1. Thailand Investment Opportunities in Target Sectors and in Environmental and Alternative Energy Sector Ms. Sudjit Inthaiwong Deputy Secretary General Board of Investment 27 September 2007 Augsburg, Germany

2. Outline of Presentation  Current Investment Environment  Target Sector Opportunities  Environmental and Alternative Energy Sector  BOI Incentives & Support

3. Current Investment Environment

4. Liberal Investment Regime  Approvals of land ownership  Liberal tax policies and exemptions  Liberal entry for skilled technicians, experts, and families  No local content requirements  No location requirements in all but 6 activities (for environmental protection)

5. Strong Net Applications Value As of August 16, 2007 €6.52 €6.80 €13.12 €14.08 €10.82 €5.84

6. Value of Investment Promotion Applications By Industry 2003 – July 2007 As of August 16, 2007 €6.80 656.1 70 5.4 51 4.3 27 2.5 €13.12 31 9 €10.82 €14.10 €5.84

7. Value of Investment Application By Industry Jan – July 2006:2007 As of August 16, 2007 211. 1 272. 5 72 8 75 6 €4.44 €5.84

8. European Investments 5-Year Totals by Country 2002-2006 Country Projects € Million United Kingdom 95855.6 Netherlands73812.9 Switzerland57 641.1 641.1 Germany83246.4 Belgium25209.5 France56 72.9 72.9 Italy26 42.9 42.9 TOTAL (THB 47.55 - €) 4152,881.3

9. Sector Projects € Million Agriculture42139.7 Minerals and Ceramics 10145.8 Light Industry 70171.4 Auto and Metal Processing 64192.9 Electrical and Electronics 86531.3 Petrochemicals, Chemicals 44676.6 Services and Infrastructure 97599.1 TOTAL4132,456.8 EU Approved Applications 5-Year Totals by Sector: 2002-2006

10. Trend of EU Investment BOI Approved Projects

11. European Net Application by Country 2006/2007 (Jan-Aug) Country Projects € Million 2006200720062007 United Kingdom 1915129.7033.03 Netherlands1711110.7745.47 Switzerland8677.8811.84 Germany12228.0340.99 Belgium222.78.30 France101216.959.32 Italy9714.6825.70 TOTAL7775360.79166.65

12. German Project Approvals 5-Year Totals by Sector: 2002-2006 Sector Projects € Million Agriculture618.49 Minerals and Ceramics 587.42 Light Industry, Textiles 811.35 Auto and Metal Processing 1437 Electrical and Electronics 1616.52 Petrochemicals, Chemicals 1036.69 Services and Infrastructure 2438.97 TOTAL83246.44

13. 1 Singapore 11 Japan 2New Zealand 18Thailand 3 United States 23 Korea 4 Canada 25 Malaysia 5 Hong Kong 47 Taiwan 6 United Kingdom 93 China 7 Denmark 104 Vietnam 8 Australia 126 Philippines 9 Norway 135 Indonesia 10 Ireland 159 Laos PDR Ease of Doing Business Source: World Bank Study: Doing Business in 2007 Criteria Starting a business Hiring and firing workers Enforcing contracts Access to credit Closing a business Registering property Dealing with licenses Paying taxes Trading across borders Investor protection

14. Efficient Logistics Network Seaport – Land Transport – Airport Laem Chabang Seaport Donmuang International Airport Suvarnabhumi International Airport Klong Toey : TEU 1.4 mn./yr Laem Chabang : TEU 3.8 mn. 10 mn. Map Ta Phut: 21.4 Mn. Tank farms

15. Modern Industrial Estates  Thailand has over 50 Industrial estates, zones and parks nationwide

16. Taxes and Social Security Contributions as a % of gross wages Source: UBS Prices and Earnings 2006

17. International Education Three Major education systems are offered: 1) The International Baccalaureate (IB) 2) The American Curriculum 3) The British Curriculum Other National Systems available include Swiss, Japan, French and German Tuition Costs range between 100k and 600k baht/academic year “Thailand has led the way in providing an international option, with the number of international schools…soaring to 107 today” - International Herald Tribune Oct. 16, 2006

