CONTENTS

June 2015 Volume 25 No. 6

Page

SUBCON THAILAND 2015 1

News Bites / BOI Net Applications 2

Industry Focus: Digital Economy 4

UNESCAP 7

Auto Part Tech Day 2015 8

Company Interview: TCC Technology 9

BOI’s Missions and Events 11

Thailand Economy-At-A-Glance 12

Continued on P. 3

SUBCON THAILAND 2015Recently, the Thailand Board of Investment (BOI) co-hosted SUBCON Thailand 2015, ASEAN’s largest industrial subcontracting exhibition, from 13-16 May at BITEC. It was the ninth edition of the annual event, attracting more than 300 subcontractors from Thailand, ASEAN and Japan, and about 22,000 local and overseas buyers from 18 countries. SUBCON Thailand has expanded significantly over the past eight years. Last year, it generated around 7,918 million baht (US$237,350) in sales and 4,611 business matches. This event showcases the diversity, high quality, and productive capacity of the Thai SMEs.

Hirunya Suchinai, acting secretary-general of the BOI, declared that SUBCON Thailand 2015 was the ninth consecutive rendition and this continuity is based on the BOI’s confidence that Thai parts manufacturers have the potential to grow into various other businesses.

Thailand is pushing an ambitious agenda that involves infrastructure expansion, investment restructuring, and setting up a digital economy. All of these initiatives are meant to drive the Thai economy forward and to provide additional growth opportunities for local enterprises, especially the SME sector.

The GDP of small and medium-sized enterprises (SMEs) is expected to grow 3.5% this year thanks to a rebound in the domestic tourism industry and the recovering US market, according to the Office of Small and Medium Enterprises Promotion (OSMEP). In fact, SMEs contributed 37% of the country’s GDP. Furthermore, Thai SME exports were worth 456 billion baht in the first quarter this year, predominantly importing from ASEAN members, Japan, the US and China.

NEWS BITES BOI NET APPLICATIONSNational Budget 2016 FY

The national budget for the 2016 fiscal year has been set at 2.720 trillion baht, representing an increase of 145 billion baht, or 5.6 percent, over that of 2015.

At the first reading by the National Legislative Assembly on 21 May 2015, Prime Minister General Prayut Chan-o-cha explained that out of the national budget, more than 2.706 trillion baht would be set aside for the regular expenditures of various government agencies and state enterprises, while 13.5 billion baht would be allocated as payments for the national reserves.

Like the 2015 national budget, the 2016 national budget has been set on the basis of the Sufficiency Economy approach and the royal advice to “understand, reach out, and develop.” The objective is to attain the goal of stability, prosperity, and sustainability, in accordance with Thailand’s vision 2015-2020.

The budget is also based on the principles set in the 11th National Economic and Social Development Plan, 2012-2016. It will be a deficit budget because there are still many risks in the country’s economic situation. The investment budget accounts for 20 percent of the total budget.

The Government expects that it will be able to earn 2.439 trillion baht in revenue in the 2016 fiscal year. It will also continue to maintain strict fiscal discipline. Public debt now accounts for only 46 percent of GDP.

About 6.4 billion baht has been allocated for developing special economic zones, 70 billion baht for water resource management, and 30.5 billion baht for the resolving of problems in the southern border provinces.

Fostering Innovation

The Government is attaching great importance to fostering innovation and has introduced measures to promote research and development in order to attain the goal of stability, prosperity, and sustainability.

Prime Minister Prayut Chan-o-cha has said that the listing of Thai innovations and the opening up of markets for innovative Thai products and services are among measures to promote innovation for development.

Government agencies are allowed to buy products and services on the innovation list with at least 10 percent of their budget allocations each year, but not exceeding 30 percent. However, the products and services must be certified by relevant agencies to ensure their accepted standards. They also must be creative and applicable on a commercial basis.

2014(US$ = 32.90THB)

2014 (Jan-May)(US$ = 32.52 THB)

2015 (Jan-May)(US$ = 33.55 THB)

Number of projects Value Number of

projects Value Number of projects Value

Total Investment 3,363 65,101 471 9,161 306 1,438

Total Foreign Investment 1,573 31,094 334 7,072 155 406

By Sector

Agricultural Products 789 8,158 57 391 31 121

Minerals / Ceramics 103 4,685 16 470 10 80

Light Industries / Textiles 120 1,274 14 90 7 22

Automotive / Metal Processing 736 9,895 111 4,866 39 99

Electrical / Electronics 384 4,418 77 199 67 47

Chemicals / Paper 485 12,693 42 784 17 99

Services 746 23,980 154 2,362 135 971

By Economy

Japan 643 8,164 155 2.202 40 153

Europe 243 4,668 43 1,974 36 21

Taiwan 72 780 9 21 10 36

USA 70 3,858 11 812 7 3

Hong Kong 43 701 16 225 9 44

Singapore 121 1,279 18 102 26 90

By Location

Central 1,113 9,867 180 783 138 544

East 1,294 40,770 183 7,070 74 321

South 190 1,524 21 204 19 96

Unit: US$ MillionNote: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries / Statistics on net applications are adjusted whenever applications are returned to applicants due to insufficient information.

The Industrial Technology Assistance Program has been extended in an effort to strengthen small and medium-sized enterprises (SMEs). The project is intended to help SMEs solve their technical problems and meet the challenges in introducing technology-based products and processes.

The Prime Minister has said that a target had been set to develop 13,000 entrepreneurs. The public sector will provide five billion baht in financial assistance, which accounts for one-third of the total investment budget. The remaining amount will come from investments by the private sector. It is expected that the program will reduce production costs for SMEs and contribute to the country’s overall economy. The program is likely to generate employment, valued at 90 billion baht, within six years, as well.

A fund has been set up in the form of a “fund of funds” to mobilize money for investment through a joint-venture fund, established by universities and research institutes. The funding source will support the country’s innovation on a commercial basis.

