Workshop on Sharing Asian Experiences:

Promoting Foreign Direct Investment Effectively

Singapore, 8 October 2012
Experience of Thailand

Pitchaya Sirivunnabood, Ph.D.
The ASEAN Secretariat
Disclaimer for presentations
The views expressed in this presentation are the views of the author and do not
necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI),
the Asian Development Bank (ADB), its Board of Directors, or the governments they
represent. ADBI does not guarantee the accuracy of the data included in this paper and
accepts no responsibility for any consequences of their use.

Terminology used may not necessarily be consistent with ADB official terms.
Outlines
1. Thailands FDI Performance

2. Thailands FDI Policies

3. Challenges Ahead
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1. Thailands FDI Performance
Thailands FDI in Global Economy
Source: UNCTAD and ASEAN FDI Database
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Unit: USD billion, %
1. Thailands FDI Performance
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Source: UNCTAD, 2012
Unit: USD millions
Thailands FDI inflows has increased since the global financial
crisis in 2008, which caused a sharp increase in FDI stock.
FDI Projects Approved by BOI
Source: Thailands Board of Investment
The rate of approval has stayed at the average of 80 90 percent,
except in 2009 (64 percent) that the authorities were cautious
about the global condition after the subprime crisis in 2008.
1. Thailands FDI Performance
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1. Thailands FDI Performance
Thailands FDI Inflows and Outflows (USD Million, %)
Source: Bank of Thailand
A new trend of Thailands FDI has emerged as the FDI outflows
has grown consistently since 2009.
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FDI by Sector (% of Total FDI Inflows)
Source: ASEAN FDI Database
1. Thailands FDI Performance
Manufacturing sector has always held the biggest proportion since
2000; however, an increasing trend has shown in services sector in
recent years.
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1. Thailands FDI Performance
Set aside financial sector, FDI mainly flows to automotive products
and computer, electronic products and electrical equipment.
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1. Thailands FDI Performance
Source: Bank of Thailand
Thailands Total Value of Export by Selected Sectors (USD million)
Same as sub-sectors that FDI flows into, the export values of such
sub-sectors have held a major proportion and increased over the
years.
Source: UNCTAD, ADB
1. Thailands FDI Performance
GDP growth, export growth, manufacturing growth have moved
in the same direction with the inward FDI growth.
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Thailands Growth Rates (%)
ASEAN LPI Map in 2012
1. Thailands FDI Performance
Thailands LPI score is in the high range, which gives Thailand
advantages in terms of FDI attraction.
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Countries 2007 2012 2007 2012 2007 2012 2007 2012 2007 2012 2007 2012 2007 2012 2007 2012
Brunei Darussalamn.a n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Cambodia 2.5 2.56 2.19 2.3 2.3 2.2 2.47 2.61 2.47 2.5 2.53 2.77 3.21 n.a. 3.05 2.95
Indonesia 3.01 2.94 2.73 2.53 2.83 2.54 3.05 2.97 2.9 2.85 3.3 3.12 2.84 n.a. 3.28 3.61
Lao PDR 2.25 2.5 2.08 2.38 2 2.4 2.4 2.4 2.29 2.49 1.89 2.49 2.13 n.a. 2.83 2.82
Malaysia 3.48 3.49 3.36 3.28 3.33 3.43 3.36 3.4 3.4 3.45 3.51 3.54 3.13 n.a. 3.95 3.86
Myanmar 1.86 2.37 2.07 2.24 1.69 2.1 1.73 2.47 2 2.42 1.57 2.34 2.08 n.a. 3.29 2.59
Philippines 2.69 3.02 2.64 2.63 2.26 2.8 2.77 2.97 2.65 3.14 2.65 3.3 3.27 n.a. 3.14 3.3
Thailand 3.31 3.18 3.03 2.96 3.02 3.08 3.24 3.21 3.31 2.98 3.25 3.18 3.21 n.a. 3.91 3.63
Singapore 4.19 4.13 3.9 4.1 4.27 4.15 4.04 3.99 4.21 4.07 4.25 4.07 2.7 n.a. 4.53 4.39
Vietnam 2.89 3 2.89 2.65 2.5 2.68 3 3.14 2.8 2.68 2.9 3.16 3.44 n.a. 3.22 3.64
ASEAN 2.92 (64) 3.02 (63) 2.76 (61) 2.78 (67) 2.71 (67) 2.82 (73) 2.92 (62) 3.02 (62) 2.88 (63) 2.95 (65) 2.90 (66) 3.11 (59) 2.97 (62) n.a. 3.37 (63) 3.42 (64)
Brazil 2.75 (61) 3.13 (45) 2.39 (74) 2.51 (78) 2.75 (49) 3.07 (46) 2.61 (74) 3.12 (41) 2.94 (49) 3.12 (41) 2.77 (65) 3.42 (33) 2.58 (126) n.a. 3.10 (72) 3.55 (49)
Russia 2.37 (99) 2.58 (95) 1.94 (136) 2.04 (138) 2.23 (93) 2.45 (97) 2.48 (94) 2.59 (106) 2.46 (83) 2.65 (92) 2.17 (119) 2.76 (79) 2.40 (131) n.a. 2.94 (87) 3.02 (94)
India 3.07 (39) 3.08 (46) 2.69 (47) 2.77 (52) 2.90 (42) 2.87 (56) 3.08 (39) 2.98 (54) 3.27 (31) 3.14 (38) 3.03 (42) 3.09 (54) 3.08 (46) n.a. 3.47 (47) 3.58 (44)
China 3.32 (30) 3.52 (26) 2.99 (35) 3.25 (30) 3.20 (30) 3.61 (26) 3.31 (28) 3.46 (23) 3.40 (27) 3.47 (28) 3.51 (31) 3.52 (31) 3.13 (72) n.a. 3.95 (36) 3.80 (30)
LPI Customs Infrastructure
International Tracking & Domestic
Timeliness
Shipments Tracing Logistic Cost
Logistics Quality
Competence
1. Thailands FDI Performance
*Table refers to score in each category (1-5; 5, best). The table in parentheses represents rank out of 150 countries surveyed in
2007 and 155 countries surveyed in 2012; n/a = not available
Source: World Bank, Connecting to Compete reports (2007 and 2012)

