Thai Overseas Investment Promotion

Chokedee KaewsangDeputy Secretary General 

Thailand Board of Investment6 March 2015

Why Outward Investment ?

Why companies invest overseas Why government  must  support 

• seeking Restructure country’s economy

• Resource seeking Enhance industry competitiveness  

• Efficiency seeking Generate National Income

• Technology/IP seeking Etc.

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Target countries and industries (1/2)

Target Countries

Group 1: Myanmar, Indonesia, Vietnam, Cambodia, and Laos PDR

Group 2: China, India, and other ASEAN countries

Group 3: Middle East, South Asia, and Africa

Priority Industries

1) Textile and Garment

2) Food and Agro-Industry

3) Automobile Parts

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Cambodia Laos PDR Myanmar Vietnam IndonesiaPriority Industries   Food and Agro‐Industry   Automobile Parts   Textile and garmentOther Industries   Health care and hospitality    Construction and construction materials   Electronic parts and equipment   Agricultural machinery   Plastic products  Logistics e.g. distribution center, air   transportation services, and etc.   Leather goods  Mining and quarrying  Petrochemicals   Energy and alternative energy  Industrial zone

Industries Priority Country: Group 1

Target countries and industries (2/2)

Thailand’s Measures to Support Outward Direct Investment

Measures Responsible Organization

Protection of Investment• Agreement for the Promotion and Protection of 

Investment with partner countriesMinistry of Foreign Affair

Fiscal Measures• Double Taxation Agreement• Tax exemption on dividends from offshore 

investmentMinistry of Finance

Financial Measures• Long term loan• Risk guarantee• Capital outflow

EXIM Bank/Commercial BanksThai Credit Guarantee Corporation (TCG) Bank of Thailand

Providing Information/Investment Related Services• Training Courses/Seminars• Information Center/Investment Handbook• Explore opportunities for overseas investment• Consulting services• Business matching

BOIMinistry of CommerceMinistry of Foreign AffairMinistry of IndustryCommercial BanksFTI etc.

BOI’s Roles in Promoting Thai Overseas Investment

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Establish responsible

body

Provide information

&Knowledge

Explore investment

opportunities

Establish Thai Overseas Investment Development Center to organize training course for Thai investors who want to invest overseas.

Establish Thai Overseas Investment Information Center to provide information for investors with consultant team to guide Thai investors to invest in target countries

In-depth study on investment opportunities in target industries Arrange seminars on investment opportunities on many issues e.g. laws and

regulations of doing business overseas, market opportunity in interesting industries, etc.

Provide information by BOI’s local experts and consultants (mobile unit) in target countries, such as Myanmar, Vietnam and Indonesia.

Organize investment missions to explore investment opportunities and discuss with government agencies overseas

Coordinate problem solving

Coordinate with other agencies to facilitate investment and solve problems for investors G2G cooperation with target countries to create business opportunities and reduce

investor’s obstacles

Establish “Thai Overseas Investment Promotion Division”

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Thai Overseas Investment Information Center: toi.boi.go.th

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Investment mission to explore Investment Opportunities (1) 

Vietnam

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Investment mission to explore Investment Opportunities (2) 

Myanmar

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Investment Seminars

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Advisory services by expert from private sector

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Training for Thai investors (TOISC)

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Investment Incentives in CLMV

Major Investment Incentives: Cambodia

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Major investment Incentives granted to Qualified Investment Project (QIP)• CIT exemption for up to 9 years (trigger period + 3 years tax holiday +

priority period up to 3 years)• Exemption from Minimum Tax (normally imposed at 1% of the annual

turnover inclusive of all taxes except for VAT) • Special tax depreciation rate of 40% for the first year of use of the asset in

addition to the normal tax depreciation charge.• Exemption from Import duty on imported machinery, equipment and raw

materials • Exemption from export tax except for activities as stipulated in laws in effect• Losses can be carried forward for a maximum of 5 years.

