Move to make Thailand Asean trade hub
The Ministry of Finance will propose to the Cabinet this month measures that aim to help Thailand become Asean's international trading headquarters in accordance with a government policy that Deputy Prime Minister for Economic Affairs MR Pridiyathorn Deva
Being Asean’s regional hub could earn Thailand up to Bt120 billion and generate up to Bt17 billion in revenue for the state annually.
In the past, efforts to turn Thailand into an international trading headquarters usually involved tax measures to support the establishment of Regional Operating Headquarters.
But in the face of attractive incentives offered by some other countries in the region, not enough foreign investors set up a ROH in the Kingdom.
Most ROHs relate to international operations, financial management, international procurement and trade, research and development, and joint ventures.
Singapore and Malaysia provide incentives to attract all five groups, compared to only one for Thailand.
Singapore leads the region with about 1,800 ROHs, followed by Malaysia with some 800. Thailand has only 120 ROHs.
Even though the new measures to be propose to the Cabinet may not result in Thailand competing on the same level as Singapore and Malaysia, it could entice PTT Plc – which set up an ROH abroad – to establish one in Thailand, according to a source.
Compared to Singapore and Malaysia, Thailand currently offers privileges that come with more terms and conditions and are less flexible while it has more fines for violations of terms and conditions. Hence, Thailand is not a popular destination for foreign firms seeking to set up a ROH.
Moreover, Thailand does not provide privileges pertaining to financial management, insurance and risk management.
The new measures aimed at boosting the attractiveness of Thailand as a ROH hub will comprise tax incentives, with an emphasis on transactions related to a company’s overseas revenue base and affiliated firms located overseas, and more accommodating, flexible terms and conditions.
Problems impeding interna-tional business operations will be reduced, privileges for financial management will be expanded and insurance, trade and logistics companies which have a revenue base abroad will no longer have to organise work permits for foreign employee. Family members of employees will also not need a visa to stay in the country.
However, there will be no privileges for revenue transmitted overseas at a tax rate lower than Thailand’s 15 per cent.
It is necessary for Thailand to make these changes, as such businesses generate annual revenue as high as Bt157 billion for Singapore a year.
The entry of foreign firms which use Thailand as an investment-management base would attract top executives.
The creation of high-salary jobs should promote research and development activities and help curb the number of large Thai firms which choose to set up an investment-management base overseas to take advantage of more attractive incentives and privileges.
