1. CONTENTS
March 2015
Volume 25
No. 3
Page
Subcontracting 1
News Bites / BOI Net Applications 2
Thailand Moving Forward 5
Thailand +1: Towards the AEC 6
Thailand Advances in WEF Ranking 7
2015 Index of Economic Freedom 8
Economic Outlook 8
Company Interview: SCC Tech 9
BOI’s Missions and Events 11
Thailand Economy-At-A-Glance 12
Continued on P. 3
Subcontracting
Thailand rests upon a solid and productive industrial foundation. Even though the
country plays host to a wide range of multinational corporations, the presence of
a vibrant industrial parts and components sourcing sector (i.e. subcontracting) is
what permits the Thai economy to be competitive on a global level.
What is subcontracting? It is a manufacturing strategy in which a company
decides to outsource some or all of its production operations to a vendor. This
process is considered better than a complete external procurement as there
can be a tighter control on the product quality. In a typical subcontracting
process, a manufacturing company provides raw materials/components to a
subcontracting vendor. The vendor in turn processes these materials to turn
them into a final product. This product (if not a finished product) is then used by
the manufacturing company to carry out the rest of the operations to turn it into
a finished product for the marketplace.
The key areas of industrial subcontracting are namely the metals, electronics,
plastics and rubber industries as well as industrial ICT solutions and consulting
services. Indeed, the subcontracting sector and the innovative materials it
develops are integral to many of the products used in industry today. Without the
subcontracting sector, the wheels of industry would grind to a screeching halt.
Buyers meet Sellers

2. NEWS BITES BOI NET APPLICATIONS
SEZ Progress
On March 16, 2015, Gen. Prayut Chan-o-
cha, Prime Minister, presided over the 2/2015
meeting of Policy Committee on Special
Economic Zones, which included Deputy
Prime Minister M.R. Pridiyathorn Devakula,
concerned ministers and officials.
The Prime Minister handed over related
policies to concerned agencies, and four
newly-established sub-committees: 1) Sub-
committee on privileges, boundaries, and
one-stop service center in investment; 2)
Sub-committee on Labors and one-stop
service center in labor, public health and
security; 3) Sub-committee on Infrastructure
and customs; and 4) Sub-committee on land
acquisition and management.
The Policy Committee on Special Economic
Zones agreed to the establishment of an
additional sub-committee which composes of
representatives of the private sector to provide
advices on marketing and convince investors
to tangibly invest in the special economic
zones. Also agreed on was the list of targeted
industries which will receive high privileges if
investing in the special economic zones: 1)
agricultural, fishery and related industries,
2) ceramics, 3) textile, garment, and leather
industries, 4) furniture manufacturing, 5)
gem and jewelry, 6) medical equipment
manufacturing, 7) automotive, machinery, and
parts, 8) electrical appliances and electronics,
9) plastic production, 10) medicine production,
11) logistics, 12) industrial estates/zones, and
13) tourism related industries. Details of each
group will be announced by the BOI. The
Committee also approved targeted industries specifically for
each and respective special economic zone in Tak, Sakaew, Trat,
Mukdaharn, and Songkhla.
The Policy Committee also approved the 2nd phase of special
economic zone development covering 63 sub-districts of 16
districts in 5 provinces, that is, Nongkhai (22 sub-districts),
Chiang Rai (21 sub-districts), Nakhon Panom (13 sub-districts),
Narathiwas (5 sub-districts), and Kanjanaburi (2 sub-districts);
and on leasing/ transformation of land in 6 special economic
zones to be used for the establishment of industrial estates
(altogether 24,871 rai), that is, in Tak (14,858 rai), Sakaew (2,944
rai), Trat (740 rai), Mukdaharn (1,085 rai), Songkhla (1,095 rai),
and Nongkhai (4,149 rai). Ministry of Interior is to work on details
with regard to legal matters and compensation.
Better Transport
During the official visit to Japan on 7-9 February, the Prime
Minister proposed a joint-venture model for collaboration in
constructing a high-speed railway system. The railway network
would enhance Thailand in trade and investment and would raise
people’s income.
Suvarnabhumi Airport is preparing to cater to larger passenger
traffic in the second quarter of Fiscal 2015, which is expected
2013
(US$ = 30.06THB)
2014 (Jan)
(US$ = 32.93 THB)
2015 (Jan)
(US$ = 32.73 THB)
Number of
projects
Value
Number of
projects
Value
Number of
projects
Value
Total Investment 2,237 34,334 70 612 36 234
Total Foreign Investment 1,132 16,227 51 351 18 18
By Sector
Agricultural Products 64 742 - - - -
Minerals / Ceramics 28 1,144 - - 1 0
Light Industries / Textiles 59 327 2 7 - -
Automotive /
Metal Processing
378 7,668 15 126 4 8
Electrical / Electronics 207 2,784 11 9 5 4
Chemicals / Paper 124 722 6 72 4 3
Services 272 2,838 17 137 4 1
By Economy
Japan 562 8,746 26 137 5 6
Europe 132 972 7 77 3 1
Taiwan 53 216 2 3 3 4
USA 55 359 1 0 2 1
Hong Kong 39 624 3 61 1 0
Singapore 93 704 8 61 2 3
By Location
Central 366 3,339 12 37 9 9
East 586 7,897 28 202 8 9
South 180 4,990 11 113 1 0
Unit: US$ Million
Note: Investment projects with foreign equity participation from more than one country are
reported in the figures for both countries.
to grow by 9 per cent year on year. The airport management
has prepared to cope by installing 16 more passport readers
and electronic charts, opening the Transfer Baggage Terminal
to serve transit passengers, and improving taxi services among
others.
