the big picture: auto & electronics investment projects after floods yuthasak kanasawat...
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The Big Picture: Auto & Electronics Investment Projects After Floods
Yuthasak KanasawatExecutive Director of Investment Strategy & Policy Bureau
Thailand Board of Investment (BOI)
ASEAN Manufacturing Forum#1Ballroom, Raffles Hotel Singapore
March 8, 2012
Outline
• Post-Flood Economic Overview
• Investment Promotion & Investment Rehabilitation Measures
• Quick Recovery of Automotive & Electronics Industries
• Why Still Thailand?
Post-Flood Economic & Post-Flood Economic & Industrial OverviewIndustrial Overview
GDP -9% in Q4 of 2011
6 5.33.9
-4.2
-7-5.2
-2.8
5.9
12
9.26.6
3.8 3.2 2.7 3.7
-9
-15
-10
-5
0
5
10
15
Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11
%
Source : NESDB
GDP in the 4th Quarter drastically change from forecasted 5% (annual rate) to -9% because of the flood, which makes GDP growth rate of Thailand at very low rate of 0.1% in 2011
MPI -34.4% in Q4 of 2011
11.6 9.45.8
-9.7
-22
-10.7-5.5
11.5
31.2
17.6
9.8
2.6
-2.5
1.6
-34.4
-15.2
-2.1
-40
-30
-20
-10
0
10
20
30
40
Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q4/11 Jan-12
%
Source: OIE
Manufacturing Production Index (MPI) plummeted as much as -34.4% in the Q4 because of flood in Thailand. It recovered to -15.2% in Jan 2012.
Economic Performance
Economic Projections 2009 2010 2011 2012e
1) GDP (%) -2.3 7.8 0.1 5.5 - 6.5
2) Export, FOB value (%) -14.0 28.5 17.2 17.2
3) Import, CIF value (%) -25.2 36.8 24.9
4) Manufacturing Production Index (%) -7.2 14.4 -9.3
5) Headline Inflation -0.9 3.3 2.9 3.5 - 4
6) Core Inflation 0.3 1.0 1.7 2.2
Source: NESDB. & Bank of Thailand as of Jan 2012
Investment Promotion & Investment Investment Promotion & Investment Rehabilitation MeasuresRehabilitation Measures
1231
14901591
2112
0
500
1000
1500
2000
2500
2008 2009 2010 2011
446
639
447
673
0
100
200
300
400
500
600
700
2008 2009 2010 2011
Number of Projects Investment Value(Billion Baht)
Net Application for Investment Promotion at Recorded Level in 2011
Billion BahtBillion Baht
2121 2929 2525 3636 1919 21215454
18185454
7171
00
5050
100100
150150
200200
250250
300300
JanJan
4040
8080
120120
160160
200200
9090 9595105105
9696 101101
136136 132132
160160159159
148148
178178191191
ProjectsProjectsNumber of projects 2011Number of Projects 2010
Investment 2010Investment 2010Investment 2011Investment 2011
56564040 4646 5252 33 88
105105
141141
172172
136136145145170170
4242
161161
5353
11 6060
3636
171755
106106101101
164164
4545
136136
4242
FebFeb MarMar AprApr MayMayJunJun JulJul AugAug SepSep OctOct NovNovDecDec
482482
7070
112112
Number of projects 2012
7979
Source: BOI, as of 14 Feb 2012Source: BOI, as of 14 Feb 2012
22 77
Investment 2012Investment 2012
Application for Investment Remains StrongApplication for investment promotion 251 billion baht in the 4th quarter of 2011, increase 50.3%, despite the great flood. The positive trend continued in Jan 2012
Investment Promotion Measures to Promote Industrial Rehabilitation
a) Tax exemption on machinery and equipment to replace those damaged by flood.
b) Normal investment promotion package to new projects
c) Special investment promotion package to BOI-promoted companies directly affected by the great flood that are still enjoying their tax holidays
Eligibility• Existing BOI-promoted projects directly affected by flood • Still have remaining unused corporate tax exemption period
Special Investment Promotion Package
Remaining Corporate Income
Tax Exemption
New Corporate Income Tax Holiday
1. Projects subject to a cap
stay at existing
province
Renew 8 years tax holiday (150% cap on new investment * + remaining unused cap)
Relocation Renew 8 years tax holiday (100% cap on new investment* + remaining unused cap)
2. Projects not subject to a cap
≤ 5 years left + 3 more years
> 5-6 years left + 2 more years & 2-year 50% tax reduction
> 6-7 years left + 1 more year & 4-year 50% tax reduction
> 7-8 years left + 5-year 50% tax reduction
Or choose new tax incentive scheme no. 1
*All fixed assets (except land) including repairs of existing machinery and replacement machinery previously imported under the BOI scheme*All fixed assets (except land) including repairs of existing machinery and replacement machinery previously imported under the BOI scheme
Measures to support construction of flood prevention systems by industrial estates
Industrial estates that invest in flood prevention systems are offered 8-year tax holidays with the corporate income
tax exemption ceiling of 200% of their investment excluding land cost and working capital.
Quick Recovery of Automotive & Quick Recovery of Automotive & Electronics IndustriesElectronics Industries
Number of Companies %
Total 867 100
Feb 2012 422 49.5
March 2012 506 58.4
April 2012 586 67.6
May 2012 595 68.6
June 2012 611 70.5
July 2012 620 71.5
Progress on Factories’ Rehabilitation in 7 industrial estates
Progress on Factories’ Rehabilitation in 7 industrial estates
Almost all industries have returned to normal in Jan 2012, except E&E, textile, & Apparel
Auto assembly -11.4% to 1.46m in 2011
750
928
327 411
459
584
389
434 525
559
158
1,177
1650
999
1458
533626
409
144
571485
589
363
296
218262
683
545
780 800
332
233180
42
17515213066
14821
539
534
900
734
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000ผลิ�ต จำ�� หน่�ยใ น่ประ เทศ ส่งออก
As automotive industry will return to normal in the 2nd quarter, auto assembly is forecasted to be at recorded level of 2 million in 2012. With flood impact was limited, motorcycle assembly increased 10% to 2.95 million in 2011
New Projects in E&ECompany Invest
(Million $US)Products
Mitsubishi Electric 260 Air conditioners
Microchip 215 IC assembly & testing
Canon 200 Digital copiers
Electrolux 65 Refrigerators
Makita 60 Hand tools
New Projects in Automotive SectorCompany Invest
(Million $US)Products
Toyota Motor 600 Automobiles & engines
Jatco 300 Continuously variable transmission (CVT)
Linglong Tyres 90 Automotive tires
Mitsubishi Motor 80 Engines
Why Still Thailand?Why Still Thailand?
Business Sentiment Recovered Sharply After the Flood
Thailand’s Undeniable Strengths • Strong macroeconomic fundamentals
• Good infrastructure
• Strategic location at the center of ASEAN
• Center of many strategic industries/services: food, automotive, petrochemical, HDD, white goods, tire, tourism, medical services, etc
• Competitive corporate income tax rate of 23% at present and will reduced to 20% from Jan 1, 2013
• Ease of doing business: # 17 out of 183 countries around the world / # 2 in South East Asia
Integrated water management system with single command will be implemented, including construction and upgrade of many reservoirs, flood ways or water diverting channels, preventive dikes, etc.
THANK THANK YOUYOU