. baht)
Number
of
Projects
1,116 279,800
761 212,649
820
575
266,300
209,622
604
408
144,000
89,366
By Country
Japan
282 107,382
U.S.A.
73 37,916
Taiwan
120 17,632
Hong Kong 31
6,241
Singapore
84 19,910
E.U.
144 31,175
257
40
50
20
51
79
83,369
40,131
6,824
9,710
8,985
23,019
177
33
38
4
35
57
32,574
10,388
2,554
1,518
12,471
15,389
Total
Foreign
Value of
Investment
(mil. baht)
Number Value of
of
Investment
Projects (mil. baht)
Note: Investment projects with foreign equity participation from more than one country are
reported in the figures for each country