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by The Thailand Board of Investment

June 2008         •      Volume 18          •     No. 6

Global Competitiveness on the Rise
Prime Minister Vows to Lift Ranking to “Top 20” Within Four Years

Thailand’s ranking in the 2008 IMD World Competitiveness        Thailand’s improved ranking in the WCY comes on the
Yearbook (WCY), which is acknowledged as a benchmark in         heels of the 2008 World Bank Ease of Doing Business
ranking global competitiveness of nations, improved six slots   Report, which showed that for 2008, Thailand moved up
to 27th in 2008. The improved global competitiveness ranking    in the rankings to #15 in the world, from #18 a year ago.
reversed a two-year trend that saw Thailand’s competitiveness   This is consistent with the IMD ranking, for ease of doing
fall from 25th in 2005 to 29th in 2006 and 33rd in 2007.        business is a key factor in a country’s competitiveness. In
                                                                addition, a 2008 Grant Thornton survey ranked Thailand as
                                                                the 8th most attractive emerging market for investment in
                                                                the world, on par with Malaysia, and somewhat ahead of
NEWS BITES / BOI NET APPLICATIONS                       P. 2    Vietnam and the Philippines.

ECONOMIC NEWS:                                                  According to the World Competitiveness Yearbook, the
THAILAND INVESTMENT YEAR                                P. 4    United States continued to top the competitiveness table for
INDUSTRY FOCUS:                                                 2008, but the IMD indicated that 2nd ranked “Singapore
SUBCON THAILAND 2008                                    P. 5    is closing the gap with the US and 2008 might be the
                                                                turning point were the US falls from its leadership of top
COMPANY SPOTLIGHT:                                              competitors.”
TATA MOTORS                                             P. 7

RESONANCE OF THE CHAMBERS:                                      The World Competitiveness Yearbook, which has been
BRITISH CHAMBER OF COMMERCE THAILAND                    P. 8    compiled annually since 1989, utilizes 331 criteria (2/3
                                                                of which are hard data and 1/3 of which come from an
BOI INVESTMENT MISSIONS                               P. 10     Executive Opinion Survey) to rank 55 economies. It is
                                                                acknowledged to be a worldwide reference with objective
INSIDE THE BOI                                        P. 11
THAILAND ECONOMY-AT-A-GLANCE                          P. 12

                                                                                                        Continued on P. 3
                                             THAILAND INVESTMENT REVIEW
                                                                  June 2008

    NEWS BITES                                                          BOI NET APPLICATIONS

    Record Exports Lift Thai Trade Surplus                                                                    2007             2007 (Jan-May)          2008 (Jan-May)
                                                                                                         (US$ = 34.51 THB)       (US$ = 35.54 THB)       (US$ = 32.37 THB)

    Permanent Secretary for Commerce Siripol Yodmuangcharoen                                          Number of
                                                                                                                              Number of
                                                                                                                                                     Number of

    said that the country’s exports in May climbed to a new record
                                                                        Total Foreign
    high of about $15.46 billion, up 21.4 per cent when compared        Investment
                                                                                                        845          14,559     344          3,459      365          3,118

    to the same period last year. Imports in May totaled $14.17
    billion, an increase of 15.7 per cent from the corresponding
                                                                        By Sector
    period of 2007, which meant that the May trade account was
                                                                        Agricultural Products            46           258        24           149        21           172
    in surplus by US$1.29 billion. Mr. Siripol said his ministry
                                                                        Minerals / Ceramics
    remains confident that Thailand’s exports for 2008 could                                             27           798        8            184        15           362

    reach the target growth of 12.5 per cent.                           Light Industries / Textiles      59           259        33           143        37           212

                                                                        Automotive /
                                                                                                        228          4,449       89           679        86           463
                                                                        Metal Processing

                                                                        Electrical / Electronics        153          2,289       69           513        58           861

                                                                        Chemicals / Paper               129          2,889       47           956        44           551

                                                                        Services                        203          3,616       74           835       104           498

    Mercedes-Benz Opens One Roof Centre                                 By Country
                                                                        Japan                           330          4,320      134          1,387      143           795
    Mercedes-Benz, which entered the Thai market over 50 years          Europe                          139          2,148       52           148        67           787
    ago through dealers and has operated its own branch for 10
                                                                        Taiwan                           44           171        21            66        25           106
    years, has invested 660 million Baht in a “One-Roof Centre”
2   that integrates the essential pre- and post-delivery functions of   United States                    38          2,485       15           444        17            61

    Mercedes-Benz products under the same roof.                         Hong Kong                        24           170        10           135        11            95

                                                                        Singapore                        80           989        29           143        32           513

    Wolfgang Huppenbauer, president and CEO of Mercedes-
    Benz (Thailand) Ltd., said “The centre is our regional first        By Zone
    for an integrated operation center that provides before-sales,      Zone 1                          298          1,296      119           446       121           327
    after-sales and dealer services. With all of our services and       Zone 2                          415          11,416     160          2,462      172          2,425
    operations integrated under one roof, we will be able to
                                                                        Zone 3                          132          1,847       65           552        72           366
    provide more speedy service with greater efficiency in all
                                                                                                                                                        Unit: US$ Million
                                                                        Note: Investment projects with foreign equity participation from more than one country are re-
                                                                        ported in the figures for both countries.

