Chinese factory applications to rise

Chinese factory applications to rise

30% surge seen as production base shifts

Duangjai: Firms avoiding US tariffs
Duangjai: Firms avoiding US tariffs

Investment applications from Chinese manufacturers looking to Thailand as a production base to avoid US tariffs are expected to surge by 30% this year to 71.5 billion baht.

Duangjai Asawachintachit, secretary-general of the Board of Investment (BoI), said the prolonged trade war between China and the US has prompted Chinese manufacturers to look at relocating to Asean.

The surge in Chinese investment is expected to continue until 2020, she said.

According to a BoI report, investment applications from Chinese projects in the first nine months of this year amounted to 45 billion baht, up 100% from the same period last year, mainly from the rubber industry and tyre manufacturing.

Ms Duangjai said a recent visit by an economic team headed by Deputy Prime Minister Somkid Jatusripitak helped persuade Chinese companies to move their production base to Thailand, with some deciding to expand output here.

"Most Chinese investors who met Mr Somkid and the BoI said a key reason to move their production base to Thailand is the continuity of the government's infrastructure development policy, improvements in ease of doing business and Thai workers' skills," she said.

During an Oct 21-24 trip to Guangdong and Hong Kong, Mr Somkid and the economic team met senior-ranking executives of leading Chinese firms, including Hairma Nantong Technology, Midea Group, Huawei, Quantum Hi-Tech China Biological, Primax and its affiliated company Tymphany, Lexin, Advanced Fiber Resources Zhuhai, Gree Electric Appliances, Shenzhen Forms Syntron Information and Shenzhen YUTO Packaging Technology.

Thailand advanced six notches to 21st out of 190 countries in the World Bank's 2020 Ease of Doing Business (EODB) rankings.

The country scored 80.1, slightly below Malaysia, which ranked 12th with a score of 81.50, while Singapore ranked second with a score of 86.2, according to the latest EODB report.

Thailand's overall score in the 2020 report inched up by 1.65 percentage points from the previous year, on a scale of 0 to 100.

Thailand saw a significant improvement in ranking in two indicators: dealing with construction permits, ranking 34th with a score of 77.3, up from 67th with a score of 71.9 in the 2019 report; and protecting minority investors, ranking third with a score of 86, up from 15th with a score of 86.

Ms Duangjai said Huawei, China's leading global provider of information and communications technology (ICT) infrastructure and smart devices, submitted applications on Oct 24 to the BoI to establish Huawei Academy in the Eastern Economic Corridor (EEC).

She said Thailand's new benefits to woo foreign investors looking to relocate their production base amid the Sino-US trade war have been instrumental in bringing Chinese investment to Thailand.

Under the so-called Thailand Plus investment package approved by the cabinet on Sept 10, the measures cover tax incentives, special investment zones for individual countries and future amendments to the Foreign Business Act to ease foreign investment.

Under the package, entrepreneurs can enjoy a corporate income tax deduction of 250%, up from 200%, for business investment or training expenses in advanced technology during 2019-20.

Operators that employ highly skilled personnel in advanced technology will be allowed to deduct remuneration from taxable income during 2019-20 by up to 150%, compared with zero now.

The BoI expects 5,000 companies to apply for the measures and employ 40,000 workers in advanced technology.

Operators who invest in automation systems to upgrade their production are also allowed a deduction of 200%, up from 150%, from corporate income tax during 2019-20.

Mr Somkid said several Hong Kong investors are expected to relocate their investment to Asean and Thailand, and a leader from the Hong Kong administration is scheduled to bring Hong Kong investors to visit the EEC in late November.

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