Thailand Investment Review (november 2010)
In terms of numbers of applications by investing nations, Japan was top with 256 applications (up 45.5%, compared to the same month in the previous year), with a total investment worth of Bht55.2 billion (up 21.0%, similarly), followed by Singapore 48, China 22, Belgium 5, Hong Kong 18, Netherlands 16, Taiwan 31, USA 27.
November 2010 Volume 20 No. 11 BOI Fair 2011: "Going Green for the Future" Under efforts for sustainable development in the country, the Thailand Board of Investment (BOI) is organizing a BOI Fair for 2011. To be held during 10-25 November next year, the event aims to stimulate the Thai economy and add vigor to investor confidence in Thailand. The theme of the BOI Fair is "Going Green for the Future." This is in line with the BOI's strong support of industries and technologies that protect the environment, and its policy on sustainable development adopted in early 2010. BOI Fair 2011 is to be part of nationwide celebrations marking the auspicious occasion of His Majesty King Bhumibol Adulyadej's 84th birthday next year. The much-anticipated event will also serve as a showplace for business, with the country's industrial capacity, modern technology and knack for innovation in the spotlight. Thailand's competitiveness and productivity are expected to get a boost from the Fair, as local and foreign entrepreneurs will meet, build networks, transfer knowledge, and have the opportunity to show their companies' industrial technologies. This will be the third such Fair held by the BOI, with previous events in 1995 and 2000 that had 2 million and 4.5 million participants, respectively. The 2011 event anticipates 5 million participants. The venue for BOI Fair 2011 is the Impact Exhibition and Convention Center in Muang Thong Thani near Bangkok. With eight halls and state-of-the-art facilities, the expansive Impact location has accommodated some of the most prestigious events held in Thailand, including the Science & Technology Fair, Motor Expo, and second BOI Fair in 2000. Building on Past Success Highly successful in their own right, the two previous BOI Fairs laid a solid foundation for the 2011 event. Both saw good coordination from the private and public sectors across the country. Held during celebrations of the King's 50th year on the throne, the inaugural Fair in 1995 took place at Laem Chabang. With 57 pavilions, it attracted 344 exhibiting companies. Continued on P. 3 CONTENTS Cover Story: BOI Fair 2011 News Bites & BOI Net Applications Thailand E&E Still Growing Company Interview: Toyota Boshoku First Global Forum on Medical Devices Latin Business Forum 2010 Thailand and region grow in 2010 The World Investment Prospects Survey 2010-2012 BOI Investment Missions Thailand Economy-At-A-Glance Page 1 2 4 6 8 8 9 10 11 12 November 2010 NEWS BITES Prime Minister Stresses Thailand's Plan to Become a Creative Economy Hub in ASEAN Prime Minister Abhisit Vejjajiva has stated that Thailand would proceed with its plan to become a creative economy hub in the ASEAN region. The Prime Minister emphasized the plan in his keynote address on the topic "The Role of Thailand and the ASEAN Economic Community," given at a gathering of members of the public and private sectors in Bangkok on October 13. The development of Thailand as a center for the creative economy is aimed at increasing the value of Thai products and services from culture, wisdom, and innovation. Another target is to increase the share of the country's creative industrial value from 12 percent to 20 percent of GDP by 2012. BOI NET APPLICATIONS 2008 (US$ = 33.23THB) Number of projects Value 2009 (Jan-Sep) (US$ = 33.78THB) Number of projects Value 2010 (Jan-Sep) (US$ = 30.78THB) Number of projects Value Total Investment Total Foreign Investment By Sector Agricultural Products Minerals / Ceramics Light Industries / Textiles Automotive / Metal Processing Electrical / Electronics Chemicals / Paper Services By Economy Japan Europe Taiwan USA 1,262 788 1,343 10,555 765 488 8,703 4,038 1,108 605 9,294 4,321 79 14 54 176 164 72 229 266 153 73 56 20 70 252 357 179 1,148 1,012 116 1,502 2,954 498 3,626 2,329 2,417 610 1,042 416 1,031 1,664 5,899 2,993 51 13 36 108 101 43 136 176 90 28 32 16 40 179 202 107 339 250 67 1,052 863 377 1,091 1.349 221 160 755 60 338 813 2,254 971 60 16 37 158 117 81 136 256 90 31 27 18 48 178 303 124 475 940 177 983 714 536 593 1,792 1,181 104 91 125 288 654 2,872 795 Nakhon Ratchsima Province: A Prototype for Integrated Food, Energy, and Industrial Production Commonly referred to as Korat, Nakhon Ratchasima province in northeastern Thailand has been selected as a prototype for integrated food, energy, and industrial production. Hong Kong Singapore By Zone Zone 1 Zone 2 Zone 3 Unit: US$ Million Note: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries. The pilot project is carried out jointly by the Ministry of Agriculture and Cooperatives, the Ministry of Energy, and the Ministry of Industry. Emphasis is placed on the production of high-quality tapioca , which can be developed into ethanol. The Government has set the use of alternative energy in its national agenda by promoting the production of alternative energy, especially biomass and biofuel, such as gasohol and biodiesel, to enhance energy security. Nationwide ICT Learning Centers The Ministry of Information and Communications Technology plans to establish 1,100 community-based ICT learning centers in the 2011 fiscal year. According to the ICT Ministry, the centers will be set up with financial support of 500 million baht from the Government, which has been informed that local people in various provinces have greatly benefited from the existing 280 community ICT learning centers, in terms of knowledge, occupations, and income generation. Thailand began to set up community-based ICT centers in 2007. By the end of the 2010 fiscal year, the number will increase to