by The Thailand Board of Investment

THAILANDINVESTMENTREVIEW

October 2009 • Volume 19 • No. 9

COVER STORY : PRIME MINISTER MEETS US INVESTORS P. 1

NEWS BITES & BOI NET APPLICATIONS P. 2

THAILAND’S ECONOMIC PROJECTIONS FOR 2009 AND 2010 P. 4

BOI AND JAPAN ADVANCE JTEPA P. 5

INDUSTRY FOCUS : MEDICAL HUB OF ASIA P. 6

ONE START ONE STOP INVESTMENT CENTER (OSOS) P. 8

BOI’S NEW STOCKHOLM OFFICE P. 9

BOI INVESTMENT MISSIONS P. 10

INSIDE THE BOI P. 11

THAILAND ECONOMY-AT-A-GLANCE P. 12

Continued on P. 3

Prime Minister Meets US Investors In conjunction with his visit to the East Side of New York to participate in the 64th annual meeting of the United Nations General Assembly, Prime Minister Abhisit Vejjajiva took time on 22 September 2009 to speak with a select group of industry leaders at the famed St. Regis Hotel. The event, organized by the Ministry of Industry and the Board of Investment, was more than an occasion to reassure the private sector that Thailand would emerge from the global economic slowdown even stronger and with more vitality. It was a time for the prime minister to be able to hear firsthand the concerns of the U.S. investment community and to offer information on what his government has and will be doing with regard to the economy and with the investment environment.

Thailand, UK Formalize Agreement on R&D

Thailand’s National Science and Technology Development Center (NSTDA) and the United Kingdom’s Office for Science recently signed an agreement to jointly conduct research and development in the areas of new diseases, bio-electronics, life science and climate change.

According to NSTDA Director Sakarindh Bhumiratana, Thailand and the UK have already collaborated on a series of eight workshops.

Under the agreement, researchers from the National Electronics and Computer Technology Center (NECTEC),, the National Center for Genetic Engineering and Technology, and the National Metal and Materials Technology Center will join NSTDA research institutes and will be involved in the workshops.

“Our role is to facilitate researchers, develop an environment for them to work together and provide the funds. We plan to evaluate the project every couple of years,” Sakarindh said.

The UK’s chief scientific adviser, John Beddington, indicated that the two sides would jointly research subjects such as biomass fuel and tackling the issue of waste in both agricultural and urban areas.

Forbes bullish on Thai economy

At the Forbes Global Forum, Steve Forbes, chairman and CEO of Forbes Media, told a press conference he was confident of the Thai government’s ability to bring the country into economic recovery. In his view, the Thai economy is poised to definitely recover due to the Thai government’s determination to cope with the economic challenges facing the country, even as political uncertainties remain a key deterrent to investment confidence.

The Thai government must attempt to assure foreign investors of its ability to contain problems arising from political divisiveness. Should the government manage to restore investor confidence, he said, it is very likely the Thai economy will recover.

Nissan to launch eco-car in March 2010

Nissan Motor (Thailand) is investing Bt5 billion (US$150 million) in an eco-car project in Thailand, with the first vehicle to be unveiled in March. Nissan Motor (Thailand) President Toru Hasegawa said that the Kingdom’s first eco-car will be unveiled at a Thailand motor show in March 2010.

NEWS BITES BOI NET APPLICATIONS

2008(US$ = 34.79 THB)

2008 (Jan-Aug)(US$ = 33.80 THB)

2009 (Jan-Aug)(US$ = 33.96 THB)

Number of projects Value Number of

projects Value Number of projects Value

Total ForeignInvestment 832 8,550 548 5,298 407 2,511

By Sector

Agricultural Products 62 486 37 234 39 218

Minerals / Ceramics 30 561 19 442 9 126

Light Industries / Textiles 73 370 49 217 33 59

Automotive / Metal Processing 214 2,016 142 966 90 434

Electrical / Electronics 144 1,924 89 1,598 84 489

Chemicals / Paper 103 1,099 67 653 36 203

Services 206 2,092 145 1,188 116 982

By Country

Japan 324 2,960 213 1,536 146 981

Europe 157 1,878 94 1,006 82 208

Taiwan 45 212 33 167 23 130

United States 34 215 24 85 27 134

Hong Kong 20 137 12 105 13 28

Singapore 74 1,052 52 869 31 146

By Zone

Zone 1 263 1,082 181 604 153 623

Zone 2 412 6,027 266 3,434 163 1,148

Zone 3 157 1,441 101 1,260 91 740

Unit: US$ million

Note: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries.

The company, he said, plans to manufacture gasoline-powered 1,300 cc and diesel-powered 1,400 cc vehicles with an annual production of 200,000 units. Thailand will become Nissan’s production base for exporting the environment-friendly vehicles to Southeast Asia and worldwide.

Atchaka Sibunruang, secretary-general of Thailand’s Board of Investment (BOI), said the Nissan plan to produce eco-cars in Thailand is likely to draw other automakers to invest more in Thailand. The move is also expected to restore confidence among foreign investors in the Thai government’s policy after it has been viewed with uncertainty for some time.

In addition, the BOI executive said, Thailand will emerge as the production base for exporting energy-saving vehicles to the world. Among incentives given to eco-car manufacturers include corporate income tax exemptions for eight years, tariff reduction on imported materials at a rate of 90 per cent for two years and excise tax reduction from 30 per cent to 17 per cent.

