thailand s country presentation on sezs development
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Thailand’s Country Presentation
on SEZs Development
Linkage to Development Strategy
The 12th National Economic and Social Development Plan (2017 – 2021)2036
2015 The 12th 5-year Plan (2017-2021) The 13th 5-year Plan 14 15
20-Year National Strategy (2017 – 2036)
Social
Strategy 1 Resilience Enhancement
Strategy 2 Just and inclusive development
Economic
Strategy 3 Competitiveness building
Strategy 10 International Cooperation for Development
EnablingFactor
Strategy 7 infrastructure and logistics development
Strategy 8 Science&techresearch/innovation
NaturalResource
Strategy 4 Environment friendly development
Security
Strategy 5 Building country's security
PublicAdministration
Strategy 9 spatial development
Spatial
Strategy 6Good governance in public sector
10 Development Strategies
6 Development PillarsHuman capacity building
Creation of equal opportunity and society
Building competitive
Improving quality of life and environment friendly
National security
Balance and development of public administration
“Stability Prosperity Sustainability”A vision of the 20-Year National Strategy
used as a vision framework of the 12th Plan.Together with SDGs Goal
Vision
Strategy 9 Regional, Urban and Economic Area Development“Distribute growth to every region evenly”
North: High-value economic base
Northeast:Eliminate poverty,become self-reliant
Central Production base, green industrial base,
safe and quality agri-food products, tourist destination
South
Green industrial base, tourist destination
Improve urban environment
to create more livable towns and promote growth
Restore eastern seaboard area
to become a major industrial base
Develop border economic zones
to open gateway to neighboring countries
Narrow income gap and distribute income evenly
Create more livable towns
Ensure efficient and eco-friendly economic base
Increase investment in border economic zones by 20%
Goals
Type of SEZs
27 September 20176
• Boarder Special Economic Zones (BSEZS)
• Industrial Estate or Industrial Park
• Eastern Economic Corridor (EEC)
UDONTHANIUdonthani I.E.NONG KHAINong Khai I.E.
PRACHINBURIHi-Tech Kabin I.E.Sakaew , Sakaew I.E.CHACHOENGSAOWell Grow I.E.Gateway City I.E.TFD I.E.TFD2.I.E.CHONBURIHemaraj Chonburi I.E. Hemaraj Chonburi I.E. (Project 2)Hemaraj Eastern Seaboard (2)Hemaraj Eastern Seaboard (3)Amata Nakorn I.E.Amata Nakorn I.E.(Project 2)Pin Thong I.E.Pin Thong I.E. (Laem Chabang)Laem Chabang I.E.Pinthong I.E. (Project 3)Pinthong I.E. (Project 4)Pinthong I.E. (Project 5)Banbueng I.E.Yamato Industries I.E.Hemaraj Eastern Seaboard (4)RAYONGMap Ta Phut I.E.Hemaraj Eastern I.E.Hemaraj Rayong I.E.Padaeng I.E.Eastern Seaboard I.E.(Rayong)Amata City I.E.Hemaraj Eastern Seaboard I.E.Asia I.E.Asia Terminal I.E.RIL I.E.Rayong (Ban Kai) I.E.Luckchai Rubber City I.E.
SONG KHLASouthern I.E. (Songkhla)
LAMPHUNNorthern Region I.E.
Lamphun 2 I.E.
PICHITPhichit I.E.
SARABURISaraburi I.E.(Kaengkhoi)
Nong Khae I.E.
AYUTTHAYAHi-Tech (Ban Wa) I.E.
Bang Pa-In I.E.Saharattananakorn I.E.
BANGKOKBangchan I.E.
Latkrabang I.E.Gemopolis I.E.
Gemopolis (Project 2) I.E.
SAMUTSAKHONSamut Sakhon I.E.
Sinsakhon I.E.Maharajnakorn I.E.
SAMUTPRAKARNBangpoo I.E.
Bangpoo (North) I.E.Bangplee I.E.
Asia (Suvarnabhumi) I.E.
RATCHABURIRatchaburi I.E.
Industrial Estate( 54 I.E. in 16 Provinces) I-EA-T Owned 12 IE.s
Joint Venture 42 IE.s
Work in Process I.E.
Fully Developed I.E.
30 I.E. in EEC
7
BSEZ
EEC
Progress : Announcement of Establishing SEZ Areas
• The first phase SEZs are located in 5 provinces, namely Tak, Mukdahan, Sakaeo, Trat, and Songkhla.
• The second phase SEZs are located in 5 provinces, namely Nong Khai, Narathiwat, Chiang Rai, Nakhon Phanom, and Kanchanaburi.
