October 2010 Volume 20 No. 10
High-Geared ROH Package Thailand eyes becoming leader Many of the world’s leading corporations are seeing their businesses thrive after entering Thailand’s Regional Operating Headquarters (ROH) scheme, launched eight years ago. In August 2010, the Thai government handed out attractive new incentives, aiming to supercharge the program’s popularity and make companies with regional headquarters here even more competitive. “This represents the most generous ROH incentive program offered in the entire region,” Deputy Finance Minister Pradit Phataraprasit said of the expanded benefits package. As of August, some 89 ROHs had already been established in Thailand. The expectation is that the new package will enable Thailand to rival Singapore as the top ROH hub in Southeast Asia. Among the ROH incentives granted by the Revenue Department, Ministry of Finance, qualifying companies that set up regional operating headquarters in the country are entitled to a 10-year corporate income tax (CIT) rate of 0% on the portion of income derived from their overseas operations. A rate of just 10% is levied on income from their domestic operations. A five-year extension on the corporate tax exemption is possible under certain conditions, meaning that the CIT benefits can be granted for a total of 15 years under the expanded program. In addition, a personal income tax rate of only 15% will be applied for eight years on income earned by the company’s expatriate employees in Thailand, if the income generated from services provided to overseas companies is at least 50% of the company’s total revenue. Another advantage of entering the program is that the dividends received by the ROH from its associated companies are tax exempt. Likewise, exemption applies to the dividends paid out of
the ROH’s net profits to its companies incorporated abroad and not carrying on business in Thailand. Enhancements to the ROH scheme now also allow new and existing companies to qualify as a treasury center to further reduce their cost and improve convenience. As part of this, the Bank of Thailand is making foreign currency dealings of regional headquarters easier. ROH companies can transfer, lend or borrow with their overseas affiliates in foreign currency rather than being restricted to convert into Thai baht. In addition, no approval is required for foreign currency deposit for money borrowed from Continued on P. 3
Cover Story: ROH Package
News Bites & BOI Net Applications
AmCham Outlook Survey
Thailand, One of Most Competitive Countries in the World
Company Interview: Nestle
Airport Rail Link Opens
Company Interview: DOW
Map Ta Phut Resolved
BOI Investment Missions / Inside the BOI
BOI NET APPLICATIONS
Public and Private Sectors Joining Hands in Increasing Processed Food Exports The public and private sectors are joining forces in upgrading the standards of Thai food and increasing the value of Thai processed food exports. The Board of Trade of Thailand has signed a memorandum of understanding with the Thailand Trade Representative Office and the National Food Institute to foster their cooperation in enhancing the potential for processed food production for export. Under the MOU, the Thailand Food Export Center will be established to help develop small- and medium-sized enterprises in the processed food industry. Foreign experts will be invited to offer technical know-how on various matters, ranging from standard production to packaging and taxation. The objective of the signing of this MOU is to increase Thai processed food exports to 48 billion baht in the next five years. In the initial stage, emphasis will be placed on such target groups as hospitals, military units, and prisons in European Union countries.
Government’s Policy of Promoting Labor Welfare
2008 (US$ = 33.23THB) Number of projects
2009 (Jan-Aug) (US$ = 33.96THB)
2010 (Jan-Aug) (US$ = 31.69THB)
Number of projects
Number of projects
Minerals / Ceramics
Light Industries / Textiles
Automotive / Metal Processing
Electrical / Electronics
Chemicals / Paper
Total Investment Total Foreign Investment By Sector
Unit: US$ Million
The Government has a policy to promote Note: Investment projects with foreign equity participation from more than one country are and support labor welfare in order to provide reported in the figures for both countries. stability and safety for workers. At the same time, it attaches great important to labor relations based on the achieve “decent work for all.” In 2006, Thailand joined other Asian tripartite system in order to boost relations between employers, countries in the Asian Decent Work Decade, which is paving the way for full, productive, and decent employment for all by 2015. employees, and government officials. The Prime Minister spoke of the labor welfare policy on 27 August 2010, when he presented awards to a number of outstanding workplaces in recognition of their good performance in terms of labor welfare and relations. The award presentation took place at the Miracle Grand Hotel in Bangkok. It is organized each year by the Department of Labor Protection and Welfare to honor good workplaces and encourage various companies to provide better welfare for their workers and promote relations with them. This year a total of 559 workplaces in Thailand were presented with the awards. Out of this number, 146 had received these awards for five consecutive years, from 2006 to 2010. The contest of outstanding workplaces is divided into three types. The first type involves small workplaces, comprising between 50 and 299 workers. The second type consists of medium-sized workplaces, with 300 to 999 workers, and the third one, large workplaces, comprises those with 1,000 workers and over. Prime Minister Abhisit pointed out that the Government intends to upgrade workers’ quality of life while moving the country toward becoming a welfare state by 2017. It has encouraged the business sector to have social and labor responsibility in order to
November 18, 2010, 8:00-17:00 hours at Sheraton Grande Sukhumvit Hotel
Summary of ROH Criteria & Benefits
Continued from P. 1
domestic commercial banks, foreign deposit, and investment abroad, if the sum is under US$500 million.