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With government support, OSMEP expects the number of new registered SMEs to reach 100,000 this year, up from 80,000. There are 2.7 million SME companies in Thailand, but most have not yet registered. Still, some 174 Thai SMEs showed up to SUCON 2015, hence illustrating their collective value to ongoing national economic development.

Thailand has a well-established manufacturing sector and the country’s pivotal role during the exhibition will further strengthen its industrial footprint. Thailand’s central location within the ASEAN region and the launch of the ASEAN Economic Community (AEC) later this year, position Thailand as an attractive subcontracting destination, providing affordable and locally sourced parts and an educated workforce of subcontractors and manufacturers.

This year, SUBCON featured the main subcontracting exhibition, a business matchmaking program, a buyers’ village, academic to business forums (A to B), and information seminars. Regarding the profile of exhibitors, they were primarily manufacturers of metal parts, plastic and rubber parts, electrical and electronic components, molds and dies, tooling systems, jigs and fixtures and motion technology, and other related supporting industries such as logistics service providers. On the other hand, the target visitors represented the automotive, electrical and electronics, and machinery industries.

Upon closer inspection, business matchmaking and industrial linkage activity permit Thai SME subcontractors to identify business partners, enter into business collaboration, explore new marketing channels, and engage in one-on-one meetings pre-arranged by the buyers and the sellers. Additionally, the buyers’ village functions as a venue for purchasers and international procurement offices in Thailand and other countries to exhibit the parts they need to acquire or for which they require local subcontractors. Meanwhile, educational and visionary seminars for industrial entrepreneurs covered interesting topics, including investment opportunity analysis, business strategies, management and technology and product development. These presentations were conducted to provide investors a wide array of information on Thailand’s strengths and leadership as a global and regional sourcing center.

Some 45 different seminar topics were covered at SUBCON 2015, which were offered by more than 30 different organizations and attended by some 4,141 people. Themes included Opportunity for Thai Automotive Part Market, Business Opportunity in Medical Devices Industry in Thailand, How to Tap into Aerospace Industry: Opportunity for Thai Part Manufacturers, Thailand

Current Investment Promotion Policy, Mold Technology and IT for Smart Industry. Plus, the A to B forums not only link educational institutions and research agencies to the manufacturing industry, but also identify personnel with the necessary skills to help commercialize innovations.

Overall, the annual worth of Thailand’s subcontracting industry is as high as 100 billion baht, with a growth rate of about 10% each year. This industry has huge potential and plenty of room to expand further. According to an article published in The Nation, Manu Leopairote, chairman of UBM Asia (Thailand) declared, “With the ASEAN Economic Community materializing, UBM believes that ASEAN will become the world’s important economic zone.” He went on to state, “As the AEC turns all ASEAN nations into one single manufacturing base, their manufacturing sector will enjoy greater potential and higher competitiveness in the international market, particularly in parts manufacturing or supporting industries for automobiles, electrical appliances, electronics components, and machinery.”

In the last few years, SUBCON Thailand has continued to help businesses expand and grow. Today, the event is recognized as ASEAN’s most important and largest industrial subcontracting event, specializing in the procurement of industrial parts. The exhibition is unique from other events due to its facilitation of business negotiations and business matching during the fair. Moreover, this trade show has secured a reputation as the place to highlight products and services, and for executives from the region and overseas to build relationships that will prove to be mutually beneficial.

For a long time, the BOI has recognized the importance of industrial subcontracting to the advancement of the Thai manufacturing sector. As such, the BOI set up the BOI Unit for Industrial Linkage Development, also referred to as BUILD, which has played a vital role in connecting local and foreign businesses over the past 20 years. Indeed, BUILD operates as an intermediary between manufacturers of ready-made products and small/medium-sized parts manufacturers. This service has resulted in the bringing together businesses and the transfer of production technology that has led to strong growth in supporting industries across Thailand. For more information about BUILD, please contact http://build.boi.go.th.

Through such events as SUBCON and the continuing work throughout the year by BUILD, the BOI supports the needs of investors and works with them to facilitate the success of investments in Thailand.

June 2015

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INDUSTRY FOCUS

DigitalEconomyWhat does the term “digital economy” mean? Simply put, it refers to an economy that is based on digital technologies, which are rapidly transforming both business practices and social interaction. Accordingly, the Thai government is giving a boost to the digital economy in order to enhance the competitiveness of the Thai industrial sector and prepare Thailand for the ASEAN Economic Community. In response to this policy, entrepreneurs and operators of the digital business will be created and developed, so that they will become a driving force for the country’s productivity.

The strategic framework for digital economy promotion consists of four areas: Digital Commerce, Digital Entrepreneurship, Digital Innovation, and Digital Content. In pushing forward this forward-looking agenda, the Ministry of Information and Communication Technology aims to promote a new generation of entrepreneurs, as well as commercial and industrial innovations.

At the same time, it will assist traders and investors in turning to the digital system and fashioning a new market for the digital content industry. Entrepreneurs will be urged to be aware of the importance of the use of information and communication technology in enhancing efficiency and reducing production costs. Related laws also will be revised in order to accommodate the digital economy in the future.

Implementation of the digital economy plan envisages involvement of all stakeholders – the government, regulators, businesses and individuals – in achieving the stipulated goals. With the government of Thailand implementing policies in a comprehensive manner, the digital economy plan has the potential to make a significant contribution to the economic and social welfare of the Thai population.

The five themes of the digital economy program are hard infrastructure, soft infrastructure, service infrastructure, promotion and innovation, and society and knowledge. Under the hard-infrastructure theme, the government will cooperate with the private sector to provide suitable information-technology infrastructure to support a digital economy, such as high-capacity broadband Internet, various data centers, and digital gateways. For soft infrastructure, the government will revise laws and regulations to boost confidence about online transactions such as verification systems to identify individuals online and cyber-security in order to encourage e-commerce.

