Wannaphong Durongkaveroj
Ph.D.
Candidate
Arndt-Corden
Department of Economics
Crawford
School of Public Policy
College
of Asia and the Pacific ANU
E-mail address: Wannaphong.durongkaveroj@anu.edu.au
 |
| Figure source: https://www.scbeic.com |
Presently, the global economic
system is increasingly interconnected in terms of economics, social affairs,
and politics. A technical term in economic textbooks such as ‘Isolated Country’
was replaced by ‘International Economic
Interdependence’ which refers to the economic interaction condition by
using a business to be a main instrument for connecting each economic system to
one another.
It is well recognized that Thailand
is an export-oriented country. There are many supportive policies for encouraging
international trade such as the free trade agreements, economic integration,
and foreign exchange intervention to devalue the currencies. However, the
international trade can be expanded by the foreign direct investment (FDI) by
which the foreign companies can open businesses or factories in Thailand, use
Thailand as a manufacturing base, exploit local resources, and export goods. Currently,
one of the most important economic policies of Thailand inevitably is the Special Economic Zones (SEZs) policy
which aims to boost the investments among Thai and foreign investors for some
certain businesses. It can be regarded as a practical policy which promotes and
supports the trade and financial liberalization, resource allocation, and
stimulates the economic growth and structural change. Moreover, it can be
viewed as an effective instrument for nourishing industrialization. Especially among
East Asian countries (Ge, 1999; Aggarwal, 2007; Zeng, 2015), the successful
establishment of Chinese Special Economic Zones brought about the expansion of the
aforementioned policy to several countries, for instance, Mexico and India (Ge,
1999; Gleason, Lee, & Mathur, 2002; Bontempi & Prodi, 2009).
In Thailand, the National Policy
Committee on Special Economic Zones was established to consider, approve, and
draft the rules and regulations of the Special Economic Zones as well as controlling,
following, and assessing the operation results. There were the establishments
of 6 subcommittees who are responsible for different areas such as 1) The
Subcommittee on the Privilege, Area Scope, and One Stop Service Investment
Center, 2) The Subcommittee on the One Stop Service Labor, Public Health, and
Security, 3) The Subcommittee on the Infrastructure and Customhouse, 4) The
Subcommittee on the Real Estate Procurement and Administration, 5) The
Subcommittee on the Marketing and Public Relations, and 6) the Subcommittee on Special Economic Zones mobilization at
Area-Level, legislation, announcements, and order for supporting the Special
Economic Zones Operations (National Council for Peace and Order, 2014).
Nevertheless, although the success of the establishment of Special Economic
Zones in many East Asian countries such as China, Singapore, Malaysia, and South
Korea may appeal other countries, not every Special Economic Zone
always succeeds. This is similar to the case of the Special Economic Zones in
Sub-Saharan Africa which were initially established in 1970; however, the
amount of investment and employment barely grew up compared with other
continents. This is mainly because of the lack of good business qualities
(Farole, 2011; Zeng, 2015).
Establishment Law
An important law which supports the establishment of Special
Economic Zones is the Announcement of National Policy Committee on Special
Economic Zones No.1/2558 and No. 2/2558. The details are described down below (Thailand
Office of the Board of Investment, 2015):
1. The Special Economic Zones for Stage
1 According to the Announcement of the National Policy Committee on Special
Economic Zones No.1/2558
1.1 Tak
Special Economic Development Zone consists of 14 sub-districts
in 3 districts which are:
- Mae Sot
District (8 sub-districts consist of Mae Sot, Mae
Tao, Ta Sai Luat, Phra that Pa Daeng, Mae Gasa, Mae Pa, Mae Ku, and Mahawan)
- Phop
Phra District (3 sub-districts consist of Mae Charao, Mae Ramat, and Khane
Chue)
- Located
close to Myawaddy Special Economic Zone in Myanmar.
