The Thailand Board of Investment (BOI) approved, on 11 October, incentives to encourage companies to speed up Industry 4.0 transformation. It also reported that total investment applications for the nine months to September 30 amounted to THB520 billion (USD15 billion), already higher than for the whole of last year.
Industry 4.0 is often used interchangeably with the notion of the fourth industrial revolution and has been defined as “a name for the current trend of automation and data exchange in manufacturing technologies, including cyber-physical systems, the Internet of things, cloud computing and cognitive computing and creating the smart factory”.
“The BOI has long been incentivising companies in moving towards productivity enhancement and automation, but it’s now time to move further to support Industry 4.0 transformation,” said BOI Secretary General Duangjai Asawachintachit. “The tax incentive package approved today offers improved incentives to Industry 4.0 projects which require higher investments.”
The measures approved include a three-year corporate income tax exemption covering 100% of the investment into the Industry 4.0 upgrade. The BOI will be co-operating with the National Science and Technology Development Agency (NSTDA), which will help assess and advise the Industry 4.0 transformation investment plans that companies will be required to submit.
Applications must be filed by the end of 2022. Companies that receive approval will be required to fully implement their upgrade plans within three years from the date of issuance of the BOI certificate. This new measure supplements the existing measures to support the adoption of automation systems and digital technology adoption.
In a continuation of its policy to help strengthen local small and medium-sized enterprises (SME), the board also approved an extension of the existing special investment promotion measures for SMEs until the last business day of 2022.
The meeting reported that the total value of investment applications filed by both local and overseas investors during the first nine months of 2021 amounted to THB520.7 billion, more than double the THB216.6 billion applications filed during the same period of last year, and higher than total for the entire year. In terms of the number of projects, this equated to 1,273 project applications from January to September, compared to 1,037 in the same period a year and 1,623 project applications in the whole of 2020.
“Despite the impact of the Covid-19 pandemic and related travel restrictions, investors show sustained confidence in Thailand and in our key target sectors,” said Ms Duangjai.
The 12 target sectors represented a total of 605 applications, with a combined investment value of THB269.7 billion, compared to 533 applications with a combined value of THB126.7 billion in the same period a year earlier.
The electric and electronics sector led the way with THB77.2 billion in combined investment value, an increase of 107% from the THB37.4 billion in the same period a year earlier and exceeding the total amount of THB75 billion filed in the whole of 2019, before the start of the Covid-19 pandemic.
Other target sectors that received the highest interest in terms of investment value during the nine months include the medical sector with THB59.2 billion worth of applications, petrochemicals and chemicals sector with THB36.8 billion, the agroindustry and food sector with THB31.7 billion, and the biotech sector with THB20.9 billion.
In terms of geographical distribution, the Eastern Economic Corridor attracted 33% of the combined investment value of applications with 348 projects worth a THB173.8 billion, a 60.6% increase on year. This area still attracts the majority of investment in such key sectors as automotive and petrochemicals.
From January-September 2021, the combined value of foreign direct investment (FDI) project applications more than tripled to THB372.1 billion, from THB116.4 billion in the same period a year earlier. FDI accounted for 46% of the total number of applications and 71.5% of the combined investment value.
Japanese FDI ranked first with 125 projects worth THB67.8 billion, followed by investments from the US with 31 projects worth THB26.9 billion, Singapore with 75 projects worth THB26.8 billion, China with 89 projects worth THB23.7 billion and Taiwan with 28 projects worth THB15.8 billion.
The first nine months of the year also saw a total of 134 applications under the productivity enhancement scheme, with the combined investment of THB14.8 billion. Most of these applications involved machinery upgrading, including automation, and the use of renewable energy or energy savings.