11

INVESTMENT OPPORTUNITIES IN THAILAND

7 March 2005

Presented byDr. Atchaka Brimble

Senior Executive AdvisorThailand Board of Investment

22

• About Thailand• Thailand’s strong FDI statistics• Why Thailand• Investment Opportunities in Thailand

Thailand: An Investment Destination of Choice

33

Thailand:Strategic location in Asia

44

PopulatioPopulation:n: 64.8 million64.8 million69% of population between ages 1569% of population between ages 15--6464Population growth rate: 0.91%Population growth rate: 0.91%Literacy:Literacy: 96%96%Government:Government: Constitutional MonarchyConstitutional MonarchyReligionReligion:: BuddhiBuddhismsm 94%94%

*GDP rate 2004:*GDP rate 2004: 6.2%6.2%*GDP per capita:*GDP per capita: $2,794 *GDP:*GDP: $152 152 billion

Agriculture: 10%Manufacturing: 35%Services: 52%

ThailandThailand *Projected

55

Thailand Rated #4 FDI Location Thailand Rated #4 FDI Location for Inflows 2004for Inflows 2004--20072007

● Results of a 2004 survey of 87 international direct investment location experts.

● Subsequent survey of transnational corporations ranked Thailand #3 in Asia for FDI inflows.UK/Singapore/S.

KoreaTop 9

Mexico/MalaysiaTop 7

Poland/Czech Republic

Top 5

THAILANDTHAILANDTop 4Top 4USATop 3

IndiaTop 2

ChinaTop 1GLOBAL RANKING

66

Japanese manufacturers Japanese manufacturers rank Thailand #2 globallyrank Thailand #2 globally

Thailand: Top Selection Factors

1. Market growth potential2. Labor costs3. Political and social stability4. Supply base for assemblers5. Base for exports6. Developed local Infrastructure7. Tax incentives for investment8. Industrial clusters9. Domestic market size10. Policies to attract foreign

capital

Includes production, sales, R&D, outsourced operations

Malaysia10Taiwan9Korea8Indonesia7Russia6U.S.5Vietnam4India3

ThailandThailand#2#2China1CountryRank

Promising CountriesPromising Countriesfor Overseas Business for Overseas Business Operations FY2004Operations FY2004

Source: “Outlook for Japanese Foreign Direct Investment” conducted by Japan Bank for International cooperation (JBIC), Nov. 2004

77

2004 Results of AmCham Outlook: Bullish on Thailand

““Expansion plans for Expansion plans for Thailand increased Thailand increased from 2003, whereas from 2003, whereas

those for China, those for China, Vietnam and India Vietnam and India

fell.fell.””-- The Nation July 8, 2004

Six ASEAN American Chambers participated In the AmCham Outlook, an annual business confidence survey of members in the region.

20042003Business expansion planned

19%31%India

25%47%Vietnam

47%50%China

83%66%Thailand

88

50.7 (Nov)31.0

49.8

7.3

-0.7 (Nov)

1.7

87.7+23.6

2.7

6.2

2004p

NA0.9-2.8-2.4-2.9-3.5Fiscal Balance(US$ billion)

NA51.845.2

59.548.8

67.556.1

79.766.7

95.177.6

External Debt (US$ billion)

(% of GDP)

34.8

12.5

9.3

56.8+7.4

0.3

4.4

1999

5.25-6.256.75.42.14.8GDP Growth (%)

NA42.138.933.032.7International Reserves(US$ billion)

2-48.07.06.29.3Current Account Balance

NA4.22.72.55.5Trade Balance(US$ billion)

94-96+7.5-10

78.4+18.6

66.1+4.8

63.1-7.1

67.9+19.5

Export Value (US$ billion)

(% change)

2.5-3.51.80.71.61.6Inflation (%)

2005p2003200220012000

ThailandThailand’’s Macroeconomic Indicess Macroeconomic IndicesSource: Bank of Thailand *Full Year Forecast