Option #1 Current ROH Tax Regime
Option #2** New ROH Tax Regime
• Paid-up capital of at least 10 million baht • Establishment of 3 associated companies/ branches in the 1st year • Income generated from overseas services ≥50% of total company income.
• Paid-up capital of at least 10 million baht • Establishment of associated companies/ branches establishment: in at least 1 country within the 1st year, at least 2 countries within the 3rd year, and at least 3 countries within the 5th year • Having staff working for ROH services and running business operation. • Having operating expenses ≥15 MB/year or investment spending ≥30 MB /year • By the end of 3rd year, having skilled staff of at least 75% of employees, and at least 5 employees, that receive remuneration of at least 2.5 MB/year
2. Corporate Income Tax • Overseas income • Local income
• 10% unlimited period • 10% unlimited period
• Exempt for 10 years* • 10% for 10 years*
“These new terms make it easier for ROH companies to operate by reducing bureaucratic and regulatory encumbrances,” Pradit told the media.
Ideal ROH Location Thailand is an ideal spot for regional headquarters, with its central location in Asia, sturdy economic foundation, outstanding expatriate services, and excellent business and transportation infrastructure.
Exempt for 10 Years (If income generated from overseas services ≥50% of total company income)
10% unlimited period
10% for 10 Years* (If income generated from overseas services ≥50% of total company income)
10% unlimited period
10% for 10 Years* (If income generated from overseas services ≥50% of total company income)
Nestlé is among the nearly 90 6. Personal Income Tax for Flat rate of 15% for a period not more than Flat rate of 15% for a period not more than multinationals that realize this each foreign employee 4 Years 8 years and have established ROHs in (If income generated from overseas services ≥50% of total company income) Thailand. Nophadol Siwabutr, 7. Accelerated Depreciation Accelerated Ratio Corporate Affairs director of (25% of asset value in 20 years) Nestlé (Thai) Ltd., said there 8. Notification Period No time limit Within 5 years from the date the relevant are “significant benefits” to the law becomes effective program. “It helps make our organization more competitive. * Extension of 5 years if all criteria have been met and if the company’s accumulated operating expenses exceed 150 million baht by the end of the 10th year. We are able to locate important ** Effective date published in Royal Gazette regional service functions in Thailand and to provide those services to our other offices in the region cost-effectively because Supportive Government of the significant tax breaks,” he remarked. According to Sathit Limpongpan, permanent secretary of the Ministry of Finance, many companies that already maintain extensive operations in Thailand but do not yet have an ROH here are expressing an interest in possibly joining the scheme to reap the advantages. Sathit said these include Japanese automakers Nissan and Toyota, the Japanese electronics company Hitachi, the German conglomerate Siemens, the US company Dow Chemicals, and Siam Cement of Thailand. To qualify for the special tax benefits and privileges, the ROH company needs to have a minimum of 10 million baht in paid-up capital. It must also serve associated companies or branches in one other country in the first year, two other countries in the third year and three other countries in the fifth year. The ROH should have annual expenses within Thailand of at least 15 million baht, or have invested at least 30 million baht per year in the country. After the first three years of being under the program, the ROH company must have at least 75% of its total employees be skilled staff, according to the criteria set by the Director-General of the Revenue Department, and have at least 5 employees, each of whom receives at least 2.5 million baht in annual remuneration. Functions that typically may qualify under the ROH plan include business management and administration; procurement of raw materials, parts and finished products; R&D work; technical support; marketing and sales promotion; human resources training; business advisory services; investment feasibility studies and analyses; and credit management.
Government support of investment in Thailand is strong. Policies complement the country’s inherent strengths as a strategically located business hub and a center for production and regional outsourcing. Besides helping to facilitate the ROH scheme, the BOI assists investors in optimizing their business activities through a range of other programs and operations. These include matchmaking services for locating quality suppliers of parts and components to reduce sourcing costs and putting investors in touch with product design centers and international distribution centers. Serving as a focal point for businesses when dealing with the government, the One Start One-Stop Investment Center (OSOS) in Bangkok also makes investment in the country easier by bringing together under one roof representatives of 10 different ministries. Opened in November 2009, the OSOS offers assistance on applications for business licenses, factory certification, environmental impact assessments, and many other matters. The One Stop Shop for Visa and Work Permit Services is now also located at the center. Positive responses are being accorded to the ROH plan from all sides. Even economists, for example, are noting that the program benefits Thailand’s economy by generating higher domestic consumption through expatriates purchasing big-ticket products. The ROHs also create new jobs for the Thai people from the increased activities related to conducting regional business.