1.2
Mukdahan Special Development Zone consists of 11 sub-districts in 3 districts
which are:
- Mueang
Mukdahan District (5 sub-districts consist of Si Bun Rueang, Mukdahan, Bang Sai
Yai, Kham Ahuan, and Na Si Nuan)
- Wan Yai
District (4 sub-districts consist of Bang Sai Noi, Chanot, Wan Yai, and Pong
Kham)
- Don Tan
District (2 sub-districts consist of Pho Sai and Don Tan)
- Located
close to Savan-Seno Special Economic Zone in Laos.
1.3
Sakaeo Special Economic Zone consists of 4 sub-districts in 2 districts which
are:
-
Aranyaprathet District (3 sub-districts consist of Ban Dan, Pa Rai, and Tha
Kham)
-
Watthana Nakhon District (1 sub-district consists of Phak Kha)
- Located
close to Poipet O’Neang Speical Economic Zone in Cambodia.
1.4 Trat
Special Economic Zone consists of 3 sub-districts in 1 district which are:
- Khlong
Yai District (3 sub-districts consist of Khlong Yai, Hat Lek, and Mai Rut)
- Located
close to Koh Kong Special Economic Zone in Cambodia.
1.5
Songkhla Special Economic Development Zone consists of 4 sub-districts in 1
district which are:
- Sadao
District (3 sub-districts consist of Samnak Kham, Samnak Taeo, and Padang Besa)
- Located
close to Iskandar Special Economic Zone in Malaysia.
2. The Special Economic Zones for Stage
2 According to the Announcement of the National Policy Committee on Special
Economic Zones No.2/2558
2.1
Chiang Rai Special Economic Zone consists of 21 sub-districts in 3 districts as
which are:
- Chiang
Khong District (7 sub-districts consist of Khrueng, Bun Rueang, Rim Khong,
Wiang, Si Don Chai, Sathan, and Huai So)
- Chiang
Saen District (6 sub-districts consist of Ban Saeo, Pa Sak, Mae Ngoen, Yonok,
Wiang, and Si Don Mun)
- Mae Sai
District (8 sub-districts consist of Ko Chang, Ban Dai, Pong Ngam, Pong Pha,
Mae Sai, Wiang Phang Kham, Si Mueang Chum, and Huai Khrai)
- Located
close to Huay Xai Special Economic Zone in Laos.
2.2 Nong
Khai Special Economic Zone consists of 13 sub-districts in 2 districts which
are:
- Mueang
Nong Khai District (12 sub-districts consist of Khai Bok Wan, Nai Mueang, Ban
Duea, Phra That Bang Phuan, Pho Chai, Phon Sawang, Mi Chai, Wiang Khuk, Si Kai,
Nong Kon Ko, Hat Kham, and Hin Ngom)
- Sakhrai
District (1 sub-district consists of Sakhrai)
- Located
close to Vientiane-Nonhthong Special Economic Zone and Chaiyasathan Development
Zone in Laos
2.3
Nakhon Phanom Special Economic Zone consists of 13 sub-districts in 2 districts
which are:
- Mueang
Nakhon Phanom District (10 sub-districts consist of Kurukhu, Tha Kho, Na sai,
Na Ray Khwai, Nai Mueang, Ban Phueng, Pho Tak, Nong Yat, Nong Saeng, and At
Samat)
- Tha
Uthen District (3 sub-districts consist of Non Tan, Ram Rat, and Woen Phra Bat)
- Located
close to Thakhek Specific Economic Zone and Phoukhyo Specific Economic Zone in
Laos.
2.4
Kanchanaburi Special Economic Zone consists of 2 sub-districts in 1 district
which are:
- Mueang
Kanchanaburi District (2 sub-districts consist of Kaeng Sian and Ban Kao)
- Located
close to the Dawei City in Myanmar.
2.5
Narathiwat Special Economic Zone consists of 5 sub-districts in 5 districts
which are:
- Mueang
Narathiwat District (1 sub-district consists of Khok Khian)
- Tak Bai
District (1 sub-district consists of Chehe)
- Yi-ngo
District (1 sub-district consists of Lahan)
- Waeng
District (1 sub-district Lochut)
- Su-ngai
Kolok (1 sub-district consists of Su-ngai Kolok)
- Located
close to the Kelantan state in Malaysia.
