Thailand’s Country Presentation

on SEZs Development

Linkage to Development Strategy

The 12th National Economic and Social Development Plan (2017 – 2021)2036

2015 The 12th 5-year Plan (2017-2021) The 13th 5-year Plan 14 15

20-Year National Strategy (2017 – 2036)

Social

Strategy 1 Resilience Enhancement

Strategy 2 Just and inclusive development

Economic

Strategy 3 Competitiveness building

Strategy 10 International Cooperation for Development

EnablingFactor

Strategy 7 infrastructure and logistics development

Strategy 8 Science&techresearch/innovation

NaturalResource

Strategy 4 Environment friendly development

Security

Strategy 5 Building country's security

PublicAdministration

Strategy 9 spatial development

Spatial

Strategy 6Good governance in public sector

10 Development Strategies

6 Development PillarsHuman capacity building

Creation of equal opportunity and society

Building competitive

Improving quality of life and environment friendly

National security

Balance and development of public administration

“Stability Prosperity Sustainability”A vision of the 20-Year National Strategy

used as a vision framework of the 12th Plan.Together with SDGs Goal

Vision

Strategy 9 Regional, Urban and Economic Area Development“Distribute growth to every region evenly”

North: High-value economic base

Northeast:Eliminate poverty,become self-reliant

Central Production base, green industrial base,

safe and quality agri-food products, tourist destination

South

Green industrial base, tourist destination

Improve urban environment

to create more livable towns and promote growth

Restore eastern seaboard area

to become a major industrial base

Develop border economic zones

to open gateway to neighboring countries

Narrow income gap and distribute income evenly

Create more livable towns

Ensure efficient and eco-friendly economic base

Increase investment in border economic zones by 20%

Goals

Type of SEZs

27 September 20176

• Boarder Special Economic Zones (BSEZS)

• Industrial Estate or Industrial Park

• Eastern Economic Corridor (EEC)

UDONTHANIUdonthani I.E.NONG KHAINong Khai I.E.

PRACHINBURIHi-Tech Kabin I.E.Sakaew , Sakaew I.E.CHACHOENGSAOWell Grow I.E.Gateway City I.E.TFD I.E.TFD2.I.E.CHONBURIHemaraj Chonburi I.E. Hemaraj Chonburi I.E. (Project 2)Hemaraj Eastern Seaboard (2)Hemaraj Eastern Seaboard (3)Amata Nakorn I.E.Amata Nakorn I.E.(Project 2)Pin Thong I.E.Pin Thong I.E. (Laem Chabang)Laem Chabang I.E.Pinthong I.E. (Project 3)Pinthong I.E. (Project 4)Pinthong I.E. (Project 5)Banbueng I.E.Yamato Industries I.E.Hemaraj Eastern Seaboard (4)RAYONGMap Ta Phut I.E.Hemaraj Eastern I.E.Hemaraj Rayong I.E.Padaeng I.E.Eastern Seaboard I.E.(Rayong)Amata City I.E.Hemaraj Eastern Seaboard I.E.Asia I.E.Asia Terminal I.E.RIL I.E.Rayong (Ban Kai) I.E.Luckchai Rubber City I.E.

SONG KHLASouthern I.E. (Songkhla)

LAMPHUNNorthern Region I.E.

Lamphun 2 I.E.

PICHITPhichit I.E.

SARABURISaraburi I.E.(Kaengkhoi)

Nong Khae I.E.

AYUTTHAYAHi-Tech (Ban Wa) I.E.

Bang Pa-In I.E.Saharattananakorn I.E.

BANGKOKBangchan I.E.

Latkrabang I.E.Gemopolis I.E.

Gemopolis (Project 2) I.E.

SAMUTSAKHONSamut Sakhon I.E.

Sinsakhon I.E.Maharajnakorn I.E.

SAMUTPRAKARNBangpoo I.E.

Bangpoo (North) I.E.Bangplee I.E.

Asia (Suvarnabhumi) I.E.

RATCHABURIRatchaburi I.E.

Industrial Estate( 54 I.E. in 16 Provinces) I-EA-T Owned 12 IE.s

Joint Venture 42 IE.s

Work in Process I.E.

Fully Developed I.E.

30 I.E. in EEC

7

BSEZ

EEC

Progress : Announcement of Establishing SEZ Areas

• The first phase SEZs are located in 5 provinces, namely Tak, Mukdahan, Sakaeo, Trat, and Songkhla.

• The second phase SEZs are located in 5 provinces, namely Nong Khai, Narathiwat, Chiang Rai, Nakhon Phanom, and Kanchanaburi.

