why thailand business opportunities - ispi · 2013-09-19 · 1 why thailand & business...
TRANSCRIPT
1
Why Thailand &
Business Opportunities
Duangjai AsawachintachitDeputy Secretary General
Thailand Board of Investment (BOI)
September 11, 2013Rome, Italy
2
Duangjai AsawachintachitDeputy Secretary General
Thailand Board of Investment (BOI)
September 12, 2013Milan, Italy
Why Thailand &
Business Opportunities
Thailand-not just a great place for holidays
At the Center of Asia
Thailand is the World’s
•17th largest manufacturer
•20th largest exporter of goods
•33th largest economy
ASEAN’s 2nd largest economy
Source: Economist Fact Book
Thai Economy: Sophisticated
• World’s 10th biggest car marker (2.5 m cars manufactured in 2012)
• Regional hub for auto electronics, consumer goods, processed food
• Upper middle income country with growing middle class
Thailand at a Glance Population
• Total population : 65.9 mil • Labor force 2012 : 39.4 mil
GDP Growth• 2012 : 6.4% • 2013(Forecast) : 4.0-5.0%
Export Growth • 2012 : 3.2%• 2013(Forecast) : 6.5%
Inflation • 2012 : 3.0%• 2013(Forecast) : 2.0-3.0%
Sources : Fiscal Policy Office and ASEAN
ASEAN 2011
Population (Mil) 604.8
GDP at current prices (Mil.USD)
2,178,148.1
GDP Growth (%) 4.7
GDP Per Capita (PPP) (USD)
5,580.7
Inter. Merchandise Trade (Mil.USD)
2,388,592.3
ASEAN
JTEPAASEAN-Korea
ASEAN-China
ASEAN-CER
Thai-NewZealand
Thai-Australia
Thai-India
In Effect Under
negotiation
Thai-Peru
BIMSTEC
Thai-EU
Thai-Chile
Thailand’s Extensive FTA Network
ASEAN-India
ASEAN-Japan
Source: Department of Foreign Trade as of August 22, 2013
11 FTA Agreements
finalized
RCEP
Year 2012Population(Millions)
GDP(USD
Billion)
FDI(USD
Million)
Indonesia 241 878 19,853
Philippines 96 250 2,797
Vietnam 89 142 8,368
Thailand 70 366 8,607
Myanmar 55 55 2,243
Malaysia 29 304 10,074
Cambodia 15 14 1557
Lao PDR 6 9 294
Singapore 5 275 56,651
Brunei 0.42 17 850
Total 607 2,310 111,294
Statistics of AEC members in 2012
Source: UNCTAD 8
Thailand: the Crossroads of ASEAN
The World Bank RanksThailand among the easiestplaces to do Business inAsia and 18th in the World
2013 2013
1 Singapore 11 Finland
2 Hong Kong 12 Malaysia
3 New Zealand 13 Sweden
4 United States 14 Iceland
5 Denmark 15 Ireland
6 Norway 16 Taiwan
7 United Kingdom
17 Canada
8 Korea, Rep 18 Thailand
9 Georgia 19 Mauritius
10 Australia 20 Germany
Source: Doing Business 2013, October 25, 2012
2013 World Bank’s Ease of Doing Business Survey
World Bank Ranks Thailand among the easiest places to do Business in Asia and 18th in the World
No restrictions on foreign currency
100% foreign ownership
No export requirements
No local content requirements
LIBERAL INVESTMENT REGIME
235223
194 187 179 174 165 161
133121
32
0
50
100
150
200
250
Prime Office Occupancy CostsUS$/sq ft/annum
Source: CBRE Prime Office Occupancy Costs, Q1/2013 as of June 24, 2013 US$1=Bt29.89 and A$1=Bt29.57 in Q2, 2013
Investment allocation for infrastructure development programs
Total: 67 billion US$Unit in USD Million
13
Infrastructure Development Programs
7
5,002
9,765
14,215
15,701
12,401
5,728
3,155
