THAILAND BOARD OF INVESTMENT Promotion programs for aerospace industry in Thailand and future plans"

Aerospace as a targeted S-curve Industry Medical Hub 5 New S - Curve Aviation & Logistics Agricultural and Biotechnology Smart Electronics 5 First S - Curve   Food for The Future Automation and Robotics Biofuels and Biochemical Affluent Medical and Wellness Tourism Digital Economy

Linkage industries such as automotive and electronics Thailand’s Key Success Factors to be a next Asia aerospace manufacturing and MRO Hub Linkage industries such as automotive and electronics Competitive wage compared with Singapore and Malaysia Lower aircraft landing/takeoff/ parking fees than some countries such as Singapore Obtain BOI privileges to reduce the financial burden of starting business Strategic location for Asia’s MRO hub Government strategic plan to improve U-Tapao as Asia’s MRO hub 3

Thailand’s Targeted Sectors Thailand’s Targeted Sectors Thailand’s Targeted Sectors for MRO & OEM Thailand’s Targeted Sectors for MRO Airframe MRO – Lightweight /Composite material structure MRO Engine MRO – New generation engine MRO Component MRO - Landing gear, Wheels and Brakes, APU, Engine Fuel and control and IFE MRO Thailand’s Targeted Sectors for OEM Tier 2 & 3 – OEM Parts Tier 4 – Support Services/Raw Materials Source: Frost & Sullivan

Parts/ Equipment Manufacturing Value Chain of Aerospace industry Parts/ Equipment Manufacturing MRO Raw material Titanium Plastic Composite Advanced Fiber/ Fabric 3rd Tier Blade Vane Aero Structure Cable Electrical Wire 2nd Tier Apparatus Avionic Engine Propeller Navigation 1st Tier Airplane UAV Helicopter Rocket Related Industries Space Industry Supporting Industry Service Industry Air Transportation Cargo Logistics Training Center Laboratories Machine tools, measuring instruments /Testing Explore/navigation Electromagnetic interference Gauge machine Temperature durability tester Geo-informatics 5

BOI’s Investment Incentives Supporting Investment Environment BOI’s Investment Incentives Tax Incentives Non-tax Incentives Exemption of import duties on machinery / raw or essential materials imported for use in production for export and for R&D Land ownership rights Work permit & visa facilitation Up to 13 years of corporate income tax exemption Supporting Policies 100% foreign ownership No local content requirements No export requirements No restriction on foreign currency 6

Corporate Income Tax Exemption (Years) Eligible Activities in the Aerospace Industry and Basic Incentives (1/4) Aircraft and Parts Corporate Income Tax Exemption (Years) Manufacturing Aircraft or Aircraft Parts 8 Aircraft parts such as fuselage, key airplane parts, equipment and other components Onboard Devices and Equipment (except disposable and reusable aircraft utilities and supplies) Onboard devices and equipment such as seats, life vests, carts, cooking equipment, etc. 5 Repair Aircraft or Aircraft Parts 8 Aircraft parts such as fuselage, key airplane parts, equipment and other components Onboard Devices and Equipment (except disposable and reusable aircraft utilities and supplies) Onboard devices and equipment such as seats, life vests, carts, cooking equipment, etc. 3

Eligible Activities in the Aerospace Industry and Basic Incentives (2/4) Corporate Income Tax Exemption (Years) Activities Conditions Space Devices and Equipment Aerospace devices and equipment e.g, Spacecraft/satellite/propulsion system/carrier rocket parts, electronic and communication devices, tracking devices, guidance, navigation, control devices, etc. Must be approved by related agencies e.g, Geo-Informatics and Space Technology Development Agency (Public Organization) 8 years tax holiday (A1) Space Operating Systems Aerospace operating systems e.g, Tracking systems, teleport or ground station systems, monitoring and evaluation systems, navigation systems, etc. Must be approved by related agencies e.g, Geo-Informatics and Space Technology Development Agency (Public Organization) 8 years tax holiday (A1)

