“Thailand Investment Policy and

Opportunities”

Mr. Chokedee KaewsangMr. Chokedee Kaewsang

Deputy Secretary General

Thailand Board of Investment

28 August 2013

Hong Kong

• Economic Overview

• Why Thailand

Presentation Outline

• Why Thailand

• Investment Policies

• Sectors of Opportunities

Economic Overview

Fast Facts

GDP HKD$ 2.79 trillion (2012)

HKD$ 41,099 per capita

An Upper Middle Income An Upper Middle Income CountryCountry

12% 12% Agriculture

45% Industry

43% Services

Population 67 Million

Labor Force 40.2 million

Sources: MOC, NESDB, Pocket World in Figures 2013 Edition

Exchange rate: HKD 1=Bt 4.0709 as of Jul 31, 2013

Economic Projection Year 2013

(% YoY) 2011 20122013

Q1 Year (P)*

GDP (at 1988 price) 0.1 6.5 5.3 4.2-5.2

Export of goods (US$) 14.3 3.2 4.5 7.6

Import of goods (US$) 24.9 7.8 7.1 7.6

Current Account to GDP(%) 1.7 0.8 0.8 0.9

Inflation 3.8 3.0 3.0 2.3-3.3

Unemployment rate 0.7 0.7 0.7 0.7

Source: NESDB as of May 20, 2013

Remark: (P) = Projection

Thailand Nominal GDP and Growth Rate

1.45

1.59

1.74

1.92

2.08

2.23 2.22

2.48

2.59

2.84

--11..44

44..44 44..88

22..22

55..3377..0 0 66..22

44..55 55..11 4.84.8 22..66

--22..33

7.8 7.8

0.10.1

66..44

55..33

0

5

10

1.50

2.00

2.50

3.00GDP

Growth Rate

HKD$ (trillion) (%)

0.910.89 0.89

0.95

0.99

1.05

0.71

--1010..55

--22..33

-15

-10

-5

0.00

0.50

1.00

1.50

Source: NESDB :Q1 2013 as of May 20, 2013,

Exchange rate: HKD$ 1= Bt 4.0709, as of Jul 31, 2013

1,2681,358 1,357 1,318 1,262

1,4891,591

2,112

1,584

1,500

2,000

2,500

3,000

Nu

mb

er o

f ap

pli

cati

on

sInvestment Applications Submitted 2003 – 2013 (Jan-Jun)

(Includes Foreign and Domestic Projects)

1,029

1,268 1,318 1,262

692

619

0

500

1,000

Nu

mb

er o

f ap

pli

cati

on

s

Source: BOI, as of April 29, 2013

Value of Investment Applications Submitted, 2003– 2013 (H1)(Includes Foreign and Domestic Projects)

161.2173.1

126.3

161.1 156.7165.3 159.2

150

200

250

300H

KD

$ B

illi

on

GlobalRecession

78.4

126.3109.6 109.9

68.4 68.4

0

50

100

150

HK

D$ B

illi

on

Source: BOI, as of Aug 7, 2013 Exchange rate: HKD$ 1=Bt 4.0709

150.5300

400HKD$ billion

Agro Minerals Fashion Auto E&E Chemical Services

Value of Investment Promotion Applications

By Industry, 2003 – 2013 (Jan-Jun)

363.3

9 13.1 10 15 9.3 17.5 16.2 17.7 23.29 21.62

39.132.2

6.5 6.54.8 7.2 7.7

14.55.4

4.7

33.6

4.5 4.4 1.6 2.8 3.8

11.1

2.8

17.8 35.8

13.6 18.9 14 16.532

62.8

36.519.5 16.9 20.8 16.1

21.5

41.2

8.514.8

30.426.9

37.3

12.9 5.6 10.1

21.4

60.1

6.513.4

4043.4

29.5

42.1

40.7

92.4

41

60.4

74.2

115.2 8.1

3

41.9

15

21.320.6

16.2

18.8

31.1

0

100

200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(Jan-

Jun)

