Thailand 2016: Foreign Investment Trends & Opportunities
April 6, 2016
The Thai economy is bumping along at present, with minimal growth expected during the year. TheWorld Bank expects 2.9 percent growth in the country in 2016. Like many Asian and indeed global economies, we have been affected by the slow down in China, with a domestic political situation and medium term outlook still unclear.
At present however, rather than see foreign investors come to Thailand to manufacture and sell, we are seeing a different pattern – our military government has concentrated on getting much needed investment into our Thai infrastructure development, an improvement on the previous situation where corruption had eaten its way into our democratic political system. It is hard to say when the military will step down and allow us to function as a democracy again, it seems some time away. However, all Armies like infrastructure development, and a benefit of us being under this current Government is a commitment to infrastructure improvements. We are seeing foreign investors from China and Singapore, as well as the U.S. and especially Japan in areas such as logistics, engineering, airport, in addition to successfully competing for Government tenders.
Our Government released a new Board of Investment Policy Update on March 1 this year, it can bedownloaded here.
The Deputy Prime Minister has also released incentives for foreign investors to enter Thailand and make money in response to the overall slowdown. These include:
* Double Depreciation during 2016, including new assets in machinery, equipment, tools, computers, software, vehicles and constructions
* Triple R&D expenses, permitted until 2019
* Next Generation Automotive
* Smart Electronics
* Aviation & Logistics
* Agriculture & Biotech
* Food Processing
* Biofuels & Biochemicals
* Digital Technologies
* Medical Hub
* Affluent & Wellness Tourism
Each of these sectors attracts a 10-15 years corporate income tax (CIT) exemption, an ability to apply for grants from the Thai Baht Competitiveness Fund, and personal income tax exemption for qualified foreign experts.
In addition to these, we have also targeted the Automotive Industry, and especially the R&D prototype sector (cars and motorcycles). Using Thailand as a base enables investors to enjoy tax incentives including import duty, excise tax, VAT and depreciation expenses.
The Government has also announced a series of incentives for foreign investors setting up in our Special Economic Zones. The main benefit here is the reduction of CIT from 20 percent to 10 percent, while in our so-called “Super Clusters” which include Automotive, Electrical Appliances, Food Industry, Medical, Digital Technologies and Eco-Friendly Petrochem, we offer eight years Corporate Income Tax exemption, an additional five years at 50 percent, and a waiving of import duty on imported machinery.
With an eye on developing Thailand as a base for ASEAN, we have also announced a series of incentives designed to attract enterprises looking to set up in Thailand as an International Trading Center. These include:
* 10 percent CIT rate
* CIT exemption for royalties, dividends, capital gains and income from overseas sales
* CIT exemption for qualified activities income received from overseas subsidiaries
* 15 percent personal income tax for expatriates
As can be seen, these are an extensive list of incentives, many of which are superior to those offered by China during its manufacturing boom years. Although Thailand’s economy may not have an excellent year in 2016, these incentives, many of which last for considerable periods – are now amongst the most attractive in ASEAN. Our Government is actively seeking to attract foreign investment, now may also be a good time given China’s increasing costs, to consider Thailand as your ASEAN and Asian manufacturing base for the years to come.