More Incentives For Flood-Hit Thai Provinces

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INDUSTRIAL ESTATES

More incentives for flood-hit provinces

Nalin Viboonchart

The Nation

BANGKOK: -- The Board of Investment has approved new incentives to boost projects in industrial estates in Ayutthaya and Pathum Thani provinces, which were hit hard by last year's floods. Submissions for BOI privileges in those areas have been quite low, while those for the Eastern region are increasing.

Secretary-general Atchaka Sibunruang said yesterday after a BOI board meeting that the new incentives had been agreed to attract more investment in Ayutthaya and Pathum Thani, where several industrial estates were inundated in late 2011. Unlike those provinces, applications for the Eastern region, particularly Rayong and Chon Buri, are increasing as investors want to avoid risk from floods in the Central region.

According to BOI data, applications for investing in Ayutthaya in the January-February period were for 24 projects with a combined investment value of Bt13.094 billion. For Pathum Thani province, there were 15 projects with a combined investment value of Bt13.384 billion.

The applications for Chon Buri province during the same period were for 40 projects worth a combined Bt21.483 billion, while Rayong saw applications for 37 projects worth a combined Bt53.252 billion.

Atchaka said the BOI was concerned that if it did not offer more privileges to attract new projects from both newcomers and existing players, the investment climate in both flood-hit provinces would get worse.

A source from the BOI board said the Finance Ministry had not objected to the new privileges despite the expected loss of revenue from corporate income tax, as the government wants to boost the economies of Ayutthaya and Pathum Thani.

Industry Minister Pongsvas Svasti said investment projects in industrial estates in Pathum Thani, which is categorised as a Zone 1 province that normally offers fewer incentives, would now enjoy an exemption from corporate income tax for eight years, up from three years currently. The tax exemption will now be limited to 150 per cent of the total investment value, up from 100 per cent currently.

Investment projects in estates in Ayutthaya province, which is categorised as Zone 2, will enjoy an eight-year tax waiver, up from seven years currently. There, too, the exemption limit is increased to 150 per cent of total investment value from 100 per cent under the current scheme. In addition, the tax holiday can be extended for three years, but on 50 per cent of total investment value.

New investments will be also be offered tax waivers for importing machinery.

Pongsvas said that to be eligible for the new incentives, investors must submit their application by December 31.

"The new privileges are expected to bring not only economic benefits, but social ones," he said. "We would like both to maintain jobs and create new ones in Ayutthaya and Pathum Thani provinces, where many factories are located. We don't want social problems due to decreased investment to occur," he said.

The BOI board yesterday also approved 11 investment projects worth a combined Bt83.89 billion. The biggest project was a gas-fired power plant operated by Gulf JP UT worth Bt47.73 billion. The power plant will be located in Rojana Industrial Park, Ayutthaya province.

A project of Nippon Steel Galvanizing (Thailand) worth Bt10.346 billion will also benefit. That project aims to produce 360,000 tonnes of galvanised steel per year to serve the demands of the automotive industry.

-- The Nation 2012-03-29

[BookMan]

It seems logical that many companies would want to invest outside of the flood zone. There doesn't seem to be measure put in place to stop a repeat of last years floods.

[Katipo]

I work in Hi Tech Estate and the work on the dyke which will eventually circle the entire complex has begun, although it will not be finished by the time the rainy season comes.

We have moved a lot of our most valuable/sensitive equiptment to the second floor as a precautionary measure, and many of the machines we have bought are now more easily able to be moved. We are also maintaining a back-up site in Chonburi.

Our facility in Malaysia has doubled capacity.

The mood here is not optimistic, with a lot of companies gone already. As you can see from the above, we are not relying on the government at all.

[Thai at Heart]

I work in Hi Tech Estate and the work on the dyke which will eventually circle the entire complex has begun, although it will not be finished by the time the rainy season comes.

We have moved a lot of our most valuable/sensitive equiptment to the second floor as a precautionary measure, and many of the machines we have bought are now more easily able to be moved. We are also maintaining a back-up site in Chonburi.

Our facility in Malaysia has doubled capacity.

The mood here is not optimistic, with a lot of companies gone already. As you can see from the above, we are not relying on the government at all.

Sorry Mr. Peach, but I think you should plan to relocate to somewhere where you don't risk being up to your ears in water. Those estates around Ayuttaya in hindsight should never have been built, but it was cheap and it was convenient. I think your back up site in Chonburi looks like a better bet day by day...

As for them being surprised about people not investing there, who in their right mind would?

[Schuimpge]

I work in Hi Tech Estate and the work on the dyke which will eventually circle the entire complex has begun, although it will not be finished by the time the rainy season comes.

We have moved a lot of our most valuable/sensitive equiptment to the second floor as a precautionary measure, and many of the machines we have bought are now more easily able to be moved. We are also maintaining a back-up site in Chonburi.

Our facility in Malaysia has doubled capacity.

The mood here is not optimistic, with a lot of companies gone already. As you can see from the above, we are not relying on the government at all.