March 2015
Page 2

3. Continued from P. 1
Continued on P. 4
Subcontracting is very useful in situations where the range of
required capabilities for a project is too diverse to be possessed
by a single general contractor. In such cases, subcontracting
parts of the project that do not form the general contractor’s core
competencies may assist in keeping costs under control and
mitigate overall project risk.
A key player in Thailand’s subcontracting sector is the Thai
Subcontracting Promotion Association (Thai Subcon). There are
around 400 members in the Association now and they are all
competent in manufacturing. Mostly comprised of SMEs, Thai
Subcon members are engaged in the manufacture of diverse
products that can be classified into four groups, including metal
(casting, stamping and pressing), plastic, rubber & polymer,
electrical/electronics and logistics, packaging & services. What
the Association is emphasizing nowadays is intra-sectoral
product trade and knowledge transfer among members in order
to stimulate development. Larger companies can help small
companies in improving the production segment, such as through
the application of more efficient operating systems and training,
as well as information exchange.
Equally important, the Association supports Thai entrepreneurs in
gaining awareness of industry trends and in providing a network
for members to obtain the latest government announcements,
such as the SME promotion policies of the Board of Investment
(BOI). Most SME companies think that applying for investment
promotion is a complicated issue, but what the company obtains
in return is massive, particularly with regards to tax incentives.
The Association also encourages subcontractors to look into
specialized areas, like alternative energy, that offer new market
possibilities. Moreover, through Thai Subcon companies have
the opportunity to attend training sessions and seminars put
together by either the BOI or the National Science and Technology
Development Agency (NSTDA).
Joint ventures, partnerships, and subcontracting prospects
have long been at the core of international growth strategies of
multinational corporations. To ensure that foreign companies
receive full support on these matters in Thailand, the BOI has
set up the BOI Unit for Industrial Linkage Development (BUILD).
BUILD acts as an intermediary between the manufacturers
of ready-made products and small- and medium-sized
manufacturers of parts. Moreover, it provides information on
subcontracting opportunities and offers its support to buyer
firms seeking sourcing networks in the country. Currently, BUILD
supports sourcing service in the following industries: plastics and
rubber, metal forming and fabrication, molds and die, assembly,
and electronic manufacturing service. In fact, if a foreign investor
is looking for a Thai supplier, subcontractor, or a joint-venture
partner in Thailand, BUILD is prepared to provide the following
services:
• Identifying suitable suppliers, subcontractors, and joint-venture
partners
• Facilitating business contacts with Thai companies
• Arranging visits to selected Thai companies
• Organizing business-trip itineraries
The BOI takes additional steps to support the country’s
subcontracting sector. For instance, it will host SUBCON Thailand
2015, ASEAN’s largest industrial subcontracting exhibition, from
the 13th to the 16th of May at the Bangkok International Trade
and Exhibition Center. Inaugurated in 2007, the annual event is
expected to host more than 400 subcontractors from Thailand,
ASEAN and Japan, and attract more than 24,000 local and
overseas buyers from 15 countries. World-class manufacturers,
such as Mercedes Benz, Samsung Electronics, Isuzu Motors,
Whirlpool, Thai Summit Autoparts Industry, Suzuki, Electrolux,
Panasonic Motors, Honda Trading, Haier, and Mitsubishi Electric,
will attend and interact with representatives of Thailand’s diverse
industrial parts and components sourcing sector.
For many observers of the subcontracting segment in Thailand,
there are good opportunities for Thai SMEs to move into the
Aerospace and Medical Device industries. Medical devices and
equipment are attractive because there is demand. At present,
Thailand is home to 256 private hospitals all over the country
and most of them have received international accreditation.
Public hospitals in Thailand now account for roughly 55% of
total medical device purchases and there is a need to upgrade
their medical equipment with more sophisticated products.
Demand for medical devices in Thailand is driven by medical
facility improvements and replacement of old medical devices/
equipment in public and private hospitals. For now, Thailand lags
in the production of high-tech medical devices. Currently nearly
all of the highly sophisticated equipment used in the country is
imported.
Regarding the Aerospace industry, large corporations such as
GE, Boeing, Rolls Royce and Airbus from the USA and Europe
are not planning to manufacture parts in China. Thailand is in
fact in a good position to become a production base for the
aforementioned aerospace giants and has an excellent central
location in the Asia-Pacific. Yet, these business opportunities will
require new machinery, technology, and operating systems, like
customized automation using flexible modular techniques and
integrated software. Such technical knowledge will give Thai
subcontractors a competitive edge, thereby lowering costs and
March 2015
Page 3

4. Continued from P. 3
boosting efficiency, which will further advance Thailand as a
major manufacturing hub.
Economic growth in the Asia-Pacific continues to outpace the
rest of the world, thereby rapidly increasing its importance to the
global economy. The AEC now looms on the horizon and is to be
established formally at the end of 2015, creating further growth
for the ASEAN region. Consequently, the Bank of Thailand (BOT)
is confident in its projection of what it described as a V-shape
recovery over the last six months of 2014. Factors making this
a reality have included a resumption of state spending, the
gradual return of private investment, and a steady pickup in the
manufacturing industry.
