Business Opportunity Sectors: Thailand

Thailand offers business and investment opportunities in following key sectors:

BUSINESS OPPORTUNITIES

• Aircraft Part Production & Aircraft Maintenance Industry
• Alternative Energy
• Automotive Industry
• Bioplastics
• Biotechnology
• Digital Economy
• Electrical & Electronic

AVIATION INDUSTRY OF THAILAND: HUB FOR AIRCRAFT

Aviation Industry of Thailand: Hub for Aircraft Service and Maintenance

The Thai aviation industry has grown rapidly over the past few decades. Geographically located in the center of Southeast Asia and sharing borders with four ASEAN nations, the country has firmly established itself as an aviation hub for the region. With this conflux of aviation activity, Thailand has also evolved into a regional aircraft service and maintenance center providing services such as refueling, repairing, maintaining and refitting aircraft.

Thailand experienced steady growth in air passengers over the past several years. Air passenger movement in Thailand grew at an average annual rate of 14.6% from 2009- 2013 as Bangkok becomes one of the world’s top tourist destinations while Thai travelers increasingly flew.

In 2013, Suvarnabhumi International airport transported 50.9 million passengers, making it the third busiest airport in ASEAN. According to the Airports Council International, Suvarnabhumi International airport was also ranked 20th in the world for cargo traffic in 2013, with approximately 1.27 million metric tons flowing into and out of the airport. It is expected that the number of flights passing through Suvarnabhumi and Don Mueang Airports will continue growing at a rate of 10% in 2014 and 11% in 2015. Based on this solid growth, both the aircraft maintenance industry and aviation supply companies have significant opportunities to profit.

In order to strengthen the Thai aviation industry and increase its competitiveness, the Ministry of Transportation will establish an Aviation Industrial Estate (AIE) and Aircraft Maintenance Repair and Overhaul (MRO) Center at Nakorn Ratchasima Airport. The feasibility study of this project is aimed to be finished by the end of 2015 to support the AEC.

Thailand’s standing as a one of the top global tourist destination bolstered by six major international airports enhances the aviation industry’s potential to expand.

Today, five major, local airlines have emerged to control approximately 50% of the Thai market, taking both tourists and freight around the country. Thai Airways International, Bangkok Airways, Air Asia Thailand, Nok Air, Thai Smile Air, Thai Lion Air and Orient Thai provide regular domestic and/or international flights to many destinations

Thailand Aircraft Traffic in 2013*

Airport	Total Movement
	Passenger (Million)	Aircraft Movement	Freight (Ton)
Suvarnabhumi	50.90	288,004	1,269,341
Don Mueang	15.56	135,988	17,149
Phuket	10.98	70,198	34,799
Chiang Mai	5.17	41,295	18,451
Hat Yai	2.47	17,056	13,953
Chiang Rai	1.05	6,882	4,565
Total	86.13	559,423	1,358,258

Source: Airport of Thailand (AOT)

Thailand: An Excellent and Expanding Market

Thailand’s aircraft and aircraft parts and equipment market has shown continual and robust growth over the past few years. In 2015, the value of aircraft parts and equipment imports increased approximately 87% from the previous year, a testament to the strong growth of the aircraft industry in Thailand.

Imports and Exports of Aircraft Parts and Equipment, 2013

HS Code	Description	Imports (US$ million)	Exports (US$ million)
88	Aircraft, spacecraft and parts	4, 696.01	1,080.85
854430	Ignition wiring sets & other wiring sets for vehicles and aircraft	247.72	426.17
840710	Aircraft engines	237.31	49.82
401130	Pneumatic tires new of rubber for aircraft	9.13	89.05
700721	Laminated safety glass for vehicles and aircraft	12.93	42.20
940110	Seats for aircraft	0.31	10.29
840910	Parts for spark-ignition type aircraft engines	1.76	3.03
401213	Retreaded pneumatic tires, of rubber, of a kind used on aircraft	2.27	0.95

(Source: United Nations Trade map)

In 2013, aircraft, spacecraft, and parts (HS code 88) was Thailand’s largest aircraft import sector, with imports valued at US$4.7 billion, a 94% increase from the previous year. Major import markets of aircraft, spacecraft, and parts were France (45%) and the US (39%).

The Thai government has supported the growth of the aerospace industry by providing benefits and incentives through the Board of Investment (BOI). BOI incentives bolster Thailand’s potential to attract new aerospace investment projects.

Today, the leading aircraft parts producers in Thailand include Ducommun Technologies, Weston SEA, Triumph Structures, Dreissen Aircraft Interior Systems and Leistritz.

Excellent Aerospace Maintenance, Repair & Overhaul Center (MRO) Situated in the heart of Asia, Thailand is gearing up to become a full service aerospace hub and major player in the region’s multi-billion dollar a year aircraft maintenance industry. In 2012, Thailand’s aircraft maintenance industry had a market value of US$637 million, a 20% increased from 2011. This industry is expected to continue growing in the coming years and further accelerate with the launch of the ASEAN Economic Community (AEC) in 2015.

Thailand will be more competitive in the aerospace industry in comparison to many other ASEAN countries as the Kingdom already has the infrastructure in place for repair services, including overhaul of aircraft engines, and is already a major hub for the electronics and electrical appliances (E&E) industry. Moreover, Thailand has commenced training aerospace professionals and technicians to service the industry.

This opens great opportunities for cluster development for both avionics and communications equipment. Today, there are numerous aerospace maintenance, repair & overhaul (MRO) companies and organizations in Thailand. The largest companies include, among others, Thai Airways International, Scandinavian Aircraft Maintenance, and Thai Aviation Industries, Triumph Aviation Services Asia and Eurocopter.

Attractive Investment Incentives

Thailand Board of Investment offers a wide range of tax and non-tax incentives for investments in a variety of activities. Tax-based incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions and reductions. Non-tax incentives include permission to bring into the Kingdom skilled workers and experts to work in investment promoted activities, to own land and take or remit foreign currency abroad. Additionally, foreign businesses are entitled to 100% ownership for manufacturing and some services sectors such as aircraft service and maintenance.

Recognizing the potential of the aerospace industry in Thailand’s future technological development, the BOI has classified the manufacture airframes, airframe parts, and major aircraft appliances, e.g. engines, aircraft parts, propellers and avionics, as a priority activity of special importance and benefit to the country. As such, projects receive an uncapped eight-year corporate income tax exemption, exemption from import duties on machinery and raw materials used in manufacturing export products, regardless of location. Projects in these activities are also eligible to receive other non-tax incentives.

Projects in manufacture or repair of other aircraft parts and onboard devices (except disposable and reusable aircraft utilities and supplies) are granted a five-year corporate income tax holiday, exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, as well as non-tax incentives.

Projects that repair aircraft, parts and equipment are granted an eight-year corporate income tax exemption, an exemption on import duty on machinery and raw or essential materials used in manufacturing export products, as well as non-tax incentives.

ALTERNATIVE ENERGY IN THAILAND

In order to strengthen Thailand’s long-term energy security and global economic competitiveness the country has committed itself to develop its alternative energy capabilities. This policy emerged at the national level as the Alternative Energy and Development Plan (AEDP), a 10 year initiative (2012-2021) to better diversify and build a more sustainable energy sector. With this plan, Thailand has set the target of increasing alternative energy consumption from 7,413 ktoe (kilo tonnes of oil equivalent) in 2012 to 24,664 ktoe in 2021.

According to the Energy Policy and Planning Office, Ministry of Energy, Thailand used the equivalent of 2 million barrels of oil per day in 2014. Furthermore, the sector is heavily reliant on foreign inputs considering over half (57%) of that energy is imported.

In general, the major source of power generation in Thailand comes from natural gas, contributing to 66% of the total share in 2014. The other significant sources are coal and lignite which make up 21% of the share. Renewable energy currently only represents 3% of the power produced in Thailand. However, according to the AEDP initiative, this will be increased considerably in the coming years.

