Even against the background of significant changes of the political landscape in Thailand over the past years, as well as the shortage of skilled workers, the country is still regarded amongst one of the best destinations in ASEAN for foreign investment.
Thailand is the second largest, highly diversified economy in ASEAN after Indonesia and the fourth after Singapore, Brunei, and Malaysia in terms of per capita GDP.
The World Bank’s Ease of Doing Business 2017 report ranked Thailand as the 26th easiest country (of 190 countries worldwide) in which to do business. Moreover, Thailand was ranked first in US News’ Best Countries to Start a Business and eight in US News’ Best Countries to Invest in.
A strategic location, growing economy, advanced infrastructure, increased domestic consumption, and government support are all key reasons why Thailand continues to be among the highest-ranked countries for attracting FDI. Low cost of living and the rise of cost efficient co-working spaces also become part of the equation.
FDI has been the main facilitator of Thailand’s social and economic development. The Thai government is actively encouraging investments and revealing favorable polices especially to those that contribute to the development of skills, technology, innovation and sustainable development.
Thailand aspires to become a high-income country by 2032. In order to do this and to improve the country’s competitiveness, in 2016 the government has adopted a long-term investment promotion plan as a key means of moving the country toward Thailand 4.0. The aim of this ambitious program is to make Thailand an innovation and service-oriented economy.
The government started developing the Eastern Economic Corridor (EEC), one of the new growth hubs, which covers three provinces: Chachengsao, Chonburi, and Rayong and is expected to be a central gateway to East Asia and to South Asia.
Major investments in infrastructure and transportation development are underway and include the construction of a high-speed railway/highway between Bangkok and the EEC and the expansion of nearby airports and seaports, among others. The entire development project is estimated to cost $45 billion and investing financing is expected to come from a variety of sources, including arrangements such as public-private partnerships (PPP).
Foreign companies investing in the EEC through PPP will acquire special regulatory rights.
Investment is welcomed into ten target industries considered to be economic growth drivers: next-generation automotive, smart electronics, affluent medical and wellness tourism, agricultural and biotechnology, biofuel and biochemical, foods, robotics, logistics and aviation, digital and medical services.
Through the Board of Investment (BOI), foreigners looking to invest in these industries will enjoy special incentives that are highly competitive, such as corporate tax exemption for up to 15 years, reduction of personal income tax to 17% for investors, managers and experts, special visa facilitation for skilled workers and high-level executives, and the right to lease state land for up to 99 years. Projects investing in new technology, research and development, human resource development may receive additional incentives.
Furthermore, investors are permitted to use foreign currency for payment of goods and services without exchanging it into Thai baht, minimizing foreign exchange risks. This exemption will lead to easier trade practices resulting in the growth of imports and exports.
Big corporations as Alibaba, Airbus, and Rolls-Royce are currently eyeing Thailand as a location for development.
The future of Thailand as an investment location looks bright. With the development of the EEC, ease regulations and broader incentives for investment in ASEAN, the country is expecting to attract new FDI and a significant growth of 4.1 percent for the economy in 2018. However, within the region, there’s strong competition on investment incentives, since each government tries to offer the best options to draw foreign investors to their countries.
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This article is written by lawyers from the Antares Group and edited by Rishika Pundrik of Asia Law Network.
This legal update was originally published on the Antares website.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.