19Feb 2019

Agriculture 4.0 – Thailand’s superfood

Foreign investment opportunities for agriculture in the “Kitchen of the World” 

Foreign investments will help to develop Thailand into a farming superpower. The country’s natural biodiversity boosts ecosystem productivity to supply the world market as a major player in producing and exporting tropical farm products. The law firm in Bangkok supports and assists foreign companies and entrepreneurs to successfully invest in farmland and agricultural projects in the land of smile.

Apart from being one of the major exporters of rice in the world, Thailand’s other agricultural commodities include sugar, fish, canned tuna, pineapples, rubber, gr, in and frozen shrimps. Currently, almost 40% of its people work in the agriculture division, but the agriculture sector accounts only for 8-10% of Thailand’s GDP. This disproportion shows the urgent need for improvements.

Most of the local farmers are used to traditional farming methods for hundreds of years. These methods have been poorly developed and only little by little they adopted into a more innovated way using machinery for more productivity. The current non-smart system can’t feed Thailand in the future.

Agribusiness firms, both local and foreign, play an important role in Thailand’s development in the agricultural sector. Because of the better resources of technology, funds, and knowledge than the farmers and other groups in the industry, they become the innovators and pioneers in the business.

Smart agriculture, smart farmers, superfood

During the last years, Thailand has been focusing on strengthening its economy with research and development, creativity, innovation, and investment programs. Thailand 4.0 is the latest development model that the government aims to give way to pulling them out of the middle-income trap.

One of the focusses of Thailand 4.0 is the agriculture sector to promote and strengthen its abundant resources both for local and international use. Agriculture 4.0 aims to increase yield per rai by reducing inefficiencies, water consumption, fertilizers insecticides, and other chemicals and harmful effects on soil, animals, and people. Thailand is the kitchen of the world.

The government is seeking more ways to improve and give way to foreign investors to make Thailand 4.0 and Agriculture 4.0 more feasible. Multi-stakeholder partnership projects and investment programs that will bring together the non-government organizations, companies, the government, universities, and farmers shall be the way for technological transformation that will also provide access to shared information, technology, finances, and markets. This kind of project will play an important role in transforming Thailand’s agricultural progress.

Examples for agriculture 4.0 are riceberry and other superfoods. While Thai people prefer polished white rice, Thai black jasmine rice (Rice berry) with a deep purple color as well as other organic food innovations will lose soon their character as niche varieties. Lower input costs for fertilizers will give superfood a sustainable advantage, although higher labor costs are not immediately balanced by a higher market price.

Indoor vertical farms, also known as agriculture 5.0, are described in the post “Indoor Vertical Farming in Bangkok“.

Criteria for farm investments

Project in agricultural, animal husbandry, fisheries, mineral exploration, and mining, and other service businesses under List One of the FBA, Thai nationals must hold shares with a total of at least 51 percent of the registered capital. Foreign investors can hold a majority or all of the shares in promoted manufacturing projects stipulated in List Two and List Three of the FBA (B.E. 2542). Under certain circumstances, the BOI may set the maximum and the minimum for foreign shareholding in some promoted projects at the level it deems appropriate.

Under the Foreign Business Act, foreigners are strictly prohibited from operating rice farming, plantation, or crop growing, livestock farming, and forestry and timber processing from a natural forest. Foreign companies require specific investment promotion by the Thailand Board of Investment to carry on such businesses.

New BOI investment promotion
To promote “Smart Farming” and modernization of the agricultural sector, the following three measures have been implemented:
  • Production or services in the agricultural sector, e.g. production of tracking, monitoring or control systems to regulate resources (water, fertilizers, pesticides). Tax holidays will be granted for five years without any cap.
  • Measure to upgrade agriculture industry towards international standards, e.g. Good Agriculture Practices (GAP), Food Safety Management System (ISO 22000) etc. Tax holidays for three years, max. 50 % of the investment capital. The application must be submitted until December 31, 2020.
  • Promotion of local communities in certain local areas, e.g. production of organic fertilizers, nano-chemical fertilizers, organic pesticides, plants and animal breeding, quality control, packaging and preservation of fruit and vegetable, manufacturing or preservation of food and beverages and trading center for agricultural products.

Foreign investment opportunities

PUGNATORIUS Ltd. is a Bangkok-based specialist provider of bespoke transactional legal and tax advice in the corporate and property legal and taxation industry sectors. The law firm provides comprehensive services to acquire farming land, to structure the farming business, to apply for licenses and BOI investment promotion and to guide foreign clients through regulatory hurdles and red-tape. 

The focus of any foreign investment in Thailand’s farming industry should be on adding value and producing high-quality farm products. Digital technology, biotechnology, and physical technology have to be used to drive farm sector development, raising productivity both in terms of volume and quality for a variety of products. The law firm is the one-stop service point for agriculture, rubber tree and livestock investments in Thailand.

PUGNATORIUS Ltd. has been a member of the organizing committee and a speaker on the world congress on agriculture, plant science, and genomics in Bangkok 2018. The welcome message to a huge crowd of delegates from all over the world is archived here. 

Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship.

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