almost 900 in all regions of the country to cope with the growing demand. The setting up of community ICT learning centers came after the Government established the National ICT Learning Center in 2004. The main objective was to promote self-learning and lifelong education. Page 2 November 2010 Continued from P. 1 The BOI Fair in 2000 coincided with the King's 72nd birthday, and built confidence in Thailand as a major business hub. About 800 companies exhibited their products and services in 72 pavilions at Muang Thong Thani, Bangkok. The number of participants doubled from the first Fair to 4.5 million. Leading companies recognizing the effectiveness of the Fairs have unveiled key products at these events, and organizers expect an equally impressive response in 2011. Previous Fairs featured the CP Group presenting its "Technology to Fuel Life and Ideas" concept for the agro-industry, IBM unveiling a computer that can be worn like eyeglasses, and Sony showing its robotic dog "AI-BO." Automotive companies were in full force with Honda rolling out its environment-friendly compact ICVS or Intelligent Community Vehicle System, Toyota displaying its E-Com car, Ford showing its first batch of cars manufactured in Thailand, and GM making the first public launch of the Chevrolet Zafira. To help rural communities develop by finding markets for their unique products and services, the 2011 Fair is also putting the spotlight on Thai local wisdom. Exhibitions will call attention to high-potential OTOP products. Under the country's OTOP or "One Tambon One Product" campaign, the provincial towns and villages are targeted for greater economic opportunity. Other special activities planned for the 2011 event are the "CEO Forum" that would draw leading CEOs from around the world to meet with the Thai Prime Minister and attend the Grand Opening of the Fair, exhibitions by embassies and foreign chambers of commerce, the "BOI Chuan Chim" featuring samples of treats and dishes from 100 of Thailand's best restaurants, tourism promotions, and entertainment activities such as music, art and cultural performances. Parades, light and sound shows, and fireworks around the venue's lake are also to be enjoyed every evening. Big Plans in the Works The BOI is currently weaving together plans for what will likely be its biggest-ever celebration of Thailand industrial power. Exhibitors are expected to fill 84 pavilions and 3,300 booths at the 2011 Fair. Covering an area of around 240,000 sqm, this could be the region's largest exhibition of technology and innovation. Among the pavilions to be arrayed beside Muang Thong Thani Lake are several related to the Fair's celebration of the King's 84th birthday, including the 2,000 sqm Royal Pavilion featuring exhibits connected with the King's Royal Projects. Many activities are being designed for BOI Fair 2011. Besides the special events celebrating the King's birthday and royal projects, a plethora of investment exhibitions will showcase the accomplishments in production and innovation by BOI-promoted Thai and foreign investors. The Fair is also an opportunity for companies to demonstrate their efforts in corporate social responsibility (CSR) and environmental protection and preservation. All of this will help suppliers connect with buyers, which in turn would expand local markets and strengthen Thai industry confidence and competitiveness. At the upcoming Fair, pavilions designated for particular industries will host exhibitions on products ranging from jewelry to renewable energy. For instance, the Ministry of Science and Technology will showcase Thailand's advancement in science and technology. The BOI and other organizations are working together to arrange nearly 100 seminars on various business and investment topics. Consultation on finance, production and marketing will be provided to entrepreneurs by experts from the Ministry of Industry. Progress from Diligent Efforts The Fair is an example of how the Thai government and the BOI are working hard to enhance investor confidence. Even through a series of global economic downturns in recent years, Thailand remains a thriving business hub thanks to timely stimulus packages and attractive investment incentives. Optimism for a prosperous BOI Fair 2011 is running high with Thailand's resilient economy well into a strong recovery. The Bank of Thailand now estimates that Thailand's economic growth for 2010 will be within the range of 7.3 percent to 8 percent. With another good year for applications for investment promotion, the BOI is confident that the upcoming Fair will meet with success and contribute to the further economic growth of the nation. The Thailand Board of Investment invites the public to visit the Fair, where they can see Thailand's industrial capability and its modern technology. Likewsie, the private sector is invited to join the event and showcase their respective company's advancement and competitiveness. For further information about the Fair, please contact: the BOI Fair 2011 Organizer Office Tel. 02 553 8300, 02 553 8111 ext. 8254, 8235, 8270 Fax. 02 553 8333, 02 936 2541 e-mail: email@example.com Website: www.boifair2011.com Page 3 November 2010 INDUSTRY FOCUS Thailand E&E Still Growing With Major New Investments New investment projects continue to crop up across Thailand's electrical appliances and electronics (E&E) landscape, adding strength to strength in an already expansive industry. The E&E industry alone accounts for nearly 30% of the country's total exports. Manufacturers of electrical products and electronics are not only the main driver of the export sector but also provide combustion to national economic growth. In July, South Korea's Samsung group said it has chosen Thailand over Vietnam as the site for an additional air-conditioner production line. The new plant will start production in 2011, lifting Thai Samsung Electronic's capacity to 3 million