It’s time to rethink

Recent challenges Thailand has faced have included not only the Covid-19 pandemic and ensuing lockdowns, but also the supply chain ‘nightmare’ which has contributed to shipping disruptions and disruptions. and trade, affecting consumers with shortages and higher prices. In the face of successive pandemic waves and these economic repercussions, Thailand has done relatively well with its cautious yet responsive approach given the impacts on its tourism sector, which plays such an important role in its economy. As the country already faces a surge in tourist numbers having eased restrictions and reopened on May 1, visitors will also include business travelers as companies focus on a stronger rebound, in addition to reassessing their operations. The new normal is leading many companies around the world to seek to avoid dependency and consider geographically diversifying their operations.

The post-Covid image

The rebound is taking shape as uncertainties remain with concerns over growth and the specter of inflation, reopening (which eliminated the need to quarantine and show an RT-PCR test on arrival in Thailand) signals increased confidence and a sense of optimism on the part of the government, the business community and the population at large and heralds a more positive outlook for the second half of the year. From an economic perspective, now is an opportune time for Thailand to not only attract companies wishing to relocate or relocate, but to focus on specific advantages that highlight the country’s strengths, including the more agile landscape emerging for international companies beyond just labor costs and incentives. The government’s promotion of International Business Centers (IBCs) and corresponding tax and non-tax incentives can help establish Thailand as an ASEAN regional hub, attracting more multinationals to set up their headquarters and their shared services in the country.

Increased focus on the benefits of IBC

The IBC regime offers tax and non-tax measures that promote Thailand as a center of the Southeast Asian region, also aligning Thailand’s tax measures with international standards improving the country’s competitive position. The attractiveness of IBC, defined as “a company incorporated in Thailand that provides management, technical, support or financial management services to its associated companies, whether located in Thailand or overseas”, in addition competitive incentives, are the additional benefits that Thailand offers, including a skilled and ready workforce, including university graduates who can contribute to the success of IBCs, a popular and attractive destination for expatriates and their families, supported by some of the best private schools and a high standard of living at a reasonable cost, and an improved SMART Visa program, which streamlines the application process, allowing qualified experts, investors and entrepreneurs to live and work faster and more easily in Thailand in targeted sectors – without work permit requirements and a maximum validity period of four years, together with privileges additional age. The Thailand Board of Investment (BOI), which supports the activity of the regional headquarters now called IBC, provides significant incentives and a key factor in the decision-making process for international companies opting for IBC as they are exempt from import duties on machinery. (used for R&D and training activities), have permission to bring in qualified personnel and experts to work in the activities promoted by the IBC, have majority or 100% foreign ownership in the IBC, and have permission to own land for use in IBC activities. The BOI has also reviewed the possibility for IBC to provide flexible loans to associated companies. This includes foreign currency loans to associated companies in foreign countries, Thai baht loans to associated companies in Thailand, Vietnam and countries bordering Thailand.

Global companies take the lead

The BOI capitalizes on growing investor interest in Thailand, including an increase in project approvals year-on-year, and sees IBC further boosting confidence by attracting top talent and mobilizing new new investments contributing to the country’s long-term growth. However, the overall effort of the Thai government must also be taken into account, given the huge levels of investment and policies that have been adopted to drive key infrastructure projects in the country, providing a ‘connectivity advantage’. important, as ports, rail and road networks develop facilitation and improved logistics and integration with sea and land transport. Companies that have established an IBC presence in Thailand for their international operations include Toyota, Nestlé, Huawei (ASEAN headquarters), Exxon, Michelin, Suntory and Nissin Foods, to name a few, covering a range of industries around the world. From 2019 to date, BOI’s CBI has supported a total of 124 projects. BOI data over the past six years shows a breakdown of established IBCs in Thailand by sector, with the largest cluster, at around 25%, involved in the automotive and power and fuel sectors. electronics, food, technology and medical services tracking. Additionally, many companies, once their IBC is established, decide to make new investments to grow their operations and workforce, building on their success. With the combined government support, including tax incentives from the Department of Revenue, non-tax incentives and one-stop service from the BOI, the country’s strategic geographical location, advanced connectivity and logistics, and a workforce skilled work, Thailand is proving to be more than just another market with a clear track record supporting the success of multinationals.