BOI needs to be empowered: TEBA

BOI needs to be empowered: TEBA

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ERICH PARPART
THE NATION October 13, 2014 1:00 am
THE Thai-European Business Association has suggested that the government empower the Board of Investment and its offices abroad by providing more resources in order to promote and increase the communication channels between foreign investors, Thai officials and the Thai private sector. It is hoped the move would encourage more Western investments in the country.
Meanwhile, more than half the major European businesses who already have a presence here, especially in the automobile industries, are looking to expand their footprint in Thailand through increasing their capacity and expanding their production base in preparation for the full implementation of the Asean Economic Community next year. About 80 per cent of the TEBA’s 50 members belong to the automobile industry.
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Thailand Top 10 Destination

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The United Nations World Tourism Organization, in its Tourism Highlights 2014 Edition, reports that international tourist arrivals grew by 5% last year to a record 1087 million arrivals.

Although the global economy continues towards a slow recovery, there were an additional 52 million international tourists last year. The report notes that”…international tourism receipts in destinations around the world grew 5% in real terms (taking into account exchange rate fluctuations and inflation) to reach US$ 1159 billion (euro 873 bn). Growth in receipts mirrored the growth in international arrivals (also +5%), confirming the strong correlation between these two key indicators of international tourism.”

The UNWTO reports the Asia and Pacific region to have the strongest prospects, with 6% growth in 2013 and similar growth this year. Looking at earning, the Asia and Pacific region had ever better 8% growth last year at US$ 359 billion; arrivals accounting for 23% of the world’s total, receipts accounting for 31%. “As in 2012, South-East Asia was again the fastest growing subregion both in the region and in the world in 2013, with an increase of 11% in international tourist arrivals on the back of buoyant intraregional demand. Thailand reported strong growth (+19%), welcoming 27 million tourists, 4 million more than in 2012.”

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The report also shows that Thailand has moved into the list of the world’s top 10 tourism destinations, in terms of both visitor numbers and visitor expenditure with record-breaking arrivals in 2013. “Thailand moved up two positions in the ranking by international receipts to 7th, while it entered the top 10 by arrivals in 10th position, in a bumper 2013 when international arrivals were up by 19 percent to 27 million and receipts by 23 percent to 42 billion US dollars.”

It is the first time that Thailand entered the top 10 list in terms of arrivals. Thailand was ranked No. 11 in 2012, when the number of tourists totaled 22.4 million. UNWTO referred to this climb of five positions as an “amazing” development.

This year began with a slow start for tourism, for obvious reasons, and from January to July 2014 Thailand saw a 10% year on year drop with 13.6 million foreign arrivals. Malaysia is Thailand’s largest tourist market, followed by China and Russia.

According to the Tourism Authority of Thailand (TAT), international arrivals for the year are expected to reach 25.5 million, bringing in 1.2 trillion baht, with about one million Chinese tourists expected to visit Thailand between August and October.

Europe also shows a positive trend as Thailand works to encourage tourists, especially from France, Italy, and Spain. A recent news report shows that confidence remains strong among French tourists in particular, as a report released by French travel website Le Quotidien du Tourisme shows that Thailand is the most searched for destination in online search engines. The Tourism Authority of Thailand projects visitor numbers from France to reach over 636,400 by the end of 2014. In a move to boost tourism the Immigration Bureau has allowed citizens of 48 countries and Hong Kong Special Administrative Region to get a 30-day extension of their stay in Thailand after the expiry of their normal period of stay. The 49 tourist markets generate about half of Thailand’s total visitor arrivals.

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Logistics Performance Index in Thailand

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Strategically located at the crossroads of mainland Southeast Asia, the Kingdom of Thailand shares a common land border with four neighboring countries totaling 5,582 kilometers. In fact, there are 30 Thai provinces physically connected with Myanmar, Laos, Cambodia, and Malaysia. Presently, Thailand is linked to its neighbors through an extensive and functioning network of roads, waterways, and air routes. Yet with the ASEAN Economic Community looming in the distance and the Thai government’s drive to lift the country out of the middle-income trap, improvements need to be made in the field of logistics if the Kingdom aims to achieve future progress and prosperity.

Over the past 20 years, Thailand’s international trade has expanded over 600%. Manufacturing exports, in particular, have increased to where they account for 86% of the country’s total exports as of September 2014. Such growth, aided in part by the Kingdom’s bilateral trade agreements with Japan, South Korea, China, India, New Zealand, and Australia, has led the Thai government to upgrade its logistics infrastructure and expertise. Currently, foreign companies dominate the logistics industry in Thailand. Its top 10 freight forwarders are Maersk Line, K&N, DHL, UPS, Schenker, Panalpina, Phoenix International, BAX Global, Agility, and UTI.