18. E&E Agro- Industry Automotives Investment Opportunities High Value Added Fashion Target Sectors Alternative Energy Biotechnology

19. Participate in Thailand’s success  Agro-industry: US$10.22 billion in exports  E&E: US $ 41.13 billion in exports  Auto electronics: US$7 billion industry  Jewelry: US$3.6 billion in exports  Textiles: US$6.8 billion in exports  Services: Account for about 50% of GDP  Biotechnology and much more…

20. New import and corporate tax waivers (up to 8 years, regardless of zone) to develop smaller, more fuel efficient cars.  Excise tax of only 17% for vehicles with engines smaller than 1,300cc for petrol and 1,400cc for diesel  No more than 5 litres/100 km  Emissions compliant with Euro4 specification or higher 4Carbon dioxide emissions no more than 120 gm/km  Full front and side impact protection based on UNECE Reg94 and Reg95 specifications  Investment applications must be submitted by the end of November 2007 New Eco-Car Promotion

21. Environmental and Alternative Energy

22.  CITIES in 1983  World Heritage in 1987  the Vienna Convention for the Protection of the Ozone Layer.  the Montreal Protocol on Substances that deplete the ozone layer Thailand is a Party to

23. Alternative Energy in Thailand SolarBiogas Wind Bio Cluster GarbageWaterBio Diesel Ethanol

24. Energy Policy and Development Plan Short term : Restructure and Improve Energy Industry Management Procure Energy and Promote Conservation Promote Alternative Energy and Establish Energy Price Structure Establish Measures Pertaining to Clean Energy Promote Private Sector and Public Participation in policy-making Longer term: Support and promote alternative energy, and R&D Sustainable Energy Development Energy Efficiency Promotion of Competition in the Energy Business Competition encourages efficiency and fairness

25. Target of Power Generation using Renewable Energy in 2011 Energy type Current RE Generation (MW) Target of RE Generation (MW) Amount of Increased Capacity (MW) Biomass1,9772,800823 MSW410096 Biogas53025 Hydro44156112 Wind1115114 Solar304515 Total2,0613,2461,185

26. RE Power Generation Situation (Mid-2006) 100 MW (4.25 MW) 43 43 MW (0.55 MW) 10 MW (4.60 MW) 85 MW (25.48 MW) 2,800 2,800 MW (1,761.29 MW) 200 200 MW (44.33 MW) Biogas in livestock farm and Agro-industry - Bangkok - Municipality - Industry estate - Remote area - Roof top - Industry - Wind farm in south area of Thailand - Hybrid with diesel - Sugarcane Industry -Biomass power plant -Community power plant - mini/micro hydro plant Biomass Wind Biogas Hydro Photovoltaic MSW

27. Share of Final Energy Consumption by Fuel 2006 Source: Department of Alternative Energy Development and Efficiency, MOE

28. Energy Situation in Thailand 2006 Oil 47% Natural gas 32% Coal 13% Hydro 2% Primary energy consumption Transportation 36% Agriculture 5% Industrial 38% Resident & Commercial 21% Consumption by Sector 90% import Source: MOE

29. Electricity Generation by Fuel Type 2006 (including off-grid)

30. CDM Projects in Thailand Classified by type of project 47% 27% 8% 5% Source: DEDE 2006

31. MOE Projects Renewable energy-fuel producers (SPPs and VSPPs) will receive fixed adders and the adder bidding. MOE provides 7-year low-interest rate loans. 4 In 2006, there were 167 projects within the amount of 4 billion baht. Energy Ministry fund invests in energy service companies (ESCO) to manage energy-saving for industrial plants to produce gas for resale. BOI provides investment incentives. Kyoto protocol: producers are able to sell carbon credits to developed countries. In 2007 there are 7 Clean Development Mechanism (CDM) approved projects and 8 CDM projects under consideration.