US Companies Turn Thumbs Up In AmCham Outlook Survey US companies in Thailand paint a bright picture of their local operations, as seen in survey results from the American Chamber of Commerce (AmCham). Respondents show confidence in the country as a favorable hub in all vital categories, from corporate profits to education of children, according to AmCham’s “ASEAN Regional Business Outlook Survey 2010: Thailand.”
Sixty-three percent of respondents said they expect a profit increase this year, and that jumps to 88% anticipating profit growth in 2011. As another sign of strong confidence in Thailand, nearly half of the companies nodded that they would be increasing their number of employees in 2010, up from one-third in the 2009 survey. For 81% of these respondents, the current workforce expansion would be as high as 20%. AmCham also asked member companies to evaluate the sentiment in Thailand toward the United States. An overwhelming 73% expressed satisfaction in that regard. The majority of respondents said they expect the Thai economy to expand in 2010. Most also possess a buoyant attitude about the world economy, with 70% forecasting a more vigorous global performance in 2010. That is an explosive turnaround from 2009, when just 30% of members predicted improvement in the world economy.
regional survey was compiled by AmCham Singapore in cooperation with other chambers. Businesses operating in Thailand already benefit from the country’s free trade agreements with several nations, the longstanding ASEAN FTA, and the China-ASEAN Free Trade Area launched earlier this year. Advantages will only increase when the 10 countries of the ASEAN region form a single market as planned by 2015. The removal of trade and investment barriers is enabling a freer flow of goods, services and projects, and ministers across ASEAN are meeting regularly to speed up regional liberalization.
(Responded “Satisfied” or “Extremely Satisfied at a combined rate of 60% or above in the 2010 survey) Factors
Availability of Low Cost Labor
Office Lease Cost
Housing Cost Personal Security
With a data collection period of 12 May-1 June, the 2010 survey features opinions from 84 responding US companies in Thailand, about half of which manage affiliated operations in multiple countries. Fifty-two percent of this year’s respondents are in the service sector and 34% are manufacturers. For the bulk of companies, annual sales in Thailand range between $1 million and $50 million. Twenty-eight percent of companies employ fewer than 50 employees in ASEAN, including Thailand. The regional workforce is as high as 500 for 42%. Thirteen percent of the US companies in Thailand have more than 2,000 employees across ASEAN.
Sentiment Towards the U.S.
This is the ninth year of the AmCham Business Outlook Survey. In previous versions, US companies in Thailand had expressed dissatisfaction in the categories of “laws and regulations,” “tax structure,” “availability of trained personnel,” and “new business incentives offered by government.” AmCham noted that the categories were dropped from the 2010 results because respondents no longer considered them as problems. There was even a response of general acceptance by companies to the April-May political rally. “In spite of the political situation, Thailand respondents maintain a relatively optimistic business outlook in 2010,” AmCham said.
In view of this, US companies in Thailand are attaching greater value to markets in ASEAN, as revealed by the survey. Some 59% of respondents said ASEAN increased in importance for their companies over the past two years. For the coming two years, 71% see the region growing in significance. Factors for raised expectations of ASEAN include the economic recovery, limited growth opportunities in other regions around the world, and changes in the companies’ business strategies. Among the survey pool, 78% of companies now utilize the ASEAN FTA and 50% already use the China-ASEAN scheme.
Workforce Expansion: Thailand
Do you expect your company’s total number of employees to increase, decrease, or remain about the same in 2010?
Eye on ASEAN The Thailand segment was part of a broad canvassing of senior executives at US enterprises in seven Southeast Asian countries: Singapore, Indonesia, Malaysia, the Philippines, Thailand, Cambodia and Vietnam. The
Source: Amcham Survey 2010
As for expansion of business within Thailand, 30% of respondents said they intend to step up investment in the country.
Although the survey was conducted in May, during the height of the unrest and demonstrations in Bangkok, U.S. businesses in Thailand maintain a relatively optimistic business outlook in 2010”, said AMCHAM President Joe Geagea. “More than half of those responding to the survey still expect overall economic growth in Thailand.
Thailand continues to be a rewarding experience for expatriates, offering a positive environment for professional and family life.
When asked whether they regularly receive requests from employees based in other locations to be transferred to Thailand, 44% of companies indicated in the affirmative. That is up from 34% in 2009. Ninety-nine percent of respondents also said their expatriate employees have expressed satisfaction with assignments in the country. AmCham also inquired as to whether the expatriate employees attempt to extend their time in Thailand
and 89% of companies said yes, up from 84% a year ago.