For the promotion and innovation theme, the government will develop the digital skills of entrepreneurs to improve their efficiency. It will utilize digital tools to support the business growth in sectors such as banking, services and manufacturing. It will utilize IT to support small and medium-sized enterprises. Under the last theme, society and knowledge, the government will provide universal access to online channels, ensuring everyone can access the Internet at an affordable price.

“Thailand has an opportunity to utilize digital tools to drive the economy, and the government will set up a venture-capital funding organization such as cloud funding to help start-ups and

other businesses run their operations smoothly,” Deputy Prime Minister M.R. Pridiyathorn Devakula declared. “The government will also have data centers to provide analytic business information to support small and medium-sized businesses.”

The eight proposals approved by the cabinet in early January 2015 address challenges such as cyber security and consumer rights, while others tackle organizational and regulatory changes. The Ministry of Information and Communications Technology (ICT), for example, will become the Ministry of Digital Economy and Society. There also would be restructuring at TOT (a state-owned telecoms company that provides mobile and wireless broadband services) and CAT Telecom (another state-run organization that runs Thailand’s international infrastructure, including gateways, satellites and submarine cable networks).

Worth mentioning is that a significant change under the raft of proposed bills is that the National Broadcasting and Telecommunications Commission (NBTC) will come under the supervision of the Digital Economy Policy Committee and allocate 50% of its license fees to the digital economy development fund.

As communications operators such as True, AIS, and DTAC, invest in deploying new mobile infrastructure, economic activity will be generated, thereby improving productivity, fueling innovation and driving the creation of new businesses as well as providing improved access to online services and facilitating the development of smart cities.

The existing 2G/3G networks using the 900MHz and 1800MHz bands, along with the 850MHz band, currently support millions of mobile users. These bands are therefore essential to the three largest mobile operators in Thailand to ensure continued availability of mobile services as well as to expand the availability of mobile broadband services using 3G and 4G technology, thereby supporting the Thai government’s digital economy agenda. For instance, both public and private operators are aiming not only to increase fiber coverage, but also to extend the reach of fixed networks into more remote areas under the rural broadband funding program.

While a number of frameworks and policies have been put forward in order to redefine the ICT landscape in Thailand, the government announced its new Digital Economy Plan in November 2014 to increase economic and social prosperity through digitization and placing Thailand at the digital forefront in the region. Acknowledged as a policy of critical importance for the development of the Thai economy, the plan was placed under the direct leadership of the Deputy Prime Minster.

Two goals, to be achieved within a five-year period, have been set by the plan, namely: 1) doubling the number of Internet users (from approximately 20 million currently) and 2) doubling the total value of ICT products and services (from approximately 700 billion baht currently).

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The government of Thailand has strong ambitions to turn the country into a digital economy, which ultimately depends on better broadband infrastructure – including mobile infrastructure – being available. Greater accessibility to the Internet and enhanced usage by the general population will support Thailand’s transition to becoming a digital economy. In fact, the digital economy master agenda opens up many new sources of revenue for Thai carriers, telecommunication service providers, and other businesses in digital content provision, digital entertainment and gaming, e-commerce, and consumer electronics. If all measures are implemented correctly, the digital economy can contribute to as much as 30% of GNP by 2020, according to the IDC.

A noticeable trend in the Thai telecommunications sector today is the increasing usage of mobile internet by Thais, a key factor for Thailand moving up the global rankings of the recent International Telecommunication Union ICT Development Index (IDI). The Internet-ready population of Thailand is seeing the highest rates of usage for social media, mobile games, music and video files, emails, and online shopping compared to the country’s neighbors. Moreover, there is a recognition that the release of several mobile data bundles and unlimited social media packages by the industry’s leading operators to meet demand and usage has contributed immensely, changing the way Thai society communicates now.

Equally significant, the data center market in Thailand has received a boost with the infusion of 7.59 billion baht that was approved by the Board of Investment of Thailand (BOI) in December 2014. The news followed in the wake of the new government’s digital economy policy to turn Thailand into a trade hub in ASEAN using information technology.

The ICT market in Thailand is set to benefit from government measures to enhance its national IT infrastructure capacity. In the government’s budget for the fiscal year starting October 2014, Reuters reported that nearly 18% of the 2.58 trillion baht (US$78.4 billion) in planned spending is earmarked towards investments. Certainly, the country had several inherent advantages as a data center location, including its strategic position as the gateway into countries that make up the Greater Mekong Subregion (GMS), many of which share their borders with Thailand.

As the government sharpens it focus on ICT, a digital drive is taking shape in Thailand, underpinned by plans that include incentives for investors and improved communications infrastructure. For instance, the new BOI strategy (2015-2021) gives priority to investments that are beneficial to the industrial sector and the country’s economic development, such as high-tech, creative and service industries that support the development of the “digital economy”, and industries that utilize local resources.

Indeed, there are six major points of investment-promotion policy in the seven-year strategy. The first and most important point is to promote investment that helps enhance national competitiveness by encouraging research and development, innovation, and value creation. The BOI hopes the new investment strategy will encourage investments from companies in the high tech and creative industries, incentivize service industries that support the growth of the country’s digital economy and attract industries that will utilize local resources. It will give priority to “business activities” or investments that will support Thailand’s overall development strategy, which includes Thailand’s participation in the ASEAN Economic Community (AEC).

M.R. Pridiyathorn Devakula, deputy prime minister in charge of economic affairs, stated at the “New BOI Investment Promotion Strategy” symposium that it was time for the country to change its investment profile in order to nurture a healthy digital economy and maintain solid growth in the long term. “A digital-based economy is not only about hardware or software, but also a new economic base. It is fundamental if other sectors such as manufacturing, agriculture, services, finance and banking are to grow,” he said.

Indeed, the Thai government has announced that it will be offering tax incentives to encourage local and international businesses to establish at least 40 data centers in the country this year. The establishment of these new facilities is expected to require a 30 billion baht investment. As a result, the government will launch a number of promotional packages through the BOI in order to attract interest from foreign companies looking to partner in joint data center initiatives with local businesses. International partners will enjoy strong tax privileges if they decide to transfer technology into the domestic market. The new investment project also aligns with the current BOI strategy, which aims to direct funding into Thai startups and burgeoning national tech firms.