Source: BOI, as of July 16, 2013

78.5

161.0173.2

125.9

156.0

109.6

156.7

109.9

164.5155.4

96.2

123.4

97.4

159.2

100

120

140

160

180

HK

D$

Value of Foreign Applications Submitted, 2003 – 2013 (H1)

48.059.2

96.2

75.6 73.1

86.2

58.0

97.4

68.4 68.4

0

20

40

60

80

100

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012 (H1)

2013 (H1)

HK

D$

Billio

n

Source: BOI, as of July 9, 2013

68.4

43.3

68.4

45.2

40.0

50.0

60.0

70.0

Bil

lion

2012 (H1) 2013 (H1)

+0.05%

Foreign Direct Investment Applications

7.3

2.8 5.1 2.57.1

3.84.2

0.10.0

10.0

20.0

30.0

Total Japan ASEAN Hong Kong EU USA.

HK

D$ B

illi

on

Source: BOI, as of July 9, 2013 Exchange rate: HKD$ 1= Bt 4.0709 as of July 31, 2013

12,940

72

40

50

60

70

80

9,000

12,000

15,000

No

. o

f P

roje

cts

Mil

lion

Value

No.of Projects

Trend of HK Applications

1,171

3,394

1,037

3,2582,818

3,77820 2026

32

22 19

0

10

20

30

0

3,000

6,000

2008 2009 2010 2011 2012 2012 (H1) 2013 (H1)

No

. o

f P

roje

cts

HK

D$ M

illi

on

Source: BOI, as of July 15, 2013 Exchange rate: HKD$ 1=Bt 4.0709 as of July 31, 2013

HK Investment Applications

Totals by Sector: 2008 – 2013 (H1)

Sector Projects HKD$ Million

Agricultural Products 4 108.77

Minerals and Ceramics 8 446.29

Light Industries/Textiles 17 373.85

Metal Products and Machinery 26 2,344.69Metal Products and Machinery 26 2,344.69

Electric and Electronic Products 53 5,044.12

Chemicals and Paper 18 856.10

Services 85 19,222.16

TOTAL 211 28,395.98

Source: BOI, as of July 15, 2013

Exchange rate: HKD$ 1=Bt4.0709 as of July 31, 2013

Why Thailand

• Market potential

• Attractive Investment Policies• Attractive Investment Policies

• Competitive cost

• Well-equipped infrastructure

Thailand

•67 million population

•GDP (2012) US$ 365 billion (HKD$ 2.79 trillion)

ASEAN

•GDP (2011): US$1.8 trillion (HKD$ 13.74 trillion)

ASEAN

•GDP (2011): US$1.8 trillion (HKD$ 13.74 trillion)

•GDP per capita: US$3,376 (HKD$ 25,775)

•GDP Growth: 5.7% and 6.4% in 2011-2012

•Population: 600 million people

•Area: 4.46 million km2

ASEAN+3

•+2 billion pop.(1/3 world pop.)

•US$9.9 trillion GDP (HKD$ 75.58 trillion) (18% of world GDP)

Exchange rate: US$1=Bt31.08 and HKD$1 = Bt 4.0709 as of 31 July 2013

ASEAN

JTEPAASEAN-Korea

ASEAN-China

Thai-India

ASEAN-EU

Thai-EU

Thailand’s FTA and Trade PartnersThailand’s FTA and Trade Partners

ASEAN-India

ASEAN-Japan

11 Agreements, 16 CountriesASEAN

ASEAN-CER

Thai-NewZealand

Thai-Australia

In Effect Under

negotiationPending

Thai-Peru

BIMSTEC

Thai-Chile

Source: Department of Foreign Trade as of August 22, 2013

finalized

RCEP

The World Bank Ranks

Thailand among the easiest

places to do Business in

Asia and 18th in the World

20132013 20132013

11 Singapore 1111 Finland

22 Hong Kong 1212 Malaysia

33 New Zealand 1313 Sweden

44 United States 1414 Iceland

55 Denmark 1515 Ireland

66 Norway 1616 Taiwan66 Norway 1616 Taiwan

77United

Kingdom1717 Canada

88 Korea, Rep 18 Thailand

99 Georgia 1919 Mauritius

1010 Australia 2020 Germany

Source: Doing Business 2013, October 25, 2012

TNCs’ top prospective host

economies for 2012–2014(Percentage of respondents selecting economy as a top

destination)