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2. Thailands FDI Policies*
To enhance efficiency and effectiveness, the tax privileges will be
granted to projects that benefit the economy while good governance will be
used to manager and supervise the application of tax and duty privileges.
To promote development of quality and production standards to
enhance competitiveness in the world market, every promoted project that
has an investment capital of THB 10 million or more (excluding cost of land
and working capital) must obtain ISO 9000 certification or similar
international certification.
Previous conditions on exports and use of local materials are repealed
so that the criteria for promotion will be in line with international trade and
investment agreements.
Special investment promotion will be given to regions or areas with low
income and inadequate investment facilities.
Priority is given to small and medium industries.
Priority is given to agricultural activities and agricultural products, projects
related to technological and human resource development, public utilities,
infrastructure and basic services, environmental protection and
conservation and targeted industries
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*source: Board of Investment, Thailand
Investment promotion policy for sustainable
development
Investment promotion measures for target
industries
Measure to promote energy conservation,
alternative energy utilization or reduction of
environmental impacts
Measure to promote production efficiency
improvement by technology upgrade for
manufacturing of new products
Measure to solve environmental problems
2. Thailands FDI Policies*
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*source: Board of Investment, Thailand
Development of Thailands Social and Economic Master Plans
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Source: National Economic and Social Development Board of Thailand
The 11
th
five-year Master Plan (2012-2016) by Thailands National
Economic and Social Development Board (NESDB) is now achieving
the stage of sustainable industry.
2. Thailands FDI Policies
Economic Restructuring to
Green Economy
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Utilization of income
creation measures:
PEDD, PES, Biodiversity
offsets
Source: National Economic and Social Development Board of Thailand
Environmental friendly
services, including
health care services
Mitigation of natural-
resource and
environmental damages
Industrial restructuring
to green/ low carbon
production and
alternative energy
Agricultural
restructuring for
sustainable production
Energy and transport
policy reforms towards
clean and effective
energy
Development of carbon
credit market and CDM
utilization
Utilization of AEC
Recent Investment Policy Measures
The BOI announced that all areas throughout the country, except
Bangkok, shall be designated as Investment Promotion Zone until
31 Dec. 2012.
The BOI announced an additional tax measure to rehabilitate flood-
affected investment to stimulate investment within the industrial
estates or promoted industrial zones in Ayutthaya and Pathumthani
provinces.
Thailand allowed foreign banks operating branches in the country to
convert such branches into subsidiaries with a maximum of 20
branches and 20 off-premise ATMs, without limitation on the
location.
BOT promulgated a new law related to regulation of operations of
Treasury Centers for Enterprises (CTE) to assist international
companies with HQs in Thailand and import-export companies,
allowing them to better manage their funding.
2. Thailands FDI Policies
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3. Challenges Ahead
An upgrade for physical and soft
infrastructures
Transparency
Public and investors confidence
Income distribution
AEC impacts
Green growth economy
Political stability
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THANK YOU
pitchaya.siri@asean.org