1. The Big Picture: Auto & Electronics Investment Projects After Floods Yuthasak Kanasawat Executive Director of Investment Strategy & Policy Bureau Thailand Board of Investment (BOI) ASEAN Manufacturing Forum#1 Ballroom, Raffles Hotel Singapore March 8, 2012

2. Outline Post-Flood Economic Overview Investment Promotion & Investment Rehabilitation Measures Quick Recovery of Automotive & Electronics Industries Why Still Thailand?

3. Post-Flood Economic & Industrial Overview

4. GDP -9% in Q4 of 2011 % Source : NESDB GDP in the 4 th Quarter drastically change from forecasted 5% (annual rate) to -9% because of the flood, which makes GDP growth rate of Thailand at very low rate of 0.1% in 2011

5. MPI -34.4% in Q4 of 2011 % Source: OIE Manufacturing Production Index (MPI) plummeted as much as -34.4% in the Q4 because of flood in Thailand. It recovered to -15.2% in Jan 2012.

6. -5.2% Reduction in Export in 4 th Quarter of 2011 US$ million Source : Ministry of Commerce After recorded level of US$ 21.3 billion in September 2011, export dropped -5.2% in the 4 th Quarter compared with the same period in 2010 to US$ 49.2 billion.

7. Economic Performance Economic Projections 2009201020112012e 1) GDP (%)-2.37.80.15.5 - 6.5 2) Export, FOB value (%)-14.028.517.2 3) Import, CIF value (%)-25.236.824.9 4) Manufacturing Production Index (%) -7.214.4-9.3 5) Headline Inflation-0.93.32.93.5 - 4 6) Core Inflation0.31.01.72.2 Source: NESDB. & Bank of Thailand as of Jan 2012

8. Investment Promotion & Investment Rehabilitation Measures

9. Number of Projects Investment Value (Billion Baht) Net Application for Investment Promotion at Recorded Level in 2011

10. Billion Baht 21 29 25 36 19 21 54 18 54 71 0 50 100 150 200 250 300 Jan 40 80 120 160 200 90 95 105 96 101 136 132 160 159 148 178 191 Projects Number of projects 2011 Number of Projects 2010 Investment 2010 Investment 2011 56 40 46 52 38383838 105 141 172 136 145 170 42 161 53 160 36 175 106 101 164 45 136 42 FebMar Apr May JunJul Aug Sep OctNov Dec 482 70 112 Number of projects 2012 79 Source: BOI, as of 14 Feb 2012 27272727 Investment 2012 Application for Investment Remains Strong Application for investment promotion 251 billion baht in the 4 th quarter of 2011, increase 50.3%, despite the great flood. The positive trend continued in Jan 2012

11. Number of Projects Amount Invested Bt Billion Comparison of Net Foreign Applications for Investment Jan 2011 vs Jan 2012 67 80 +19% 15 25 +64% Source: BOI, as of 14 Feb 2012

12. 234 390 200 Total FDI 30 60 103 Japan 90 Hong Kong 13 11 Singapore 16 2 India 3 11 28 Billion baht 2010 2011 400 +82% +67% 4 China USA 15* 7 *Include investment by US Companies through Singapore 187 Application for Investment Promotion by Foreign Investors Application increased 67% in 2011 with Japan as largest investor

13. Investment Promotion Measures to Promote Industrial Rehabilitation a)Tax exemption on machinery and equipment to replace those damaged by flood. b)Normal investment promotion package to new projects c)Special investment promotion package to BOI-promoted companies directly affected by the great flood that are still enjoying their tax holidays

14. Eligibility Existing BOI-promoted projects directly affected by flood Still have remaining unused corporate tax exemption period Special Investment Promotion Package Remaining Corporate Income Tax Exemption New Corporate Income Tax Holiday 1. Projects subject to a cap stay at existing province Renew 8 years tax holiday (150% cap on new investment * + remaining unused cap) RelocationRenew 8 years tax holiday (100% cap on new investment* + remaining unused cap) 2. Projects not subject to a cap ≤ 5 years left+ 3 more years > 5-6 years left+ 2 more years & 2-year 50% tax reduction > 6-7 years left+ 1 more year & 4-year 50% tax reduction > 7-8 years left+ 5-year 50% tax reduction Or choose new tax incentive scheme no. 1 *All fixed assets (except land) including repairs of existing machinery and replacement machinery previously imported under the BOI scheme

15. Measures to support construction of flood prevention systems by industrial estates Industrial estates that invest in flood prevention systems are offered 8-year tax holidays with the corporate income tax exemption ceiling of 200% of their investment excluding land cost and working capital.

16. The establishment of 2 committees : 1.the Strategic Formulation Committee for Reconstruction and Future Development (SCRF) 2.the Strategic Formulation Committee for Water Resources Management (SCWRM) Objectives: 1.To set direction for the rehabilitation and development of the country 2.To prevent flooding in the long run Progress: The cabinet approved in principle the establishment of 350- billion- baht fund for flood prevention (27 Dec 2011). The cabinet approved the plan to set up the National Water and Flood Policy Committee (NWFPC), the single command authority on water management (7 Feb 2012). Government Action, Long–term phase

17. Quick Recovery of Automotive & Electronics Industries

18. Number of Companies% Total867100 Feb 201242249.5 March 201250658.4 April 201258667.6 May 201259568.6 June 201261170.5 July 201262071.5 Progress on Factories’ Rehabilitation in 7 industrial estates

19. Almost all industries have returned to normal in Jan 2012, except E&E, textile, & Apparel

20. Auto assembly -11.4% to 1.46m in 2011 As automotive industry will return to normal in the 2 nd quarter, auto assembly is forecasted to be at recorded level of 2 million in 2012. With flood impact was limited, motorcycle assembly increased 10% to 2.95 million in 2011

21. New Projects in E&E CompanyInvest (Million $US) Products Mitsubishi Electric260Air conditioners Microchip215IC assembly & testing Canon200Digital copiers Electrolux65Refrigerators Makita60Hand tools

22. New Projects in Automotive Sector CompanyInvest (Million $US) Products Toyota Motor600Automobiles & engines Jatco300Continuously variable transmission (CVT) Linglong Tyres90Automotive tires Mitsubishi Motor80Engines

23. Why Still Thailand?

24. Business Sentiment Recovered Sharply After the Flood

25. Thailand’s Undeniable Strengths Strong macroeconomic fundamentals Good infrastructure Strategic location at the center of ASEAN Center of many strategic industries/services: food, automotive, petrochemical, HDD, white goods, tire, tourism, medical services, etc Competitive corporate income tax rate of 23% at present and will reduced to 20% from Jan 1, 2013 Ease of doing business: # 17 out of 183 countries around the world / # 2 in South East Asia

26. Integrated water management system with single command will be implemented, including construction and upgrade of many reservoirs, flood ways or water diverting channels, preventive dikes, etc.

27. THANK YOU