1 China (1)2 United States (2)3 India (3)4 Indonesia (6)5 Brazil (4)6 Australia (8)6 United Kingdom (13)8 Germany (8)8 Russian Federation (5)

(x) = 2011 ranking

8 Russian Federation (5)8 Thailand (12)

11 Viet Nam (11)12 Mexico (10)13 Japan (-)14 Netherlands (-)14 Poland (6)14 South Africa (-)17 Korea, Republic of (-)17 Sweden (-)19 France (19)19 Italy (-)19 Malaysia (19) Developed economies

Developing and transition economies

Source: UNCTAD Top host economies for FDI 2012-2012 as of July 12, 2012

ASEAN Corporate Income Tax 2013

15%

20%

25%

30%

0%

5%

10%

15%

Singapore Thailand Vietnam Malaysia Indonesia

Source: KPMG

Affordable Office Space

1266.4

856.4768.6 724.7

600

800

1000

1200

1400

HKD$/sq ft/annum

468.5358.7 351.4 344.0

212.3 175.7

0

200

400

600

Source: CBRE Market View Asia Pacific Office, Q3/2012 as of Jan 21, 2013

Note: US$1=Bt29.8 and HKD$1 = Bt 4.0709 as of 31 July 2013

Wage Comparison92.4

54.849.6

42.833.3

21.5 20.917

30

40

50

60

70

80

90

100

Wage

Lev

els

(US

$)

Gross Net

21.5 20.917 14.6

8.5 8 7.9 7.6

0

10

20

30

Wage

Lev

els

(US

$)

Cities ranked according to gross value of index. New York = 100Source: UBS/Prices & Earnings update September 2012

Hemaraj Land and Development PLC

Amata Industrial Estate

Gateway CityIndustrial Estate

Asia Industrial Estate

Laem Chabang Industrial Estate

304 Industrial Park

Map of basic infrastructure sites and industrial parks in and around Bangkok

Ping Thong Industrial Estate

Padaeng Industrial Estate

Map Ta Phut Industrial Estate

Wellgrow Industrial Estate

Golf Course

International School& University

Hospital

Rojana Industrial Park

Thailand’s Industry Cluster by IEs*

Food and dairy products (sugar, bakery,

NORTH

• E&E parts

• Food and dairy products (sugar, bakery,

dried fruit snack, juice, and MSG).

• Agricultural processing (animal feed)

CENTRAL

• Automotive parts

• Chemical products

• Electronics parts

• Consumer products

BANGKOK &

VICINITY AREAS:

• Food & beverages

• Chemical products

• Electronics parts

• Consumer

products(Shampoo,

toothpaste and etc)

• Consumer products

WEST

• Apparels.

• Frozen and

processed food.

• Electronics parts

• Food products (ice

cream, yogurt, and

ready-to-drink

yogurt)

EAST

• Automotive parts

• Chemical products

• Petrochemical products

SOUTH

• Palm oil

• Gypsum

• Automotive parts

Source: Office of Transport and Traffic and Policy Office (BOI’s Overseas Office Meeting) as of Oct 31, 2012

* Industrial Estates

Projected Infrastructure Investment (2011-2020)

57.10

81.2579.7975.40

47.5844.6550.00

60.00

70.00

80.00

90.00HKD$ Bn

22.69

39.5344.65

22.69

3.66

0.00

10.00

20.00

30.00

40.00

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Ministry of Transport as of Jan 2013

Note: US$1=Bt29.8 and HKD$ 1=Bt 4.0709 as of July 31 ,2013

Investment Budget Plan for

Transportation, 2013-2020

ROAD (33.9%)

HKD$ 159.47 billion

RAIL(60.8%)

HKD$ 285.97 billion

Total budget: HKD$ 470.1 billion

HKD$ 159.47 billion HKD$ 285.97 billion

MARINE(3.3%)

HKD$ 15.57 billion

AIR(1.93%)

HKD$ 9.09 billion

Source: The Office of Transport and Traffic Policy and Planning (BOI’s Overseas Office

Meeting) as of Oct 31, 2012 Note: US$1=Bt29.8 and £1=Bt 4.0709 as of July 31, 2013

107

Distance (km)Single-track

Double track

Projects Under Rail Transport

Development ProgramHigh-Speed

Train

Budget

(1st phase)

HKD$ mil.

