The Big Thailand Relocation Package
Profiteering from the US-China trade dispute in the land of smile
Thailand Plus: Thailand offers a “relocation package” to attract foreign companies to relocate from their current manufacturing location to the land of smile. This targets mainly investors from China, Japan, South Korea, Taiwan, and the USA, but might be applicable to investors from other jurisdictions as well. The obvious target will be to circumvent escalating punitive U.S. tariffs on Chinese goods. “Thailand Plus”, the new package, covers comprehensive measures that will enhance Thailand’s attractiveness as an investment location, including investment acceleration incentives, fiscal measures supporting STEM manpower development, deregulation, and improved pre- and post-investment services.
Moving supply chains: However, the difficulties of moving output and building new supply chains should not be underestimated. There are several factors that need to be considered including existing infrastructure. These include availability, frequency, and capacity of road, air and ocean freight networks, ease of access to raw materials and semi-finished goods, skilled labor (especially in the high-tech sectors), social and political stability, friendly business policies, a manageable tax regime, government subsidies and incentives in some cases, availability and stable supply of resources such as power supply, water, etc. Another consideration is the availability of free trade zones (FTZs), bonded warehouses and international transportation for the movement of products to function.
STEM (Science, Technology, Engineering, Mathematics) – Seven arguments to allocate to Thailand
These are the characteristics of Thailand’s relocation package:
#1. All agencies: The official statement “It is a package involving all agencies in order to facilitate companies production relocation.” indicates tax holidays and other tax advantages, the possibility for 100% foreign ownership, facilitation of visa and work permit, land ownership rights, release from customs duties, and an enhanced promotion by Thailand’s Board of Investment.
#2. EEC: The benefits under the Thailand Relocation Package (TLP) can be combined with the EEC benefits to maximize the attractiveness of the relocation to Thailand.
Under the Thailand Plus Scheme, Investment projects worth at least THB 1 billion (USD 32.26 million) in the identified activities submitted to Thailand’s Board of Investment (BOI) by the end of 2020 will be entitled to additional 5 years of 50% reduction of corporate income tax given that at least THB 1 billion of actual investment is put in place by December 2021.
#3. Country packages: As already announced by the Thai government, promotional packages will be specially tailored to suit the specific needs of investors from different countries, dealing with investors’ priorities in terms of promotional privileges. This country approach might not result in an equal playing field and requires a smart structuring of the investment to obtain access to the most favorable package.
#4. U.S. Thai Treaty of Amity: Business with a U.S. shareholding can benefit from a special treaty between the USA and the Kingdom of Thailand to get basically the same treatment as a local Thai-owned company. Details are explained in the article “Seven steps: The U.S. Thai Treaty of Amity company”
#5. Special compensation: The customized promotion package to compensate for investor’s losses from the trade dispute. Details on this approach are unknown yet.
#6. SME: Although production typically requires a significant investment, the scheme will also provide stimulus packages for SMEs.
#7. Timeline: September 2019, the BOI approved Thailand Plus incentives, aimed at attracting foreign businesses to relocate and expedite large-scale investment as well as strengthen workforce development.
These new measures include an enhanced incentive package for projects worth at least THB 1 billion of investment, additional incentives for companies engaged in human resource development, and revised incentives to encourage corporates to set up STEM (Science, Technology, Engineering and Mathematics), or educational or vocational training institutions.
In 2020, Thailand’s BOI will launch several roadshows to woo investments from China and Hong Kong.
This website will be updated to constantly reflect the latest insights and information. Stay tuned!
Assign PUGNATORIUS GROUP to obtain the whole scope of benefits
Professional services to utilize Thailand’s governmental relocation package
PUGNATORIUS Ltd. is the Bangkok-based specialist provider of transactional legal and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property transactions and developments. The law firm supports the
- Corporate, tax and financial structuring of foreign direct investments in Thailand
- Advice on the legal framework under the Thailand relocation package.
- Formation of Thai companies
- Investment promotion under Thailand’s Board of Investment
- Application for relocation package benefits
- Commercial contracts
- Business visa, work permits, and other supporting tasks
Details and a comprehensive professional offer are available on request.