Measures to Minimize Business Interruption
1. Factories can be allowed to temporarily relocated elsewhere to
continue their production for the period of 6 months from the
application submission date. This temporary relocation period can
be extended if necessary.
2. Manufacturing process can be allowed to be outsourced partially or
wholly on a temporary basis.
3. The BOI, the Ministry of Labor and the Immigration Bureau help
facilitate companies to bring in foreign experts and technicians to
rehabilitate the factories

Measures to Reduce Tax Burdens
1. The importation of machinery for replacement is entitled to
duty-free. (submission deadline: by the end of June 2012).
2. Raw materials imported damaged by the flooding can be
counted as part of the waste allowance without any tax burden.
3. Additional years of corporate income tax exemption are offered
to BOI-promoted companies directly affected by the recent
flooding that are still during their tax holidays (Please see
details in slide4 & 5.)
4. Industrial estates that invest in flood prevention systems are
also offered 8-year tax holidays with the corporate income tax
exemption ceiling of 200% of their investment excluding land
cost and working capital. (Please see details in slide 6.)

Tax Incentives for Directly Flood-Affected Companies
Eligibility
• Existing BOI-promoted projects directly affected by
flood
• Still have remaining unused corporate tax exemption
period
Remark: An official announcement is to be used issued soon.

Incentives
1. Projects subject to a corporate income tax exemption cap

*All fixed assets (except land) including repairs of existing machinery and replacement
machinery previously imported under the BOI scheme

Tax Incentives for Industrial Estates
Conditions
• All industrial estates/zones
• Invest in flood-prevention infrastructure and system

Incentives
• 8-year corporate income tax exemption with cap of 200% of
investment excluding costs of land and working capital

Source: BOI Thailand

According to Thailand’s Government Public Relations Department, the objective of the National Tourism Development Plan is to move Thailand’s tourism competitiveness up at least 15 places, which would put it among the top five destinations in Asia.

In order to achieve this aim, five strategies have been set for implementation:

• Develop infrastructure and logistics, linking with domestic and international tourism.
• Development and rehabilitation of tourism sites and improvement of various rules and regulations to enhance the country’s potential for accommodating more tourist arrivals.
• Development of the creative economy, which is the focus in the 11th National Economic and Social Development Plan, 2012-2016. New products and services will be launched, while incentives for tourism trade and investment will be offered and human resource development will be emphasized.
• Create confidence in Thailand’s good image among visitors, so that the country will welcome a greater number of tourists who will spend more in Thailand.
• Participation of the public sector, civil society, and local administrative organizations in tourism management.

Thailand’s tourism sector made a full recovery in 2010 following the impacts of global recession of political uncertainty, with approximately 15 million arrivals in 2010, and earnings which have grown to 586 billion baht, or about 11.9% on average over the past five years.

The BOI offers attractive investment incentives for many tourism related activities; incentives that include tax and import duty exemptions for those who qualify. At nearly 14% of GDP, the tourism industry is set to get even stronger!

As a consequence of the high numbers on tourist arrivals in 2010, the hotel and restaurants sector expanded by 8.4%. For the full year, there were 15.8 million tourists coming to Thailand, which represents an increase of 12.0% over 2009. Looking ahead to another successful year, the NESDB notes that “It is expected that, in 2011, the tourism sector will continue to grow steadily with an approximated foreign tourists of 16.8 – 17.0 million persons. Thus, the related businesses in production and services sectors are likely to improve.”

In 2011, the NESDB forecasts that the overall economy will also continue to grow, within a range of 3.5 to 4.5%, with exports expanding by 12.5%, private investment by 8.5% and consumption by 4.0%. Reporting on Q4 2010, exports expanded by 21.2% over the same quarter in 2009, reaching US$51,850 million. Breaking this down, the key drivers in the export sector in the final quarter of 2010 were vehicles and parts (23.8%), electrical appliances (17.3%), rubber (49.0%), rubber products (27.6%) and jewelry (77.5%). The major export markets during this period were the US, the EU (15) and Japan, markets which grew by 12.0%, 14.6% and 24.4%, respectively. For the full year of 2010, the export value was US$193,663 million, representing a 28.5% expansion.

As for the factors that will support growth, the NESDB said they will include a “(i) strong global economic rebound, and (ii) increase of income in many sectors such as government, private sector and farm income. However, there are risks and uncertainties especially the heightening of inflationary pressure from high oil price, labor shortage in various industries, and volatility in capital flow that would have a vast impact on Thai baht, stock market and real estate sector.