    Dubai “Bullish” Exploring Landbridge in

    Thai cabinet ministers endorsed a proposal to conduct a joint
    feasibility study with Dubai World to develop a logistics
    network in southern Thailand.

    According to its chairman, Sultan Ahmed Bin Sulayem, Dubai
    World, one of the world’s largest port operators, was very
    interested in helping build a landbridge linking the Andaman
    Sea and the Gulf of Thailand in the southern provinces. “We
    believe that it will be a successful project and we can claim
    that we are a logistics expert,” he said.
                                     THAILAND INVESTMENT REVIEW
                                                                   June 2008
Continued from P. 1

                                                                                       work place the highest of the 55 countries surveyed
                                                                                       at 57%, far higher than the average of 43%. In
                                                                                       addition, labor costs are low, both for total hourly
                                                                                       compensations for manufacturing workers (5th
                                                                                       ranked) and for remuneration in service professions
                                                                                       (#7) and management (#12). The number of days lost
                                                                                       to industrial disputes (0.36 days per 1,000 inhabitants)
                                                                                       ranked #11, far below the average value of 34.78

                                                                                       In terms of management practices, attitudes and values,
                                                                                       which are components of business efficiency, the
                                                                                       yearbook noted in customer satisfaction, as measured
                                                                                       by companies in which customer satisfaction is
                                                                                       emphasized, Thailand ranked #8. In addition, Thailand
                                                                                       ranked #10 for efficient supervision of management
                                                                                       by corporate boards, #10 for national culture being
                                                                                       open to foreign ideas, and #12 for entrepreneurship.

                                                                                       Thailand’s infrastructure also scored well in several
                                                                                       categories, including a top ranking in percentage of
                                                                                       total first university degrees in science and engineering.
                                                                                       Other areas where Thai infrastructure scored high
                                                                                       were dial-up internet costs (#4), mobile telephone
                                                                                       costs (#5), ecological footprint (#6), percentage of
                                                                                       manufactured exports (#11), and electricity costs for
                                                                                       industrial clients (#15).

                                                                                       In economic performance, Thailand’s unemployment
                                                                                       rate of 1.38% ranked first, far below the average value
                                                                                       of 6.61% for all countries and was 11th in exports
                                                                                       as a percentage of GDP at 62%, compared with the
                                                                                       average value of 42% for the 55 countries in the
                                                                                       report. The cost of living, based on a basket of goods
                                                                                       and services was ranked #14 at 74.90, well below the
                                                                                       average value of 86.3 and the baseline of New York
The Yearbook identifies four components that make up                                   at 100.
the overall ranking: Economic performance, government
efficiency, business efficiency, and infrastructure. Thailand’s                In government efficiency, Thailand’s 7% VAT/GST ranked
rank in each component improved, which led to the rise in the                  5th, while contributions to social security by both employer
overall ranking.                                                               and employee were ranked among the top ten and overall
                             2005        2006         2007         2008
                                                                               labor regulations ranked 6th in terms of not hindering business
                                                                               activities. In addition, the yearbook indicated that the ageing
 Overall Performance          25          29           33            27        of society was not a burden for economic development, as
 Economic Performance         7           19           15            12        Thailand ranked 9th in that category.
 Government Efficiency        14          20           27            22
 Business Efficiency          25          25           34            25        While Thailand’s global competitiveness is clearly on the rise,
 Infrastructure               39          42           48            39
                                                                               it does not mean that there are areas in which improvement is
                             Source: IMD World Competitiveness Yearbook 2008
                                                                               not needed.

A look inside the numbers reveals that Thailand ranks in                       The GCY cites five challenges that the Thailand Management
the top five in four sub-factors: employment, prices, fiscal                   Association sees for Thailand in 2008.
policy, and labor market, and within each sub-factor ranking,
Thailand had numerous categories in which it ranked in the                     •   Tackle the problem of inflation
top third of the 55 countries.                                                 •   Increase investor confidence by speeding up public
                                                                                   investment projects to improve infrastructure
In terms of business efficiency, Thailand’s labor force had                    •   Drive measures to improve energy efficiency
three top 10 rankings, with the percentage of women in the
                                                                                                                          Continued on P. 10
                                            THAILAND INVESTMENT REVIEW
                                                                 June 2008


    As part of Thailand Investment Year, the Board of Investment       Mr. Suwit Khunkitti, Deputy Prime Minister and Minister of
    (BOI) is looking at ways to enhance the investment environment     Industry, said that on May 14, 2008, the Board of Investment
    in Thailand. As part of this effort, the BOI and Deputy Prime      “fast track” express lane at Suvarnabhumi Airport opened for
    Minister Suwit Khunkitti met with foreign chambers of              business. Experts (executives, skilled labor and specialists)
    commerce in Thailand and is systematically addressing issues       from BOI-approved companies that have been granted
    raised by the chambers.                                            permission for entry into the Kingdom for the purpose of
                                                                       investment under the Investment Promotion Act, are able
    Board of Investment Offers Project Approvals in 15                 to utilize the “Diplomatic & Official/APEC/BOI lanes” at
    Business Days                                                      immigration by presenting their validated passports.