Energy Savings and Targets – The Renewable and Alternative Energy Development Plan (AEDP), 2012-2021

The end goal of the AEDP is to achieve 25% reliance on total national energy generation from alternative or renewable sources by the year 2021 and to set the country’s societal development on a path towards a low-carbon usage base, away from fossil fuels. The breakdown of the sources is as follows: solar, wind, hydro-power, bio-energy (biomass, bio-gas, MSW), biofuels (ethanol, bio-diesel, new alternative diesel fuel), and new energy sources (tidal, geothermal).

Nonetheless, the main focus of the plan is on solar and bio-energy because of the suitability and ease of production for these energy sources in Thailand.

Biomass

Biomass energy production utilizes the combustion or partial-combustion of organic material to be converted into electricity or fuel. The materials readily available in the country are solid waste from rice, sugarcane, cassava, corn, rubber and palm production. In 2014, Thailand consumed 2,452 megawatts of energy from biomass. According to the AEDP, Thailand aims to increase the use of biomass for energy to 4,800 megawatts by 2021. The government also has included biomass energy in the country’s Feed-in Tariff scheme.

Biogas

The main process behind biogas involves the decomposition of organic matter by bacteria which produces gases that are usable as fuel. The gas that is produced is mainly composed of methane mixed with carbon dioxide and other elements at trace levels. Thailand consumed 312 megawatt of electricity produced from biogas energy in 2014. AEDP aims for 3,600 megawatts of biogas utilization by 2021. The government also has included biogas energy in the country’s Feed-in Tariff scheme.

Municipal Solid Waste (MSW)

MSW is converted to electrical energy mainly through incineration in heat boilers and powering turbines. Currently there are 21 waste power plants in Thailand. In 2014, Thailand consumed 66 megawatts of power through MSW. These numbers are set to grow as the AEDP initiative has set a target of 400 megawatts by 2021. The government has also included MSW energy in the country’s Feed-in Tariff scheme.

Biofuels

Biofuels that are currently commercially produced and utilized in Thailand can be categorized into two general types, biodiesel and ethanol. Biodiesel is a diesel fuel substitute derived from lipid-based biomass, through transesterification. Commercially available products in the market are “B100” and “B5” biodiesel.

The other form of biofuel in the country is ethanol. Ethanol is a petrol fuel substitute that is derived from sugar-based biomass and lignocellulose biomass, by fermenting plant materials such as sugar cane molasses, tapioca, paddy straw, cassava and corn.

The consumption of ethanol was 3 million liters per day in 2014 and is estimated to reach the target of 9 million liters per day by 2021. Currently, there are 21 factories producing ethanol in Thailand with a total capacity of 5.04 million liters per day. The government also has included biofuel energy in the country’s Feed-in Tariff scheme.

Solar Energy

Thailand has a high potential for utilizing solar radiation as an alternative source of energy. The average solar radiation received throughout the country is 18.2 MJ/m2 per day. The areas receiving the highest amount of radiation are in the north-eastern and some parts of the central region. The country is exposed to the highest amount of sunlight between the months of April and May.

Solar electrical power generation can be divided into two forms, photovoltaics (PV) and solar thermal heat systems. The photovoltaic process in solar cells converts solar energy directly into electricity. In a solar thermal heat system, solar energy is concentrated via reflections and used to heat fluids to generate steam, which in turn drives a turbine that produces electricity. This is considered one of the cleanest methods of electricity production as no emissions are involved in the energy production process.

In 2014, Thailand solar power consumption was 1,299 megawatts. Thailand’s AEDP targets solar energy capacity of 3,000 megawatts by 2021. The government has also included solar energy in the country’s Feed-in Tariff scheme.

Wind power

Wind power generation in Thailand has high potential in the offshore and gulf regions and is also feasible inland. The largest wind farm in Thailand is in Nakhon Ratchasima province and has a production capacity of 207 megawatts. While local wind energy potential is composed of many different factors including varying topography, the main meteorological factor influencing overall wind potential in Thailand is the seasonal monsoons.

In 2014, Thailand consumed 224 megawatts of commercial wind power and is aiming to reach 1,800 megawatts by 2021. The government also has included wind energy in the country’s Feed- in Tariff scheme.

Hydropower

According to the Department of Alternative Energy Development and Efficiency there are 43 small hydropower plants currently in operation, with the highest concentration in the northern mountainous region. Small hydropower plant projects are also a crucial tool in controlling irrigation for agriculture usage and supporting rural communities’ development programs.

In 2014, Thailand’s small hydropower energy production totaled 142 megawatts. Thailand’s AEDP has a target to increase power generation from small hydropower plants to 324 megawatts by 2021. The government has also included small hydropower in the country’s Feed-in Tariff scheme.

Clean Development Mechanism (CDM)

Thailand is also part of the global effort to reduce carbon emission to mitigate climate change. A mechanism to expedite that effort is the Clean Development Mechanism (CDM). This is a tool formed under the Kyoto Protocol to reduce carbon dioxide level in the atmosphere through carbon credit trading. It allows foreign investors from designated countries to buy carbon credits to offset their emission levels and helps the host country develop its sustainability goals through investments in green projects by trading Certified Emission reduction (CER) credits.

Support for Investors

To promote investment in renewable energy development, the Thai government has also initiated a Feed-in Tariff scheme to help new investors mitigate investment risks from the inconsistent nature of renewable energy sources. Feed-in TariffF rate (FiTF) is a fixed buying rate for electricity calculated from initial investment of power plant construction and the full lifetime used of its operation and maintenance cost. Further, price inflation for raw material used in biological energy production (for waste, biomass and biogas) is expected. As such, the scheme will also compensate for this by adding an additional rate (FiTv, 2017) on top of the fixed buying rate (resulting in FiT (1)). Additionally, rate add-ons (FiT Premium) are offered for targeted biofuel groups and projects located in the Southern border provinces. The details are as follows:

FiT Rate for Very Small Renewable Power Producer Projects (VSPP)

Production Capacity (MW)	FiT (Baht/Unit)				FiT Premium (Baht/Unit)
	FiTF	FiTV,2017	FiT(1)	Support Duration (Years)	Biofuel Project Group Participants (For the first 8 years)	Southern Border Provinces Group Participants (2) (For the duration of the project)
1) Waste (Integrated Waste Disposal)
Installed Capacity≤ 1 MW	3.13	3.21	6.34	20	0.70	0.50
Installed Capacity > 1-3 MW	2.61	3.21	5.82	20	0.70	0.50
Installed Capacity > 3 MW	2.39	2.69	5.08	20	0.70	0.50
2) Waste (Landfill)	5.60	–	5.60	10	–	0.50
3) Biomass
Installed Capacity ≤ 1 MW	3.13	2.21	5.34	20	0.50	0.50
Installed Capacity > 1-3 MW	2.61	2.21	4.82	20	0.40	0.50
Installed Capacity > 3 MW	2.39	1.85	4.24	20	0.30	0.50
4) Biogas (Liquid/solid waste)	3.76	–	3.76	20	0.50	0.50
5) Biogas (Energy Crops)	2.79	2.55	5.34	20	0.50	0.50
6) Water Energy
Installed Capacity ≤ 200 kW	4.90	–	4.90	20	–	0.50
7) Wind Energy	6.06	–	6.06	20	–	0.50

Notes: FiTF: Feed-in Tariff fixed rate, calculated from initial investment of the power plant construction and the full lifetime of its operation and maintenance cost.

 

FiTV, 2017: Feed-in Tariff variable, calculated from investment cost of raw materials used for power generation that changes according to time.

(1) FiT = FiTF + FiTV. This FiT rate will only apply to projects that feed electricity into the system within the year 2017. After 2017, FiTV rate will continuously increase according to the core inflation rate. This only applies to waste (integrated waste disposal), biomass and biogas (energy crops) categories.

(2) Projects in Yala, Pattani, Narathiwat and Chana, Thepha, Saba-Yoi and Na-Thawi districts in Songkhla provinces.

Automotive Industry

Thailand has approximately 709 Tier 1 auto-parts suppliers and 1,700 Tier 2 and 3 suppliers. More than half of the Tier 1 suppliers are automotive component companies. Of the top 100 auto parts manufacturers in the world, 50% have factories in Thailand. Thailand’s production base is diverse enough to supply all necessary components, from tires to structural components.