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2013 2014 2015 2016 2017 2018 2019 2020
Infrastructure Development Programs: Investment profileFinancial Budget (USD Million)
Calendar Year
14
Year 2013 2014 2015 2016 2017 2018 2019 2020 Contingencies
Million USD 7 5,002 9,765 14,215 15,701 12,401 5,728 3,155 693
% 0.01 7.5 14.65 21.32 23.55 18.6 8.59 4.73 1.04
Infrastructure Development Programs
ASEAN Corporate Income Tax 2013
0%
5%
10%
15%
20%
25%
30%
Singapore Thailand Vietnam Malaysia Indonesia
Source: KPMG
BOI’s Attractive Investment Incentives
Tax
Import duty exemptions/ reductions
Corporate Income Tax/ Exemption for 3 to 8 years
50% reduction of corporate income tax for up to 5 years
Double deduction on utility costs
Deductions for qualifying infrastructure costs
Non-TaxLand ownership rights
Work permit & visa facilitation
ASEAN Business Outlook Survey 2014: Economic Outlook
P R O F I T O U T L O O K
Source: AMCHAM ASEAN Business Outlook Survey 2014 as of Aug 23, 2013
BOI Zoning and Incentives
Zone: 1 2 3Incentives: Lower Higher
Import Duty Privileges Outside I.E Inside I.E
Zone 1 50% Reduction 50% Reduction
Zone 2 50% Reduction Exempt
Zone 3 Exempt Exempt
Corporate Income Tax
Outside I.E Inside I.E
Zone 1 No Privilege 3 years
Zone 2 3 years 7 years
Zone 3 8 years 8 years
• Decentralization
– Incentives vary according to zones
• Priority activities
– 8-year corporate income tax exemption and exemption of import duties on
machinery regardless of location
• Optional incentive scheme
– Skills, Technology and Innovation (STI)
• Special temporary measures (Until Year-end 2013):
“Investment Promotion Policies for Sustainable Development”
19
Major BOI Incentives Schemes
20
“ Investment for Sustainable Development”
Application submission deadline: December 31, 2013 1. Special incentives for 3 groups of targeted activities1) Manufacture of eco-friendly material and product, e.g. bioplastics2) Energy saving and alternative energy3) 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
Benefit
- In 1st fiscal year, have one operating company in another country; a second within 3rd year; a third within 5th year
- Have annual expenses in Thailand of Bt15 million, or have invested at least Bt30 million in Thailand
- By end of 3rd year, 75% of ROH personnel to be qualified staff, and 5 persons earning at least Bt2.5 million annual salary and benefits per person
- All companies must be real operating companies with a physical presence and staff
For portion of income from OVERSEAS OPERATIONS
0% CORPORATE INCOME TAX
for 15 years
Key Conditions
Benefit
For portion of income from LOCAL OPERATIONS
10% CORPORATE INCOME TAX
for 15 years
Regional Operating Headquarters
Benefit
In addition to conditions for income from overseas and
local operations:
- Income generated from services to overseas companies must be at least 50% of total revenues
For income of EXPATRIATE EMPLOYEES
15% PERSONAL INCOME TAX
for 8 years
Key Conditions
UNCTAD SurveyTop Ten Prospective Host Economies for 2013-2015
Country Rank
China 1
USA 2
India 3
Indonesia 4
Brazil 5
Germany 6
Mexico 7
Thailand 8
UK 9
Japan 10
