Thailand’s Economic Outlook and
Policies for Growth
Ms. Ketsuda Supradit Minister (Economic and Finance)
for UK and Europe
for Discover Thailand Seminar:
Business Opportunities at House of Commerce,
Iceland Federation of Trade
6 September 2016
2
Outline
1. Key facts
3. Economic Policies for Growth
4. Why should you invest in Thailand?
2. Recent Economic Situation and Outlook
Key facts….
• Area: 513,120 sq km
• Population: 67 million
• Top five cities by GPP: Rayong (East), Chacherngsao (East), Bangkok (Central), Chonburi (East), Ayudhaya (Central)
• Currency: Baht (current 1 Euro = 36 Baht)
• GDP: US$395.3bn (2015), 2nd largest economy of Southeast Asia
• Real GDP growth: 7.8pc (2010), 0.1 pc (2011), 6.5pc (2012), 2.8pc (2013), 0.9 pc (2014), 2.8 pc (2015) 3.0-3.5 pc (2016)
• GNI per capita : US$5,410, a upper-income country since 2011.
• GDP share of world total: 0.5pc
4
Thailand’s GDP composition
Manufacturing 34%
Services 44%
Agriculture 13%
4.5% 4.5%
5
Services (44 pc) (consists of wholesale and retail trade (13 pc),
transport, storage and communication (7 pc) hotels and restaurants
(5 pc) Manufacturing (34 pc), Agriculture (13 pc)
2. Recent Economic Situation and Outlook
1. Recent Economic Situation
Thai economy in Q2/16 expanded by 3.5%,
accelerating from the previous quarter mainly due to domestic demand
while exports also improved
Source: National Economic and Social Development Board, Thailand 7
3.2 1.9 2.4
-4.1
2.9
6.1 5.0
15.3
5.2
2.6 2.5
0.5
-0.5
0.8 0.9 2.1
3.0 2.7 2.9 2.8 3.2 3.5 3.3
1.3
-0.2 1.4
-6.8
9.5
2.3 0.6
1.7
0.7
-0.3 0.5 -0.3 0.0 0.7 0.4 0.9 0.7 0.6
0.8
0.8 1.0 0.8
-8.0
-3.0
2.0
7.0
12.0
17.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 YF
2011 = 0.8% 2012 = 7.2% 2013 = 2.7% 2014 = 0.8% 2015 = 2.8% 2016(YTD)
= 3.4%
Real Gross Domestic Product
%yoy %qoq sa
Source: Ministry of Commerce, National Statistics Office, and Bank of Thailand
1. Economic Situations and Outlook: Internal and
External Stability
Internal economic stability External economic stability
8
1.1
0.0
2.0
4.0
6.0 Unemployment (%)
178.7 3.2
0.0
1.0
2.0
3.0
4.0
5.0
0
50
100
150
200
250
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q1-1
6
Q2-1
6
USD bn Reserves (Bil. USD)Reserves/ST External Debt…
5.4
16.7
-10.0-5.00.05.010.015.020.0
-15.0
-5.0
5.0
15.0
25.0
35.0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q1-1
6
2M
/Q2-1
6
Current Account Balance (Mil. USD)
Current Account to GDP (%) (RHS)
0.1
0.8
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q1-1
6Q
2-1
6Ju
l 16
Inflation (%) Headline Inflation…
Core Inflation…
Source: Bank of Thailand, Ministry of Finance, and IMF Fiscal Monitor (April 2015)
Fiscal Sector Financial Sector
1. Economic Situations and Outlook: Financial and
Fiscal Stability
9
17.6
0.04.08.0
12.016.020.0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q1-1
6M
ay-1
6
Capital Adequacy Ratio
(BIS Ratio)
44.4
0.0
20.0
40.0
60.0
80.0
Public Debt to GDP Fiscal Sustainability Framework at 60
94.2%
5.8%
Domestic External
96.7%
3.3% Long-term
Short-term
87.0%
13.0%
Long-term
Short-term
By instrument types
By remaining maurity
Public Debt Component
1.3
-1.0
1.0
3.0
5.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mar-
16
Jun
-16
Net NPLs
(% to Total Loan)
Main Challenges
1. Export Declining
3. Aging Society
4. Middle Income Trap
2. Income Inequality
11
12
2. Economic Policies for Growth
How can we get out?
1. Stimulate Domestic Growth
3. Promote Inclusive Economic
Growth
2. Raise Productivity
2. Economic Policies for Growth
New Growth Strategies
1. Maintain Strong Economic Foundation
3. Seed the new S-curves or Hi-tech industries
2. Strengthen the existing industries or S-curves industries
2. Economic Policies for Growth
3 Main Focuses
1. Improve supporting infrastructure
Fintech: PromptPay
physical infrastructure
2. Economic Policies for Growth
3 Focuses
2. private investment:- in future industries
tax and non-tax incentives provided to hi-tech
industries (S-Curve Industries)
encourage immediate investment.
