Thailand does not leave much to chance. Broad-based strategies that include collaboration between private industry, government and research have been part of its DNA in developing strong manufacturing sectors over the years.
In fact globally the country is second is hard disk drive exports, seventh in computer device exports and 12th in automobile production.
Thailand intends to fuel further economic growth given the new opportunities that have arisen due to the formation of the ASEAN Economic Community. This market is valued at $2.6 trillion and has a population of 622 million people. Thailand is the second largest economy in the ASEAN nations, and wants to ensure this standing continues.
“We felt the need to restructure and upgrade our industries’ capabilities to a higher technical level to ensure that we can compete in the future, “ explained Dr. Atchaka Sibunruang , Minister of Industry.
In that vein, earlier this year, the country rolled out its Super Cluster Strategy.
The plan calls for an increased integration of research, academic, and public-private assets into core industry cluster ecosystems, as well as adding support in areas of workforce development, infrastructure, logistics and technology. The Super Clusters are those areas of business using advanced technology and are considered to be the growth industries.
- Automotive and Parts
- Electric Appliances, Electronics and Telecommunication Equipment
- Eco-Friendly Petrochemicals
- Digital-based industries
Future plans for other Super Clusters include robotics, automation, aerospace, medical devices and food.
These Super Clusters are built on the success of current manufacturing sectors. Sibunruang pointed out that within the ASEAN countries Thailand considers themselves leaders in petrochemical, food and biotech industries and wants to make sure it not only keeps that standing but moves ahead. “We are trying to jump ahead of our neighbors and offer more incentives in order to be strong competitors in this market,” Sibunruang explained.
Tax incentives for the Super Clusters include:
- 8-year corporate income tax exemption and an additional 5-year reduction of 50%
- Import duty exemption on machinery
- For future industries with significant importance, the Ministry of Finance will consider granting 10-15 years corporate income tax exemption
- Personal income tax exemption for renowned specialists who work in the specified areas, both Thais and foreigners
- Non-tax considerations include potentially granting permanent residence to leading specialists and permission for foreigners to own land to implement promoted businesses.
The government also has approved, in principle, a US$269 million fund which would include matching grants to encourage and support investors in the high-value added activities in Super Cluster such as such R&D and training.
The targeted activities for a couple of Super Clusters are as follows:
Automotive and Parts
- Manufacture automobile engines
- Manufacture parts that are not locally produced including those that support Hybrid, EV, PHEV cars
- Manufacture fuel injection parts as well as parts for transmission and engine systems
- Manufacture of motorcycles with engine size 248CC
- Manufacture auto tires
Electronic Appliances, Electronic and Telecommunication Equipment
- Electronic designs including microelectronics designs and embedded system design
- Electronic productions and parts using advanced technology including part for medical devices, hard disk drives and solid state drives
- Materials for microelectronics including wafers and materials based on thin-film technology
- Advanced technologies for electrical appliances including the Internet of Things.
Eco-friendly Petrochemicals and Chemical Products
- Eco-friendly chemicals or polymers
- Specialty polymers and specialty chemicals
- Bioplastic-coated paper packaging
To enable growth the country is also working on infrastructure improvements and has a plan that startedin 2015 and runs through 2022. It includes five programs which include expanding:
- Mass transit in Bangkok metropolitan area ( US$20 billion)
- Highway system ( $14 billion)
- Inter-city rail networks ($13 billion)
- Air capacity ($1.4 billion)
- Marine transportation ($2.8 billion)
Making sure there is a sufficient workforce to accommodate the growth is part of the plan as well. "We already have a strong workforce and in some areas we are not starting from zero with regard to training for growth, Sibunruang says. She points out that the country already has talent in the automotive and electronic sectors. But there is a big push to train more technicians who are in high demand.
“We are encouraging companies to work closely with educational institutes to supply these future workers," she added. " Government officials will co-ordinate these efforts by setting up public/private working groups.”
And time is of the essence for these plans. Companies, both domestic and foreign, who are interested in becoming involved in Super Cluster activities must apply for investment promotion within 2016 and must start operation within 2017 to accelerate investment.
“Our objective is to create world-class industry ecosystems that will enable both Thai and foreign operated companies to be even more successful while operating in Thailand, “said Korbsiri Iamsuri, director of Thailand’s Board of Investment for North America, “Our goal is to ensure that Thailand is an optimal operating environment for business and ASEAN headquarters for foreign companies.”