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Thailand Industry – Awaited Investment Strategy Arrives

By on Sep 08, 2014 in Industrial

The silence that followed the introduction of the new investment promotion strategy of the Board of Investment (BoI) in January 2013 has finally been broken.  A BoI meeting last Tuesday, chaired by Gen Prayuth Chan-ocha, approved the principle of the strategy for 2015-21, a seven-year plan aimed at strengthening Thailand’s competitiveness, creating value for the industrial sector and shifting the country from the middle-income trap to a high-income nation.

Under the seven-year plan, the BoI will continue to promote investment in the same seven sectors — agriculture and agribusiness; mining, ceramics and basic metals; light industry; metal products, machinery and transport equipment; electronics industry and electrical appliances; chemicals, paper and plastics; and services and public utilities.  However, criteria will be changed so that broad-based investment promotion will be refocused on activities, and importance of the activities will be prioritised. Sector-based incentives will become merit-based by reducing the basic tax incentives and providing additional incentives based on the project’s merit to enhance activities such as research and development (R&D) and environmental protection, while zone-based incentives will be focused more on industrial clusters.

As the goal is to create value for the industrial sector and the country, the new strategy will also focus on merit-based incentives to encourage investors to improve their capabilities and upgrade the industrial sector. Merit-based incentives will be given to R&D activities — for example, if an investment is made in an R&D project according to the amount stipulated, it will be eligible for additional year or more of corporate income tax exemption.

In the five-year plan introduced in January 2013, the BoI will change its role from that of regulator to facilitator for investors by having a one-stop service and reducing barriers in order to foster a better investment environment.  More details of the criteria for evaluating and measuring projects and how the merit-based incentives and clusters will be set up are expected to be released during BoI roadshows from October-December. The new investment strategy is expected to take effect next Jan 1.

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