Totaling US$ 219 billion worth of goods, exports contributed to 58% of Thailand’s GDP in 2013, and the transport sector underpinned this notable performance. The export-dependent nature of the Thai economy, with recent structural changes toward a higher share of value-added manufactured goods and level of global trading, requires a strong and integrated transport and trade facilitation system. As a result, the government of Thailand is working on improving its trade systems such as the customs. An e-logistics system is currently being introduced, to cut logistics cost, reduce paperwork, optimize routes and flows, and increase the time management proficiency of freight transport companies.

The logistics sector is a huge industry in Thailand. It contributes about Bt300 billion to the economy annually, accounting for 3.2% of the country’s total GDP and providing employment to some 3.5 million Thais. Furthermore, the Kingdom has been witnessing a downward trend of logistics cost per GDP over the past decade, from a range of 16-18% during 2001-2008 to a range of 14-15% during 2009-2012. Transportation costs in Thailand remain high due to a limited capacity of competitive alternative modes of transport albeit the efforts of operators to apply IT to lower hauling overheads. In addition, the sector still relies heavily on land transport (accounting for 83% share) despite the elevated price of oil. According to the 2014 Logistics Performance Index conducted by the World Bank, Thailand ranks 35 in logistics competency among all 160 countries, thereby demonstrating its competitiveness in the region compared to other developing countries.

It must be said that the Thai economy needs to improve the efficiency of its logistics systems, which is revealed by its relatively high costs in relation to its GDP. Having a direct impact on both the industrial structure and spatial distribution of the economy, the costs associated with logistics in Thailand have a direct impact upon the sustainable development of the Thai economy. While the government of Thailand has taken proactive measures to reduce national logistics costs in relation to its GDP, it is now a priority to craft the appropriate logistics policies in order to propel forward the economic development of the Kingdom.

thailand-logistics-performance-index

International trade largely has fueled Thailand’s industrial and commercial growth. Given this dependence on global trade linkages, freight logistics have played an important role in the competitive edge of various Thai industries. From a macro- economic perspective, outlays for logistics can be divided into four categories: transportation costs, inventory-carrying costs, administration costs, and infrastructure costs. Comprising expenditures for service, fuel, vehicle repair and maintenance, transportation costs usually account for over 49% of total logistics outlays in developed economies. Moreover, inventory- carrying costs consist of expenditures related to warehousing and financing, while administration costs include employee compensation and communications.

About 86% of Thailand’s cargo is currently moved by road, 12% by ship, 2% by train and the rest via air freight. With a road density of around 125.7 kilometers per thousand square kilometers, the Kingdom possesses an extensive road network of urban and rural roads. Likewise, with the possibility of a Trans-Asian highway linking most countries on the Asian mainland, this could be the key contributor to Thailand becoming a regional logistics hub of ASEAN. In addition, the Kingdom is home to six international airports, affording access to all regions. A state-of-the-art facility located in the outskirts of Bangkok, Suvarnabhumi currently services over 100 commercial airlines. In 2013 alone it handled some 50 million passengers as well as 1.3 million metric tons of freight. Yet its ongoing phase-two extension will uplift capacity to 60 million passengers. Actually, Suvarnabhumi has been ranked as the 6th best airport globally by the 2013 ASQ Survey for the year 2012 in the category of large airports that provide service to more than 40 million passengers per annum.

As was reported in The Nation, Dr. Witoon Simachokedee, permanent secretary at the Ministry of Industry, declared that Thailand’s master plan for industrial logistics targeted a 15% reduction in logistics cost for manufacturing and a 10% increase in efficiency of logistics and supply-chain management by 2016. It is worth noting that last fiscal year (Oct. 2012-Sept. 2013), the Department received a budget of Bt110.8 million under the strategic plan for development of the country’s logistics system. About 30 projects already have been completed, which concentrated on 501 business operators, logistics-cost reduction of at least Bt3 billion, human resource development of at least 6,575 people and linkage improvement of at least 28 supply chains.

 

 

 

Indeed, the strategic plan consists of three main thrusts: Producing logistics-management professionals for manufacturing sites, promoting cooperation and linkages among business units in manufacturing supply chains, and supporting factors to raise the competitiveness of supply chains in specific industries. The targeted industries are food, petrochemicals, electrical appliances and electronics, automobiles and parts, textiles and garments, and rubber and rubber products. Taken as a whole, these industries hold 70% inventory.