“The availability of international education continues to be a strength in Thailand,” AmCham noted in its report. Eighty-five percent of survey respondents said they feel the ability to find international education for their children will not be a problem in the coming years.
As for giving back to Thai society, 72% of enterprises acknowledged taking part in corporate social responsibility (CSR) activities in 2010, very similar to 71% last year. For more than 80%, CSR efforts involve cash donations. Seventy-eight percent said their employees volunteer for civic projects throughout Thailand.
Thailand Remains One of Most Competitive Countries in the World Thailand is one of the world’s most competitive countries, with high marks especially for its business sophistication, investment protection and export power. This is according to the “Global Competitiveness Report 2010-2011” released by the World Economic Forum (WEF). In the report, the WEF ranks Thailand as the world’s 38th most competitive nation among 139 countries and territories evaluated. Thailand stands prominently among the top one-third of all economies around the world and is ahead of its rival business hubs in Southeast Asia. “Thailand continues to benefit from its relatively large domestic and export ma-rkets, its excellent transport infrastructure, the efficiency of its labor market, and a relatively well functioning goods market. In addition, the country’s business environment is relatively sophisticated with developed clusters and companies operating across the value chain,” the WEF said. According to the Geneva, Switzerland-based organization, recent political uncertainty in Thailand was a key reason for the slight decline from 36th place a year ago. With many strengths that benefit business people, researchers, technology advocates and other sectors across local society, Thailand outshines countries such as Spain, Indonesia, Italy, India, Vietnam, Russia, Mexico, the Philippines and Cambodia on the 2010-2011 competitiveness list.
Thailand Excels in Key Areas In several categories, Thailand ranks strongly in the top quarter of all countries. The WEF places Thailand way up the list at 12th globally for strength of investor protection, even ahead of economies such as Japan, India, Indonesia, Australia, Italy, Sweden, France, South Korea, Taiwan, mainland China, Germany and Switzerland. In the category for value of exports
of goods and services, Thailand is recognized as the 17th most competitive country in the world. It comes in 20th for exports as a percentage of the gross domestic product (GDP). The report finds Thailand 26th in the world for number of local suppliers and 28th in air transport infrastructure. As for the soundness of its banks, their solvency and the health of their balance sheets, the country also places high globally at No. 30. A nearly as impressive rating at just one rank lower was given for ease of access to loans. Moreover, Thailand is regarded as the 34th best country in the world for both labor-employer relations and prevalence of well-developed business clusters. Thailand is positioned in the top one-third of countries for quality of roads (36th place), intensity of competition among local industries (37), attracting and retaining talented people to avoid a brain drain (38), minimal business impact of rules on foreign direct investment (39), quality of electricity supply (42), university-industry collaboration in R&D (42) and quality of port infrastructure (43). In many other categories, Thailand also stands above the norm. It places in the top half of all countries for efficiency of legal framework (48), judicial independence (54), capacity for innovation (56), fewest procedures required to start a business (57), female participation in the labor force (57), quality of management or business schools (58), quality of scientific research institutions (59), prevalence of foreign ownership of companies (60), production process sophistication (60), staff training (62), transparency of government policymaking (63), availability of the latest technologies (64) and quality of educational system (66). Areas where the report indicated that Thailand should seek improvement include policy stability, inflation, and its regulations on taxes, labor and foreign currency. “Such efforts will then buttress the country’s innovation potential, which will become Continued on P. 10
Praises ROH Scheme as Boost to Competitiveness With its diverse business operations currently located in Thailand, Nestlé (Thai) Ltd. is applauding the effectiveness of the Thai government’s Regional Operating Headquarters (ROH) scheme. “I see significant benefits to Nestlé from Thailand’s ROH program because it helps make our organization more competitive. We are able to locate important regional service functions in Thailand and to provide those services to our other offices in the region cost-effectively because of the significant tax breaks that are offered,” said Nophadol Siwabutr, Corporate Affairs director of Nestlé (Thai).
Currently, Nestle operates six manufacturing facilities in Thailand, the Coffee-mate plant being the biggest in the world in that product line. The local pet-care products facility is also large. Along with the ROH component, both of these projects are promoted by the Thailand Board of Investment (BOI), which has thrown its full weight behind the regional headquarters program.
Attractive ROH Incentives
Thailand’s ROH program targets companies that have, or aim to have, a presence in several countries in the region. Providing services to other offices in the region is important for Nestlé, which currently has 50 facilities across all ASEAN countries.
The Thai government launched the ROH program in 2002 to help boost the competitiveness of companies that base some of their regional functions in Thailand. Typically, those functions may include business management and administration; sourcing of raw materials, parts and finished products; R&D work; technical assistance; marketing and sales promotion; human resources training; business advisory services; investment feasibility studies and analyses; and credit management.