2. Economic Policies for Growth
facilitate private sector participation in large public investment projects
border towns near our high growth neighbours will be established.
3 Main Focuses
3 Focuses
3. Improve productivity
Encourage more coordinate between
businesses and acadamic sector
Promote research and development (R&D)
2. Economic Policies for Growth
incentives for private sector to do more R&D
3 Main Focuses
4 Layers to thoroughly support economic growth and
boost private investment
2. Economic Policies for Growth
19
4
2
1
Hi-tech Industries
SMEs & New
Start-Up
Individuals & Villages
Upgrade Existing Industries
3
2.1 Local-level short-term treatments and
competitiveness enhancements
2. Economic Policies for Growth
1. Village funds
for investment
projects
2. Village and
sub-district funds
for public utilities
3. Drought treatments and
Competitiveness
Enhancement
3.1 Soft loans for urgent
expenses in 1 year
3.2 Soft loans for SME per sub-
district in 10 years
3.3 Soft loans to modify crops
in 1 years
2.2 New PIT Deduction and Allowances for 2017 tax year
onward
Personal Income Tax
Structure
Taxable Income up to
150,000 baht
Exempt
150,000 – 300,000 baht 5%
300,001 – 500,000 baht 10%
500,001 – 750,000 baht 15%
750,001 – 1,000,000 baht 20%
1,000,001 – 2,000,000
baht
25%
2,000,001 – 5,000,000
baht
30%
5,000,001 baht and
above
35%
Deduction
Reduce tax burden
and improve
income distribution
2. Economic Policies for Growth
Current 40% of
assessable
income but
not exceed ฿
60,000
New 50% of
assessable
income but
not exceed
฿100,000
Please visit www.mof.go.th
for full detail
Allowances
Current Personal : ฿
30,000 Child
: ฿15,000
each (limited
to 3 children)
New Personal : ฿
60,000 Child
: ฿30,000
each (for all
children)
2.3 SMEs empowerment: Financial Assistance
2. Economic Policies for Growth
22
1. Guarantee Scheme
2. Venture Capital Fund
3. Policy Loan
4. Credit Guarantee for Micro entrepreneurs
5. Soft Loan for Replacing New Machines and Expanding Factories
1. SMEs OUT of One Bookkeeping System
23
2.3 SMEs empowerment: Corporate Income Tax Privileges
2. Economic Policies for Growth
2. SMEs IN One Bookkeeping System (Consolidate financial
accounts and enter tax system)
2016 Tax year
2016 Tax
year
2017 Tax
year 0-300,000 baht 0-300,000 baht
300,001 baht
up
300,001 -3,000,000 baht
3,000,001 baht up
2017 Tax
year 0-300,000 baht
300,001 baht up
Net Profit
Net Profit
• S-Curve industry – CIT Exemption
• Innovation Technology Credit Guarantee Scheme
• Tax Exemption for Venture Capital Fund of
dividends and capital gain for New Start-up company
24
2. Economic Policies for Growth
2.4 New Start-up: Tax Privileges and Credit
Guarantee Scheme
2. Economic Policies for Growth
25
Super Clusters
Automobile & Parts
2.6 Strengthen the Super Clusters
Petrochem &
Eco-Friendly
Chemicals
Appliance
Electronic &
Telecom
Digital Agro
Products
Textile & Apparel
Strengthen
Value Chain
Linkages to research institutions & universities
Additional Support to R&D Activities
BOI Privileges
(Tax and Non-Tax)
26
2. Economic Policies for Growth
2.7 Seeding the New S-Curves
First S-Curve
Upgrade Existing Industries
New S-Curve
Next-generation automotive
Smart Electronics
Affluent, medical, &
wellness tourism
Agriculture & Biotech
Food for the future
Robotics Biofuels &
Biochemical
Aviation & Logistics
Digital
Medical hub
Develop New hi-tech Industries
BOI
Privileges
Additional
Tax
Incentives
Joint Venture
Fund for
R&D
investments
2.8 Business Competitiveness Enhancement
2. Economic Policies for Growth
27 Source: KPMG, 2015
Lower Corporate Income Tax to 20% permanently, the 3rd
lowest in ASEAN.
2.9 Business Competitiveness Enhancement
2. Economic Policies for Growth
28
• Reinforce digital economy development Improve social welfare
management
• Reduce cash handling & transaction cost Enhance efficiency and
transparency
PromptPay &
Card Usage
Promotion e-Tax Government
e-Payment
• e-Withholding
Tax
• e-Tax Invoice
and e-Receipt
• e-Filing
• To enable
e-Payment
using
alternative ID
• To promote
debit card
usage
• To integrate
social welfare
database
• To promote
e-Payment for
government
transactions
29
2.10 Logistic Infrastructure Investment Projects in FY2015-
2023 (฿1.796 tril., $51.3 bil.)