    As part of the “Thailand Investment Year 2008–2009”                Executives of the BOI-promoted companies who are not
    campaign, which is focused on attracting investment into the       based in Thailand, are also eligible to access the Diplomatic
    country, the Board of Investment has reduced the application       & Official/APEC/BOI lane given that their name, position,
4   and approval process. Effective May 8, 2008, all projects          passport number, and flight details are sent to BOI’s One
    proposing investments of less than 40 million Baht will            Stop Service Center for visas and work permits via email at
    be processed within 15 working days, under the following  of fax +66 2 931-1191
                                                                       Mr. Satit Chanjavanakul, Secretary General of BOI, said, “We
    To facilitate BOI-promoted companies, the BOI has                  are pleased to offer this additional benefit to investors during
    streamlined the approval process, reducing the process time        Thailand Investment Year 2008-2009. The fast-track lane
    from 40 working days to 15 working days for projects that          offers foreign investors similar convenient immigration entry
    meet the following criteria:                                       privileges as APEC members and ELITE card holders.”

    1.   Investment must not exceed 40 million Baht exclusive of       BOI Establishes Investment Help Desk and Expands
         working capital and cost of land (except software project     Services of One-Stop Service Center for Visas and Work
         that can be of any invest ment size).                         Permits
    2.   The debt to equity ratio must not exceed 3:1.
    3.   Only new machinery will be used under the investment          In a recent meeting with the Joint Foreign Chambers
         project.                                                      Consultative Committee, it was suggested that the government
    4.   There is no environmental impact issue and no                 establish a one-stop service center for all foreign investors. On
         environmental impact assessment (EIA) required.               March 20, the Board of Investment established a “help desk”
    5.   Value added is not less than 20% of sales revenue             that can help all investors, whether they are BOI-promoted or
         (except for project in agriculture and processing of          not. This unit is situated in the Investment Sevice Center on
         agriculture projects, electronics and electrical parts, and   the ground floor of the office of the Board of Investment.
                                                                       In addition, the Board of Investment, in cooperation with the
    In the event that an investment project fails to submit all        Immigration Bureau and the Ministry of Labor, have expanded
    required information within five days from the date the            the scope of the One-Stop Service Center for Visas and Work
    application was submitted, the BOI may revert to the normal        Permits to include executives from all foreign chambers.
    40 working day processing time.

    Immigration “Express Lane” Open for Foreign Investors

    To expedite the arrival of investors into Thailand during
    “Thailand Investment Year 2008-2009,” the Board of
    Investment (BOI), in cooperation with the National Airport
    Immigration Division, has opened a “fast track” express lane
    for foreign investors at Suvarnabhumi Airport.
                                   THAILAND INVESTMENT REVIEW
                                                        June 2008

                                                                  plastic and rubber parts, electrical and electronic components,
                                                                  molds and dies, tooling, jigs and fixtures, motion technology,
                                                                  and other related supporting sectors.

                                                                  The ‘Business Matchmaking’ program, a highly effective
                                                                  tool of SCT ‘08, is a marketing channel that arranged one-on-
                                                                  one meetings for potential buyers and subcontractors. It is a
                                                                  free tailor-made online program which is easy to access and
                                                                  register with its twenty-four seven service. The program was
                                                                  available for two months of unlimited use prior to the show
                                                                  and will continue to be available one month after the event has
                                                                  ended. The program allows potential buyers to identify the
                                                                  qualifications and the capacity of the subcontractors as well
                                                                  as their product type and needs. It also includes a customized
                                                                  section for special interest products and services. The
                                                                  matchmaking program is convenient for all parties, buyers
                                                                  and exhibitors, as it tells the place and time to meet. There
                                                                  were over fifteen hundred business pairs matched through the
                                                                  program this year.