Special Economic Zones

Area

Sq.kms. Rai

10 SEZs 6,220.05 3,887,507.21

TakMukdahanSakaeoTratSongkhla

1,419.00578.50332.0050.20552.30

886,875.00361,542.50207,500.0031,375.00345,187.50

Nong KhaiNarathiwatChiang RaiNakhon PhanomKanchanaburi

473.67235.17

1,523.63794.79260.79

296,042.00146,981.25952,266.46496,743.75162,993.75

In 2015, Thailand commenced the establishment of special economic zones (SEZs) in 10 provinces.

8/9/2017

Strategic and Policy Design

Border SEZ Development Policy

Work Plan• Incentives• Infrastructure and customs checkpoints• Labor management• Improvement of health services for

border residents, including health insurance for migrant labor

• Government land for rent in industrial or service activities

• Security• Natural resources and environmental

management

HR PlanResponsible agencies working under 6 sub-committees of the NC-SEZ

Budget Plan• Integrated Budget Plan

• Infrastructure and customs checkpoints Budget Plan

Encourage and facilitate investment in SEZ

Promote economic activities in accordance with each area’s potential

Manage natural resources and environment in SEZ

Strengthen efficiency of community enterprise and private sector in SEZ

Enhance participation of people & other development partners

Provide economic & social infrastructure : transportation/border-crossing/electricity/water/safety/public health/labor/environment

Risk

Operational Guideline Operational Plan

Obj.

Goal

VisionEmerging economic gateway connecting neighboring countries and better people’s quality of life Promote concrete & balance development for emerging border economic areas, improve quality of life and solve security problems1. Prosperity contribution & quality of life improvement 2. Sustainable area growth3. Competitive enhancement

Decision-Making Mechanism

• People’s acceptance• Budget allocation• Environment & Natural

Resources• Public health issue at borders• Security• Human trafficking and illegal

migrant workers• Collaboration with neighboring

countries

Principles Implement projects under current law using inclusive approach Role of Government (granting incentives/provide necessary

infrastructure/facilitate investment) , Private sector (investment) people (participate & gain benefits)

SEZ development must not have negative impacts on environment, natural resources, society, security, and relationship with neighboring countries

Being flexible & adjustable according to circumstances SEZ areas are designated by administrative boundary

2015: Total budget of 2,377.7575 Mb.2016: Total budget of 6,168.9142 Mb. 2017: Total Budget of 3,305.9245 Mb.

Cabinet

The National Committee on Special Economic Zone Development (NC-SEZ)

8/9/2017

Implementation Issues

Management Mechanism for SEZ Development

Subcommittee on Steering the

development of SEZs

National Committee on SEZ Development (NC-SEZ)Chairman : Leader of NCPO

Secretary : NESDB Secretary General

NC-SEZ Office

Subcommittee on Privileges, Designated Area, and

Investment-related OSS

Subcommittee on OSS on

Labor, Public Health, and

Security

Subcommittee on Infrastructure and Customs Checkpoints

Subcommittee on Land

Acquisition and Management

Subcommittee on Marketing Promotion

Chairman: Minister of Finance Secretary : Director-General of FPO

Chairman: Minister of LabourSecretary : Deputy Director-General of DOE

Chairman: Minister of InteriorSecretary : MOI

Chairman: Minister of TransportSecretary : Director-General of OTP

Chairman: Minister of Industry1

Secretary : OIE

Chairman: Mr. Suwaphan(Minister Attached to the Prime Minister’s Office)2Secretary : Office of the Permanent Secretary, Prime Minister Office

8/9/2017

1 Revised according to the meeting of Policy Committee for Special Economic Zones 1/2017 (15 June 2017)

2 Currently, Mr. Suwaphan is appointed as Minister of Justice.

27 September 201714

Implementation of the SEZs Policy• Institutional Initiative

Governmental Policy, Acting by related government agencies such as I-EA-T, BOI and local government agencies

• Stakeholder Management Government and Private Sector coordination

• Human Resource Management Have clear criteria of assessment of performance of officers Lack of skilled labor, have action plan for develop skilled labor

to meet the requirement of new industries

27 September 201715

Implementation of the SEZs Policy• Risk Management

Political Risks / Cooperation from neighboring countries

Monitoring and Evaluation SEZs

17

Number of Tenants 4,442 companies

Number of Workers 601,594 persons

Investment Capitals 3,068,000

87.7

Million Baht

Billion USD (35 Baht/USD)17

Owned by I-EA-T22%

Joint Managing

78%

(13,793 acres)

(52,004 acres)

Industrial Operation Land

65,797 acresOwned by

I-EA-T12%

Joint Managing

88%

Available Land for Sale/Rent 9,030

acres

(1,082 acres)

(7,948 acres)

Overall Performance in Thai Industrial Estates

18

Japan37%

Europe9%ASEAN Countries

16%

China14%

USA8%

Others16%

Overall Performance in Thai Industrial Estates

Samples of Prominent Companies in I.E.s

Success Factors

• Investment Incentives• Clear Target Activities• Labor Management and One Stop Service Center• Budgeting

1) General activities under the BOI’s list of eligible activities

2) 13 Target activities as designated by the National Committee on SEZ Development (NC-SEZ):• 8 year corporate income tax exemption,• an additional 50% reduction on corporate

income tax for 5 years• submission of investment project application

by 31 Dec 2018

• EXIM Bank provides financing facilities for investment projects in SEZ.