units per year. Samsung had initially targeted Vietnam for expansion but strong demand growth in the Thai market prompted the change. According to Somporn Jangreenapawong, a business manager at Samsung's Thai subsidiary, air-conditioner sales in Thailand during the first half of 2010 soared 130% y-o-y. Growth drivers are said to be the hot weather, the government's elimination of the excise tax on air conditioners in 2009 that led to a 10% reduction in prices locally, and the trend for greater health consciousness among people in Thailand. In June, the Sony group obtained approval from the Thailand Board of Investment (BOI) to invest 2.6 billion baht in a production expansion project at the company's Ayutthaya Province factory for digital cameras, parts and lenses. The project will boost Sony's annual capacity at the Ban Wa Industrial Estate to 2.1 million digital cameras, 2.73 million lenses and 2.2 million parts. Designed to incorporate local content worth more than 2.41 billion baht per year, the expansion will create 1,029 jobs. Minnesota-based Hutchinson Technology is also breaking ground in Ayutthaya Province for a 4 billion baht production facility, its first outside the United States. The 13,000sqm factory will produce suspension assemblies for the read-write heads of HDDs. Manufacturing is especially robust in lines such as air conditioners, refrigerators, digital cameras, hard disk drives (HDDs), integrated circuits (ICs), computer monitors, keyboards and printers. Thailand is a leading production hub for such products, and is recognized as a vital part of the global supply chain. Thailand E&E Export & Import 2002-2010f Source: Custom Department & EEI Meanwhile, the local industry is still growing. Virtually month after month, new E&E investment projects keep coming. In October 2010, the Japan-based Minebea group confirmed plans to pour 120 billion baht into two electronic parts plants in Thailand. The company will invest 54 billion baht in a rolling bearing parts factory in Ayutthaya Province. With a capacity of 40 million precision units per month, the plant will generate 850 new jobs. Minebea is also spending 65 billion baht to build an additional electronic parts factory in Lop Buri Province. The facility is to have a monthly production capacity of 15 million units while creating 1,700 jobs. Construction on both plants will begin in 2011. Just before that, Japan's Hitachi Global Storage Technologies in August unveiled intentions to invest an extra 15.5 billion baht in its plant at Thailand's Prachin Buri Province. The project will boost the company's output of HDDs and components, including head gimbal assemblies. BOI Secretary General Atchaka Sibunruang said the projects show that foreign investors' confidence in Thailand remains strong. She elaborated that investors are confident in the country's long-term investment potential, reasonable production costs, skilled labor, healthy economic fundamentals, government support and market growth. Lively Industry, Strong Support Thailand's E&E exports in 2009 hit US$42.48 billion. Outbound shipments in 2010 are estimated at US$49.13 billion, representing solid 15% annual growth. The country is also a substantial importer of E&E products, with the value of inbound shipments for 2010 projected at a hefty US$36.10 billion, according to the Customs Dept and the Electronics and Electric Institute. Support of E&E is one of the Thai government's industrial development priorities. Top developmental objectives are to enhance the industry's overall competitiveness, encourage skills advancement and continuous technological innovation, and attract high value long-term investments. Page 4 November 2010 The BOI extends vigorous support to E&E investment, granting special incentives such as tax and duty exemptions. In 2009, the Board approved incentive applications by 219 electronics and electrical appliance projects, representing US$3 billion in new investment value. Enthusiasm in the industry only heightened in 2010 as the number of submitted projects from January to July was 30% greater than during the same seven-month period a year earlier. Minebea in particular said its latest investment is a response to the BOI's new policy allowing industries to hire more unskilled foreign workers to expand the labor pool. The policy applies to large companies that have operated in Thailand for at least 20 years. The number of alien workers cannot exceed 15% of a company's total workforce. Other bodies that contribute to E&E growth include the Science and Technology Ministry, Federation of Thai Industries, Electronics and Electric Institute, National Electronics and Computer Technology Center, Thai Microelectronics Center, and Hard Disk Drive Institute. Hitachi. Manufacturers are supported by the country's busy network of companies that supply the parts and subcomponents used in HDDs, from suspensions and gaskets to motors and covers. In 2009, nearly 260 million HDD units were produced in the country. A record-high export value of 500 billion baht is projected for 2010. Thailand is also one of Southeast Asia's biggest centers for the assembly of ICs and semiconductors. Exports of ICs in 2009 totaled US$8.41 billion, according to statistics from the U.S. Commercial Service as released by the U.S. Embassy in Bangkok. ICs also make up the lion's share of Thailand's imported electronic components. Continued on P. 8 Launchpad to ASEAN Thailand's E&E industry will build on its already strong foundation by continuing to tap opportunities spawned by the ASEAN Free Trade Area (AFTA) agreement and bilateral free trade pacts with various countries. The revocation of import and export tariffs on electronic components among AFTA signatories in particular opens doors to convenient materials access and greater market penetration for manufacturers. Even now ASEAN is Thailand's top E&E destination with a 20% share of