Back in January 2015, the Bangkok Post reported that greater
investment in supporting industries (i.e. Thai subcontracting
sector) will be a crucial factor in strengthening the automotive
industry to compete with other countries ahead of ASEAN
economic integration. According to Mr. Arthit Wuthikaro, director-
general of the Industrial Promotion Department (IPD), “Supporting
industries such as industrial machinery and electronic parts are
the backbone of Thailand’s car industry.” He further declared,
“Rising capacity in those industries would help Thailand to
increase its competitiveness.”
In cooperation with the Bureau of Supporting Industries
Development, the IPD will focus on developing the capacities
of Thai SMEs in the areas of human resources, technology
and automation. The government also will assist SMEs to
access financial support in order to increase productivity and
upgrade machinery. Similarly, the government will build testing
laboratories to reduce costs during product testing. And finally,
the department will hold business-matching events to facilitate
Thai SMEs in finding qualified partners to expand output and to
enhance quality.
After the AEC is in force, the auto parts market is expected to
grow, boosting the domestic subcontracting industry given the
close cooperation between the public and private sectors. In
addition to higher demand in the AEC market, the subcontracting
industry will be further fuelled by the second-phase eco-car
project which involves 10 leading manufacturers with a total
investment of at least Bt139 billion.
It has been suggested that small and mid-sized contractors
should seek joint ventures with overseas firms to survive the
upcoming ASEAN single market. Plus, many Thai subcontractors
are small companies with 10 or so workers, making it difficult for
them to conduct research and develop projects on their own.
Meanwhile, Thai SMEs can lower costs by shifting production
processes that require low technology to countries with lower
labor costs. The subcontracting industry is important to create
and sustain confidence amongst foreign investors. Providing
government incentives is one approach, but overseas firms
will not come to Thailand if there are no parts and components
manufacturers for them.
The International Institute for Trade and Development (ITD) sees
Thailand as one of the top five countries that can expect rising
foreign direct investment (FDI) after AEC integration. Last year,
the country recorded US$13 billion in foreign direct investment
and is expected to see continuous growth once the AEC is
operating. The Bank of Thailand has projected that Thailand’s
2015 GDP will grow by 3.5% with the AEC playing a major
role. Beneficiaries will include multiple industries, but especially
the Automotive, Auto Parts, Electronics & Electrical Appliance
industries.
The AEC is supportive of Asia’s development as a dynamic
global production hub. ASEAN is considered now one of the
world’s most attractive subcontracting destinations and many
large multinational corporations in a wide range of industries
count on it for low cost, high quality production - especially from
Thailand.
March 2015
Page 4

5. Thailand Moving Forward
“Thailand Moving Forward” was an international conference that
took place at the Dusit Thani Hotel in Bangkok in the closing
days of January 2015. Organized by both The Nation and The
Asian Wall Street Journal, and hosted by Siam Commercial
Bank, the event covered a number of critical issues related to the
future of the Thai economy, ranging from government policies
to the adoption of a new business mindset. The symposium
was designed as a platform for selected ministers to outline to a
diverse audience their plans and for interaction with key business
leaders of Thailand, whose roles and input are crucial to the
eventual success of the country’s transformation.
At the moment, the Government is putting into place processes
to reform Thailand’s political and economic systems. Indeed,
economic restructuring is paramount and the current
administration is aiming to turn Thailand as a regional springboard
for foreign investors.
As the keynote speaker at the forum, Deputy Prime Minister MR
Pridiyathorn Devakula declared that the Thai economy would
recover this year due to capital injection from the government,
which would stimulate the private sector. In addition to a surge
of investment applications in December 2014, other factors that
will propel economic recovery for this year include a stimulus
package, a string of large infrastructure projects (particularly in
transportation and logistics), and a new investment strategy.
MR Pridiyathorn stated that the government is aiming to convert
Thailand into a regional business center, applying tax incentives
to encourage MNCs to set up their international headquarters
in the country and promoting investment in the digital economy,
particularly the development of hard infrastructure (broadband,
international gateways) and soft infrastructure (laws, regulations,
policies. Furthermore, domestic consumption prompted by falling
oil prices and an improving investment climate will drive economic
growth to 4% for 2015. In fact, both domestic consumption and
private investment have gained traction since the final quarter
of last year and are major contributors to GDP, expanding by at
least 2% during the October-to-December quarter. Moreover,
about 1,500 of the 3,800 plants that won factory licenses late last
year are expected to start up during the first quarter of 2015 after
1,608 plants began operating in the fourth quarter last year.
To sustain growth, MR Pridiyathorn said the current Thai
government would focus on supporting new industries. The
country aspires to be a hub of bioplastics, aviation, and
alternative energies (renewables) as well as a regional leader
in the production of eco-cars and hybrid vehicles (electric,
bio-fuels, natural gas). Promoting Thailand as a headquarters
for multinational companies is another priority of the Prayuth
administration in pursuing sustainable development.
From a macro perspective, it is clear that reform and restructuring
are the main targets of the Government. Minister of Energy Dr.
Narongchai Akrasanee elaborated that “new form plus new
function requires a new structure”. This formulaic approach will
serve as the principal guideline to revive Thailand’s economy and
to free the country from the shackles of the “middle-income trap”.
Accordingly, economic restructuring will be carried out and a
multitude of measures will be enacted to improve productivity.
For instance, there are policy-specific instruments that are
focused on the creation of special economic zones, corporate
income tax exemptions, export and tourism promotion, market
integration with neighboring countries (GMS, ASEAN, East Asia),
reorganization of SOEs, energy diversification, expansion of
transportation and logistics, and ICT reform.