32. Promotion of Power Generation Using Renewable Energy 2007: MEA and PEA announce fixed-rate “Adders” categorized by RE technologies and provided in addition to the normal purchasing rate under the Regulations for Power Purchase from VSPPs Source: Energy Planning and Policy Office

33. Adder Rates for Renewable Energy VSPPs Fuel/TypeAdder (Baht/kWh) Biomass, Biogas0.30 Mini Hydro (50-200 kW) 0.40 Micro Hydro (<50 kW) 0.80 MSW2.50 Wind2.50 Solar8.00 SPPs Fuel/TypeAdder (Baht/kWh) MSW2.50 Wind2.50 Solar8.00 Other RE types0.30 (Bidding)

34. Solar Power

35. Geography Yearly average photometry (Mega June/ m2 per day) Energy Capacity (1,000 ton equivalent to oil) Over all country18.2554,070.6 Photometry and solar energy capacity of country Region Amount (System)Installation Size (Kilowatt) Central107286.675 North5211,255.241 North East52164.75 South128510.95 Total8082,217.616 Solar power development by DEDE Energy Installation from 1993-2005

36. BOI Solar Energy Promotions Product/ServiceInvestment Solar Cells 7,000,000 units €39.33 million Solar Cell 12 MW€21.07 million Solar Cell Modules 750,000 Sheets€37.33 million Solar Cell Module 400,000 Sets€10.30 million Solar Cell Module 195,000 Pieces Solar Cell 7,000,000 Pieces €29.02 million Solar Grade Silicon 600k Kilograms Mono Crystalline Silicone Ingot 345,600 Kilograms Solar Cell Modules 110,000 Sets €12.54 million

37. BOI Investment Incentives and Support

38. BOI Investment Services  BOI is a Full Service Investment Center We provide comprehensive information on opportunities in Thailand We work with you in obtaining permits, visas and work permits One stop shop for visas and work permits in 3-hours or less  Industrial Subcontracting assistance (BUILD) Free sourcing assistance to your specifications International standards  Investment Facilitation Unit We assist you with other government agencies

39. The Board of Investment Basic Incentives and Measures The Board of Investment Basic Incentives and Measures  Land ownership : A promoted company 50% or more foreign owned may apply, per section 27 Investment Promotion Act  Permission to bring in technicians and experts  Corporate Tax exemption : 3 to 8 years  Import duty exemption/reduction on machinery and raw materials  Subsequent 50% reduction of corporate income tax after expiration of exemption  Double deduction  Double deduction of public utility costs  Deductions for infrastructure construction/installation costs

40. BOI Fiscal Incentives BOI OFFERS corporate income tax exemptions of up to 8 years -depending on activity and Zone Tax on Corporate Profits  Ordinary Company 30%  Small Co. paid up capital<5M baht -net profit not over 1Mbaht 15% -Net profit over 1M>3M baht 25% -Net profit over 3M baht 30%  Company listing on SET 30% Regional Operating HQ10% (No exemption)

41. New Incentives in High Standard Environmental Conservation Projects Exemption on import duty on machinery and equipment Maximum corporate income tax deduction of 3 years, valued at not more than 70% of the capital expenditure for the project Announced 18 July 2007 by BOI

42. Investment Opportunities in Alternative Energy  The BOI Offers an 8-year Corporate Income Tax Exemption, Regardless of Zone:  Production of Solar Cells  Manufacture of energy-saving machinery/equipment or machinery/equipment using alternative energy  Energy Service Consulting Companies (ESCO), with approval of the Ministry of Industry  Energy-saving machinery or equipment for existing BOI projects can be imported duty- free

43. BOI Basic Promotion Packages 3 Investment Promotion Zones to promote industrial decentralization Zone: 1 2 3 Incentives: Lower Higher Incentives

44. % of First Three Years’ Sales Add. Income Tax Exemption, No cap 1% or at least 150 million baht1 year 2% or at least 300 million baht2 years 3% or at least 450 million baht3 years Additional incentives for skills, technology, and innovation (Optional) Investment and Expenditures on: Research and development or design Advanced technology training Funding of educational and research institutes Note: Corporate income tax holiday may not exceed eight years.

45. BOI Office Frankfurt: Bethmannstr 58, 5.OG 60311 Frankfurt am Main Tel: (49 69) 92 91 230 Fax: (49 69) 92 91 232 E-mail: fra@boi.go.th Europe Desk : BOI Headquarters Bangkok, Thailand Tel: (66) 2 537 8111

46. Thailand—Each Piece Fits Perfectly.