Speaking at a seminar in January, M.R. Pridiyathorn Devakula described the digital economy plan as a key element of the government’s policy agenda. The authorities will provide the tools needed to strengthen Thailand’s ICT backbone, while also improving soft infrastructure, legislation and regulations governing the sector. “Our government is planning to work with the private sector to develop hard infrastructure, such as a national broadband network, spectrum to provide 4G wireless broadband, the establishment of a national government data centre and an increased number of international internet gateway facilities,” he told participants.

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The increased focus on ICT is likely to drive up sales of hardware and software, spawning more opportunities for service providers along the supply chain. As described by the Oxford Business Group, some estimates suggest sales of new devices, including smart phones, PCs and tablets, will expand by around 4% this year, though other analysts expect higher growth on the back of rising demand sparked by the government’s digital drive. Forecasts also anticipate strong sales growth in regions away from major hubs, as connectivity improves and small and medium-sized enterprises look to capitalize on the digital agenda.

The new Digital Economy Plan holds good prospects for boosting the economic and social well-being of the Thai population. For example, launching the 4G network and its related infrastructure will result in direct benefits for the economy.

Likewise, e-learning is becoming an important engine in building knowledge-based societies and opening up education to everyone. It increases educational opportunities, acts as a platform for skill-building and promotes development in rural

and remote areas. In addition, broadband can propel economic advancement in these areas and help bridge the digital divide through improving productivity, generating non-agricultural jobs and fostering the growth of small- and medium-sized businesses. And finally, cloud-based services can benefit from availability of the latest technologies being deployed within mobile networks, to enable better streaming of digital content and data through social media.

In support of the government plan, the BOI offers attractive and extensive investment promotion incentives for everything from embedded software and enterprise software, cloud services, software parks, and data centers. All of these activities receive the highest BOI promotion of an 8-year corporate income tax exemption without cap, exemption of import duty on machinery/raw materials and non-tax incentives.

Thailand continues to move forward with an array of investment policies that support the nation’s drive to become an upper income country, with high value added manufacturing at the center of the ASEAN Economic Community.

Activities Conditions Incentives

5.1.1 Manufacture of advanced technology-electrical products

The advanced technology electrical products must have the capability to connect with the internet network (Internet of Things).

A3

5.3.2 Manufacture of telecommunication products

5.3.2.1 Manufacture of emission, transmission and reception devices used in fiber-optic and wireless communication systems

5.3.2.2 Manufacture of other telecommunication products

A2

5.4.3 Manufacture of parts for telecommunication products

5.4.3.1 Manufacture of parts for emission, transmission and reception devices used in fiber-optic and wireless communication systems

5.4.3.2 Manufacture of parts for other telecommunication products

A2

5.7 Software5.7.1 Embedded software5.7.2 Enterprise software and/

or digital content

1. Projects must have expenses for salaries for IT-personnel of at least 1,500,000 baht per year.

2. Projects must include software development processes specified by the Software Industry Promotion Agency (SIPA).

3. Projects with an investment of 10 million baht or more (excluding cost of land and working capital) must obtain a quality standard certificate from SIPA or receive a Capability Maturity Model Integration (CMMI) quality standard certificate or any equivalent standard within two years from the full operation start-up date. If the project fails to meet such conditions, one-year corporate income tax exemption shall be withdrawn.

4. Revenue derived from sales or the provision of services that are directly related to a promoted software business shall be regarded as revenue of such promoted businesses.

A1A3

(not subject to the

corporate income tax exemption

cap)

7.9.2 Industrial zones or technology industrial zones

7.9.2.1 Science and Technology Parks

1. Must have an incubation center2. Must have a modern system for both domestic and international communications and

telecommunications3. Must have a continuous electricity backup system4. Must have other facilities, as approved by the Board

A1

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UNESCAPThe 2015 edition of the Economic and Social Survey of Asia and the Pacific, introduces a new multidimensional index of inclusiveness that captures the economic, social, and environment dimensions of development. Published annually by the United Nations Economic and Social Commission for Asia and the Pacific, the report highlights a key message that while policy focus on economic growth is necessary, it is not sufficient for achieving development. Policymakers throughout the region need to internalize the aspects of inclusive growth and sustainable development into their domestic policy frameworks for progress to be achieved. What follows is a summary of the major economic and social themes that pertain both to the Southeast Asian region and to Thailand.

Historically speaking, Southeast Asia always has been open to international trade. Today, the region is known for its extensive production networks of electronic and automotive parts. However, exports have contributed less to economic growth in recent years as weak global demand was offset by strong domestic demand, particularly private consumption. This current trend reflects Southeast Asia’s place in the world as both a production base and a growing market of 620 million people. Certainly, the region is an integral component to the functioning and prosperity of the global economy. Plus, its proximity to China and India as well as its numerous sea and air linkages to destinations further afield are features that continue to attract entrepreneurs and multinational corporations.

Overall, Southeast Asia continues to perform well in terms of

exports and FDI inflows, but performance varies widely; the composition of exports raises concern in some countries. The survey mentions that the region’s share of global exports climbed back to about 7% in 2013, similar to the level in 2000, after falling in the years in between amid China’s rapid expansion. FDI inflows rose to a record US$125 billion, or 9% of global FDI inflows, in the same year.

Long-term investment in infrastructure should figure more prominently in domestic demand; this also is vital for Southeast Asia’s export competitiveness. Since the Asian financial crisis of 1997-1998, the region has been predominantly a net capital exporter, as reflected in large capital account surpluses. However, as countries built up foreign currency reserves, the surplus savings of the region were invested largely in United States Treasury bills. Presently, central banks in Southeast Asia hold reserves worth more than US$700 billion.