Special Economic Zones
Area
Sq.kms. Rai
10 SEZs 6,220.05 3,887,507.21
TakMukdahanSakaeoTratSongkhla
1,419.00578.50332.0050.20552.30
886,875.00361,542.50207,500.0031,375.00345,187.50
Nong KhaiNarathiwatChiang RaiNakhon PhanomKanchanaburi
473.67235.17
1,523.63794.79260.79
296,042.00146,981.25952,266.46496,743.75162,993.75
In 2015, Thailand commenced the establishment of special economic zones (SEZs) in 10 provinces.
8/9/2017
Strategic and Policy Design
Border SEZ Development Policy
Work Plan• Incentives• Infrastructure and customs checkpoints• Labor management• Improvement of health services for
border residents, including health insurance for migrant labor
• Government land for rent in industrial or service activities
• Security• Natural resources and environmental
management
HR PlanResponsible agencies working under 6 sub-committees of the NC-SEZ
Budget Plan• Integrated Budget Plan
• Infrastructure and customs checkpoints Budget Plan
Encourage and facilitate investment in SEZ
Promote economic activities in accordance with each area’s potential
Manage natural resources and environment in SEZ
Strengthen efficiency of community enterprise and private sector in SEZ
Enhance participation of people & other development partners
Provide economic & social infrastructure : transportation/border-crossing/electricity/water/safety/public health/labor/environment
Risk
Operational Guideline Operational Plan
Obj.
Goal
VisionEmerging economic gateway connecting neighboring countries and better people’s quality of life Promote concrete & balance development for emerging border economic areas, improve quality of life and solve security problems1. Prosperity contribution & quality of life improvement 2. Sustainable area growth3. Competitive enhancement
Decision-Making Mechanism
• People’s acceptance• Budget allocation• Environment & Natural
Resources• Public health issue at borders• Security• Human trafficking and illegal
migrant workers• Collaboration with neighboring
countries
Principles Implement projects under current law using inclusive approach Role of Government (granting incentives/provide necessary
infrastructure/facilitate investment) , Private sector (investment) people (participate & gain benefits)
SEZ development must not have negative impacts on environment, natural resources, society, security, and relationship with neighboring countries
Being flexible & adjustable according to circumstances SEZ areas are designated by administrative boundary
2015: Total budget of 2,377.7575 Mb.2016: Total budget of 6,168.9142 Mb. 2017: Total Budget of 3,305.9245 Mb.
Cabinet
The National Committee on Special Economic Zone Development (NC-SEZ)
8/9/2017
Implementation Issues
Management Mechanism for SEZ Development
Subcommittee on Steering the
development of SEZs
National Committee on SEZ Development (NC-SEZ)Chairman : Leader of NCPO
Secretary : NESDB Secretary General
NC-SEZ Office
Subcommittee on Privileges, Designated Area, and
Investment-related OSS
Subcommittee on OSS on
Labor, Public Health, and
Security
Subcommittee on Infrastructure and Customs Checkpoints
Subcommittee on Land
Acquisition and Management
Subcommittee on Marketing Promotion
Chairman: Minister of Finance Secretary : Director-General of FPO
Chairman: Minister of LabourSecretary : Deputy Director-General of DOE
Chairman: Minister of InteriorSecretary : MOI
Chairman: Minister of TransportSecretary : Director-General of OTP
Chairman: Minister of Industry1
Secretary : OIE
Chairman: Mr. Suwaphan(Minister Attached to the Prime Minister’s Office)2Secretary : Office of the Permanent Secretary, Prime Minister Office
8/9/2017
1 Revised according to the meeting of Policy Committee for Special Economic Zones 1/2017 (15 June 2017)
2 Currently, Mr. Suwaphan is appointed as Minister of Justice.
27 September 201714
Implementation of the SEZs Policy• Institutional Initiative
Governmental Policy, Acting by related government agencies such as I-EA-T, BOI and local government agencies
• Stakeholder Management Government and Private Sector coordination
• Human Resource Management Have clear criteria of assessment of performance of officers Lack of skilled labor, have action plan for develop skilled labor
to meet the requirement of new industries
27 September 201715
Implementation of the SEZs Policy• Risk Management
Political Risks / Cooperation from neighboring countries
Monitoring and Evaluation SEZs
17
Number of Tenants 4,442 companies
Number of Workers 601,594 persons
Investment Capitals 3,068,000
87.7
Million Baht
Billion USD (35 Baht/USD)17
Owned by I-EA-T22%
Joint Managing
78%
(13,793 acres)
(52,004 acres)
Industrial Operation Land
65,797 acresOwned by
I-EA-T12%
Joint Managing
88%
Available Land for Sale/Rent 9,030
acres
(1,082 acres)
(7,948 acres)
Overall Performance in Thai Industrial Estates
18
Japan37%
Europe9%ASEAN Countries
16%
China14%
USA8%
Others16%
Overall Performance in Thai Industrial Estates
Samples of Prominent Companies in I.E.s
Success Factors
• Investment Incentives• Clear Target Activities• Labor Management and One Stop Service Center• Budgeting
1) General activities under the BOI’s list of eligible activities
2) 13 Target activities as designated by the National Committee on SEZ Development (NC-SEZ):• 8 year corporate income tax exemption,• an additional 50% reduction on corporate
income tax for 5 years• submission of investment project application
by 31 Dec 2018
• EXIM Bank provides financing facilities for investment projects in SEZ.
