Cabinet approves new investment incentives
Thailand’s cabinet approved a raft of incentives last week to stimulate investment and counter concerns about the country’s strengthening currency, offering tax cuts for machinery, human resource development, and loans with special rates, among other privileges.
To further sweeten Thailand’s investment appeal, the Board of Investment (BOI) is also preparing a second package of privileges that it will submit for approval early next month, Ministers of Finance Uttama Savanayana told reporters.
Among the measures approved by the cabinet, last week were a corporate income tax deduction of 2.5 times expenditure on machinery, a one-year tax exemption for importing new machinery, and special-rate loans offered by the Export-Import Bank of Thailand for exporters to alter their machinery for export.
In addition, Thailand is offering up to 200 percent corporate income tax deductions for businesses that invest in human resource development. Companies can also receive tax deductions for investing in STEM (science, technology, engineering, and math) education or vocational programs.
The government decided to offer more generous incentives to offset higher investment costs because of the rise in the value of Thailand’s currency, the baht. The baht gained in value against the dollar more than any currency in Asia last year because of the country’s robust financial position. Economists have said the phenomenon is temporary, and a correction in currency values will take place as funds begin flowing into infrastructure projects.
Uttama said new incentives are essential to stimulate private investment. The Thai economy, similar to many other economies, is also attempting to weather weak global demand, trade tensions between great powers, and losses in tourism revenues related to the transnational spread of the coronavirus.