THAILAND INVESTMENT REVIEWOctober 2009

2

“The same reasons that you originally invested in Thailand have not changed” said the prime minister, assuring that there will be fresh opportunities for investment, and underscoring that Thailand continues its commitment to free and fair trade, and to an investment regime that is both open and transparent. He highlighted the 176 years of Thai-US relations and the fact that American investors were among the first to discover Thailand’s markets, to which they have made important contributions.

The prime minister told his audience that there were already signs of increased confidence in the economy. It should be noted here that the value of BOI net applications in the third quarter is increasing more than 90% from the previous quarter and is near even with that compared year on year.

The prime minister also carefully outlined the measures that he had taken since assuming office in the midst of an economic recession and global economic downturn, as well as a complicated political situation; the first course of action being the implementation of a short-term stimulus package. That stimulus was aimed at alleviating the impact of the negative economic downturn on the most vulnerable members of society, and it was this prompt and decisive action that, in turn, led to increased consumer confidence.

In this regard, Thailand’s Fiscal Policy Office has recently forecast that private spending is likely to improve, with private consumption to rise by 4.2% in 2010. Also, that the current unemployment rate in Thailand is only 1.8% of the total workforce in 2009 and forecast at 1.3% next year. The economy in 2010 is forecast to expand at 3.3 percent, largely due to the expansionary fiscal policy implemented by the government.

Apart from the initial government response to the economic crisis, the prime minister noted that he had only two weeks earlier presided over the official opening of “Thailand: Investing from Strength to Strength 2012.” This, he elaborated, was to be the second phase of the stimulus package and “an historical investment for Thailand to strengthen its economy and regain global competitiveness.” The budget for this phase of stimulus will be US$45 billion, which represents about 16 percent of the gross domestic product (GDP), spread over the next three years at about 5% per year. Over US$9 billion of this will be in projects that have been launched already, such as the “Purple Line” MRT, for the repair of railways and “roads without dust”, which is a program to pave roads outside of Bangkok.

The projects will create at least 1.5 million jobs over the next three years. In addition to stimulating national economic growth, the program will also see an expansion in investment opportunities for the private sector. “We are also making sure that the whole package goes right to the fundamentals of the economy…” the prime minister remarked.

The mass rapid transit system in Bangkok is set to be extended into the suburbs, which will further alleviate traffic and create

additional employment and investment opportunities, as will the upgrade of the rail system. The “roads without dust” program could eventually add several thousand kilometers of paved roads in rural areas, adding to the nations existing excellent national roadways.

The “Thailand: Investing from Strength to Strength 2012” initiative will be funded from internal sources, by tapping into the excess liquidity in the banking system. Also included will be what the prime minister termed as “substantial investments in irrigation to help increase productivity in the agriculture sector, promoting alternative energy, improving education and public health in rural areas, as well as contributing to the tourist and service sectors—thus pushing Thailand forward to the creative economy”.

Thailand, it should be recalled, was one of the first countries in Asia to have a policy promoting the use of biofuels, the generation of power from renewable energy, cogeneration, and distributed generation. The Board of Investment offers an excellent investment incentive package that places alternative energy as a priority activity and offers an import duty exemption on machinery and income tax exemption for 8 years, regardless of zone. Eligible Activities include fuel from agriculture and waste (ethanol, bio-diesel and biogas), power plant using renewable fuel, manufacture of solar cells, manufacture of fuel cells and production of natural gas vehicle (NGV) equipment and parts.

The prime minister also made note that “like other countries in ASEAN, Thailand’s economy is on the way up, it will be strong and ready, in time to take part in the ASEAN Economic Community that we are building by the year 2015”. At that time, it will have an integrated market of 600 million, the fastest growing market in the world.

The prime minister noted that American investors could soon avail themselves of the One Start One Stop service center, where everything from visas to work permits can be arranged under one roof. This reflects Thailand’s commitment to making the country an easy place to do business, which is perhaps why the country ranks number 12 on the World Bank’s Ease of Doing Business list. The prime minister also expressed his hope that those who had not yet done so would set up Regional Operating Headquarters in Thailand. In this regard, on 14 September 2009, the Board of Investment, with the prime minister as its chairman, approved the establishment of a Regional Operating Headquarters working committee to review the promotion packages, and their related problems. The committee is to submit its recommendations to the Board of Investment within two months. There are currently 81 promoted ROHs in Thailand.

Following his prepared remarks to the investors, the prime minister’s lunch guests had the opportunity for an open and frank discussion with prime minister on a range of issues of concern to their respective industries, and concerning the Thai economy. Some guests representing companies in

Continued from P. 1

Continued on P. 10

THAILAND INVESTMENT REVIEWOctober 2009

3

Thailand’s Economic Projections for 2009 and 2010

The Fiscal Policy Office (FPO) at the Ministry of Finance has recently announced its forecast that the Thai economy for 2009 will contract at -3.0 percent, as a result of the global economic crisis that adversely affected the export volume of goods and services.

Despite the sharp contraction during the first half of the year, the FPO has projected that the economy would start to recover in the second half of 2009, and show positive growth in the last quarter of the year. Major contributing factors to Thailand’s economic recovery are expanding public expenditures, especially from investment expenditures under the “Strong Thailand 2012” program, along with the revival of major trading partners’ economies, particularly the Asian economies. Nonetheless, the Thai economy still faces some risks from the slow recovery of private expenditures in both consumption and investment. The sharp contraction in private spending, particularly during the first half of the year, would cause average private consumption in 2009 to shrink at the rate of -1.0 percent.