P=Projected; Fiscal Balance and External Debt for 2004 are Jan-Nov

99

Asian TsunamiAsian Tsunami• GDP* affected only mildly: reduced 0.25% to

5.25%-6.25% growth forecasted for 2005• Major efforts underway to sustain and rebuild

affected businesses– Many construction projects have begun– BOI incentives for affected businesses to rebuild– 60 Million Euro Tsunami Recovery Fund to help

businesses continue operations– Many other government supports to be given

• Effects were generally not long-term. *Bank of Thailand Feb 2005

10102,517.52,517.5Iron and steel10102,647.12,647.1Gems and jewelry992,694.62,694.6Rice883,092.13,092.1Garments773,132.03,132.0Plastic pellets663,230.53,230.5Radios, Televisions553,432.53,432.5Rubber444,974.34,974.3Integrated circuits335,681.75,681.7Automobiles & parts229,302.79,302.7Computers & components11

Value Value (USD Mil.)(USD Mil.)

ThailandThailand’’s Top 10 Exports (2004)s Top 10 Exports (2004)Source: Thai CustomsSource: Thai Customs

Strong, diverse exports reflect the strengths of Thailand’s industries

1111

ThailandThailand’’s Top 10 Imports (2004)s Top 10 Imports (2004)

2,841.52,841.5Auto Parts & Accessories (Incl. Chassis and bodies)

10102,984.02,984.0Jewelry, Silver Bars and Gold99

3,433.63,433.6Metal Manufactures884,852.34,852.3Computers, Parts & Accessories775,830.45,830.4Iron and Steel667,357.27,357.2Integrated Circuits558,121.88,121.8Chemicals449,454.99,454.9Industrial Machinery339,498.19,498.1Electrical Machinery & Parts22

10,730.510,730.5Crude Oil11

Value Value (USD Mil.)(USD Mil.)

Top 10 Imports (2004)Source: Thai Customs

1212

BOI Statistics:BOI Statistics:

Investments in Thailand Investments in Thailand are Boomingare Booming

1313

Value of Net Applications Increasing

Unit: Billion Euros 13.122

2001 2002 2003 20040

200

400

600

700

6.0944.986

3.69835%

22%

115%500

300

100

Foreign and domestic investment applications

1414

Net Applications for BOI PromotionNet Applications for BOI Promotion

13,0781,2516,096961Total Investment

7043994943USA

521824916Hong Kong4468129262Singapore

114 2.52 Italy

6419472874EU2,0373402,127316Japan

6,1407494,973668Total Foreign

Value(Million Euro)

# of Projects

Value(Million Euro)

# of Projects

20042003

1515

NetNet ApplicationsApplications

3,2523,2522242241,0721,072159159Services, InfrastructureServices, Infrastructure

13,07813,0781,2511,2516,0966,096961961TOTALTOTAL

2004200420032003: : Million EUROMillion EURO

123123151151

23723782822828181181

# # ProjectsProjects

1,1201,1201,2561,256

1,2101,210356356398398684684

ValueValue

2,4722,472162162Petrochemicals/ Petrochemicals/ ChemicalsChemicals

1,6801,680218218Electrical/ElectronicsElectrical/Electronics

1,2041,204260260Automotive/Metal Automotive/Metal ProcessingProcessing

2462469696Light IndustryLight Industry3,1543,1543535Minerals/CeramicsMinerals/Ceramics1,0701,070256256AgricultureAgriculture

ValueValue# # ProjectsProjects

Sector:Sector:

1616

Value of Net Applications Value of Net Applications by Country/Sector in 2004by Country/Sector in 2004