                                                                  At the ‘Buyers Village,’ participating buyers presented their
                                                                  parts for procurement and looked for subcontractors to help

Generates Transactions Over 2.5 Billion Baht
From 14-17 May 2008, The Board of Investment Unit for             produce their products. Moreover, the buyers explained
Industrial Linkage Development (BUILD) together with CMP          their procurement policies and standards in addition to going
Media (Thailand) Co., Ltd. organized ‘SUBCON THAILAND             into further detail about their unique needs at the ‘Buyers         5
2008’ (SCT ’08), Thailand’s only industry subcontracting          Presentation Sessions’. Also at the ‘Buyers Village,’ visitors
exhibition. This exhibition was an opportunity to improve the     could find a number of International Procurement Offices
systematic and integrated network of industrial linkages and      (IPO) which typically act as a satellite purchasing operation for
business relationships throughout the country.                    the home country and provide localized supply management
                                                                  services with local language and cultural capabilities.
The exhibition successfully brought together both Thai and
international parts manufacturers. Two hundred and forty three    The ‘Academic to Business’ (A2B) is a linkage project for
exhibitors had displays in two hundred and fifty one booths.      the education sector. It provides research to the industrial
The event also brought in more than thirteen thousand buyers,     production sector in order to support the improvement of skills
an increase of more than fifty percent from the previous year.    and the education of human resources. There are a number of
                                                                  top and well-known universities in Thailand that are lined up
Mr. Satit Chanjavanakul, Secretary General of BOI, stated
that the four day event created transactions worth over two
and a half billion Baht, which will likely increase up to three
to five billion Baht after the exhibition is over.

A variety of activities were arranged at the exhibition;
Subcontractor Exhibition, Business Matchmaking, Buyers
Village, Buyers Presentation Sessions, Academic to Business
(A2B), Industrial Clinic, and Educational and Visionary

The Subcontractor Exhibition was a demonstration space for
Thai and Asian supporting industries. It featured local and
international subcontractors that manufactured metal parts,
                                           THAILAND INVESTMENT REVIEW
                                                                June 2008

    to join the program as a part of the research and development     Mr. Phonprasit Denmoree, Purchasing Manager of BMW
    unit. Universities that participated in the exhibition included   (Thailand) said, “SCT ‘08 was a way to help create opportunities
    Chulalongkorn University, which presented a project of mixed      for industrial enterprises to meet other businesses in their
    polymer development for use in engineering of PCs and ABS,        industry. It was extremely helpful for us to join the exhibition
    Kasetsart University, which presented an online service to add    this year since we plan to increase local raw material usage.”
    funds to cell phones and wireless beepers, King Mongkut’s
    Institute of Technology Ladkrabang, which presented a             Mr. Chanin Khochan, Chief of BUILD said SCT ‘08 expanded
    research project on HDD, and Mahanakorn University of             the development capacity of Thailand subcontractors. It gave
    Technology, which presented projects on ozone deodorants.         them the opportunity to increase trade, to facilitate the demand
                                                                      from the large enterprises, especially the automobile group
    Educational and visionary seminars were held in association       and, six eco-car companies that obtained BOI promotions.
    with the 25th Anniversary Exhibition of INTERMACH ’08.            Moreover, BOI will promote SCT ‘09 to be an ASEAN
    The seminars covered a number of topics which included            exhibition in hopes of increasing the number of buyers, while
    productivity enhancement techniques, financial and investment     encouraging investors to invest in Thailand. Furthermore,
    management, procurement policies of local and international       BOI aims to push Thailand as the auto parts trade center of the
    buyers, and efficient procurement management.                     ASEAN region.

    There was a large turn out of participants, with over nine        For over a decade now, BUILD has helped promote and
    seminars throughout the event. One of the presenters was          develop supporting industries in order to maximize the
    the Sales Director of TATA Motors (Thailand), who gave an         industrial competitiveness of the Thai Kingdom. The Unit
    overview of the Thailand automobile industry and provided         performs as an intermediary between manufacturers of ready-
    insight into SMEs.                                                made products and small-medium-sized part producers. The
                                                                      linkages lead to the transfer of production technology which
    Furthermore, SCT ‘08 provided an ‘Industrial Clinic’ which        facilitates strong growth in supporting industries.
    offered business development and investment consultation
6   services by public and private agencies.                          SCT ‘09 will be held May 13th-16th 2009.

                                         BOI Unit Promotes Subcontracting
    BUILD arranges several activities throughout the year with        Thai and foreign buyers by matching buyers’ enquiries to
    five major activity themes, apart from SCT.                       potential suppliers. The ‘Sourcing Service’ then sends the
                                                                      profile to buyers to screen and approve. After, a one-on-one
    To begin with, Venders Meet Customers (VMC) provides              meeting is set up for further individual discussion.
    opportunities for local parts manufacturers to view assembly
    processes by visiting selected assembly plants. It provides        Last but not least, BUILD offers an efficient matching
    manufacturers parts and components networking possibilities       tool and marketing channel with their on-line ‘ASEAN
    and initial contacts.                                             Supporting Industry Database’ (ASID). ASID collects details
                                                                      on manufacturers in Thailand and other ASEAN member
    BUILD has also put together the VMC Road Show Program             countries. With ASID, buyers across the globe can easily
    which provides opportunities for Thai part manufacturers to       access and search for information on parts suppliers via the
    participate in overseas exhibitions and trade fairs with the      internet at, free of charge. At the same time
    aim of widening Thai suppliers’ knowledge and vision. These       ASEAN suppliers can also register and present their company
    road shows often lead to business development, improvement        profiles and parts information for free. The information is
    in competition, and opportunities to enter the global supply      categorized into five major industries: Automotive, Electronic
    chain.                                                            and Electrical, Petrochemical and Plastic, Mold and Die, and
                                                                      other supporting industries.
    In addition, BUILD has also set up a ‘Market Place’ to connect
    buyers and parts manufacturers, serving as one-stop sourcing      BUILD’s commitment and dedication to continuously develop
    center. Market Place offers a reverse marketing channel,          pro-active activities for industrial linkage development
    allowing buyers to present their sample part requirements and     has not gone unnoticed. In 2004, the World Association of
    procurement policies directly to several producers at one time    Investment Promotion Agencies (WAIPA) awarded BUILD
    which facilitate the buyer in sourcing parts locally.             the ‘Best Business Linkage Development’, award for their
                                                                      effort to strengthen linkages as model practices for investment
    Furthermore, BUILD provides a ‘Sourcing Service,’ which           promotion agencies (IPAs) worldwide.
    assists in sourcing parts and components in Thailand for both
                                       THAILAND INVESTMENT REVIEW
                                                              June 2008


