1. 1 Mr. Satit Sirirangkamanont Secretary General Thailand Board of Investment Expanding Opportunities for U.S. Investments in Thailand Expanding Opportunities for U.S. Investments in Thailand 30 November 2004 American Chamber of Commerce in Thailand

2. 2 Updates on U.S. Applications to the BOI Improving efficiency of policies to strengthen industrial competitiveness – Focusing on critical success factors – Strategic industries Improving BOI facilitation services Thailand: An Investment Destination of Choice

3. 3 BOI update: U.S. Investments in Thailand

4. 4 Net Applications for BOI Promotion 20032004 Jan-Oct # of Projects Value (Million USD) # of Projects Value (Million USD) Total Investment 961$7,6201,049$12,065 Total Foreign 668$6,217617$6,348 Japan316$2,659286$2,180 USA 43$1,18633$852 EU 74$91171$525 Netherlands 9$24114$270 Singapore 62$36562$378 Taiwan 67$19852$216

5. 5 6 Target Sectors Agro-Industry Fashion Automotive Electronics and ICT Energy High Value-Added Services Designated a Target Sector November 29, 2004

6. 6 Total Foreign and Domestic Net Applications By Sector Sector2003 2004 Jan-Oct #ProjectsValue (Million USD) #ProjectsValue Agriculture181$855226$1,112 Minerals and Ceramics 28$49831$1,707 Light Industry 82$44584$298 Automotive and Metal Processing 237$1,512218$1,220 Electrical and Electronics 151$1,570173$1,920 Petrochemicals and Chemicals 123$1,400134$2,570 Services & Infrastructure 159$1,340183$3,238 TOTAL TOTAL961$7,6201,049$12,065

7. 7 5-Year Totals by Sector: 1999-2003 U.S. Investments Approved Sector #ProjectsValue (Million USD) Agriculture30$177 Minerals and Ceramics 5$200 Light Industry 34$301 Auto and Metal Processing 35$255 Electrical and Electronics 84$1,980 Petrochemicals, Chemicals 31$1,018 Services and Infrastructure 22$64 TOTAL241$3,995

8. 8 2004 Results of AmCham Outlook: Bullish on Thailand “ Expansion plans for Thailand increased from 2003, whereas those for China, Vietnam and India fell. ” - - The Nation July 8, 2004 Six ASEAN American Chambers participated In the AmCham Outlook, an annual business confidence survey of members in the region. Business expansion planned 20032004 Thailand66%83% China50%47% Vietnam47%25% India31%19% 76% expect profits to increase 80% expect their businesses to expand Availability of trained personnel significant area of strength –More than 100% increase in satisfaction Increased satisfaction with –Personal security –Costs of labor, housing, and raw materials AmCham Thailand in 2004:

9. 9 Thailand Rated #4 FDI Location for Inflows 2004-2007 ●Results of a 2004 survey of 87 international direct investment location experts. ●Subsequent survey of transnational corporations ranked Thailand #3 in Asia for FDI inflows. GLOBAL RANKING Top 1China Top 2India Top 3USA Top 4 THAILAND Top 5Poland/Czech Republic Top 7Mexico/Malaysia Top 9UK/Singapore/S. Korea Source: Prospects for FDI flows, TNC Strategies and Promotion Policies: 2004-2007, UNCTAD & Corporate Location

10. 10 BOI direction: Strengthening Thailand’s Industrial Competitiveness Focusing on value-added, Focusing on sustainability Focusing on sustainability

11. Tandem FDI and DDI investments to ensure balanced development and sustainability EconomicGrowth PovertyEradication  Production  Employment  Income  Provincial Clusters  Community Enterprises DDI Domestic Direct Investment FDI Foreign Direct Investment ThailandCompetitiveness  Productivity  Skills, Technology, Innovation  Higher value-added industries  Industrial clusters

12. 12 New Policies in 2004 Alternative energy Semi-conductor Hard Disk Drive (HDD) Energy-saving machinery or equipment for existing projects New policies for the 3 Southern Provinces Bleaching, dyeing and finishing Carbon black Film-making and entertainment Long-stay tourism

13. 13 Regional Development Sustainable Competitiveness Focusing on Strategic Industries Attracting foreign and domestic investments in tandem. Incentives based on Zones and Sectors.. Meeting needs of investors and the nation..

