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Investment Opportunities in Thailand

Thailand Board of Investment (BOI) Los Angeles Office5 February 2016

At the Center of Asia: Thailand is the World’s• 12th largest agricultural output • 16th largest manufacturing output • 24th biggest economy by purchasing power• 27th biggest exporter (as % of total world goods)

ASEAN’s 2nd Largest Economy

Source: Economist, Pocket World in Figures 2015

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Top 10 Thai Exports

Item2015

(Jan-Nov) 2014

1. Motor cars, parts and accessories 23,646.0 24,548.22. Automatic data processing machines and parts

thereof 16,105.0 18,313.4

3. Precious stones and jewellery 10,442.0 10,080.34. Polymers of ethylene, propylene, etc. in primary

forms 7,627.9 9,680.7

5. Refine fuels 7,511.5 11,309.76. Electronic integrated circuits 7,079.4 7,495.97. Rubber products 6,326.7 8,006.18. Machinery and parts thereof 6,315.2 7,216.59. Chemical products 5,867.8 8,602.310. Iron and steel and their products 4,827.1 5,270.6Others 101,526.5 116,999.8

Total 197,275.0 227,523.5

Unit: Million USD

Source: www.moc.go.th as of Jan 8, 2016

Top 10 Imports into Thailand Unit: Million USD

Item 2015(Jan-Nov) 2014

1. Crude oil 18,117.0 33,216.52. Machinery and parts 17,981.8 21,374.93. Electrical machinery and parts 14,463.2 15,290.34. Chemicals 12,166.0 14,527.05. Iron, steel and products 9,868.7 12,802.3

6. Parts and accessories of vehicles 9,242.3 9,061.6

7. Electronic integrated circuits 8,818.1 9,688.6

8. Jewellery including silver bars and gold 8,212.6 8,870.3

9. Computers, parts and accessories 6,820.9 7,903.010. Other metal ores, metal waste scrap, and

products 6,556.4 7,867.5

Others 74,794.4 87,146.4Total 187,041.2 227,748.4

Source: www.moc.go.th as of Jan 8, 2016

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Principal Thai Exports to US Unit: US$ million

Source: MOC, as of 22 January, 2016

Item 2015(Jan-Nov)

2014(Jan-Nov)

Growth (% yoy)

1. Automatic data processing machines and parts 4,464.7 4,050.0 10.24

2. Rubber products 1,555.8 1,411.9 10.19

3. Radio-broadcast receivers, television receiverand parts 1,460.1 1,258.6 16.01

4. Precious stones and jewellery 1,227.7 1,259.0 -2.48

5. Articles of apparel and clothing accessories 868.6 912.8 -4.856. Prepared or preserved fish, crustaceans, molluscs

in airtight 854.8 1,029.7 -16.99

7. Machinery and parts 758.6 605.5 25.28

8. Prepared or preserved fruits 637.2 537.8 18.48

9. Motor cars, parts and accessories 613.7 570.0 7.67

10. Electronic integrated circuits 590.7 585.8 0.83Others 9,097.5 9,592.5 -5.16Total 22,129.4 21,813.7 1.45

Principal Imports from US Unit: US$ million

Item 2015(Jan-Nov)

2014(Jan-Nov)

Growth (% yoy)

1. Aeroplanes, gliders, instruments and parts 2,161.2 1,989.8 8.622. Chemicals 1,211.8 1,139.9 6.313. Electronic integrated circuits 1,193.8 1,208.8 -1.24

4. Machinery and parts 1,189.8 1,299.2 -8.42

5. Vegetables and vegetable products 1,110.1 951.2 16.70

6. Electrical machinery and parts 644.7 645.8 -0.17

7. Jewellery including silver bars and gold 507.2 950.4 -46.648. Parts and accessories of vehicles 502.8 482.8 4.159. Scientific, medical, testing

appliances and instruments 502.3 447.4 12.27

10. Computers, parts and accessories 402.1 516.9 -22.20Other 3,446.5 3,676.2 -6.25

Total 12,872.3 13,308.2 -3.28

Source: MOC, as of January 22, 2016

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Medical Industry

Service Industry

E & E Industry

Chemical Industry

Automotive Industry

Food Industry

Steel Industry

Cardinal Health 222 (Thailand) Ltd.

POSCO (Thailand) Co.,Ltd.Dongbu Thai Steel Co.,Ltd

Thai Samsung Electronics Co.,LtdWestern Digital (Thailand) Limited Seagate Technology (Thailand) Ltd.

