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Why Thailand?

Source: Thailand Board of Investment's Investment Review Publication

The BOI Investment Review is a monthly publication of the Thailand Board of Investment.  www.business-in-asia.com and Runckel & Associates believe that much of this information needs wider dissemination.  We are therefore working with the BOI to help promote these useful articles and index them into categories that are easy to find.


By Alita Thomas

The many benefits Thailand offers foreign investors make it one of the region's most attractive investment destinations.  Comparative analysis of costs of doing business in Asia underscores Thailand as a cost-competitive location for investors, offering a quality lifestyle for expatriates.  Adding a healthy macroeconomic environment, a positive regulatory business environment and a welcoming culture clearly sets Thailand apart from its competitors.

Positive Business Climate: Procedure in Starting a Business


Numerous indicators of Thailandís business regulatory environment have also improved. Based on the seven groups of business environment indicators in the World Bankís Doing Business 2004-2005 Report, Thailand ranks 20th among the 145 countries surveyed and first in Southeast Asia in terms of ease of doing business. Starting a business in Thailand is significantly easier in terms of procedures required, duration and cost compared to China, India, Malaysia and Vietnam. Lower startup barriers in Thailand allow entrepreneurs and businesses to quickly put their resources to productive uses.

Thailand requires the lowest number of procedures in the shortest time to register a business property for foreign investors as compared to Singapore, China, India, Malaysia and Vietnam.  It takes only 2 procedures, 2 days and costs 6% of the registered business value to register a property. Thailand also competes favorably regarding business start-up procedures. Further, Thailand was awarded the highest index for disclosure of ownership and financial information to investors by the World Bank. Thai regulations require businesses to disclose information on ownership, such as family, indirect and beneficial ownership, financial performance and the precise nature of business transactions. The Stock Exchange of Thailand publishes all ownership changes and quarterly statements on its website. By enforcing and encouraging transparency, legal protection from expropriation benefits foreign investors in Thailand.

Cost of Doing Business:

A recent study commissioned by the Board of Investment compared the cost of living and doing business in Thailand to regional competitor countries including Singapore, Malaysia, China, India and Vietnam. By comparing robust indicators published by multinational organizations such as the World Bank and other prominent groups, the study concluded that Thailand is in an excellent position to maintain its competitive standing among its neighbors, both for current and potential foreign investors.

Improving Competitiveness:

The World Bankís 2004-2005 Global Competitiveness Report [www.weforum.org] and the Institute for Management Developmentís World Competitiveness Yearbook [www02.imd.ch/wcc/yearbook] reflect Thailandís improving macroeconomic environment. For example, the health of Thailandís macro economy is now 23rd among the 104 countries surveyed in the latest Global Competitiveness Report, up three places from last year. The improvement is the result of continued low inflation, reduced external vulnerabilities, a strong fiscal stance with declining government budget deficits, and higher national savings.

Growth prospects in Thailand are also strong, with GDP growth in 2005 projected by the World Bank at 5.8%. International trade continues to play an important role in Thailandís economic stability and growth, with the export of goods and services now accounting for more than 60% of Thailandís GDP. The rise in demand for Thai exports, combined with increased public investment spending, is expected to continue to stimulate the Thai economy.

Low Business Costs:

Annual costs for A-grade office space in Bangkokís central business district are the lowest of any city surveyed, at approximately US$13/sq.ft./year ó less than Bangkokís closest competitor city Kula Lumpur (US$14.20) ó and substantially lower than other regional hubs such as New Delhi, Shanghai and Singapore. This is in addition to significantly lower rental rates for industrial space outside Bangkok. Industrial electrical power and water costs are also highly competitive. Further, investors find that the cost of wages for skilled labor in Thailand are extremely inviting.
 

Vibrant Regional Transportation Hub


Bangkok serves as a convenient hub for transportation throughout the Southeast Asian region. The Royal Thai Government plans to further improve Thailandís infrastructure, and although the final amounts are still being finalized, the investments could total up to 1 - 1.5 trillion baht (US$26 billion) over the next four years.

Major infrastructure developments include the upgraded capacity of Laem Chabang Port, which will vastly improve efficiency of sea freight cargo for importers and exporters. The new Suvarnabhumi International Airport, a state-of-the-art facility set to open in September 2005, will boast a yearly passenger capacity of 45 million, expandable to 100 million. Bangkokís underground mass rapid transit system will be developed further to connect with other modes of transportation in Bangkok, vastly reducing traffic and road congestion. Such projects will ensure Thailandís place as a regional transportation hub for years to come.

Attractive Tax Rates and Government Incentives

Corporate income taxes in Thailand are also low, ranging from 30% down to 10%, based on criteria such as profits, listing on the Stock Exchange of Thailand, and operating status under Thai law. For example, regional operating headquarters are taxed at only 10%. In addition, the Board of Investment offers numerous investment incentives that substantially reduce and/or eliminate tax liabilities, depending on a variety of circumstances. [For more information on BOI tax incentives, visit www.boi.go.th]
 


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