Bangkok- Nong

Khai (Laos-

Kunming)615 km 23,641

Bangkok-Padang 982 km 20,061

Railway improvements

to cover 47 provinces

3,755

173107 Double track

Triple trackBesar (Malaysia)

982 km 20,061

Bangkok-Rayong 221 km 18,265

Bangkok-Chiang

Mai745 km 29,540

Total2,563

km91,507

Source: Report on Investment Plan for Transport Sector (Year 2013-2020), OTP as of Feb 6, 2013

Note: US$1=Bt29.8 and HKD$1 = Bt 4.0709 as of 31 July 201

Investment Policies

Liberal Investment Policy

• No Restriction on foreign shareholding in

manufacturing

• 100% foreign shareholding allowed in some • 100% foreign shareholding allowed in some

service

• No local content requirement• No export condition

Tax Incentives

� Corporate income tax holidays up to

8 yrs

� Additional 50% reductions of

corporate income tax for 5 yrs

� Import duty reductions or exemptions on machinery and raw

BASIC BOI PRIVILEGES AND MEASURES

Non-Tax measures� Land ownership rights for

foreign investors

� One Stop Services Center (OSOS)

� Work permit/visa facilitation for foreign � Import duty reductions or

exemptions on machinery and raw materials

� Double deduction of public utility costs

� Deductions for infrastructure construction/installation costs

facilitation for foreign experts and technicians

One-Stop-Shop

Visas & Work Permits are issued in 3 3 hourshours

Activities Eligible for BOI PromotionActivities Eligible for BOI Promotion

Agriculture and Agro-Industries Mining, Ceramics Basic MetalsLight Industries

e.g. jewelry, shoe, garments

Metal Products, Machinery, Transport

including automotive, Aerospace

Electrical and ElectronicsChemical,

Petro-Chemical, paper, plastics

Services

and Public Utilities

10 Target Industries

Sectors of Opportunities

Target industry to Thailand

• Automotive

• Electronics & Electrical Products• Electronics & Electrical Products

• Alternative Energy

• High Value Added Services

Thailand Automotive Industry

As of Aug 1, 2013

World’s Automotive Production 2012

19,272

10,329 9,9438,000

12,000

16,000

20,000

Thousands

World’s Production: 84 Million

THAILAND: 2.45 Million

#10 in Worlds’ Automotive Production

#1 in ASEAN for Automotive Production

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

Source: OICA and Thailand Automotive Institute as of Aug 1, 2013

Thailand’s Automotive Industry Overview

Thailand:

10th largest

automobile

producer in

the world in

2012

Target:

To

manufacturer

3,000,000 units

in 2017

Output:

14 assemblers

with a

combined

production of

more than

High local

content :

80-90% for

pick-up and

30-70% for

passenger car2012in 2017

more than

2,000,000 in

2012

passenger car

Source: TAI

OPPORTUNITIES: COMPONENTS NEEDED IN THAILAND

� Automatic Transmissions� Continuously Variable Transmissions (CVT)� Traction motors for automobiles; e.g. hybrid or fuel cell cars� Regenerative Braking System� Electronic Stability Control (ESC)� Rubber tires for vehicles� Rubber tires for vehicles� Substrate for catalytic converters� Electronic fuel injection systems� Battery for electric-powered vehicles

