Transcript Slide 1

Current Situation and BOI Promotion Policy of
E&E Industry in Thailand
Mr. Seksan Ruangwohan
Director
Investment Promotion Bureau 3
Thailand Board of Investment
May 2012
1
Presentation Outline
• Current World Economy and Current Situation
of E&E Industry in Thailand
• Why Thailand
• BOI E&E Investment Policies
• Investment Promotion Policy for Sustainable
Development (Hi-Tech Industry)
• New Measures for affected by flood projects
• BOI and BOI Services
• Investment Opportunities
Current World Economics and Current
Situation of E&E Industry in Thailand
World Economy Status
Global GDP Growth 2011, 2012 (p), 2013 (p)
GDP GROWTH
(%)
2011
2012
(p)
2013
(p)
World
3.9
3.5
4.1
Advanced
economies
1.6
1.4
2.0
Emerging
and
developing
economies
6.2
5.7
6.0
2011
2012
(p)
2013
(p)
United States
1.7
2.1
2.4
EU
1.6
0.0
1.3
Japan
-0.7
2.0
1.7
Brazil
2.7
3.0
4.1
Russia
4.3
4.0
3.9
India
7.2
6.9
7.3
China
9.2
7.5
8.8
ASEAN-5
4.5
5.4
6.2
GDP GROWTH
(%)
Source: IMF, April 2012 | NESDB, January 2012| FPO, March 2012
Source: IMF, April 2012
Overall Thailand GDP Growth
GDP growth from 1999 - 2011
QGDP 2001 – Q1, 2012
Q2,11 Q3,11 Q4,11 Q1,12 Q2,12
Adapted from: NESDB (2012) and Index Mundi (2012)
Foreign Direct Investment in Thailand
+45.4%
Quarterly Foreign Direct Investment in
Thailand according to BOI applications
+50.3%
World Electrical and Electronics industrial status
exports and imports of the ASEAN-5
Exporting amount of the ASEAN-5
Importing amount of the ASEAN-5
Source: Global Trade Atlas, April 2012 | IEE
World Electrical and Electronics industrial status
Top 15 country based on the export in 2011
RANKING
COUNTRY
EXPORTING VALUE in 2011
(Million US Dollars)
1
China
669,618
2
Hong Kong
244,259
3
United States
218,501
4
Germany
181,799
5
Japan
170,165
6
Singapore
152,631
7
South Korea
137,265
8
Netherlands
123,982
9
Taiwan
114,361
10
Mexico
93,879
11
Malaysia
80,358
12
France
55,753
13
Thailand
53,219
14
Italy
45,897
15
Czech Republic
43,291
In 2011, Thailand
ranked#13 in the
WORLD for export in
E&E market
The 3th country in
ASEAN
Second to Singapore (6th)
and Malaysia (11th)
Source: Global Trade
Atlas, April 2012
Thailand E&E Export & Import 2002-2012
BillionUS$
60
53
50
47
46
42
41
40
30
20
33
25
20
28
21
24
35
28
31
34
36
41
53
43
32
17
10
0
2002
2003
2004
2005
Export
2006
2007
2008
2009
Import
2010
2011
Jan-April
2012
Source: Customs Department & EEI
Total E&E Export
33
35
Thousand
Domestic Sale
31
30
25
20
22
Electrical
Appliance
Electronics
20
15
10
5
3.2 4
0
-
Total E&E Export
= 7.2 Bil USD (-13.9%)
Total Electrical Appliance =
3.2 Bil USD (-6.7%)
Total Electronics
= 4.0 Bil USD (-19.0%)
Source: IEE, Thailand, April, 2012
Top E&E Export
Top E&E Import
Electrical Products
Electrical Products
1. Air-conditioner
2. Circuit breaker,
switches, plugs
3. VDO camera
4. Refrigerator
5. Color TV
1. Circuit breakers,
switches, plugs
2. VDO tape, CD, DVD
3. TV parts, components
4. Wiring harness
5. VDO cameras
Electronics
Electronics
1. Computer parts
2. IC
3. PCB, PCBA
4. Diode, transistors,
semiconductors.
