Why investing in Thailand

Why investing in Thailand

3 good reasons for investing in Thailand :

Gateway to Asia

Thailand enjoys a strategic location and serves as a gateway into the heart of Asia – home to what is today the largest growing economic market. 

The country also offers convenient trade with China, India and the countries of the Association of Southeast Asian Nations (ASEAN), and easy access into the Greater Mekong sub-region, where newly emerging markets offer great business potential.

Hub of ASEAN

Thailand was one of the founding members of ASEAN and has been instrumental in the formation and development of the ASEAN Free Trade Area (AFTA). AFTA entered into force on 1 January 2010 for the six original ASEAN (ASEAN-6) members (Thailand, Singapore, Malaysia, Indonesia, Philippines, and Brunei) thereby reducing import duties to zero; the so-called CLMV countries (Cambodia, Laos, Myanmar and Vietnam) will follow suit in 2015. 

Thailand is ideally located at the crossroads of Asia, with easy access to the region’s dynamic markets, including its own booming domestic consumer market of 65.12 million people.  Thailand has long been a proponent of free and fair trade and its attractiveness as a production base for leading international companies is enhanced by a number of free trade agreements, and Thailand is certain to be a beneficiary of the ASEAN Economic Community (AEC), which will enter into force in 2015.

Source: Bank of Thailand 

Social and political stability

Thailand is a foreigner friendly and welcoming Buddhist country. The country's form of government is a constitutional monarchy, with a high reverence for the Thai Monarchy, and devotion to the teachings of Buddhism. And although the vast majority of the people in Thailand are Buddhist, all religions are welcome, and His Majesty the King is the patron of all religions.

Growing economy

Economically, this country of 65.12 million people is characterized by steady growth, strong exports and a vibrant domestic consumer market. Abundant natural resources and a skilled and cost-effective work force help attract foreign investors, and enable them to prosper and develop industry in Thailand. 

Source: Bank of Thailand

World-class infrastructure

In addition to a growing highway system that now connects not only every province in Thailand, but also to neighboring countries of Laos, Cambodia and Vietnam, Thailand also offers:

7 international airports

Modern city-wide mass transit in Bangkok

3G/WiFi and broadband access

6 deep sea ports and 2 international river ports, including containers, tank farms and liquid jetties

Thailand’s development plans for 2012–2022 include a high speed rail network that will connect north, south, east and west of Thailand, as well as to southern China.  The mass transit system in Bangkok is being expanded into the suburbs and air and marine transportation will be further strengthened to meet the pace of growing demand.

FDI policies

The country's well-defined investment policies focus on liberalization and encourage free trade. Foreign investments, especially those that contribute to the development of skills, technology and innovation are actively promoted by the government. Thailand consistently ranks among the most attractive investment locations in international surveys, and the World Bank’s 2015 Ease of Doing Business report places Thailand as the 26th easiest country in the world and the second-ranked emerging economy in Southeast Asia in which to do business.

Likewise, the United Nations Conference on Trade and development (UNCTAD) ranks Thailand as the 8th most attractive host economy in the world for 2014-2016. 

Government support and incentives

Numerous government agencies support investors. Through the Board of Investment, the government offers a range of tax incentives, support services and import duty exemptions or reductions to an extensive list of promoted activities.

Companies receiving investment promotion privileges from the Board of Investment are not subject to foreign equity restrictions in the manufacturing sector, and there are no local content requirements nor export requirements, as Thailand's investment regime is in total compliance with WTO regulations.

The Board of Investment also coordinates the activity of the One-Stop Service Center for Visas and Work Permits, which enables foreign staff of BOI-promoted companies to obtain work permits and long-term visas within three hours or less.

The BOI also administers the One Start One Stop Investment Center, which opened in November 2009 to facilitate a full range of services and streamline investment procedures by bringing representatives from more than 20 government agencies under one roof.

In addition to the activities of the BOI, other government organizations, such as the Department of Export Promotion and international chambers of commerce, provide invaluable support and a host of other important services.

Long–established and newly emerging industries 

With steady economic development and strong support industries, the country's industrial production has grown and diversified rapidly both in long–established and newly emerging industries.