The NESDB made other economic projections for 2011 such as headline inflation is expected to be in the range of 2 .8 -3 .8 percent, private consumption projected to expanded by 4 .0 percent, private investment forecasted to grew by 8.5 percent, export value in us dollar term is projected to expanded by 12.5 percent, and current account surplus of 3.2 percent of GDP, down from 4.6 percent of GDP in 2010.

In this regard, the Economic Outlook notes that the expected average Dubai crude oil price in 2011 is in the range of US$85- 95, although it also points out that Morgan Stanley sees oil above US$100 and Goldman Sachs above US$105.

The report notes that the world economy is improving but still fragile, especially with regard to the economic recovery in the EU and Japan, and that the ASEAN economy too will slow down as governments try to contain inflation and monitor exchange rates. The US economy is expected to grow by 3.0% in 2011, China by 9.0%.

The Thai economy in 2011 is seen to likely improve, and as noted previously reach GDP growth of between 3.5% and 4.5%, particularly if the world economy maintains its recovery. Also supporting economic growth will be the increased salaries of both government workers and private employment, as well as in farm income. One additional factor is the stability of financial institutions in Thailand, with NPLs at 1.9% and good liquidity. The excess liquidity in commercial banking, which was at 1.24 trillion baht in Q4 2010, should ease credit and also support economic expansion.

During the year, under the current projection, total consumption is to grow by 3.9%. investment by 7.3%, export value by 12.5% and import value by 14.6%. The trade balance is to have a surplus of US$11.2 billion, and inflation should be in the range of 2.8 – 3.8%.

On an even more positive note, the NESDB believes that the Thai economy could grow by more than 4.5% if world economic growth exceeds 4.2%, there are no serious political disruptions to affect confidence and tourism, the Dubai crude oil price remains below US$95 per barrel, stimulus funding under Thai Kem Khang is not delayed and the average disbursement rate of the current budget is more than 94% of the total budget, the policy interest rate is less than 3.5% and there are no severe natural disasters that affect agricultural production.

While there are many variables that ultimately determine the economic growth of a country, it is certain that Thailand remains on a positive trajectory and that 2011 will see further strengthening of the economy and better opportunities for investors in many sectors of industry.

http://www.boi.go.th:8080/issue_content.php?issueid=74;page=0

Perfectly positioned to lead, Thailand rose to prominence because of its abundant resources of natural rubber, cost- effective workforce, and strategic location in the Asia-Pacific region. According to the Thai Rubber Association, the Asia- Pacific currently accounts for 57% of global rubber demand and will remain the world’s strongest growth area through at least 2013. This represents continued lucrative opportunities for Thai rubber businesses.

Besides a prime location, Thailand offers rubber investors an ample water supply, a low incidence of power outages, and a reliable transportation infrastructure for smooth operations.

Moreover, Thai rubber businesses are flourishing because of solid government policies promoting the industry. This includes the lower tariffs resulting from the country’s free trade agreements with trading partners such as China, Australia, New Zealand, and ASEAN states. In addition, Thailand is a member of the Association of Natural Rubber Producing Countries, which also consists of Indonesia, Malaysia, Vietnam, China and Sri Lanka. All of this is conducive to increased business in the region, with Indonesia being the world’s second-biggest rubber producer, followed by Malaysia, India and China.

Many considerable developments enriched the Thai rubber industry in 2010. Of major importance was the Thai government’s announced plans to launch the next phase of its initiative to expand rubber plantations nationwide. An initial budget of 11.42 billion baht will create new plantations of rubber saplings in the northern, eastern and central regions, with the southern area long well-established. More than 100,000 planters are expected to benefit from this expansion, which aims to increase Thailand’s natural rubber supply by an additional 250,000 metric tons per year from 2017.

The first part of 2010 also saw several new projects in the country’s growing tire sector, a vital cog in the Thai rubber machine. Thai Bridgestone Co., Ltd. unveiled plans for a US$25 million retread plant. Goodyear (Thailand) Public Co., Ltd. is also investing in a radialization project for airplane and automobile tires, and Dunlop Tire (Thailand) Co., Ltd. has launched a plant featuring an innovative production system.

In other major industry developments, condom manufacturer Thai Nippon Rubber Co. is spending 600 million baht to build a large production facility in Chonburi Province. The plant will increase the company’s capacity by 75% from the current 800 million pieces. Moreover, the Sri Trang Group said it will double its annual capacity within five years to 20 billion gloves and 160,000 metric tons of other products such as block rubber and technically specified rubber.

As another forward step taken in 2010, the Thailand Board of Investment (BOI) in August organized a mission to Chennai and Mumbai to strengthen investment and business collaboration with India. Rubber products and automotive parts were high on the agenda.