Source: UNCTAD
Investment Prospect
Survey, based on 159
company responses
Comparison of Net Foreign Applications for Investment
2011 vs 2012
Number of Projects
72 8540 3463 80
532
200
289117
228
200
336
367
0
200
400
600
800
1000
1200
1400
1600
1800
2011 2012
Number of Projects
Services
Chemical
E&E
Auto
Fashion
Minerals
Agro
Amount Invested
0.4 0.80.7 0.40.3 0.9
6.02.0
4.0
1.1
2.2
2.5
2.3
3.1
0
3
6
9
12
15
18
2011 2012
1,059
1,584
10.16
16.6
Euro Billion
Source: BOI, as of Jan 18, 2013 €1=Bt39.03 in Q2, 2013
Comparison of Net Foreign Applications for Investment
2012 (Jan-Jul) vs 2013 (Jan-Jul)
Number of Projects
43 4717 2243 40
231
171134
114
82
160
146
281
0
100
200
300
400
500
600
700
800
900
2012 (Jan-Jul) 2013 (Jan-Jul)
Number of Projects
Services
Chemical
E&E
Auto
Fashion
Minerals
Agro
Amount Invested
0.5 0.50.2 0.40.4 0.2
4.1
2.1 0.8
0.80.4
1.4
1.4
3.1
0
2
4
6
8
10
2012 (Jan-Jul) 2013 (Jan-Jul)
Euro Billion
829
702
-15.3%8.5
7.6
-10.3%
Source: BOI, as of Aug 19, 2013 €1=Bt39.03 in Q2, 2013
Foreign Direct Investment Applications
0.60.6 0.80.2
0.002
10.1
4.9
0.001
1.21.4
9.5
16.5
0
3
6
9
12
15
18
Total Japan EU ASEAN USA. Italy
Eur
o B
illio
n
2011 2012+63.5%
Source: BOI, as of June 21, 2013 Exchange rate: €1=Bt39.36 in Q1, 2013
Foreign Direct Investment Applications
0.4 0.40.8
0.3 0.7 0.3
8.5
5.4
0.40.8
4.9
7.6
0
2
4
6
8
10
Total Japan ASEAN China EU Hong Kong
Eur
o B
illio
n
2012 (Jan-Jul) 2013 (Jan-Jul)
-10.3%-10.3%
Source: BOI, as of Aug 19, 2013 €1=Bt39.03 in Q2, 2013
27
Italian Investment
Trend of Italian Applications
11.8
3.2
14.6
7.7
20.9
33.7
17.3
59.8
27.7
1.9 1.4 0.1
32
4
7
12
10
6
89
56
10
20
40
60
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(Jan-Jun)
Eur
o M
illio
n
0
5
10
15
20
No
. of P
roje
cts
Value
No.of Projects
Source: BOI, as of Aug 6, 2013 Exchange rate: €1=Bt39.03 in Q2, 2013
Italian Investment Applications Totals by Sector: 2002 – 2013 (Jan-Jun)
Sector Projects € Million
Agricultural Products 4 5.34
Minerals and Ceramics 2 12.62
Light Industries/Textiles 15 18.21
Metal Products and Machinery 19 126.91
Electric and Electronic Products 9 6.80
Chemicals and Paper 8 8.64
Services 16 21.53
TOTAL 73 200.03
Source: BOI, as of Aug 6, 2013 Exchange rate: €1=Bt39.03 in Q2, 2013
Italian Companies in Thailand
Sectors of Opportunity
Target Industries
Agriculture and food processing
Automotive
Machinery
Mold & Die
Target Industries
Biotechnology
Alternative energy
Electronics & Electrical Appliances
Gems & Jewelry
As of Aug 1, 2013
Thailand Automotive Industry
Automotive Industry“ Thailand: Automotive Hub of Asia”
10th largest automobile producer in the world in 2012
14 assemblers with a combined production of more than 2,000,000 in 2012
High Local content of up to 90%
Target of 3 million units in 2017
World’s Automotive Production 2012
19,272
10,3299,943
5,6494,558 4,145
3,343 3,002 2,479 2,454 2,232 1,979 1,968 1,577 1,1790
4,000
8,000
12,000
16,000
20,000Thousands
World’s Production: 84 Million
THAILAND: 2.45 Million
#10 in Worlds’ Automotive Production
#1 in ASEAN for Automotive Production
Source: OICA and Thailand Automotive Institute as of Aug 1, 2013