According to the index, 2015 holds plenty of promise. Indeed, growth in the region is expected to rise to 4.9%, led by a recovery in Thailand and faster economic expansion in Indonesia and the Philippines. Growth is set to edge up further to 5.1% in 2016. Infrastructure investment will play a critical role in the development outlook of these economies.

When examining Thailand specifically, the report portrays a country that finds itself in the midst of a rehabilitation and transformation. The economy contracted in the first half of 2014, as consumer sentiment and investments fell due to significant

Activities Conditions Incentives

7.9.2.2 Software Parks

7.9.2.3 Data center industrial estates or industrial zone

1. Projects must have high-speed fiber- optic main communications systems throughout the area.

2. The main telecommunications system must have a high-speed cable from the software park to domestic and international telecommunication centers.

3. Continuous back-up of electricity supply must be installed.4. The total area must not be less than 5,000 square meters.

1. Must provide complementary services for customers located in project, e.g. server co-location, managed service, customer’s server backup service, disaster recovery services (DRC), data center, professional consultation, etc.

2. Area of data center must not be less than 3,000 square meters3. Must have a main hi-speed telecommunications system linking the data center with

domestic and international telecommunication centers for at least 4 systems. The domestic telecommunication system must have a speed of at least 10 Gbps each, for at least 3 systems, and the total speed of the whole system must be at least 60 Gbps

4. Must be able to service clients during maintenance or during equipment replacement in the system. (concurrently maintainable)

5. Must have a “Continuous Rating” generator, which is capable of supporting the entire electricity needs of the Data Center, with a backup generator that can support the need for electricity when one of the generators doesn’t function properly

6. Must have equipment or backup system for UPS IT Cooling and UPS Cooling. This system or equipment needs to be able to function immediately after a main system fails to function properly and this must ensure the failure in the main system does not affect service.

7. Must have backup independent distribution paths in electricity distribution system8. Must have failure a prevention system to prevent risks from damage or any malfunction in

any equipment9. Must have a highly efficient air conditioning system, with backup system10. Must have fire prevention system for the entire area11. Must have a 24-hour security system12. Must be certified with ISO/IEC 27001 (data center)

A1

A1

7.10 Cloud service 1. Must be located in at least 2 data centers in Thailand that are certified with ISO/IEC 27001 (data center)

2. Must have connections among all related data centers with speed of at least 10 Gbps for each connection, with backup connections at the same speed

3. Must be certified with ISO/IEC 27001 (cloud security) and ISO/IEC 20000-1 (cloud service)

A1

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Auto Part Tech Day 2015“Auto Parts Technology Day 2015” was held during 27-28 May 2015 at Thailand Science Park, Pathum Thani. Mr. Pichet Durongkaveroj, Minister of Science and Technology presided over the event, stating that the cabinet has given priority to the automotive and auto parts industry. In addition to drive the industrial growth via Eco-car Phase II, the cabinet aims to stimulate the development and production of electric vehicles in Thailand. Prime Minister Prayuth Chan-o-cha has ass igned the Ministry of Science and Technology, through the National Science and Technology Development Agency (NSTDA), to coordinate with the Ministry of Industry, the Thailand Board of Investment, and other relevant agencies to st imulate automotive development. This will support Thailand to be a hub of electric vehicle production in the future.

In the same event, Mrs. Piengjai Keawsuwan, the honorary president of AAF and Vice President of Nissan

Motor (Thailand), noted that Thailand was the largest car producer in ASEAN last year: produced 1,880,007 units and sold 881,832 units in the domestic market. ASEAN remains the largest importer of auto parts and vehicles from Thailand.

She stated that the major reasons that Thailand has been successful in becoming an automotive hub in ASEAN are government support, s t rategic locat ion, support ing infrastructure, skilled workers, and the strong supporting industries. The next challenge for the Thailand automotive industry is the local auto parts manufacturers and SMEs that must apply innovation into their products and move into the green technologies. Thai auto parts entrepreneurs have to strengthen their technological capabilities for competitiveness. They, also, need to gear up for the competition in price, quality, delivery schedule, product design and development. This will expand their opportunity in the global market.

political uncertainty. Another contributing factor was declining domestic demand for vehicles and parts, which resulted in a mild contraction in manufacturing. With the resumption of government functions, the economy began to recover in the second half of the year. A stimulus package of US$11 billion was announced, with a focus on jobs and assisting farmers.

In 2015 and 2016, a mild rebound to 3.9-4% growth is predicted by the index. On balance, the economy also should benefit from the lower cost of production due to the drop in global oil prices, although the agricultural sector will confront numerous challenges, such as low commodity prices for rubber and sugarcane. Consumer spending may surge upwards from the fiscal stimulus, but will remain constrained by high household debt. Moreover, a recovery in construction and in tourism will provide a boost to the economy. Equally important, in March 2014, the central bank reduced its policy interest rate by 25 basis points to 2%, the lowest in three years, with a view to support the contracting economy. It has since kept the rate on hold.

After a number of delays, the planned multi-year infrastructure investment program is expected to take off in 2015. This outlay of financial resources could boost domestic demand while increasing the economy’s long-term competitiveness, especially in the transport and logistics sectors. Thailand also should take advantage of an integrated market and production base under the ASEAN Economic Community (AEC), such as the automotive industry where the country already has a huge advantage.

Without a doubt, the launching of the AEC this year should accelerate country-specific reforms in order to realize the potential welfare gains from the establishment of a borderless economic union. The index notes that in 2007 the 10 ASEAN members committed to accelerating the integration process with the goal of forming a single market and production base by 2015. At the 25th ASEAN summit in November 2014, it was affirmed that 82.1% of deliverables under the so-called AEC Blueprint had been achieved to date. Likewise, it was agreed that the implementation of remaining measures would be fast-tracked, including those related to non-tariff barriers, the customs single window, and services and investment liberalization.

