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Thai LAND OF INVESTMENT

Thai LAND OF INVESTMENT. Pannee Chengsuttha Director Thailand Board of Investment, Paris Office October 24, 2006, Vicenza, Italy. Suvarnabhumi International Airport. Thailand in General. Key Data: Region: Southeast Asia Population: 65 million Area Total: 514,000 km 2

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Thai LAND OF INVESTMENT

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  1. ThaiLAND OF INVESTMENT Pannee Chengsuttha Director Thailand Board of Investment, Paris Office October 24, 2006, Vicenza, Italy Suvarnabhumi International Airport

  2. Thailand in General Key Data: Region: Southeast Asia Population: 65 million Area Total: 514,000 km2 Area Land: 511,770 km2 Religion: Buddhism (94%) Capital: Bangkok

  3. The Macroeconomic Picture in Statistics(1 of 2) 2002 20032004 2005 2006f GDP Growth (%) 5.4 6.8 7.1 4.5 4.25-5.251 GDP (US$ Bil) 126.3 133.2 165.7 176.4 194.84 Inflation (%) 0.7 1.8 2.7 4.5 4-51 GDP Per Capita 1,966 2,198 2,631 2,825 2,9964 (US$) Foreign Reserves 38.9 42.1 43.0 52.1 57.22 (US$ Bil.) Source: Bank of Thailand Notes: 1=ThailandOutlook.com, 2=As of April 30, 3= avg. Jan-April, 4=NESDB

  4. The Macroeconomic Picture in Statistics(2 of 2) 20022003 2004 2005 2006f Export Growth (%) 5.8 14.0 22.0 15.0 11.0-13.01 Value of Exports 66.9 77.6 97.7 109.2 125.94 (US$ Bil.) Current Account 5.55.6 3.1 -3.7 n.a. (% of GDP) MPI 123.2 138.4 146.5 155.4 164.43 (Manufacturing Production Index) Capacity Utilization 59.3 66.3 70.7 72.6 75.13 Source: Bank of Thailand Notes: 1=ThailandOutlook.com, 2=As of April 30, 3= avg. Jan-April, 4=NESDB

  5. Thailand is committed to increase openness … as indicated by increase external trade and FDI, tariff reforms, FTAs Indicators of Openness Gross FDI

  6. Major Foreign Investors (2001-2005) (Applications for Investment Privileges) 400 Billion Euro with Thai Baht equivalent €10.4 Bn (THB 514.6) 300 TOP 3 : Japan , USA , EU 200 €2.9Bn (THB142.9) €2.4 Bn (THB117.7) €1.5 Bn (THB74.8) 100 0 Japan EU USA Taiwan

  7. European Investments 5-Year Totals by Country 2001-2005

  8. Major Sources of EU Investment in Thailand Applying for BOI Promotion in 2005-2006 421.58 UNIT MILLION € 450 400 350 300 250 200 148.55 150 72.05 100 14.33 50 6.15 0 Italy UK Italy France Germany TotalInvestment No. of Projects Italy Netherlands TOP 3 : NL, UK, GER Ex Rate: €1 = 48.56 THB

  9. The Board of Investment Basic Incentives and Measures • Guarantees and Permissions • Guarantees against nationalization and price controls • Permission to own land and bring in foreign experts • Tax Incentives • Tax exemption /reduction on imported machinery and input • Income tax exemption • Support services • Advisory and information provision • Publications

  10. Value of Investments Increasing 2002 2003 2004 2005 14.08 Unit: Euro Billion 13.12 112% FDI increases 62% to 9.97 billion 6.80 6.52 25% 44% Total investment applications

  11. Basic BOI privileges and incentives Tax Incentives • Corporate income tax holidays up to 8 years • Import duty reductions or exemptions on machinery and raw materials Non-Tax Incentives • Land ownership rights for foreign investors • Permission to bring in foreign experts and technicians • Work permit/visa facilitation

  12. Zones Sector Matrix: Incentives to strengthen competitiveness Zone-Based Incentives: Low High Zone 1 → Zone 2 → Zone 3 Strategic or Priority Industries Maximum incentives regardless of zone or location Example : Software Mould & Die

  13. Ease of Doing Business Source: World Bank Study: Doing Business in 2006

  14. Promising Countries for Overseas Business Operations Source: 16th Annual JBIC Survey: “Outlook for Japanese Foreign Direct Investment” , Nov. 2004

  15. 1. Market growth potential 2. Labor costs 3. Political and social stability 4. Supply base for assemblers 5. Base for exports 6. Developed local infrastructure 7. Tax incentives for investment 8. Industrial clusters 9. Domestic market size 10. Policies to attract foreign capital Key Factors Supporting Thailand’s Rankings Source: 16th Annual JBIC Survey: “Outlook for Japanese Foreign Direct Investment,” Nov. 2004

  16. Developed Infrastructure Highwaysystem: 64,000 km connects all 76 provinces Mobile phonesgrowing 6 million/yr 24 million users in 2003. 7 internationalairports: 700,000 tons cargo. 25 million passengers per year World-classWi-Fiandinexpensivebroadband widely available Rail system:4,000 km linking to Malaysia & Singapore 8 deep sea ports 57 industrial estatesin 21 provinces