Major multinational automotive industry leaders with presence in Thailand include: Auto Alliance Thailand (Ford and Mazda), BMW Manufacturing, General Motors, Hino Motor, Honda Automobile, Isuzu Motors, Toyota Motors, Mercedes-Benz Thailand, Mitsubishi Motors, Nissan Motors, Tata Motors, Suzuki Motor, and Volvo Car Thailand.

Big Industry Drivers

The Thai automotive industry saw historic growth during 2012 and 2013. Both these years saw Thailand produce over two million vehicles. Thailand’s successful Eco Car Project initiated its second phase in 2013, marking a new phase in the Thai automotive industry.

The second phase has attracted investment applications from major car manufacturers including: Ford, General Motors, Honda, Mazda, Mitsubishi, Nissan, SAIC, Suzuki, and Toyota. Phase two projects are investing US$4.3 billion with total production capacity of 1.5 million units.

AUTOMOTIVE INDUSTRY OVERVIEW

The Thai automotive industry continues to be a mainstay of Thailand’s economy. In 2014, Thailand’s automotive industry was the largest export sector, with an export value of US$30 billion according to the Thailand Ministry of Commerce.

With 2.46 million vehicles manufactured in Thailand in 2013, the country was ranked 9^th amongst automotive manufacturing countries in the world. Even though Thailand’s automotive industry was affected by the economic slowdown in 2014, the automotive industry is predicted to rebound in 2015 and see production reach 3 million units according to the Thai Automotive Institute.

The top ten destinations of Thai automotive exports accounted for 57% of all Thailand’s automotive exports worldwide. Australia and Indonesia are the major destinations of Thai manufactured automotive products.

Top 10 Thailand’s Vehicle Export Destinations, 2014

Country	Value (million US$)	%
Australia	4,080	13.3%
Indonesia	2,692	8.8%
Malaysia	1,959	6.4%
Japan	1,936	6.3%
Philippines	1,753	5.8%
Saudi Arabia	1,614	5.3%
USA	1,056	3.5%
South Africa	810	2.6%
UAE	798	2.6%
Vietnam	759	2.5%
Total	17,457	57%

(Source: The Ministry of Commerce)

THAILAND’S AUTO PARTS INDUSTRY

The automotive parts and components sector has been critical to the success of Thailand’s automotive industry. Today, there are approximately 2,400 automotive suppliers in the country, 709 of which are original equipment manufacturers (OEMs). Major foreign parts and components manufacturers in Thailand include: Bosch, Denso, Continental, Magna International, Aisin Seiki, Johnson Controls, Faurecia, ZF Friedrichshafen, Yazaki, and Lear.

Thai-made automotive parts are internationally recognized for their high quality. A report published by the Japan Automobile Manufacturers Association stated that Thailand-made automotive parts have the highest quality among ASEAN countries. Local manufacturers supply around 85% of the parts used in pickup truck assembly and around 70% of the parts used for passenger cars assembled in Thailand. Thailand produces nearly 100% of the parts used in the domestic assembly of motorcycles.

In 2014, the majority of Thailand’s automotive parts exports were OEM parts (US$6.6 billion), comprising nearly 80% of total automotive parts exports. This is followed by engines (US$1.1 billion), at almost 13%, spare parts (US$675 million) with 8%, and other parts (US$ 55 million) with nearly 1%.

AUTOMOTIVE ELECTRONICS

Electronics have become an indispensable element of the modern automobile. Electronics and electronic systems have improved a range of automobile elements including: safety, fuel efficiency, performance, and comfort. Furthermore, the current trends of alternative fuel vehicles, increased fuel efficiency, and stricter emissions standards, are increasingly spurring demand for automotive electronics. The global demand for automotive electronics systems is expected to reach US$204.6 billion in 2014 and is forecast to reach US$314.4 billion in 2020.

As the largest automotive production center in ASEAN, opportunities in Thailand’s automotive electronics market are increasingly visible as Thailand pushes to become one of the top global eco-car manufacturing centers. Already leading automotive electronics manufacturers such as Mizuki, Murata, Omron, Toyota Tsusho, as well as other top manufacturers are found in Thailand.

OPPORTUNITIES

Thailand is the premier automotive production base in ASEAN. It is one of the top ten global automobile manufacturers and a leading producer of automotive components. While many leading vehicle manufacturers and auto parts producers have production facilities in-country, some auto parts are still imported from abroad. Manufacturing opportunities in Thailand for foreign suppliers include: electric fuel-injection systems, substrates for catalytic converters, automobile transmissions, electric stability controls electric air conditioning systems, and regenerative braking systems, among others.

As Thailand continues to lead Southeast Asia’s automotive industry, Thailand will require more R&D, design and testing centers to maintain its industrial supremacy. Major industrial leaders – such as Nissan, Toyota, Honda, and Denso – already operate such facilities in Thailand.

Thailand offers business friendly tax schemes to encourage continued investment in Thailand’s strategically vital industry. A

Promising Investment Destination

Thailand is an ideal location as a world-class automotive production base. Nearly all of the world’s major automotive manufacturers have production facilities in the country. Strategically situated in the center of Southeast Asia, Thailand provides easy access to the world’s fastest growing regional market. These are the factors that contribute to the market entry opportunities for foreign investors.

 

The automotive industry’s government support provides foreign investors with tax and non- tax incentives for the manufacturing of vehicles, vehicle parts, and for automotive R&D and testing. The Thai government also does not impose export requirements, local content requirements, location requirements, or foreign equity restrictions on foreigners involved in the previously stated activities.

Abundant skilled-labor supply

Thailand has a highly efficient, skilled, and affordable labor pool. In 2014, more than 550,000 workers were employed in the industry. Moreover, automotive firms in Thailand are currently applying the successful German apprenticeship system in their own Thai operations in order to train the next generation of skilled labor for Thailand’s growing automotive industry.

Auto Parts Clusters

Under government support and guidance, auto parts clusters were developed to tighten business connections between automotive firms and their suppliers, lower logistics costs, and improve efficiencies.

Excellent Infrastructure

Thailand is a transportation hub of the ASEAN region. The country provides world-class infrastructure along with cost effective logistics. Thailand’s extensive road and rail networks span the nation, facilitating access to nearby countries. Bangkok’s Suvarnabhumi International Airport and Laem Chabang deep-sea port are globally recognized gateways of global logistics. Thailand offers manufacturers a geographically accessible and logistically convenient location.

Thailand’s Trade Liberalization

In order to enhance global commerce opportunities, Thailand has bilateral free trade agreements with many countries, including Japan, India, Australia, and New Zealand, and participates in multilateral free trade agreements with China and ASEAN. Furthermore, the ASEAN Free Trade Agreement (AFTA) has expanded Thailand’s market to include the 10 member states of ASEAN that collectively comprise a market of 600 million consumers and a combined GDP of more than US$2 trillion.

The establishment of the ASEAN Economic Community (AEC) in 2015 will fully integrate this US$2 trillion market into the global economy. This new economic bloc with streamlined movement of goods, services, and investment capital will provide unparalleled opportunities for manufacturers.

Excellent Government Support

The Thai government views the automotive industry as a cornerstone of the national economy and is preparing to make Thailand one of the premier global automotive hubs by promoting the country as a global green automotive production base. The Master Plan for Automotive Industry (2012-2016) was developed with the goal of establishing the Kingdom as one of the world’s key automotive manufacturing locations.

ATTRACTIVE INVESTMENT INCENTIVES

Thailand Board of Investment (BOI) offers a wide range of tax and non-tax incentives for projects that meet national development objectives. Tax-based incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemption of up to eight years. Non-tax incentives include permission to bring in expatriates, own land and take or remit foreign currency abroad.

Recognizing the importance of the automotive sector, tax incentives are granted to approve projects in numerous automotive activities, including manufacture of vehicle parts; manufacture of rubber tires for vehicles; manufacture of automobile engines; manufacture of motorcycles; manufacture of fuel cells; and general automotive manufacturing.

Additional information about specific manufacturing activities relating to automotive industries can be found on the BOI website (www.boi.go.th) or by contacting the BOI’s Investment Promotion Bureau.

