New Strategy Needed to Boost Business Investment in Thailand: Minister

Beautiful beaches, spicy culinary sensations and amazing shopping have long made Thailand a tourism mecca. For someone starting a business in Thailand these scenic and cultural attractions don’t hurt, but aren’t enough to seal the deal.

Sound development incentives, attractive tax arrangements, clear government policies and transparent Thai business laws are critical.

In a nation marked by political unrest and changing social times, the challenge in attracting new business investment to Thailand requires new thinking according to Industry Minister Wannarat Channukul.

Like his political predecessors, he has vowed to change the country’s investment promotion strategies to improve Thailand’s regional and global competitiveness.

He believes a fundamental shift in the way the country’s Board of Investment offers privileges and incentives is critical.

“We have to keep revising (privileges) to catch up with our pace of development. As well, we can see investors comparing rivals in the region before making decisions,” he said in a recent press interview.

Board of Investment

The BoI is an important reference for business advice in Thailand and under Thai law has a key role in promoting foreign direct investment.

It offers tax incentives and Thai business law exemptions to businesses which meet certain criteria.

New industries

Mr Wannarat said that for decades the BoI had offered incentives for investors making a business investment in Thailand’s lower-income provinces.

However this had been a ‘hard sell’ as investors were more likely to start a production business in Thailand where there was existing infrastructure.

Newer industries such as renewable resources needed to be targeted as Thailand moved away from labour-intensive industries to higher-value production. This includes plans to increase biodiesel production to 8.5 million litres per day by 2012. This new fuel has a ready supply source in Thailand by way of palm oil – production has been tipped to reach 2.23 million tons.

Transparent policies

Attracting foreign investment also relies on transparent laws and policies. According to one international law firm in Thailand, BSA Law, some of the main issues which concern prospective investors include:

• Foreign ownership laws. The Foreign Business Act is a key piece of Thai law which restricts certain business activities for foreign companies;
• Trademark and patent protection, which is covered by Thailand law;
• Corruption in business dealings, which under Thai business law and other foreign laws can lead to heavy fines and jail terms.
• Thailand work permits and Thai labor laws, which set minimum wages, working hours and conditions such as severance pay.

The Thai government has recently established a sustainable energy plan to secure the country’s energy needs.

Its rich agricultural and manufacturing base has this kingdom uniquely poised to establish itself as a leader in alternative energy production.

Providing better incentives for direct foreign investment and more transparent foreign ownership laws (these are a minefield best negotiated with the help of a Thai law firm) can only be a step forward.