• Long-term credit with a repayment period of 15 years with special interest rate at prime rate -2.50% in 1st year, -1.50% in 2nd-8th year and -1.00% in 9th-15th year

• Additional short-term revolving credit

1. Incentives Scheme

Revenue Department(1) Reduction of corporate income tax from 20% to

10% in 10 accounting periods(2) Submission investment project application by 31

Dec 2017Customs Department(1) Reduction of registered capital for bonded

warehouses from 10 to 5 million baht(2) Free zone’s registered capital must value at

10 million baht or higher

Incentives set apart from BOI’s Investment

Promotion List

• Minimum project investment of five hundred thousand baht

• Allow to use the used machinery in the promoted project, but not exceeding 10 million baht

Easing Condition for SMEs

The private sector can currently submit investment project application. BOI has announced investment promotion for SEZ, highest incentives are granted to target activities and easing investment conditions are offered to SMEs. Moreover, Non-BOI promoted projects can apply for the reduction of corporate income tax of company or juristic partnership located in the SEZ, easing establishment condition of bonded warehouse, and supporting financial facilities for investment.

BOI’s Incentives

Financing Facility for Investment

Projects

8/9/2017

2. Target Activities for SEZ 13 Target Activities Approved by NC-SEZ

1 Agro-industry, fishery industry, and related activities

2 Ceramic products manufacturing

3 Textile and garment industries, and manufacture of leather

products

4 Manufacture of furniture or parts

5 Manufacture of gems and jewelry or parts

6 Manufacture of medical devices or parts

7 Manufacture of engine and vehicle parts, and manufacture of machinery, equipment, and parts

8 Electronics and electrical appliances industries

9 Manufacture of plastic products

10 Manufacture of Medicine

11 Logistics

12 Industrial zones / industrial estates

13 Tourism promotion service and activities to support tourism

Additional Target Activities Announcement

Activities eligible for promotion:1. Crop drying and silo facilities 2. Manufacture of products from agricultural by-products or

agricultural waste (except for those with uncomplicated production processes, e.g. drying, dehydration)

3. Metal Fabrication industry 4. Production of printed matterTarget activities not on the list of BOI’s Investment Promotion activities, but receiving incentives for investment in SEZs:1. Manufacture of animal feed or mixes for animal feed2. Manufacture of construction materials and manufacture of high-

pressure concrete for public utilities work 3. Manufacture of body care products, e.g. soap, shampoo,

toothpaste, cosmetic products4. Manufacture of plastic products for consumer goods5. Manufacture of pulp or paper articles6. Factory development of industrial plants and/ or warehouses

8/9/2017

3. Labor Management and One Stop Service Center

At present, Cambodian workers can work in Sakaeo and Trat SEZs on a temporary basis for 30 days.

• OSS center opens in 10 SEZ areas.

• OSOS Center at Chamchuri Square opened on 9 July 2015 and links with OSS at each SEZs.

OSS for Investment

OSS for Labor, Public Health and Security in … Province• Located in 10 SEZ areas

• OSS provides registration service in Sakaeo Trat, Tak, Chiang Rai, and Kanchanaburi for migrant workers working on a temporary basis.

On 18 February 2015, Cabinet endorsed foreign workers from Myanmar, Laos PDR and Cambodia to work in the Kingdom on a temporary basis during the prescribed periods or seasons provided according to Section 14, Alien Working Act, B.E. 2551 (2008). Relevant agencies were assigned as follows:•Ministry of Interior has to announce the exception

of alien labor from Myanmar, Laos PDR and Cambodia to work in Thailand.•Ministry of labor has to announce the regulation of

the office of prime minister on stipulated location, religion, type of work and labor condition to allow the legal permission regarding Section 14, provide a guidance to work permit, and establish labor OSS at each SEZ site.•Ministry of Foreign Affairs has to revise Agreement

on Border Crossing with neighboring countries (Laos PDR). Agreement with Cambodia and Myanmar have successfully been signed.• Immigration Bureau provides automatic fingerprints

database to link Alien Workers mobility information to the central office.

