Thailand ended 2014 with a record high number of investment applications, totaling $31 billion, from foreign investors. Of the total number of applications, 74 projects were submitted by companies, including Ford Motor Co., General Motors and Seagate Technology.
To continue the success, the government announced in February, a seven-year investment strategy, which includes a mix of non-tax, merit-based incentives and tax benefits. It will also remove zoning restrictions for foreign investors.
The county is hoping the new investment strategy will encourage investments especially in the high tech and creative industries. Priority will be given to “business activities” or investments that will support Thailand’s overall development strategy, which includes Thailand’s participation in the ASEAN Economic Community (AEC).
IndustryWeek asked Korbsiri Iamsuri, director of the Thailand Board of Investment about the country’s economic development plans.
Q: What were the factors that led to the $31 billion in foreign investment last year?
- The new and expanded projects were submitted before new policy was effective.
- Investors saw that domestic unrest did not affect the investment.
- The government's announcement that it plans to stimulate the economy.
Q: What were the factors that made last year so successful?
- The government declared the investment in infrastructure such as roads and railways and accelerate government budget disbursement to stimulate domestic consumption and public spending.
- The upcoming integrated ASEAN single market in 2015 was a factor.
Q: Given the record high number of foreign investments in 2014, we can assume that the issue of general stability in the country was not a factor.
Thailand’s economy is well known for its ability to withstand all negative impacts. A few years back we had a severe flood that damaged the manufacturing industry. We were struggling for a while and was able to continue doing business. Last year, despite the domestic unrest and global economic crisis, the Board of Investment, a government economic agency, received a new record of applications in almost 50 years, an increase of 73% from 2013.
Q: Were there specific measures of government took to ensure companies that things are “business as usual.”
- Since the military coup on May 22, the government has announced policies to ensure that there is no obstacle to the investment.
- The pending investment applications were quickly approved order to accelerate the economy.
- The government announced new special economic zones along the borders.
- The government announced many economic stimulus packages to stimulate domestic consumption and public spending.
Q: Can you outline your strategy which gives ‘business activities” that support the country’s participation in the AEC?
- Projects from SMEs to mega projects support the participation of AEC.
- The government announced policies to shift to a high technology, innovation projects.
- The government announced special economic zones along the borders to facilitate movement of goods and labor.
Q: Are you seeing an influx of activity due to the AEC?
AEC will be a direct influencer for Thailand to review any barriers or opportunities. The Single Market policy will increase more activities as investors see the benefits of the tax and tariff free trade.
Q: Can you give details on your SME strategy?
- The minimum capital investment requirement of each project is half the amount required by a normal project.
- Projects located in 20 provinces with lowest per capita income will receive additional benefits such as double deduction on costs and years of corporate income tax exemption.
- Machinery used in the project can be combined between new and used machines.
Q: How does your 20% corporate tax rate compare to other AEC countries.
Thailand's corporate income tax is the 2nd lowest in ASEAN countries, only behind Singapore which is 17%.