• Long-term credit with a repayment period of 15 years with special interest rate at prime rate -2.50% in 1st year, -1.50% in 2nd-8th year and -1.00% in 9th-15th year
• Additional short-term revolving credit
1. Incentives Scheme
Revenue Department(1) Reduction of corporate income tax from 20% to
10% in 10 accounting periods(2) Submission investment project application by 31
Dec 2017Customs Department(1) Reduction of registered capital for bonded
warehouses from 10 to 5 million baht(2) Free zone’s registered capital must value at
10 million baht or higher
Incentives set apart from BOI’s Investment
Promotion List
• Minimum project investment of five hundred thousand baht
• Allow to use the used machinery in the promoted project, but not exceeding 10 million baht
Easing Condition for SMEs
The private sector can currently submit investment project application. BOI has announced investment promotion for SEZ, highest incentives are granted to target activities and easing investment conditions are offered to SMEs. Moreover, Non-BOI promoted projects can apply for the reduction of corporate income tax of company or juristic partnership located in the SEZ, easing establishment condition of bonded warehouse, and supporting financial facilities for investment.
BOI’s Incentives
Financing Facility for Investment
Projects
8/9/2017
2. Target Activities for SEZ 13 Target Activities Approved by NC-SEZ
1 Agro-industry, fishery industry, and related activities
2 Ceramic products manufacturing
3 Textile and garment industries, and manufacture of leather
products
4 Manufacture of furniture or parts
5 Manufacture of gems and jewelry or parts
6 Manufacture of medical devices or parts
7 Manufacture of engine and vehicle parts, and manufacture of machinery, equipment, and parts
8 Electronics and electrical appliances industries
9 Manufacture of plastic products
10 Manufacture of Medicine
11 Logistics
12 Industrial zones / industrial estates
13 Tourism promotion service and activities to support tourism
Additional Target Activities Announcement
Activities eligible for promotion:1. Crop drying and silo facilities 2. Manufacture of products from agricultural by-products or
agricultural waste (except for those with uncomplicated production processes, e.g. drying, dehydration)
3. Metal Fabrication industry 4. Production of printed matterTarget activities not on the list of BOI’s Investment Promotion activities, but receiving incentives for investment in SEZs:1. Manufacture of animal feed or mixes for animal feed2. Manufacture of construction materials and manufacture of high-
pressure concrete for public utilities work 3. Manufacture of body care products, e.g. soap, shampoo,
toothpaste, cosmetic products4. Manufacture of plastic products for consumer goods5. Manufacture of pulp or paper articles6. Factory development of industrial plants and/ or warehouses
8/9/2017
3. Labor Management and One Stop Service Center
At present, Cambodian workers can work in Sakaeo and Trat SEZs on a temporary basis for 30 days.
• OSS center opens in 10 SEZ areas.
• OSOS Center at Chamchuri Square opened on 9 July 2015 and links with OSS at each SEZs.
OSS for Investment
OSS for Labor, Public Health and Security in … Province• Located in 10 SEZ areas
• OSS provides registration service in Sakaeo Trat, Tak, Chiang Rai, and Kanchanaburi for migrant workers working on a temporary basis.
On 18 February 2015, Cabinet endorsed foreign workers from Myanmar, Laos PDR and Cambodia to work in the Kingdom on a temporary basis during the prescribed periods or seasons provided according to Section 14, Alien Working Act, B.E. 2551 (2008). Relevant agencies were assigned as follows:•Ministry of Interior has to announce the exception
of alien labor from Myanmar, Laos PDR and Cambodia to work in Thailand.•Ministry of labor has to announce the regulation of
the office of prime minister on stipulated location, religion, type of work and labor condition to allow the legal permission regarding Section 14, provide a guidance to work permit, and establish labor OSS at each SEZ site.•Ministry of Foreign Affairs has to revise Agreement
on Border Crossing with neighboring countries (Laos PDR). Agreement with Cambodia and Myanmar have successfully been signed.• Immigration Bureau provides automatic fingerprints
database to link Alien Workers mobility information to the central office.