Other incentive schemes• Incentive for Special Economic Zones

Major Investment Incentives: Laos PDR

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Major investment Incentives• CIT exemption for 1 – 10 years based on location (4-10 years for projects

located in zone 1, 2-6 years for zone 2, and 1-4 years for zone 3) • Exemption from profit tax in the next accounting year, if the net profit derived

from business activities is used for business operation• Exemption from import duties on imported raw material, equipment, spare

parts and vehicles which are directly used for production• Exemption from export duties for exportation of general goods and products• Loss can be carried forward for 3 consecutive accounting years

Other incentive schemes• Incentives for projects in education and health sectors• Incentive for Specific and Special Economic Zones

Major Investment Incentives: Myanmar

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Major investment Incentives• CIT exemption for 5 years • Exemption or relief from customs duty and other internal taxes on imported machinery,

equipment and raw materials• Exemption from corporate income tax up to 50% of the profit accrued from export of

goods• Exemption or relief from commercial tax on the exported goods• Exemption or relief from CIT on profit kept in a reserve fund and reinvested within 1

year since the reserve is made• The right of foreign employee to pay personal income tax at the same rate applicable to

Myanmar Citizen• Deduction for expenses in respect of research and development• Right to carry forward and set off losses up to 3 consecutive years within 2 year the

loss is sustained• Land lease up to 50 years plus 2 renewals of 10 years each

Other incentive scheme• Incentives for Special Economic Zones

Major Investment Incentives: Vietnam

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Major investment Incentives• Preferential tax rate of 10%, 15% and 20%• CIT exemption for the first 2 or 4 years • 50% CIT reduction after the CIT exemption period expired• Exemption from Import duty on imported machinery, equipment and raw

materials • Exemption from land rental from 3 years to the duration of the project

Other incentive schemes• Incentives given to BOT projects• Incentives for Special Economic Zones• Incentives for projects in high-technologies• Incentives for projects in supporting industries• Incentives for enterprises invested in agriculture and rural areas

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Thailand’s export sector unlikely to drive OFDI

Firms in Thailand’s competitive sectors are relatively small

Limited numbers of Thai transnational cooperation

Domestic banks tend to be localized

Our largest export sectors (electronics and motors accounts for 32%) are often part of transnational corporations’ (TNC) supply chain, therefore decisions do not rest entirely with Thai firms

Firms in Thailand’s competitive sector such as food and hospitality are relatively small. (The  largest  firm in the food industry accounts for only 15% ‐ 18% of the revenue of the top regional firm)

No Thai firms are among the 100 regional non‐financial TNCs ranked by foreign assets compared to Malaysia (4), Korea (6), Singapore (8).

Top 3 Malaysian banks’ foreign branches exceed 1400 v 50 for top 3 Thai banks

Weaknesses in value chain suggest Thailand OFDI will not

look like NIE countries

NIE countries re‐located manufacturing functions overseas while keeping R&D, branding and marketing. 

Source: UNCTAD; MOC; BOT; Bloomberg;  World Bank; literature review; BBL; KBANK; SCB; Maybank: CIMB; Public Bank; Advisor analysis 

Thailand-specific factors

Promotionof OFDI

Training and development• SPRING & IES• Singapore business  federation (Private) 

Policy and G2G• Ministry of Trade and Industry• Economic Development Board

Government proactive support• Government sector take charge in 

creating suitable environment such as tax treaties and investors protection negotiation

Leverage internal and external parties• SPRING is a semi government agency 

providing training to SMEs and startups• Private associations are leveraged to provide 

trainings and educate business

Relationship & Contacts• Cluster Group (IES)• International Group (IES)

Provide essentials contacts• Arrange roundtable meetings with 

potential business partners and relevant government agencies

• Maintain relationship with various associations for collaborations

Information provision and supporting service• IE Singapore (IES)

360º information provision• IE provide extensive information and assistance to 

business on country basis (e.g. Brazil, Malaysia, China etc) and sector basis 

• Seek opportunities for business by leveraging international network and foreign government policies

Financing• PFI participating financial institution• IE Singapore & IEH• Singapore doesn’t have  an EXIM bank and is not planning to create one!.

Extensive use of market mechanism• PFI is a group of private banks providing loan 

via normal procedures but with IE’s assistance in guaranteeing 70% of the loan.

• IE provides equity financing of 2:1 only if firms can raise equity from 3rd party

Source:  International Enterprise Singapore (IE Singapore); Interviews ; Advisor analysis

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Example: IE Singapore’s OFDI promotion eco-system

http://toi.boi.go.th

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