       Indian Auto Giant Enters Thailand
       Tata Motors Joins Eco-car Program
Less     than two years after Tata
Motors, a subsidiary of the Tata                                                                     According to Tata Motors (Thailand)’s
Group, began producing one-ton                                                                       C h i e f E x e c u t i v e O ff i c e r A j i t
pick-up trucks in Thailand, the Indian                                                               Venkataraman, response to the Xenon
auto giant announced it would join                                                                   has been quite positive. “Thailand is
Thailand’s eco-car program.                                                                          a very tough market to penetrate, as
                                                                                                     the country is already a hub for one-
Tata Motors, which was founded more                                                                  ton pick-ups. We recognized that we
than 60 years ago to manufacture                                                                     were walking into a ‘Lion’s Den’,
locomotives and other engineering                                                                    and we believed that by listening to
products, has become the world’s                                                                     customers and giving them what they
5th largest medium and heavy truck                                                                   want, we would find our market.
manufacturer along with the 2nd
largest heavy bus manufacturer in the                                                                “We know that fuel prices have been
world.                                                                                                    constantly going up and by
                                                                                                          utilizing the most advanced
Through partnerships and                                                                                  technology available, we
collaborations with world-class                                                                           designed the Xenon with a 2.2
auto manufacturers, including                                                                             liter engine that not only is
Daimler-Benz and Fiat, as                                                                                 highly fuel efficient, but also
well as a commitment to                                                                                   provides more horsepower than
research and development and                                                                              any of the 2.5 liter engines.”
innovation (Tata Motors holds
more than 100 international                                                                                    Moving from a fuel-efficient
patents), the company has                                                                                      one-ton pickup truck into                7
been able to expand into the                                                                                   the manufacturing of an eco-
production of passenger and                                                                                    car seemed like a natural
commercial vehicles.                                                                                           progression, so when the Board
                                   Deputy Prime Minister Suwit Khunkitti in TATA pick-up truck.                of Investment announced the
In recent years, Tata Motors                                                                                   eco-car program, Tata Motors
has emerged as an international automobile company with a was one of the seven companies to submit a proposal.
presence in Europe, Africa, the Middle East, Asia, Australia,
and now with their recent purchase of Jaguar Land Rover, The eco-car is an initiative of the Thai government to make
even the United States.                                                      the country a prominent producer of cars that meet state-of-
                                                                             the-art emission and safety norms.
After years of R&D in Southeast Asia, the company came to
the conclusion that Thailand was the right place for a regional While Tata acknowledges that the conditions set forth for
manufacturing base, due to the size of the Thai market (the the eco-car are rather stringent, it noted that the conditions
second largest pickup market in the world after the United were part of a strategic decision on the part of the Thai
States), the strong supply base, the qualified personnel, government.
attractive government incentives, and access to ASEAN and
a number of other Free Trade Agreements.                                     Tata is confident that it will be able to achieve all the standards
                                                                             set out in the eco-car platform, and that Tata’s eco-car will
Accordingly, in 2006, Tata Motors entered into a joint venture be as safe and energy-efficient as any eco-cars produced in
with Thonburi Automotive Assembly Plant Company of Thailand.
Thailand to manufacture and market the company’s pick-
up vehicles in Thailand. Currently, this plant manufactures “We have been selling our vehicles in Europe for more than
nearly thirty thousand units of Tata Motors’ Xenon, a 2.2 a decade,” Ajit noted, “and we have successfully met all the
liter, one ton pick-up truck designed and built specifically for standards that the EU has put in force. We are committed to
Thailand.                                                                    delivering a quality vehicle to the marketplace at affordable
                                                                                                                          Continued on P. 10
                                            THAILAND INVESTMENT REVIEW
                                                               June 2008