1 2 Labor
At present, Myanmar workers can work in designated districts in Tak, Chiang Raiand Kanchanaburi on a temporary basis for 30 days.
8/9/2017
4. Budget Allocation2016The government has invested in projects in SEZ areas with total budget of 6,168.9142 MB. (under SEZ Integrated Budget Plan) divided into Transport Infrastructure 61 % Border Checkpoint and Security 18 % and the Others 21%
SEZIntegrated
Budget (MB)
Transport Infrastructure
3,748.1473
Border Checkpoint and Security
1,136.6469
Public health 310.4467
Labor/OSS/Investment/Forest/Industrial Estate/Urban Planning/Waterworks
973.6733
Total 6,168.9142
2015The government has invested in initiative project in SEZ areas with the budget of 2,377.7575 MB.Border Check Point & Security 1,192.0422 MB.Infrastructure 847.3663 MB.Water Resources 302.3490 MB.Planning/Urban Planning/ 36.0000 MB.
Education
** Cabinet endorsed projects in 2015 with the central budget of 2011 and 2013-15.
21
WaterResources
13%
Work Plan/Urban Planning/
Education1%
Infrastructure36%
Border Checkpoint&
Security50%
Infrastructure61%
Border Checkpoint&
Security18%
Public health
5%
Labor/OSS/ Investment/Forest/Industrial
Estate/Urban Planning/Waterworks
16%
In addition, more investment projects in SEZ provinces are allocated in relevant budget plans, which are :1) Water Management Integrated Budget Plan 618.4835
MB2) Environmental and Waste Management Integrated Budget Plan 72.3548 MB
8/9/2017
4. Budget Allocation (2)
2017Investment projects are allocated in SEZ Integrated Budget Plan in total of 3,305.9245 MB.
3
In addition, more investment projects in SEZprovinces are allocated in relevant budget plans,which are :1) Infrastructure and Logistics System Development
Integrated Budget Plan: 6,916.5989 MB2) Water Management Integrated Budget Plan:
1,012.3215 MB
Customs (C.I.Q.), Security and
Forestry 42%
Waterworks24%
Public Health20%
Urban Planning/Drainage Planning
6%
Industrial Estate4%
Labor3% Trade
Promotion1%
2018SEZ Pre-ceiling Budget Requests under SEZ Integrated Budget Plan is in the process of consideration.
4
8/9/2017
4. Budget Allocation (3)Significant Projects of SEZ Integrated Budget Plan in 2017
Border Checkpoint: Construction of border checkpoint, facilities, cargo and passenger terminal. Increasing effectiveness of agricultural checkpoint (Fishery, Agriculture and Livestock)
Investment OSS: Establishment of investment OSS, training and building network for entrepreneur
Industrial Estate: Construction of industrial estate in Sakaeo
Security: District level capacity building for services and solving local people’s difficulties and improvement of Personal Identification and Blacklist Immigration Control System (PIBICS)
Public Health: Hospital construction, prophylactic system management, medical equipment provision, health care system/ Thai traditional medicine development/ Labor Health insurance
Water resources: Improvement of provincial waterworks construction for SEZ
Natural Resources (Forest): Natural Resources Management system in SEZ area
Labor : Establishment of labor OSS, training, providing labor equipment and skill standard testing
Urban Planning : Preparation of land use planning and drainage planning
8/9/2017
27 September 201726
Invite investors to invest in backward area
Lack of Skill Labor in time of Development
Our tenants move to other countries
27 September 201727
Because Thailand Labors need to be trained for hight tech industries that will start operation in EEC.
Lack of Skill Labor in time of Development
Progress : Investment in SEZ
Source : Infographic by NESDB with BOI’s data, August, 2017
Land developer selection procedure for state-owned land in Trat SEZ by The Treasury Department
Land developer is Property Perfect Public Company Limited.
To develop a city of international tourism center, food safety and international trade
system services
3,001 MB
Financial facilitation for SEZ investment projects in Special Economic Development ZonesBy EXIM Bank
3 investors were approved.Tak : cassava by products
Songkla : servicesNong Khai : plastic product
90 MB
8/9/2017
257 Million USD
Recommendations
• New financial modality for resources mobilization such as
PPP, Infrastructure fund
• Policy dialogue with neighboring countries for issues such as
labor management, connectivity, regional value chain
• Stronger integration amongst public sector/line Ministries
• Increase awareness of developer, investors by all elements of
marketing
27 September 201730
Urgently develop skilled labor for S Curve
Enhance more cooperation with neighboring countriesMALAYSIA,CAMBODIA, MYANMAR, LAO P.D.R.
More relaxation on regulation in SEZ to facilitate investors
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