1 Duangjai Asawachintachit Deputy Secretary General Thailand Board of Investment (BOI) 5 July 2012 Thailand’s Investment Trends and Policies

2 1.FDI in Thailand 2. Policies Related to Sustainable Development 3.Thai Investment Overseas Topics

3 1. FDI in Thailand

4 Value of FDI Net Flow to Thailand by Sector ( ) Source: Bank of Thailand

5 Ratio of FDI Inflow into Thailand to World FDI Source: UNCTAD

6 Ratio of FDI inflow into Thailand to FDI inflow into ASEAN Source: UNCTAD

7 NET FOREIGN APPLICATIONS SUBMITTED (2003 – MAY 2012) Source: BOI, as of 13 June 2012

8 NET FOREIGN APPLICATIONS SUBMITTED (JAN-MAY) BY SECTOR Source: BOI, as of June 27,

9 BOI INVESTMENT FOREIGN APPLICATION (JAN-MAY) BY SECTOR SectorProjectsBaht Billion Agriculture Minerals and Ceramics Light Industry Auto and Metal Processing 2, Electrical and Electronics 1, Petrochemicals, Chemicals 1, Services and Infrastructure 1, TOTAL 8,0263,351 Source: BOI, as of June 27, 2012

Total FDI Japan 100 Hong Kong Singapore 25 5 Korea Billion baht % +68% 4 China Taiwan 8 4 Major Investors in Thailand is mostly from Asia Investment Applications Submitted to BOI ที่มา : BOI สำนักความร่วมมือการลงทุน ต่างประเทศ

11 Policies Related to Sustainable Development

12 BOI’s Vision Your Partner for Sustainable Investment

13 Application submission deadline: December 31, Special incentives for 3 groups of targeted activities 1) Manufacture of eco-friendly material and product, e.g. bioplastics 2) Energy saving and alternative energy 3) High technology activities e.g. industrial electronics, electronic parts for vehicles, biotech, nano-tech, functional fiber etc. Incentives Exemption of import duties on machinery 8-year exemption of corporate income tax with no cap 5-year 50% reduction of corporate income tax on net profit 10-year double deduction of transportation, electricity and water supply costs deduction from net profit of 25% of investment in infrastructure installation and construction costs in addition to normal capital depreciation Policies for “Investment for Sustainable Development”

2) Measure to promote energy conservation and alternative-energy utilization Incentives  Import duty exemption on machinery.  3-year corporate income tax exemption on the revenue of existing projects, accounting for 70% of the investment under this measure excluding cost of land and working capital. Eligibility  BOI-promoted projects of which tax holidays have expired or those which are not granted tax holidays  non-BOI projects Conditions  Investment must be completed within 3 years after the issuance of the investment promotion certificate.  Energy consumption must be reduced to the level determined or alternative energy must be utilized in the ration determined. Policies for “Investment for Sustainable Development”

3) Measure to promote the reduction of environmental impacts Incentives  Import duty exemption on machinery.  8-year corporate income tax exemption on the revenue of existing projects, accounting for 100% of the investment under this measure excluding cost of land and working capital. Eligibility  BOI-promoted projects of which tax holidays have expired or those which are not granted tax holidays  non-BOI projects Conditions  Investment must be completed within 3 years after the issuance of the investment promotion certificate.  Impacts on the environment must be reduced according to the criteria determined. Policies for “Investment for Sustainable Development”

16 STI R&D S&T Dev Fund Sci/Tech Funding Adv Tech Training Additional Incentive Package for STI: Skills Technology Innovation

17 External factors affecting investment in the next 5 years Shift in global economic power & economic integration esp. AEC Fragile global economy Major global crisis (energy, food, climate change, aging and epidemics) Faster technology development, shorter product cycles Continual changes in global business formation Fierce competition in attracting FDI 17

18 S&T development Highly dependent economy High income disparity Environmental and social responsibility Uncertainty of future heavy industries location Water and power supply for industrial expansion Labor quantity and quality sufficiency Fiscal pressure on tax incentives Political stability Domestic factors affecting investment in the next 5 years 18

BOI’s Future Policy Directions 1.Strengthening country’s foundations that lead to long-term industrial development 2.Creating economy-society-environment balance as well as agriculture- industry-service mix which leads to sustainable development 3.Promoting diversified business and Global Niche using country’s natural advantages 4.Promoting new growth industries such as eco-friendly products, alternative energy, biotechnology, wellness products and services etc. 5.Strengthening Thai companies’ competitiveness and business opportunities 6.Continued decentralization 7.Stronger emphasis on Thai investment overseas to enhance competitiveness

20 3. Thai Overseas Investment

21 Thailand Overseas Investment The First Time that TOI Surpassed FDI ที่มา : ธนาคารแห่งประเทศไทย

22 Snapshot of Target Countries and Sectors for Thailand Overseas Investment Myanmar Resource-seeking - Natural gas - Agriculture - Food processing Vietnam Labor-seeking - Garment - Textile - Footwear - Furniture Indonesia Resource-seeking - Coal Market-seeking - Consumer products

23 Examples of Thailand Overseas Investment Projects Company NameProject (Country) PTTEPPetroleum Exploration and Production (Myanmar, Vietnam, Cambodia, Indonesia, Oman, Algeria, Egypt, Bahrain, Australia and New Zealand) BANPUCoal mining (Indonesia, China, Mongolia, Australia) MITR PHOLSugar, Plantation, Renewable Energy, Paper (China, Laos, Australia) MINORHotel & Restaurants (Vietnam, Maldives, Sri Lanka, Australia) THAI UNION GROUPFood (MW Brands Holding—France) SAHAVIRIYA STEELSteel mill (UK) THAI BEVERAGEHotel (Australia) LANDMARKHotel (UK) ITAL-THAIConstruction (India, Indonesia, Vietnam, Malaysia, Bangladesh, Madagascar)

24  Reduce overseas investment risks  Build good relationship with target recipient countries  Use fiscal and financial measures to promote TOI  Prepare Thai entrepreneurs for overseas investment  Facilitate and solve investor’s problems Measures aimed at promoting Thai investment Overseas Approved by the Board of Investment on 13 September 2010

25 1. Information Provision  Investment guides/handbooks on target countries e.g. ASEAN  Target sector opportunity study e.g. agriculture, textiles, auto parts, tourism, construction  Investment opportunities seminars  Website  Consultancy 2. Business Development Missions to Target Countries 3. Entrepreneur capacity building - Thailand Overseas Investment Training for Entrepreneurs Current BOI Activities/Measures

26 THANK YOU