11

Mr. Satit SirirangkamanontSecretary General

Thailand Board of Investment

Expanding Opportunities for Expanding Opportunities for U.S. Investments in ThailandU.S. Investments in Thailand

30 November 2004American Chamber of Commerce in Thailand

22

• Updates on U.S. Applications to the BOI

• Improving efficiency of policies to strengthen industrial competitiveness

– Focusing on critical success factors

– Strategic industries

• Improving BOI facilitation services

Thailand: An Investment Destination of Choice

33

BOI update:BOI update:

U.S. Investments in U.S. Investments in ThailandThailand

44

Net Applications for BOI PromotionNet Applications for BOI Promotion

2003 2004 Jan-Oct# of

ProjectsValue

(Million USD)# of

ProjectsValue

(Million USD)

Total Investment

961 $7,620 1,049 $12,065

Total Foreign 668 $6,217 617 $6,348Japan 316 $2,659 286 $2,180

USA 43 $1,186 33 $852EU 74 $911 71 $525Netherlands 9 $241 14 $270Singapore 62 $365 62 $378Taiwan 67 $198 52 $216

55

6 Target Sectors

• Agro-Industry

• Fashion

• Automotive

• Electronics and ICT

• Energy

• High Value-Added Services

Designated a Target SectorNovember 29, 2004

66

Total Foreign and Domestic Net ApplicationsTotal Foreign and Domestic Net Applications By Sector By Sector

SectorSector20032003 2004 Jan-Oct2004 Jan-Oct

##ProjectsProjects

ValueValue(Million USD(Million USD))

##ProjectsProjects

ValueValue(Million (Million USD)USD)

AgricultureAgriculture 181181 $855$855 226226 $1,112$1,112

Minerals and CeramicsMinerals and Ceramics 2828 $498$498 3131 $1,707$1,707

Light IndustryLight Industry 8282 $445$445 8484 $298$298

Automotive and Metal Automotive and Metal ProcessingProcessing

237237 $1,512$1,512 218218 $1,220$1,220

Electrical and Electrical and ElectronicsElectronics

151151 $1,570$1,570 173173 $1,920$1,920

Petrochemicals and Petrochemicals and ChemicalsChemicals

123123 $1,400$1,400 134134 $2,570$2,570

Services & Services & InfrastructureInfrastructure 159159 $1,340$1,340 183183 $3,238$3,238 TOTALTOTAL 961961 $7,620$7,620 1,0491,049 $12,065$12,065

77

5-Year Totals by Sector: 1999-2003 5-Year Totals by Sector: 1999-2003 U.S. Investments Approved U.S. Investments Approved

SectorSector##

ProjectsProjects

Value Value

(Million (Million USDUSD))

AgricultureAgriculture 3030 $177$177

Minerals and CeramicsMinerals and Ceramics 55 $200$200

Light IndustryLight Industry 3434 $301$301

Auto and Metal ProcessingAuto and Metal Processing 3535 $255$255

Electrical and ElectronicsElectrical and Electronics 8484 $1,980$1,980

Petrochemicals, ChemicalsPetrochemicals, Chemicals 3131 $1,018$1,018

Services and InfrastructureServices and Infrastructure 2222 $64$64

TOTALTOTAL 241241 $3,995$3,995

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2004 Results of AmCham Outlook: Bullish on Thailand

““Expansion plans for Thailand Expansion plans for Thailand increased from 2003, whereas increased from 2003, whereas those for China, Vietnam and those for China, Vietnam and

India fell.”India fell.”

- - The Nation July 8, 2004

Six ASEAN American Chambers participated In the AmCham Outlook, an annual business confidence survey of members in the region.

Business expansion planned

2003 2004

Thailand 66% 83%

China 50% 47%

Vietnam 47% 25%

India 31% 19%

• 76% expect profits to increase

• 80% expect their businesses to expand

• Availability of trained personnel significant area of strength – More than 100% increase in satisfaction

• Increased satisfaction with– Personal security – Costs of labor, housing, and raw

materials

AmCham Thailand in 2004:

99

Thailand Rated #4 FDI Location Thailand Rated #4 FDI Location for Inflows 2004-2007for Inflows 2004-2007

● Results of a 2004 survey of 87 international direct investment location experts.