The 2015 Economic and Social Survey of Asia and the Pacific monitors regional progress, provides cutting-edge analyses and guides discussion on current and emerging socio-economic issues and policy options across the Asia-Pacific. Additionally, the report contains studies focusing on a significant aspect or challenge relevant to the economies of Asia and the Pacific region. Regarding Thailand, the survey points out that the country’s economy is on the path towards recovery, but there are risk factors that the government will have to address by implementing the appropriate measures. Even though 2014 was a setback, Thai macroeconomic fundamentals remain solid and the country possesses a wide array of strengths (industry, agriculture, fisheries, services, etc.) to move it forward. With the initiation of the AEC and the long-awaited disbursement of public funds for a variety of infrastructure projects, it does appear that Thailand will be back on track.

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COMPANY INTERVIEW

Earlier this month, the Thailand Investment Review team had the opportunity to meet and speak with Mr. Voradis Vinyaratn, Executive Director and Acting Managing Director of TCC Technology. The interview took place in a state-of-the-art conference room of the Empire Tower, overlooking the skyline of downtown Bangkok. A number of questions were asked to learn more about the company as a cutting-edge enterprise, its business activities, and the company’s future plans.

To begin, Mr. Vinyaratn remarked that TCC Technology (TCCT) is a member of the Thai Charoen Corporation Group, one of the largest conglomerates in Thailand. Founded in 2001, TCCT is the first certified SAP hosting and SAP cloud partner in Thailand as well as a Microsoft Cloud OS Network (COSN) partner, offering unmatched cloud-based solutions and services via a strong collaboration with various global associates. At present, TCCT operates not only highly secured multiple world-class enterprise data centers, but also manages to cover industrial and international data centers in the Asia Pacific via its Asia Data Center Alliance (ADCA) network. As Mr. Vinyaratn explained, TCCT possesses the capability to meet the demands from organizations looking to outsource their ICT requirements.

The core services of TCC Technology include infrastructure services (co-location, international gateway, and business continuity center services), cloud services (SAP, Microsoft Azure, and virtual private server hosted services), and IT outsourcing/consulting services. Currently, TCC Technology operates three strategic data centers. There is Empire Tower Data Center (ETDC), an enterprise data center situated in Bangkok’s Central Business District. Bangna Tower Data Center (BNDC) is another enterprise data center, which is located on the Bangna-Trad Highway and close to Suvarnabhumi International Airport. And, last but not least, there is the data center at Amata Nakorn (AMDC), which functions as an industrial data center, situated on the premises of the Amata Nakorn Industrial Estate in Chonburi province.

As Thailand’s leading carrier neutral data center and IT infrastructure services expert, TCCT lets its customers manage their software and applications on its advanced technology and infrastructure platforms. TCCT cloud computing services offer real turnkey solutions because they are based on the company’s premium data centers and international gateway services with region-wide capacity. TCCT also is a regional hub for cloud service providers ready to assist customers with diversified demands.

All TCCT data centers, including the expansion phase, have a combined hosting space of 57,000 square feet and are found in free-flood zones. With N+1 supported infrastructure, TCCT’s data center facilities can provide its customers with continuous power, precision cooling, connectivity, and security. In addition, a “Network Neutral” policy makes TCCT a centralized hub of

premium ISPs and telecommunication firms, offering its clients more choices for their connection necessities. Equally significant, TCCT guarantees its security system with ISO 27001 and ISO 9001.

Yet, what is a data center? Specifically, it is a physical or virtual infrastructure used by enterprises to house computer, server and networking systems and components for the company’s ICT needs, which typically involve storing, processing and serving large amounts of mission-critical data to clients in a client/server architecture. A data center often requires extensive redundant or backup power supply systems, cooling systems, redundant networking connections and policy-based security systems for running the enterprise’s core applications.

Mr. Vinyaratn highlighted that the company’s superior infrastructure facilities and extensive

expertise have made TCCT the preferred choice of hosting facility for leading local and multinational clients, including: IBM, Infonet (Thailand), Post Publishing, Nation Multimedia Group, Cloud Creation, NTT Communications, and NIIT Technologies. Interestingly, Mr. Vinyaratn described TCCT as a high-rise “building” comprised of “premium condominiums” that house the “assets” (data) of its customers and served by well-organized “road” networks.

Focusing on TCCT’s international gateway, Mr. Vinyaratn depicted it as a high-speed information conduit that links together a multitude of points both within the ASEAN community and beyond. The network ring starts from Thailand and connects to countries on the east towards Cambodia and Vietnam as well as the south towards Malaysia and Singapore. Then from Singapore and Vietnam, the connection both ends in Hong Kong to form a ring. This fiber-optic ring was achieved through a collaborative effort among TCCT and its alliances. Actually, TCCT collaborates with a number of regional partners, like 1-Net (Singapore), UIH (Thailand), CyberCSF (Indonesia), and PCCW (Hong Kong), thereby expanding its data center capacity along with a secured network and faster connectivity across the region.

When asked about the launch of the ASEAN Economic Community, Mr. Vinyaratn without hesitation commented that the regional common market is a positive development for the company, involving business and personnel opportunities. The “opening” of the ASEAN region will present a chance to tap into other local markets for commercial and investment purposes as well as for recruiting skilled IT professionals. Certainly, the AEC will widen the talent pool for the company to select the most talented individuals from across Southeast Asia to work at TCCT and assist in elevating the company’s position and profitability. Nonetheless, Mr. Vinyaratn already views the Thai market as being synonymous with the Greater Mekong Subregion as substantial economic integration has taken place between Thailand and the neighboring countries of Myanmar, Laos,

TCC Technology

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Cambodia and Vietnam. Without a doubt, the AEC will change the landscape of the broader Southeast Asian ITC industry, in general, and of the Thai ITC market, particularly. Companies not ready for the transition will miss most definitely the proverbial “bus” of opportunity.