These 10
Special Economic Zones shared the boundaries with the following neighboring
countries:
1.
Myanmar (Tak Special Economic
Development Zone and Kanchanaburi Special Economic Zone)
2.
Laos (Chiang Rai Special Economic
Zone, Mukdahan Special Development Zone, Nong Khai Special Economic Zone, and
Nakhon Phanom Special Economic Zone)
3.
Cambodia (Sakaeo Special Economic
Zone and Trat Special Economic Zone)
4.
Malaysia (Songkhla Special Economic
Development Zone and Narathiwat Special Economic Zone)
The main objective of Special
Economic Zones is to attract foreign direct investment which increases
country’s capability, spreads prosperity to provincial part, reduces
inequality, and also improves quality of life of people in the country. The
Special Economic Zones can be divided into stage 1 and stage 2. Stage 1
consists of the Special Economic Zones in 5 provinces which are Tak, Mukdahan,
Sakaeo, Songkhla, and Trat (National Policy Committee of Special Economic
Development Zones, 2558a). Stage 2 consists of Chiang Rai, Nakhon Phanom,
Kanchanaburi, and Narathiwat. This shows that the areas of these 10 provinces
are the frontier areas in the Great Mekong Subregion Economic Corridors (GMS
Economic Corridors) which allow the entrepreneurs in Special Economic Zones to nationally
and internationally access the factors of production market. The strategy of
Special Economic Zones consists of 3 main areas which are 1) to build new
economic areas, especially along the borders which are connected with
neighboring countries, 2) to support Thai SMEs and continuous investment in
neighboring countries, and 3) to organize border economic areas and to resolve
the illegal alien labor and smuggling of agricultural products from neighboring
countries problems. (National Policy Committee of Special Economic Development
Zones, 2558b; Office of the National Economic and Social Development Board,
2015)
Support from the Government Sector
The corporations investing in the Special Economic Zones generally
receive governmental support such as tax incentives and organization
facilitation. Moreover, if it is a business in the target activities, the owner
will receive more fiscal privileges and benefits, for instance, the measures provided
by the Office of the Board of Investment (BOI) and the Ministry of Finance.
The
requirements for considering a target business of Special Economic Zone are: 1)
it must be a high labor-intensive business; 2) it must be a business that uses
materials made from agricultural products or materials made in the region or
neighboring countries; 3) it must not be a heavy industry; and 4) it must not be
a business that can cause pollution.
In terms of
the investment promotion measures under BOI, business activities can be divided
into 2 types as follows:
1. General Activities (under the BOI’s
list of eligible activities)
2. Targeted Activities (13 industrial
sectors)
The
investment promotion measures of these 2 groups are listed below in Table 1.
Table 1 The Investment Promotion
Measures under BOI’s List of Eligible Activities
In case of general activities
under the BOI’s list of eligible activities
|
Targeted Activities (13 Industrial
Sectors)
|
Exemption
of corporate income tax for a 3-year period, but altogether not exceeding 8
years
|
Exemption
of corporate income tax for a period of 8 years (not exceeding 100 percent of
investment value, excluding the cost of land and working capital)
|
For
projects in the A1 or A2 category, which are entitled to 8-year corporate
income tax exemption, an additional 50 percent reduction of corporate income
tax for a period of 5 years will be granted
|
50
percent reduction of corporate income tax for a period of 5 years
|
-
Double deduction from the costs of transportation, electricity and water
supply
-
A 25 percent deduction of the project infrastructure installation
/construction costs from the
project capital (in addition to the deduction in depreciation expenses)
- Exemption of import duties on
machinery
-
Exemption of import duties on raw or essential materials used in
manufacturing of export products
- Permission to employ foreign
unskilled labor
- Other non-tax incentives such as
land ownership and bringing in foreign skilled labor or experts
|
Same
as general activities
|
Remarks: The projects in A1 are knowledge-based activities, focusing
on design and R&D to enhance the country’s competitiveness, for example,
industrial zones or industrial estates, biotechnology, and electronic design.
