The Board of Investment of Thailand (BOI) has endorsed a range of measures aimed at reducing the economic impact of the COVID-19 epidemic, including moves to encourage quick investment in the medical equipment manufacture.
The board also approved incentives to support technology-based “smart farming” solutions, as well as research and development in a variety of fields.
Ms Duangjai Asawachintachit, Secretary-General of the BOI, at a press conference states “In light of the unprecedented situation resulting from the virus outbreak, we have taken a range of measures to address the urgent needs of business sectors.” After a board meeting chaired by Prime Minister Gen Prayut Chan-o-cha in Bangkok, she declares, “the medical sector initiatives aim to ensure for a quick response to the problem while also laying the groundwork for longer-term development.”
The BOI amends BOI-eligible businesses and enhanced benefits for the medical sector. It is to address the high demand for medical equipment and supplies as a result of the COVID outbreak. Moreover, it also aims accelerating investment in the production of critical medical equipment and supplies. Ms Duangjai proposes modification or transformation of existing production lines. It is to boost the domestic supply of medical goods, according to a press conference held online to observe social distancing regulations.
Accelerate investments in the medical sector
- In addition to the 3 to 8-year tax breaks, eligible investments in the medical sector will receive a 50% reduction in CIT for an additional 3 years. Medical devices and parts, the non-woven fabric used as raw materials in the manufacture of medical supplies, diagnostic test kits, medications, and active pharmaceutical components are only a few examples. This policy applies to projects that submit an application for promotion between January 1 and June 30, 2020. The production must begin and generate revenue by December 31, 2020.
- A measure to encourage the adaptation of existing production lines to produce medical devices or parts. It is by exempting machinery from import tariffs if it is imported by 2020 and a production line adjustment application is submitted by September 2020.
- Benefits for the production of raw materials used in the manufacture of medical products aims to encourage Thailand to develop a compact value chain. Pharmaceutical grade alcohol production, for example, is now eligible for an eight-year business income tax exemption.
- There is an extension of the corporate income tax exemption to 5 years from 3 years. The scheme states additional benefits for use of nonwoven fabric as raw materials for the production of medical masks or medical equipment.
Temporary relaxation of investment conditions
Ms Duangjai explains that relaxation of investment conditions grants to offset the impact of the virus outbreak. It impacts the economic activity both directly and indirectly on BOI-supported firms. The BOI agrees to extend deadlines in circumstances such as duty-free machinery importation and full operation start-up. There are waivers for applications for more than two-month temporary cessations of activities.
Support for the management of water resources
The BOI promotes water resource management to stimulate private sector engagement in projects that improve the grassroots economy’s competitiveness. Companies can take advantage of tax benefits worth up to 120% of the amount they invest in projects supporting the holistic management of water resources. The projects should also contribute to flooding prevention. They should help mitigate the impact of the drought affecting parts of the country, for up to three years if the extension is approved.
The expansion covers connecting water sources to reservoirs, establishing plumbing systems and digging wells to store water. It also includes wastewater recycling plants using reverse osmosis water treatment technologies. This scheme aims at the development of local communities.
BOI Thailand Support for Research and Development
There is an expansion in scope of activities eligible for duty-free importation of materials for research and development. This is the initiative of the BOI to include all activities required to conduct R&D.
BOI Thailand Encourage the Development of Smart Farming
The BOI has simplified the conditions for investment promotion of smart farming services. It is also retaining attractive tax incentives in order to encourage investment in technologies. It is to support the modernization of the agricultural sector and allow local start-up enterprises. The major goal is the participation of the sector in the overall development of digital platforms.
Approval of Mitsubishi Motors’ EV investment project
The BOI also accepted Mitsubishi Motors (Thailand) Co., Ltd.’s project proposal for a total investment of 5.48 billion baht. It is to modernise the company’s existing automobile production line at Laem Chabang Industrial Estate. Moreover, it aims to produce electric-powered cars. The project will enable the manufacturing of 39,000 automobiles per year, with about 9,500 BEVs and 29,500 hybrid electric vehicles (HEV). The production, which will begin in 2023, targets the domestic market as well as exports to other ASEAN nations.
This announcement or initiatives taken by BOI and Royal Thai Government is a whistle-blower for foreign investors. If you are also seeking an investment opportunity in Thailand, this is the best time to do so. Connect with us for a free consultation session by mailing us at [email protected].