FOR FURTHER INFORMATION:

Thailand Automotive Institute (TAI): www.thaiauto.or.th

Thai Automotive Industry Association (TAIA): www.taia.or.th

Thai Autoparts Manufacturers Association (TAPMA): www.thaiautoparts.or.th

ASEAN Supporting Industry Database (ASID): www.asidnet.org

Bio-Plastics

BIO-PLASTICS OVERVIEW

Bio-plastics, plastics derived from renewable biomass sources such as plant starches and vegetable fats, are a cutting edge biodegradable technology seen by many as a sustainable alternative to chemically produced plastics. The most widely known types of commercial bio plastics include Polylactic acid (PLA), Polybutylene Succinate Adipate (PBSA), Polybutylene Adipate Terephthalate (PBAT), and Polyhydroxyalkanoates (PHAs). There is a growing demand for these biodegradable, environmentally friendly products as countries become increasingly environmentally conscious.

The global demand for bio-plastics is expected to more than triple to an approximately worth of US$2.9 billion by the year 2015. Starch based resins and PLA are expected to more than double in demand by 2015 while PHA resins are expected to show the greatest increase in demand.

Thailand, a nation home to both a strong, thriving agricultural base and advanced technologies and research-driven resources, provides a competitive advantage to the bio-plastics industry. The combination of input supply and advanced manufacturing resources puts Thailand in a competitive and strategic position as a nation readying itself to become one of the global hubs for the emerging bio-plastics industry.

The bio-plastics industry is an enormous business opportunity in Thailand due to rich supply of biomass, supporting industries, active industry and government cooperation, supportive government policy, and the nation’s strategic location. The Kingdom of Thailand also boasts a large agricultural base as the world’s second biggest food exporter in Asia after China and is the world’s largest exporter of cassava.

THAILAND: THE LAND OF BIO-PLASTICS OPPORTUNITIES

Thailand’s agricultural and industrial resources truly position the nation as the regional hub in the bio-plastics industry, and the Thai government has taken active steps to incentivize investment into the flourishing, emerging industry. Thailand’s strong agricultural sector, existing plastics industries and supporting governmental organizations make it an ideal location for bio- plastics investment.

Abundant supply of raw materials

Thailand has a flourishing agricultural sector in products such as rice, cassava, sugarcane and cellulose and is the world’s biggest cassava exporter and second biggest sugar exporter. Thailand’s large agricultural base, which can be used as biomass feedstock for bio-plastics, gives those investing in the bio-plastics industry an enormous comparative advantage as a cost driver and offers biomass feedstock at competitive prices and enhanced price stability.

Manufacturing raw biomass materials into bio-plastics is a profitable, value-added business opportunity that can diversify Thailand’s established plastics industry and advance Thailand’s goal to move its economy up the value chain and compete in world markets. In addition, bio plastics can meet the growing demand for biodegradable products in environmentally conscious developed nations. Thailand is transforming itself into an advanced, knowledge-based economy and is moving its manufacturing products up the value chain.

Existing complete value chain industries

Thailand offers existing complete value chain industries to the bio-plastics industry. Thailand has already established itself with a reputation as a strong competitor in the plastics industry and has established the resources and infrastructure necessary to be a global leader.

Currently, Thailand has more than 3,000 companies in the domestic plastics industry. Thailand’s large presence in plastics manufacturing ensures that there are established industries in every stage of the bio-plastics value chain process, ranging from biomass processing to bio-monomer and biopolymer industries. Thailand boasts incredible potential in its established value chain for plastics, from basic intermediates to midstream technologies such as compounding and downstream industries such as molding. In addition to such capabilities, a lactic acid plant was established in 2007 to produce lactic acid, the main raw material to produce PLA. This ensures that these established plastics industries can be used effectively to manufacture biomass into high-value-added bio-plastics.

Strong supportive government policies

The Thai government has taken an active role in promoting the bio-plastics industry with the goal to make Thailand the regional ASEAN hub for bio-plastics. The government appointed the National Innovation Agency (NIA) to create a national roadmap for the development of the bio-plastics industry as a new wave industry. In addition, the government also offers many incentives to support investment in the bio-plastics industry.

 GOVERNMENT STRATEGIES ON BIO-PLASTICS

The Thai government has a strong network in both domestic technical and industrial alliances as well as international agreements that support the bio-plastics industry. Domestically, the National Innovation Alliance (NIA) holds relationships with organizations and leading Thai universities to foster technical advancements and innovation in bio-plastics technology. The Thai government also has a strong industry-wide network comprised of institutions such as the Thai Bio-plastics Industry Association (TBIA) to further develop the bio-plastics industry.

The Thai Bio-plastics Industry Association (TBIA) currently has a memorandum of understanding (MOU) with global institutions to cooperate in developing harmonized certification and identification programs and scientifically based tests and specifications for bio plastics products. The MOU also promotes further cooperation in areas such as technology development, capacity building, joint ventures, and market development to further the global development of the bio-plastics industry.

The Thai government cooperated with the involved parties to create the roadmap to support investment in the bio-plastics industry in Thailand. The National Innovation Agency (NIA) will be the key coordinator to convert the roadmap into practical methods. According to the framework of the roadmap, the Thai Government will support the construction of a bio-plastics resin pilot plant.

In addition, there are more supplementary measures to accelerate the bio-plastics industry development, as follows:

• Permitting use of raw materials from starch and sugar at export prices
• Offering tax incentives for research and development
• Adopting compostable plastics standards that are certified at international levels
• Reducing import duties for bio-plastics resins that cannot be manufactured in Thailand
• Promoting and supporting the use and development of bio-plastics products to be launched in the market.

CURRENT BIO-PLASTICS INVESTMENT IN THAILAND

Thailand’s bio-plastics roadmap and a full range of incentives to encourage investment have attracted many bio-plastics firms such as PURAC [lactic acid and lactide], PTTGC/Nature Work [PLA], PTTMCC Biochem – a joint venture between PTT and Mitsubishi Chemical – [Bio- Butanediol (BDO), Bio-succinic (BSA) acid and PBS]. With Southeast Asia projected to become the world’s major bio-plastics manufacturing region in the next 10 years, Thailand is readying itself to be the regional hub of bio-plastics and continues to implement its roadmap, develop new innovative technology and build its infrastructure and industry.

DEVELOPED NETWORK OF SUPPORTING ORGANIZATIONS

Government and private organizations supporting the growth and competitiveness of the bio- plastics industry in Thailand include:

• The National Innovation Agency (NIA): NIA is the core operational organization in facilitating innovation development in Thailand. Operating under Thailand’s Ministry of Science and Technology, the NIA functions as a central unit and strives to coordinate and partner different organizations from various fields to promote innovation. The NIA has played an important role in promoting and supporting Thailand’s National Roadmap for the Development of the Bio-plastics Industry.
• Thai Bio-plastics Industry Association (TBIA): TBIA was founded in 2007 with support from NIA and aims to be the center of information and knowledge in bio-plastics markets and technology. TBIA assists bio-plastics firms in reaching international standards through laboratory testing and certification, encourage networking between members, academics and certification international organization and cooperate with the government in the establishment of national policy that supports the development of the bio-plastics industry. TBIA consists of 50 members ranging from upstream to downstream industries and strives to promote coordination and cooperation between raw material suppliers, plastics resin manufacturers, molded plastics producers, traders, and customers.
• The Plastics Institute of Thailand (PITH): PITH, was established in 2010, is an organization under Thailand’s Ministry of Industry with aims to support the development of bio-plastics sector by promoting coordination between public agencies and private firms. PITH supports research and development in bio-plastics, provides laboratory and testing centers, and assists government agencies to develop national policy.

BOI INVESTMENT INCENTIVES

Thailand Board of Investment offers a wide range of tax and non-tax incentives for investments in a variety of activities. Tax-based incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions and reductions. Non-tax incentives include permission to bring into the Kingdom skilled workers and experts to work in investment promoted activities, to own land and take or remit foreign currency abroad. Additionally, foreign businesses are entitled to 100% ownership for manufacturing and some services sectors such as aircraft service and maintenance.