The projects in A2 are activities in infrastructure for the country’s
development, activities using advanced technology to create value added, with
none or very few existing investments in Thailand such as manufacture of fibers
with specialty qualifications, production of electricity from renewable energy,
rail transport, and ocean marina service.
Targeted Activities
The targeted activities in the Special Economic Development
Zones have 7 sections which are categorized into 13 industrial sectors. They
can be separated into 62 activities as shown in Table 2:
Table 2 Target Activities in the Special Economic Development Zones
Section
1 Agriculture and Agricultural Products
|
|
Agricultural, fishery and related
industries
|
- Livestock and aquatic animal
propagation
- Livestock husbandry or aquaculture - Slaughtering - Grading, packaging and storage of plants, vegetables, fruits or flowers - Modified starch or starch made from plants that have special properties - Oil or fat from plants or animals - Natural extracts or products from natural extracts - Primary processed rubber - Preservation of food, beverages, food additives or food ingredients using modern technology - Cold storage or cold storage transportation - Trading centers for agricultural goods |
Section
2 Mining, Ceramics and Basic Metals
|
|
Ceramic Industries, ceramic
products
|
- Manufacture of ceramic products (except
earthen ware and ceramic tiles)
|
Section 3 Light Industry
|
|
Textile and garment industries
|
- Manufacture of natural or
synthetic fibers
- Manufacture of yarn or fabric - Manufacture of garments, clothing accessories, and household textiles - Manufacture of non-woven fabric or hygienic products made of non-woven fabric - Manufacture of bags or shoes or products made of leather or artificial leather - Manufacture of sports equipment or parts |
Manufacture of furniture
|
- Manufacture of furniture or
parts
|
Gems and jewelry
|
- Manufacture of gems and jewelry
or parts including raw materials and prototype
|
Medical equipment
|
- Manufacture of medical devices
or parts
|
Section
4 Metal Product, Machinery and Transport Equipment
|
|
Automotive, machinery, and parts
|
- Manufacture of multi-purpose
engines and equipment
- Manufacture of machinery, equipment and parts and/or repair of mold and die - Assembling of machinery and machinery equipment - Manufacture of other vehicle parts - Manufacture of motorcycles (except less than 248cc engine displacement) |
Section
5 Electrical Appliance and Electronics
|
|
Electrical appliance and
electronics
|
- Manufacture of electrical
products
- Manufacture of LED lamps - Manufacture of compressors and/or motors for electrical appliances - Manufacture of wire harnesses - Manufacture of parts and/or equipment for other electrical products - Manufacture of audio visual products - Manufacture of office electronics - Manufacture of other electronic products - Manufacture of hard disk drives and/or parts - Manufacture of top covers or base plates for hard disk drives - Manufacture of flexible printed circuits and/or multi-layer printed circuit boards - Manufacture of other memory storage equipment - Manufacture of printed circuit board assembly - Manufacture of parts for audio visual products - Manufacture of parts for office electronics - Manufacture of parts for other electronic product |
Section
6 Chemicals and Plastics
|
|
Chemical and plastic industries,
manufacture of plastic
|
- Manufacture of plastic products
for industrial goods
- Manufacture of multilayer plastic packaging - Manufacture of aseptic plastic packaging - Manufacture of antistatic plastics packaging - Manufacture of plastic products from recycled plastic. |
Medicine
|
- Manufacture of medicine
|
Section
7 Service and Public Utilities
|
|
Logistics
|
- Container yards or inland
container depots (ICD)
- Distribution Center (DC) - International Distribution Center (IDC) |
Industrial estates/zones
|
- Industrial zones or industrial
estates
- Gem and jewelry industrial zones - Logistics Park |
Tourism-related industry
|
- Ferry services or tour boat
services or tour boat renting
- Tour boat port services - Amusement parks - Cultural centers or arts and crafts centers - Open zoos - Aquariums - International exhibition centers - Health rehabilitation centers |
However,
these 10 Special Economic Zones have a variety of supportive measures for
different industrial sectors in each area. The details are shown below in Table
3.
