New Normal, New Opportunities
As the world emerges from the shadows of COVID-19, now is the time for companies to seize the possibilities and initiatives which are developing as the recovery takes hold. The pandemic has not only impacted people's health and the economy, it has also shaped and shifted consumer lifestyle patterns around the world. According to a PwC survey, nearly 80% of respondents reported that they were making more environmentally friendly, sustainable, or ethical purchases since the start of the pandemic. To respond to these behavioural changes in support of sustainability, there is a growing and increased focus on green lifestyles within the investment community. First, Chinese sport utility vehicle manufacturer Great Wall Motor (GWM) invested more than THB 23 billion in Thailand to establish a regional production hub for EVs. Second, Asia's biggest coal miner, Banpu, partnered with Thai car-sharing operator Haupcar to enter the electric vehicle sector through an EV car rental business as the company diversifies into eco-friendly energy technology. Finally, the Ministry of Industry and seven organisations under its jurisdiction joined with SCG Packaging Plc. to recycle 8,000 kilograms of used paper turning it into a range of products that will be donated to benefit the public. In order to further stimulate investment to fuel the economic recovery, the Thailand Board of Investment (BOI) approved a series of promotional measures to encourage investments that reduce impacts on the environment, support sustainable development, and participate in the development of the Bio, Circular and Green economy (BCG) as well as an enhanced scheme for electric vehicles.
Booming Digital Industry
The pandemic has heightened the speed of the adoption of digital technologies by several years—and it’s clear that many of these changes are here for the long haul. Tools that were considered new 10 years ago, such as the mobile internet, cloud computing, and big data, have become essential components in reshaping our society. According to global research firm Gartner, Thailand's IT spending is expected to grow by 6.4% year-on-year to 871 billion baht in 2022 with strong growth in enterprise software, driven by continued hybrid work and remote services. Unsurprisingly, the semiconductor industry has experienced a surge in demand as companies look for increased resilience in the global supply chain. To further strengthen Thailand’s own electronics supply chain, the BOI approved an enhanced investment promotion policy for the electronics industry adding benefits for front-end capital and technology-intensive manufacturing such as wafer fabrication, IC substrates, ICs and IC testing as well as large-scale mid-and back-end manufacturing.
In terms of infrastructure, Thailand has already deployed 5G technology and noticed accelerated speeds in downloads and connectivity. With a higher data crunching capacity combined with more efficient connectivity channels through network slicing, 5G has unleashed the potential of more than 9,000 factories in Thailand to become smart factories and shift towards industry 4.0 automation. In addition, as 5G infrastructure continues to be deployed, cloud infrastructure and communications networks are becoming increasingly integrated and merged—the fuel for cloud applications around the world. Furthermore, to drive innovations and cost-savings in delivering advanced public services, Thailand’s Ministry of Digital Economy and Society is also considering using Amazon Web Services (AWS), the world’s most comprehensive and broadly adopted cloud offering, as part of the Government Data Centre and Cloud Service (GDCC). As Thailand aspires to become more innovation-driven, the BOI approved a revamp of its promotions for businesses operating on the supply side of the digital economy by focusing on hiring and developing an IT workforce as well as upgrading companies to relevant international standards. Moreover, in light of the strong growth momentum and the increasing demand for cloud services at companies across Thailand, the BOI provides several enormously appealing investment incentives, including an exemption from import taxes on equipment and raw materials used in export manufacturing and other non-tax incentives such as the BOI’s business facilitation services. Both investments in data centres and cloud services may be eligible for an 8-year corporate income tax (CIT). The BOI previously approved an investment application by Huawei Technology (Thailand) to build two data centres at a cost of 700 million baht in Thailand to offer cloud services to public and private customers.
Thriving Towards a New Normal
With the strong support of both the private and public sectors, Thailand is moving towards a better and greener future following the pandemic. The BOI recognises the need to proactively address global environmental challenges as well as rapid technological changes and is working to support all valuable investments, both in Thailand and overseas, to enhance Thailand's competitiveness and drive the economic recovery as the country transitions from COVID-19. The BOI provides both tax and non-tax incentives to investments, especially to innovative sectors related to the Bio-Circular-Green Economy (BCG). In addition, the BOI also aims to attract investments in all 12 S-curve industries, including the medical, smart electronics, and digital industries, which have experienced high levels of growth during the pandemic and are set to play an increasingly important role in the country’s future. The BOI will continue launching measures to promote investments in Thailand with a focus on increasing Thailand’s competitiveness and adapting to the new normal.