Recognizing the importance of the bioplastics industry to the future of Thailand, the Board of Investment offers incentives to two activities related to bioplastics (Manufacture of eco-friendly chemicals and Manufacture of eco-friendly products) as priority activities of special importance and benefit to the country.

Projects that manufacture eco-friendly chemicals or polymers, or that manufacture products from eco-friendly chemicals or polymers that are incorporated within the same project as the manufacture of eco-friendly chemicals or polymers are granted an eight-year corporate income tax exemption, exemption from import duties on machinery and raw materials used in manufacturing export products, regardless of location, and non-tax incentives.

Projects that manufacture products from eco-friendly polymers are granted a five-year corporate income tax exemption, exemption from import duties on machinery and raw materials used in manufacturing export products, regardless of location, and non-tax incentives.

FOR FURTHER INFORMATION:

The National Innovation Agency (NIA): www.nia.or.th

The Thai Bio-plastics Industry Association (TBIA): www.tbia.or.th

The Plastics Institute of Thailand (PITH): www.thaiplastics.org

The National Science and Technology Development Agency (NSTDA): www.nstda.or.th

BIOTECH INDUSTRY

The Kingdom’s position as a global leader in agriculture, one of the top food exporters in the world, and a medical hub of Asia has encouraged the emergence of biotechnology in Thailand. For the past two decades, Thailand has been developing a cutting edge biotechnology industry. This knowledge-based industry has diverse applications across the medical, agricultural, aquatic, and industrial fields. With a greater focus on science and technology, the biotechnology sector has evolutionary implications where industry will move into more value-added activities to support the industry’s growth and competitiveness in years ahead.

The foundation of Thailand’s biotechnology industry was laid in 1983 with the creation of the National Center for Genetic Engineering and Biotechnology (BIOTEC). Since then, numerous public and private institutions have started conducting biotechnology research. To help facilitate the industry, the National Science and Technology Development Agency (NSTDA) provides resources to develop the critical mass of researchers necessary to achieve Thailand’s national research and development (R&D) goals for biotechnology. As the center of biotechnology development in Thailand, BIOTEC established multiple laboratories for conducting research and providing technical services in agricultural, biomedical, and environmental sciences. Additionally, the Thailand Center of Excellence for Life Sciences (TCELS) and the Board of Investment (BOI) have supported the industry, facilitating its progressive growth.

Under the Biotechnology Development Policy Framework 2012-2021, the Thai government is the driving force in stimulating developments in R&D and applications of biotechnology. This initiative aims to transform Thailand into the center of biotechnology in Asia while strengthening the country’s competitiveness. Thailand currently chairs the ASEAN subcommittee on biotechnology and is a regional and global contributor to the industry.

Currently, there are approximately 200 biotechnology firms in Thailand with a total market value over US$ 2 billion. Through strong and supportive governmental policy and the establishment of alliances between universities and industry these biotechnology companies have flourished. By bringing the appropriate stakeholders together, Thailand has linked science to business and is able to deliver biotechnological research and innovation that is applied in the industrial sector.

Thailand Biotechnology Development Policy

The National Science Technology and Innovation Policy Office (STI) cooperated with the National Center for Genetic Engineering and Biotechnology (BIOTEC) in formulating the National Biotechnology Policy Framework 2012-2021. The policy framework is directed towards strategic planning, establishing future R&D, and enhancing the country’s ability to access new technologies and applications of biotechnology, as well as development of the intellectual capital to strengthen the country’s competitiveness. The National Biotechnology Policy Framework 2012-2021 emphasizes the development of four sectors including:

1. Agriculture and food
2. Medicine and public health
3. Bioenergy
4. Bio industries

Agriculture and Food

The use of biotechnology will improve food and agriculture product yields and quality, reduce costs and also increase product value to support the country’s competitiveness in the food industry. Investments in biotechnology R&D facilities enable product development and improvements in product quality to strengthen the industry. The Food Biotechnology Laboratory, a part of BIOTEC’s research units, was established to improve and upgrade the processing and quality of traditional Thai fermented foods and transfer technologies to the private sector. Additionally, the Agricultural Biotechnology Research Unit plays a key role to support the development and implementation of new biotechnologies to drive the country’s agriculture sector.

Current Agricultural Biotechnology projects in Thailand focus on plant and animal biotechnology, including field testing recombinant DNA techniques in transgenic plants to yield resistance to diseases, pests and abiotic stress; enhancements in the nutritional value of rice and its tolerance to flooding, drought and disease; germplasm collection in plants; trait selection such as an aroma marker and a submergence tolerance marker; small particle cassava starch development for use in the pharmaceutical and food industries; and, development of methods to diagnose viruses in shrimp.

Medical and Health

Thailand, as the world’s largest medical tourism market, is well positioned to be the medical hub of Asia. The country offers state-of-the-art technological infrastructure, premium medical services, excellent medical expertise and a wide range of world-class hospitals at affordable costs. The price of medical services in Thailand is far below the USA or Europe. Thailand attracts more than 3 million international patients from all over the world for a variety of treatments ranging from advanced technologies, such as research-based stem cell therapy, to general to general treatments like dental care and basic health check-ups. As a result of the robustness of the medical sector, Thailand’s 2012 revenue from medical tourism surpassed US$4 billion.

Moreover, Thailand has developed several biotechnology programs to support the medical sector especially in alternative disease solutions for emerging diseases, re-emerging diseases, and tropical diseases. Many research programs were created by BIOTEC to provide the resources and facilities for biotechnology development including the facilitation of advanced technology transfer from overseas, human resource development, and specialized laboratories. Thailand, as a gateway into the AEC markets, welcomes openly the collaboration with investors to support these technology establishments throughout the region.

Equally important, Thailand has begun to initiate the Medical Device Cluster Project to facilitate development of medical devices under the emerging AEC single market in the year 2015. TCELS, as a major supporter in collaboration with many local and international institutes, has initiated the medical device development project that aims towards using advanced emerging technologies and advancements in the future.

Bio Energy

Thailand’s annual energy consumption has risen sharply during the past decade and will continue its upward trend. With limited domestic energy sources, Thailand needs to produce more energy from its own renewable resources including solar, wind, hydro power, bio- energy and bio-fuel. In an effort to maintain the sustainability of energy, the Thai Government developed the Alternative Energy and Development Plan (AEDP) 2012-2021, to promote renewable and alternative energy development to 25% of total energy consumption in 10 years.

Thailand has an abundance of agriculture products and agriculture waste to be utilized as bio energy. The bio energy in Thailand includes biomass, biogas, ethanol and biodiesel.

Bio Industry

Thailand’s agricultural base and the well-developed biotechnology sector provide a competitive advantage to the bio industry of Thailand over neighboring countries. The Thai Government appointed the National Innovation Agency (NIA) to create a national roadmap for Thailand to develop the bio plastic industry as a new wave industry. Thailand offers huge opportunities for the bio plastic industry due to its abundant supply of biomass, numerous supporting industries, and strong government support. Recently, Thailand’s National Bio- plastics Roadmap moved on to Phase 2 (2011-2015) which aims to develop improved market promotion and environmental management, R&D, biomass supply chain and business, and investment incentives and privileges.

The country has a comprehensive offering of suppliers across the bio-plastics value chain. According to the International Trade Center, Thailand was ranked the second largest exporter of plastic products in ASEAN and was ranked 20th in the world in 2012. Currently, Thailand has more than 3,000 companies in the domestic plastics industry. This ensures that these established plastics industries can be used effectively to manufacture biomass into high-value-added bio-plastics.

Attractive Investment Incentives

Recognizing the value of biotechnology to Thailand’s future development, biotechnology is classified as a priority activity that has special importance and benefits to the country. As such, projects in biotechnology that use modern biotechnology approved by the National Science and Technology Development Agency (NSTDA) or the Thailand Centre of Excellence for Life Sciences (TCELS) are granted an eight-year corporate income tax exemption regardless of location and are not subject to the corporate income tax exemption cap. Biotechnology projects also receive an exemption of import duties on machinery.

In addition, projects that are located in science and technology parks receive a five-year additional 50% corporate income tax reduction for net profits after the end of corporate income tax exemption period.