Source: BOI Announcement

No.2/2553, as of April 23, 2010

BOI Priority Activities

- 8-yr CIT Exemption All Zones/No cap

- Import duty Exemption on Machinery

As of Aug 8, 2013

Thailand’s E&E Industry

40

41

3661,584

23%

77%

Structure of Thailand’s E&E Industry

Assemblers

Part suppliers

Local: 43%

Foreign/JV: 57%

366

3

Part suppliers

Local: 60%

Foreign/JV: 40%

Factories Summary

Small: 1,359

Medium: 388

Large: 308

Total: 2,055

Source: Thai E&E Institute, as of June 2013

Thailand’s E&E Industry

Electrical appliances Electronics

Unit: HKD$ Billion

155.0 168.7 174.3

251.9 236.7 239.2

2010 2011 2012

174.3 (Electrical appliance)

239.2 (Electronics)

413.5

Source: EEI Thailand, as of June 10, 2013

Exchange rate: US$1=Bt 31.08 and HKD$1 = Bt 4.0709 as of 31 July 2013

Source: World Semiconductor Trade Statistics and Electrical and Electronics Institute of Thailand as of April 5, 2013

Source: World Semiconductor Trade Statistics and Electrical and Electronics Institute of Thailand as of April 5, 2013

Policy to Support Hi-Tech Industry

Eligible Activities:

5.4.3 Manufacture of industrial electronics

5.4.4 Manufacture of telecommunication equipment

5.5.1 Manufacture of semiconductors

5.5.2 Manufacture of memory storage equipment

- Only HDD & SSD & Parts

5.5.4 Manufacture of parts for telecommunication equipment5.5.4 Manufacture of parts for telecommunication equipment

5.5.5 Manufacture of medical electronics

5.5.6 Manufacture of parts for agricultural electronics

5.5.7 Manufacture of electronic parts for vehicles

5.5.10 Manufacture of solar cells and raw materials for solar cells

5.5.12 Manufacture of flat panel display

5.6 Manufacture of material for microelectronics

5.7 Electronic Design

Source: BOI Announcement No.1/2556 as of Feb 28, 2013

Policy to Support Hi-Tech Industry

Tax Incentives• Exemption of import duties on machinery

• Corporate income tax exemption 8 years with no cap

• 50% reduction of corporate income tax for 5 years from the expiry date

• Double deduction of public utility costs for 10 years

• Deduction from net profit of 25% of the investment in infrastructure • Deduction from net profit of 25% of the investment in infrastructure installation and construction cost in addition to normal capital depreciation for 10 years

Eligible• Any Locations except Bangkok

• Applicable to designated activities only

• Application submission deadlines: Dec 31, 2013

Source: BoI Announcement No.1/2556, Feb 28, 2013.

� Thailand Exports Ranked 13th in the World in 2011

� E&E exports US$54.16 billion in 2012, 23% of total exports

� Major products: HDD, IC, TV, A/C & other WG

� Thailand is the world’s largest producer of HDDs

� A leading country in the manufacture of integrated

Electronics and Electrical Industry

� A leading country in the manufacture of integrated circuits and white goods

� Strong supporting industries for electrical appliances

• Compressors, motors, plastic and metal parts

Source: Electrical and Electronics Institute, as of February’13

Renewable Energy

Alternative Energy Development Alternative Energy Development

Plan (AEDP) Plan (AEDP) 20122012--20212021

Renewable Energy ( 9,198 MW)

Solar power 2,000 MW

Wind power 1,200 MW

Hydro power 1,608 MW

AEDP 2012-2021, targeting to replace 25% of total fossil-fuel consumption

with RE at the end of 2021.

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

Source: Ministry of Energy, as of April 2012

High ValueHigh Value--Added Added ServicesServices

Many opportunities exist in this growing sector:

• R&D and design

• Printing

• Tourism facilities, esp. long-stay

• Film & Entertainment

Services IndustryServices Industry

• Film & Entertainment

• Regional Operating Headquarters

• Distribution Center (DC)/ International Distribution Centers (IDC)

• International procurement office (IPO)

• Trade and investment support office (TISO)

• Aircraft maintenance

Services account for about 50% of GDP

Thank youThank you

THANK YOUTHANK YOU

谢谢谢谢

52