It is expected that the new structure of the Thai economy will
revolve around three pillars: agriculture (with a focus on agri-
business/commercial scale farming), industry (with a focus on
tech-intensive enterprises and innovative consumer products),
and services (with a focus on becoming a trading hub status
for the region as well as for the global economy). Plus, the
new structure will permit more manufacturing to occur in major
provincial cities and border towns.
Among several non-government speakers was Dr. Sutapa
Amornvivat, chief economist at Siam Commercial Bank, who
noted that while the Thai economy can no longer depend on
exports, easy money, and domestic consumption, inflation in
Thailand is low and steady and therefore it will not act as a brake
on consumption/spending. Moreover, investment in the country’s
mass transportation system will have a positive ripple effect on
economic advancement. Likewise, Mr. Ninnart Chaithirapinyo,
a vice-chairman of Japanese car maker Toyota Motor Thailand,
stated that “Border trade accounts for 80% of our annual exports
to those countries, indicating Indochina is a potential new trade
opportunity for Thai business sector.” He pointed out that Mae
Sot and Mukdahan were good examples of developing the road
infrastructure to connect with Myanmar and Laos, respectively.
The Government is taking a comprehensive reform effort and
is addressing many areas of infrastructure improvement, mass
transit, enhanced border trade all of which help to sustain
Thailand as the place to invest in Asia.
At a seminar held in Japan the following month
the deputy prime minister elaborated on this
by noting that Thailand’s geographic location
make it an ideal location for a regional trading
hub. IHQ/ITC investment will benefit from no
income tax from dividends and capital gains
from investments in overseas subsidiaries; no
tax on income received from providing certain
services to subsidiaries, among others. He
expressed the hope that this new package
will contribute to higher growth in Thailand’s
service sector and intra-ASEAN trade, as well
as trade between ASEAN and other countries.
March 2015
Page 5

6. Thailand +1: Towards the AEC
In September 2014, Prime Minister Prayuth Chan-ocha delivered
a policy statement to the appointed National LegislativeAssembly.
His speech touched upon eleven key issues of importance
but the prime minister paid close attention to the economic
development of the country and boosting the competitiveness
of Thai business operators and Thailand in Southeast Asia.
“Accelerating our efforts to enhance our readiness, whether in
the areas of transport and logistics connectivity, trade facilitation,
development of border areas, or human resources development,
will help promote Thailand’s role and ability to make best use of
opportunities in the ASEAN Community”. As stated by the prime
minister, such a course of action “will enable Thailand to raise
living standards of the Thai people together with those of the
peoples of ASEAN”. Moreover, the Prime Minister Prayuth told
the audience that his government’s policies are based on His
Majesty the King’s principle of sufficiency economy.
In preparation for the ASEAN Economic Community (AEC) in late
2015, Thailand will usher in a period of drastic change regarding
its industrialization strategies. Following a historical trend of
accepting direct investment from Japanese companies that set
up production hubs in the country, Thailand has succeeded
in advancing the formation of industrial clustering. Moreover,
numerous business opportunities lie in various sectors of the
expanding Thai consumer market, including food services,
hospitality, and logistics, which continue to expand over the
past few years. Now, eyeing the launch of the AEC in December
2015, repositioning Thailand as a strategic base in the center of
Greater Mekong Subregion is a critical challenge for Japanese
companies expanding in Asia.
Meanwhile, Cambodia, Laos and Myanmar (CLM) are drawing
great attention from the world recently as the “last new frontier
in Southeast Asia”. Global companies are taking much notice
of these countries as new destinations for shifting their labor-
extensive production hubs from China or other ASEAN member
states where labor costs continue to rise. Due to these changing
circumstances, the transportation infrastructure projects
sponsored by the Asian Development Bank (ADB) is creating a
possibility for a new business model called “Thailand Plus One”,
by linking the benefits of lower labor costs in neighboring CLM
and the industrial clusters of Thailand.
Looking to maximize the potential of this prospect, Nikkei BP,
together with the Board of Investment ofThailand (BOI), organized
a seminar entitled “Thailand +1 – Strategy and Opportunity for
Japanese Companies” on 8 July 2014 in Bangkok, with the
aim of stimulating further the economic relationship between
Thailand and Japan for the immediate future. It was a great
success in that the audience turnout was robust and the event
achieved its primary goal of informing participants, specifically
Japanese firms, about the benefits of adopting a “Thailand + 1”
stratagem to deal with the new economic realities associated
with the upcoming AEC. The geographical location of the country
in Southeast Asia, its proximity to the resources and markets
of CLM, and the advanced state of the Thai economy make
Thailand the logical springboard for companies to expand their
operations across ASEAN.
The concept of “Thailand Plus One” has been received
enthusiastically by Prime Minister Prayuth Chan-ocha who
views it as the perfect instrument to attract a new-wave of
overseas investment to the country. Under the policy, foreign
entrepreneurs who invest in Thailand will be offered the chance
to gain a business foothold in neighboring countries as well. The
government would provide them with investment information and
support.
Prime Minister Prayuth provided further details of this novel
business model during a meeting with both executives of Thai
companies that have invested in China and Thailand’s Asia
Pacific Economic Cooperation (APEC) Business Advisory
Council in Beijing back in November 2014. Later, government
spokesperson Mr. Yongyuth Mayalarp said that the prime minister
had informed the attendees that his administration was looking to
increase foreign investment with the “Thailand Plus One” policy.