Based in Switzerland and founded in 1866, Nestlé is the world’s largest food and beverage corporation. It is said to be the foremost nutrition, health and wellness company. The corporation employs about 280,000 people and has factories or operations in almost every country in the world. In Thailand, Nestlé products have been available for almost 120 years.
To quality for the special tax benefits and privileges granted by the BOI, the ROH company needs to have a minimum of 10 million baht in paid-up capital. It must also serve associated companies or branches in one other regional country in the first year, two other countries in the third year and three other countries in the fifth year.
Nestlé joined the ROH scheme in 2009, selecting Thailand as its regional headquarters. “Because of its central geographical location in Asia, Thailand is an ideal, easily accessible base. Just this morning, I received four international visitors who flew in for a meeting and later flew out for their next appointment,” Nophadol said.
Among the incentives, ROHs are entitled to a 10-year corporate income tax rate of 0% on the portion of income derived from overseas operations, and a rate of 10% on income from domestic operations. A five-year extension on the corporate tax exemption is possible under certain conditions. In addition, a personal income tax rate of only 15% will be applied for eight years on income earned by the company’s expatriate employees in Thailand. There are also tax benefits related to corporate dividends, royalties and interest, and accelerated depreciation allowances.
“We put a lot of emphasis on getting people of different cultures to work together. In Thailand, we have a multicultural team representing more than 15 nationalities managing our business operations,” he added. “The Thai economy is also sound, and the country has infrastructure and facilities that can meet the needs of an international company and an expatriate staff. I think Thailand can play an even bigger role in the region with the implementation of the ROH program,” Nophadol said.
In addition, there are a host of new regulations that improve convenience and reduce costs through the relaxation of conditions governing the operations of a Treasury Center. For example, the ROH can now transfer, lend or borrow from affiliated companies in foreign currency rather than being compelled to convert into Thai baht.
Nestlé (Thai) currently has two ROH units. The Regional Procurement Unit sources raw materials such as sugar, milk and coffee, and packaging. The other unit, Regional Supply Chain, involves the planning and logistics of moving of product from one country to another.
Mutually Beneficial Nophadol describes Nestlé’s relations with the BOI and other government agencies in Thailand as very good. “I have been with Nestlé for 25 years, and that duration marks the extent of our long relationship with the BOI. The package of incentives offered by the BOI and other government agencies to investors is important, but just as important are the services that the BOI provides to make it easier for us to understand regulations and policy, as well as the general advice that they provide us,” he said.
“The one-stop service that Nestlé (Thai) has received from the BOI are impressive. I would strongly recommend that potential investors who wish to conduct business in Thailand always consult with the BOI first. It can save them a lot of time and money, and it helps get things moving in the right direction quickly and efficiently,” he added. As of August 2010, some 89 ROHs had already been established in Thailand. The expectation is that the even more generous new package will enable Thailand to rival Singapore as the top ROH hub in Southeast Asia. “For companies that are going regional or already have regional operations, now may be a good time to look at Thailand as a center for operations,” Nophadol said.
Airport Rail Link Opens The Express Line provides transport service within 15 minutes from Bangkok City Air Terminal at Makkasan to Suvarnabhumi Airport. There are in total four trains providing services on this line. Each train has three passenger cars, which have 170 passenger seats, and one baggage car. It provides service from 6:00 to 24:00 hr, with a fare of 100 baht per trip.
The Airport Rail Link from Suvarnabhumi Airport, via Makkasan city air terminal, to Phaya Thai station in central Bangkok, has opened for business and is providing fast and convenient transport service for passengers wishing to travel from downtown Bangkok to the airport. This system, covering a distance of 28 kilometers, runs at a speed of 160 kilometers per hour on an elevated platform parallel with the eastern railway. The Airport Rail Link consists of two service systems: the City Line and the Express Line. The City Line offers service within 30 minutes between Phya Thai station and the terminal at Suvarnabhumi Airport. It stops at eight stations, namely Phaya Thai, Ratchaprarop, Makkasan, Ramkhamhaeng, Hua Mak, Thap Chang, Lat Krabang, and Suvarnabhumi. In the initial stage, tickets will cost only 15 baht per trip. The City Line has five trains; each train has three passenger cars with the capacity of 745 passengers per train for 6:00 to 24:00 service.
The new mass transit system opens just as the way has been cleared for expansion of Suvarnabhumi Airport to accommodate 65 million passengers per year.
Airport Rail Link 2010
Source:www.railway.co.th, as of Aug 23, 2010
Interview with Andrew N. Liveris,
Chairman & CEO of The Dow Chemical Company for Thailand Investment Review The combination of our long record of success in Thailand, a partnership with Siam Cement Group that has thrived over the past twenty years, and our outstanding Thai workforce made it clear that Thailand was the right choice for our regional expansion. As a result, we have invested in a series of projects that we call the Thai Growth Project, which includes a US$3 billion investment in the most advanced technology we have available in the world as well as the best environmental health and safety practices.