Table 3 Targeted Activities Promoted in Each Area
Tak
|
Sa
Kaeo
|
Trat
|
Mukdahan
|
Songkhla
|
Chiang
Rai
|
Nong
Khai
|
Nakhon
Phanom
|
Kanchanaburi
|
Narathiwat
|
|
1. Agricultural, fishery and
related industries
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
Using incentives under the
investment promotion measures in the southern boarder provinces according to Special
Economic Zones policies.
|
2. Ceramic Industries, ceramic
products
|
x
|
x
|
x
|
|||||||
3. Textile, garment, and leather
industries
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
|||
4. Manufacture of furniture
|
x
|
x
|
x
|
x
|
x
|
x
|
||||
5. Gems and jewelry
|
x
|
x
|
x
|
x
|
x
|
|||||
6. Medical equipment
|
x
|
x
|
x
|
x
|
x
|
|||||
7. Automotive, machinery, and parts
|
x
|
x
|
x
|
x
|
||||||
8. Electrical appliances and
electronics
|
x
|
x
|
x
|
x
|
x
|
|||||
9. Plastics
|
x
|
x
|
x
|
x
|
x
|
|||||
10. Medicine
|
x
|
x
|
x
|
x
|
x
|
|||||
11. Logistics
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
|
12. Industrial estates/zones
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
|
13. Tourism related industry
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
x
|
Moreover,
there are 10 additional targeted activities which will be announced later as
follows:
1.
Crop drying and silo facilities
2.
Products from agricultural
by-products or agricultural waste
3.
Fabrication industry
4.
Production of printed matters
5.
Manufacture of animal feed or mixes
for animal feed
6.
Manufacture of construction
materials and pre-stressed concrete products for public utilities projects
(except ceramic roof tiles, wall tiles, and floor tiles)
7.
Manufacture of body care products
such as soaps, shampoos, tooth pastes
8.
Manufacture of plastic for consumer
products such as plastic packaging
9.
Manufacture of fiber or paper
articles such as carton box
10.
Real estate development for
industrial plants and/or warehouse
However, the Board of Investment
(BOI) also has set the Seven-Year Investment Promotion Strategy (2015-2022)
which changed the terms of incentives for promoting activities from allocating
incentives to each zone (zone 1-2-3), in which Zone 3 received the highest
number of incentives, to two new approaches of privilege and benefit allocation
as follows: 1) activity-based incentives which are separated into Group A (A1
are knowledge-based activities, focusing on R&D. A2 are activities using
advanced technology and have complex manufacturing process) and B; and 2)
merit-based incentives such as additional corporate income tax exemption if
there are investments or the total consumption is not less than one percent of
the total sale volume over the first three years (The board of Investment,
2014). Nevertheless, due to the changing strategies of BOI, some activities no
longer received the support from BOI, for example, forestry plantation,
smelting, and manufacture of abrasive paper. Furthermore, there was also an issue
about the areas that BOI no longer supported. In addition, Table 4 shows the connection
between the BOI’s former strategic plan and Special Economic Zones for
analyzing each area.