Inflation is projected to contract by -0.8 percent per year, following declining oil prices compared to last year, as well as the appreciating trend of the Thai Baht. The unemployment rate is projected to be 1.8 percent of the total labor force, as the employment situation improves following overall economic recovery in the second half of the year. The current account in 2009 is projected to record a large surplus of 8.0 percent of GDP, due mainly to the expected trade surplus of US$20.5 billion.

The Thai economy for 2010 is forecast to expand at 3.3 percent per year (or within the range of 2.5 - 4.1 percent per year), given continued expansionary fiscal policy from late 2009, particularly from public expenditure under the “Strong Thailand 2012” program, as well as the revival of private expenditures from the low base set in 2009. In this connection, public consumption growth in 2009 is projected to accelerate to 6.4 percent per year, while public investment growth is projected to increase to 5.3 percent per year. As for internal economic stability, inflation is projected to rise to 2.5 percent per year (or within the range of 2.0 - 3.0 percent per year), following the increasing oil price compared to 2009. The current account in 2010 is projected to record a smaller surplus of 4.0 percent of GDP (or within the range of 3.7 - 4.6 percent of GDP), as the revival in domestic demand would lead to faster expansion of import value than export value.

Public investment is forecast to accelerate to 8.2 percent per year (or within the range of 5.2 – 11.3 percent per year), while public consumption in 2010 is projected to expand at the rate of 4.8 percent per year (or within the range of 4.0 – 5.7 percent per year.) In addition, recovery of private expenditures from the low base in 2009 would support Thailand’s economic expansion. In this connection, private consumption is forecasted to grow at 4.2 percent per year (or within the range of – 4.7 percent per year), as household incomes increase following the economic revival with employment conditions and work hours returning to normal level. Private investment in 2010 is projected to grow at 6.6 percent per year (or within the range of 2.7 – 9.0 percent per year), partly due to the public investment under the “Strong Thailand 2012” program that would lead to a crowding-in effect for private investment. Meanwhile, export of goods and services in 2010 is forecasted to grow at 5.6 percent per year (or within the range of 4.8 – 6.7 percent per year), as the economies of major trading partners recover as well as improve from the low base last year. The growth of import volume of goods and services is projected to accelerate to 12.4 percent per year (or within the range of 10.6 – 14.2 percent per year), as a result of the recovery of domestic spending and export recovery.

Headline inflation in 2010 is projected to increase to 2.5 percent per year (or within the range of 2.0 – 3.0 percent per year) as global oil and agricultural prices are expected to rise in line with the recovery of the global economy. The unemployment rate is expected to further decline to its normal level at 1.3 percent of the total labor force (or within the range of 1.0 – 1.5 percent of the total labor force). As for external stability, the current account is projected to decline from the previous year, but still record a surplus of 4.0 percent of GDP (or within the range of 3.7 – 4.6 percent of GDP).

Projections 2008 2009f(As of Sept 2009)

2010f(As of Sept 2009)

Average

Economic Growth Rate (% y-o-y) 2.6 -3.0 3.3

Real Consumption Growth (% y-o-y) – Real Private Consumption – Real Pubic Consumption

2.22.50.4

-0.2-1.36.4

4.44.24.8

Real Investment Growth (% y-o-y) – Real Private Consumption – Real Public Consumption

1.13.2

-4.8

-9.1-13.7

5.3

7.06.68.2

Trade balance (billion US dollar) Export Value of Goods in US dollar (% y-o-y) Import Value of Goods in US dollar (% y-o-y)

0.216.826.4

20.5-17.2-28.8

9.710.019.5

Current Account (billion US dollar) Percentage of GDP

-0.2-0.1

22.78.7

11.54.0

Headline Inflation (% y-o-y)Core Inflation (% y-o-y-)

5.52.3

-0.80.4

2.51.5

Unemployment Rate (% of total labor force) 1.4 1.8 1.3

Source: Fiscal Policy Office, Ministry of Finance, Thailand

THAILAND INVESTMENT REVIEWOctober 2009

4

On 17 September 2009 the 2nd Meeting of the Sub-Committee on Enhancement of Business Environment in Thailand under the Japan Thailand Economic Partnership Agreement (JTEPA) was successfully held in Bangkok. It was attended by 90 participants.

The meeting, chaired by Dr. Atchaka Sibunruang, BOI Secretary General, and attended by senior officials from the BOI, other government agencies, and a Japanese delegation, was co-chaired by Mr. Makoto Shiota, Deputy Director General, Trade Policy Bureau, Ministry of Economy, Trade and Industry (METI), and Mr. Masato Otaka, Economic Minister, Embassy of Japan in Thailand. A range of issues was discussed related to the business environment in the two countries. Updates were provided on the liaison office for Japanese investors in Thailand, and the one for Thai investors in Japan. The meeting also discussed the several packages offered by the BOI to boost investment during the Thailand Investment Year 2008-2009, as well as the additional incentives in energy savings and alternative energy, high-tech and others that were adopted in response to the economic downturn, as well as those that were increased for that purpose.

The Secretary General of BOI, Dr. Atchaka Sibunruang offered the meeting additional information on the new services being offered by the One Start One Stop Investment Center, or OSOS. The center is designed to add more services for those establishing business, such as the registration and licensing process.