2. Economic Policies for Growth
Photo credit: theNounProject.com
Express ways
160 billion baht (8.9%)
Double-track
railway system
118 billion baht (6.6%)
Double-track rail
system
(standard-gauge)
1.1 trillion baht
(59.3%)
Mass rapid transit
in Bangkok and
Metropolitan
397 billion baht
(22.1%)
Air transport
52 billion baht (2.9%)
Water transport
4 billion baht (0.2%)
PPP
21%
SOEs
Revenue
3%
Toll Road
Fund
1%
Annual
Budget
12%
Govt/SOE
s
Borrow…
30
• Double Tracks (Jira – Khonkaen), ฿26 bil.
• Laem Chabang Sea Port A, ฿1.8 bil.
• Laem Chabang Shipping Center Development Phase I, ฿2 bil.
• Motorways (Pattaya – Mabtaput) , ฿17.8 bil.
Under Construction
• Motorways (Bangpa In – Nakhon Ratchasima) , ฿76.6 bil. • Motorways (Bang Yai – Kanchanavuri) , ฿49.1 bil. • Suvarnabhumi International Airport Phase II, ฿50.3 bil. • Pink line (Karai – Minburi) , ฿56.7 bil. • Yellow line (Ladprao – Samrong) , ฿54.6 bil. • Orange line (Cultural Center – Minburi) , ฿109.5 bil. • Double Tracks (Prachuab – Chumporn) , ฿17.2 bil.
Under Bidding Process
• SRT Light Red line and Dark Red line in suburb zone
• Double Tracks (Nakornpathom – Hua Hin)
• Double Tracks (Lopburi – Paknumpo)
• Double Tracks (Marbkabao – Jira)
• Purple line (Taopoon – Ratburana)
Prepare for Cabinet Consideration
• Standard Guage (Bangkok - Huahin
• Standard Guage (Bangkok – Rayong)
• Standard Guage (Bangkok - Nakhon Ratchasima)
• Standard Guage (Bangkok - Phitsanulok
Feasibility Study / Project Preparation
2.10 Logistic Infrastructure Investment progress
2. Economic Policies for Growth
31
2.10 PPP Fast Track for Infrastructure Investment
2. Economic Policies for Growth
2.11 Why should you invest in Thailand?
Invest
for the
FUTURE
Invest
NOW
ASEAN
Hub
Double Tax
Expense for
Acquiring New
Assets in 2016
PPP Fast Track • Incentives for 10 new
S-Curves • Triple R&D Tax
Expense
• R&D Promotion
for Automobile
Industry
• Thailand Future
Fund • Competitiveness
Enhancement
Fund
• Incentives for Special Economic
Zones (SEZ)
• Incentives for International
Headquarters (IHQ) and
International Trade Center
•
•
PPP
2. Economic Policies for Growth
32
33
Thailand as Strategic Gateway to CLMV and ASEAN
Mae
Sod,
TAK
KANCHA
NABURI
CHIANG
RAI
NON
GKAI
Myanmar
• 2014 GDP
growth = 7.7%
• 2014 Border
Trade growth =
8.9%
NAKORN
PHANOM
Lao PDR
• 2014 GDP
growth = 7.4%
• 2014 Border
Trade growth =
14.3%
MUKDA- HAN
Arunyapratet,
SAKEAW
Klong Yai, TRAT
Cambodia
• 2014 GDP
growth = 7.0%
• 2014 Border
Trade growth =
22.0%
Malaysia
• 2014 GDP
growth = 6.0%
• 2014 Border
Trade growth =
1.2%
Sadao, SONGK
HLA Padang Basar,
SONGKHLA
NARATHIWAT
How is Thailand doing business compared to 189 countries?
Where economies stand in the global ranking on the ease of doing business
35 Source: Doing Business 2016,The World Bank
How Thailand and comparator economies rank on the ease of doing business
36 Source: Doing Business 2016,The World Bank
How Thailand and comparator economies rank on the ease of starting a business
37 Source: Doing Business 2016, The World Bank
How Thailand and comparator economies rank on the ease of dealing with construction permits
38 Source: Doing Business 2016, The World Bank
How Thailand and comparator economies rank on the ease of getting electricity
39 Source: Doing Business 2016, The World Bank
How Thailand and comparator economies rank on the ease of registering property
40 Source: Doing Business 2016, The World Bank
How Thailand and comparator economies perform on the strength of minority investor protection index
41 Source: Doing Business 2016, The World Bank
How Thailand and comparator economies rank on the ease of trading across borders
42 Source: Doing Business 2016, The World Bank