Greiner Bio-one (Thailand) Ltd.

SCG Nichirei Logistics.,Ltd.Kintetsu Logistics (Thailand) Co.,LtdDKSH (Thailand) Limited

General Motors (Thailand) Ltd.Ford Motor CompanyNissan Motor (Thailand) Co.,Ltd

Dow Chemical ThailandChevron Thailand Exploration & Production, Ltd.Indorama Ventures Public Company Limited

Jelly Belly Candy Company (Thailand) Ltd.

GlaxoSmithKline (Thailand) Limited

Reuters Software (Thailand) LimitedIBM Thailand Co., LtdFujitsu Ltd

JJ-Muntons (Thailand) Ltd.MC-Towa International Sweeteners Co.,Ltd.Distribution/Transportation

Industry

Success Stories of US Companies

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Investor Testimonials

“We are not low-cost manufacturing but we are high-tech manufacturing. Human resources here are professional with a good

cost structure.”

--Jeff Nygaard, Senior VP and Global Head of Operations, Seagate Technology

“We relocated nine senior executives from Singapore to Thailand resulting in significant cost of living and operational savings.”

--Roger Nesti, Director of International Real Estate, Kellogg Company

Thailand is top destination for investment in the world

UNCTAD’s survey ranks Thailand 8th top prospective host economy in the world during 2014-2016

Country RankChina 1USA 2Indonesia 3India 4Brazil 5Germany 6United Kingdom 7Thailand 8Vietnam 9Russian Federation 10

Source: UNCTAD World Investment Prospective Survey 2014-2016

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Thailand is Best Country to Start a Business

Country Rank

Thailand 1

Malaysia 2

Philippines 3

Canada 4

China 5

Source: US News, Best Countries to Start a Business 2016

Why Thailand ?

• Huge Market Potential – Asia• Strategic Location with connectivity• State-of-the-Art-Infrastructure • Low Business Operation Costs • Available and affordable of Skilled Labor• Generous Tax Incentives and Services to

Investors

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ASEAN ECONOMIC COMMUNITY (AEC)

GDP (2014)

US$ 2.6 trillion

Population (2014)

622 million

Foreign Direct Investment

US$ 136 billion

GDP Growth 5.7% (2011) 6.4% (2012) 5.2% (2013)4.9% (2014)ASEAN’s GDP to double

to US$4.7 trillion in 2020

10 Countries, One Single Market in 2015

Source: UNCTAD and IMF as of April, 2014 and AEC Factsheet as of December 2015

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Infrastructure• 7 international airports§ In 2009, 53.9 million passengers, 1.1 million tons

of cargoes§ Suvarnabhumi Airport – Capacity: 45 million

passengers and 3 million tons of cargo per year • Over 70,000 km Highway Systems• 4,346 km Rail links to Malaysia & Singapore• 6 Deep Sea Ports & 2 International River Ports § Capacity over 10 million TEUs § Laem Chabang Sea Port – Capacity: 10.8 million

TEUs, with additional 8 million TEUs expansion § e-Customs facilities

• 60 Industrial Estates

Ping Thong Industrial Estate

Hemaraj Land and Development PLC

Amata Industrial Estate

Gateway CityIndustrial Estate

Asia Industrial Estate

Padaeng Industrial Estate

Map Ta Phut Industrial Estate

Laem Chabang Industrial Estate

Wellgrow Industrial Estate

Golf Course

International School& University

Hospital

304 Industrial Park

Rojana Industrial Park

Map of basic infrastructure sites and industrial parks in and around Bangkok

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Low Corporate Income Tax

Source: KPMG ASEAN Tax Guide, as of 2013

Thailand Offers Inexpensive Costs of Living for Expats in Asia Regional rank 2014 Location Global rank 2014

1 Tokyo 112 Seoul 163 Shanghai 184 Beijing 205 Nagoya 236 Yokohama 247 Osaka 268 Hong Kong 299 Singapore 31

10 Guangzhou 3438 Bangkok 17239 Jakarta 180

40 Vientiane 19041 Kuala Lumpur 19445 Chiang Mai 20648 Hanoi 22351 Ho Chi Minh City 229

Source: Cost of Living Survey by ECA International as of Jun 13, 2014

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Thai monthly wages are competitive and social security payments made by employer are low.