Eligible Activities in the Aerospace Industry and Basic Incentives (3/4) Examples of Service Corporate Income Tax Exemption (Years) Activities Conditions Vocational training centers Must teach or train technical courses in specific fields, including design training center. Must have necessary equipment, vocational training lab, and others. Projects located in a promoted science and technology park or one that is approved by the Board Will receive an additional 50 percent corporate income tax reduction from net profits for 5 years after the end of corporate income tax exemption period. 8 years tax holiday (A1) Scientific laboratories Projects located in a promoted science and technology park or one that is approved by the Board will receive an additional 50 percent corporate income tax reduction from net profits for 5 years after the end of its corporate income tax exemption period. 8 years tax holiday (A1) Calibration services Projects located in a promoted science and technology park or one that is approved by the Board will receive an additional 50 percent corporate income tax reduction from net profits for 5 years after the end of its corporate income tax exemption period. 8 years tax holiday (A1) Source: BOI 9

Eligible Activities in the Aerospace Industry and Basic Incentives (4/4) Industrial Zones or Industrial Estates Corporate Income Tax Exemption (Years) Activities Conditions Aircraft or Aerospace Industrial Zones or Industrial Estates The total area must not be <100 rai (16 Ha) Projects must allocate some or all area for bonded warehouses or free zones. Projects must have an area for aircraft and parts maintenance and repair centers. Projects must have sufficient public utilities and facilities such as roads, rainwater drainage and flood prevention systems, waterworks, wastewater treatment system, telecommunications and electricity systems, fire protection system, industrial waste management system and an appropriate security system as approved by the Board. Must be approved by related agencies. 5 years tax holiday (A3) 10

Area: 6,500 rai (include its surroundings) Eastern Aviation City The upgrade of U-tapao International Airport U-Tapao Airport Area: 6,500 rai (include its surroundings) Runway1 Runway2 New Runway Existing Runway Training Center 32 Ha (200 rai) Maintenance Repair Overhaul (MRO) 91 Ha (570 rai) New Free Trade zone 152 Ha (950 rai) New High-Speed Rail connection New Commercial area 110 Ha (675 rai ) To Cruise and Ferry Port in 10 Minutes To Pattaya in 30 Minutes Existing Terminal 1St Phase Full Phase New Passenger Terminal 224 Ha (1,400 rai)

New Investment Promotion Measures in the EEC—starting January 1, 2018 Applications must be submitted by the end of 2019 Must have cooperation with academic institution / research institution / Center of Excellence to develop human resource and improve the level of technology Incentives for targeted industries Area-based Additional incentives on top of the normal package (Only targeted Industries) Condition 1. Eastern aviation city or Aeropolis, EECi, EECd CIT exemption for 2 years and 50% CIT reduction for 5 years No of apprentices: > 10 % of all employees hired or at least 50 2. Industrial Estates for Specific Targeted industries An additional 50% CIT reduction for 5 years 3. Other Industrial Estates/ Industrial Parks in EEC An additional 50% CIT reduction for 3 years No of apprentices: > 5 % of all employees hired or at least 25

BOI promoted companies 25 companies have been promoted under aircraft part manufacturing activity 10 companies have been promoted under aircraft and part maintenance and repair activity BOI promoted companies Companies in the aircraft industry tend to look for lower cost parts for their manufacturing and repair plants. Thailand can offer this price advantage when compared with neighboring countries. Other regional locations, such as Singapore, may have a limitation regarding the ability to facilitate the expansion of aircraft part manufacturing investment.

Thai Airways Crew Training Center Robust Human Resource Aviation Training Centers Approved by CAAT2 Center Location Civil Aviation Training Center (CATC) Bangkok Aviation Training Center Royal Skyways Royal Thai Air Force Training Center Young Eagle Co., Ltd. Thai Flight Training Co., Ltd. Sri-racha Aviation Co., Ltd. International Aviation College Thai General Aviation Technology Bangkok Chonburi Nakhonpanom Pathumthani Academic Institutions Kasetsart University King Mongkut’s University of Technology Suranaree University of Technology Chulalongkorn University Thammasat University Assumption University Rangsit University Other Aviation Training Centers Pan Am Academy Thai Airways Crew Training Center Source: 1Office of Transport and Traffic Policy and Planning (OTP), Ministry of Transport, 2 The Civil Aviation Authority of Thailand (CAAT)

Manufacturing Companies Existing Key Major Players Manufacturing Companies MRO Companies 15

Website: http://www.boi.go.th Thank You THAILAND BOARD OF INVESTMENT 555, Vibhavadi - Rangsit Rd.,  Chatuchak, Bangkok 10900, Thailand Tel. (+66) 2553 8111  Website: http://www.boi.go.th E-Mail: head@boi.go.th