exports, followed by the European Union, the United States, China and Japan, each of which absorbs about 15% of shipments. Operating in Thailand also puts E&E manufacturers in close connection to their customers that have bases here or in nearby countries across Asia. "When we were doing our country selection process, what especially differentiated Thailand from other places was customer proximity," said Abraham Sleiman, managing director of Hutchinson Technology (Thailand). Thailand's E&E Export 2009 Source: MOC Future Trend HDDs and ICCs at Forefront The electronics sector is the big brother of the electrical appliances sector. In fact, electronic components of various types help feed development in the electrical appliances sector, and in a vast range of other industries from automation to automotives. HDD and IC production is at the heart of Thailand's E&E industry. The two vibrant lines account for 40% and 23% of the country's total electronics exports, respectively. In fact, Thailand is the world's largest manufacturer of HDDs, overtaking output by Singapore several years ago. Since 2005, Thailand has supplied nearly half of the world's HDDs. Four of the world's top five HDD makers are located in Thailand: Seagate, Western Digital, Toshiba and Source: EEI,Sep 10, 2009 Page 5 November 2010 COMPANY INTERVIEW ROH Contributes to Healthy Bottom Line at Toyota Boshoku The Thai government aims for its Regional Operating Headquarters (ROH) scheme to be the best in Asia. To promote the program, the Board of Investment (BOI) offers a range of attractive incentives that help ROHs in Thailand conduct business more competitively across the region. In the following interview, the vice president of Toyota Boshoku Asia Co., Ltd. (TBAS), Mr. Bunchob Ongtanasin, explains to the Thailand Investment Review (TIR) how the program helps his company operate more effectively. TIR: Please describe the corporate structure of TBAS. Khun Bunchob: TBAS is based in the outskirts of Bangkok and was established in 2001. We are a subsidiary of Toyota Boshoku Corporation (TBJ), which has headquarters in Aichi Prefecture, Japan. The parent company's history dates back to 1918. Today it is one of the world's leading manufacturers of automotive interior and exterior products, with 87 companies in 22 countries. TBAS has a registered capital of more than 728 million baht. TBAS has six companies in Thailand, with about 3,200 permanent employees here. We develop, engineer and manufacture automotive interior components such as seats, door trims, headliners, floor carpets and curtain-shield airbags; filtration and power train components including high-performance cabin air filters, air cleaners and oil filters; and textiles such as seat fabrics. The Thailand group consists of Toyota Boshoku Asia Co., Ltd. (in Prawet, Bangkok); Toyota Boshoku Gateway (Thailand) Co., Ltd. (in Gateway City Industrial Estate, Chachoengsao); Toyota Boshoku Siam Metal Co., Ltd. (in Amata Nakorn Industrial Estate, Chonburi); Toyota Boshoku Filtration System (Thailand) Co., Ltd. (in Eastern Seaboard Industrial Estate, Rayong); STB Textiles Industry Co., Ltd. (in Laem Chabang Industrial Estate, Chonburi); and S.K. Auto Interior Co., Ltd. (in Gateway City Industrial Estate, Chachoengsao). TBAS is also the ROH located in Thailand. TIR: What year did you enter the Thailand ROH scheme? How many units do you have under this program, and how extensive is the regional service coverage? Khun Bunchob: TBAS was granted ROH privileges from the Thai government starting in November 2008. Currently we have four units under the ROH scheme: (1) general management, business planning and business coordination, (2) procurement of materials and parts, (3) research and development of products, and (4) technical assistance. We provide these services to affiliates inside and outside of Thailand such as in the Philippines, Taiwan, Vietnam, Indonesia, Malaysia, Australia and India. Moreover, the ROH privileges of TBAS cover the R&D center unit, which has been importing machinery since April 2009. The training center unit is also in our planning scale of business activity. The ROH scheme offered by the Thai government and the BOI suits us well. This is because under Toyota Boshoku Corporation's structure, TBAS already serves as a regional hub for manufacturing bases in Asia and Oceania. TIR: Why did you choose Thailand as your regional headquarters? Khun Bunchob: At the top of the list would be the incentives granted by the BOI to companies that choose to set up regional headquarters here. Location is certainly also a big reason, as Thailand is the center of Asia. Excellent transportation is another key factor. Because Thailand has been making efforts to become a major hub of the Asian region for many years, the country offers a welldeveloped transport infrastructure that is superior to those of surrounding nations. This is of vital importance for TBAS. In doing our business, we must export or import products and transport personnel with our group of subsidiaries throughout the region. Thailand offers a large number of air flights and shipments for accomplishing this efficiently. Yet another reason that TBJ chose Thailand for a regional headquarters is the relative stability of the manpower here. Labor disputes do arise occasionally in Thailand but they are not as big a problem as in other countries. This is because the Thai Ministry of Labor shows sincere concern to the situation. Page 6 November 2010 Just as important from the regional headquarters aspect is the fact that foreigners enjoy living and working in Thailand. They find Thai culture colorful and appreciate that Thai people are friendly and well mannered. Moreover, Thailand is highly regarded for the quality of the international schools here, offering the children of expatriate families the opportunity for a quality education while abroad. Thailand's hospitals and medical care