● Subsequent survey of transnational corporations ranked Thailand #3 in Asia for FDI inflows.

GLOBAL RANKINGTop 1 China

Top 2 India

Top 3 USA

Top 4Top 4 THAILANDTHAILAND

Top 5 Poland/Czech Republic

Top 7 Mexico/Malaysia

Top 9 UK/Singapore/S. Korea

Source: Prospects for FDI flows, TNC Strategies and Promotion Policies: 2004-2007, UNCTAD & Corporate Location

1010

BOI direction:BOI direction:

Strengthening Thailand’s Strengthening Thailand’s Industrial CompetitivenessIndustrial Competitiveness

Focusing on value-added, Focusing on value-added, Focusing on sustainabilityFocusing on sustainability

Tandem FDI and DDI investments to ensure Tandem FDI and DDI investments to ensure balanced development and sustainabilitybalanced development and sustainability

EconomicEconomicGrowthGrowth PovertyPoverty

EradicationEradication Production

Employment

Income

Provincial Clusters

Community

Enterprises

DDIDomestic Direct

Investment

FDIForeign Direct

Investment

ThailandThailandCompetitivenessCompetitiveness Productivity

Skills, Technology, Innovation

Higher value-added industries

Industrial clusters

1212

New Policies in 2004New Policies in 2004

Alternative energy

Semi-conductor

Hard Disk Drive (HDD)

Energy-saving machinery or equipment for existing projects

New policies for the 3 Southern Provinces

Bleaching, dyeing and finishing

Carbon black

Film-making and entertainment

Long-stay tourism

1313

Regional Development

Sustainable CompetitivenessSustainable Competitiveness

Focusing on Strategic Industries

Attracting foreign and domestic investments in tandem

.

Incentives based on Zones and Sectors

. .

Meeting needs of investors and the nationMeeting needs of investors and the nation

. .

1414

ZonesZones Zone and Sector Matrix:Incentives to strengthen

COMPETITIVENESS

Proactive efforts to build up and attract investments in

Strategic or Priority Industries

Maximum incentives regardless of zone or

location.

Example: mould and die production

Zone-Based Incentives:• Zone 1• Zone 2• Zone 3

Higher incentives

Lower incentives

1515

Focus on critical success factors Focus on critical success factors to develop industry competitivenessto develop industry competitiveness• Industry competitiveness and productivity:

a different approach for each sector– Supply chain management– Manufacturing processes– Microelectronic design

• Energy and renewable energy– Gasoline, diesel, natural gas, electricity– Ethanol, biofuel, biogas, biomass– Energy-co-generation, independent power plants for

industry clusters

• Logistics– Infrastructure, oil & gas pipelines– Low-cost airlines, shipping– Logistics providers– Distribution Centers– Supply chain management systems

1616

Examples of Strategic Industries:

• High-tech electronics

• Biotechnology

Mission:

Proactively build up new growth and highgrowth industries and fill in the missing links and create backward and forward linkages.

• Fill in missing links in industrial clusters

• Build up local supply chains

• Strengthen linkages

Strategic IndustriesStrategic Industries

• Materials science

• Nanotechnology

1717 Example:

Development ofDevelopment of Local Supply ChainsLocal Supply Chains

Downstream Electronics Products

Wafers

ForwardLinkages

BackwardLinkages

Integrated Circuits

• Work together with industry, associations• Work to develop Thai suppliers• Work to attract new foreign suppliers• BOI Unit for Industrial Linkage Development

(BUILD), linkages with SMEs

1818

Development of LinkagesDevelopment of Linkages in in Strategic IndustriesStrategic Industries

Industry

UniversitiesTechnologyResearch centers

ProductionR&D

Provide incentives

1919

Example: Example: MekTec ManufacturingMekTec Manufacturing

R&D Projects of MekTec and Chulalongkorn University

Project 1: Organic solubility preservative to prevent copper oxidation, assist in soldering processes