Car Production & Share, 2012
+27%
+7%
+16%
+68%
-27%
Total ASEAN 2011: 2.99million units2012: 4.23 million units
Growth+42%
Source: ASEAN Automotive Federation(Automotive Summit 2013) as of June 24, 2013
Pure Thai23 %
SMEs
ForeignJ/V
ForeignMajority
54 %
LocalSuppliers
Tier 1
LSEs
(Total 709 Companies)Thai
Majority
23 %
[* LSEs : Large Scale Enterprises SMEs : Small & Medium Enterprises]
Source: Thai Autoparts Manufacturers Association and BOI as of Aug 2012
(14 car companies, 7 motorcycle companies)
100,000 workers
(1,700 Companies)
Tier 2,3
Assembler
Structure of Thai Automotive Industry
36
450,
000
wor
kers
Thailand’s Automotive Industry in 2013 2012
2012(Jan-Jun)
2013(Jan-Jun)
Growth (%)
Production (Unit) 2,460,414 1,069,142 1,340,569 25.39
- Passenger Car 964,344 366,465 591,032 61.28
- Commercial Car 43,816 20,428 29,650 45.14
- One ton pick up 1,452,254 682,249 719,887 5.52
Export (Unit) 1,020,059 456,868 534,366 16.96
Export (Bt Million) 484,023 214,606 240,815 12.21
Domestic Sales (Unit) 1,434,620 606,574 736,450 21.41
- Passenger Car 692,771 266,038 367,342 38.08
- Commercial Car 66,027 30,657 37,233 21.45
- One ton pick up 675,822 309,879 331,875 7.10
OEM Export value(Bt Million)
216,956.99 104,505.03 112,420.91 7.57
Source: Thailand Automotive Institute as of July 31, 2013
Estimate Production Capacity in 2015
Brand 2012 Projected Capacity
2015
Toyota 818,000 - 818,000
Ford & Mazda 500,000 - 500,000
Mitsubishi 400,000 100,000 500,000
Isuzu 220,000 100,000 320,000
Honda 240,000 - 240,000
Nissan 240,000 - 240,000
Suzuki 135,000 65,000 200,000
GM 160,000 - 160,000
Others 80,000 - 80,000
TOTAL 2,675,000 465,000 3,058,000
Forecasted by TAI Feb 2012
Thailand’s domestic sales and exports,1997-2015E
Million
Sources: The Federation of Thai Industries (FTI) as of Feb 12, 2013
1st Milestone1 million units
Rank 15th
2nd Milestone2.45 million
unitsRank 10th
3rd Milestone3 million units
Thai automotive industry: ASEAN Hub•Light Truck (1 ton Pick – up) • Eco – Car• Global supplier • Automobiles & parts regional R&D center
Rubber Processing Industry
As of June 10, 2013
Production of Rubber Products 2011 – Q1, 2013
YearGrowth
(%)
2011 2012 Q1, 2013 YOY
Car tires (mil.unit) 19.99 23.67 6.20 15.65
Truck and bus tires (mil.unit) 3.68 3.94 1.00 -0.52
Motorcycle/Bicycle tires (mil.unit) 46.03 50.34 13.57 3.30
Truck and bus inner tubes (mil.unit) 1.88 2.64 0.68 3.00
Motorcycle/bicycle inner tubes (mil.unit)
56.59 58.91 15.87 6.41
Retreads (unit) 84,146 97,062 26,386 5.58
Rubber gloves (mil.pieces) 11,835 12,017 3,044 2.92
Primary processed rubber (million tons) 1.20 1.10 0.31 -7.76
Source: Industrial Economics Information Center, Office of Industrial Economics as of June 3,, 2013
As of July 4, 2013
Food Industry
Thailand: Top Agricultural Product Exporter
World’s # 1 Cassava Exports
World’s # 2 Sugar Exports
World’s $# 3 Fishery Exports
World’s # 6 Rice & Grains Exports
Source: National Food Institute 2012
Food Safety StandardsFood Safety Standards
• Thai food factories must apply for GMP, ISO, HACCP, TQM, Water footprint and Carbon footprint.