                British Chamber Launches
              “Thailand Means Business 2008”
    In 1946, a group of 17 British businessmen                                       I am here to ensure that we maintain this
    and three ‘associate’ (non-British) members                                      number one spot and drum up more business
    came together to form the British Chamber                                        for Britain.”
    of Commerce Thailand (BCCT).
                                                                                     British Chamber of Commerce Thailand
    From this humble beginning, the BCCT                                             Chairman Rodney Bain talked about
    has grown to become the largest non-Asian                                        the challenges and opportunities facing
    chamber in Thailand, with more than 650                                          businesses investing or trading in Thailand
    corporate members and nearly 220,000                                             and several major British investors (Tesco,
    members.                                                                         British Gas, and Triumph Motorcycles)
                                                                                     shared their experiences on the ground in
    The Chamber organizes more than 100 events                                       Thailand.
    each year (monthly luncheons, breakfast
8   briefings, training seminars, trade missions,                                     In addition to this event, the BCCT is
    football dinners, etc.), all of which are open                                    conducting a series of ‘road shows’ in the
    to all members, MNCs and SMEs alike.                             region (Singapore, Hong Kong, Chiang Mai, and Phuket), and
                                                                     in July will conduct seminars in major cities in the UK (e.g.
    Over the years, the BCCT has consistently supported the          London, Manchester, Liverpool, etc.). These road shows, a
    Thai government’s efforts to attract foreign investment, and     part of the “Thailand Means Business 2008” campaign, will
    with the country’s return to democracy, it should come as        involve a series of business-to-business seminars which will
    no surprise that the British Chamber is actively promoting       be targeted at British companies seeking investment and trade
    Thailand as an investment destination.                           in or with Thailand.

    The BCCT recognized that British investors have been very        This is a chance for the BCCT to promote Thailand’s
    confused and misled by the media about the investment climate    hard- working and willing labor force, superior logistical
    here in Thailand due to the unsettled political environment in   position, self sustainability, remarkable communications, and
    the country over the past two years. This was especially true    dependable power supply. Thailand based members of the
    in 2007 after the proposed changes to legislation, such as the   BCCT will be invited to speak at the events.
    Foreign Business Act.
                                                                     The “Thailand Means Business 2008” campaign will also help
    With the new government aggressively promoting foreign           to fulfill the overall mission of the BCCT: “To serve the needs
    investment in Thailand and reversing some of the actions         and promote the development of British business in Thailand
    of the interim government (e.g. lifting capital controls,        and as ‘Partners in Progress’ contribute directly to Thailand’s
    announcing that the proposed amendments to the Foreign           economic advancement.”
    Business Act would not be pursued, etc.), the Chamber felt
    that the investment climate had been significantly improved.     Mr. Bain, declared, “The new government has stated a need
                                                                     to attract greater foreign investment in Thailand. ‘Thailand
    To help restore investor confidence and to make the many         Means Business 2008’ is the BCCT’s way of supporting this
    opportunities in Thailand more widespread, the BCCT,             desire by passing on the wealth of knowledge and practical
    together with Asia House, a United Kingdom-based company         experience of doing business in Thailand to UK companies.”
    that promotes the appreciation and understanding of Asian
    countries, organized a “Thailand Means Business 2008” event      In addition to the road shows, earlier this year, the BCCT had
    in London in May.                                                the opportunity to meet with Thailand’s Deputy Prime Minister
                                                                     and Minister of Industry, Suwit Khunkitti, at a luncheon.
    At the event, Lord Digby Jones, the British Ambassador for       After listening to the questions, the minister suggested that
    Trade and Investment, encouraged British businessmen to          the BCCT put into writing their plans and suggestions for
    invest in Thailand. “We are already the largest European         enhancing the investment climate in Thailand.
    investor in Thailand with a net value of GBP 2 billion and
                                  THAILAND INVESTMENT REVIEW
                                                       June 2008

Accordingly, the BCCT produced a white paper entitled            “Thailand Means Business 2008 — Increasing
“Thailand Means Business 2008 — Increasing Foreign               Foreign Investment in Thailand”
Investment in Thailand,” that offered up suggestions about how
the government could facilitate foreign business investment,     The following are some of the suggestions made by the British
promote foreign investment in capability development (i.e.       Chamber of Commerce Thailand (BCCT) in the “Thailand
education and training), focus on innovation and creativity,     Means Business 2008 — Increasing Foreign Investment in
and create the critical linkages between ministries to support   Thailand” paper submitted to Deputy Prime Minister and
foreign investment decisions.                                    Minister of Industry Suwit Khunkitti.