Among the many areas of interest that were discussed at the meeting was the benefit of opening a Regional Operating Headquarters in Thailand. As many companies operate throughout the region, the need for physical and

commercial integration becomes ever more important. And with its already solid grounding as a manufacturing base, high quality of living and geographical advantages, Thailand offers an excellent choice for an ROH. To further enhance Thailand’s attractiveness, in September the BOI approved the establishment of the ROH subcommittee to review promotion packages and make further recommendations within 2 months.

To enhance cooperation in textiles and apparel, experts have been sought from Japan to provide knowledge on products and know-how, such as in dyeing and finishing and fabric development for the Japanese market. One such measure would be through assistance to improve the infrastructure of the Thailand Technical Institute (THTI) Lab Testing and Inspection Center. Japan’s Ministry of Economy, Trade and Industry recently sponsored Thai delegates to visit and study the Japanese market and consumer behavior in Tokyo and Nagoya.

Also at the meeting, particular appreciation was noted for the work on the Custom Clinic’s commencement in providing advance rulings on customs tariff classifications and price calculation methods that had been announced.

To increase efficiency for Japanese businesses in Thailand, and for Thai entrepreneurs in Japan, both countries are working together in attempting to enhance the business environment, with an aim to resolve difficulties as they are incurred. Without doubt, the relationship is strong and growing stronger, and each continue to reap the rewards of a strong free trade.

BOI and Japan Advance JTEPA

THAILAND INVESTMENT REVIEWOctober 2009

5

THAILAND: Medical Hub of AsiaThailand is one of the world’s centers for medical services, with over 1,000 public hospitals and 400 private hospitals operating at international standards, offering the perfect climate for investment in healthcare, medical devices and pharmacy. It has world-class technology infrastructure, and offers the most advanced treatments by overseas-trained doctors and a multilingual staff to ensure that there are no communication barriers. Doctors are experts in their fields and nurses are registered and well trained.

Recognizing the available market and the ability to deliver medical treatment at a fraction of the cost as most countries, in 2004 Thailand’s government adopted a 5-year strategic plan to develop the country’s capacity into the “Center of Excellent Health of Asia”. This plan, advanced by the Ministry of Public Health, focuses on three main areas of healthcare: medical services, healthcare services, including spas & traditional massage, and Thai herbal products.

In the course of those five years, opportunities have grown exponentially as Thailand has in fact become a medical hub in Asia, with state-of-the-art facilities. Today, nearly 2 million foreign patients visit Thailand each year for a range of healthcare services, including cutting edge procedures like stem cell treatment. And, the domestic drugs and medical market has grown to over US$1 billion. As the health care infrastructure expands and investment in high-technology equipment soars, the medical device sector and pharmaceutical sector are also experiencing significant investment potential.Beyond the excellent medical services, patients receive personal service befitting Thailand’s reputation for care with wait-times kept to a minimum. Some of the leading hospitals catering to foreign medical-tourists assign patients a personal assistant who will walk them through the entire process from the front door, to their appointment with the doctor, to the onsite pharmacy to fill prescriptions, and to clearing all receipts for insurance reimbursement. Patients are kept informed of wait times and of what to expect throughout their stay. One notable hospital boasts a staff of doctors that can speak a dozen major languages in addition to their 60 staffed interpreters. Other hospitals possess interpreters in over 2 dozen languages. Great efforts have been made to accommodate the increasing number of international patients.

INDUSTRY FOCUS

Expatriates, executives of international corporations and embassy staff can attest to the excellent healthcare treatment in Thailand and to its competitive rates. For example, elective surgeries in Thailand’s best private hospitals are often one-tenth the cost of the same surgeries in some western countries. Popular treatments among foreign patients include general checkups, dental care, hip replacement, laser eye surgery, kidney transplants and heart surgeries.

Thailand’s status as a destination for medical outsourcing is being driven by the quality, cost, and care that it offers. In addition, increasing costs and decreasing coverage of foreign health care systems provide added impetus for growth in Thailand’s medical services. For example, insured Americans are being given the option of having surgeries performed overseas, which adds to Thailand’s potential as the premier medical service destination. At the same time, the legions of uninsured or those just seeking the best service and care available will continue to drive growth in Thailand’s medical industry. The sector’s annual growth rate has hovered around 14%, with major surgical procedures and standard medical care soaring.

Thailand’s private hospitals employ leading technology and international standards. Many have the most advanced medical equipment, including the 1st MRI (3 Tesla) in Asia–which offers better diagnosis without injection of contrast media. Moreover, speedy mobile services like helicopters and other aircraft are available and patients’ records can be obtained in an instant via the internet.

Many private hospitals have established partnerships with 1st-class international medical schools and health care institutions both in Europe and in the United States. Additionally, they have been recognized and approved to the standards of the Hospital Accreditation (HACC) of Thailand such as ISO 9002, ISO 900:2000, ISO14001, ISO 18000 and Joint Commission International Accreditation.

While Thailand excels in the medical care it delivers on a daily basis to patients from over 190 countries, the kingdom is also gaining recognition as a location for research and clinical trials of advanced medicine and for stem cell treatments. In

Photo courtesy of Bumrungrad Hospital

THAILAND INVESTMENT REVIEWOctober 2009

6

2008, the transplant of bone marrow blood stem cells for leukemia patients became authorized for use in Thailand.

As Thailand continues its ascent as the medical hub of the region, considerable opportunities in related fields are being created. For example, the medical device sector will continue to see healthy growth to meet the demands of healthcare facilities for new and upgraded medical machinery and devices. In 2008, within the medical device sector, oscilloscopes & spectrum analyzers enjoyed a 32% growth over the previous year. During the same period, diagnostic and laboratory reagents increased 20%, and apparatus based on the use of X-rays, alpha, beta or gamma radiation rose 17%.