Unit=US$ Thailand China Vietnam Malaysia Singapore

Workers 345 466 145 344 1,230

Engineers (Mid-level) 698 743 342 943 2,325

Managers (Department Chief Level)

1,574 1445 787 1,966 4,268

Legal minimum wage 9.85 / day 223 /month

113 /month

296/month1

263/month2 -

Social Security (% paid by employer) 5% 44-46.8% 22%

1)13% (monthly salary:5,000 MYR

or under)2)12%(monthly

salary: over 5,000 MYR)

16%

Source: JETRO 23rd Comparative Survey of Investment-Related Costs Comparison in Major Cities and Regions in Asia and Oceania, as of May 2013Note: 1=Malay Peninsula 2=Sabah State, Sarawak State, Labuan Island

Numbers of Thailand’s Bachelor Degree Graduates Ranked by Top 5 Faculties (2012)

Source: Labor Market Research Division, Department of Employment 2014

(Number of graduates)

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Investment Policy

BOI’s Liberal Investment Regime & Attractive Investment Incentives

Policy100% foreign

ownership

No local content requirements

No export requirements

No restriction on foreign currency

TaxImport duty exemptions on machinery/raw materials

Corporate Income Tax/ Exemption for 3 to 8 years

50% reduction of corporate income tax for up to 5 years

Double deduction on utility costs

Deductions for qualifying infrastructure costs

Non-TaxLand ownership rights

Work permit & visa facilitation

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AgricultureMining,

Ceramics Basic

Metals

Light Industries

Metal Products,

Machinery, Transport

E&EChemicals,

paper, plastics

High Value -Added Services

Activities Eligible for BOI Promotion7 Sectors

Target Industries

Automotive

Aerospace

Machinery

Agriculture and food processing

Target Industries

Biotechnology, R&D

Alternative energy

E & E and Digital Sector

Medical Device

Diversified Sectors of Opportunity

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Basic Incentives(Activity-based)

Additional Incentives(Merit-based)

1. Competitiveness Enhancement 1) R&D 2) Donation to Technology and Human Resources

Development Fund / educational or research institute/ S&T government agency

3) IP acquisition /licensing fee for commercializing technology developed in Thailand

4) Advanced technology training5) Development of local suppliers6) Product & packaging design

2. Decentralization - Investment Promotion Zones1) 20 Provinces with low per capita income 2) Special Economic Zone 3) Science & Technology Park

3. Industrial area developmentindustrial estates or promoted industrial zones

Criteria in Granting Incentives

+CIT Exemption

A1 8 years no cap A2 8 yearA3 5 year A4 3 year + import duty exemption + Non-tax incentives

IMPORT DUTY EXEMPTION B1 machinery + raw mat B2 raw mat+ Non-tax incentives

A1

A2

A3

A4

B1

B2

A1: Knowledge-based activities, focusing on R&D and design to enhance the country’s

competitiveness (8-year CIT exemption without cap, exemption of import duty on

machinery/raw materials and non-tax incentives)

A2: Activities in infrastructure for the country’s development, activities using advanced technology to create value added, with none or very few existing investments in Thailand(8-year CIT exemption, exemption of import duty on machinery/raw materials and non-tax incentives) A3: High technology activities which are

important to the country’s development, with a few investments already existing

in Thailand (5-year CIT exemption, exemption of import duty on

machinery/raw materials andnon-tax incentives)

B1/B2: Supporting industries that do not use high technology but are still important to value chain (B1 : Exemption of import duty on machinery/raw materials and non-tax incentives

B2 : Exemption of import duty on raw materials and non-tax incentives)

A4: Activities with lower technology than A1-A3 but add value to domestic resources and strengthen supply chain (3-year CIT exemption, exemption of import duty on machinery/raw materials and non-tax incentives)

Activity-based Incentives

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Group Example Activities

A18-year CIT exemption

with no ceiling

• Electricity generation from garbage or waste• Micro electronics design, embedded software/system design• Data center, Cloud service• R&D, Lab service• Biotechnology • Training center

A28-year CIT exemption

• Organic and printed electronics (OPE)• Active Pharmaceutical Ingredients• Solar cell, Electricity from renewable energy • Telecommunication device, control and measurement device• Advance Materials, Nano-material • High-risk Medical Devices• Repair of Aerospace parts and equipment• Automation machinery & equipment with design

Examples of GROUP A Activities (1/2)

Group Example Activities

A35-year CIT exemption

• HDD, Semiconductor, flat panel display, thin film• Digital content, multimedia software• Manufacture of organic fertilizers• Machinery with design or part forming process• Manufacture of automobile engines• Functional fiber

