When two superpowers go to (trade) war, it’s not all bad news, as the Thai economy has been finding out over the past few years. The Board of Investment (BOI) announced recently that the US-China trade spat has resulted in a sizeable number of manufacturers moving their production bases from China and Hong Kong to Thailand. Further bolstered by a new raft of investment incentives.
In 2018, there were 164 investment applications from Chinese and Hong Kong investors for BOI tax incentives, worth almost THB 60 billion and representing a ten-year high. Thai manufacturing and engineering jobs have seen the greatest boost, with most of the foreign businesses operating in the plastics, machinery and auto parts sectors.
Seizing the opportunity
With ten countries to choose from in the ASEAN region, businesses in China, Taiwan and South Korea have been given additional reasons to choose Thailand as a result of the Thailand Plus incentives. These are aimed at attracting foreign businesses that will make large and fast investments in the Thai economy, creating skilled jobs and strengthening workforce development.
The BOI incentives aim to quickly boost Thailand’s credentials as an investment location through:
– Extra incentives for investments made before 2021, such as a 50% reduction in corporate income tax.
– Cutting the red-tape associated with foreign investment.
– The promotion of talent development across science, technology, engineering, and mathematics.
In addition to the top-line offers that are already attracting investment, the BOI will also provide a raft of benefits to support investors with the transition. This includes a dedicated, end-to-end service help foreign investors invest in and relocate to Thailand. There will be tax benefits for employers that hire science and technology talent and that invest in employee training that relates to advanced technology.
Thailand 4.0 marches on
If you know anything about the Thai tech sector over the last three and a half years, you’ll know that Thailand 4.0 has been powering an evolution in the Thai economy. The plan is to unlock Thailand from the old economic model of agriculture and position it as a modern, talent capable centre for tech investment and growth.
Many of the incentives annouced by the BOI for foreign investors are tied into Thailand 4.0, not least that investments in automation systems will be eligible for additional tax deductions. The only pre-requisite for all of these benefits is that the foreign business must already have investment worth at least THB 1 billion by end of 2021.
Is Thailand seeing more investment?
The latest figures for the first half of 2019 show the total value of the applications that the BOI received from foreign investors has more than doubled year-on-year to THB 147.2 billion. Japanese companies are leading the way, with 114 applications worth THB 42.45 billion, then China with 81 applications worth THB 24.28, followed by Swiss investment worth THB 11.44 billion from 10 applications. So, yes, the plan is working, and it’s excellent news for Thai jobs in manufacturing, engineering and tech.