The BOI classifies the manufacture of natural rubber and rubberwood products as a priority activity. Eligible investment projects in the industry can therefore receive benefits such as tax breaks and exemption from duties on imported machinery.

As the world’s leading producer, Thailand attracts substantial investment by foreign, joint venture and domestic manufacturers in the rubber industry and related sectors. The top rubber exporting companies in Thailand are Von Bundit, Sri Trang Agro- Industry, Thai Hua, Thaitech Rubber, Southland, Bridgestone Natural Rubber, B.Right, Teck Bee Hang, Tavorn, Hadsyn, Siam Indo, A One, Numhua, and Thai Rubber Latex.

Major rubber products manufactured in Thailand include gloves at 10.93 billion units in 2009, inner tubes at 58.76 million, motorcycle tires at 19.95 million, passenger car tires at 19.58 million, bicycle tires at 18.29 million and rubber bars at 800,759 units.

Based on statistics from the Rubber Research Institute of Thailand (RRIT), in 2009 the country’s rubber exports reached 2.72 million metric tons and domestic consumption totaled 399,415. By material type that year, standard Thai rubber output was 1.06 million, ribbed smoked sheet was 837,294, concentrated latex was 703,817 and crepe was 487,160 metric tons.

The country now exports about 90% of production, or US$4.26 billion worth in 2009. The Thai rubber industry is clearly on a growth path, and the Office of Industrial Economics projects export value hitting US$6.6 billion in 2012.

Thailand is also a significant importer. In 2009, inbound shipments of rubber products, scrap, and rubber materials were worth US$1.12 million.

Tire and Non-Tire Demand Strong

The heart of Thailand’s rubber production remains the area in the south from Chumpon Province all the way to the border with Malaysia. A monsoon climate helps Thai farmers achieve high yields of about 1.76 tons of rubber per hectare. Small landholders with four hectares or less represent 95% of cultivation in the country. The industry, however, is mainly controlled by large processing plants that purchase the material through local dealers.

With manufacturing sectors such as the all-important automotive industry recovering from the global downturn, rubber output is expected to continue growing steadily in coming years. Demand is also on the upswing in sectors such as rubber gloves and condoms because of greater consumer concerns for good hygiene.

In fact, some industry experts predict that non-tire rubber demand will outpace that for tire rubber due to expanding industrialization in developing countries. This involves products such as moldings, gaskets, cushioning, adhesives, padding, belting, wire and cable sheathing, roofing and adhesives. Thailand rubber is also used to make balloons, rubber bands, pulleys, toys, sports and leisure goods, medical devices and carpet underlay.

Along with being the No. 1 exporter of high-quality rubber, Thailand is also a trendsetter as a leading R&D center for the material. The country’s 100,000 science and engineering graduates annually fuel local innovation. Added product value and greater environmental sensitivity are two trends emerging with the Thai rubber industry seeing steady advancement. Of all rubber produced for domestic consumption in Thailand, 65% is now processed into value-added goods such as better tires, gloves and elastic. Work is also accelerating on popularizing rubberwood as an environment-friendly alternative to hardwood timber.

Solid Support Amid Challenges

Thai natural rubber is prized in markets around the world. The top destinations in terms of export value are China, Malaysia, Japan, South Korea, the United States and the European Union. According to the RRIT, China absorbed the lion’s share of exports in 2009 at 42%.

Support of rubber businesses in Thailand is resolute, with policies in place for continued development. Government bodies, trade associations and R&D institutions are all active in promoting the industry’s competitiveness. In addition to the BOI and the RRIT, these include the National Science and Technology Development Agency, Department of Industrial Promotion, National Metal and Materials Research Center (MTEC), National Center for Genetic Engineering and Biotechnology (BIOTEC), Research and Development Institute of Industrial Production Technology at Kasetsart University, Prince of Songkla University, Thai-German Institute, Rubber Estate Organization and Polymer Society.

But the industry still faces growth challenges amid its stable development. For one, the market price of rubber has been in decline, threatening the margins of suppliers. Sales of smoked rubber sheets, a major product line in Thailand, are also falling off. This is putting pressure on some operators to undergo an upmarket shift to higher-quality products such as rubber blocks and concentrated latex. However, such a move will require spending on new advanced technology.

Value-added production will play a key role as companies, institutes and the government look at ways for the Thai rubber industry to evolve while maintaining its leadership position.

