BOI Announcement Related to Cluster DevelopmentComments Off on BOI Announcement Related to Cluster Development
According to BOI announcement no. 10/2558, the Thai Board of Investment (“BOI”) has launched a new program called “Moving Ahead with Cluster Development” on 23 Nov. 2015. Its purpose is to strengthen the value chain and consequently creating future industries, enhance investment competencies to attract value-added investment from existing and new investment, and to decentralize developments, as well as create opportunities to SMEs.
1. What is Cluster Development?
A cluster is a concentration of complementary and interconnected businesses and related institutions that operate within the same geographic areas. The aim of promoting business clusters is to boost the level of support and cooperation in all facets of the business, both vertical and horizontal, to strengthen the industrial value chain, enhancing the country’s investment potential and competitiveness, and expand socio-economic development to regional and local levels.
2. Types of Cluster
In the initial stage, the cluster promotion will grant privileges to following two types of Clusters:
a. Super Clusters
Super Clusters aim to privilege any activity using advanced technology and future industries by offering tax privileges:
- Eight years corporate income tax exemption, and
- A 50 percent reduction from the regular rate of corporate income tax on the net profit deriving from the promoted activity for five years counting from the expiry date of the corporate income tax exemption
- Other incentives and privileges will be in accordance the criteria prescribed in BOI Announcement No. 2/2557 dated December 3, 2014
b. Other Targeted Clusters
Other targeted clusters and any activity supporting cluster development such as agriproduct processing, textile & garment, logistic, research, etc. will obtain the same tax privileges as mentioned above.
3. Criteria for Investment Promotion
The condition of the new promotion is to corporate with academic institutions or research institutes including with submitting the application of the new project within the end of the year 2016 and having an income from the new project within the end of the year 2017.
4. Promoted Activities
The clusters for investment promotion include the following activities:
- Automotive and parts (located in Ayutthaya, Pathumthani, Chonburi, Rayong, Chachoengsao, Prajinburi and Nakorn-Ratchasima),
- Electronic Appliance and Electronics and Telecommunication Equipment (located in Ayutthaya, Pathumthani, Chonburi, Rayong, Chachoengsao, Prajinburi and Nakorn Ratchasima),
- Petrochemical and Eco-Friendly Chemical Product (located in Chonburi and Rayong),
- Digital Industry (located in Chiangmai and Phuket),
- Garment Clothing (located in Kanchanaburi, Nakornpathom, Ratchaburi, Samutsakorn, Chonburi, Chachoengsao, Prajinburi, and Sa-Kaeo), and
- Agro-processing (located in Chiang Mai, Chiang Rai, Lampang, Lamphun, Khon Kaen, Nakhon Ratchasima, Chaiyaphum, Kan Chana Buri, Ratchaburi, Petchaburi, Prachuab Khiri Khan, Rayong, Chanthaburi, Trat, Chumphon, Surat Thani, Krabi and Songkhla)
The purpose of locating and operating the promoted projects in particular zones is to establish areas in Thailand where specific business sectors are concentrated. The BOI supports this by providing for the electricity grid, water supply, and infrastructure that are developed to the specific activities’ requirements and are ready for business. The political goal of the program is to prevent countrymen from moving to Bangkok Metropolis for work. The new promotion should also help low-income workers in rural areas and give them opportunities outside the agricultural sector.