20.410118958146.4Services and Infrastructure

186522654468806422,038TOTAL

1201410734202524Chemical, Plastic, Paper

3821156214692163517Electronics/ Electrical

42633732635716Metal Processing & Automotive

46104162638Light Industry

04340012619Minerals and Ceramics

45101440333278Agriculture

TaiwanHong KongMalaysiaSingaporeU.S.A.E.U.Japan

CountrySector

1Euro = 50THB

Unit: Million Euros

1717

BOIBOI--Promoted Italian Investments Promoted Italian Investments Approved Applications:Approved Applications: 1111--Year PeriodYear Period

0.30.322ServicesServices

109.7109.7

12.112.122.422.449.749.76.56.51.11.117.617.6

Value Value (Mil. EUR)(Mil. EUR)

4646TOTALTOTAL

99ChemicalsChemicals99Electrical & ElectronicsElectrical & Electronics1212Auto & Metal ProcessingAuto & Metal Processing88Light IndustryLight Industry22Minerals and CeramicsMinerals and Ceramics55AgricultureAgriculture

##ProjectsProjects

SectorSector1994 to 20041994 to 2004

1818

Italian Companies in ThailandItalian Companies in Thailand

CementAsia Cement Public Co., Ltd.

ItalcementiGroup

Food Processing

Framec (Thailand) Co. Ltd.

Framec

Bicycle TiresLion TyresVittoria

Auto PartsSiam AdlerAdler

Solarlens

Thai CompanyThai Company

Lenses

ProductsProducts

Intercast

CompanyCompany

1919

Why ThailandWhy Thailand

Thailand: A Destination of Choice

2020

Why Thailand:Why Thailand:Liberal investment regime Stable government, economy, societyDeveloped infrastructure, extensive investments planned in next few yearsEase of doing businessCentral geographical locationOpportunities for trade and investment: Thailand is #2 in Asia for number of Free Trade AgreementsCompetitive costs

2121

Liberal Investment RegimeLiberal Investment Regime• No export requirements• No foreign equity

restrictions in manufacturing sectors

• No local content requirements

• No location requirements in all but 6 activities (for environmental protection)

2222

Stable Government, Economy, SocietyStable Government, Economy, Society• Decades long pro-business environment• Thai Business leaders, analysts and

foreign investors bullish on the recent re-election of Prime Minister Thaksin, who won with a one-party government for the first time

• Tolerant society that values stability• Friendly, welcoming culture to

foreigners and foreign business

2323

7 international airportsairports moving 700,000 tons of cargo and 25 million passengers per year

HighwayHighway system covering 64,000 km and connecting all 76 provinces

8 deep sea portsports

RailwayRailway system spanning 4,000 km linking to Malaysia and Singapore

57 57 industrial estates industrial estates in 21 provinces

World-class, WiWi--FiFi capabilities andinexpensive broadband broadband widely available

Mobile phoneMobile phone usage growing by 6 million/yr, more than 24 million users in 2003.

Suvarnabhumi Intl. Airport: 45 million passengers/yearSoft Opening Sept. 2005

Developed InfrastructureDeveloped Infrastructure

2424

New Budget:US$40-$60 Billion for Mega Projects• Upgrade Mass Transit • Improve Logistics throughout the nation:- Railways- Multimodal transport- New roads & highways

Investing Boldly in Investing Boldly in New InfrastructureNew Infrastructure

2525

ThailandThailand Ranked #2 Ranked #2 Easiest Developing Easiest Developing

Country to do Country to do BusinessBusiness

Areas Measured:Starting a businessHiring and firingRegistering PropertyGetting CreditProtecting investorsEnforcing contractsClosing a business

World Bank Ranks Thailand Global Top 20World Bank Ranks Thailand Global Top 20

Source: World Bank Doing Business in 2005The ease of doing business measure is an average of the country’s ranking in each of the 7 areas of business registration and property rights protection