5. Equipments used for
telephone or telegraphs
1.
2.
3.
4.
5.
IC
Computer parts
Mobile phones
Computers, notebook,
Palm
Printed circuit
Source: IEE, Thailand
Thailand’s Markets for E&E Export
In January and February 2012
Markets for Electrical Appliance
ASEAN
17%
JAPAN
Markets for Electronics
OVERALL
CHINA
19%
14%
ASEAN
16%
USA
12%
USA
16%
EU
11%
EU
13%
ME
9%
JAPAN
8%
CHINA
8%
ME
1%
OTHERs
27%
OTHERs
27%
1
ASEAN
2
CHINA/USA
3
EU
Source: IEE,
Thailand,
April, 2012
Projection for E&E Industry
Export projection in 2012
Product
Exporting value (Thousand Million USD)
Growth
Electrical Appliance
21.6
-2%
Electronics
28.3
-8%
E&E
49.9
-5%
Source: IEE, Thailand, April, 2012
Thailand E&E Production Index
Electrical Appliance production index
Jan – Feb 2012:
17.9% YoY
Electronics production index
Jan – Feb 2012:
28.9% YoY
Source: IEE, April, 2012
Net BOI Application for E&E Projects
Current E&E export, production index, and
BOI net application investment Status
GROWTH
APRL -> MAY
BOI INVESTMENT
+32%
E&E EXPORT
+20%
PI
+13%
WHY THAILAND
Importance of the Manufacturing Sector
Share GDP by Sector
Share Export Value by Sector
Agroindustry
8%
Agriculture
13%
Manufacturing
73%
Mining a
fuel
5.8%
Othe
0.2%
We Have Something to Boast About
Thailand in the
leading Rank
In
Asia
In the
World
Overall Business
Environment
1
17
Getting Electricity
1
9
Dealing with
Construction
1
14
Trading Across
Border
1
17
Enforcing Contracts
1
24
Registering Property
1
28
Protecting investors
2
13
• Ease of Doing Business #17 in the world, #3 in Asia
• Most Attractive FDI
Locations - #11 in the World
• Most Efficient in Public
Sector - #3 in the Asia
• Corporate Governance - #4
in the Asia
• Thailand is the world
largest producer of HDDs
Source: World Bank Study, 2011 / World investment
Prospects Survey, 2010-2012 / JBIC Survey Result, 2010
• 7 international airports
 In 2011, 66 million passengers, 1.1 million
tons of cargoes
 Suvarnabhumi Airport – Capacity: 45
million passengers and 3 million tons of
cargo per year
• Over 70,000 km Highway Systems
• 6 Deep Sea Ports & 2 International River Ports
 Capacity over 10 million TEUs
 Laem Chabang Sea Port – Capacity: 10.8
million TEUs, with additional 8 million
TEUs expansion
 e-Customs facilities
• 4,346 km Rail links to Malaysia & Singapore
• 60 Industrial Estates
2011 Cost of Living Survey
Rankings
Cities
Country
Tokyo
Japan
March
2008
2
March
2009
1
March
2010
2
March
2011
2
Osaka
Japan
11
2
6
6
Hong Kong
Hong Kong
6
5
8
9
Singapore
Singapore
13
10
11
8
Beijing
Shanghai
China
China
20
24
9
12
16
25
20
21
Taipei
Taiwan
63
61
78
52
Jakarta
Indonesia
82
106
94
69
Bangkok
Thailand
105
98
121
88
Kuala Lumpur
Malaysia
106
96
138
124
Hanoi
Vietnam
91
58
121
136
Source: World Cost of Living Survey 2011, Mercer Human Resource Consulting as of Aug 29, 2011
Efficient Logistics Network
Seaport - Land Transport – Airport
Suvarnabhumi
International
Airport
Donmuang
International
Airport
Laem Chabang
Seaport
Map Ta Put
Deep Seaport
(24)
Free Trade Agreement
Entering into force
 AFTA
 AEC in 2015
Note: ASEAN are Thailand, Malaysia, Indonesia, the Philippines, Singapore and Brunei only.