Furthermore, it needs to be pointed out that Thai logistics costs hover around 17% of production outlays, while the European Union averages 8-9%. Accordingly, the Kingdom may employ the European model, as Germany is the regional center in Europe just like Thailand is for ASEAN. This advantage could be used to manage logistics costs efficiently through railways, roads, vessels and aviation. With the ASEAN Economic Community taking shape in 2015, it becomes imperative that Thailand moves ahead with its Bt2.4 trillion infrastructure project.

Some years ago, the Thai government adopted a policy known as the “three economic rings and five trade gateways” in order to maximize Thailand’s geographic position within Southeast Asia and its well-developed infrastructure and logistics networks. To explain, the three economic rings consist of ASEAN, ASEAN+3 (China, Japan and South Korea), and ASEAN+6 (China, Japan, South Korea, India, Australia, and New Zealand). Meanwhile, the five trade gateways refer to the Kingdom’s strong road and rail linkages to neighboring countries and beyond. These include the northern gateway, linking Thailand to Myanmar, Laos, and southern China; the northeastern gateway, linking Thailand to Laos, Vietnam, southern China, and East Asia; the eastern gateway, linking Thailand to Cambodia, Laos, and Vietnam; the western gateway, linking Thailand to several BIMSTEC countries, particularly Bangladesh, India, and Myanmar; and the southern gateway, linking Thailand to Malaysia, Singapore, and Indonesia.

In addition to the aforementioned plan, Thailand already has in place a Logistics Development Strategy (2013-2017) that revolves around three missions and seven strategies. The first mission is supply chain competitiveness, which strives not only to increase competitiveness in supply chain management and potential business, but also to promote business related to trade and services in border town areas. The second mission concerns trade facilitation enhancement, which aims to develop transport services and logistics networks, to improve facilitation at gateways, and to promote services improvement and expand LSP (layered service provider) networks. And finally, the third mission deals with capacity building and policy driving factors, which endeavors both to develop human resource development systems and to create monitoring systems for self-improvement.

The ASEAN Economic Community will have a significant impact on trade between the ten member states. From Thailand’s perspective, the AEC will boost substantially the Kingdom’s trade with bordering countries (Malaysia, Myanmar, Laos and Cambodia) as well as countries further afield like China and Vietnam. Regional integration through the AEC will increase the demand for logistics services in Thailand. Raw materials, goods, and labor will be exchanged more freely, especially for border and transit trade, which are expected to expand substantially. Indeed, the AEC is expected to bring various benefits for ASEAN’s logistics industries in terms of regulations and other aspects such as simplified and harmonized customs procedures, improved transportation routes, and reduced tariffs.

Given the variety of logistics services – ranging from maritime cargo handling services to warehousing to customs clearance and more – the development of competitive logistics businesses in Thailand will require not only financial capability, but also technological know-how. As other ASEAN member states increase their equity participation in Thai businesses to up to 70%, local players will need to develop their competencies in order to compete effectively. As such, the Thai government has been developing the capabilities of the country’s logistic service providers through financial support and manpower training. It also has encouraged the logistics service providers to build networks that can interface seamlessly with logistic business partners from other ASEAN and Asian countries.

Other actions taken by the Thai government to increase efficiency of Thai logistics operations include development of e-logistics, paperless customs procedures across the borders of the Greater Mekong Subregion, and a One Stop Export Service Center, where 15 export-related organizations are located at one place to reduce the time required to obtain export documentation.

The National Economic and Social Development Board is aware of the need to develop the local industry if the Kingdom seeks to actualize its goal of becoming a regional logistics hub. To take action, it has divided Thailand’s logistics sector into a business framework across five types of activities: (1) cargo transportation inside and outside the country, by road, rail, sea, or air; (2) cargo storage, warehousing, packaging, and cargo distribution; (3) customs formalities; (4) other auxiliary logistics works; and (5) postal and parcel services.

Nonetheless, the logistics market in Thailand remains highly fragmented. Yet, trends such as outsourcing logistics services to 3PLs (Third-Party Logistics) to maximize cost efficiency and to diversify risk, as well as greater usage of heavy commercial vehicles/truck and long-haul transportation, are happening. The high value of cross-border trade between Thailand and its neighbors will provide numerous opportunities for relevant businesses throughout the supply chain. At present, many Thai corporations already have set up a logistics business in neighboring countries. Siam Cement Group (SCG), for example, has logistics and transport operations in Laos and Cambodia. Meanwhile, Loxley, a listed Thai conglomerate, has gained a foothold in Vietnam’s logistics market through a joint venture with Japan’s NTT Docomo Incorporated to establish Mobile Innovation.

