Thailand’s investment promotion laws are a particularly important element of its overall plan for future economic growth, especially regarding its competitiveness with other nations in the ASEAN Economic Community (AEC). The Investment Promotion Act of B.E. 2520 (1977), amended as recently as 2001, empowers the Board of Investment (BOI) of Thailand to grant tax and non-tax incentives for both foreign and Thai investors who engage in any types of promoted business activities as designated in BOI announcements. A few of the incentives offered by the BOI, aside from tax incentives, are such privileges as majority foreign ownership, foreign ownership of land, and special visas for foreign technicians and experts. A few of the basics of the investment promotion laws are as follows:
- In order to be eligible for investment promotion, the applicant must incorporate a company in Thailand either before or after promotion has been granted.
- Activities that the BOI designate for promotion are those which are eligible for investment promotion by the Board are those which are “important and beneficial to the economic and social development, and security of the country, activities which involve production for export, activities which have high content of capital, labour or service or activities which utilise agricultural produce or natural resources as raw materials, provided that in the opinion of the Board, they are non-existent in the Kingdom, or existent but inadequate, or use out-of-date production processes.”
- An applicant’s investment proposal must be economically and technologically sound. In considering the project, the BOI shall take into account the following factors:
- The existing number of producers and production capacity in Thailand and the size of production capacity to be created under promotion compared with demand estimates;
- The prospect for which such activity will expand the market for the products or commodities produced or assembled in Thailand and will encourage the production or assembly in Thailand;
- The quantity and proportion of the resources available in Thailand including capital, raw or essential materials and labour or other services utilised;
- The amount of foreign currency which may be saved or earned for Thailand;
- The suitability of the production or assembly processes;
- Other requirements which the Board deems necessary and appropriate.
- In considering an investment project, the BOI will take into consideration any measures take place to protect the natural environment and/or any measures that shall minimize harmful effects to the environment.
Although the BOI application procedure is streamlined to make the process as easy as possible for foreign investors to do business in Thailand, the application process involves a great deal of paperwork. It is therefore advised that prospective BOI applicants seek the assistance of a competent lawyer.