As reported by the Bangkok Post, Mr. Yongyuth elaborated by
declaring, “We plan to establish five special economic areas
along the borders and have seven more in the next phase. As we
hold talks with ASEAN members about transport connectivity, we
will also help foreign investors expand their investments to our
neighbors if they decide to invest here”.
It is no secret that Thailand is the manufacturing base for
numerous products exported throughout the world, while its
neighboring CLM countries have the potential to meet the supply
chain needs of foreign companies in the ASEAN region.
In addition to embracing the “Thailand Plus One” approach, the
administration of Prime Minister Prayuth Chan-ocha repeatedly
has mentioned that Thai overseas investment is a national
priority. Thailand’s Outbound Foreign Direct Investment (OFDI)
has increased continuously since 2007, mostly to Singapore,
Indonesia, Vietnam and Myanmar. During the last 5 years, more
than two thirds of Thailand OFDI derived from the manufacturing
and mining sectors, while wholesale, retail, financial and
insurance and real estate were among the industries that Thai
businessmen have demonstrated keen interest. The principal
destination for Thai OFDI was to ASEAN countries, accounting
for more than one fourth. The rest comprised of the European
Union, Hong Kong, Japan and the United States.
To overcome domestic resource limitations and to seek new
business horizons Thai entrepreneurs need to branch out
overseas. Indeed, the targets for Thailand OFDI are market
expansion and predominantly labor intensive industries, such
as textiles and garments, shoes and leather, agriculture, food
preparation, metal processing, auto parts and accessories,
construction materials and real estate development. By the end
of Q3-2014, the amount of Thailand accumulated OFDI was
US$6.6 billion. The top destinations for Thai businesses were
Indonesia, Vietnam and Myanmar.
When the region becomes one community under the ASEAN
Economic Community later this year, the administration of Prime
Minister Prayuth Chan-ocha is confident that Thailand can tap
fully the benefits of economic integration. The expectation is
for the country to turn the proverbial corner and experience
once more uninterrupted growth, development, and prosperity.
Accordingly, the Thai government views the comprehensive
implementation of both the “Thailand Plus One” and Thailand
OFDI strategies as the engines that will propel the country
forward once the AEC is inaugurated.
March 2015
Page 6

7. Thailand Advances in
WEF Ranking
The Global Competitiveness Report 2014-2015, released by the
World Economic Forum, contains competitive rankings of the
world’s economies, based on its global competitive index. “GCI
scores are calculated by drawing together country-level data
covering 12 categories – the pillars of competitiveness – that
collectively make up a comprehensive picture of a country’s
competitiveness. The 12 pillars are: institutions, infrastructure,
macroeconomic environment, health and primary education,
higher education and training, goods market efficiency, labour
market efficiency, financial market development, technological
readiness, market size, business sophistication, and innovation.”
The Report notes that the recovery in the global economy
is largely being driven by monetary policy. Productivity and
competitiveness need to be raised through structural reforms,
which will bring about high quality job creation and sustained
prosperity.
Unfortunately, the global economy remains at risk as there
has been insufficient progress in adopting and implementing
reforms. Also, Klaus Schwab, Founder and Executive Chairman
of the World Economic Forum, notes that “The strained global
geopolitical situation, the rise of income inequality, and the
potential tightening of the financial conditions could put the still
tentative recovery at risk and call for structural reforms to ensure
more sustainable and inclusive growth.”
Thailand Investment Review would note here that the keystone of
the Thai government’ economic development plan is to address
income disparities that exist. This is not only reflected in the
new BOI policies, which offer additional incentives to projects
that locate in underdeveloped parts of the country, but also in
the government’s special economic development zones that are
located along Thailand’s border.
The Report also notes that “Economies that consistently rank
high in the competitiveness rankings are those that are able to
develop, attract and retain talent, and constantly introduce new
and higher value-added products and services into the market.”
Furthermore, common to the leading economies in the index is
that they “possess a track record in developing, accessing and
utilising available talent, as well as in making investments that
boost innovation. These smart and targeted investments have
been possible thanks to a coordinated approach based on strong
collaboration between the public and private sectors.”
The TIR would again note that the
Thai government has embarked
on a course to move Thailand’s
economic growth away from its
erstwhile dependence on low cost
labor and towards greater reliance
on high-value added products and
innovation, which is also reflected
in the BOI policies. Perhaps
nowhere is this more evident than
in the commitment to supporting an
environment for a digital economy
to take hold in Thailand.
Asia has maintained its leading
position with robust performance.
The Report does underline that the
“…competitiveness dynamics in
South-East Asia are remarkable.”
In fact, the five largest economies
in the region, of which Thailand is
the second largest economy, have
all advanced in the competitive
ranking. Thailand is now 31st.
As Deputy Prime Minister
Pridiyathorn Devakula has noted
in a recent addresses to foreign
investors “We are undertaking drastic reforms that not only
reversed the downward spiral but are placing Thailand on an
irreversible path to become a high income country.”
Thailand remains competitive and is becoming even more so.
With the commitment to build out infrastructure, including port,
rail and road improvements, the new BOI investment incentives,
its policies for IHQ and ITC, and much more, Thailand remains
the place to invest.
March 2015
Page 7

8. to NESDB, the Thai economy will grow by 3.5-4.5 percent.
This growth will largely be due to: “(i) a gradual improvement
in export sector in line with a recovery of the global economy,
(ii) a recovery of private investment and tourism sector, (iii) an
expedition of public expenditure and investment, (iv) a recovery
of car sales and production, and (v) the decline in crude oil price.”