Currently Thailand has the necessary infrastructure in place to attract foreign investment and is in the process of launching multi-purpose, low-cost logistics bases for companies. In order to develop into a proper logistics hub for the ASEAN region the Kingdom will need to start offering attractively priced logistics services. As a result, the Thailand Board of Investment is at this time granting generous tax and non-tax incentives to logistics projects. Among the many eligible activities are container yards or inland container depots (ICDs), loading/unloading facilities for sea transport, commercial airports, mass transit systems and transport of bulk goods including rail, pipeline and maritime transportation services, and logistics service centers including both domestic and international distribution centers (DCs and IDCs). Any foreign investor, in particular 3PLs, interested in entering the Thai market would be well-advised to take advantage of these opportunities.

 

 

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Prime Minister Announces Policy

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On 12 September Prime Minister Prayut delivered his Government’s policy statement to the National Legislative Assembly, in which he outlined the policy direction of Thailand’s new government. The statement covered 11 policy areas, including upholding and protecting the institution of the monarchy; national security and foreign affairs; reduction of social disparities and providing greater access to state services; education, religion, art, and culture; public health quality and people’s health; the enhancing of economic potential; Thailand’s role in the ASEAN Community; the development and application of science, technology, research and development, and innovations; natural resource security and the creation of equilibrium between conservation and sustainable use of natural resources; good governance and anti-corruption efforts; and law and justice.

“My working principles are act first, do it seriously, and act promptly” said the Prime Minister.

The current government will promote royally initiated projects; it will work hard to suppress international crime, and will try and find a resolution to the violence in the South. To address social disparities it will promote the rights of the elderly, marginalized people and the disabled. It will work to solve the problems of landless farmers and address public land encroachment.

prime-minister-thailand-policy

Also among the 11 policy areas set out by the current administration is to reform the education system and promote vocational training, as well as foreign language study and understanding foreign cultures. “More scholarships will be provided to support technology-related studies.”

The government will also work to overhaul national health security in order to provide access to health care for all. “Monitoring system of epidemics, emerging diseases, and re-emerging diseases will be strengthened.” It should be noted that Thailand is already a medical tourist destination with international standard hospitals and cutting edge medical equipment. Expanding access to all the people of Thailand will make investment in this sector even more attractive.

To address the economic needs of the nation,” the Government will stimulate national economy through acceleration of spending of pending budget in investment for FY 2014, and use of the Government’s budget. In 2015, the budget of 2.575 trillion Baht will be allocated to every province according to their needs and order of priorities.”

 

 

 

The Prime Minister also stated that “Energy prices will be restructured as part of the energy reform. Taxes, state interests, and private interests will be adjusted and balanced. The Government will also promote alternative energy and renewable energy, as well as provide new sources of energy.”

Also in the works is to approve qualified investment projects that are pending, and to initiate public-private partnerships in infrastructure projects with potential for suitable return. In the long run, the government will develop infrastructure for transportation by expanding the electric train in Bangkok and linking it with the surrounding suburbs. Also, to improve Suvarnabhumi airport through phase 2 development and implement improvements to Don Muang airport.

The Prime Minister also said that the Government needs to lay a foundation for the digital economy and ICT development. He said that State-owned enterprises will have to adapt and compete in creating new technologies. Also commented on was that the development of IT system, analysis centers, laboratories, research institutes and centers will be established.

He said that research incentives should be enhanced, that legal barriers must be eliminated and that IT development must be feasible for commercial use.

Looking forward to the AEC, the government plans to establish a center for the purchase and export of agricultural products from neighboring countries. There will also be an economic committee at the ministerial level that will meet on a regular basis to discuss changing economic situations.” Trade related regulations will be adjusted and procedures will be streamlined through a single-window system.”

The government is aware of the need to reform the tax collection system and will address this, in addition to managing public debt that is now over 700,000 million baht. In this regard, the government will also be promoting innovation and set expenditure on research and development at not less than one percent of national income, with a 30:70 proportion of public-private investment, including the establishment of research centers.

The government will also be addressing the need to improve infrastructure and transportation in Thailand, particularly through mass transit projects in Bangkok, and at Suvarnabhumi and Don Muang airports. In this category, the government will also work to improve economic and transit links that promote trade and investment in the various regions of the country.

The Prime Minister noted that the National Council for Peace and Order (NCPO) would support Government operations, so that it could move forward in accordance with the three-phase roadmap set by NCPO.

In the short time it has been at the helm of government, the country has returned to a stable path of development and with a terrific and improving investment climate.

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「BOI奨励認可後の手続き」

(Map) Miracle Grand Convention Hotel.pdf (English)
Seminar program.pdf (English)
กำหนดการสัมมนา.pdf (Thai)

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