During a visit to Bangkok earlier this year, The Dow Chemical Company’s Chairman & CEO, Andrew N. Liveris, was kind enough to sit down with Thailand Investment Review to share his thoughts about Dow’s history plans for the future in Thailand. TIR— Dow is one of the largest US investors in Thailand and is in the midst of a large-scale expansion. Why did the company choose Thailand for these new plants and has political instability caused the company to reassess its plans? ANL — Dow Chemical has been in Thailand for more than 40 years. Together with our long-time partner the Siam Cement Group, and the constant support and encouragement of the Board of Investment, Dow’s business in Thailand has grown to serve not only the Thai market, but customers across AsiaPacific. As the company looked to expand production in Asia-Pacific, we looked for an operation that had achieved success in all elements of what we call our “Triple Bottom Line,” a metric that balances economic prosperity with environmental stewardship and corporate social responsibility. The performance of the Companies of Dow in Thailand in all three areas of our Triple Bottom Line has been exemplary. Environment practices have been truly world-class, health and safety performance has been consistently among the best in the company, and Dow’s century-old commitment to giving back to the communities in which we live and work has been honored. This is, in large part, the result of our Thai team, our Human Element, for our employees have demonstrated that they understand the need not only to ensure that our facilities are safe, but to behave as a good neighbor and partner, working with local communities to support activities that are most important to their well-being and prosperity.
We remain confident that Thailand is the right choice for these investments, which will make Thailand Dow’s largest production facility in Asia. The political imbroglio does not change that perception. We see nothing but growth for our projects and our ability to sell great products to help the economy grow and to create local jobs directly and indirectly through our investment. And on a personal note, I was the Dow leader here over 20 years ago who was involved in the beginning of the Map Ta Phut investments with Siam Cement. My family and I - my youngest was born here - loved Thailand and its people, and understand the evolution of the Country as it strives for excellence in all of its endeavors. We at Dow are proud to call Thailand home. TIR — How would you characterize Dow’s relationship with and the level of support from the Thai government over the years? ANL — Since pioneering polystyrene production in Thailand in 1978, Dow has enjoyed an excellent relationship with the Thai government. We have worked particularly closely with the Board of Investment and the Industrial Estate Authority of Thailand, both of which are excellent examples of government agencies that provide the sort of cooperation and support that facilitates investment. And, I am pleased to note, we have also found that the doors of Thai government have always been open to us, at good or bad times. TIR — As a global chemical giant, Dow has plants in almost every corner of the globe. How does the quality of the team in Thailand compare to the workers in other countries? Is there sufficient technically skilled labor available in Thailand? ANL — The team that has been assembled in Thailand is truly first class. EH&S performance is among the best in Dow globally and our Thai operations are as efficient as other Dow plants anywhere in the world, with many of the Thai plants ranking in the top quartile. Moreover, our Thai employees have ‘bought into’ Dow’s Vision of Zero — ZERO incidents, injuries, illnesses, accidents and ZERO environmental harm.
We have implemented state of art technology in MTP which minimizes environmental footprint of our operations. Our operation teams constantly look for ways to even further reduce waste generation and energy consumption. The team has received many of Dow’s global WRAP (Waste Reduction Always Pays) awards from our technology center. This is an award to recognize team’s effort in improvement for environment management. At this point in time, I am also delighted to hear that Dow’s Thai Growth Project has just crossed 50 million hours worked and zero lost time injuries as of early September. TIR — Environmental issues have taken on added importance in Thailand in recent years. What steps has Dow taken over the years to improve its environment, health and safety performance? How does the performance of the Companies of Dow in Thailand measure up to Thai environmental standards? ANL — It is important to understand that at Dow, both in Thailand and everywhere we operate, protecting people and the environment is a part of everything we do and every decision we make. Protecting the planet is now one of three corporate values at Dow. Each employee and officer is responsible to ensure that our products and operations meet applicable government standards or Dow best practices, whichever is more stringent, and thanks to their dedication and hard work, all our businesses in Thailand meet or exceed Thai government standards. In 1995, the Dow Chemical Company set important goals to improve our environment, health and safety performance. In 2006, we set the bar even higher with the introduction of a more ambitious, next-generation set of goals. The 2015 Sustainability Goals reflect Dow’s ongoing commitment to the principles of Responsible Care® and have a broad external focus. Under these goals, we have committed to continuing to improve our product stewardship and innovation, reducing our global footprint, and strengthening relationships with the communities in which we live and work. Furthermore, we recognize that as a global leader in sustainable chemistry, our responsibility does not end at our fence lines. Accordingly, we are committed to using our knowledge and culture of innovation to help solve some of the world’s most pressing problems — affordable and adequate food supply; decent housing; energy & climate change; sustainable water supplies; or improved personal health and safety.
