Thai tax incentives aim to draw greater Malaysian investment
Malaysian applications rose 42% year on year in the second quarter as Thailand highlighted investment opportunities across high-tech and green industries.
- Thailand is offering an incentive package that includes a corporate tax and import duty exemption for up to 13 years, which can be extended to 15 years for R&D activities.
- Following the new measures, investment applications from Malaysia increased by 42% year-on-year to US$97 million in the second quarter of 2026.
- The initiative specifically targets businesses in northern Malaysia and aims to attract investment in high-value sectors like semiconductors, electric vehicles (EVs), biotechnology, and deep-tech R&D.
- Beyond tax breaks, Thailand is promoting its geographical proximity, skilled workforce, established infrastructure, and access
Investment applications from Malaysia rose 42% year on year to US$97 million (RM395 million) in the second quarter of 2026, as Thailand presented a package of incentives to attract more Malaysian businesses, particularly those in northern Malaysia.
Across Thailand, applications for investment approached US$44 billion (RM179 billion) during the first half of 2026, marking a 37% increase from the same period a year earlier.
Foreign direct investment applications grew by 80% to more than US$40 billion (RM163 billion).
In 2025, Malaysian investors submitted 35 projects with a combined application value of US$175 million (RM712 million).
From 2021 through the second quarter of 2026, machinery and vehicles led Malaysian investment at THB5.82 billion (RM717 million), followed by agriculture, food and biotechnology at THB4.88 billion (RM601 million) and high-value services at THB3.36 billion (RM414 million).
Patarakrit Vichitbhat, a senior investment promotion officer at the Thailand Board of Investment (BOI), said businesses in northern Malaysia could benefit from being close to Thailand.
Other advantages included industrial estates and skilled workers, together with stable utilities and established infrastructure and supply chains.
He also pointed to access to more than 60 million people in Thailand’s domestic market and over 700 million consumers across the Association of Southeast Asian Nations (ASEAN).
An exemption from corporate tax and import duties is available for 13 years under the package.
When an investor carries out research and development (R&D), the exemption period can be extended to 15 years.
Import-duty exemptions apply to machinery, raw materials used in export production and goods imported for R&D.
Investors may also claim deductions equal to twice their transport, electricity and water costs, as well as a 25% deduction on expenditure for installing or constructing facilities.
The targeted portfolio spans semiconductors, electric vehicles (EVs), aerospace and clean technology, as well as biotechnology, advanced medical and biotech industries, and deep-tech R&D.
Between 2023 and 2025, the semiconductor and advanced electronics sector drew 753 applications valued at THB800 billion (RM98.5 billion).
Patarakrit said investment opportunities in the EV industry were not confined to vehicle assembly, but also covered batteries, components and charging infrastructure.
The areas being promoted also include bio and green industries, automation, robotics, artificial intelligence and digital services.
Psusist Wongsurawat, Consul-General of Thailand in Penang, said geographical proximity and transport connections made it easier for companies to invest across the border and develop regional supply chains.
“We hope more Malaysian investors, particularly from the northern region, will consider Thailand when establishing or expanding their businesses,” he said.
Source: The Star