The BOI also offers a wide range of non-tax incentives, including permission to own land, permission to bring in foreign experts and skilled technicians to work on promoted projects, and a wide range of added-value services. For example, the BOI operates a One-Stop Service Center for Visas and Work Permits, which enables investors to obtain work permits and long- term visas within three hours or less.

Developed Network of Supporting Organizations

Government and organizations supporting the growth and competitiveness of biotechnology industry in Thailand include:

• National Science and Technology Development Agency (NSTDA)
• National Center for Genetic Engineering and Biotechnology (BIOTEC)
• Thailand Science Park (TSP)
• National Biopharmaceutical Facility (NBF)
• Research and Development Certification Committee Secretariat (RDC)
• Thailand Center of Excellence for Life Sciences (TCELS)
• Thailand Institute of Scientific and Technological Research (TISTR)
• Biodiversity-Based Economy Development Office (BEDO)
• The Venture Capital (VC) Industry in Thailand
• Other associations: Thai Pharmaceutical Manufacturers Association (TPMA), Pharmaceutical Research and Manufacturers Association (PReMA), Thai Medical Device Technology Industry Association (THAIMED), Thai Cosmetic Manufacturers Association, Thai Bioplastics Industry Association, Standards & Quality Association of Thailand and the Thai Society for Biotechnology.

Digital Economy: Thailand – Land of Digital Smiles

Thailand’s reputation as a business-friendly country for foreign investment made it a leading center of commerce in Southeast Asia in the 20th century. Through a combination of low tax rates, world-class infrastructure, cost-effective workforce, and strategic geographic location,

Thailand has emerged as a globally recognized destination for service and industry sectors. Now in the 21st century as trade shifts towards the internet and technology, Thailand is transforming itself into an economy that not only embraces the industrial, but the digital as well. The digital revolution has already greatly changed the way 67 million Thai citizens interact with the world and each other. Thailand has 35 million internet users and 30 million social network users.

Currently, there are 96.4 million mobile phones in usage in Thailand with 34.6 million are smart phone users. The government plans to establish the Ministry of Digital Economy and Society to replace the existing Ministry of Information and Communication Technology and a National Digital Economy and Society Committee led by Thailand’s prime minister. In order to prepare itself for the new digital economy, the Thai government has developed a large scale program that includes reshuffling government agencies to align synergies and produce a digital economy framework revolving around 4 aspects of development and 5 strategies. The 4 areas for development are: digital commerce, digital entrepreneur, digital innovation, and digital content. The 5 strategies to ensure these 4 aspects are successfully implemented focus on hard infrastructure, soft infrastructure, service infrastructure, digital economy promotion and innovation, and digital society.

1. Hard Infrastructure

• National fiber optic broadband network
• Gigabit bandwidth fiber coverage nationwide in 3 years
• National wireless 3G and 4G broadband networks
• Expansion of Wi-Fi coverage nationwide
• Public and private sector data center and cloud infrastructure development

2. Soft Infrastructure

• E-payment and E-transaction standards
• Data privacy protection and cyber-security laws
• Facilitation and promotion of e-commerce activities
• Computer emergency response team readiness

3. Service Infrastructure

• Rules and regulations for implementation of digitization of government and public services
• The application of E-logistics to facilitate trade and supply chain management
• Data service innovation

4. Digital Economy Promotion and Innovation

• Low cost enabler technology for e-commerce for SMEs
• Encourage and facilitate ICT HR development
• Establishing a data bank of useful digital content for use by local developers
• Encourage and promote fail-safe data centers and large scale cloud computing facilities for both public and private sectors

5. Digital Society

• Digital ICT technology to improve life quality of disabled individuals
• Implementation of smart cities in Thailand
• Enhanced medical services in Thailand, especially technologies to reach remote areas

Thailand offers a wide variety of opportunities for investors interested in Thailand’s IT sector and digital economy sector. The following are examples of various opportunities available to investors.

Data Centers

Data centers ensure cloud services, connected devices (internet of things), and mobile apps quickly and efficiently relay data to users around the world. Not only are data centers crucial for consumer and enterprise usage, but data centers are also necessary for establishing “smart cities”.

As data becomes more and more crucial for everything from determining traffic light patterns to conveniently storing thousands of photos and videos in the cloud, data centers will become the necessary infrastructure for a successful 21st century economy. Construction of public and private sector data centers as well as promotion of data centers is a core aspect of Thailand’s digital economy initiative. The strategic location of Thailand continues to attract data center investment from the private sector. In the first quarter of 2015, TCC Technology, Digital Port Asia, and Super NAP International have committed investments in data centers in Thailand that total approximately US$30.8 million.

Fertile Startup Ecosystem

The startup movement in Thailand is growing, dynamic, and innovative. Thai startups have become well known in the region for developing innovative solutions in e-commerce, payment, and shared economy sectors, among others. A unique aspect of the Thai startup ecosystem that is a rarity among global startup cities is the small amount of accelerator and incubator pr ograms and a focus on coworking spaces. Thailand currently only has 7 accelerators nationwide, but Bangkok alone has 11 coworking spaces and more continue to appear around the country from Phuket to Chiang Mai. Coworking spaces in Thailand have already achieved in a short time what other startup communities in the region have still been struggling to achieve – a genuine startup community. The collaborative and communal philosophy of a coworking space allows tech entrepreneurs, investors, developers, creatives, and technology leaders to work side by side amidst an environment that promotes the free exchange of thoughts insights, ideas, support, andinnovation.

Some of the largest coworking spaces in Thailand include Hubba, Launchpad, Pah Creative Space, and The Hive. Startups in Thailand also benefit from Thailand being ASEAN’s electronics hub. Easy access to OEMs, electronics components, and prototyping facilities have allowed startups focused on the Internet of Things (IoT) to turn their ideas into actual devices. Drivebot, a Thai startup that has gained international recognition, has developed a small device that can monitor a car’s health. It is able to alert the driver via a smartphone app whenever the car has an issue, and also monitors driving behavior and gas mileage. Drivebot is just one of the many new, young hardware startups that have developed innovative solutions for everyday issues. Already Thailand has multiple programs devoted to hardware startups such as: Maker Zoo, MakerSpace, and Startup Factory.

The growth of the Thai startup ecosystem and Thailand’s innovative startups has attracted the attention of foreign venture capitalist firms, accelerators, and incubator programs and the development of local equivalents. These firms are now recognizing the exciting developments going on in Thailand and have begun to tap into this new hub of innovation.

• 500 Startups – The US startup investor/accelerator 500 Startups announced in early 2015 a new investment fund of US$10 million called “500 TukTuks” dedicated to investing in Thai startups. 500 Startups has previously invested in Thai startups in their 2013 Southeast Asia investment fund called “500 Durians”.
• Softbank Venture Korea – The Korean venture capital arm of the Japanese Softbank Group, took a 23% equity stake in Thai online gaming operator Ini3 Digital in 2014.
• Disrupt University – A Thai based organization, Disrupt University provides guidance and practices from Silicon Valley. The members of the university are successful Silicon Valley entrepreneurs and former executives of global tech companies.
• Golden Gate Ventures – An early stage venture capital firm focusing on Southeast Asian startups, Golden Gate Ventures has offices in Singapore and San Francisco. Golden Gate Ventures was a lead investor in the seed round funding for the Thai based mobile dating app Noonswoon.
• Ardent Capital – One of Thailand’s first local venture capital firms. Ardent Capital is a lead investor in one of Thailand’s leading e-logistics startups, aCommerce, and has invested in companies all over Southeast Asia.
• CyberAgent Ventures – A leading Japanese venture capital firm, Cyberagent Ventures established a permanent office in Bangkok in 2014. Cyberagent Ventures has invested in aCommerce, a leading e-logistics company, and Priceza, one of Thailand’s most popular price comparison websites.
• InVent – The venture capital arm of Thai telecommunication company AIS, InVent focus specifically on funding innovative Thai startups.

Support from Global Technology Companies

Thailand’s potential to become a major digital economy hub in ASEAN has attracted interest from some of the largest technology firms in the world to support the Thai government’s push for a sustainable digital economy. This assistance will greatly help establish the foundations for robust digital development in the future.

