BOI In­cen­tives in Thai Aero­space

Thai-American Business (T-AB) Magazine - - Contents - John Fran­gos is Con­sul­tant and Na­pat Siri- ar­mart is At­tor­ney- at- Law at Tilleke & Gib­bins. They can be con­tacted at John. Fr@ tilleke. com and Na­pat. S@ tilleke. com. Yanika Chan­tarasak also pro­vided as­sis­tance. Writ­ten by: John Fran­gos and Na­pat Siri-

The Thai gov­ern­ment has iden­ti­fied the avi­a­tion in­dus­try as a key driver for the coun­try’s eco­nomic growth. To spur in­vest­ment in aero­space man­u­fac­tur­ing, the Gov­ern­ment, through the Board of In­vest­ment ( BOI), has in­tro­duced a num­ber of in­cen­tives. The ar­eas of fo­cus in­clude the man­u­fac­tur­ing and re­pair of air­craft and air­craft com­po­nents.

Most of the in­cen­tives in­volve tax ex­emp­tions. These in­clude re­lief on cor­po­rate in­come tax ( CIT) and im­port du­ties. Non­tax in­cen­tives in­clude the right to op­er­ate a busi­ness with a for­eign- ma­jor­ity owned struc­ture, work per­mits for ex­pa­tri­ate work­ers, for­eign land own­er­ship, and per­mits to take or re­mit for­eign cur­rency abroad. Be­low is a ta­ble high­light­ing the in­cen­tives.

MERIT- BASED IN­CEN­TIVES

Ex­am­ples of merit- based in­cen­tives are as fol­lows:

Mer­its for com­pet­i­tive­ness en­hance­ment - These in­clude projects that in­volve re­search, tech­nol­ogy de­vel­op­ment and in­no­va­tion, tech­nol­ogy do­na­tions, hu­man re­source de­vel­op­ment funds, and IP ac­qui­si­tions. Mer­its for de­vel­op­ment of in­dus­trial ar­eas - These are for projects lo­cated within an in­dus­trial es­tate or a pro­moted in­dus­trial zone. Mer­its for de­cen­tral­iza­tion - These in­clude in­vest­ment projects that are lo­cated in 20 des­ig­nated low- in­come prov­inces. The prov­inces are: Kalasin, Chaiya­phum, Nakhon Phanom, Nan, Bueng Kan, Buri Ram, Phrae, Maha Sarakham, Muk­da­han, Mae Hong Son, Ya­sothon, Roi Et, Si Sa Ket, Sakhon Nakhon, Sa Kaew, Sukhothai, Surin, Nong Bua Lam­phu, Ubon Ratchatan, and Am­natcharoen ( ex­clud­ing bor­der prov­inces in South­ern Thai­land and Spe­cial Eco­nomic De­vel­op­ment Zones which have sep­a­rate spe­cial in­cen­tive pack­ages).

As for the zon­ing, the BOI used to tar­get zon­ing clus­ters for the aero­space in­dus­try, but by virtue of a re­cent BOI no­ti­fi­ca­tion is­sued on Novem­ber 29, 2016 the BOI can­celled the tar­get clus­ters for the aero­space in­dus­try, and al­lowed projects to be set up in any area ( sub­ject to other laws, such as build­ing con­trol laws, town plan­ning laws, etc.).

IN­DUS­TRIAL ES­TATE

In ad­di­tion to the in­cen­tives, the gov­ern­ment is es­tab­lish­ing a spe­cial­ized aero­space in­dus­trial es­tate at U- Ta­pao- Pat­taya In­ter­na­tional Airport. The plan is be­ing ex­e­cuted in three phases:

1. The Aero­space In­dus­trial Es­tate - planned uti­liza­tion is a to­tal of 80 hectares; 2. Orig­i­nal Equip­ment Man­u­fac­tur­ers -

planned uti­liza­tion of 50 hectares; and 3. Maintenance Re­pair Op­er­a­tion sec­tor – planned uti­liza­tion of 32 hectares.

CON­CLU­SION

Thai­land is tak­ing pos­i­tive mea­sures to pro­mote in­vest­ment in avi­a­tion. If the plans come to fruition, Thai­land has the po­ten­tial to be­come a cen­tral avi­a­tion man­u­fac­tur­ing hub in South­east Asia. To ul­ti­mately achieve that goal, along with eco­nomic in­cen­tives, the coun­try must in­vest in re­search and de­vel­op­ment, as well as en­gi­neer­ing and avi­a­tion train­ing. The BOI has rec­og­nized this fact. Hope­fully the com­bi­na­tion of the right in­cen­tives and an im­prove­ment in hu­man re­sources will en­able Thai­land to raise its avi­a­tion sec­tor to new heights.

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