NESDB notes that in 2014 the BOI recorded its highest level ever
for investment applications received. Moreover, it projects that
private investment will grow by 5.0 percent, picking up from 4.8
percent in the last projection. Also, NESDB sees an expansion of
investment in preparation for the forthcoming ASEAN Economic
Community. Looking at auto production, NESDB writes that
“production and domestic sale volumes in 2015 will be not less
than 2.0 million and 780 thousand vehicles, respectively.”
Export value, private consumption and total investment will
increase by 3.5 percent, 2.9 and 6.0 percent, respectively, while
headline inflation is expected in the range of 0.0 – 1.0 percent,
with the current account likely to have a surplus of 4.9 percent
of GDP.
“The World Economy in 2015 is expected to grow by 3.5 percent,
a gradual improvement from 3.2 percent in 2014 due to a robust
growth of the US economy, which is expected to record the
highest growth rate in 10 years. However, the Eurozone and the
Japanese economies recovered slowly amidst rising deflationary
pressures. At the same time, the Chinese economy is likely
to slow down compared to 2014, whereas NIEs and ASEAN
economies tend to perform better than 2014 due to a sharp drop
in inflation.”
2015 Index of Economic Freedom
The Heritage Foundation has released in 2015 Index of Economic
Freedom, covering 186 countries. This is the 21st edition of the
Index “Launched in 1995, the Index evaluates countries in four
broad policy areas that affect economic freedom: rule of law;
limited government; regulatory efficiency; and open markets.
There are 10 specific categories: property rights, freedom from
corruption, fiscal freedom, government spending, business
freedom, labor freedom, monetary freedom, trade freedom,
investment freedom, and financial freedom. Scores in these
categories are averaged to create an overall score.”
The Heritage Foundation writes that the findings of this year’s
Index continue to demonstrate a strong link between economic
freedom and the various dimensions of human development.
“Those countries that have adopted some version of free-market
capitalism, with economies supported by efficient regulations
and open to the free flow of goods, services, and capital, have
participated in an era of globalization and economic integration
in which solutions to many of the world’s development problems
have taken hold and generated real improvements in living
standards.”
Thailand’s economic freedom score is 62.4, and is the 75th freest
in the 2015 Index. There have been some improvements made
in freedom from corruption, business freedom, labor freedom,
monetary reform, fiscal freedom, and trade freedom. Thailand is
now ranked 12th out of 42 countries in the Asia–Pacific region.
The government is undertaking a reform of the tax structure, it
has introduced new investment incentives, worked to support
an increase in cross-border trade, including by addressing labor
issues, and is taking action on a wide range of issues to enhance
Thailand’s economic standing. The country has managed to hold
the line during the past years and is setting the stage for a future
of growth and economic freedom.
Economic Outlook
In its Economic Outlook, Thai Economic Performance in Q4 and
2014 and Outlook for 2015, the National Economic and Social
Development Board (NESDB) reports that the economy in Q4
grew by 2.3 percent. “On the expenditure side, main contributions
were from, private consumption expenditure, private investment
and government expenditure. On the production side, almost all
sectors improved especially manufacturing, construction, and
hotel and restaurants sectors which expanded for the first time in
several quarters. Meanwhile, wholesale and retail trade and real
estate sectors accelerated.”
With growth of only 0.7 percent in 2014, accompanied by low
growth in private consumption and an investment contraction,
the forecast for the current years offers relief. In 2015, according
March 2015
Page 8

9. Continued on P. 10
COMPANY INTERVIEW
SCC Tech
S m a l l a n d m e d i u m -
size enterprises (SMEs)
in Thailand today face
domestic and international
conditions that are changing
rapidly. Correspondingly,
Thai SMEs have a strategic
and significant role in the
national economy. By providing opportunities for entrepreneurship
and innovation, SMEs will foster greater participation in all
sectors. In order to enable SME operators to compete effectively
in the world market and to survive in the ASEAN Economic
Community, business matching has been promoted between
Thai SMEs and their foreign counterparts.
Thailand’s Third SME Promotion Master Plan (2012-2016) seeks
to make SMEs the primary driving force of the Thai economy
by giving importance to the development of their capacity, so
that they may run their businesses using knowledge, creativity,
innovation, and cultural uniqueness, both at the sectoral level
and at the entrepreneurial level. According to the Office of Small
and Medium Enterprises Promotion (OSMEP), the importance of
SMEs is illustrated in the following figures. There are around 2.7
million SMEs in Thailand and they account for 37% of national
GDP and employ 11 million people. While most of the SMEs are
running domestic businesses, they represent 25% of Thailand’s
exports. The government of Thailand defines an SME as any
business with an annual turnover of not more than Bt200 million.
This month, the Thailand Investment Review team was afforded
the chance to meet and speak with Mr. Somkiat Chupukcharoen,
Managing Director of SCC TECH. A number of questions were
asked to learn more about the company as a Thai SME, its
business activities, and the company’s future plans.
As a mid-sized enterprise, SCC TECH at present employs around
90 staff. The company aims to develop itself into a world-class
company by enhancing its operations and human resources,
especially in technology and skills. Likewise, SCC TECH seeks
to fabricate high-quality products and to transform itself into a
green and lean manufacturer. With those goals in mind, Khun
Somkiat has pushed the company to comply with international
standards and embedded SCC TECH into the global supply
chain. In 2007, the company joined both the Department of
Export Promotion and the Federation of Thai Industries. Then
from 2008 to 2012 SCC TECH obtained certification for ISO
9001:2000, ISO 9001-2008, TS16949, and the Thailand Trust
Mark. For Khun Somkiat, customer satisfaction is a key metric of
the company success and that can be attained only with a quality
product and professional service.