Source: BOI International Affairs & www.thaifta.com, as of Feb 05, 2010
Second Stimulus Package (2010-2012)
The cabinet approved an investment framework featuring 618 projects worth
35.74 billion USD for the second stimulus package, covering 2010-2012.
Projects
1) Irrigation
Budget
(Billion USD)
5.95
2) Transportation &
Logistics
14.27
3) Energy
5.14
4) Telecoms
3.87
5) Fundamental
Tourism
Infrastructure
0.50
6) Health Care
2.48
Source: Royal Thai Government, PDMO as of 2010
Projects
7) Education
Budget
(Billion USD)
3.45
8) People’s Welfare
0.21
9) Science &
Technology
0.30
10) Environment
0.13
11) Tourism
Development
0.21
12) Creative
Economy
0.44
13) Community
Development
2.29
BOI E&E Investment Policies
Basic BOI Privileges and Measures
Non-Tax Incentives
Tax Incentives
 Land ownership rights
 Import duty reductions or
for foreign investors
exemptions on machinery and raw
materials
 Permission to bring in
foreign experts and
 Corporate income tax holidays up
technicians
to 8 years
 Work permit & visa
 Additional 50% reductions of
facilitation
corporate income tax for 5 years
• One-Stop-Shop: Visas
 Double deduction of public utility
& Work Permits are
costs
issued in 3 hours
 Deductions for infrastructure
construction/installation costs
BOI Zoning and E&E
Basic Incentives
Zone-Based
Incentives:
Lower incentives
• Zone 1
• Zone 2
• Zone 3
Higher incentives
Corporate Income Tax Exemption
Zone
Inside
Industrial
Estate
Outside
Industrial
Estate
Zone 1
5 Years
5 Years
Zone 2
7 Years*
6 Years
Zone 3
8 Years
8 Years
* Laem Chabang IE and Rayong IE receive 8
years
Objectives of E&E Investment Policies
• To enhance competitiveness of E&E industry
• To promote investments along the entire value
chain
• To attract high value long-term investments
• To encourage development of Skills, Technology
and Innovation (STI)
E&E Investment Incentives
Investment projects are categorized as follows:

General Investment Projects

Priority Activity Projects

Special Priority Activity Projects

High Value Long-term E&E Investment Projects

Existing Projects
General Investment Projects (1/2)
1. General investment projects:
Incentives
=
Basic Incentives
+
STI Incentive (Optional)
*Additional tax holidays
*No limit on tax exemptions
Additional STI Incentives (Optional)
Investment and Expenditures on:
•
•
•
•
Research and development or design
Advanced technology training
Funding of educational and research institutes
Donation to Tech&HRD Fund
% of First Three Years’ Sales
1% or max. 150 million baht
2% or max. 300 million baht
3% or max. 450 million baht
Additional tax
holidays
1 year
2 years
3 years
Note: Corporate income tax holiday may not exceed eight years.