  17. Suvarnabhumi International Airport World’s Newest Airport World’s Biggest Single Terminal Open September 28, 2006 in THAILAND 1st Phase: 76 flights/hour 45 million passengers/year State-of-the-Art Cargo Systems

  18. Low Rent Costs forGrade-A Office Space in Asian CBDs Source: Colliers International. 2Q 2004. Asia Pacific News Bangkok Central Business District: €10/sq. ft./year

  19. Comparative Business Costs Sources: Electricity: IMD Corp. income tax: KPMG Office costs: DTZ Ex Rate: €1= 50 THB

  20. Lowest Cost of Living in Asian Cities Note: New York is base city for index, with score of 100.0 Source: Mercer Human Resource Consulting, 2004

  21. Strategic Location to World Markets EFTA 1/Oct/03 US 1/Sep/04 China EFTA 29/Dec/02 Japan India Bahrain Thailand AFTA Peru Australia 1/Jan/05 Effective On Negotiation New Zealand Double Taxation Agreement with 52 countries including Italy Since 31 May 1980

  22. Investment Opportunities in Thailand  Auto parts  Machinery and parts  Fashion and Jewelry  Electronic and Electrical products  Value Added Services

  23. Auto & Autoparts Industry Geared for Excellence

  24. 2005 production ~ 1.125 million units(World’s 14th largest) Export ~ 440,000 units Largest in Southeast Asia Capacity of 2.0 million units in 2008 World’s largest production of one-ton pickup trucks 820,000 units in 2005 Thailand: Automotive Hub of ASEAN

  25. Automotive Industry in Thailand

  26. Thailand Automotive and Parts Trade Balance Unit = Mil US $ < Current Rate : 1 US $ = 41 Bath As of Year, 2003 Australia Japan India Malaysia Indonesia USA China Source : The Customs Department of Thailand

  27. Auto assembly for local and export markets under AFTA and other FTA arrangements Auto part manufacturing to serve domestic and export markets Potential small car hub -- low fuel consumption NGVtarget: 120,000 NGVs by 2008 Investment Opportunities in Automotive Industries

  28. Fashion IndustryDesigning the FutureLeather, Gems & Jewelry, Textiles & Garments

  29. Fashion Industry Objective: Becoming SE Asia’s Fashion Center • Gem & Jewelry Capital of Southeast Asia • Renowned expertise in diamond cutting • Bangkok Fashion City • Major government push for the industry • Many renowned - branded garments, produced in Thailand for USA & EU Markets • Brunet, Triumph, Victoria Secret, Saint Michael, Marks & Spencer

  30. Gems and JewelryInvestment Opportunities in Thailand • BOI Incentives outside GIE: • Imported Duty • exemption/reduction on • machinery & raw • materials • Up to 8 years corporate • income tax holiday • Addition incentives if • locate in BOI Zone 3 • Non-tax incentives • Incentives in GIE: • Import Duty exemption/ • reduction on machinery • & raw materials • 5- 8 years tax holiday • VAT exemption on • imported duty on Raw • Material • VAT exemption on sales to • BOI promoted companies • and within GIE • Non-tax incentives

  31. Textile Industry Cluster 1. Integrated Textile Industrial Zones/Estate Developers: • 8 years corporate income tax holiday • Duty-free machinery 2. Textile-Related Activities: BLEACHING & DYEING & FINISHING PROJECTS • Locating in Textile IE: • 8 years corporate income tax holiday • Duty-free machinery • Locating outside Textile IE: Standard incentives according to zone OTHER TEXTILE-RELATED PROJECTS locating on Textile IE • Duty-free machinery • Corporate income tax exemptions: • Zone 1: 5 years • Zone 2: 7 years • Zone 3: 8 years

  32. Machinery and EquipmentToward Regional Manufacturing and Distribution Hub in the Region

  33. Opportunities in Machinery • Thailand continues to industrialize, but is dependent on foreign industrial machinery for immediate future. • Industries in Thailand developed over the past decade with parallel increases in demand for machinery imports. • High demand for: • Food and farm machinery • Alternative energy/energy conservation machinery • Textile machinery • Automotive machinery

  34. Machinery and EquipmentInvestment Opportunities in Thailand • Machine tools • Plastic injection machinery • Plastic extrusion machinery • Packaging machinery • Material handling equipment • Robotics and factory automation equipment • Specialized/process machinery or equipment for specific industries

  35. Recent Political Incident • Peaceful Political change • More stable than in recent months • No Real Negative Impact on investment • Business as normal • IMF, World Bank have confidence on Thai economy after the incident • BOI’s Policy has never changed

  36. BOI and SIMEST • Memorandum of Understanding signed in 2005 • Promotes cooperation in investment, organizing investment promotion activities, exchange of information • Auto parts, Machinery and parts, Jewelry and Textile

  37. Where to contact us * Royal Thai Embassy, Rome * BOI Office in Paris Address: Ambassade Royale de Thaïlande 8, Rue Greuze, 75116 Paris, France Tel: +33 1 5690 2600 Fax: +33 1 5690 2602 E-mail: par@boi.go.th BOI on the Internet : www.boi.go.th

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