are of a high standard as well. All of these considerations are important to foreign investors. TIR: Does Thailand's ROH program make your company more effective? Khun Bunchob: The ROH component has expanded our scope of effectiveness. Because TBAS is a foreign company in this country, the Thailand Foreign Business Act restricted us to operating only certain types of businesses here. After joining the ROH program, however, we can now enjoy a wider scale of permitted business activities. The ROH also helps operations run smoothly. For example, the ROH makes it easier for our R&D in Thailand to provide support and technical assistance on new products to our affiliates throughout the region. This enables us to continually improve products offered in all countries to ensure customer satisfaction. As Toyota emphasizes the need for creative thinking year after year, effective R&D is vital for advancing our production processes, environmental friendliness, and breakthroughs in lightweight products to boost fuel efficiency. It all contributes to a healthy bottom line. TIR: Is the ROH scheme important to Thailand's development? Khun Bunchob: Absolutely. The ROH program is beneficial to Thailand's industrial, economic and social development in many ways. Having regional headquarters here means that foreign companies will transfer their expertise and technology to Thailand. This has a very positive impact on the Thai people. For example, at TBAS we send local engineering graduates who we hire to Japan for training on how to use our company's highly sophisticated R&D tools and production equipment. This knowledge enhances their life skills. Moreover, when an ROH company's expat employees come to Thailand to work for a few years, many will relocate their families here as well. This pours money into the economy, as they will often lease or purchase condominiums and cars and buy other high-priced products, helping local businesses prosper and supporting local job growth. TIR: Does TBAS have growth plans in Thailand? Khun Bunchob: Part of our growth plans in Thailand involves R&D work on carbon neutral materials that are friendly to the environment. For example, P.T. Toyota Boshoku Indonesia has developed an eco-friendly material made of fiber from kenaf, a plant which is superior at CO2 absorption. Business operations localized in Indonesia also include kenaf seed development and production of board from the material that we use to make door trims, seat backboards, package trays, headliners and other interior parts. Right now, TBAS is considering the possibility of kenaf cultivation and investment in Thailand. If the soil and weather in Thailand suits kenaf well, and the labor cost proves worthwhile, then we may start a new business operation here in kenaf seed improvement and cultivation for retting and fiber production. That is an example of the TBJ policy via TBAS to transfer knowledge, machinery and technology to the local country. In fact, TBAS has already started some R&D operations in Thailand on interior design products, including car seats. TIR: What is the mission or business philosophy of TBAS? Khun Bunchob: In the Toyota Boshoku group, we follow the "TB Way." This is a code of conduct for a sensible course of action and a good mental attitude in meeting challenges to achieve a common goal. Our motto is to "reinforce our stance as a company with strong community ties." It is vital that we are seen by local people as contributing to the development of the local country and the growth of its people. You can notice this in many ways. For example, we go beyond the regular transfer of manufacturing technology in that we also transfer design knowledge. Moreover, we work hard to get local staff involved in management. In fact, to achieve the goal of localization of management, we built a Regional Office Headquarters and a Research & Development Center with education and training facilities at our Bangkok site. TBAS also believes that corporate social responsibility is very important and we engage in many CSR activities and donation drives. We extend this overall philosophy to every country that we operate in, including through the Thailand ROH component to all of our locations in Asia and Oceania. Page 7 November 2010 First Global Forum on Medical Devices A regional medical hub in Asia, Thailand hosted the World Health Organization's (WHO) First Global Forum on Medical Devices; held in Bangkok from 9 to 11 September. It was a gathering of more than 350 leading health experts from over 100 countries who came together to review new evidence and agree on ways in which developing countries could improve their access to medical devices. WHO Director Dr. Margaret Chan stated in her address to the forum that "Health officials and hospital managers in all countries, at all levels of development, need guidance....We are here to help set the agenda for a more rational approach to the acquisition and use of medical devices in their full range of applications." According to WHO, there are approximately 10,500 different types of medical devices on the market, ranging from high-tech diagnostic equipment to basic technologies. They also report that "revenue from sales of medical devices worldwide was estimated at US210 billion for 2008." In fact, a WHO report entitled Medical Devices: Managing the Mismatch, An outcome of the Priority Medical Devices Project, lists Thailand as 8th for sales for medical devices among middle income countries. The Thai Medical Device Industry Association forecasts the Thai market will reach US$1.2 billion by the year 2015. The meeting ended with a call for innovative technologies aimed at "identifying and evaluating innovative medical devices, either existing or under development, which address global health concerns and which are likely to be accessible, appropriate and affordable for use in low- and middle-income countries." The call is