the second plant in the world to utilize this innovative joint HPPO technology and demonstrates Dow’s commitment in Thailand to reducing emissions and energy usage. TIR — What has Dow been doing to improve the quality of life in the communities around its production facilities? ANL — As I mentioned earlier, Corporate Social Responsibility is part of Dow’s Triple Bottom Line and community success is a major part of our 2015 Sustainability Goals. We view the communities around our facilities as stakeholders and, as we grow, we want them to reach their full potential. Accordingly, the Companies of Dow in Thailand engage in extensive community outreach programs. Our employees and management meet with local communities on a weekly basis to learn what the villagers want and need the most. By listening to local communities, we are able to support a wide range of activities that best meet the needs of the people and support their future development. Through corporate philanthropy, both in terms of financial contributions and donations of products, we provide immediate relief, and we also support capacity building or leadership activities that help communities develop to the point that they can stand on their own feet. We are particularly proud that many of the activities we support are employee-initiated and that our employees in Thailand volunteer to share their expertise with the communities around our plants to make them a better place in which to live. TIR — Many of Dow’s projects in Thailand are in partnership with Siam Cement. How important is it to Dow to have such a strong local partner? ANL — Having Siam Cement as a partner has been instrumental in our success in Thailand. They share our values, our corporate culture and our commitment to excellence, and for more than 20 years, we have enjoyed a good working level at all levels. I have known our colleagues at Siam Cement for over two decades and I firmly believe that the SCG-DOW Group is Dow’s best joint venture partnership anywhere in the world because of the quality of the Siam Cement Group and its people. As we move forward with our Thai Growth Project, which is our third wave of investment in Thailand, we are pleased to continue to work with the Siam Cement Group on a wide range of projects to better meet the needs of our customers in the region.
In Thailand, our commitment to reducing energy intensity is clear. Over the past few years, each of our plants has implemented energy reduction projects and our commitment to continue reduction in energy intensity remains strong. For example, the SCG-DOW Group is constructing a worldscale Propylene Oxide (PO) plant in Thailand using innovative hydrogen peroxide to propylene oxide (HPPO) technology jointly developed by Dow and BASF. This technology offers several substantial environmental benefits, including a significant reduction of wastewater and energy usage when compared to existing PO technology. The SCG-DOW PO plant will be only
Map Ta Phut Resolved Environmental Issues Cleared After a rigorous process, the Administrative Court in Thailand has cleared the way for all but two of the projects under injunction, enabling them to proceed. Guidelines have now been established for companies to conduct their health and environment impact assessments, and the list of the 11 types of industrial projects that
can potentially create severe impact to the communities in terms of natural resources, environment and health, was released in August 2010 by the National Environment Board. Projects on the list must follow the procedures laid out, in accordance with Article 67 of the Constitution, and shown in the charts below.
National Environment Board issues list of 11 potentially severe impact projects
Simplified Flowchart for EIA and E/HIA Process PROJECT
1) Land reclamation projects
2) Mining, defined by the mineral • Underground Mining Method, only the caving method and no backfill • Lead Mining, Zinc Mining or Metal Mining using cyanide or mercury or lead nitrate in lead mining process with arsenopyrite associate material • Coal Mining, specifically coal mineral transportation take out project area by cars • Sea Mining
- On E/HIA List?
On EIA List?
- Confirmed by relevant committee?
Prepare E/HIA Report - Based on MoNRE guideline issued on December 29, 2009
(Duration depends on each project) Key Processes
3) Industrial Estates as defined by the Industrial Estate Authority of Thailand Act or Projects with similar feature
Prepare EIA Report - Based on MoNRE guideline issued on June 16, 2009
Public scoping (50 days)
Submit to ONEP
Submit to ONEP
6) Production, disposal or configuration of radioactive substances
7) Hazardous waste disposal or incineration plants (except concrete incinerators that use hazardous waste as supplementary material or fuel)
Note: Size and additional details as specified in MoNRE notification issued on August 31, 2010.
Public hearing organized by relevant authority (50 days)
Comment by independent organization (60 days)
Relevant authority reviews comments from Expert Review Committee, public hearing session and independent organization and make responses (15 days)
8) Aviation transport system
11) Thermal Power Plants • Coal-fired Power Plant • Biomass-fired Power Plant • Natural Gas-fired Power Plant • Nuclear Power Plant
Review by ONEP & Expert Review Committee (75 days)
5) Mineral Smelting Industry of Metal Industry
10) Dams or Reservoirs
Public review (50 days)
Review by ONEP & Expert Review Committee (75 days)
4) Petrochemical Industry Upstream Petrochemical Industry Intermediate Petrochemical Industry
Consideration by relevant authority upon issuing license
Notes: For additional details, please consult Office of Natural Resources and Environmental Policy and Planning (ONEP), Ministry of Natural Resources and Environment (MoNRE)
Continued from P. 5
increasingly important as it moves toward the most advanced stage of economic development,” the WEF said.
