BOI's new 7-year strategy should sustain growth of GDP

The new BOI strategy will be effective from January 1, 2015, to December 31, 2021. It will give priority to investments that are beneficial to the industrial sector and the country’s economic development such as high-tech, creative and service industries that support the development of the “digital economy”, and industries that utilise local resources.

“The economy is recovering but its current rate of expansion is still not satisfactory, while recent economic numbers are still alarming. However, we expect everything to be better in 2015, when Thailand’s economic growth should be able to expand by 3.5-4.5 per cent, and this new BOI strategy will play a role in this expansion,” Prayut told more than 2,500 foreign and domestic investors along with officials who attended the launch of the new BOI strategy yesterday.

He said the calmer political situation when compared with the first six months of protest in 2014 should help increase investor confidence. The value of BOI investment-privilege approvals amounted to Bt600 billion in the first 11 months, and the total should “definitely” surpass the target of Bt700 billion this year.

He also expects inbound tourism to return to normal during the high season and increase next year, but the estimate for 2014 at 25 million is still less than last year’s 26.7 million. Nevertheless, he believes that the number will reach 27 million in 2015.

“Despite nobody coming here in the first half of the year, the number of expected inbound visitors for 2014 is still at 25 million while the number of tourists by October had accumulated to 2.2 billion. This is the actual number despite suggestion that there is a law that is stopping people from visiting here,” Prayut said.

 

Six major points

Hirunya Suchinai, acting secretary-general of the BOI, said there were six major points of investment-promotion policy in the seven-year strategy. The first and most important point is to promote investment that helps enhance national competitiveness by encouraging research and development, innovation, and value creation.

The remaining five points are to promote investment activities that are environment-friendly, promote clusters to concentrate investment in accordance with regional potential, promote investment in border provinces in the South to help develop the local economy, promote special economic zones (SEZs) especially in border areas, and to promote Thai overseas investment, she said.

The new BOI policy will offer an additional three-year exemption of corporate income tax to investment projects located in five SEZs, namely Tak, Trat, Sa Kaew, Songkhla and Mukdahan. The establishment of another SEZ in Nong Khai is under consideration, Prayut said.

Hirunya said the BOI’s current zoning system would be replaced by two new approaches for granting investment incentives that are more targeted and prioritised, called “activity-based” and “merit-based” incentives. The list of business types eligible for privileges has been reduced from the current 240 but there are still more than 200 on the new list.

“The activity-based incentives are based on the importance of activities, ranging from A1 to B2. The activities in the A1 field are those that the country wants to promote the most, and will receive the highest incentives, such as an eight-year corporate-income-tax exemption without a cap, exemption of import duty on machinery and raw materials, and other non-tax incentives,” she said.

A1 activity-based incentives include electricity generation, creative product design, electronics design, and R&D. 

Merit-based incentives are meant to encourage investment that benefits the country. A 200-per-cent additional cap on corporate-income-tax incentives will be granted to a company that has a high ratio of expenditure on R&D, Hirunya said.