Turning to the topic of TCCT’s human resources, Mr. Vinyaratn stated that currently there are 202 Thai employees and 2 expats on staff. Indeed, the company’s “people-ware” functions as one of the three pillars of TCCT, along with software and hardware. Concerning the core offerings of the company, engineers and IT specialists form the backbone of a team that is sharp and knowledgeable. To maintain a competitive edge in the Thai ICT market, Mr. Vinyaratn explained that TCCT actively invests in training and certification of its personnel. It is essential that the company’s “people-ware” be upgraded much the same as its software and hardware components. Likewise, TCCT aims to stay ahead of the curve and so full compliance with government regulations, regarding the qualifications of its team members, is critical to the success of the company. Moreover, lateral promotion happens to be the norm internally with staff moving across different departments and acquiring expertise about both the company and the ICT industry. In short, TCCT can be described as a permanent learning environment.

Worth mentioning, over the years TCCT has gained international recognition that includes: Certified SAP Cloud & Hosting Partner (the first and only one in Thailand), Uptime Institute APAC Networking Group (the only founding member in Thailand), and the 2014 Frost & Sullivan Excellence Award bestowed to the company as Thailand’s data center service provider of the year.

On the subject of the Board of Investment, Mr. Vinyaratn mentioned that TCCT has an excellent relationship with the government agency. As a BOI-promoted company, Mr. Vinyaratn pointed out that the partnership has been a boon for business. The building and maintenance of data centers are a capital-intensive endeavor and as a result, the incentives and privileges received by TCCT from the BOI have permitted the company to grow and to expand domestically as well as regionally. Plus, BOI certification assists TCCT to raise its profile in the industry and in formulating the company’s investment plans, short-term and long-term. At present, the relationship has deepened as the Digital Economy Initiative is being pushed by the BOI at

the behest of the Thai government and TCCT is an industry leader and pioneer.

Nonetheless, according to Mr. Vinyaratn, for the ICT industry to progress, for Thailand to move forward, it is imperative that there be standardization of deliverables. Such consistency would result in greater confidence of the Thai ICT market on the part of consumers and investors alike. Also, product/service uniformity would give a real boost to the government’s ambition to transform Thailand into a real knowledge-based economy. Keep in mind that one of the primary missions of the ICT industry is to protect a company’s most precious asset – information. Accordingly, homogeneity of rules and regulations, together with enforcement, is fundamental. In fact, this approach not only adds value to

Thai products and services, but also should be embraced and advocated as the country’s new “selling point” by the government, particularly the BOI.

TCCT’s data centers are combined with professional managed services expertise, advanced data center technologies, and strategic alliances with leading ICT industry partners to give its clients the hosting solutions that best fit their needs. It is apparent that ICT has become increasingly important in today’s global environment. It can help organizations meet daunting business challenges, while handling competition and rising costs. However, a stable IT system must be supported by a high-performance, and high-capacity data center. Information is money and therefore the industry trend today is moving from “on-premise” storage to “off-premise”, closer to the user.

It is interesting to note however that as different businesses compete with each other, the commercial advantage one can have over another may depend primarily on its use of ICT. For example, being able to extract the right information for the customer and to provide it in an efficient and cost-effective manner can become a significant advantage over the competition. This mining of information is facilitated by the technology used to store and manipulate this data. As hardware and software mechanisms become more sophisticated and faster, businesses can utilize their stored information to maximize their commercial advantage and enhance their connectivity. For Mr. Vinyaratn this is TCC Technology in a nutshell: A company making it possible for others to raise their competitiveness in an increasingly globalized and digitized marketplace.

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BOI Deputy Secretary General Duangjai Asawachintachit led a mission to the United Kingdom from 6-12 June 2015 where she spoke in London, Birmingham and Glasgow at BOI seminars on “Thailand: Moving Forward”. The seminar focused on investment opportunities in Thailand and BOI privileges for potential investment in sectors such as automotive, aerospace, and international headquarters.

Deputy Prime Minister H.E. M.R. Pridiyathorn Devakula, together with BOI Senior Executive Investment Advisor Ajarin Pattanapanchai and BOI executives during the China Road Show 23 -25 June 2015, gave the opening remarks and keynote speech at a BOI seminar on “Thailand’s New Investment Promotion Strategies: Towards Sustainable Growth” on 24 June 2015 at the Shangri - La Hotel, Shanghai, China.

BOI Senior Executive Investment Advisor Ajarin Pattanapanchai gave a presentation on investment opportunit ies for Biotechnology in Thailand on 15 June 2015 at the Courtyard Hotel Marriot Philadelphia, USA. The seminar was held before the start of the BIO International Convention 2015, which is a global biotechnology event that draws participants of leading agencies in biotechnology from around the world.

BOI Deputy Secretary General Chokedee Kaewsang led a business delegation to the Republic of Kazakhstan from 14—19 June 2015 and briefed investors about Thai Overseas Investment during Thailand Week 2015 on 16 June 2015 at the Rixos Almaty Hotel, Kazakhstan.

BOI Deputy Secretary General Duangjai Asawachintachit spoke at the Australia – Thailand Business Forum, organized by the Australian Embassy Bangkok and the Australia-Thailand Institute, 25 June 2015, Shangri-La Hotel, Bangkok. From left: James Wise, former Australian Ambassador to Thailand, Alex Cullum, Exec. Director Austcham, .Greg Wallis, Senior Trade Commissioner/ Minister-Counsellor to Thailand, BOI DSG Duangjai Asawachintachit, David Nardone, President/ CEO Hemaraj Land and Development and David Ames, MD of Linfox Thailand.

BOI Deputy Secretary General Duangjai Asawachintachit gave a presentation on “Investment Opportunities in Biotechnology sector in Thailand” to a BOI seminar held on 23 June 2015 at the Sheraton Grand, during an investment promotion mission to Taipei, Taiwan, from 21 – 25 June 2015.