Private hospitals consistently record healthy growth, which then leads to increased demand for imported drugs. Moreover, additional imported drugs were placed on the National List of Essential Medicines. With a robust chemicals industry and great biodiversity to support pharmaceutical manufacturing, Thailand imported US$1 billion in pharmaceutical products in 2008 – an increase of 18% over the previous year. The major sources of these imports were France, the United States, Germany, Switzerland and the United Kingdom. These countries accounted for more than 45% of the total pharmaceutical products imported into Thailand.

In 2008, the export value of medication was US$164 million – a rise of 9% over the previous year. Thailand’s primary export destinations are Vietnam, Myanmar, Cambodia, Malaysia, Hong Kong, and the Philippines, which together accounted for 70% of total pharmaceutical exports.

Thailand has taken on groundbreaking research. For example, researchers are experimenting with rice starch that is extracted from broken rice by pulling out proteins to get pure carbohydrate flour, which can be used as filler in drug tablets helping them hold their shape and release drugs more effectively. Demand is high as the cost is roughly 20% of other filler materials.

Thailand is also investing in research and development for tropical diseases such as dengue fever and malaria, among others, and invites investments into biotechnology research. For example, BIOTECH-Novartis International Pharmaceutical Drug Discovery Partnership (A 3-year partnership) was initiated in 2005 with the goal of identifying potential uses of micro-organisms and natural compounds as sources for innovative medicine. The research partnership has recently been extended for another 3 years to May 2011.

Safety and quality are the guiding principles, as local pharmaceutical manufacturers must comply with the International Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation Scheme (PIC/S) by 2008. International standards coupled with fervent pharmaceutical industry growth make Thailand an extraordinary investment location.

Opportunities for investment in the medical food sector also continue to grow with generous support from a new investment policy from the government, rich agricultural resources, investments in international quality standards and technology. As a result, it offers an excellent location for cost-effective manufacturing of medical food. Major suppliers of medical food in Thailand include, among others: Mead Johnson Nutrition, Abbott and Novartis. In fact, Thailand’s strategic position enables Mead Johnson’s Chonburi manufacturing and R&D center – its largest outside of the US – to serve as a hub for its Asia Pacific operations. The company serves domestic and global markets demands.

The Board of Investment of Thailand (BOI) grants attractive tax incentive to investors in the medical sector that include exemption from import duties on machinery throughout the period of promotion in all zones. In this regard, there are two categories of investment that include Priority for Medical Supplies, which receive an 8-year exemption regardless of investment zone, and the Active Ingredient category, which receive incentives, but is zone-based. Further, the manufacture of medicine and/or active ingredients in medicine that achieves GMP standards prescribed by PIC/S within 2 years of the date the project commences operations receives an exemption from corporate income tax for a period of 8 years for projects in Zone 3; 7 years for projects located in an industrial estate or a promoted industrial zone in Zone 2; 6 years for projects in Zone 2; and 5 years for projects in Zone 1.

Apart from attractive tax incentives, the BOI also provides non-tax incentives such as land ownership rights for foreign investors, permission to bring in foreign experts and technicians, and work permit and visa facilitation for expatriate employees.

In addition, the BOI has announced with Thailand Investment Year 2008-2009 package, the following eligible activities: • Medical food – new BOI category• Manufacture of medical supplies or medical equipment• Manufacture of scientific equipment

If investors apply for promotion within the TIY, extra privileges applied to projects would include a 50% reduction of corporate income tax for 5 years; a double deduction of transportation, electricity and water supply costs for 10 years; and a 25% deduction from net profit for facility installation and construction costs in addition to normal capital depreciation.

This Thailand Investment Year package will be granted to all qualified projects located anywhere but Bangkok, with a condition that the applications must be submitted within December 2009.

THAILAND INVESTMENT REVIEWOctober 2009

7

To facilitate investment, on November 23, 2009, the Board of Investment will open the One Start One Stop Investment Center (OSOS) at Chamchuri Square in Bangkok’s Central Business District (CBD).

The es tab l i shment of the OSOS is a direct result of the government’s efforts to work with investors to solve problems that are important to the investment community. When the government of Prime Minister Abhisit Vejjajiva took office in January of 2009, one of the urgent tasks it set was to enhance investor confidence.

To accomplish this, his administration has made it a priority to address issues concerning investors. One of those issues raised in a series of consultative meetings was the need to better facilitate investors as they had to deal with multiple agencies spread all across Bangkok. To respond to their needs, the government tasked the Board of Investment with creating the OSOS.

The primary objective of the center is to facilitate the entry of new investors and assist those already with investments in Thailand who wish to expand. For businessmen — Thai or foreign; big or small; BOI-promoted or not — interested in investing in Thailand, the One Start One Stop Investment Center will offer investors a wide range of investment-related services.

When it opens, the center will house representatives of key investment-related agencies — more than a dozen in total — including the Board of Investment, several other agencies under the Ministry of Industry, Department of Business Development (Ministry of Commerce), Industrial Estate Authority of Thailand, the Revenue Department (Ministry of Finance), Department of Export Promotion (Ministry of Commerce), etc.