Source Board of Investment Thailand

Source Board of Investment Thailand
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As Thailand’s main export are Rice and Shrimp and with the Miami gulf disaster still affecting shrimp production in the region the Thai Baht is expected to hold its ground for some time. As we see the west deplete itself of Raw minerals and price itself out of the labour sector this will also benefit the Asia economy as manufacturing and the western countries continue the trend of changing to service industry orientated societies.

50 per cent reduction of import duty on machinery that is subject to import duty of not less than 10 per cent

Corporate income tax exemption for 3 years for projects located within industrial estates or promoted industrial zones, provided that such a project with capital investment of 10 million baht or more (excluding cost of land and workng capital) obtains ISO 9000 or similar international standard certification within 2 years from its start-up date, otherwise the corporate income tax exemption will be reduced by 1 year.

Exemption of import duty on raw or essential materials used in the manufacturing of export products for 1 year.

Projects in Zone 2 shall be granted:

50 per cent reduction of import duty on machinery that is subject to import duty of not less than 10 per cent

Corporate income tax exemption for 3 years, increased to 5 years for projects located within industrial estates or promoted industrial zones, provided that such a project with capital investment of 10 million baht or more (excluding cost of land and working capital) obtains ISO 9000 or similar international standard certification within 2 years from its start-up date, otherwise the corporate income tax exemption will be reduced by 1 year.

Exemption of import duty on raw or essential materials used in the manufacturing of export products for 1 year

Projects in Zone 3 shall be granted:

Exemption of import duty on machinery

Corporate income tax exemption for 8 years provided that a project with capital investment of 10 million baht or more (excluding cost of land and working capital) obtains ISO 9000 or similar international standard certification within 2 years from its start-up-date, otherwise the corporate income tax exemption will be reduced by 1 year

Exemption of import duty exemption on raw or essential materials used in the manufacturing of export products for 5 years

Projects located in one of the following 36 provinces of Zone 3: Chai Nat, Chanthaburi, Chiang Mai, Chiang Rai, Chumphon, Kamphaeng Phet, Khon Kaen, Krabi, Lamphang, Lamphun, Loei, Lop Buri, Mae Hong Son, Mukdahan, Nakhon Ratchasima, Nakhon Sawan, Nakhon Si Thammarat, Phangnga, Phattalung, Phetchabun, Phetchaburi, Phitsanulok, Pichit, Prachin Buri, Prachuab Khiri Khan, Ranong, Sa Kaew, Sing Buri, Songkhla, Sukhothai, Surat Thani, Tak, Trang, Trat, Uthai Thani, and Uttaradit, shall be granted Zone 3 tax and duty privileges and further privileges, as follows: … see map of Thailand

(1) A project located within industrial estates or promoted industrial zones is entitled to the following privileges:

(1.1) 50 per cent reduction of corporate income tax for 5 years after the exemption period;

(1.2) Double deduction from taxable income of transportation, electricity and water costs for 10 years from the date of first revenue derived from promoted activity;

(2) For a project located outside industrial estates or promoted industrial zones, a deduction can be made from net profit of 25 per cent of the project’s infrastructure installation or construction cost for 10 years from the date of first sales, and net profit for one or more years of any year can be chosen for such deduction. The deduction is additional to normal depreciation.

Projects located in one of the following 22 provinces: Amnat Charoen, Buri Ram,Chaiyaphum, Kalasin, Maha Sarakham, Nakhon Phanom, Nan, Narathiwat, Nong Bualamphu, Nong Khai, Pattani, Phayao, Phrae, Roi Et, Sakhon Nakhon, Sathun, Si Sa Ket, Surin, Udon Thani, Ubon Ratchathani, Yasothon, and Yala shall be granted Zone 3 tax and duty privileges and further privileges as follows: … see map of Thailand

(1) 50 per cent reduction of corporate income tax for 5 years after the exemption period;

(2) Double deduction from taxable income of transportation, electricity and water costs for 10 years from the date of first revenue derived from promoted activities;

(3) Deduction can be made from net profit of 25 per cent of the project’s infrastructure installation or construction cost for 10 years from the date of first sales, and net profit for one or more years of any year can be chosen for such deduction. The deduction is additional to normal depreciation.

Promotion of jewelry is according to zones or special industrial estates around Thailand. Projects located inside a promoted gem and jewelry industrial estate or zone one are exempt from import duty on machinery, regardless of zone.

If located in Zone 1, corporate income tax exemption is for five years.

If located in Zone 2, corporate income tax exemption is for seven years. If located in Zone 3, corporate income tax is exempt for eight years.

Other privileges are granted according to the Board of Investment as needed Projects located outside a promoted gem and jewelry industrial estate or zone offer other privileges as designated by BOI.