2626

Free Trade AgreementsFree Trade AgreementsThe Americas• Peru• United States

Asia• India**• Japan• ASEAN*• China (through ASEAN)• BIMSTECOceania

• Australia*• New Zealand The Middle East

• Bahrain

*FTAs Completed **Early Harvest Agreement

2727

ASEAN:ASEAN:503 million503 million

Australia:Australia:20 million20 million

China:China:1.3 billion1.3 billion

India:India:1.1 billion1.1 billion

Hub of Access to Major MarketsHub of Access to Major Markets(See countries and populations below)(See countries and populations below)

Japan:Japan:127 million127 million

2828

Low Rent Costs forLow Rent Costs forGradeGrade--A Office Space in Asian A Office Space in Asian CBDsCBDs

05

101520253035404550

Bangk

okSing

apore

Kuala

Lumpu

rBeij

ingSha

ngha

i

Ho Chi

Minh C

ityMum

bai

New D

elhi

Bangkok

Singapore

Kuala Lumpur

Beijing

Shanghai

Ho Chi Minh City

Mumbai

New Delhi

Source: Colliers International. 2Q 2004. Asia Pacific News

Bangkok Central Business District: Bangkok Central Business District: €€108.84/sq. meter/year108.84/sq. meter/year

2929

Comparative Business CostsComparative Business CostsVietnamIndia ChinaSingaporeThailandThailand

€0.27€0.53€0.34€0.68€$0.29Fuel Costs

€0.34€1.30€0.14€1.22€0.30Water Costs (Industry)US$/cubic m

€5.08€3.74€5.36€3.35€2.26Industrial Electricity(Off Peak)US$/kwH

€8.64€4.78€8.34€5.40€5.03Industrial Electricity (Peak)US$/kwH

Sources:Electricity: ASEAN Center for EnergyWater costs: Various government agenciesFuel: German Technical Cooperation (2003)

1 Euro=50 THB

3030

Cost of Living Index for Asian CitiesCost of Living Index for Asian Cities

Note: New York is base city for index, with score of 100.0

Source: Mercer Human Resource Consulting, 2004

63.563.5BANGKOKBANGKOK11911966.8Mumbai10967.7Kuala Lumpur10483.6Singapore4683.9Jakarta4584.5Ho Chi Minh City3685.3Taipei3185.6Hanoi2995.3Shanghai16101.1Beijing11104.1Seoul7109.5Hong Kong5130.7Tokyo1

IndexCityGlobal Rank

3131

Selected EntrySelected Entry--Level SalariesLevel Salaries• Engineer €340 /month• Accountant €218 /month• Salesperson €191 /month• Junior secretary €149 /month• Receptionist €108 /month• Minimum Wage €2.8-3.5/day (depending on

locations)

Number of working hours: 48/weekSocial security contribution by employers

-Social security fund: 5% of salary-Workmen’s Compensation Fund : 0.2 – 1.0% of salary