Intel Corporation – The world’s largest chip developer has offered to show the Thai government how it assisted other countries in developing their own digital economies. In Thailand, Intel now offers localized training courses in information and communication technology that are designed to enable individuals and SMEs to develop their digital literacy.

Microsoft – In February 2015, Microsoft announced that it would establish a Microsoft Innovation Center at the main facility of the National Science and Technology Development Agency. This new innovation center will partner with government agencies with the goals of educating a new generation of IT workers, developing cutting edge software solutions that will enhance Thai SME’s efficiency and competitiveness, aiding the growth of Thailand’s IT industry, and fostering innovation and entrepreneurship through Microsoft’s various incubation programs.

EMC – The world’s largest information management company has begun to offer training courses and programs to train Thai university students in Big Data and related technologies in order to make Thailand a hub to train data science professionals.

Cisco Systems – the world’s largest IT networking firm has stated its interest in supporting Thailand’s Digital Economy by collaborating with the Thai government on national broadband initiatives, data centers, internet gateways, cloud service infrastructure for Thai SMEs, e – government services, etc.

Innovative Workforce

A core component of Thailand’s digital economy initiative is an education system that is able to produce the next generation of technology leaders, entrepreneurs, thinkers, and innovators. Thailand is home to a number of universities with top tier technology programs that produce high quality IT professionals every year. The leading tech schools in Thailand include: Chulalongkorn University, Sripatum University, Kasetsart University, King Mongkut Institute of Technology, Chiang Mai University, and Rajamangala Institute of Technology. Bangkok University’s School of Entrepreneurship and Management and Thammasat University have become well known centers of entrepreneurship and innovation due to their close relationship with Thailand’s startup community.

Access to Markets

The ASEAN bloc is one of the fastest growing regions in the world. 2015 is the year that the ASEAN Economic Community (AEC) comes into effect. Thailand is in a unique position to play a major role in this economic bloc of 600 million consumers, which has a combined GDP of more than 2 trillion dollars. As the largest economy in mainland Southeast Asia, Thailand has become a hub of commerce for the fast growing Cambodia, Laos, Myanmar, and Vietnam (CLMV) markets. International headquarters established in Thailand will have a key advantage over competitors in other geographies as they can tap many of the world’s most exciting emerging economies.

DEVELOPED NETWORK OF SUPPORTING ORGANIZATIONS

Organizations supporting the growth and competitiveness of Thailand’s Digital Economy Initiative include:

1. Incubators

• Software Park Incubator
• True Incube
• DTAC Accelerate
• AIS The StartUp
• National Science and Technology Development Agency’s Business Incubation Center
• Mseed
• I4-X Accelerator
• TechGrind Thailand Incubator

2. Coworking Spaces

• Anchor Coworking Space
• Busy Bees @ 115
• Glowfish
• Guru’s Box
• Hubba
• JOINT Workspace
• KoHUB Lanta
• Launchpad
• Ma’D
• Muchroom
• PAH Creative Space
• Phuket Coworking
• Pun Space
• The Sync
• Third Place
• The Hive
• The SEA
• Makerspace
• Maker Zoo
• The Startup Factory

Government Agencies & Bodies

• Thailand Science Park – The Thailand Science Park (TSP) was set up in 2002 as a fully-integrated R&D hub for science and technology. It is managed by the Technology Management Center (TMC) of the National Science and Technology Development Agency (NSTDA) under the Ministry of Science and Technology. The park was established to promote greater innovativeness and encourage more R&D activities within the technology intensive sectors. In addition to advanced facilities and business space, the TSP offers a full range of value-added services to support technology businesses.
• Thailand Software Park – The Park is an organization under the National Science and Technology Development Agency. The park was designed to strengthen and grow Thailand’s domestic software industry by engaging with stakeholders from all industries of Thailand both industrial and service.
• National Electronics and Computer Technology Center (NECTEC) – The NECTEC is a designated research center under the authority of NSTDA. Its main responsibilities are to undertake, support, and promote the development of electronics and computer technologies through research and development activities.
• National Software Industry Promotion Agency (SIPA) – SIPA is an organization designed to promote Thailand’s software industry, support research and technology transfer, assist in fostering the software industry’s growth.
• Electronic Transactions Development Agency (ETDA) – The ETDA was established to develop, promote, support electronic transactions in Thailand, and provide the necessary IT infrastructure that facilitates electronic transactions, and assisting Thai businesses involved in electronic transactions.
• Electronic Government Agency – The Electronic Government Agency was established to develop, manage, and provide services related to basic e-Government infrastructure as well as lead the development of both technological and human capital for future e- Government applications and infrastructure.
• The National Broadcasting and Telecommunications Commission (NBTC) – NBTC is an independent state regulatory body which was established in 2010 to allocate Thailand’s radio spectrum and regulate the broadcasting and telecommunications sectors.
• Association of Thai ICT Industry (ATCI) – The ATCI encourages the use of ICT to strengthen the Thai economy and society through trade and cooperation and promotes the sustainable growth and development of the ICT sector.

BOI Investment Incentives

Thailand Board of Investment (BOI) offers a wide range of tax and non-tax incentives for projects that meet national development objectives.

Tax-based incentives include exemption of import duties on machinery and raw materials used in manufacturing export products, and corporate income tax exemption of up to eight years. Non tax incentives include permission to bring in expatriates, own land and take or remit foreign currency abroad.

As part of its efforts to help develop the Digital Economy, the Board of Investment (BOI) offers attractive investment promotion incentives to a range of activities involved in activities related to the Digital Economy:

Electronic design, embedded systems & software, cloud service, and technology industrial zones (i.e. science and technology parks, software parks, data centers) are classified as activities of special importance and benefit to the country.

Projects in electronic design, embedded systems & software, cloud service, data center Software Park and science park are granted 8-year corporate income tax exemptions without being subject to a corporate income tax exemption cap, as well as exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, and non-tax incentives.

Projects in enterprise software and/or digital content are granted 5-year corporate income tax exemptions without being subject to a corporate income tax exemption cap, as well as exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, and non-tax incentives.

In addition, projects that manufacture advanced technology electrical products with the capability of connecting with the internet network (Internet of Things) are granted a 5-year corporate income tax holiday, exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, as well as non-tax incentives.

Projects in electronic devices for wireless/optic fiber telecommunications are granted 8 years of corporate income tax holiday, exemptions of import duty on machinery and import duty on raw or essential materials used in manufacturing export products, as well as non-tax incentives. Projects in E-commerce can only obtain non-tax incentives.

For Further Information:

Thailand Software Park: www.swpark.or.th

Thailand Science Park: www.sciencepark.or.th

Association of Thai ICT Industry (ATCI): http://www.atci.or.th

National Broadcasting and Telecommunications Commission: www.nbtc.go.th

Thailand: Worlds’ Electrical and Electronics Industry Hub

With a total export value of US$55 billion in 2014, Thailand’s electrical and electronics industry has flourished and developed for decades. The electrical and electronics industry has not merely played an important role in Thailand’s economy as a main growth driver, but has also made Thailand Southeast Asia’s electrical and electronics manufacturing hub. Thailand’s government, recognizing the crucial role the electrical and electronics industry will continue to play in Thailand’s economic development, offers attractive investment incentives to attract major global players in the electrical and electronics industry.

In 2014, the electrical and electronics industry accounted for 24% of Thailand’s annual export revenues. The main export destinations were the USA (17.3%), ASEAN (16.7%), Hong Kong (12.5%), Japan (10%), and China (8.8%).

ELECTRICAL APPLIANCE INDUSTRY

Thailand is one of ASEAN’s largest production centers in the electrical appliances sector and globally recognized for its manufacturing prowess. Besides being the world’s 2nd largest producer of air conditioning units, Thailand’s expertise in refrigerator production is world class.

Accordingly, Thailand’s 2014 electrical appliance exports were valued at US$23.5 billion and electrical appliance imports totaled US$17.6 billion in 2014.

Proof of Thailand’s attractiveness is evident in the many global electrical appliance manufacturers that already have plants in the Kingdom, including: Bosch & Siemens, Daikin, Electrolux, Fisher & Paykel, Haier, LG, Panasonic, Samsung, and Toshiba.

