To ensure Thailand’s economy continues to develop in coming decades, the Thai government adopted a new economic model in 2016 called “Thailand 4.0”, focused on transforming Thailand into a value-based economy built on science, technology, innovation and creativity. Five existing high potential industries and an additional five new targeted industries were identified as new engines of growth for the country.
To further boost the country’s competitiveness, the Thai government has generated a long-term infrastructure plan to accelerate economic growth. This plan prioritises improvement of existing infrastructure as well as the construction of numerous new projects in many areas. Extending the roads and highway network of Thailand, presently connecting provinces within the country, into all bordering countries, will facilitate increased trade and investment among mainland ASEAN members.
Broadly, the goals of the Thailand 4.0 plan cover economic prosperity to create a value-based economy driven by innovation, technology and creativity; social well-being and raising human values and environmental protection.
The Board of Investment will seek to prioritise investment approval for projects in the sectors targeted by the “Thailand 4.0” industrial policy. Highlights of the package include tax breaks through the Eastern Economic Corridor, a special economic zone; tax advantages for industries in automation and robotics systems in an effort to boost manufacturing and advantages for foreign investors who employ highly-skilled personnel in the field of science, technology, engineering, and mathematics (STEM). Such companies are eligible for CIT tax deductions of 200% for training expenses, beginning in the 2019-20 financial year. These efforts are built on the foundation of historical success. Thailand is a leading producer in Asia of food, electronics and cars. Largest companies include PTT Public Company Limited; Siam Commercial Bank; Siam Cement Group; Kasikornbank; Bangkok Bank; PTT Global Chemicals and CP All.
In a fresh effort to catch up with neighbours such as Vietnam in attracting foreign investment, Thailand introduced a stimulus package in September 2019 called Thailand Plus. With this package, the government of Thailand is reaching out to companies hit by the US-China trade stand-off which are looking at a China+1 strategy.
EIU predicts that Thailand will be partial towards China as the government seeks investment for infrastructure projects. Economic integration with the country’s neighbours in the Association of South- East Asian Nations (ASEAN) will intensify despite differences on the issue of Myanmar, while negotiations on and ratification of free-trade agreements (FTAs) with major trading partners will advance. Opposition to the sale of assets to foreigners will continue and efforts will increase to introduce new incentives to promote inward investment in targeted industries.
Tripudjo Soemarko is the Advisor – Government Relations of our Indonesian subsidiary, Indonesia Business Partners. He is a career banker with over 30 years of work experience at HSBC.
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