• For food exports, BRC , IFS, and SQF must be applied.• Agricultural Commodity and Food Standards (ACFS)
– Good Manufacturing Practice(GMP)– Good Hygienic Practice (GHP)– ISO 22000 (Safety on Food Supply Chain)
Source: National Food Institute (NFI) as of July 20, 2011
*BRC (British Retail Consortium) *IFS (International Food Standard) SQF* (Safety Quality Food)
• “Fast expansion in the current Halal market”• Economic factor• Market demand factor
• Thailand’s Halal market is reliable• Fast expansion of the Muslim population; one in four people in the
world now is Muslims, with most living in Asia.• There are approx. 2 billion Muslims, accounting for 30% out of the total
6.8 billion world population, according to Pew Research Center.• In 2025, Muslim population will be rising to 30% of the world
population reflecting the huge demand for Halal food.• In China, there are more than 30 million Muslim people, accounting for
2.3% of the world population.• In Europe, there are 30 million Muslim people , which include5 million
in the UK, 4.2 million in France and 3.5 million in Germany*
Halal Market
Source: NIA / Chiangmai Research Center, Jan 25, 2010, * Logistics Digest ,March 2011, World of Halal Seminar 2011, May 27, 2011
Source: Ministry of Commerce, as of Jan 28, 2013
€1=Bt39.96 in 2012
Food Processing Equipment
• An abundance of investment opportunities in machinery used in the packaging of agricultural products, such as filling, closing, sealing, wrapping and labeling machines.
• €381 million (Bt15.22 billion) was spent in 2012 on importing machinery into Thailand for this purpose, and €30 million (Bt1.18 billion) was spent on machinery for the preparation of meat and poultry.
Source: Investor’s Guidebook
BOI priority 8-year income tax holiday for food processing and farm machinery (no cap)
Agro-industry Machinery Needs
• Thailand needs to continually improve to remain competitive and meet increasing international standards
• Large, growing markets for:– Farm machinery– Food processing machinery
Gems and Jewelry Sector
Bangkok Gems & Jewelry Fair, ranks among the top such fairs in the world.
World’s #1 exporter of silver jewelry
World’s #2 exporter of semi-precious stones.
World’s #3 exporter of precious stones
Source: Gem and Jewelry Institute of Thailand, 2012
Bangkok - Asia’s New Gem and Jewelry Center
• Gem and Jewelry Institute of Thailand Test Laboratory – Accredited by the World Jewelry Confederation
1) Certified written grade reports for sapphires, rubies, and diamond,2) Determination of geographical origins for sapphires, rubies, emeralds3) Gem and Jewelry Training Center - Courses in Diamond Grading, Gem and Jewelry Business, and an FGA-Gemologist Diploma Program
• Annual GIT International Gem and Jewelry Conference
PRIME facilities and
infrastructure
PRIME advantage
PRIME location
FREE ZONE FOR ALL:- Gold, diamonds, gems, jewelry & related products- Fashion industry & high value products- Medical equipment / accessories- Telecommunication / IT / Computers / Electric & Electronic accessories- Sport equipment / accessories- Stationery & toys
FACTORY IN THE PARK
Source: www.gemopolis.com
Exports of Pearls, Precious Stones, Jewelry
7.02
8.559.40 9.51
10.45
3.932.38 2.68 2.72
3.31 3.58
4.74
0
3
6
9
12
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(Jan-Jul)
Eur
o B
illio
n
Source: Ministry of Commerce, as of Aug 27, 2013 Exchange rate: €1=Bt39.03 in Q2, 2013
Gems and Jewelry Exports, 2010-2013 (Jan-Jul)
2010 2011 20122012
(Jan-Jul)2013
(Jan-Jul)%
Growth
HONG KONG 2,078.99 1,918.48 2,270.36 1,220.35 905.95 -25.76
U.S.A. 886.21 1,035.28 1,010.21 557.63 585.67 5.03
SINGAPORE 18.72 89.85 64.74 42.35 472.95 1,016.71
GERMANY 188.83 221.51 342.38 177.76 206.78 16.33
U. ARAB EMIRATES 149.60 187.57 242.74 135.95 193.33 42.21
ITALY 144.22 137.21 132.65 85.25 62.30 -26.91
OTHERS 5,931.63 5,921.57 6,391.26 3,173.96 1,504.39 -52.60
TOTAL 9,398.20 9,511.47 10,454.34 5,393.25 3,931.37 -27.11
Source: MOC units: € Million, as of Aug 27, 2013
Exchange rate: €1=Bt39.03 in Q2, 2013
BOI Incentives: Production Related to the Gems and Jewelry Industry
Rights & Benefits:• Projects located inside a gems and jewelry industrial estate or
promoted gems and jewelry industrial zone shall be granted:1.1 Exemption from import duty on machinery regardless of zones.1.2 Exemption of corporate income tax for
• Zone 1: 5 year tax holiday• Zone 2: 7 year tax holiday• Zone 3: 8 year tax holiday
