Thailand's BoI changes strategy

[webfact]

BOARD OF INVESTMENT
BoI changes strategy
Kwanchai Rungfapaisarn
The Nation

New investment promotion measures to affect 80 businesses; bid to restructure the national economy

BANGKOK: -- The Board of Investment yesterday gave the nod in principle to the new investment promotion strategy for 2015-21, which focuses on industries that will lead to a change in the country's economic structure, the creation of value-added businesses and sustainable growth.

The new plan will take effect in January with the aim to strengthen the country's competitiveness and wean it away from dependence on low-cost labour.

The seven-year timeframe conforms to the 11th National Economic and Social Development Plan for 2012-16 and the 12th plan.

The board meeting, chaired by junta chief Prayuth Chan-ocha, also endorsed measures to encourage small and medium-sized enterprises (SMEs) to improve their production efficiency and boost investment in the deep South.

BoI secretary-general Udom Wongviwatchai said this new investment promotion policy would apply to project applications filed after January 1. The BoI will go on a roadshow to introduce the new strategy to local and foreign investors from October-December.

"Under the new seven-year investment promotion strategy, the BoI will switch from the criteria of promoting on a broad basis to a focused and prioritised basis," he said.

After the switch, 40 businesses, such as the makers of snacks and ready-to-drink green tea, will not receive support, while 40 others will not receive waiver of corporate income tax. Under the existing policy, about 240 business types enjoy BoI incentives.

Sustainable growth

The BoI would focus on industries that can propel Thailand to become a higher-income country with sustainable growth. It will also focus on facilitating non-tax issues such as the entry of foreigners to work in Thailand and labour-skill development.

The BoI will continue to promote investment in the same seven sectors - agriculture; ore; light industry; metal, machinery and transport equipment; electric and electronics equipment; chemicals, plastic and paper; and service and utility - but will focus more on the ones employing advanced technology, research and development and environmentally-friendly techniques.

Incentives will be activity- and merit-based. Priority will be given to both inbound and outbound investment. Zoning-based promotion would be scrapped in favour of cluster-based promotion.

The measures to increase SME competitiveness include extending the SME incentive scheme by three years from this year. The incentives will be given to SMEs in 35 selected sectors.

The meeting approved measures to encourage existing businesses to invest more in improving production efficiency, such as by replacing old machinery with energy-saving or green machinery and by spending more on R&D.

Those conforming to these measures will be awarded privileges such as waiver of import duties and waiver of corporate income tax for three years at a ratio of 50 per cent of the investment in machinery replacement.

To enjoy these incentives, they have to apply under this measure by 2017.

The meeting also endorsed the extension of the promotion programme in the four provinces in the deep South and four districts of Songkhla by three years to 2017.

The BoI approved 15 investment projects worth more than Bt40 billion, covering various industries including alternative energy, auto parts and biomass.

Since its first meeting on June 8, the BoI members, who were appointed by the junta, have approved 121 projects, including the 15 projects approved yesterday, with total investment value of Bt318.8 billion.

Source: http://www.nationmultimedia.com/business/BoI-changes-strategy-30241327.html


-- The Nation 2014-08-20

[GeorgeO]

Clearly aiming to follow the Taiwan model, which was of course a huge success because of perfect timing; but Thailand has a lot of catching up to do, not least in education...!!

[zaphod reborn]

And the BOI does try to facilitate the flow of foreign expert workers into Thailand. Unfortunately, there is something called immigration which doesn't understand this and is unwilling to differentiate between illegal long-stayers and legal workers.

Edited August 19, 2014 by zaphod reborn

[siampolee]

The whole system needs a clean up regarding visa's, business protectionist policies and shareholding rights for a start. An education system that actually educates as opposed to indoctrinates, the list is endless and sadly the horizons of those officials involved are indeed very limited in their range

The ''red tape'' surrounding business activities in Thailand for home grown business alone is strangling efforts at expansion and regarding the idea of foreign investment, well its more like commercial seppuku in many ways.

[ebean001]

Maybe we will find that Thailand has too many rich farms. Where is the industrial revolution where people leave the rich farms for the city? I own a rich farm and let me be the first to tell you - very little labor is required anymore. All you need is a phone to call the guy to do whatever needs to be done by machines.

[smileydude]

What BOI and Thailand needs to do:

1. Remove protectionist regulations but with a gradual clear timeframe allowing enough time for local business to develop international level competitiveness.

If you keep protecting certain businesses they will never be motivated to evolve competitively e.g. worker productivity, skill-appropriate wage hikes (versus continually depending upon cheap labor), innovation, efficient production and management etc.

2. Promote Foreign Direct Investment (FDI) by removing the all the barriers e.g. tariffs, taxes, bureuacracy, setting up special economic zones etc.

3. Develop your workforce efficiency and productivity through better educational systems. Germany has long emphasized vocational training rather then a University degree as the skills attained are highly specialized, direct and less wasteful of resources then a liberal arts education that results in having no specific skill-set. Imagine everyone spending 4-10 years in college versus a 2 year engineering vocational degree where you have a high degree of technical skill in a specific production process. It might not look fancy or "entitled" but it gets the job done and done well. Look no further thenthe level of QC in the German automotive assembly business.

[dharmabm]

Any link to the details of the changes?

[Thai at Heart]

They really hate ichitan tea don't they

[RamblingSam]

... I own a rich farm and let me be the first to tell you - very little labor is required any more. All you need is a phone to call the guy to do whatever needs to be done by machines. ...

Hmmm; If the highly mechanised farming methods used in Europe, the US and elsewhere are to be used in Thailand, where are all the existing farmers and their families going to seek employment? Are these farmers also going to take on the cost of the equipment, and not pay off these costs via the savings made by reduced labour costs, AS WELL AS plough their increased profits into developing other forms of employment for those not now working the land? I doubt it, they'll want the former heavily subsidised, and the latter, well, that's someone else's problem, not something they want to address. Furthermore, they'll demand imported equipment, not kit which is manufactured in Thailand, by those who are no longer working in the fields. Many people don't look back 2-3 centuries at what happened when countries like the US and Europe industrialised it's farms, and the problems that then had to be solved.

[primapagina]

Hi,

does anyone know if BOI status may apply to a bakery production in Bangkok (not a shop, a production activity)? I know I can visit the site and then go to the BOI office and ask, but before that, I'd like to get an independent advice, not the official rules. I already know many aspects of the BOI (including the industry categories, but it is not clear) and I know small companies owned by friends operating under BOI although the requirements were not exactly satisfied... this is Thailand and the gap between the rule and the reality is.... oh, you know it!).

I might also consider meeting a professional/expert/studio for this (but not PriceWaterhouseCooper, if you know what I mean...).