General Investment Projects (2/2)
• Exemption from import tariffs on
machinery without time limit
• For ICs, HDDs and parts, Material
for Micro Electronics (Wafer or Thin
Film Technology), upgraded existing
machinery can be utilized in new
investment projects
Activity Projects
Priority ActivityPriority
Projects
Priority activity projects:
Manufacture of: Semiconductor , HDD and parts,
Telecom equipments and parts, Medical electronic parts,
Agritronics products and parts, Industrial automation
equipments, Automotive electronic parts, Flexible Printed
Circuit and multi-layer PCB
Incentives = 8 years corporate income tax exemption
regardless of location
+
STI Incentive (Optional)
*No cap on tax exemptions
Special
Priority
Activity Projects
Special Priority
Activity
Projects
Special priority activity projects:
● Manufacture of: Solar cell and its raw materials,
Media/Platter for HDD, Flat panel display, Wafers and
thin film technology
(production process must be approved by the BOI)
● Electronic Design, Software
Incentives = 8 years corporate income tax exemption
without cap (regardless of location)
Incentives for Software Development
Software Group
1. Enterprise Software (transaction processing, business solutions)
2. Embedded Software (mobile phones, microchips)
3. Digital content, including:
–
–
–
–
–
–
Animation
Cartoons and characters
Computer-generated imagery
Web-based applications
Cloud Computing
Interactive applications
– Games
– Wireless location based service
content
– Visual effects
– Multimedia video conferencing
applications
– E-learning content via broadband and
multimedia
Incentives: Duty-free machinery
8 years income tax exemption without cap
Specific Software Procedure
1. Modeling
2. Requirement Analysis
3. Design
4. Implementation
5. Program and System Testing
6. Deployment
7. Configuration and Change Management
8. Professional Training
Privileges for high value long-term
E&E Investment projects (15,000 M ฿)
Extended duration of corporate income tax holidays
Project
Project 1
Project 2
5 Yrs
Final Project
Companies may
choose to
consolidate into
one project
or keep as separate
projects
8 Yrs
Duration of Privileges (yrs)
62
Compulsory STI expenditures for
high value long-term E&E investments
All high value long-term investment projects
must meet the following STI criteria during
operation of final project:
STI
Zone 1
Zone 2
Zone 3
requirements
st
of
total
1
•2%
•1.5% of total 1st •1% of total 1st
•R&D
• Advanced
3-year sales or at
3-year sales or at 3-year sales or at
least 500 million
least 400 million
least 300 million
Technology
baht whichever is
baht whichever is
Baht whichever is
Training
less
•Funding
less
less
educational/ Required total STI expenditures are calculated from the first 3-year
research
sales of the final project and previous projects combined.
institutions
Privileges for Higher value long-term
E&E Investment projects (30,000 M ฿)
Extended duration of corporate income tax holidays
Project
Project1
Project 2
8 Yrs
Final Project
Companies may
choose to
consolidate into
one project
or keep as separate
projects
8 Yrs
Duration of Privileges (yrs)
62
Incentives for Existing projects
• Existing projects can import machinery
and equipment with duty exemption in
order to enhance efficiency and
technological capabilities
Investment Promotion Policy for
Sustainable Development
Policy to Support Hi-Tech Industry
Tax Incentives
• Exemption of import Duties on machinery
• Corporate Tax exemption 8 years with No Cap
• 50% Reduction of corporate income tax for 5 years from
the expiry date
• Double deduction of public utility costs for 10 years
• Deduction from net profit of 25% of the investment in
infrastructure installation and construction cost in
addition to normal capital depreciation for 10 years
Policy to Support Hi-Tech Industry
Eligibility
• Any Location except Bangkok
• Applicable to designated activities
only
• Application submission deadline:
Dec 31, 2012
Policy to Support Hi-Tech Industry
Hi-Tech E&E Products
• 5.4 Telecom Products, Industrial Automation Equipment
• 5.5 Semiconductor, Solar Cell, HDD & SSD & Parts,
Telecom Parts, Flat Panel Display, Automotive
Electronic Parts, Agritronic Parts, Medical Electronic
Parts
• 5.6 Material for Micro Electronics
• 5.7 Electronic Design
New Measures for affected by flood
projects
New measure for affected by flood projects (2012)