In the white paper, the BCCT suggested a few ideas that          •   BCCT recommends that to support the objective of
they felt would only enhance business between the United             making Thailand the most investor friendly country in the
Kingdom and Thailand.                                                region, corporate income tax should be reduced from 30%
                                                                     to a level comparable with that applied in neighboring
The paper, excerpts of which appear in the sidebar on this           countries and to reduced the top rate for personal income
page), offers up simple, practical measures that the BCCT            tax from 37% to a level comparable with that applied in
believes can be easily implemented.                                  neighboring countries
                                                                 •   BCCT recommends the introduction of tax relief for
The BCCT notes that the BOI investment promotion activities          corporate sponsorship of the development of government
and programs continue to be a significant factor when British        education
investors look at Thailand as a potential location for their     •   BCCT suggests double deduction of corporate tax relief
activities.                                                          for education and training
                                                                 •   BCCT recommends expanding the activities of the One-
Heightening these activities and incentives and offering them        Stop Shop so that it can facilitate all issues for business
to industries outside of the BOI’s promoted sectors, part of         visas and work permits for non-BOI promoted investment
the suggestions made by the BCCT, will only help to fuel             of THB 2 million or more
the BOI’s “Thailand Investment Year 2008-09” and directly        •   To maximize the efficiency of Thailand’s investment
contribute to an increase in investment and trade between the        promotions in the UK, BCCT recommends that the
two kingdoms.                                                        BOI send a senior official to the Royal Thai Embassy in
                                                                 •   BCCT recommends expanding the current role of the BOI
                                                                     to offer promotional privileges to a wider range of service
                                                                 •   BCCT recommends that the time taken to process a
                                                                     BOI application be reduced to a maximum period of 20
                                                                     working days, with the right of appeal.
                                                                 •   BCCT recommends that a business visa be issued for one
                                                                     year initially, then for a period of five years at a time and
                                                                     that work permits should run for the same period.
                                                                 •   BCCT suggests that the scope of work permitted under a
                                                                     work permit should be any occupation not prohibited by
                                                                     law and that a work permit holder may carry out his duties
                                                                     anywhere in Thailand without specific endorsement of
                                                                     the work permit.
                                                                 •   BCCT recommends that the 90-day (three month) reporting
                                                                     period be abolished and replaced by an obligation to
                                                                     report a change of address within 14 days of occurrence
                                                                 •   With regard to the Foreign Business Act (FBA) and other
                                                                     legislation that regulates foreign business activities in
                                                                     specific industries (e.g. banking, telecoms, insurance,
                                                                     shipping, etc.), BCCT suggests the creation of a regime
                                                                     that is attractive, if not more liberal, than that available in
                                                                     other developing Asian countries.
                                            THAILAND INVESTMENT REVIEW
                                                                 June 2008


                                                Deputy Prime Minister Suwit Khunkitti led a high-level delegation to Japan, where
                                                he met with the Kankeiren in Osaka and Keidenran in Tokyo, and spoke at the 14th
                                                International Conference on The Future of Asia.

        Deputy Prime Minister Suwit Khunkitti visited Italy on a fact-finding mission
        and met with Milan Mayor Letizia Moratti at City Hall. Pictured are Mr. Pramode
        Vidtayasuk, Director-General, Ministry of Industry (2nd from left), Deputy Prime
        Minister Suwit Khunkitti (3rd from left), Mrs. Letizia Moratti (3rd from right), Thai
        Ambassador to Rome (2nd from right).

                                            Deputy Secretary General Sudjit Inthaiwong (3rd from right), led an investment
                                            promotion to Canada, which included a visit to The Windmill Centre.


        Senior Executive Investment Adviser Hirunya Suchinai led a BOI mission to
        Australia where they met with the Geelong Manufacturing Council, RMIT
        University, the Paykel factory and Fisher. Focus of talks, besides overall investment
        climate in Thailand, was Thailand’s shipping and marine industries.

    Thialand’s Global Competitiveness                                 TATA, Continued from         P. 7

    on the Rise, Continued from P. 3
    •   Improve industries’ competitiveness                           By producing a ‘value-for-money vehicle,’ Tata hopes to
    •   Establish mechanisms to support business adjustment in        change the perception of “cheap Indian products.”
        various sectors including SMEs.
                                                                      Ajit also noted that the eco-car program accommodated a
    Prime Minister Samak Sundaravej vowed to lift the country’s       variety of fuel options and that Tata was exploring different
    competitiveness ranking to 20th out of 55 countries over the      options for its eco-car.
    next four years, from 27th at present. The premier said he was
    ready to team up with Mr. Suwit Khunkitti, his deputy PM and      “With rising fuel prices, we (Tata Motors) do not want to put
    Industry Minister, to push Thailand to a higher ranking.          all our eggs in one basket. The company is working with
                                                                      a number of different blended gases and alternative energy
    “‘We both agree that we are in a good position to lift up         forms. We are trying to plan five to ten years in advance but
    Thailand from 27th slot to 20th within four years. A higher       no one knows what the price of oil will be at that time so the
    ranking is achievable if the government is allowed to stay in     company is doing everything it can to diversify itself.”
    office for four years.”
                                                                      Tata Motors will produce one hundred thousand eco-cars
                                                                      per year in Thailand, with forty-eight percent of its output
                                                                      earmarked for the domestic market and fifty-two percent to
                                                                      be exported to markets in ASEAN, Asia-Pacific, and South
                                     THAILAND INVESTMENT REVIEW
                                                          June 2008


                                          Deputy Prime Minister Suwit Khunkitti was the keynote speaker at a recent meeting
                                          of the India-Thai Business Association.and India-Thai Chamber of Commerce.

