Trade and Foreign Direct Investment Opportunities in Special Economic Zones in Thailand


Thailand is creating more trade and investment opportunities for foreign investors to support the formation of ASEAN Economic Community. Huge amount of infrastructure development projects have been set up for ASEAN connectivity. Special Economic Zones along border lines have been laid out for free flow of people, trade, and investment starting as early as 2015.

Mid of last year, the Thai government approved a 75 billion USD master plan for infrastructure.  Thailand’s infrastructure development plan from 2015-2022 with 4 main objectives of; (1) to revamp the provincial rail network; (2) to improve public transport systems to ease traffic congestion in Bangkok; (3) to boost the capacity of highways to connect with production bases in rural areas and neighboring countries; and (4) to improve the efficiency of water and air transport systems.

This plan opens opportunities to do more business with Thailand, to trade with Thailand, and to investment in Thailand.  And within 8 years, additional road and rail networks being built will further facilitate greater trade and investment within the ASEAN Economic Community.

As a way to further promote border trade while also addressing development gaps that exist between Thailand and some of its neighbors, the Thai Government has approved 45 related infrastructure project for the Special Economic Zones (SEZ) worth 81 million USD for fiscal 2015.

 

These special economic zones expect investment in 2015 for approximately 900 million USD in industrial estates, small, medium and large entrepreneurs in logistics, agricultural processing products, and labor-intensive manufacturing sector. It will create jobs, income, higher living standards, and so on. Migrant workers from neighboring countries can just cross to the border in the morning to work in Thailand and go back to their homes.

In the initial stage, National Economics and Social Development Board  (NESDB), Board of Investment (BOI), the Ministry of Foreign Affairs, and the Damrong Tham Center will be responsible for providing information to investors and coordinating the operations of the special economic zones. The Ministry of Labor has been instructed to seek ways to manage migrant labor in these zones. Migrant workers will be allowed to work here and return to their countries on the same day. Moreover, relevant government agencies were told to prepare for the establishment of the zones, in terms of local public health, education, and safety measures.

BOI announced “Investment Promotion in Special Economic Development Zones” that will give attractive investment incentives for investments in SEZ at the cross-border areas. (Unofficial Translation)

There are 5 special (pilot) economic zones covering areas of ​​36 districts in 1,132 square miles. These special economic zones expect investment in 2015 for approximately 900 million USD in industrial estates, small, medium and large entrepreneurs in logistics, agricultural processing products, and labor-intensive manufacturing sector.

Each zone will also have its own specialization.

  • Tak province (Mae Sor District) will become an international cross-docking center and labor industrial network for garment, textile, and processed food industries.
  • Sa Kaeo province (Aranyaprathet District) will become an agricultural food processing industry and transportation of goods in transit center, which can easily transport goods to Lamchabang Seaport and Suvanabhumi International Airport.
  • Trat province (Klong Yai District) will become a logistics center, transportation-of-goods-in-transit center, and center of tourism in the region.
  • Mukdahan province (Mueang District) will become a logistics center and transportation-of-goods-in-transit center.
  • Songkhla province (Sadao and Padang Besar Checkpoints) will focus on processed industries, such as rubber, tire, seafood processing, halal food, and it will also become a transportation-of-goods-in-transit center.

Incentives will be given by BOI.

In case general activities are eligible for investment promotion, SEZ projects shall receive the following incentives:

  • 3 additional years of corporate income tax exemption
  • In cases where projects are already granted an 8-year corporate income tax exemption, an additional 5-year 50% corporate income tax reduction shall be granted instead
  • Double deductions from the costs of transportation, electricity and

water supply

  • Additional 25% deduction of the cost of installation or construction

of facilities

  • Exemption of import duty on machinery
  • Exemption of import duty on raw materials used for export production
  • Other non-tax incentives
  • Permission to use foreign unskilled workers

In cases of target activities for special economic zones specified by the

policy committee on special economic zone development, SEZ projects shall receive the following incentives:

  • 8-year corporate income tax exemption and additional 5-year 50%

reduction of corporate income tax

  • Double deductions from the costs of transportation, electricity and

water supply

  • Additional 25% deduction of the cost of installation or construction of facilities
  • Exemption of import duty on machinery
  • Exemption of import duty on raw materials used for export production
  • Other non-tax incentives
  • Permission to use foreign unskilled workers

 

For more information, please visit BOI website at www.boi.go.th

Panalee Choosri

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