A43-year CIT exemption

• Manufacture of products from agricultural by-products or agricultural waste

• Heat Treatment• Audio visual, LED, Office automation• Assembling of machinery• Manufacture of fashion products with conditions on product

development and design• Paper product

Examples of GROUP A Activities (2/2)

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Special Package: “Super Cluster”Electrical Appliances, Electronics and Telecommunication Equipment Super Cluster

7 Provinces : Ayuddhaya, Patumthani, Chon Buri,

Rayong, Chachoengsao, Prachinburi, Nakorn

Ratchasrima

Target Activities

Electronic Design

e.g. Microelectronics Design, Embedded System Design

Electronic products and parts using advance technology

e.g. Manufacture of parts for emission, transmission and

reception devices used in fiber optic and wireless

communication systems, Manufacture of parts for other

telecommunication products

Advanced Technology Electrical Appliances e.g. Internet of

Things

Digital Industry Super Cluster

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2 provinces : Chiang Mai and Phuket

Target Activities

Software (Embedded Software, Enterprise Software,

Digital Content)

Cloud Service

Data Center

Software Park

Movie Town

Thai Motion Picture Production and Motion Picture

Supporting Services

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Automotive and Parts Super Cluster

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7 Provinces : Ayuddhaya, Patumthani, Chon Buri,

Rayong, Chacheongsao, Prachinburi,

Nakorn Ratchasrima

Target Activities

Manufacture of Motorcycle with engine size > 248 CC. (only

for projects with forming of engine parts)

Manufacture of Automobile Engines

Manufacture of Important Parts that are not locally

produced or are few i.e.

- Parts using advance technology

- Safety and Energy Efficient System

- Equipment for Hybrid, EV, PHEV cars

- Fuel injection parts/ Transmission/ Engine System

Manufacture of Automobile Tires

Eco-friendly Petrochemical and Chemical Products Super Cluster

2 provinces : Chon Buri and Rayong

Target Activities

Petrochemical or Specialty Chemical Products

Plastic or Bio-chemical products

Bio-plastic products

Manufacture of paper container coated with bio-plastic

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Additional Incentives & Conditions

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Incentives Super ClusterTax ü 8-year corporate income tax exemption and

additional 5-year reduction of 50%

Additional Conditions: Ø Must have cooperation with academic institution / research institution /

Center of Excellence in the cluster to develop human resource and improve the level of technology e.g.

• Cooperation in the Talent Mobility / Work-integrated Learning / Co-operative Education / Dual systems

• Cooperation in development of human resource or technology as approved by the Board of Investment

Ø Must apply for investment promotion within 2016 and must start operation within 2017 to accelerate investment, unless under necessity i.e. large-scale project, the BOI will consider relaxation as deemed appropriate.

BOI Services

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BOI SUPPORT SERVICES

35Overseas offices

Country desks

1-Stop for visas & work permits:work permits in 3 hours

Interaction with other govt. agencies on behalf of investors

Subcontracting Development Program by BUILD Unit

Investment Matchmaking Program

ASEAN Supporting Industry Database

Industrial Sourcing Services

• ASEAN Supporting Industry Database (ASID) Information and profiles of companies in supporting industries and manufacturers of parts and components in 10 ASEAN countries www.asidnet.org

• Free Sourcing Service: sourcing@boi.go.th• SUBCON THAILAND 2016: 11-14 May

2016, Bangkok, Thailand: Largest subcontracting event in ASEAN

• Contact: BOI Unit for Industrial Linkage Development (BUILD) Email: build@boi.go.th

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18th Floor, Chamchuri Square Building319 Phayathai Road, PathumwanDomestic Call: 0 2209 1100, Inter. Call: (+662) 209 1100Email: osos@boi.go.th

More Convenience, less time,more efficiency!

More Convenience, less time,more efficiency!

Thank YouThailand Board of Investment,

Los Angeles Office 611 North Larchmont Blvd.,

3rd Floor, Los Angeles, CA 90004, USA

Tel (1) 323 960-1199

E-mail: boila@sbcglobal.netWebsite: www.boi.go.th

Office of the Board of Investment, HQ

555 Vipavadi Rangsit Rd., Chatuchak, Bangkok 10900

Thailand Tel (662) 553 8111Fax (662) 553 8222

E-mail: head@boi.go.thWebsite: www.boi.go.th