• Existing projects with existing capacity corporate tax
exemption of the investment
Investing in the same
affected province
Treated as if new project with 8 years corporate tax
exemption (150% Cap of new investment + Existing Cap)
Investing in another
province
8 years corporate tax exemption (100% Cap of new
investment + Existing Cap)
• Existing projects with existing non-capacity corporate tax
exemption of the investment
Existing Corp Tax exemption years
Additional Corp Tax exemption years
Less than or equals to 5 years
3 additional years tax exemption
More than 5 years – 6 years
2 additional years tax exemption + 50% tax
deduction for 2 years
More than 6 years – 7 years
1 additional year Corp Tax exemption +
50% tax deduction for 4 years
More than 7 years – 8 years
50% tax deduction for 5 years
New measure for affected by flood projects (2012)
• New projects to be invested in the affected by flood
provinces
Investing province
Normal Incentives
New Incentives
Industrial areas in
Pathumthani
5 years Corp tax
exemption with 100% Cap
8 years Corp tax exemption
with 150% Cap
Industrial areas in Phra
Nakhon Si Ayutthaya
7 years Corp tax
exemption with 100% Cap
8 years Corp tax exemption
with 150% Cap + 3 years 50%
Corp tax deduction
• Exemption from importing duty on new and less than 10
year-old machineries
• Projects eligible for sustainable development still receives
the same incentives
• Application submission deadline is December 31, 2012
BOI & BOI Services
Liberal Investment Policy
• No foreign equity restrictions in
manufacturing sectors
• 100% foreign ownership possible in
many services
• No restrictions on foreign currency
remittances
• No export requirement
• No local content requirement
BOI Support
Services
Investment Matchmaker Program
Sectional divisions to guide
you through the process
Industrial Subcontracting Services
Vendors meet customers program
(BUILD Unit)
1-Stop for visas & work permits:
work permits in 3 hours
ASEAN Supporting Industry Database
Interaction with other govt. agencies
on behalf of investors
Country desks
Overseas offices
– Staff from relevant agencies will also be available for
consultations on a range of topics.
– Help investors with applications to make sure
investors know what is required to:
•
•
•
•
•
•
Register a company
Apply for investment promotion privileges
Obtain a foreign business license
Tax registration
Complete an environmental impact assessment
Obtain utilities, etc.
– OSOS staff will also accept applications for things
such as corporate name registration, corporate tax
ID numbers, VAT registration, foreign business
licenses, investment promotion incentives, etc.
Represented Agencies at OSOS
Ministry of Public Health
Food and Drug Administration
Ministry of Tourism and Sports
Ministry of Transport
Natural Resource and
Environment Planning and
Policy Office
Ministry of Commerce
Business Development
Department
Ministry of Labor and
Social Welfare
Ministry of Finance
Revenue Department
Customs Department
Excise Department
Ministry of Natural
Resources and Environment
Social Security Office
Labor Welfare and
Protection Department
Investor
Ministry of Interior
Ministry of Energy
Energy Business Dept.
Mineral Fuels Dept.
Ministry of Industry
Office of the Board of Investment
Department of Industrial Work
Department of Mining and
Primary Industries
Industrial Estate
Authority of Thailand
Department of Lands
Department of Public Works and
Town and Country Planning
Provincial Electricity Authority
Metropolitan Waterworks Authority
Provincial Waterworks Authority
One Start One Stop Investment Center
18th Floor, Chamchuri Square Building
319 Phayathai Road, Pathumwan
Bangkok 10330, Thailand
Tel: 66(0)2 209 1100
Email: [email protected]
Investment Opportunities
Industrial Value-Added
HIGH
Opportunity in the Missing Links
Telecom
PC
CE
IC Design
Wafer
Components
IC
PCB
Thailand imported E&E parts and
products for US$ 43 billion in 2011
LOW
Upstream
Midstream
Industries
Downstream
Targeted E&E Products
Products
EMS
Countries
Solar Cell
Embedded Software
IC & Electronic Design
Media/Substrate
Wafer
Japan, USA, Germany, UK, Taiwan
Japan, USA, Europe
USA, Taiwan
Japan, USA
USA
USA, Canada, Singapore, Taiwan,
China, Hong Kong, Germany, Sweden,
Belgium, Finland, France, Hungary,
Norway, Switzerland, UK, Netherlands,
Luxembourg
Thank you