Sorry Mr. Peach, but I think you should plan to relocate to somewhere where you don't risk being up to your ears in water. Those estates around Ayuttaya in hindsight should never have been built, but it was cheap and it was convenient. I think your back up site in Chonburi looks like a better bet day by day...

As for them being surprised about people not investing there, who in their right mind would?

Sorry Thai at Heart, but I think you are wrong.

1. The estates around Ayutthaya and Pathumtani where perfectly located and still are.

My factory is in Navanakorn. There's a tremendous amount of work going on currently, which might not be 100% ready for the next raining season, but then again, I see no reason that flooding to last year's extend will happen again. Why?

2. Reasons for last year's flooding where mainly human errors.

Flame me for it, but 3 basic errors where made during last year's flooding, causing a cascading problem that spun out of control.

a. Water in dams was kept high until it was too late to release it without causing problems downstrea.

b. Water was intentionally blocked (understand the reasons like protecting one's house or factory or dare I say Bangkok)

c. Water (as it was blocked) saturated the dikes of cities and industrial estates because they where not designed or built for long term blocking of water. These dikes where only good for a couple of days and typically only for diverting water in a different direction.

d. Drainage and maintenance of existing canals and rivers for years has been left unattended, causing a severe degradation in their capacity.

e. Bangkok eventually became the main reason for flooding to spin out of control

A massive hill/dike that kept water rising in Pathum and Ayutthaya

This year BKK will also be better prepared with dredging, early drainage and less blocking of water, better diversion upstream.

3. So this year will see a quite different situation.

- Monkey cheeks (even if no plans in place yet) can and will be used.

Do you not think that the government/army/ministry will enforce the use of these much earlier on if necessary.

- Industrial Estates know the weak-points and will be much earlier and much better prepared with measures.

- Factories have learned from last year and know much better how to act and protect their property...For sure I know....

With all this, Industrial Estates have far less to worry about except to act in line with last year's lesson.

For one, I am not worried, only prepared.

Personally much more worried about the wage-increase as that affects my bottom-line. Flooding? Not soo much...

[Thai at Heart]

I work in Hi Tech Estate and the work on the dyke which will eventually circle the entire complex has begun, although it will not be finished by the time the rainy season comes.

We have moved a lot of our most valuable/sensitive equiptment to the second floor as a precautionary measure, and many of the machines we have bought are now more easily able to be moved. We are also maintaining a back-up site in Chonburi.

Our facility in Malaysia has doubled capacity.

The mood here is not optimistic, with a lot of companies gone already. As you can see from the above, we are not relying on the government at all.

Sorry Mr. Peach, but I think you should plan to relocate to somewhere where you don't risk being up to your ears in water. Those estates around Ayuttaya in hindsight should never have been built, but it was cheap and it was convenient. I think your back up site in Chonburi looks like a better bet day by day...

As for them being surprised about people not investing there, who in their right mind would?

Sorry Thai at Heart, but I think you are wrong.

1. The estates around Ayutthaya and Pathumtani where perfectly located and still are.

My factory is in Navanakorn. There's a tremendous amount of work going on currently, which might not be 100% ready for the next raining season, but then again, I see no reason that flooding to last year's extend will happen again. Why?

2. Reasons for last year's flooding where mainly human errors.

Flame me for it, but 3 basic errors where made during last year's flooding, causing a cascading problem that spun out of control.

a. Water in dams was kept high until it was too late to release it without causing problems downstrea.

b. Water was intentionally blocked (understand the reasons like protecting one's house or factory or dare I say Bangkok)

c. Water (as it was blocked) saturated the dikes of cities and industrial estates because they where not designed or built for long term blocking of water. These dikes where only good for a couple of days and typically only for diverting water in a different direction.

d. Drainage and maintenance of existing canals and rivers for years has been left unattended, causing a severe degradation in their capacity.

e. Bangkok eventually became the main reason for flooding to spin out of control

A massive hill/dike that kept water rising in Pathum and Ayutthaya

This year BKK will also be better prepared with dredging, early drainage and less blocking of water, better diversion upstream.

3. So this year will see a quite different situation.

- Monkey cheeks (even if no plans in place yet) can and will be used.

Do you not think that the government/army/ministry will enforce the use of these much earlier on if necessary.

- Industrial Estates know the weak-points and will be much earlier and much better prepared with measures.

- Factories have learned from last year and know much better how to act and protect their property...For sure I know....

With all this, Industrial Estates have far less to worry about except to act in line with last year's lesson.

For one, I am not worried, only prepared.

Personally much more worried about the wage-increase as that affects my bottom-line. Flooding? Not soo much...

That would be why two general manager friends of mine have been running around in Rayong for the last 2 weeks looking for land. A lot of factories are going to move. Was it Honda and Mitsubishi who announced new factories recently, but not near Ayyutaya? Companies will move location within Thailand or move out altogether.