Table 4: The Connection between
Special Economic Zones and the Former Investment Promotion Measure
Special Economic Zones
|
|||||
Stage 1
|
Stage 2
|
Area outside the SEZ
|
Total
|
||
BOI’s Former Strategic Plan
|
Zone 1
|
-
|
-
|
Bangkok, Nakhon Pathom,
Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon
|
6 Provinces
|
Zone 2
|
-
|
Kanchanaburi
|
Chachoengsao, Chonburi, Nakhon
Nayok, Ayutthaya, Phuket, Rayong, Ratchaburi, Samut Songkhram, Saraburi,
Suphan Buri, and Ang Thong
|
12 Provinces
|
|
Zone 3.1
|
Tak, Trat, Mukdahan, Sa Kaeo, Songkhla
|
Chiang Rai
|
Krabi, Kamphaeng Phet, Khon Kaen,
Chanthaburi, Chainat, Chumphon, Chiang Rai, Chiang Mai, Trang, Nakhon
Ratchasima, Nakhon Si Thammarat, Nakhon Sawan, Prachuap Khiri Khan,
Prachinburi, Phang Nga, Phatthalung, Phichit, Phitsanulok, Phetchaburi,
Phetchabun, Mae Hong Son, Ranong, Lopburi, Lampang, Lamphun, Loei, Sing Buri,
Sukhothai, Surat Thani, Uttaradit, and Uthai Thani
|
36 Provinces
|
|
Zone 3.2
|
Narathiwat, Nong Khai, Nakhon
Phanom
|
Kalasin, Nan, Buri Ram, Pattani,
Phayao, Phrae, Maha Sarakham, Yasothon, Yala, Roi Et, Si Sa Ket, Sakon
Nakhon, Satun, Surin, Nong Bua Lam Phu, Chaiyaphum, Ubon Ratchathani, Udon
Thani, and Amnat Charoen
|
22 Provinces
|
||
Total
|
5 Provinces
|
5 Provinces
|
66 Provinces (67 including Bueng
Kan)
|
76 Provinces
(77 Provinces including Bueng Kan)
|
|
Source:
The Committee on Special Economic Zone Policies (2558a)
Table 4 shows
that the Special Economic Zone policies were mostly implemented in Zone 3.1 and
3.2 according to the former strategic plan of BOI. This appointed 10 provinces
as the Special Economic Zones supported by the government. However, caused by the
changing strategies of BOI from giving incentives based on the production
activities in each area, 49 provinces were deprived of getting support. This
may affect the economy and the society due to the moves of industries and
factories to new supported areas.
Presently,
apart from the Special Economic Zones organized by the government and the
investment promotion measures under the Board of Investment, there is also another
policy so-called ‘cluster promulgation’. A cluster is the gathering of
interconnected businesses and related institutions that operate within the same
geographic areas. The purpose of promoting business clusters is to boost the
level of support and cooperation in all facets of the business, in order to
strengthen the industrial value chain. There are the Special Economic Zones in form
of clusters which have goals consisting of 2 stages: 1) super clusters which
include clusters of businesses using advanced technology and future industry
such as automotive and parts, electrical appliances, electronics and
telecommunication equipment, and medical hub; 2) other targeted clusters such
as agro-processing products, and textiles and garment (Board of Investment,
2015). The principle of clusters is unchangeably about tax and non-tax benefits,
for example, 8-year corporate income tax exemption and additional 5-year 50%
reduction, and permission for foreigners to own land to implement the promoted
activities. Therefore, nowadays, the government has
many proactive policies emphasizing on manufacturing and service.
In
conclusion, according to the Special Economic Zones of Thailand, there are interesting
issues as described below:
1.
The Special Economic Zones policy
can be regarded as a ‘top-down’ policy; the central government (or the Office
of The National Economic and Social Development Board) selects certain specific
areas to be the Special Economic Zones, then decentralizes duties, and
responsibilities to each area (towards the provincial governors). In fact, it
found out that Special economic Zones in each area were initiated due to the
need of each area. After having the public discussions with the local people,
the provincial governors proposed the areas under their own responsibilities to
be Special Economic Zones. All of these areas are the areas along the borders.
Moreover, different industries receiving such support were also chosen from the
provincial governors’ proposals; this reflected the need of local people towards
seminars or public discussions.
2.
The Special Economic Zones policy is
the distorted incentive policy for producer market. In other words, the
government has clearly identified areas, targeted industries that need the
support, and incentives; this affects the decisions of the private sector on
the favorable types of industry for manufacturing and the most appropriated
areas for their own industries. The Special Economic Zones policy can be
regarded as a market intervention activity.
3.