The major export destinations for Thailand’s electrical appliances in 2014 were ASEAN, USA, Japan, China, and India. ASEAN was the largest export market with total value of US$4.3 billion in 2014, a 15% increase from 2013.

ELECTRONICS INDUSTRY

In 2014, Thailand’s overall trade in the electronics industry alone was worth US$59.5 billion, with export revenues accounting for over US$32 billion.

In 2014, Thailand’s main electronics exports were electronic hardware components (including hard disc drives) and integrated circuits (IC), which accounted for approximately 56% and 24% of total electronics exports respectively. Thailand is now the 2nd largest HDD exporter and producer in the world. At the same time, Thailand holds an equally renowned reputation in the IC and semiconductor sectors due to Thailand being one of the main manufacturing bases for these products in the ASEAN region.

Companies that have already taken advantage of Thailand’s dynamic industry include world-class companies: Fujitsu, LG Electronics, Seagate, Sony, Samsung and Western Digital.

Thailand’s electronics industry, embracing the new digital age boon, has seen exports rise to US$32 billion in 2014. The primary markets for these exports were the USA (19.5%), Hong Kong (19.3%), ASEAN (14.3%), China (10.8%) and Japan (7%). Increasing demand for electronics saw imports rise to US$27 billion with mainly printed circuits and IC being imported to supply Thailand’s increasingly advanced electronics manufacturing ecosystem.

Data Storage and Hard Disk Drives (HDD)

Thailand is the 2nd largest global producer and exporter of hard disk drives. In 2014, Thailand’s data storage devices including HDD exports totaled approximately US$11.6 billion and grew by 11% from 2011. The competitiveness of Thailand’s HDD industry is based on its world class industrial clusters containing supporting industries that manufacture most of the components utilized in the assembly of HDDs.

Integrated circuits (IC)

Integrated circuits are Thailand’s largest electronics import and second largest electronics export. According to Thai Electrical and Electronics Institute, the value of ICs imported into Thailand in 2014 reached nearly US$10 billion and exports reached nearly US$8 billion. Ranked in order of importance, the major export markets for Thailand’s ICs in 2014 are: Hong Kong, Taiwan, Singapore, and China. The continued miniaturization of electronic devices ensures increased demand for integrated circuits and profitable opportunities in Thailand for investors.

OPPORTUNITIES

IC and Data Storage Integrated circuits are an integral component of smartphones, a now ubiquitous market that is expected to be worth US$1 trillion in 2015. The arrival of next generation web connected electronics, wearable devices and Internet of Things (IoT) devices, means integrated circuits will continue to see increased growth and greater demand. The global integrated circuit market is forecast to reach US$379 billion in 2019 due to the increasing blending of everyday devices with Internet connectivity.

Although Thailand’s electronics market is well developed, the production of integrated circuits remains an opportunity for manufacturers. Integrated circuits still are imported mainly from China, the USA, South Korea, Taiwan, and Japan. In 2014, Thailand imported nearly US$10 billion worth of integrated circuits. In addition, IC design and related activities offers a burgeoning field of  opportunity, particularly in wafer design.

Technological innovations in the consumer and enterprise sectors have produced the next generation of HDD and newer data storage techniques such as Solid State Drives (SSD) and Solid State Hybrid Drives (SSHD). Decades of experience in data storage technology and expertise derived from its years as a central hub of data storage production makes Thailand an ideal location for the production of next generation data storage solutions.

RFID

Thailand’s prowess at electronics reaches the radio-frequency identification (RFID) technology industry as well. RFID technology is playing an increasingly important role in various industries worldwide, from organizing warehoused inventories to tagging livestock. The RFID Institute, a joint public-private sector research institute was established in 2009 as a test bed center working with private companies to design state of the applications and technologies for various industries including: security, logistics, healthcare, retail, and transportation.

Automotive Electronics

Electronics and electronic systems have improved a range of automobile elements including safety, fuel efficiency, performance, and comfort. Furthermore, the current trends of alternative fuel vehicles, increased fuel efficiency, and stricter emissions standards, are increasingly spurring demand for automotive electronics. The value of global automotive electronics is forecast to reach US$314.4 billion within 2020.

Access to markets:

In order to enhance global commerce opportunities, Thailand has bilateral free trade agreements with many countries, including Japan, India, China, Australia, and New Zealand. Thailand is also currently in the process of establishing free trade agreements with the European Union, Canada, Turkey, and Chile. As a member of ASEAN, Thailand participates in multilateral free trade agreements with China, South Korea, Australia, New Zealand, India, and Japan.

Furthermore, the establishment of the ASEAN Economic Community (AEC) in 2015 will fully integrate this US$2 trillion regional market into the global economy. This new economic bloc with streamlined movement of goods, services, and investment capital will provide unparalleled opportunities for manufacturers. Excellent logistics systems: Thailand is a transportation hub of the ASEAN region. The country provides world-class infrastructure along with cost effective logistics. Thailand’s extensive road and rail networks span the Kingdom, facilitating access to nearby countries. Bangkok’s Suvarnabhumi International Airport and Laem Chabang deep-sea port are globally recognized gateways of global logistics. Thailand offers manufacturers a geographically accessible and logistically convenient location.

Electronics clusters: The establishment of electronic clusters has been a key method of leveraging the capabilities of firms that comprise Thailand’s electronics industry. Proximity between firms and their input suppliers within the clusters enhances communication and facilitates flow of goods while providing an environment that promotes technology innovation and improved efficiencies. Another attractive aspect of the electronics cluster is streamlined supply chain management, which allows for reduced logistics costs. Manufacturers also benefit from shared core technological innovations and human resource development programs.

DEVELOPED NETWORK OF SUPPORTING ORGANIZATIONS

Government organizations supporting the growth and competitiveness of the electrical and electronics industry in Thailand include the Electrical and Electronics Institute (EEI), National Electronics and Computer Technology Center (NECTEC), Thai Organic and Printed Electronics Innovation Center (TOPIC), and Thai Embedded Systems Association.

ATTRACTIVE INVESTMENT INCENTIVES

Thailand Board of Investment offers a wide range of tax and non-tax incentives for investments in a variety of activities. Tax-based incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions and reductions. Non-tax incentives include permission to bring into the Kingdom skilled workers and experts to work in investment promoted activities, to own land and take or remit foreign currency abroad. Additionally, foreign businesses are entitled to 100% ownership for manufacturing and some services sectors such as aircraft service and maintenance.

Recognizing the importance of the electronics and electric appliance industry in Thailand’s future technological development, the BOI has classified electronics design and embedded software as priority activities of special importance and benefit to the country. As such, projects receive an uncapped eight-year corporate income tax exemption, exemption from import duties on machinery and raw materials used in manufacturing export products, regardless of location. Projects in these activities are also eligible to receive other non-tax incentives.

Numerous other activities in the E&E sector are granted eight-year corporate income tax exemptions, exemption from import duties on machinery and raw materials used in manufacturing export products, regardless of location, and non-tax incentives. Among the activities eligible for these incentives are:

• Manufacture of organics and printed electronics (OPE) and parts for organics and printed electronics (OPE)
• Manufacture of electronic control and measurement instruments for industrial/agricultural use and parts electronic control and measurement instruments for industrial/agricultural use
• Manufacture of emission, transmission and reception devices used in fiber-optic and wireless communications systems and parts for emission, transmission and reception devices used in fiber-optic and wireless communications systems
• Manufacture of security control equipment and parts for security control equipment
• Manufacture of solar cells and/or raw materials for solar cells
• Manufacture of solid state drives and/or parts for solid state drives
• Manufacture of advanced technology hard disk drives and/or parts
• Manufacture of wafers

Additional information about specific manufacturing activities relating to automotive industries can be found on the BOI website or by contacting the BOI’s Investment Promotion Bureau 3.

For further information:

Electrical and Electronics Institute: www.thaieei.com

National Electronics and Computer Technology Center (NECTEC): www.nectec.or.th

Electronic & Computer Employers’ Association: www.eceathailand.com

Thai Organic & Printed Electronics Innovation Center: www.topic.in.th/

Thai Embedded Systems Association: www.tesa.or.th