open to manufacturers, institutions, universities, governments, individuals and non-profit organizations, with one submission per applicant being accepted. Thailand's strength in medical devices continues to grow and the country is increasingly being recognized around the world as a place for investments in health care. Latin Business Forum 2010 The Latin Business Forum is scheduled to be held on 18 November 2010 at the Santi Maitri building, Government House, Bangkok. The event is being organized by the Office of Thailand Trade Representative, The Thai Chamber of Commerce, The Southeast Asia - Latin America (SEA-LAC) Trade Center of the University of Thai Chamber of Commerce and the ASEAN Foundation in cooperation with the Inter-American Development Bank (IDB), Thailand Ministry of Foreign Affairs, Embassies of Latin American countries in Thailand (Argentina, Brazil, Chile, Cuba, Mexico, Panama, and Peru) and The Thailand Board of Investment is one of the co-organizers for this event. The Forum is in recognition of the expanding trade and investment opportunities that exist between these two regions and the potential synergies that have yet to be fully exploited. Opening remarks will be offered by Prime Minister Abhisit Vejjajiva, and will include four plenary sessions that will discuss a range of issues from business opportunities to free trade agreements. Continued from P. 5 Electrical Appliances 800 Strong With 800 factories, Thailand's electrical appliances sector is highly regarded among buyers of white goods around the world. The country is ASEAN's largest production base in the sector, and the world's second-biggest maker of air conditioners and fourth-largest for refrigerators. Nearly 43% of investors are Japanese manufacturers. The Office of Industrial Economics projects 18% expansion for the Thai electrical appliances sector in 2010. The sector's leading product lines by export value are air conditioners, refrigerators, and digital cameras and video camera recorders. The main markets are ASEAN with a nearly 20% share of exports, and the European Union and Japan at about 15% each. The United States absorbs more than 10% of shipments, and the Middle East and China take in about 6% each. Most of the Thai E&E industry's major players are foreign or joint-venture companies. Japanese manufacturers in Thailand include JVC, Sony, Orion, Nikon, Pioneer, Panasonic, Canon, Sharp, Hitachi, Mitsubishi, Toshiba, TDK, NEC, Stanley, Epson, Alpine, Minebea, Seiko and Sanyo, among many others. Other prominent investors are Taiwan's Tatung and Acer; South Korea's LG and Samsung; Seagate, Western Digital, Hutchinson and Honeywell of the United States; and Europe's ETA, Stiebel Eltron, Schneider, BHS, ABB and Fasco. Even with the substantial development achieved by the highly competitive Thai E&E industry, lucrative investment opportunities still exist � the so-called missing links for an absolutely comprehensive top-to-bottom local supply chain. These areas ripe for further investment include IC design, automotive electronics, radio-frequency identification, wafer components, telecom products and network equipment. Page 8 November 2010 Thailand and region grow in 2010 The World Bank's East Asia and Pacific Update 2010, Volume 2, released at the end of October, clearly states that the output of the region has recovered to above pre-crisis levels and in fact, for some countries, is expanding near pre-crisis rates. The economy in Thailand, in fact, has grown by 10.6 percent year-on-year as of the first half of 2010, which is above pre-crisis levels. The report underlines a number of challenges remaining for Thailand, but that despite slower growth for the second half of the year it sees the nation's GDP growing by 7.5 percent for the full year. At the end of September 2010, Thailand's Ministry of Finance raised its annual growth projection to the same level, adding that private investment is likely to increase by 16.5 percent for the year, against its previous projection of 4.2 percent. A significant contributing factor to the stellar economic growth in Thailand during such difficult times in the global economy, and with domestic political tensions, was the fact that "a higher proportion of manufacturing output (in this case vehicles) went to domestic rather than foreign consumption." The Bank reports that private consumption in Thailand during the first half year grew by 7.6 percent, with a near 50 percent increase in vehicle purchases, year-on-year. This growth in private consumption is reflective of the overall situation in East Asia, where the Bank reports that the contribution of private consumption to GDP, for most middle-income countries, recovered to pre-crisis levels. Thailand's auto industry has not only recovered from the global economic recession, but is at a tipping point and now poised to achieve an annual auto production of 2.5 million to 3 million units within the next five to seven years, as reported by the Thai Auto Institute. Auto production in 2010 alone could reach between 1.6 million and 1.8 million units. Thailand's largest auto manufacturer, Toyota, has reported a one to two month back order for almost every model, seeing this trend to continue as a result of growth in both domestic and export markets. While exports from the region have also recovered, their growth is seen to be slowing in the face of slowing consumer demand and uncertain G-3 growth prospects. In Thailand, growth in the manufacturing sector has been driven by export demand, and in Q2 merchandise exports grew by 42 percent year-on-year. Total exports as of the end of September 2010, according to the Ministry of Commerce, have increased by 22.71 percent yearon-year. On the fiscal policy side, the Work Bank writes that "...deficits in most countries are projected to remain substantially larger than precrisis averages at least through 2011, as governments worry about