OSOS staff will help investors with various applications to make sure they understand what is needed to register a company, obtain investment promotion privileges, obtain a foreign business license, complete an environmental impact assessment, request permission to use land for industrial

operations, obtain utilities, etc. OSOS staff will also accept applications for things such as corporate name registration, corporate tax ID numbers, VAT registration, foreign business licenses, investment promotion incentives, etc.

In addition to assisting investors with procedural matters, staff from relevant agencies will be on hand to consult with them on a range of topics. What this means is that if an investor has a question that requires an

interpretation from more than one agency, rather than having to go from office to office in search of answers, the matter can be addressed by the various experts at the OSOS.

At the end of the year, the BOI’s highly-successful One–Stop Service Center for Visas and Work Permits will move to the OSOS offices, making OSOS a true one stop shop for investment-related services. The existing visa and work permit office in Rasa Tower on Phaholyothin Road, will shut on December 25, 2009 and re-open at the OSOS on January 4, 2010.

New Location:18th Floor, Chamchuree Square Building319 Phayathai Road, Pathumwan, Bangkok 10330, ThailandTel: 66(0)2 209 1100Email: osos@boi.go.th

One Start One Stop Investment Center (OSOS) to Open on November 23

Comprehensive Service at One Location

THAILAND INVESTMENT REVIEWOctober 2009

8

BOI’s New Stockholm Office

Continued on P. 11

As the Prime Minister wrapped up his meetings with the diplomatic and investment community in New York, the staff of the Board of Investment, led by Minister of Industry Chanchai Chairungruang, accompanied by secretary general, Dr. Atchaka Sibunruang, converged on Stockholm, Sweden, to conduct meetings with local business executives and then to open a new BOI office. In its continuing effort to meet the needs of the foreign investment community, and facilitate their operations in Thailand, the Swedish office, opened on 25 September 2009, is the BOI’s 13th overseas office and the sixth overseas office to be opened in the fiscal year; others include Beijing, Taipei, Guangzhou, Seoul and Sidney.

The BOI was pleased to have the opportunity at the outset to meet with Mr. Hans-Göran Stennert, Chairman of the IKEA Group, which currently has a sourcing partnership in Thailand. IKEA has the intention to open a retail outlet in Thailand sometime in the future, under a joint venture arrangement. The company sees a lot of potential in Thailand within its supply chain, and as a retail location.

Included on the itinerary, were meetings with Ericsson, which has had business relations with Thailand since 1908, when it installed the first telephone system with 100 subscribers. With much changed since that time, Ericsson is awaiting the introduction of 3G technology to the market with hopes of launching in Thailand as a sub-regional hub.

The following day, BOI also had occasion to meet with executives from Gripen International, which had recently sold 6 fighter aircraft to the Royal Thai Air force and whose first plane had its maiden voyage only a week earlier. The company is considering a Thai operation along the lines of its South African office, which happens to employ about 2,000.

The main event, held at the Grand Hotel, Stockholm, was an investment seminar entitled “Thailand Means Business”, which reflects the pro-investment environment that the country offers and the commitment of the BOI to further strengthen the relationship with Swedish investors. To underscore the importance of that relationship, the event was attended

by senior officials from both Sweden and Thailand, including Her Excellency, Dr. Ewa Björling, Minister for Trade, Ministry for Foreign Affairs of Sweden; His Excellency Chanchai Chairungruang, Minister of Industry of Thailand, and His Excellency Thanarat Thanaputti, Thailand’s Ambassador to Sweden. Over 70 guests were also in attendance.

In offering the welcoming remarks to the seminar, Thailand’s Ambassador to Sweden spoke to the fact that Thai-Swedish relations date back more than 140 years to the signing of the Treaty of Friendship, Commerce, and Navigation during the reign of King Rama V. And that formal diplomatic relations between Thailand and Sweden

were established in 1882, with over the past 125 years the two great nations enjoying close bilateral ties in a host of areas and multilateral cooperation, including through the Asia-Europe Meeting (ASEM) and ASEAN-EU.

The keynote speakers at the event included Thailand’s Minister of Industry, who spoke of the close relations between Thailand Sweden, and also of the initiatives being taken by the Thai Government in response to

the global economic downturn. In that regard, the Minister spoke of Thailand’s three-year stimulus package, the Invest for Strength package, which he noted will inject US$45 billion into the economy into such areas as infrastructure and logistics, and investments in the Thai people. The net effect of this will be the creation of 1.5 million new jobs. The Minister also noted with gratitude the continuing interest of Swedish businessmen. And in fact, Thailand and Sweden have always enjoyed good and friendly relations on a political, professional and personal level.

Also among the speakers were Dr. Atchaka Sibunruang, BOI Secretary General; and Dr. Sakarindr Bhumiratana, President, National Science and Technology Development Agency. The Head of the Thailand Office of the Swedish Trade Council (Exportadet), Mr. Hakan Nylander, who also helped arrange the day’s event, spoke about business opportunities in Thailand. He was followed by three 15 minute case studies offered by Swedish businesses operating in Thailand: M2 Engineering, Glenasia, and Electrolux. Following the

Minister of Industry Chanchai Chairungruang delivers keynote address

THAILAND INVESTMENT REVIEWOctober 2009

9

On 2-5 August 2009, BOI Deputy Secretary General Ajarin Pattanapanchai led a delegation to Tokyo, Osaka and Kyoto, Japan. The purpose of the mission was to attend the investment seminar and speak on “Thailand Investment Opportunity and Policy: Alternative Energy and Environment-Related Industry”. The target industries included the green and energy industries, and during the mission the delegation met with several potential investors.