Period: 2004-2007

Result: Increase in product quality and reduced manufacturing costs

Project 2: Development of liquid polyamide to strengthen the coating of flexible printed circuits

Investment: 25 million baht

Period: 2004-2007

Result: Increase in product quality and reduced manufacturing costs

Project 3:Nanotechnology development for manufacturing of new flexible printed circuits

Investment: 50 million baht

Period: 2004-2009

Result: New product development

2020

Example of Priority Activity: Example of Priority Activity: International Procurement Offices (IPOs)International Procurement Offices (IPOs)Criteria: Warehouse(s) and computerized inventory

system

Procurement activities, quality control and packaging

Several sources of procurement, including a domestic source

Incentives: Exemption of import duties on machinery

Exemption of import duties on raw materials and essential materials

No foreign ownership restriction

Example:Example: Isuzu Isuzu (Thailand) Co., Ltd.(Thailand) Co., Ltd.Joint Venture: Singapore and Thai

Investment: 1.7 Billion Baht

2121

Example of Priority Activity: Example of Priority Activity: Regional Operating Headquarters (ROH)Regional Operating Headquarters (ROH)

Criteria: • Service branches/affiliates in 3 countries

• Majority or totally foreign-owned

• Income derived from managerial, technical, administrative, or prescribed support services for branches/associated companies

Incentives: Corporate income tax of 10% for:• Qualified services• Royalties from ROH in Thailand• Interest income on loans made to ROH branches/ associated enterprises

Tax exemption for dividends from ROH branches/associated enterprises

Personal income tax of 15% for expatriate employees for 2 years

2222

Example: ExxonMobil Ltd.Example: ExxonMobil Ltd.ROH of Exxon Mobil Corporation since February 2003

Reasons Thailand Chosen:

• Cost of operations• Efficient, competitive business support center• Available relevant skills, language proficiency, ability to work in multicultural environment• Telecommunications infrastructure• Expatriate living: friendly Thai hospitality, quality housing, international schools

• BOI facilitation with government agencies

Functions Accounting, information systems, financial analysis, payroll, payables, credit, customer service and sales support

Employment: Thai 584, Foreign 41; more when fully functional

7 countries supported: Singapore, Japan, Malaysia, Australia, U.S., Hong Kong, Thailand

2323

Example:Example: Reuters Software Reuters Software (Thailand) Co., Ltd.(Thailand) Co., Ltd.

A global software development centers for ReutersCurrently employs 470 people

Sample of clients: Merrill Lynch, ABN AMRO, Hong Kong Bank

Reasons for investing in Thailand:

• Lower operating costs compared to Singapore• Teamwork• Strong software skills• Thai employees work well with offices in other countries

BOI Promotion:

5-year corporate income tax exemption

2424

BOI update:BOI update:

Improving BOI Improving BOI Facilitation ServicesFacilitation Services

2525

Investment policy and incentive provider

Investment Projects Administration

Facilitation Services

Investment and industry monitoring

Role of the BOI

2626

Continuous improvement in streamlining and efficiency One Portal One Database, Increasing ease of information access for

investors Online Applications and Raw Materials &

Machinery Tracking System: January 1, 2005

More after care services

More focus on getting feedback to improve BOI policies and services

Backed by ISO 9001:2000 CertificationBacked by ISO 9001:2000 Certification

Creating an Enabling Environment for Investments

2727

Increasing responsiveness to investorsIncreasing responsiveness to investors

Strengthening Country Desks at BOI HQ:

• United States • Europe

• Japan + Korea

• China + Hong Kong + Chinese Taipei

• ASEAN + India

2828

BOI Offices in the U.S.BOI Offices in the U.S.

New York:

61 Broadway, Suite 2810New York, NY 10008

nyc@boi.go.th (212) 422-9009

(moved from WTC)San Francisco:

Coming Soon!

BOI Headquarters

www.boi.go.th

head@boi.go.th

Thank You!