Established in November 2004 with registered capital of Bt20
million, the business focus of SCC TECH is the manufacturing
of metal parts for automobiles, motorcycles, and machinery. For
instance, Khun Somkiat mentioned that SCC TECH specializes in
sprockets, latches, brackets, and hinges. In fact, motorcycle parts
account for 50% of the company’s output, while automobiles and
machinery account for 40% and 10%, respectively. SCC TECH
exports some 25% of its manufactured goods to the US, EU,
Japan, Vietnam, Indonesia, Pakistan, Philippines, and Myanmar.
On the other hand, approximately 75% of its output is directed
towards the Thai market.
SCC TECH started off as a family business and for the past
three decades has reinvented itself to what it is today. The
company set up shop in Samut Prakan some 11 years ago
and its current facility covers an area of 5,000 sqm, with 4,000
sqm for production purposes. Khun Somkiat pointed out that
the principal customers of SCC TECH in the car manufacturing
sector are Nissan, Isuzu, Ford, and Chevrolet. Meanwhile, the
company’s principal customers in the motorcycle manufacturing
sector are Yamaha, Honda, Kawasaki, Suzuki, and Ducati.
For 25 years the company has provided customized products
for motorcycles. However, for the past five to six years SCC
TECH has been providing parts for automobiles. Still, the future
growth plans of the company call for a change of strategy that
will shift the business focus of SCC TECH to medical devices.
As observed by Khun Somkiat, the company possesses enough
manufacturing capacity as the fabrication of medical tools entails
the use of the same equipment.
The Board of Investment (BOI) has approved its “Seven-Year
Investment Strategy” (2015-2021), with a focus on promoting
investments that create value for Thailand and those that have
a positive impact on society and the environment. According
to Khun Somkiat, the BOI is the best way to do business as
the government agency can provide assistance when dealing
with import duties regarding machinery. The relationship in its
March 2015
Page 9

10. Continued from P. 9
embryonic stages but SCC TECH is eager to explore all options
with the BOI in order to broaden its market reach. The company
already submitted an application under the new investment
promotion policy. As Khun Somkiat observed, the SME sector
is large and expanding and as a result requires a close
partnership with the BOI. One good example of this cooperation
is business matchmaking with the BOI Unit for Industrial Linkage
Development (BUILD).
The raising of the minimum wage has hindered the growth of the
SME sector. Consequently, for many SMEs there has been a
move towards automation, thereby resulting in the replacement
of workers. Plus, there is not enough skilled labor for SMEs in
Thailand as workers are more attracted to become employees
of MNCs. Nonetheless, Khun Somkiat stressed that SMEs like
SCC TECH are keen on elevating the skills and knowledge
of their personnel. As such, training sessions and workshops
organized by the Thai Subcontracting Promotion Association, the
Thai-German Institute, the Department of Industrial Promotion,
and the Bureau of Supporting Industries Development assist in
the betterment of SCC TECH’s production line staff members.
Furthermore, signed MOUs between Thai Subcon and a number
of local universities and technical colleges, like the Thai-Nichi
Institute of Technology and Rajanagarindra Rajabhat University,
afford SCC TECH another venue to improve its human resource
base.
Still, for Khun Somkiat, the key to the future success of SCC
TECH is to drive new innovation, especially product design,
rather than rely on customer orders as such a course of action
would feed into the value added process. With this in mind, SCC
TECH is not intimidated by the upcoming inauguration of the
AEC. The company has set its sights on changing itself from a
pure parts manufacturer to a trader of value added products along
with the production of high quality parts. However, the mindset
must change for Thailand to be more competitive. Quality must
be emphasized rather than low cost quantity. But for the Thai
SME sector to adapt properly there must be more information
distributed by the government about the mechanics of the AEC. It
is no secret that profit margins in the automotive sector for SMEs
are small therefore there is a need to diversify regarding parts
manufacturing, like for the medical and aerospace industries.
Since the company’s inception, SCC TECH has been a leader in
the blanking, precision and press products industry, advancing
both manufacturing and quality assurance technologies. SCC
TECH constantly improves its technology through continuous
R&D and upgrades its machinery in order to ensure total reliability
for its finished products. Also, SCC TECH products meet all the
stringent international standards regarding quality and safety.
Indeed, through its process of innovation, SCC TECH creates
products that are meant for peak performance. SCC TECH has
set its standards comparable to established OEM requirements
and regularly reviews its capability to maintain consistency in
quality.
As Khun Somkiat declared, “There is no doubt that quality is
extremely important to our customers. That is why we never rest
in our attempts to make the very best possible products. The
success of SCC TECH clearly shows that our manufacturing
capacity and production standards more than meet the needs of
our growing customer base.”
SCC TECH is a SME that is ready for the opportunities and
challenges of not only of the ASEAN Economic Community, but
also of the global market.
March 2015
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11. Minister of Commerce Gen. Chatchai Sarikulya, Minister of
Tourism and Sports Kobkarn Wattanavrangkul, and BOI Senior
Executive Investment Advisor Ajarin Pattanapanchai undertook
a mission to Mumbai and New Delhi, India, to attend “the Trade
Investment and Tourism Forum”. Ms. Ajarin later spoke at
the “Business Forum, Thailand: Gateway to the ASEAN”, 25
February.