BOI’S MISSIONS AND EVENTS

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THAILAND ECONOMY-AT-A-GLANCE

Source: Stock Exchange of Thailand

Source: Bank of ThailandSET 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) 2553 8111 Fax: +66 (0) 2553 8316 Website: www.boi.go.th E-mail: head@boi.go.thBEIJINGThailand Board of Investment, Beijing Office Royal Thai Embassy No.40 Guang Hua Road, Beijing, 100600, P.R.China Tel: (86-10) 6532-4510 Fax: (86-10) 6532-1620 E-mail: beijing@boi.go.th

FRANKFURTThailand Board of Investment, Frankfurt OfficeBethmannstr. 58, 5.OG60311 Frankfurt am Main Federal Republic of Germany Tel: (49 69) 92 91 230Fax: (49 69) 92 91 2320E-mail: fra@boi.go.th

GUANGZHOUThailand Board of Investment, Guangzhou OfficeRoyal Thai Consulate-General GuangzhouNo.36 Youhe Road, Haizhu District, Guangzhou, P.R.C 510310 Tel: +8620 8385 8988 Ext. 220-225 +8620 8387 7770 (Direct Line)

Fax: +8620 8387 2700 E-mail: guangzhou@boi.go.th

LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General 611 North Larchmont Boule-vard, 3rd Floor, Los Angeles, CA 90004 USA Tel: (1-323) 960 1199Fax: (1-323) 960 1190E-mail: boila@boi.go.th

MUMBAIThailand Board of Investment,Mumbai OfficeRoyal Thai Consulate-General,1st Floor, Dalalmal House, Jamnalal Bajaj Marg, Nariman Point, Mumbai400 021 Republic of India Tel: (9122) 2204 1589-90 Fax: (9122) 2282 1071E-mail: mumbai@boi.go.th

NEW YORKThailand Board of Investment, New York Office 7 World Trade Center, 34th Floor, Suite F, 250 Greenwich Street, New York, NY 10007Tel: (1-212) 422 9009Fax: (1-212) 422 9119E-mail: nyc@boi.go.th

OSAKAThailand Board of Investment, Osaka Office Royal Thai Consulate-General, Osaka, Bangkok Bank Bldg. 7th Floor , 1-9-16 Kyutaro-Machi, Chuo-Ku, Osaka 541-0056 Japan Tel: (81-6) 6271-1395 Fax: (81-6) 6271-1394E-mail: osaka@boi.go.th

PARISThailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze75116 Paris, FranceTel: (33 1) 5690 2600 (33 1) 5690 2601Fax: (33 1) 5690 2602E-mail: par@boi.go.th

SEOULThailand Board of Investment, Seoul Office#1804, 18th Floor, Koryo Daeyeongak Center,97 Toegye-ro, Jung-gu, Seoul, 100-706, Korea Tel: (822) 319-9998 Fax: (822) 319-9997E-mail: seoul@boi.go.th

SHANGHAIThailand Board of Investment, Shanghai OfficeRoyal Thai Consulate-General15 F., Crystal Century Tower, 567 Weihai Road, Shanghai, 200041, P.R.China Tel: (86-21) 6288-9728, (86-21) 6288-9729 Fax: (86-21) 6288-9730E-mail: shanghai@boi.go.th

STOCKHOLMThailand Board of Investment, Stockholm OfficeStureplan 4C 4th Floor 114 35 Stockholm, Sweden Tel: +46 (0)8 463 1158 +46 (0)8 463 1172 +46 (0)8 463 1174 to 75 Fax: +46 (0)8 463 1160 E-mail: stockholm@boi.go.th

SYDNEYThailand Board of Investment, Sydney Office 234 George Street, Sydney, Suite 101, Level 1,New South Wales 2000, Australia Tel: +61-2-9252-4884 Fax: +61-2-9252-4882E-mail: sydney@boi.go.th

TAIPEIThailand Board of Investment, Taipei Office Taipei World Trade Center 3rd Floor, Room 3E39-40, No.5, Xin-Yi Road, Sec.5Taipei 110, Taiwan, R.O.C. Tel: (886) 2-23456663Fax: (886) 2-23459223 E-mail: taipei@boi.go.th

TOKYOThailand Board of Investment, Tokyo Office Royal Thai Embassy8th Fl., Fukuda Building West,2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 JapanTel: (81 3) 3582 1806Fax: (81 3) 3589 5176E-mail: tyo@boi.go.th

Facts about ThailandPopulation (2014) 65 millionASEAN Population 625 millionLiteracy Rate 96%Minimum Wage 300 Baht/day

GDP (2014) US$ 373.6 billionGDP per Capita (2014) US$5,445 GDP Growth (2014) 0.7%GDP Growth (2015, projected) 3.5-4.5%Export Growth (2014) -0.3%Export Growth (2015, projected) 3.5%

Trade Balance (2014) US$ 24.6 billionCurrent Account Balance (2014) US$ 14.2 billionInternational Reserves (2014) US$ 157.1 billionCapacity Utilization (2014) 60.48%Manufacturing Production Index (2014) 168.2Core Inflation (2015, projected) 1.59Headline Inflation (2015, projected) 1.89Consumer Price Index (May 2015) 106.53 (2011=100)

Corporate Income Tax 10-20%Withholding Tax 0-15%Value Added Tax 7%

May Average Exchange RatesUS$1 = 33.55 baht€1 = 37.43 baht£1 = 52.02 baht100 ¥ = 27.79 bahtCNY1 = 5.41 baht

Top 10 Exports 2015 (Jan-Apr)

Product Share Value (US$ bn)

1 Motor cars, parts and accessories 12.01 8.44

2 Automatic data processing machines and parts thereof

8.12 5.70

3 Precious stones and jewellery 4.96 3.49

4 Polymers of ethylene, propylene, etc in primary forms

3.92 2.75

5 Refine fuels 3.58 2.52

6 Electronic integrated circuits 3.39 2.38

7 Rubber products 3.33 2.34

8 Chemical products 3.18 2.24

9 Machinery and parts thereof 3.14 2.20

10 Iron and steel and their products 2.60 1.83

Total 70.27Source: Ministry of Commerce

Source: Bank of Thailand

Source: Bank of Thailand BOI

June 2015

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