3232

Investment Opportunities in Investment Opportunities in ThailandThailand

3333

AUTOMOTIVEAUTOMOTIVE

FASHIONFASHION

Agri & FOODSAgri & FOODS

ICT & SOFTWAREICT & SOFTWARE

TOURISMTOURISM

OTHERSOTHERS

Chiang MaiTourism

Songkhla:Marine Food Products

SongkhlaRubber, Para wood Furniture

PattaniHaral Food Processing

Chiang MaiCanned & Dried Fruits

Chiang MaiGems & Jewelry

Chiang MaiHandicrafts

LumphoonElectronics

Western ProvincesHigh Value Vegetable

KarnchanaburiGems & Jewelry

Surat ThaniShrimp Farms

Surat ThaniSamui Tourism

PhuketGems & Jewelry

TradKoh Chang Tourism

RajburiOrchids

RanongShrimp Farms

PhuketIT City

Samut SongkramMarine Food Products

KrabiPalm oil

SatoonMarine Food Product

TrangMarine Food Products

Surat ThaniLang Suan Fruits

ChumpornFruits

ChanthaburiGems & Jewelry

Chanthaburi:Tropical Fruits

Chiang RaiHigh land crops

LumpangCeramics

Phuket:Tourism,

Surat ThaniPalm Oil

RajburiPottery & Ceramics

Surat ThaniPara wood Furniture

PetchaburiPineapple

Samut SakornMarine Food Products

NakornpathomPork & Poultry

Chiang MaiClothes

TakGems & Jewelry

ChaiyapoomTextile & garment

NakornrajsimaSilk

Udon ThaniClothes & cotton

Khon KaenClothes & cotton

SurinSilk

AyuthauaSoftware & Electronics

SamutprakarnAuto Parts/Accessories

Rayong:Auto Assembly

Cholburi:Petrochemical

SaraburiCement & ceramics

PathumthaniTextlie

BangkokDigital Contents

SaraburiChicken, Dairy Farms

Loei:Winery

Khao Yai: Winery

Khon KaenSugar

RajburiSugar

Thailand Competitiveness Initiative Projects12 July 2004

CLUSTERS IN THAILANDPhayao

Jewels shaping

Sakon NakonClothes

PitsanulokAgriculture Machinery

Ubon RajthaniJewels shaping

NakornrajsimaBasic plastic product

SamutprakarnLeather

CholburiElectrical appliances

Prachuab KirikhanBasic Iron Production

PhuketMedical Services

Kenan Institute Asia

AyuthauaAuto Assembly

3434

6 Target Sectors:6 Target Sectors:• Agro-Industry: food and

rubber products• Fashion: Garments,

Leather, Jewelry• Automotive

• Electronics and ICT

• Alternative Energy• High-Value Added

Services: Long-Stay Tourism, Regional Operating Headquarters, Film and Animation, Software Development, and others

3535

Target Industry: AgricultureTarget Industry: AgricultureBOI Priority Promotion:

Rubber processingFood processingFruit and Vegetable Preservation PackagingLogisticsQuality standards & inspectionsMachinery for agro-industry

TARGET:TARGET:Kitchen of the WorldKitchen of the World

Facts about Thailand:• 1 of 5 net exporters of food in world• #1 exporter of natural rubber, rice, canned & frozen seafood, canned tuna, canned pineapples, cassava, tapioca• #2 exporter of sugar

Agriculture 49%

Services37%

Industry

14%

Labor force by occupation

3636• Exemption on machinery import duties • 8 years corporate income tax holiday

““MISSINGMISSING”” LINKS in ThailandLINKS in Thailand’’s s AgroAgro--Industry Value Chain:Industry Value Chain:

• Production or preservation of ready-to-eat food• Farm Management• Packaging material, food packages • Cold Storage or Cold Storage Transportation• Crop Drying & Silo Facilities • Inspection analysis of crops, livestock or aquatic-animal diseases• Inspection analysis of Soil or Water for Agricultural use• Forestry Plantations• Production of farm / food-processing machinery

Agriculture Cluster StrengtheningAgriculture Cluster Strengthening

3737

Target: Detroit of AsiaBecome part of the Top 10 largest

auto producers by year 2010, producing 1,800,000 units/yr.

Thailand Facts:Auto sector: 12% of GDP2nd largest producer and

exporter of pickup trucksin world. Production in 2004 reached 470,000. Target for 2005 is 600,000.

Largest auto producer in Southeast Asia, expanding at a rate of 20-25% in 2004

14 vehicles assemblerswith capacity of 1,152,000units/year

Target Industry: AutomotiveTarget Industry: Automotive

1 Euro=50 THB

Facts Continued:Recent new rounds of investment

from multinationals such as Toyota, Nissan, Mitsubishi, Mazda, GM, Ford, BMW, varying from €20.2 million to €5.8 billion.

