BoI soothes fears over new tax-privilege policy
Applications for investment privileges from the Board of Investment will not be affected by the board's revised policies if they were submitted before the new regime goes into effect, the BoI's secretary-general has ensured worried businesses.
Speaking at a seminar in Chon Buri on strategies to promote new investments for sustainable growth of Thai industries, Udom Wongviwatchai said many business operators were concerned about the BoI's revised five-year (2013-18) investment-privilege policy. However, the new policy will only be applicable to new applicants, he said.
Under the new policy, corporate tax exemptions will not exceed eight years, but the BOI has proposed that the Investment Act be amended to allow flexibility on this point. The amendment would allow tax exemptions to exceed eight years to lure highly desirable investments away from Thailand's trade rivals. Corporate tax deductions could be raised from 50 per cent to a maximum of 90 per cent, as well as import duty exemptions for research and development products and R&D support funds.
In addition, the amended act would promote Thai investments overseas, not just domestic projects like the current version. However, such amendments will take time, so the current rules remain in force for now. When the Investment Act has been amended, the new privileges will take effect, Udom said.
The new policy will end privileges offered by the various BOI investment zones, but will be granted under a new "industry cluster" scheme. In the past, Investment Zone 3 offered the highest privileges, but failed to draw investors as intended because of problems with its basic structure. In contrast, industry-cluster privileges will cover the entire supply chain.
The government may invest in basic structures, such as testing laboratories. Both the private and state sectors can submit industry-cluster projects to the BOI for review. This may encourage wider distribution of investments, such as to the southern border provinces.
According to Industry Minister Prasert Boonchaisuk, the Eastern region is a vital economic driving force. Between 2008 and last year, that region accounted for 2,761 BOI-promoted investment projects valued at Bt1.37 trillion, or 47 per cent of the total during that period. Most of the projects were in the services and infrastructure sectors.
The BOI is listening to feedback from operators nationwide to make proper adjustments to its plans and policies to fulfil the needs of businesses and effectively promote investment, he said.
Suntorn Tanyawattanakul, chairman of the Chon Buri Chamber of Commerce, said the BOI should also consider other factors affecting investment in each region of the country, such as city zonings and layouts that may not support the establishment of the clusters of industries the board wants to promote. Furthermore, reducing the steps investors have to go through among various agencies to get their projects approved would be most welcome.
Suphan Chansarnwat, president of the Chon Buri Federation of Industries, wants the BOI to upgrade the investment privileges offered to small and medium-sized enterprises as well as encouraging SMEs that produce the same goods to join forces to benefit from economies of scale, rather than competing with one another.
The BOI should also support R&D for SMEs, such as providing funds to set up product-testing labs, as smaller companies lack the capital to set up such facilities.
Finally, the private sector should not just wait for BOI investment privileges, but businesses should be constantly upgraded to achieve sustainable growth, a prominent economist from Kasertsart University said.