Tokyo: The Thai government plans to increase income tax holidays for companies that invest in the Eastern Economic Corridor (EEC), covering Chon Buri, Rayong and Chachoengsao provinces, from eight to 15 years in an effort to draw investment into the region.
The government wants the EEC to be a home for high-technology manufacturers, and at least six of the 10 targeted industrial clusters, expected to create S-curved growth, are likely to launch in the area, said Kanit Sangsuphan, head of the Finance Ministry's working group to enhance private investment.
To attract investment from the technology sector into the EEC, the government has amended the Board of Investment (BoI) law to lengthen the exemption of corporate income tax to 13 years.
The work permit period for foreigners will also be extended to five years from 2-4 years, while personal income tax will be cut for researchers, Mr Kanit said.
Moreover, the Finance Ministry has a mandate to offer a waiver for corporate income tax for another two years, taking the total to 15 years, he said.
The EEC spans 26,000 rai of land to be developed by the Industrial Estate Authority of Thailand and private industrial estate developers in the three provinces. It is located near the Eastern Seaboard.
Mr Kanit said the amendment of the BoI's law regarding tax perks was awaiting the Council of State's deliberation.
Separately, a special law, which will flag the exact locations of the EEC in the three provinces, will be presented for the cabinet's approval in the next few weeks, he said.
Mr Kanit said the draft of a law governing the establishment of a 10-billion-baht competitiveness fund, designed as a source of funding for tech start-ups and small and medium-sized enterprises, was also under the Council of State's deliberation.
Infrastructure projects in the EEC include the US$1-billion third phase of Laem Chabang port, the $580-million Pattaya-Map Ta Phut motorway, the $1.82-billion double-track railway from Kaeng Khoi to Map Ta Phut, and the upgrade of U-tapao airport to an international airport capable of handling 3 million passengers a year.
The government is stepping up efforts to rev up private investment to shield the country's economy from tepid exports, weak domestic consumption and spiralling household debt, aiming to boost economic growth to 5% in the long run.
Deputy Prime Minister Somkid Jatusripitak yesterday urged Japanese investors to pour money into the EEC, where a special economic zone can act as a springboard into Asean countries, China and India.
To accommodate investors, the government will develop a railway line to link the EEC with Myanmar's Dawei deep-sea project, a high-speed railway route connecting Bangkok with Rayong province, and other facilities such as a port and U-tapao airport, he said at Nikkei's 22nd International Conference on the Future of Asia with the theme "Rising to global challenges, realising Asia's potential".
With planned infrastructure development in the EEC worth $8 billion, the corridor will become a gateway for the region to export goods to the world market, Mr Somkid said.
He said the EEC's location offered potential for developing a high-tech base because its sites are near production sites for cars and parts, petrochemicals and electrical appliances.
Mr Somkid said the economy was on track to recover as seen by 3.2% growth in the first quarter, up from a modest 0.8% expansion in the same period last year.
The country's public debt-to-GDP ratio remains low at 45%, while the unemployment rate is a mere 0.9%.
Thailand's competitiveness ranking has also improved to 28th this year from 30th last year because the country's reform, covering the economy and social issues, is a priority for the Prayut Chan-o-cha administration, Mr Somkid said.
Thai outbound direct investment last year amounted to $2.5 billion, half of which was invested in Cambodia, Laos, Vietnam and Myanmar.