On 19-24 September, BOI Deputy Secretary General Sudjit Inthaiwong led a delegation to Helsinki, Finland where she was invited to speak at a seminar on “Investment Opportunities in Thailand”. The purpose of the visit was to promote investment opportunities and BOI privileges available in Thailand.

On 12-19 September 2009, Ms. Duangjai Asawachintachit, BOI Assistant Secretary General, led a delegation to Melbourne, Australia. The purpose of the mission was to promote investment opportunities and BOI privileges available in Thailand. During the visit, she also met with officials from several trade associations, for example the Australian Automotive Aftermarket Association (AAAA), AUSTRADE and the Victorian Employers’ Chamber of Commerce and Industry (VECCI). The target industries included the automotive and machinery industries and during the mission the delegation visited several potential investors.

BOI INVESTMENT MISSIONS

PM Meets US Investors, Continued from P. 3

the manufacture of hard disk drives (HDD), for instance, suggested that the government give more focus to human resource development in Thailand, on R&D and on education. Another, an automotive executive, remarked on Thailand’s strength as an open economy, to which the prime minister added that the Thai government would continue to strongly support free trade and other economic cooperative frameworks.

In the agriculture sector, ways to further develop agriculture by increasing productivity and value-added products was discussed. Other questions and comments ranged from taxation to the new budget, with all those attending receiving the full attention of the prime minister, who will take all concerns and comments into consideration as he works to restore investor confidence and boost Thailand’s economic performance.

It should be recalled that also at its meeting on 14 September the BOI approved the establishment of the matching fund for technology and human development, which aims to enhance

human development, R&D , technology and innovation, to name a few. The National Science Technology Development Agency will be responsible for the establishment of the matching fund. The BOI also has improved the promotion package for Skills, technology and innovation (STI) by counting all donations that support the matching fund as eligible expenses under STI.

All in all, it was a productive session that enabled an exchange of views among friends, with all in attendance looking forward to increased productivity and economic growth in Thailand.

THAILAND INVESTMENT REVIEWOctober 2009

10

On 8 September, Mr. Winyoo Laopoonpittaya, BOI senior investment officer welcomed the delegation of students and advisors from Asian Institute of Management, Philippines. The purpose of the visit was to study and learn about BOI’s role and policy for the investment promotion in Thailand. The event was held at meeting room 1, Thailand Board of Investment, Bangkok.

On 24 September 2009, Ms. Duangjai Asawachintachit, BOI Assistant Secretary General welcomed H.E. Mr.Chaiyong Satjipanon, the ambassador of Royal Thai Embassy, Switzerland together with the Swiss journalist delegation. The purpose of the visit was to learn about current investment environment in Thailand and BOI privileges under Thailand Investment Year Package. The meeting was held at the meeting room 1, Thailand Board of Investment, Bangkok.

On 16 September, 2009, Deputy Secretary General Ms. Sudjit Inthaiwong, was invited to speak at the “Trade and Investment Opportunity in Bostwana, Ethiopia and Tanzania” seminar. The purpose of the seminar was to promote investment opportunities in Bostwana, Ethiopia and Tanzania and trade relations between Thailand and those countries. The event was held at the Miracle Grand Convention Hotel, Bangkok.

INSIDE THE BOI

BOI’s New Office, Continued from P. 9

presentations, there was an opportunity for those attending the seminar to pose questions and learn about information of their specific interest.

The BOI Stockholm Office was then ceremoniously and officially opened by the BOI Secretary General, who again underlined the many opportunities that Thailand has to offer for investment, as well the brighter outlook on the economic horizon. During the course of the seminar, it was noted that among the many Swedish companies operating in Thailand are included ABB, Mölnlycke Health Care, Electrolux, Eka Chemicals, Perstorp and Volvo, Autoliv, and Cerebos, with products that range from electronics to auto parts to medical equipment.

Thailand is Sweden’s largest trade partner in Southeast Asia, with bilateral trade in 2008 of close to US$1 billion, and this year alone exports to Sweden were at a value of Bt.9.9 billion, with imports at 9.2 billion. Certainly the investment opportunities are plenty. Moreover, with an estimated 400,000 Swedes visiting Thailand each year, and many Thai traveling

to Sweden to work, the foundation for future business and an even closer relationship is solid.

From 2003 through July of 2009, the Board of Investment has received a total of 35 project applications from Swedish businesses, totaling approximately 6,181 million baht, with the lion’s share being in electrical and electronics businesses. With the exception of 2009, during which time applications dropped following the onset of a global economic recession, applications for promotion received by the BOI from Sweden had annually been increasing.

The BOI office in Sweden is being led by Ms. Chollada Areerajjakul (chollada@boi.go.th), a seasoned BOI investment promotion officer, with its new address listed on page 12 of this publication.