The government has identified 15 activities that are classified as activities of special importance and benefit to the country: Economic forest plantations (except for eucalyptus); Creative product design and development centers; Manufacture of airframes, airframe parts and major aircraft appliances, e.g. engines, aircraft parts, propellers and avionics; Electronic design; Software; Production of electricity or steam power from waste or refuse-derived fuel; Energy Service Companies (ESCO); Industrial zones or technology industrial zones; Cloud services; Research & Development; Biotechnology; Engineering design; Scientific laboratories; Calibration services; Vocational training centers.

Projects in these activities will be granted corporate income tax exemption without being subject to a corporate income tax exemption cap.

Friendly and rich culture

Thailand has gained a well-deserved reputation throughout the world for its gracious hospitality. The friendliness of its people and the diverse nature of Thai culture make visitors feel safe and at home in Thailand. In, 2014 Bangkok was named “World’s Best City” by Travel & Leisure magazine and ranked #6 for overall expat experience in the HSBC Expat Experience Report 2014. 

Education and healthcare services

The education standards in Thailand are accepted by many international examining bodies, and a great number of international schools and colleges offer world-class education, while its universities are outstanding.

In terms of healthcare, the country has developed an excellent reputation globally, due to its internationally-certified doctors and medical staff, and modern facilities and equipment. It is so good that one of the fastest-rising tourism sectors is medical tourism, with international patients visiting Thailand to take advantage of Thailand's world-class and extremely affordable health care system.

Investment Zones

There are three Investment Zones based on economic factors, i.e., the level of income and the availability of infrastructure in each province. 

Zone 1 

6 Central provinces with high income and good infrastructure: Bangkok, Samut Prakan, Samut Sakhon, Pathum Thani, Nonthaburi and Nakhon Pathom 

Zone 2 

12 provinces: Samut Songkhram, Ratchaburi, Kanchanaburi, Suphanburi, Ang Thong, Ayutthaya, Saraburi, Nakhon Nayok, Chachoengsao, Chon Buri, Rayong and Phuket 

Zone 3 

The remaining 58 provinces with low income and less developed infrastruture. 

All areas in the Zone 3 provinces are designated as Investment Promotion Zones. 

Criteria for Granting Tax and Duty Privileges

To relieve the fiscal burden of the government and to respond to current and future economic situations, the Board of Investment prescribes new policies as follows:

Zone 3 - Approved projects located in the provinces shall be granted: 

  1. Exemption of import duty on machinery;
  2. 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;
  3. Exemption of import duty exemption on raw or essential materials used in the manufacturing of export products for 5 years;
  4. A project located in one of the following 36 provinces: Krabi, Kamphaeng Phet, Khon Kaen, Chanthaburi, Chai Nat, Chumphon, Chiang Rai, Chiang Mai, Trang, Trat, Tak, Nakhon Ratchasima, Nakhon Si Thammarat, Nakhon Sawan, Prachuab Khiri Khan, Prachin Buri, Phangnga, Phattalung, Pichit, Phitsanulok, Phetchaburi, Phetchabun, Mukdahan, Mae Hong Son, Ranong, Lop Buri, Lamphang, Lamphun, Loei, Songkhla, Sa Kaew, Sing Buri, Sukhothai, Surat Thani, Uttaradit, and Uthai Thanishall be granted tax and duty privileges under 1, 2 and 3 and further privileges, as follows:
    1. A project located within industrial estates or promoted industrial zones is entitled to the following privileges:
    2. 50 per cent reduction of corporate income tax for 5 years after the exemption period;
    3. Double deduction from taxable income of transportation, electricity and water costs for 10 years from the date of first revenue derived from promoted activity;
    4. 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.
  5. A project located in one of the following 22 provinces: Chaiyaphum, Kalasin, Nakhon Phanom, Narathiwat, Nan, Nong Khai, Buri Ram, Pattani, Phayao, Phrae, Maha Sarakham, Yasothon, Yala, Roi Et, Si Sa Ket, Sakhon Nakhon, Sathun, Surin, Nong Bualamphu, Amnat Charoen Udon Thani, and Ubon Ratchathani shall be granted tax and duty privileges under 1, 2, 3 and further privileges as follows:
    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.