the downside risks to growth despite the clear recovery in private investment and consumption. Moreover, in the region's middleincome countries some temporary stimulus measures are becoming permanent and governments are planning to boost infrastructure spending to address gaps accumulated since the 1997�98 Asian financial crisis." This is true in Thailand, with the introduction of the agricultural price insurance scheme, pension, Summary of Forecasts Source: Bank of Thailand, as of September 7, 2010 and education subsidies. At the same time, capital expenditures in Thailand have increased under the stimulus package, aimed at enhancing the nation's water, transportation and other infrastructure. The report does state that although Thailand's infrastructure could be better, the quality of its infrastructure is better than most of its neighbors. In September 2010, Prime Minister Abhisit Vejjajiva, speaking at the "Special Investors Event for the Stock Exchange of Thailand", announced that the government would be embarking on new major logistic and infrastructure projects. This included the approval of a framework for Thailand-China cooperation to build three high-speed train routes connecting Thailand's northeast with China via Lao PDR; connecting Bangkok to the Thai eastern seaboard center of Rayong; and a route to the Malaysian border town of Padang Besar. In addition to providing improved rail service, the construction of high-speed train routes is in preparation for ASEAN becoming a single market and Thailand's role as a production base within that the Economic Community. The fiscal deficit in Thailand, as reported by the World Bank, is projected at 3.2 percent of GDP in FY2011, which is an increase of 1.9 percent above FY2010. Nevertheless, the report also notes the intention of the government to balance the budget within the next five years. Thailand is among those countries noted that have taken measure to expand outflows and liberalize capital accounts. This includes measures to "...facilitate outflows. These include lifting limits on vertical outward investments, increasing limits on outward FDI per company, raising ceilings on property investments, increasing the maximum for foreign currency deposits, and more than doubling the minimum amount of mandatory repatriation of export earnings." Clearly, there remain challenges ahead for Thailand and for the region, particularly as unemployment in major export destinations pressures demand for manufactures. At the same time, significant progress has been made and Thailand's economy has been returned to the path of growth and progress, looking to the future and ever increasing levels of investment and trade. Page 9 November 2010 Thailand improves in the World Investment Prospects Survey 2010-2012 The World Investment Prospects Survey 2010-2012 was recently released by the United Nations Conference on Trade and Development (UNCTAD). The report, which provides insight on future trends in foreign direct investment by leading transnational companies, shows that Thailand remains as competitive and attractive a location for investing in as it ever has. Overall, the report notes the impact that the downturn in the global economy has had on foreign direct investment with the overall level in mid-2010 not even at the level it was three years ago. Nevertheless, the findings of the Survey show that while the immediate period will still be choppy, investors become more optimistic looking out over the medium-term. Whereas last year's report showed that 47% of investors were pessimistic about their business environment, this level has improved significantly, now with only 36 percent sharing that view. The level of optimism increases more than three-fold into 2011, when viewed both in terms of the global environment, and rises from 13 percent to 62 percent into 2012. "On the basis of the findings of the survey, as well as other indicators of TNC and FDI activity, UNCTAD estimates the level of FDI inflows in 2011 to reach a range of US$1.3�1.5 trillion, rising in 2012 to between US$1.6 and US$2 trillion." Thailand is 11th most attractive FDI destination in the world Source: UNCTAD World Investment Prospects Survey 2010-2012 Thai Automotive Industry Forecast One thing that is made clear from the Survey is the rise of Asia, with six countries from the region now counted among the top 15, including Thailand, which comes in ahead of Poland, Australia and Malaysia. Thailand now ranks 11th in the Survey, up from 15th last year. It is interesting to note that while the Survey includes the automotive industry as being among those that have cut their international investment programs in 2009 due to over capacity, 2010 has in fact been a very strong year in Thailand for this sector. In June, Ford Motor Company announced its US$450 million investment in Thailand, Toyota invested in a factory expansion, and Mitsubishi Motors named Thailand its export hub for the Global Small Car. Another industry that was noted suffering from over capacity in 2009, globally, was electronics. Here again, in the first half of 2010 Thailand experienced a 16 percent increase in E&E export growth, and a 37 percent increase in its export value. Source: The Federation of Thai Industries, as of Jul 28, 2010 Page 10 BOI INVESTMENT MISSIONS November 2010 From 4 to 11 October Minister of Industry Chaiwuti Bannawat led an investment mission to Japan, accompanied by BOI Secretary General Dr. Atachaka Sibunruang, where they met with investors to discuss new government investment policy and the improved investment environment in Thailand. On 7 October BOI Secretary General Dr. Atchaka Sibunruang attended a seminar on Business in Thailand: Looking Forward 2011. The seminar addressed a broad range of issues related to improving the investment environment in Thailand. From 19 to 24 September BOI Secretary General Dr. Atchaka Sibunruang led an investment