Thailand unveils two weapons to attract foreign investment
Thailand has unveiled the focus of its four-year strategy to attract foreign direct investment to boost its faltering economy: clean energy and incentives to offset the new Global Minimum Tax.
Prime Minister Srettha Thavisin has embarked on an international roadshow since coming to power in August, “selling” the country to corporate investors during trips to the US, China and other states. His government is extending invitations for global digital giants to build major infrastructure including headquarters in Thailand.
Five key industries targeted
Narit Therdsteerasukdi, Board of Investment (BOI) secretary-general, recently revealed progress in negotiations.
The prime minister's investment goals focus on the digital, electronics, and electric vehicle (EV) sectors. Over the next four years, the BOI will target investment in these three sectors, plus the BCG (Bio-Circular-Green Economy) and creative industries. These five industries will be pivotal in elevating the country's economic development to new heights, according to the BOI.
Digital sector attraction
The government is targeting investment in two segments: data centres and cloud services. Prominent US companies in talks with Thailand include Amazon Web Services (AWS), Google and Microsoft.
In the digital platform realm, companies such as Meta, TikTok, and OpenAI are also part of the investment focus. On the electronics front, large US companies like Western Digital (WD), Analog Devices Inc (ADI), and Hewlett-Packard (HP) are among those targeted.
Thailand’s foreign-investment push can take advantage of the trend for business relocation amid geopolitical tensions between China, Taiwan and the US. The world’s largest microchip-maker, Taiwan, is looking to take its production offshore with Thailand as one possible destination for relocation.
The kingdom’s strategic location and neutral stance help it to avoid geopolitical issues.
Meanwhile, the global shift towards AI and digital transformation has generated a significant demand for cloud services worldwide, Narit said.
Microsoft has committed to invest in Thailand as an AI hub in Asia, establishing a regional cloud data centre and AI Centre of Excellence.
Narit said the Memorandum of Understanding (MOU) with Microsoft covers not just financial investment but also the development of digital government systems, the State Cloud project, elevating digital workforce skills, enhancing cybersecurity, and fostering knowledge in AI.
Focus on clean energy and Global Minimum Tax
The BOI has highlighted clean energy and compliance with the Global Minimum Tax (GMT) as crucial tools for attracting investments amid global uncertainty. By embracing clean energy, Thailand aims to position itself as a responsible and sustainable investment destination. Additionally, the country’s commitment to joining the GMT next year demonstrates commitment to fair and transparent economic practices, aligning with Organisation for Economic Co-operation and Development (OECD) standards.
Under the GMT, a minimum corporate income tax rate of no less than 15% will be imposed globally.
Thailand has prepared for both aspects for some time now and is confident that these are new tools to attract investments, the BOI secretary-general said.
Some 1,000 multinationals in Thailand will fall under the GMT’s scope, meaning they will no longer receive tax exemptions. However, the BOI will allow companies applying for investment promotions to choose tax deductions instead of exemptions, meaning only a moderate increase in their tax burden. The BOI will also utilise a 100-billion-baht competitiveness fund to reduce investment costs amid higher taxes.
Setting up regional headquarters
The BOI said Thailand enjoys advantages due to its well-developed digital infrastructure and skilled workforce. International digital companies that already have regional headquarters in the kingdom include Agoda, which employs 3,000 people in Thailand.
Tesla ‘eyeing $5bn investment’
Talks with Tesla for a $5-billion investment in Thailand are ongoing, according to reports.
This investment would be a significant boost for the Thai economy and further solidify the country's position as a key player in the global EV market.
"The global EV business is currently expanding rapidly. In Thailand, the registration of EVs has reached 70,000 units, with 58,000 being passenger cars. This figure accounts for 16% of all new vehicle registrations in October. The EV sector is growing rapidly, and Thailand's supportive measures instil confidence in both investors and consumers," Narit said.