14. 14 Zones Zone and Sector Matrix: Incentives to strengthen COMPETITIVENESS Proactive efforts to build up and attract investments in Strategic or Priority Industries Maximum incentives regardless of zone or location. Example: mould and die production Zone-Based Incentives: Zone 1 Zone 2 Zone 3 Higher incentives Lower incentives

15. 15 Focus on critical success factors to develop industry competitiveness Focus on critical success factors to develop industry competitiveness Industry competitiveness and productivity: a different approach for each sector –Supply chain management –Manufacturing processes –Microelectronic design Energy and renewable energy –Gasoline, diesel, natural gas, electricity –Ethanol, biofuel, biogas, biomass –Energy-co-generation, independent power plants for industry clusters Logistics –Infrastructure, oil & gas pipelines –Low-cost airlines, shipping –Logistics providers –Distribution Centers –Supply chain management systems

16. 16 Examples of Strategic Industries: High-tech electronics Biotechnology Mission: Proactively build up new growth and high growth industries and fill in the missing links and create backward and forward linkages. Fill in missing links in industrial clusters Build up local supply chains Strengthen linkages Strategic Industries Materials science Nanotechnology

17. 17 Example: Development of Local Supply Chains Development of Local Supply Chains Downstream Electronics Products Wafers Forward Linkages Backward Linkages Integrated Circuits Work together with industry, associations Work to develop Thai suppliers Work to attract new foreign suppliers BOI Unit for Industrial Linkage Development (BUILD), linkages with SMEs

18. 18 Development of Linkages in Strategic Industries Development of Linkages in Strategic Industries Industry Universities Technology Research centers ProductionR&D Provide incentives

19. 19 Example: MekTec Manufacturing Example: MekTec Manufacturing R&D Projects of MekTec and Chulalongkorn University Project 1: Organic solubility preservative to prevent copper oxidation, assist in soldering processes Period: 2004-2007 Result: Increase in product quality and reduced manufacturing costs Project 2: Development of liquid polyamide to strengthen the coating of flexible printed circuits Investment: 25 million baht Period: 2004-2007 Result: Increase in product quality and reduced manufacturing costs Project 3: Nanotechnology development for manufacturing of new flexible printed circuits Investment: 50 million baht Period: 2004-2009 Result: New product development

20. 20 Example of Priority Activity: International Procurement Offices (IPOs) Criteria: Warehouse(s) and computerized inventory system Procurement activities, quality control and packaging Several sources of procurement, including a domestic source Incentives: Exemption of import duties on machinery Exemption of import duties on raw materials and essential materials No foreign ownership restriction Example: Isuzu (Thailand) Co., Ltd. Joint Venture: Singapore and Thai Investment: 1.7 Billion Baht

21. 21 Example of Priority Activity: Regional Operating Headquarters (ROH) Criteria: Service branches/affiliates in 3 countries Majority or totally foreign-owned Income derived from managerial, technical, administrative, or prescribed support services for branches/associated companies Incentives: Corporate income tax of 10% for: Qualified services Royalties from ROH in Thailand Interest income on loans made to ROH branches/ associated enterprises Tax exemption for dividends from ROH branches/associated enterprises Personal income tax of 15% for expatriate employees for 2 years

22. 22 Example: ExxonMobil Ltd. ROH of Exxon Mobil Corporation since February 2003 Reasons Thailand Chosen: Cost of operations Efficient, competitive business support center Available relevant skills, language proficiency, ability to work in multicultural environment Telecommunications infrastructure Expatriate living: friendly Thai hospitality, quality housing, international schools BOI facilitation with government agencies Functions Accounting, information systems, financial analysis, payroll, payables, credit, customer service and sales support Employment: Thai 584, Foreign 41; more when fully functional 7 countries supported: Singapore, Japan, Malaysia, Australia, U.S., Hong Kong, Thailand

23. 23 Example: Reuters Software (Thailand) Co., Ltd. A global software development centers for Reuters Currently employs 470 people Sample of clients: Merrill Lynch, ABN AMRO, Hong Kong Bank Reasons for investing in Thailand: Lower operating costs compared to Singapore Teamwork Strong software skills Thai employees work well with offices in other countries BOI Promotion: 5-year corporate income tax exemption

24. 24 BOI update: Improving BOI Facilitation Services

25. 25  Investment policy and incentive provider  Investment Projects Administration  Facilitation Services  Investment and industry monitoring Role of the BOI

26. 26  Continuous improvement in streamlining and efficiency  One Portal One Database,  Increasing ease of information access for investors  Online Applications and Raw Materials & Machinery Tracking System: January 1, 2005  More after care services  More focus on getting feedback to improve BOI policies and services Backed by ISO 9001:2000 Certification Creating an Enabling Environment for Investments

27. 27 Increasing responsiveness to investors Strengthening Country Desks at BOI HQ: United States Europe Japan + Korea China + Hong Kong + Chinese Taipei ASEAN + India

28. 28 BOI Offices in the U.S. New York: 61 Broadway, Suite 2810 New York, NY 10008 nyc@boi.go.th (212) 422-9009 (moved from WTC) San Francisco: Coming Soon!

29. BOI Headquarters www.boi.go.th head@boi.go.th Thank You!