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We stand ready for our neighbouring friends to share and utilize our financial platform
The Asset asks Somchai Sujjapongse, permanent secretary, Ministry of Finance, Thailand, what’s next for the country
Daniel Yu 28 Jun 2017
What is the outlook for investment in Thailand?
 
Investments, both public and private, have played an important role in the Thai economy. During the past decade, however, major investments have been lagging. Nonetheless, overall investments are starting to pick up as the economy begins to gain traction with GDP growth close to potential at 3.2% last year and expected at 3.6% this year.
 
On this point, the Thai government plans to upgrade our entire logistics system with the aim to reduce logistic costs and better connect Thailand to the CLMV (Cambodia, Laos, Myanmar, Vietnam) region. We plan to invest as much as 1.7 trillion baht (US$49 billion) to upgrade our roads, railways, airports, and seaports over the next five years.
 
Some of these large-scale public investments have begun to take shape, some under bidding processes, and we expect the building of all projects to begin this year. We expect that such public investment will crowd in both domestic and foreign private investors. Therefore, we expect investments to continue to be an important driver for the Thai economy for the next several years.
 
What areas of opportunities are being developed to spur investment?
Thailand always welcomes investment, both foreign and domestic. We have been particularly generous in granting many incentives for the private sector to invest or jointly invest in public projects.
 
For example, we have shortened our PPP (Public Private Partnership) process from 25 months down to only nine months. We have revised our BOI (Board of Investment) incentives, making it more generous with up to 13 years’ free tax for strategic industries that focus on innovation.
 
We have designated areas called the Eastern Economic Corridor (EEC) in our eastern provinces to house our future industries such as advanced automotive, smart electronics, robotics, aviation, and medical hubs, to name a few. We are also setting up our national infrastructure fund called the “Thailand Future Fund” as a vehicle for private investment in public infrastructure.
 
These massive infrastructure investment projects led by the government initiative, aim to enhance our long-term economic foundation especially in terms of connectivity and new growth driver sectors. As you can see, it will be an exciting time for Thailand as we transform ourselves to be a more productive and innovative economy.
 
What has been the progress to build Thailand as a hub for CLMV?
Thailand is fortunate to be located at the heart of CLMV, one of the fastest growing regions in the world today. As such, it is natural for Thailand to become a hub for CLMV. On the logistic front, we are now upgrading our infrastructure to better connect to our neighbouring countries.
 
We are also setting up Special Economic Zones at the border in order to promote production and trade with our neighbours. Moreover, the EEC that is now under construction is capable of handling exports and imports from CLMV to the world.
 
On the financial front, many of the top Thai banks now operate in CLMV as more and more Thai companies invest in the region. Our capital market is open to CLMV investors and borrowers. And our currency, the baht, has been widely used for border trade. We also stand ready for our neighbouring friends to share and utilize our financial platform to raise financial resources to meet with investment demands.
 
The progress to build Thailand as a hub for CLMV has been great and this progress will ensure that every country will gain from the regional connectivity together.
 
What is the progress of attracting companies to Bangkok to set up their treasury centre?
Thailand has put in place tax and non-tax incentives for multinational companies that set up their regional operating headquarters, international trading centres, or treasury centres in Thailand. Incentives include corporate income tax exemption for income received from overseas affiliates and a reduced rate on personal income tax for expats.
 
As of today, 100 international headquarters and 16 multinationals with almost 150 affiliates in CLMV and the Asean region have chosen to operate their treasury centres in Thailand.
 
What is being done to revive exports?
To counter softer global demand, Thailand plans to revive exports by upgrading the quality of our products and services. To do so, we are now modernizing our infrastructures physically and institutionally—logistics, legal, and financial infrastructures—in order to facilitate business operation. We have just revised our incentives to attract leading companies to help transform Thailand into a knowledge-based economy. We also allow for a 300% tax deduction on expenses the companies spend on R&D.
 
Apart from our attempt to diversify our products and markets, we also hope that with many policies to intensify our competitiveness, this will translate into better products and services. We are confident that the fruitful results can revive our long-term export trajectory. 
 
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