Transforming Thailand Under BOI’s New Economy Era

Why New Economy?

The impact of global challenges — including geopolitical conflicts, supply chain issues, technological disruptions, and climate change — coupled with Thailand’s goal of escaping the middle-income trap and creating sustainable growth, underscores the need for Thailand’s Board of Investment (BOI) to adopt a “New Economy” strategy that focuses on advancing industries and services to increase its potential. BOI recently announced its intent to do just that, as part of its investment promotion agenda for the next five years (2023-2027).

The “New Economy” comprises three core concepts:

1. an innovative economy driven by technology, innovation, and creativity;
2. a competitive economy with high growth potential and the ability to adjust rapidly;
3. an inclusive economy that considers sustainable development, environmental and social concerns, and reduces inequality.

Previously, the Thai government identified 12 targeted industries to drive economic growth. However, under the New Economy strategy, BOI has shifted its focus to five major industries. These industries include:

Attaining the New Economy Goals

BOI aims to restructure the Thai economy towards a “New Economy” to increase its long-term competitiveness. It has established seven pillars of the “New Economy” to implement and achieve the defined goals.

1. Restructure industries in which Thailand excels and establish a new industrial foundation that leverages the country’s potential and strengthens supply chains.
2. Accelerate transitions to smart and sustainable industries such as automation, digital technology, smart city, BCG, and more.
3. Promote Thailand as a hub for international business and a gateway for regional trade and investment.
4. Strengthen SMEs and startups and connect them to the global market and supply chain.
5. Promote investment opportunities in various regions by applying the success model of the Eastern Economic Corridor (EEC), emphasizing regional potential and inclusivity.
6. Promote the development of community and society through investments such as social enterprises and projects that support the environment.
7. Promote Thai investment overseas to expand business opportunities for Thai companies.

New Strategy for New Economy

The BOI has revised the business categories for investment promotion to reflect a more precise direction of promoting industries such as BCG, high-tech, digital and creative industries, and high-value services.

Additionally, the BOI has added A1+ group privileges for upstream industries that use advanced technology and innovation, such as upstream electronics and targeted technology development activities—including biotech, nanotech, and advanced materials technology— and that engage in technology transfers to academic or research institutions. Such industries can now enjoy corporate income tax exemption for up to 13 years.

The BOI is also adding to the list of activities that are eligible for investment promotion, such as fuel cell electric vehicles (FCEV) and fuel cell equipment, battery swapping stations, hydrogen production from water that uses renewable energy, products for hydrogen electricity generation, novel food, aerospace industry activities, and more.

The Role of BOI

To achieve its aims, Thailand’s investment promotion agency will step beyond the role of “promoter.” BOI intends to assume a comprehensive role, serving as not only a promoter offering tax and non-tax incentives, but also as an integrator of investment support tools, a facilitator of services, and a connector of industries to generate more business opportunities. The BOI seeks to cultivate an ecosystem that facilitates investment, and it will employ all essential tools to achieve this goal, from a robust package of tax and non-tax incentives to a One-Stop Service for pre- and post-investment.

The BOI’s New Economy strategic plan for investment promotion may be another critical turning point in Thailand’s economic transformation towards becoming a high-income country with more equitable wealth distribution.

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To learn more about how your company can maximize the benefits of BOI’s New Economy model, contact Tractus today.

Authored by

Written by Khemthong Chanchao, Consultant based in the Thailand office.