Problems relating to Trade and Investment on Thailand
6. Reduction and elimination of preferential policies for foreign capital |
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Issue |
Issue details |
Requests |
Reference |
| (1) Review of Dwindled Foreign Investment Incentive Measures | - At the end of November 2014, new investment incentive policy was abruptly released for enforcement from 1 January 2015. Apart from the brevity of the period from the policy release to its enforcement, incentives that are based on location were revoked. Consequently, no incentives could be expected on a member firm's effort for business expansion into local areas. In total, (especially on tax incentives), the grant of incentives to the member firm has dwindled. Promulgation of policies of this kind negatively impacts not only the member firm but it is much concerned that it could induce other foreign firms' loss of confidence in the Thai government, prompting them to withdraw their investments in Thailand. |
- It is requested that GOT: -- reviews NIIP, and -- continues its previous grant of incentives by regions. |
- BOI's New Investment Promotion Policies (enforced on 1 January 2015) |
| (Action) - In January 2013, BOI released the NIIP 2013-2017 that introduces incentive measures on specified industrial clusters, repealing the previous incentive measures based on geographical zoning. - In May 2013, BOI announced it would decide upon the details by December 2013 for the specified industrial clusters under NIIP, for enforcement from 1 January 2015. - Thailand National Council for Peace and Order (NCPO) approved set up of 5-special economic zones to boost border trade (destined to Malaysia, Myanmar, and Cambodia) by 20% up per annum. - On 19 August 2014, the Thailand Board of Investment (BOI) approved the NCPO's new investment promotion strategy (2015-2021) (NIPS) that focuses on the projects concerned with hi-tech research & development, and increased local contents, in the manner friendly to the environment. According to the BOI report, while discontinuing the BOI investment zones, BOI will develop new local industrial integration focused on enabling a long-term sustainable growth development on the 7-prioritised business sectors, including electric/electronic, metal, machinery, transport products and equipment, infrastructure and service business. - On 25 November 2014, the Board of Investment of Thailand (BOI), headed by chairman general Prayut Chan-o-cha, premier, held a plenary meeting, approved the new investment policy for 7-years (2015-2021), and on 3 December 2015, promulgated announcement of BOI No. 2/2557 policies and criteria for investment promotion. Its Japanese translated version was uploaded at BOI home page on the same day. Major changes are: (1) Replacing the conventional zone scheme aimed at invigorating the local economy with the new policy focused on the shift of the Thai industrial structure (as above), which is focused on the high technology industry. (2) Under the new scheme, used machines over 5 years old are neither entitled to benefits, nor may be used in the project. (3) On plural non-manufacturing types of industry, incentives granted individually by BOI notification, etc. are now included in the industries entitled to incentives. |
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| (Improvement) - On 16 March 2016, premier Prayut at Thai special economic development policy committee meeting decided to expand the scope of the beneficiary under investment incentives to the 13 business sectors in the SEZs: (i) agriculture; (ii) fishery and related industries; (iii) ceramics; (iv) textiles, clothes and leather; (v) furniture; (vi) jewelry and ornaments; (vii) medical appliances; (viii) automotive, machinery and parts; (ix) electrical appliances and electronics; (x) plastics; (xi) pharmaceuticals; (xii) logistics; and (xiii) tourism-supporting industries. - On 8 October 2015, Thai special economic zone committee determined 10-business sectors (dry/storage of agricultural produce,) subject to incentive measures at the SEZ to be located near the national border. - On 17 March 2016, Thai BOI designated "aeronautics, automation, robotic engineering" as target activities of "Super Cluster Incentives (SCI)" based on the Industrial cluster policy. SCI's main incentives include each sector in aviation, automation, and robotics. The main incentives under SCI includes exemption for 8-years of corporate income tax (CIT), 50% reduction of CIT for 5-years, exemption of import customs tariff on machines and raw materials, etc. |
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