mission to Sweden and Denmark, where they marked the one year anniversary of the BOI's Stockholm Office and met with current and potential investors to discuss new investment policy. From 12 � 16 September Deputy Secretary General Duangjai Asawachintachit led an investment mission to Adelaide and NewCastle, Australia, where she met with investors in steel, machinery, autos and shipbuilding, and attended an investment seminar on opportunities in Thailand. BOI Calendar of Events Tuesday 30 November 2010 Seminar on "Thailand Investment Seminar", 10.00 - 12.00 hrs. Dansk Industri, Sundkrogskaj 20, K�benhavn, Denmark Organised by BOI Office, Stockholm ------------------------------------------------------------------------------Wednesday 1 December 2010 Seminar on "Thailand Investment Seminar", 10.00 - 12.00 hrs. Radisson Blue Scandinavia Hotel, Margrethepladsen 1, 8000 �rhus C, Denmark Organised by BOI Office, Stockholm ------------------------------------------------------------------------------Thursday 9 December 2010 Seminar on "Thailand Investment Seminar", 09.30-13.30 hrs. Hobart, Australia Organised by BOI Office, Sydney From 12 to 18 September BOI Director Chitra Kulvanich led an investment mission to London, where she spoke with investors about new investment policies in Thailand, such as the new incentives for Regional Operating Headquarters. Page 11 November 2010 THAILAND ECONOMY-AT-A-GLANCE Facts about Thailand Population (2009) ASEAN Population Literacy Rate Minimum Wage (1 Jan 10, Bangkok) GDP (2009) GDP per Capita (2009) GDP Growth (2009) GDP Growth (2010, projected) Export Growth (2009) Export Growth (2010, projected) Trade Balance (2009) Current Account Balance (2009) International Reserves (2009) Capacity Utilization (2009) Manufacturing Production Index (2009) Customer Price Index (September 2010) (2007 = 100) Corporate Income Tax Withholding Tax Value Added Tax September Average Exchange Rates US$ 1 = 30.79 Baht 1 = 40.18 Baht �1 = 47.91 Baht 100� = 36.48 Baht CNY1 = 4.55 Baht 67 million 584 million 96% 206 Baht/day US$ 263.5 billion US$ 3,921.3 -2.2% 7.0 � 7.5% -13.9% 25.7% US$ 19.4 billion US$ 20.3 billion US$ 138.4 billion 60.93% 180.44 108.5 10-30% 10-15% 7% Exchange Rate Trends SET Monthly Closing Values Source: Bank of Thailand Industrial Capacity Utilization Source: Stock Exchange of Thailand (%) Top 10 Exports 2010 (Jan-Sep) Product 1 2 3 4 5 6 7 8 9 10 Automatic data processing machines and accessories Motor cars, parts and accessories Precious stones and jewellery Electronic integrated circuits Rubber Refine fuels Rubber products Polymers of ethylene, propylene, etc in primary forms Chemical products Iron and steel and their products Total Source: Ministry of Commerce Share 9.80 9.34 5.75 4.22 3.87 3.58 3.27 3.19 2.89 2.51 Value (US$ bn) 14.02 13.37 8.23 6.05 5.53 5.12 4.69 4.56 4.14 3.59 143.14 Source: Bank of Thailand International Reserves / Short-term Debt (%) Source: 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: www.boi.go.th E-mail: firstname.lastname@example.org BEIJING Thailand Board of Investment, Beijing Office Royal Thai Embassy No.40 Guang Hua Road, Beijing, 100600, P.R.China Tel: (86-10) 6532-4510 Fax: (86-10) 6532-1620 E-mail: email@example.com FRANKFURT Thailand Board of Investment, Frankfurt Office Bethmannstr. 58, 5.OG 60311 Frankfurt am Main Federal Republic of Germany Tel: (49 69) 92 91 230 Fax: (49 69) 92 91 2320 E-mail: firstname.lastname@example.org GUANGZHOU Thailand Board of Investment, Guangzhou Office Investment Promotion Section, Royal Thai Consulate-General, Guangzhou, Room 1216-1218, Garden Tower, 368 Huanshi Dong Road, Guangzhou, 510064 P.R.C. Tel: (86-20) 833-38999 Ext: 1216 to 18 (86-20) 838-77770 Fax: (86-20) 838-72700 E-mail: email@example.com STOCKHOLM Thailand Board of Investment, Stockholm Office Stureplan 4C 4th Floor 114 35 Stockholm, Sweden Tel: +46 (0)8 463 1158 +46 (0)8 463 1172 +46 (0)8 463 1174 to 75 Fax: +46 (0)8 463 1160 E-mail: firstname.lastname@example.org LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General 611 North Larchmont Boulevard, 3rd Floor, Los Angeles, CA 90004 USA Tel: (1-323) 960 1199 Fax: (1-323) 960 1190 E-mail: email@example.com NEW YORK Thailand Board of Investment, New York Office 61 Broadway, Suite 2810 New York, NY 10006 U.S.A. Tel: (1-212) 422 9009 Fax: (1-212) 422 9119 E-mail: firstname.lastname@example.org OSAKA Thailand Board of Investment, Osaka Office Royal Thai Consulate-General, Osaka, Bangkok Bank Bldg. 7th Floor , 1-9-16 KyutaroMachi, Chuo-Ku, Osaka 541-0056 Japan Tel: (81-6) 6271-1395 Fax: (81-6) 6271-1394 E-mail: email@example.com PARIS Thailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze 75116 Paris, France Tel: (33 1) 5690 2600 (33 1) 5690 2601 Fax: (33 1) 5690 2602 E-mail: firstname.lastname@example.org SEOUL Thailand Board of Investment, Seoul Office #1804, 18th Floor, Coryo Daeyungak Tower, 25-5, Chungmuro 1-ga, Jung-gu, Seoul, 100-706, Korea Tel: (822) 319-9998 Fax: (822) 319-9997 E-mail: email@example.com SHANGHAI Thailand Board of Investment, Shanghai Office Royal Thai Consulate-General 15 F., Crystal Century Tower, 567 Weihai Road, Shanghai, 200041, P.R.China Tel: (86-21) 6288-9728, (86-21) 6288-9729 Fax: (86-21) 6288-9730 E-mail: firstname.lastname@example.org SYDNEY Thailand Board of Investment, Sydney Office Suite 101, Level 1, 234 George Street, NSW 2000, Australia Tel: (+61) 2 9252 4884 Fax: (+61) 2 9252 2883 E-mail: email@example.com TAIPEI Thailand Board of Investment, Taipei Office Taipei World Trade Center 3rd Floor, Room 3E39-40, No.5, Xin-Yi Road, Sec.5 Taipei 110, Taiwan, R.O.C. Tel: (886) 2-23456663 Fax: (886) 2-23459223 E-mail: firstname.lastname@example.org TOKYO Thailand Board of Investment, Tokyo Office Royal Thai Embassy 8th Fl., Fukuda Building West, 2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 Japan Tel: (81 3) 3582 1806 Fax: (81 3) 3589 5176 E-mail: email@example.com Page 12