The Special economic Zones of
Thailand were established after Thailand participated in the development of
neighboring countries’ Special Economic Zones. This issue was susceptible in
terms of politics and international relations due to the fact that neighboring
countries may consider the Special Economic Zones of Thailand as the
competitors of their Special Economic Zones. Therefore, this policy did not
promote the economic integration (the AEC in particular) which has become in
effect since 2015.
4.
The laws supporting Special Economic
Zones were still limited at the level of announcements under the National
Policy Committee on Special Economic Zones. The private sector, especially
foreign investors, may consider this as the instability in terms of laws.
Although the Special Economic Zones Act is in the consideration process, the
process which occurred after the establishment of the Special economic Zones is
too delayed; therefore, the initial stage of this policy may cause some
hesitation to invest or make any contract for renting long-term areas which
limited to minimum of fifty years among the investors.
5.
All of these ten areas of Special
Economic Zones are the border areas which are the connecting points of ASEAN
Highway Network. Hence, they do not cause a lot of economic impacts which derived
from mega projects because there were the infrastructure operations such as
roads, electricity, water supply, and other public utilities settled in the
areas already. However, the policy will support the fast development of
logistics system in ASEAN. Furthermore, the government should operate the
infrastructure development without delay in these ten areas simultaneously.
Since the original conditions of each area are diverse, the amount budget and
time may be differently spent as well. The government should focus on the areas
where the level of development is still low in order to boost up the confidence
of the private sector and facilitate their decision-making on the moves of
production bases in different areas.
6.
In terms of incentives, investors
can use incentives after installing their factories. During the first two to
three years (the period of time may be different as it depends on the type of the
industry), the companies may not gain much profit, so they do not have to pay
the corporate income tax. Therefore, the companies may not receive any
advantage from this policy in terms of tax incentives, so the government should
increase additional incentives apart from the tax incentives to the companies at
the initial stage of investment.
7.
There are no special differences
that can attract Thai and foreign investors between the following tax
incentives which are: 1) general activities which have been supported by the BOI
according to the announcement of the Board of Investment No.2/2557 focusing on
the investment promotion policies and measures for investing in general
activities in the country, and 2) targeted activities according to the Special
Economic Zones policy specified by NC-SEZ (the national Committee on Special
Economic Zone Development). Therefore, the Special Economic Zones policy will
be considered as special only in terms of public utilities inside the industrial
estates in each area of Special Economic Zones.
8.
The regulation for considering
targeted activities of Special Economic Zones does not conform to 20-Year
National Strategy, BOI policies, and Thailand 4.0 Policy because it is
implemented for the labor-intensive industries while other policies focus on
the capital/technology-based industries. Therefore, the Special Economic Zone Policy
does not support Thailand’s advanced industries but the unskilled and low-cost
labors in light industry.
9.
The government should consider what
local people can receive from the establishment of the Special Economic Zones.
In terms of hiring alien labors, the negative and positive impacts on Thai
citizens or local labors in the Special Economic Zones should be considered.
10.
The Special Economic Zones aim to
promote environmentally friendly production. However, the policy still allows
the double deduction of delivery, electricity, and water expense for 10 years.
This policy does not support or promote the awareness of the companies on the
environmental issues or productive usage of electricity and water supplies
because of the double deduction. Therefore, this measure contradicts to the
principle of the Special Economic Zones.
11.
Each province has different targeted
activities promotions, so there are differences in amount of investment and
investment atmosphere. The government should realize the impacts in regards to the
different welfare and future production expansion.
12.
Trading and manufacturing are not
the same issue. Although a border area is an area where a high number of cross-border
trades and high value exists, it is not necessary to produce goods in this area
to export products and services to neighboring countries where customer purchasing power is lower than in Thailand. To choose a manufacturing
area (including establishing an industrial estate) should be based on the basis
of capital and delivery advantages; this does not only require the consideration
on the volume of trade numbers, but also the overall image of trading partners.
In
conclusion, the Special Economic Zone policy is a new policy of Thailand which
promotes international trade effectively. However, the incentives, targeted
industries, and patterns and mechanisms should be modernized and conform to
other policies.
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