For Vijay Shah, CMD, Hitech Group, heading to Thailand to invest around Rs eight crore in a reverse osmosis (R/O) plant there was the best decision he took as far as investing outside of India is concerned. That was 18 months ago. "The ease of doing business in Thailand is unbelievable," he said.
Shah's company focusses on a B2B (business-to-business) model where his firm assembles imported components required for R/O and sells it to water purifier makers. He has been in business for over two decades in India, and his firm has a turnover of Rs 300 crore, raked in from the domestic market. But, he's not happy with the Indian import duties (between 10-40 percent). Thailand, as it turns out, doesn't impose import duties. And that is why many businesses like Shah's have made that nation their export base.
"Thailand has business-friendly investment policies and infrastructure, which is a boon for startups. There is government involvement and support, besides skilled labour," Shah told Firstpost. He heaped praises on Thailand's Board of Investment (BOI) and said that the best thing for him, besides the professional work culture in that country, is the fact that tax rates are not cumbersome. His firm received a seven-year tax exemption.
In Thailand, the Board of Investment, under the Office of the Prime Minister, promotes investment into Thailand, as well as Thai overseas investments. The BOI, for instance, links investors with government agencies and the private sector and provides business support services both in Thailand and outside that country.
Not just for tourists
In a bid to move away from being known as a tourist country, infamously for sex tourism, the Thai government is making concerted efforts to woo investments from across the world. From being an agricultural economy, the nation expanded its scope and moved into light industries, and then into intensive production, and is now focusing on technology and innovation.
As such, the nation has attracted investments from several Indian companies. At present, it has secured investments worth $2 billion from around 40 Indian firms, in the areas of software, agri chemicals and electric car development. That list includes Tata Motors, Tata Steel, TCS, The Aditya Birla Group, Tech Mahindra, Kirloskar Brothers, among others.
The BoI has set an investment application target of 720,000 million baht for 2018 after closing the year 2017 with a total investment application value of 641,978 million baht, which is a 22 percent increase over 2016, said Duangjai Asawachintachit, the BOI's Secretary General.
Chachoengsao, Chonburi and the Rayong Provinces have been designated for the development of the so-called Eastern Economic Corridor (EEC), a pilot project for the economic development of Thailand’s eastern seaboard.
"BOI has logged a 5-10 percent increase in investment application value every year," Asawachintachit said. "We believe that the 2018 target of 720,000 million baht is possible. We will focus on industries that are a foundation of the Thai economy, including agriculture, food, digital, logistics, education, tourism, and the services industries."
Officials at the BOI said the Asia-Pacific region holds economic promise as the growth rate forecast for the region stands at 4.9 percent per annum over the next 20 years. “In 2034, the region will account for 42 percent of global air passenger traffic, with an extra 1.8 billion passengers. Given its immense growth potential and budding opportunities, many world class aerospace companies are looking to expand and locate their business in the Asia-Pacific region,” they said.
Therefore, under the EEC, a specific outlay has been made for development, especially in the proposed U-Tapao aeropolis. Money will be spent on deep sea ports and on a high-speed railway network linking major airports including Bangkok's Suvarnabhumi airport.
Thailand is the second-largest economy in the Association of Southeast Asian Nations (ASEAN) region. The nation has a $23.5 trillion market and is home to 3.9 billion people.
Thailand, now, is one of the world’s most improved economies in terms of the ease of doing business, having implemented eight reforms during the 2016-17 period, according to the World Bank’s Doing Business 2018 report. The adoption of a secured transactions law bolstered the rights of creditors and borrowers, while changes to risk assessment and land administration systems boosted efficiency markedly. These reforms, and a host of others, have created a much more welcoming business climate in that country. Not so long ago, starting a company in Thailand took an average of 27.5 days. Now, it takes less than five, demonstrating the southeast Asian nation's progress, the report pointed out.
The best things in Thailand, said Shah, are the long-term corporate income tax benefits, simple import duty structure, support for startups and, more importantly, the availability of long-term work visas and work permits. "The Indian government should also create a business-friendly environment, push stable economic and business policies, promote manufacturing and re-export," which would help entrepreneurship and boost the government's 'Make in India' programme, he said.
Furthermore, to make things easier for potential investors, the Thai government has come out with a new type of visa – the SMART Visa programme with an aim to attract highly skilled manpower into the tech sector, alongside inviting investors to pump money into startups.
The SMART Visa is applicable only to foreign experts, executives, investors and entrepreneurs who wish to go to that country on work, or invest in a select band of targeted industries called the '10 S-Curve’. The 10 S-Curve industries include automotive, smart electronics, medical and wellness tourism, agriculture and biotechnology. Besides these, the Thai government is focused on the food sector, automation and robotics, aviation and logistics, bio-fuels, biochemicals and a digital medical hub.
Investors can also avail of a corporate income tax exemption of up to eight years, avail import duty exemptions on raw material and machinery, and benefit from a 20 percent income tax rate that is the second lowest among the ASEAN countries. The government also provides and matches grants for investment, R&D, innovation, and human resource development for targeted industries.
(The correspondent was in Thailand on invitation from the Board of Investment, Government of Thailand)
Updated Date: May 09, 2018 18:37 PM