1,709 parts suppliers:709 OEM part suppliers

386 for automobiles201 for motorcycles122 for both

1,000 suppliers for support industry & raw materials

3838

•• Opportunities:Opportunities:

Sophisticated electronic Sophisticated electronic systems including mould and systems including mould and die technologydie technology

Design, R&D and testingDesign, R&D and testingPrecision engineeringPrecision engineering

Component parts manufacturerscan receive up to:- 8 years corporate income tax holiday

- Exemption of machinery import duty

- Other important rights and benefits

Target Industry: AutomotiveTarget Industry: AutomotiveParts Not Sufficiently Produced in Thailand

• Passenger Car Engines• Fuel Injection Pumps*• Transmissions*• Differential Gears• Injection Nozzles*• Electronic Systems• Electronic Control Units• Turbo Chargers*• Substrates for Catalytic

converters• Anti-Lock Brake Systems

3939

Target Industry: Fashion Target Industry: Fashion Garments, Leather & JewelryGarments, Leather & Jewelry

Facts about Thailand:Fashion is 1 of 5 Thai

Government priority sectorsThailand is the Gem and

Jewelry Capital of Southeast Asia.

Exports of gems and jewelry are expected to reach €3.8 billion by 2008

Many high-end branded garments, jewelry & accessories such as Cartier and Christian Dior are produced in Thailand

*Direct flights from Milan to Thailand on Thai Airways

Bangkok Fashion City ProjectThe Thai Government has invested €36.4 million to further develop the fashion sector in Thailand:

1. International Fashion Schools2. Fashion Trend Center3. Textile/Garment Industry Competitiveness4. Leather Industry Competitiveness5. Jewelry Industry Competitiveness6. Bangkok Fashion Week7. Trend Setting (fashion workshops)8. International Fashion Contests9. Bangkok Fashion City Promotion10. Top Fashion Report11. Fashion Roadshow

4040

Target Industry: Fashion Target Industry: Fashion Garments, Leather & JewelryGarments, Leather & Jewelry

OpportunitiesItalian exports of textile machinery to Thailand are strong. Italy has significant market share especially in sub-sector of bleaching, dyeing, printing, finishing machinery.International marketing utilizing Thailand’s low labor costs for highly skilled craftsmen, such as diamond cuttingSpecialized services on Integrated Textile Industrial Estates, strongly BOI-promotedVery strong demand for design institutes & education centers. Thai culture places high importance on creativity and fashionItalian expertise to improve quality of raw materials in many areas such as in consulting services, machinery, design.

• Up to 8 years corporate income tax holiday • Exemption on machinery import duties • Plus other important rights and benefits

4141

Regional Operating HeadquartersRegional Operating Headquarters

Accounting, information systems, financial analysis, payroll, payables, credit, customer service and sales support

Functions

• Cost of operations• Efficient, competitive business support center• Available relevant skills, language proficiency, ability to work in multicultural environments• Telecommunications infrastructure• Expatriate living: friendly Thai hospitality, quality housing, international schools

• BOI facilitation with government agencies

Reasons Thailand Chosen:

Employment: Thai 584, Foreign 41; more when fully functional

7 countries supported: Singapore, Japan, Malaysia, Australia, U.S., Hong Kong, Thailand

Exxon Mobil Corporation since February 2003

4242

EUEU--Thailand Thailand PartenariatPartenariat::Business Matchmaking EventBusiness Matchmaking EventBangkok November 17Bangkok November 17--18 200518 2005

• Selecting 500 small and medium sized enterprises in the EU and Thailand

Companies interested in this event can find more information at www.euthailandpartenariat.com orEmail: euthai@boi.go.thTel +662 936 4555 Fax +662 936 4556

Targeted Sectors:Agro-Industry

Automotive/TransportICT, Electronics

SoftwareFashionTourism

R&DEnvironmental

preservationPrinting

4343

BOI in Europe:

Paris: par@boi.go.th

Frankfurt: fra@boi.go.th

BOI Headquarters:

website: www.boi.go.th

email: head@boi.go.th

Contact Information

Thank You!