1.3 Other privileges will be granted according to BOI Announcement No.1/2543 dated August 1, 2000.
• Projects located outside gems and jewelry industrial estate or promoted gems and jewelry industrial zones shall be complied to standard incentives according to zones
Source: Guide to BOI 2010
Bangkok - Asia’s New Gem and Jewelry Center
• Gem and Jewelry Institute of Thailand Test Laboratory – Accredited by the World Jewelry Confederation
1) Certified written grade reports for sapphires, rubies, and diamond,2) Determination of geographical origins for sapphires, rubies, emeralds3) Gem and Jewelry Training Center - Courses in Diamond Grading, Gem and Jewelry Business, and an FGA-Gemologist Diploma Program
• Annual GIT International Gem and Jewelry Conference
Renewable Energy
Alternative Energy Development Plan (AEDP) 2012-2021
Renewable Energy ( 9,198 MW)
Solar power 2,000 MW
Wind power 1,200 MW
Hydro power 1,608 MW
MSW 160 MW
Biomass 3,630 MW
Biogas 600 MW
New forms of RE (3 MW)
Geothermal energy 1 MW
Wave and Tides 2 MW
AEDP 2012-2021, targeting to replace 25% of total fossil-fuel consumption with RE at the end of 2021.
Source: Ministry of Energy, as of April 2012
Economic transition from labor intensive to knowledge-based is
creating great demand
As of Mar 4, 2013
• Thailand continues to industrialize, but is dependent on foreign industrial machinery for immediate future.
• High demand for:– Food and farm machinery– Alternative energy/energy conservation machinery– Textile machinery– Automotive production machinery– Mould & Die Industry
Opportunities in Machinery
60
BOI Services
� One-Stop Center for Visas and Work PermitsBOI, Department of Employment and Immigration Bureau process applications or renewals of visas and work permits within three hours, assuming all required documents are provided. The center is right next to OSOS.
61
Special Business Units� One Start One Stop Investment Center (OSOS)
21 agencies from 10 Ministries in one location provides services and advice on business establishment in Thailand
� BOI Unit for Industrial Linkage Development (BUILD) BUILD assists foreign buyers wishing to source from Thai suppliers and arrange participation of Thai manufacturers in trade shows and exhibitions abroad.
6262
62Overseas offices
Country desks
1-Stop for visas & work permits:work permits in 3 hours
Interaction with other govt. agencies on behalf of investors
Industrial Subcontracting Services Vendors meet customers program
(BUILD Unit)
Investment Matchmaking Program
ASEAN Supporting Industry Database
BOI SUPPORT SERVICES
63
18th Floor, Chamchuri Square Building
319 Phayathai Road, Pathumwan
Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100
Email: [email protected]
More Convenience, less time,more efficiency!
More Convenience, less time,more efficiency!
Where to contact BOI in Europe?
ParisThailand Board of InvestmentAmbassade Royale de Thailande8, Rue Greuze, Bat. B, 3eme etage, 75116 Paris, France
Telephone: +33(0) 1 5690 2600+33(0) 1 5690 2601
Fax: +33(0) 1 5690 2602Email: [email protected]
65
Thank you