 A BOI delegation led by Deputy Secretary General Sudjit Inthaiwong, participated in a
 seminar on Northern Thailand as the Strategic Hub in the Greater Mekong Subregion.
 Thai Minister of Foreign Affairs, H.E. Mr. Nopadol Pattama, German Federal Minister
 of Economics and Technology, H.E. Mr. Michael Glos, Dr. Raphael L’Hoest, Counsellor
 for Economic Affairs, German Embassy, Bangkok, Mr. Jean-Pierre A. Verbiest, Country
 Director, Asian Development Bank, HE Governor of Chiang Mai Province Mr. Wiboon
 Sanguanpong were among the participants in the seminar.

                                        Mr. Qu Gongmin, Special Advisor, China Council for the Promotion of International
                                        Trade, Shangdong Sub-Council and Mr. Pariyes Piriyamaskul , Director of the Board
                                        of Investment’s Shanghai Office led a group of businessmen from Shangdong, China
                                        to learn about investment opportunities in the textile and electronics and electrical
                                        appliance industries in Thailand.

 Mr. Takashi Nagatani led an inbound mission from OTA City to explore investment
 opportunities in the electronics and electrical appliances industry in Thailand.


 In order to further increase foreign investment in the automobile
 industry, in particular eco-cars, BOI approved eco-car projects
 receive corporate income-tax exemption for eight years and
 permission to import machinery duty-free. This is just one
 of the many reasons Tata Motors has had such a pleasant
 experience working with the BOI.

 In April 2008, the Board of Investment (BOI) approved Tata
 Motors’ 7.3 billion Baht (US$229 million) proposal to begin
 manufacturing eco-cars here in Thailand.

 “Working with the Board of Investment was a pleasant                BOI
 experience, because they were so pro-active,” Ajit said. “The       Promoted Companies
 BOI, the Ministry of Industry and all the agencies we worked        Directory 2007
 with have all been very supportive.”                                Available NOW!

                                                                                                        For more information please contact
                                                                                                           Ms. Nonlanee and Ms. Ploypailin
                                                                            Tel: 66 (0) 29361429 Ext. 210, 211 E-mail :
                                                                 THAILAND INVESTMENT REVIEW
                                                                                                  June 2008

 Facts about Thailand                                                                                                                         Exchange Rate Trends

 Population (2007)                                                              65 million
 ASEAN Population                                                              570 million
 Literacy Rate                                                                        96%
 Minimum Wage (1 Jun. 08, Bangkok)                                            203 baht/day

 GDP (2007)                                                           US $245.5 billion
 GDP per Capita (2007)                                                      US $3,720
 GDP Growth (2007)                                                               4.8%
 GDP Growth (2008)                                                           4.5-5.5%                                                                                                                             Source:
 Export Growth (2007)                                                          18.10%                                                                                                                    Bank of Thailand

 Trade Balance (2007)                                                    US $12 billion                                                SET Monthly Closing Values
 Current Account Balance (2007)                                         US $14.9 billion
 International Reserves (2007)                                          US $87.4 billion
 Capacity Utilization (2007)                                                    74.58%
 Manufacturing Production Index                                                  180.70
 Consumer Price Index (April 2008)                                               141.03
                                                                           (2002 = 100)

 Corporate Income Tax                                                                  10-30%
 Withholding Tax                                                                       10-15%
 Value Added Tax                                                                           7%                                                                                                                    Source:
                                                                                                                                                                                              Stock Exchange of Thailand

 April Average Exchange Rates                                                                                                   Industrial Capacity Utilization (%)
 US$ 1       =     32.06 baht
 €1          =     49.90 baht
 £1          =     62.99 baht
 100¥        =     30.77 baht

 Top 10 Exports 2007
                                                                 Proportion%            Value
                                                                   (y-o-y)            (US$ bn)                                                                                                                    Source:
                                                                                                                                                                                                         Bank of Thailand
 1. Automatic data processing
     machines and accessories                                         11.35              17.31                    International Reserves / Short-term Debt (%)
 2. Motor cars, parts and accessories                                  7.90              12.04
 3. Electronic integrated circuits                                     5.28               8.05
 4. Rubber                                                             3.70               5.64
 5. Precious stones and jewellery                                      3.53               5.38
 6. Polymers of ethylene, propylene, etc                               3.42               5.21
 7. Iron and steel and their products                                  3.01               4.60
 8. Machinery and parts thereof                                        2.86               4.37
 9. Refines fuels                                                      2.69               4.10
 10. Chemical products                                                 2.57               3.92
Source: Ministry of Commerce
                                                                                                                                                                                                         Bank of Thailand

 Head Office, Office of the Board of Investment
 555 Vibhavadi-Rangsit Road, Chatuchak Bangkok 10900, Thailand. Tel: +66 (0) 2537 8111, +66 (0) 2537 8555 Fax: +66 (0) 2537 8177
 Website: E-mail:
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