Seven opportunities: Eastern Economic Corridor

“The reliable reference page to up to date developments in Thailand’s new flagship investment zone.” -Insider

 

Exceptional opportunities for foreign investments in Thailand

The Eastern Special Development Zone, better known as Eastern Economic Corridor, has been erected on May 15, 2018, by publishing the law in the Royal Gazette. The law firm advises foreign companies to participate in public-private partnerships with the Thai government and benefit from highly attractive investment and tax incentives. 

The EEC consists of the three Eastern provinces Rayong, Chonburi, and Chachoengsao with a combined area of 13,285 square kilometers. The Eastern Economic Corridor expects investments of US$ 50 billion during the next five years, mostly through foreign direct investments. The surrounding Eastern provinces of Nakhon Nayok, Prachin Buri, Sa Kaeo, Chanthaburi, and Trat will be sooner or later involved as well.

The corridor is primarily intended to accommodate investments in ten targeted “S-curve” industries: next-generation cars, smart electronics, affluent medical and wellness tourism, agriculture and biotechnology, food, robotics for industry, logistics and aviation, biofuels and biochemical, digital and medical services. However, attractive opportunities are present in other areas as well.

The 11th targeted industry, defense, had been added with the aim of improving the country’s military technology and innovation. Defense investments receive eight years tax holidays for activities of high importance or knowledge-based investments, as well as high-tech activities, complicated production processes, and capital-intensive investments. 

The Thai defence industry ecosystem consists of tanks, armour and battle vehicles; army drones; unmanned aerial vehicles (UAVs); military robotics; unmanned aerial watercraft; communication systems; and weapons repair.

“Eastern Economic Colony”: Under the foreigner-focussed EEC bill, more than one hundred Thai laws and regulations had be amended or suspended to facilitate foreign desires by hitherto unthinkable privileges. Around ten laws and more than 100 articles have been waived to sweeten business incentives and eliminate legal restrictions on foreign investments.

Seven smart advantages have been announced:

  • Smart City to change the quality of life of Thai people
  • Smart Mobility by efficient transport (
  • Smart People by education and social equity
  • Smart Living by life security
  • Smart Economy by ease of doing business
  • Smart Governance by efficient public services
  • Smart Energy & Environment by green energy, clean and safe environment.

Not only the specific foreigner legislation (land ownership, business activities, work) will be relieved. Also for traditional hurdles like the limited term of lease contracts, a legal shortcut is in the making. Some advantages might be available for foreigners only. The latest update on EEC benefits is monitored at Seven benefits: Eastern Economic Corridor.

The EEC could be seen as offshoot of the Chinese geo-economic doctrine for OBOR (One Belt, One Road) the trans-national connectivity project to connect China with Asia, Europe, and Africa through the land corridor (SREB, Silk Road Economic Belt) and the sea corridor (MSR, Maritime Silk Road) to augment global trade and economic cooperation.  

Seven opportunities to benefit from the EEC 

The Eastern Economic Corridor provides for seven (7) business opportunities (or challenges), which can be outlined as follows:

#1. STANDALONE: Benefits for new or existing business ventures to be set-up in the EEC. The advantages cover tax holidays and other tax benefits, multi-year business visa, extended land lease structures, and other benefits. Details are currently uncertain and will be explained at Seven benefits: Eastern Economic Corridor.

The EEC is subdivided into clusters with a different infrastructure and investment promotion scheme. Private investments have to pick the most beneficial cluster for their foreign direct investment. Details are showcased at Seven EEC clusters.

#2. PPP EEC TRACK: Participation in the infrastructure Public-Private Partnership Eastern Economic Corridor Fast-Track scheme. More about the seven-speed public-private-partnerships in Thailand at Seven-speed public-private-partnerships in Thailand.

Current projects are listed at Seven government projects in the Eastern Economic Corridor. Public-private partnership investment opportunities in the infrastructure and energy sector are not easily accessible for foreign companies. The Consultancy House supports and assists to identify PPP investment opportunities in the EEC arena. More at EEC: How to find and get the best PPP projects

#3. RELOCATION: Benefits from a relocation of existing Thai businesses from Bangkok or other provinces to Chon Buri, Rayong or Chachoengsao. In which cases might it be beneficial to move the company’s headquarters from Bangkok into the EEC? Is it worth the efforts to resettle human resources, assets and office address?

The law firm carries out a thorough comparison study mentioning and weighting the pros and cons of a relocation from a comprehensive legal, tax and business perspective. 

#4. TWO THAIS: Synergy effects from the combination of two Thai businesses, one inside and one outside of the EEC. How to clever allocate human resources, assets and ventures between the two locations?

The law firm supports and assists on a sophisticated tax planning scheme to combine EEC-exclusive tax advantages with Bangkok-related business tasks. This includes a transfer pricing management, profit shifting schemes and other tax structuring elements, carefully taking into consideration current and future (BEPS) tax legislation. 

#5. Foreign plus EEC: Synergy effects from the combination of the head office in an AEC state or the foreign headquarters outside of AEC with a Thai company in the EEC. How to design an incentive and tax efficient legal environment for the Thai affiliate company?

#6. NON TARGETED: Benefits for Thai companies in the EEC which do not belong to the ten targeted industries as mentioned above. How to utilize EEC benefits in other industries? How can capital gains from property developments and the sale of a business be tax-efficiently structured? The current list of targeted industries to obtain a BOI super promotion in the Eastern Economic Community is available at EEC: Target Industries.

#7. PRIVATE: Benefits of private land ownership and personal income taxation for foreigners in the EEC. How to make use of the EEC benefits as a foreign individual? How can the taxpayer benefit on his non-salary income? How can non-qualified income sources be transformed into low taxation income? How can capital gains from property developments and the sale of a business be tax-efficiently structured? 

Professional services for investments and business activities in the Eastern Economic Corridor

Doing business in the EEC is one of the law firm’s areas of competence, long-standing experience, and unique market reputation. The scope of professional services and the terms for assigning PUGNATORIUS Ltd. are described at “Legal advice, tax structuring, transaction support services and business matchmaking on Thailand’s Eastern Economic Corridor.”


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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