1 2 Labor

At present, Myanmar workers can work in designated districts in Tak, Chiang Raiand Kanchanaburi on a temporary basis for 30 days.

8/9/2017

4. Budget Allocation2016The government has invested in projects in SEZ areas with total budget of 6,168.9142 MB. (under SEZ Integrated Budget Plan) divided into Transport Infrastructure 61 % Border Checkpoint and Security 18 % and the Others 21%

SEZIntegrated

Budget (MB)

Transport Infrastructure

3,748.1473

Border Checkpoint and Security

1,136.6469

Public health 310.4467

Labor/OSS/Investment/Forest/Industrial Estate/Urban Planning/Waterworks

973.6733

Total 6,168.9142

2015The government has invested in initiative project in SEZ areas with the budget of 2,377.7575 MB.Border Check Point & Security 1,192.0422 MB.Infrastructure 847.3663 MB.Water Resources 302.3490 MB.Planning/Urban Planning/ 36.0000 MB.

Education

** Cabinet endorsed projects in 2015 with the central budget of 2011 and 2013-15.

21

WaterResources

13%

Work Plan/Urban Planning/

Education1%

Infrastructure36%

Border Checkpoint&

Security50%

Infrastructure61%

Border Checkpoint&

Security18%

Public health

5%

Labor/OSS/ Investment/Forest/Industrial

Estate/Urban Planning/Waterworks

16%

In addition, more investment projects in SEZ provinces are allocated in relevant budget plans, which are :1) Water Management Integrated Budget Plan 618.4835

MB2) Environmental and Waste Management Integrated Budget Plan 72.3548 MB

8/9/2017

4. Budget Allocation (2)

2017Investment projects are allocated in SEZ Integrated Budget Plan in total of 3,305.9245 MB.

3

In addition, more investment projects in SEZprovinces are allocated in relevant budget plans,which are :1) Infrastructure and Logistics System Development

Integrated Budget Plan: 6,916.5989 MB2) Water Management Integrated Budget Plan:

1,012.3215 MB

Customs (C.I.Q.), Security and

Forestry 42%

Waterworks24%

Public Health20%

Urban Planning/Drainage Planning

6%

Industrial Estate4%

Labor3% Trade

Promotion1%

2018SEZ Pre-ceiling Budget Requests under SEZ Integrated Budget Plan is in the process of consideration.

4

8/9/2017

4. Budget Allocation (3)Significant Projects of SEZ Integrated Budget Plan in 2017

Border Checkpoint: Construction of border checkpoint, facilities, cargo and passenger terminal. Increasing effectiveness of agricultural checkpoint (Fishery, Agriculture and Livestock)

Investment OSS: Establishment of investment OSS, training and building network for entrepreneur

Industrial Estate: Construction of industrial estate in Sakaeo

Security: District level capacity building for services and solving local people’s difficulties and improvement of Personal Identification and Blacklist Immigration Control System (PIBICS)

Public Health: Hospital construction, prophylactic system management, medical equipment provision, health care system/ Thai traditional medicine development/ Labor Health insurance

Water resources: Improvement of provincial waterworks construction for SEZ

Natural Resources (Forest): Natural Resources Management system in SEZ area

Labor : Establishment of labor OSS, training, providing labor equipment and skill standard testing

Urban Planning : Preparation of land use planning and drainage planning

8/9/2017

27 September 201726

Invite investors to invest in backward area

Lack of Skill Labor in time of Development

Our tenants move to other countries

27 September 201727

Because Thailand Labors need to be trained for hight tech industries that will start operation in EEC.

Lack of Skill Labor in time of Development

Progress : Investment in SEZ

Source : Infographic by NESDB with BOI’s data, August, 2017

Land developer selection procedure for state-owned land in Trat SEZ by The Treasury Department

Land developer is Property Perfect Public Company Limited.

To develop a city of international tourism center, food safety and international trade

system services

3,001 MB

Financial facilitation for SEZ investment projects in Special Economic Development ZonesBy EXIM Bank

3 investors were approved.Tak : cassava by products

Songkla : servicesNong Khai : plastic product

90 MB

8/9/2017

257 Million USD

Recommendations

• New financial modality for resources mobilization such as

PPP, Infrastructure fund

• Policy dialogue with neighboring countries for issues such as

labor management, connectivity, regional value chain

• Stronger integration amongst public sector/line Ministries

• Increase awareness of developer, investors by all elements of

marketing

27 September 201730

Urgently develop skilled labor for S Curve

Enhance more cooperation with neighboring countriesMALAYSIA,CAMBODIA, MYANMAR, LAO P.D.R.

More relaxation on regulation in SEZ to facilitate investors