What Makes BCG Model Important for Your Business in Thailand?

Bio-Circular-Green or BCG Model is one of the concepts which is attracting great attention and focus of the Royal Thai Government and Board of Investment of Thailand. This makes a point that if you are planning to start your business in Thailand, orient it towards the BCG Model to attain greater advantages. To guide you, let us go through the ideologies and processes associated with the BCG Economy of Thailand.

Sectors or Industries of Importance for Thai BCG Economy

1. Agriculture, Farm, and Food: In this sector, the government is focused on increasing productivity, value and standard of major agricultural products and promotes the minor ones with value-addition. The government is also ready to introduce smart farming and farmer schemes which involves a great deal of automation and digitalization of farming techniques.

 

2. Healthcare, Medical Services, and Wellness: Preference has been given to promote methods to facilitate clinical research among researchers, industry and regulatory bodies, including use of genetic data. The focus is also on research and development and production technology of vaccines, biopharmaceuticals and medical devices.

 

3. Energy, Bio-chemicals and Bio-petroleum: Energy-from-waste has been the area of focus for this sector along with special emphasis on waste management and recycling of agricultural and production wastes. Bio-refineries and bio-chemical setups are very important and crucial for this segment of the Thai BCG Economy.

 

4. Tourism and Creative Economy: Tourism has been one of the major sources of revenue for Thailand since long and emphasis has been given to this segment to boost its yield by providing better experiences for tourists by using smart technologies. The government is also seriously concerned about the conservation and rehabilitation of environment and target niche market related to the tourism industry.

 

General Prayut Chan-o-cha, Prime Minister and Defense Minister, recently presided over a meeting to review and adopt the framework for the BCG Economy Model Strategic Plan, 2021-2026, established by the BCG Economy Model Committee. In this process, few strategies were discussed on and finalized to be followed to promote the BCG model in Thailand.

Strategies Formulated for Thai BCG Model

• The first strategy aims to ensure resource base and ecosystem preservation by combining conservation and use.

• The second strategy includes using capital, resources, identity, innovation, and new technologies to inspire communities and develop the local economy. Based on the idea of “exploding from within,” area-based capacity would be used, with a focus on using biodiversity and cultural diversity to maximize the value in supply chains and services.

• In the third strategy, the BCG economy model’s industrial growth would be boosted for long-term competitiveness. To improve production quality, knowledge, technology, and innovation would be used. The environmentally sustainable manufacturing system of “less is more” would be emphasized.

 

• In order to minimize the effects of global change, the fourth strategy aims to improve resilience. Science, technology, and creativity can be used to help cities and businesses reach their full potential. According to consumer demand, development and service types will be changed, and “green growth” will be encouraged.

 

The industries and strategies focused upon by the Royal Thai Government in the framework to promote the BCG Model is what make BCG important for your business in Thailand. The major target of any business is to gain profit and popularity and create an unending cycle of sustenance and continuity, both for employees and the company. There are a few declarations and announcements made by the Board of Investment of Thailand that can help your business achieve the above if you adopt the BCG Model.

Benefits for Businesses Adopting BCG Model

Companies investing in BCG Model are entitled for 100% corporate income tax (CIT) exemption on the value of their investment. This exemption excludes the cost of land and working capital.

• Other Exemptions and Deductions include the following:

1. Exemptions of Corporate Income Tax for 3-10 years
2. Exemptions or Reductions of Import Duties on Machinery
3. Reduction of Import Duties on Raw Materials
4. Exemption of Import Duties on R&D Materials
5. Double Deduction on Cost of Transportation, Electricity and Water
6. 25% Deduction on Installation or Construction of Facilities
7. Exemption of Import Duty on Raw Materials Used in Production for Export

• Non-tax Incentives covers the following:

1. Permit for Foreign National to Enter Kingdom to Study Investment Opportunities
2. Permit to bring in Skilled Workers and Experts to Work in Investment Promoted Activities
3. Permission to Own Land
4. Permit to Remit Money Abroad in Foreign Currency
5. No Local Content Requirement
6. No Export Requirements
7. No Restriction on Foreign Currency
8. Visa Facilitation

• Thai Government has announced the following Merit-based additional incentives:

1. Research & Development (R&D)
2. Support academic or research institutes or technology and human resource development fund
3. IP licensing fee
4. Advanced technology training
5. Development of local suppliers
6. Product and packaging design

• Area-based incentives announced by the Thai Government include special benefits for companies operating from the following zones or purposes:

1. EEC 3 provinces
2. SEZ 10 provinces
3. Southern border provinces
4. 20 provinces with lowest income
5. Industrial Estates or Zones
6. Science and Technology Parks (TSP, Food Innopolis, Space Krenovation Park)

Apart from these, the Board of Investment has announced other schemes and proposals declaring CIT exemptions for up to 10 years (no cap) for businesses directly involved in the core activities of innovation and functionality of the target industries of the BCG model. Targeted core technologies like biotechnology, digital technology, nanotechnology and advanced material technology are eligible to receive technology-based incentives for up to 10 years with some cap.

Therefore, by now, you must have understood that these exemptions and deductions are going to add to your business margin and ensure a higher return on investment if you invest in projects or ventures associated with the Thai BCG Model. This was the reason as to why you should know about the BCG Model. If you wish to proceed further and know more about investment under the BCG Model, feel free to mail us at [email protected]