SEZ interest pales next to EEC
Investment applications for 10 special economic zones (SEZs) remain low compared with those made for the flagship Eastern Economic Corridor (EEC), with the number of projects and investment value totalling 75 projects and 11 billion baht, respectively, from 2015 to April 1, 2020.
According to the latest report by the National Economic and Social Development Council (NESDC), key investments were mainly in apparel, plastic products, feed meal, automotive and parts, machinery and parts, construction materials and hospitals.
The military-led government announced the formation of 10 SEZs in 2015 in Tak, Sa Kaeo, Mukdahan, Trat, Songkhla, Nong Khai, Nakhon Phanom, Kanchanaburi, Narathiwat and Chiang Rai.
The government allocated a budget worth a combined 42.5 billion baht to finance the infrastructure and facilities projects covering roads, logistics, customs offices and industrial estates and bridges for those special zones between 2016 and 2020. Infrastructure projects are 70% complete and are scheduled to be fully complete by 2022.
The Board of Investment (BoI) has offered privileges including a corporate income tax exemption for eight years plus a 50% reduction in the tax rate for five years once the tax holiday lapses.
The Finance Ministry has also offered a corporate income tax reduction of 10% for 10 years for investment categories that are not entitled to BoI privileges.
The cabinet also approved additional tax measures this February to boost private investment in 10 SEZs and the EEC.
One of the two measures is a reinstated corporate income tax of 10%, down from 20%. The previous 10% rate expired in December 2017.
The 10-year measure will be offered for investment projects located in the 10 SEZs. Investors are required to register with the Finance Ministry by Dec 31 this year.
The other measure is a tax deduction of up to three times annual revenue for private companies that contribute or donate to EEC human resources development institutes focused on Industry 4.0. The tax deduction must not exceed 100 million baht.
This measure will be implemented until Dec 31, 2020.
According to the NESDC's report, the Tak SEZ ranked first, drawing applications for 31 projects worth 3.89 billion baht, followed by Songkhla with 12 projects worth 2.55 billion baht.
Sa Kaeo had six projects worth 1.88 billion baht, while the Kanchanaburi SEZ drew six projects worth 945 million baht.
The Nong Khai SEZ lured four projects worth 722 million baht, while Mukdahan had four projects worth 402 million baht.
Nakhon Phanom drew the least investment with only one project worth 15 million baht.
Chiang Rai had seven projects valued at 172 million baht, Narathiwat had two projects worth 191 million baht, and Trat two projects at 280 million baht.
The NESDC reported that 4,024 new companies with total registered capital of 7.95 billion baht were established between January 2015 and April 1 this year to do business in the 10 SEZs. Some 98% of them are small and medium-sized enterprises.
According to a source at the NESDC who requested anonymity, total investment from private sources to establish industrial factories and public infrastructure investment is estimated at a total 24.2 billion baht.
The government has also established one-stop service centres for foreign workers in 10 zones that employ a combined 385,487 foreign workers.
For 2019, the BoI reported total investment applications stood at 756 billion baht from 1,624 projects. This value was 7% lower than for 2018 applications, which were worth 815 billion baht, with the number of projects also down 7% from a year earlier.
In 2019, Chinese investment applications surpassed those from Japanese firms for the first time, coming in at almost four times in value at 262 billion baht for 203 projects.
Applications for investment in the EEC amounted to 506 projects, with investment worth 445 billion baht last year.
For the first quarter of this year, the EEC drew investment applications for a total of 117 projects, up from 116 projects in the same quarter last year, with investment worth 47.6 billion baht, a sharp drop from 75.1 billion baht in the first quarter of 2019.
The value of investment applications for the EEC accounted for 67% of total applications worth 71.4 billion baht submitted to the BoI in the first quarter.