Developing Countries Drive Growth The 139 countries evaluated for this latest report represent 98 percent of the world’s GDP. Developing nations are clearly leading the global recovery. The WEF said there is a “continuing shift in the balance of economic activity away from advanced nations and toward developing ones.” The report cites predictions
by the International Monetary Fund for emerging markets to expand 6.25% in 2010 while advanced economies will grow at a much slower pace of 2.25%. It should be recalled that the IMF forecasts Thailand’s full year GDP growth to be as high as 8%. Thailand continues to be a competitive location for investment, offering benefits across the board. Think Asia, invest Thailand!
BOI INVESTMENT MISSIONS
On 9 September 2010, Deputy Secretary General Duangjai Asawachintachit made a presentation on “Investing in Thailand” at the China International Fair for Investment and Trade (CIFIT) in Xiamen, China.
From 31 August to 3 September 2010, Ms. Pannee Chengsuttha, Director of Europe Division, International Affairs Bureau, led an investment mission to the Philippines, where the delegation met with government officials and members of the private sector to discuss investment opportunities and visit factories.
INSIDE THE BOI
On 1 September 2010, Industry Minister Chaiwuti Bannawat presided over a seminar organized by BOI: “BOI Watch: Investment for Sustainable Development” at Centara Grand & Bangkok Convention Centre at Central World.
On 2 September, Secretary General Dr. Atchaka Sibunruang addressed the 3rd meeting of the Sub-Committee on Enhancement of Business Environment in Thailand under the Japan Thailand Partnership Agreement (JTEPA).
BOI Calendar of Events
On 2 September Deputy Secretary General Ajarin Pattanapanchai welcomed a visiting delegation from the Board of investment of Sri Lanka.
Tuesday 9 – Friday 12 November 2010 Business delegations to participate in Electronica 2010 New Munich Trade Fair Centre, Munich, Germany Organised by BUILD (BOI Unit for Industrial Linkage Development ------------------------------------------------------------------------------Tuesday 9 – Friday 12 November 2010 Business delegations to participate in ELMIA Subcontractor 2010 Jönköping, Sweden Organised by BUILD (BOI Unit for Industrial Linkage ------------------------------------------------------------------------------Thursday 18 November 2010 Latin Business Forum 2010, 09.00-17.00 hrs. Sheraton Grande Sukhumvit Hotel Bangkok, Thailand Organised by The SEA-LAC Trade Center (UTCC), The Thai Chamber of Commerce, and ASEAN Foundation (co- organized by Thailand Board Of Investment)
Exchange Rate Trends
Facts about Thailand Population (2009) ASEAN Population Literacy Rate Minimum Wage (1 Jan 10, Bangkok)
67 million 584 million 96% 206 Baht/day
GDP (2009) GDP per Capita (2009) GDP Growth (2009) GDP Growth (2010, projected) Export Growth (2009) Export Growth (2010, projected)
US$ 263.5 billion US$ 3,921.3 -2.2% 7.0 – 7.5% -13.9% 25.7%
Trade Balance (2009) Current Account Balance (2009) International Reserves (2009) Capacity Utilization (2009) Manufacturing Production Index (2009) Customer Price Index (August 2010) (2007 = 100)
US$ 19.4 billion US$ 20.3 billion US$ 138.4 billion 60.93% 180.44 108.6
Corporate Income Tax Withholding Tax Value Added Tax
SET Monthly Closing Values
Source: Bank of Thailand
10-30% 10-15% 7%
August Average Exchange Rates US$ 1 = 31.70 Baht €1 = 40.94 Baht £1 = 49.67 Baht 100¥ = 37.11 Baht CNY1 = 4.66 Baht
Industrial Capacity Utilization
Source: Stock Exchange of Thailand (%)
Top 10 Exports 2010 (Jan-Aug) Product
Value (US$ bn)
Automatic data processing machines and accessories
Motor cars, parts and accessories
Precious stones and jewellery
Electronic integrated circuits
Polymers of ethylene, propylene, etc in primary forms
Iron and steel and their products Total
Source: Bank of Thailand
International Reserves / Short-term Debt (%)
Source: Bank of Thailand
Source: Ministry of Commerce
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: email@example.com 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: firstname.lastname@example.org
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: email@example.com
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: 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
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: firstname.lastname@example.org
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: 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
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
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