Thailand’s Board of Investment (BOI) has unveiled five strategic measures to mitigate the effects of US tariffs and the global trade war, aiming to boost the competitiveness of Thai businesses and fortify local supply chains.
Key initiatives include:
- Enhanced Support for SMEs: Corporate income tax exemptions for SMEs investing in modernization, automation, and digital technology have been extended from three to five years, with a full exemption on investment in operational efficiency.
- Boosting Domestic Supply Chains: A 50% corporate income tax reduction for an additional two years is offered to EV and appliance manufacturers that meet specified local content requirements (e.g., 40% for BEVs, 45% for PHEVs).
- Investment Organization and Protection: Promotion is being discontinued for certain low-tech and oversupplied industries (like solar panels, automotive accessories, and finished steel products) to protect domestic producers. Additionally, businesses in furniture and bag production will require majority Thai ownership.
- Preventing Trade Circumvention: Stricter production process requirements, including a minimum four-digit change in customs classification, are mandated for key export industries. Businesses involved in metal production, chemicals, plastics, and metalworking will also be restricted from owning land and must operate within industrial estates.
- Promoting Local Employment: Manufacturing businesses with over 100 employees must ensure at least 70% of their workforce is Thai nationals. Minimum income thresholds for foreign specialists (e.g., 150,000 baht for executives, 50,000 baht for specialists) are also being implemented to attract high-skilled talent and promote knowledge transfer.
The Board of Investment (BOI) of Thailand is promoting the use of local components in the electric vehicle (EV) and electrical appliance sectors through a combination of incentives and requirements designed to strengthen domestic supply chains.
Key measures include:
- Incentives for Local Content:
- EV and appliance manufacturers that meet specified local content requirements are eligible for a 50% corporate income tax reduction for an additional two years.
- The local content requirements are set as follows:
- For Battery Electric Vehicle (BEV) production: at least 40% of the total value of raw materials must be sourced locally.
- For Plug-in Hybrid Electric Vehicle (PHEV) production: at least 45%.
- For EV parts: at least 15%.
- For electrical appliances: at least 40%.
- Companies must obtain “Made in Thailand” (MiT) certification from the Federation of Thai Industries to qualify for these benefits.
- Support for Local Parts Manufacturers:
- These initiatives aim to expand opportunities for Thai parts manufacturers and integrate them into global supply chains.
- The BOI will facilitate business-matching activities, such as SUBCON Thailand and Business Matching events, and organize Sourcing Day events in collaboration with leading companies in the automotive, electronics, and electrical appliance industries.
The implications for local parts manufacturers are significant, as these measures are designed to create demand for their products by encouraging foreign companies to source a substantial portion of their components locally. This integration into the EV and electrical appliance sectors is expected to bolster the growth and competitiveness of local parts manufacturers.
These measures are designed to mitigate risks from US trade policies, protect domestic industries, and create a balanced business environment, thereby ensuring Thailand’s economic resilience and competitiveness.