I don't doubt that some efforts will be made to stop the flood happening again, but many factories have not reopened (and never will) and the crazy thing about putting a dam_n around the estate, is that is of no benefit if the rest of the supply chain is under water. I am not saying that the country will become an economic wasteland, but why risk putting a factory there, when you can put it somewhere where it NEVER floods. I don't think I would want to be the employee talking to head office saying "Don't worry boss, the Thai government said it is all under control".

Rayong and surrounding areas are the obvious spots, and I expect to see a migration down there in quite rapid time.

[timewilltell]

I work in Hi Tech Estate and the work on the dyke which will eventually circle the entire complex has begun, although it will not be finished by the time the rainy season comes.

We have moved a lot of our most valuable/sensitive equiptment to the second floor as a precautionary measure, and many of the machines we have bought are now more easily able to be moved. We are also maintaining a back-up site in Chonburi.

Our facility in Malaysia has doubled capacity.

The mood here is not optimistic, with a lot of companies gone already. As you can see from the above, we are not relying on the government at all.

Sorry Mr. Peach, but I think you should plan to relocate to somewhere where you don't risk being up to your ears in water. Those estates around Ayuttaya in hindsight should never have been built, but it was cheap and it was convenient. I think your back up site in Chonburi looks like a better bet day by day...

As for them being surprised about people not investing there, who in their right mind would?

Sorry Thai at Heart, but I think you are wrong.

1. The estates around Ayutthaya and Pathumtani where perfectly located and still are.

My factory is in Navanakorn. There's a tremendous amount of work going on currently, which might not be 100% ready for the next raining season, but then again, I see no reason that flooding to last year's extend will happen again. Why?

2. Reasons for last year's flooding where mainly human errors.

Flame me for it, but 3 basic errors where made during last year's flooding, causing a cascading problem that spun out of control.

a. Water in dams was kept high until it was too late to release it without causing problems downstrea.

b. Water was intentionally blocked (understand the reasons like protecting one's house or factory or dare I say Bangkok)

c. Water (as it was blocked) saturated the dikes of cities and industrial estates because they where not designed or built for long term blocking of water. These dikes where only good for a couple of days and typically only for diverting water in a different direction.

d. Drainage and maintenance of existing canals and rivers for years has been left unattended, causing a severe degradation in their capacity.

e. Bangkok eventually became the main reason for flooding to spin out of control

A massive hill/dike that kept water rising in Pathum and Ayutthaya

This year BKK will also be better prepared with dredging, early drainage and less blocking of water, better diversion upstream.

3. So this year will see a quite different situation.

- Monkey cheeks (even if no plans in place yet) can and will be used.

Do you not think that the government/army/ministry will enforce the use of these much earlier on if necessary.

- Industrial Estates know the weak-points and will be much earlier and much better prepared with measures.

- Factories have learned from last year and know much better how to act and protect their property...For sure I know....

With all this, Industrial Estates have far less to worry about except to act in line with last year's lesson.

For one, I am not worried, only prepared.

Personally much more worried about the wage-increase as that affects my bottom-line. Flooding? Not soo much...

And with all the reasons you give in item 2 - which ones do you think have now gone away. I certainly havent seen much in the way of dredging - has anything else changed dramatically from last year. Hopefully this year will see less rain but if not I am 100% certain Bangkok will be saved at the expense of most other areas.

[Schuimpge]

That would be why two general manager friends of mine have been running around in Rayong for the last 2 weeks looking for land. A lot of factories are going to move. Was it Honda and Mitsubishi who announced new factories recently, but not near Ayyutaya? Companies will move location within Thailand or move out altogether.

I don't doubt that some efforts will be made to stop the flood happening again, but many factories have not reopened (and never will) and the crazy thing about putting a dam_n around the estate, is that is of no benefit if the rest of the supply chain is under water. I am not saying that the country will become an economic wasteland, but why risk putting a factory there, when you can put it somewhere where it NEVER floods. I don't think I would want to be the employee talking to head office saying "Don't worry boss, the Thai government said it is all under control".

Rayong and surrounding areas are the obvious spots, and I expect to see a migration down there in quite rapid time.

Well, supply chain is a concern, fully agree..there's no use having your factory dry but nobody reaching it.

But moving your complete factory is as much a major disruption to your business as being surrounded (but not flooded) by water, if not more.

You can move your factory, but if 90% of your supply chain is still in your old area, then you will face increased production-cost that will reduce your competitiveness.

The majority (pretty much all) of my customers except 2, are rebuilding or producing again at the same location.

2 factories closed and moved. 1 had an operation already in Korat. They just took the insurance money and closed here I guess. Factory was already very very old and badly maintained. The second 1 had an operation already in Chonburi and the flooding just speeded up their plans to consolidate over there.

I do see factories that are even now not cleaned or reopened. For sure there's a huge problem with employment, it's very easy to find people nowadays. But the big names are all business as usual, I'm picking up more business right now than I ever did in the last 7 years of operation.

And that's mostly coming out of Flooded areas/factories...

[timewilltell]

Anyway the Thais are not stupid - for any tax exemption you first have to make a profit!!