THAILAND INVESTMENT REVIEWOctober 2009

11

THAILAND ECONOMY-AT-A-GLANCE

Source: Stock Exchange of Thailand

Source:Bank of Thailand

Source:Bank of Thailand

Source:Bank of Thailand

SET Monthly Closing Values

International Reserves / Short-term Debt (%)

Exchange Rate Trends

Industrial Capacity Utilization (%)

Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, ThailandTel: +66 (0) 2537 8111, +66 (0) 2537 8555 Fax: +66 (0) 2537 8177 Website: www.boi.go.th E-mail: head@boi.go.thBEIJINGThailand Board of Investment, Beijing OfficeRoyal Thai Embassy, No. 40 Guang Hua Road,Beijing P.R.C. 103600Tel: +86 10 6532 1749Fax: +86 10 6532 1748E-mail: beijing@boi.go.th

FRANKFURTThailand Board of InvestmentFrankfurt OfficeRoyal Thai EmbassyBethmannstr. 58, 5.OG60311 Frankfurt am Main, GermanyTel: +49 (0) 69 9291 230Fax: +49 (0) 69 9291 2320E-mail: fra@boi.go.th

GUANGZHOUThailand Board of InvestmentGuangzhou Office Royal Thai Consulate-GeneralRoom 1216-1218, Garden Tower 368, Huanshi Dong Road, Guangzhou, P.R.China 510064Tel: 009-86-20-8333-8999 9 Ext.1216-18009-86-20-8387-7770Fax: 009-86-21-6288-9730E-mail: guangzhou@boi.go.th

LOS ANGELESThailand Board of InvestmentLos Angeles Office611 North Larchmont Boulevard, 3rd Floor, Los Angeles CA 90004, U.S.A.Tel: +1 (0) 323 960 1199Fax: +1 (0) 323 960 1190E-mail: boila@sbcglobal.net

NEW YORKThailand Board of InvestmentNew York Office61 Broadway, Suite 2810New York, N.Y. 10006, U.S.A.Tel: +1 (0) 212 422 9009Fax: +1 (0) 212 422 9119E-mail: nyc@boi.go.th

OSAKAThailand Board of InvestmentOsaka OfficeRoyal Thai Consulate-GeneralBangkok Bank Bldg, 7th Floor1-9-16 Kyutaro Machi, Chuo-Ku, Osaka 541-0056, JapanTel: +81 (0) 6 6271 1395Fax: +81 (0) 6 6271 1394E-mail: osaka@boi.go.th

PARISThailand Board of InvestmentParis OfficeAmbassade Royale de Thaïlande8, Rue Greuze, 75116 Paris, FranceTel: +33 (0) 1 5690 2600Fax: +33 (0) 1 5690 2602E-mail: par@boi.go.th

SEOULThailand Board of Investment, Seoul Office1804, 18th Floor, Daeyungak Tower, 25-5, 1-Ka, Chungmu-Ro, Chung-Ku, Seoul 100-706, KOREATel: (822) 319 9998 Fax: (822) 319 9997E-Mail: seoul@boi.go.th

SHANGHAIThailand Board of InvestmentShanghai OfficeRoyal Thai Consulate-General15F, Crystal Century Tower567 Weihai Road, Shanghai 200041, P.R.C.Tel: (86-21) 62889728, (86-21) 62889729Fax: (86-21) 62889730E-mail: shanghai@boi.go.th

STOCKHOLMThailand Board of Investment, Sweden OfficeStureplan 4C, 4th floor,114 35 Stockholm, SwedenTel: 009-46-8463-1158 009-46-8463-1172 009-46-8463-1174-75Fax: 009-46-8463-1160E-mail: chollada@boi.go.th

SYDNEYThailand Board of Investment, Sydney OfficeSuite 101, 234 George Street,Sydney, NSW 2000Tel: +61 2 9252 4882 +61 2 9252 4884Fax: +61 2 9252 2883Email: sydney@boi.go.th

TAIPEIThailand Board of Investment, Taipei OfficeTaipei World Trade Center3rd Floor, No.5, Sec.5, Hsin-Yi Road, Taipei 11011, Taiwan R.O.C.Tel: 886 2 2345 6663Fax: 886 2 2345 9223E-mail: taipei@boi.go.th

TOKYOOffice of Economic andInvestment AffairsRoyal Thai Embassy8th Floor, Fukuda Building West, 2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 JapanTel: +81 (0) 3 3582 1806Fax: +81 (0) 3 3589 5176E-mail: thaiboitokyo@gol.com,tyo@boi.go.th

Facts about ThailandPopulation (2009) 66.7 millionASEAN Population 584 millionLiteracy Rate 96%Minimum Wage (1 Jun. 08, Bangkok) 203 Baht/day

GDP (2008) US $273.4 billionGDP per Capita (2008) US $4,081GDP Growth (2008) 2.6%Export Growth (2008) 16.8%

Trade Balance (2008) US $0.2 billionCurrent Account Balance (2008) US $-0.2 billionInternational Reserves (2008) US $111.01 billionCapacity Utilization (2008) 67.65%Manufacturing Production Index (2008) 190.23Customer Price Index (Sep 2009) 105.3(2007 = 100)

Corporate Income Tax 10-30%Withholding Tax 10-15%Value Added Tax 7%

September Average Exchange Rates

US$ 1 = 33.78 Baht€1 = 49.16 Baht£1 = 55.13 Baht100¥ = 36.94 Baht

Top 10 Exports 2009 (Jan - Aug)Product Share Value

(US$ bn)

1 Automatic data processing machines and accessories

10.24 9.67

2 Motor cars, parts and accessories 6.85 6.473 Precious stones and jewellery 6.66 6.284 Electronic integrated circuits 4.11 3.885 Refine fuels 3.52 3.326 Rice 3.48 3.287 Iron and steel and their products 3.33 3.158 Polymers of ethylene, propylene, etc

in primary forms3.01 2.84

9 Chemical products 2.96 2.7910 Rubber products 2.90 2.74

Total 94.40Source: Ministry of Commerce

THAILAND INVESTMENT REVIEWOctober 2009

12