Deputy Prime Minister M.R. Pridiyathorn Devakula, together
with Industry Minister Chakramon Phasukavanich and BOI
executives, during the Japan Road Show to Tokyo, Nagoya
and Osaka, 17-21 February, delivered the keynote speech at
BOI seminar “New Investment Promotion Strategies: Towards
Sustainable Growth” and held a Business Networking Lunch with
Keidanren, NCCI, and Kankeiren.
BOI Deputy Secretary General Duangjai Asawachintachit,
together with members of the Thailand Board of Investment
Frankfurt and Paris offices, organized investment promotion
missions to Belgium, Netherlands, and Spain, 16 – 20 February.
BOI Deputy Secretary General.Chokedee Kaewsang led a
business delegation to Dhaka and Chittagong, the People’s
Republic of Bangladesh, 31 January – 4 February. The delegation
visited government agencies, industrial estates, factories and
attended Thai- Bangladesh business matching with several
chambers of commences in Bangladesh.
BOI’S MISSIONS AND EVENTS
BOI Senior Executive Investment Advisor Ajarin Pattanapanchai
during an investment mission to San Francisco and San Jose,
California, 1 – 8 March, where she spoke at BOI seminars on
“Investment Opportunities in Thailand”.
BOI Deputy Secretary General.Chokedee Kaewsang led an
investment mission to Ehime, Hiroshima, Fukuoka and Fukui,
Japan, 7 – 13 March, meeting with potential investors in
machinery, equipment and parts, among others.
March 2015
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12. THAILAND ECONOMY-AT-A-GLANCE
Source: Stock Exchange of Thailand
Source: Bank of Thailand
SET Monthly Closing Values
International Reserves / Short-term Debt (%)
Exchange Rate Trends
Industrial Capacity Utilization (%)
Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, Thailand
Tel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8316 Website: www.boi.go.th E-mail: head@boi.go.th
BEIJING
Thailand Board of Investment,
Beijing Office
Royal Thai Embassy
No.40 Guang Hua Road,
Beijing, 100600, P.R.China
Tel: (86-10) 6532-4510
Fax: (86-10) 6532-1620
E-mail: beijing@boi.go.th
FRANKFURT
Thailand Board of Investment,
Frankfurt Office
Bethmannstr. 58, 5.OG
60311 Frankfurt am Main
Federal Republic of Germany
Tel: (49 69) 92 91 230
Fax: (49 69) 92 91 2320
E-mail: fra@boi.go.th
GUANGZHOU
Thailand Board of Investment,
Guangzhou Office
Royal Thai Consulate-General
Guangzhou
No.36 Youhe Road, Haizhu
District, Guangzhou, P.R.C
510310
Tel: +8620 8385 8988
Ext. 220-225
+8620 8387 7770 (Direct Line)
Fax: +8620 8387 2700
E-mail: guangzhou@boi.go.th
LOS ANGELES
Thailand Board of Investment,
Los Angeles Office
Royal Thai Consulate-General
611 North Larchmont Boulevard,
3rd Floor, Los Angeles, CA
90004 USA
Tel: (1-323) 960 1199
Fax: (1-323) 960 1190
E-mail: boila@boi.go.th
MUMBAI
Thailand Board of Investment,
Mumbai Office
Royal Thai Consulate-General,
1st Floor, Dalalmal House,
Jamnalal Bajaj Marg,
Nariman Point, Mumbai
400 021 Republic of India
Tel: (9122) 2204 1589-90
Fax: (9122) 2282 1071
E-mail: mumbai@boi.go.th
NEW YORK
Thailand Board of Investment,
New York Office
7 World Trade Center,
34th Floor, Suite F, 250
Greenwich Street,
New York, NY 10007
Tel: (1-212) 422 9009
Fax: (1-212) 422 9119
E-mail: nyc@boi.go.th
OSAKA
Thailand Board of Investment,
Osaka Office
Royal Thai Consulate-General,
Osaka, Bangkok Bank Bldg.
7th Floor , 1-9-16 Kyutaro-
Machi, Chuo-Ku, Osaka
541-0056 Japan
Tel: (81-6) 6271-1395
Fax: (81-6) 6271-1394
E-mail: osaka@boi.go.th
PARIS
Thailand Board of Investment,
Paris Office
Ambassade Royale de
Thailande, 8, Rue Greuze
75116 Paris, France
Tel: (33 1) 5690 2600
(33 1) 5690 2601
Fax: (33 1) 5690 2602
E-mail: par@boi.go.th
SEOUL
Thailand Board of Investment,
Seoul Office
#1804, 18th Floor, Koryo
Daeyeongak Center,
97 Toegye-ro, Jung-gu, Seoul,
100-706, Korea
Tel: (822) 319-9998
Fax: (822) 319-9997
E-mail: seoul@boi.go.th
SHANGHAI
Thailand Board of Investment,
Shanghai Office
Royal Thai Consulate-General
15 F., Crystal Century Tower,
567 Weihai Road, Shanghai,
200041, P.R.China
Tel: (86-21) 6288-9728,
(86-21) 6288-9729
Fax: (86-21) 6288-9730
E-mail: shanghai@boi.go.th
STOCKHOLM
Thailand Board of Investment,
Stockholm Office
Stureplan 4C 4th Floor
114 35 Stockholm, Sweden
Tel: +46 (0)8 463 1158
+46 (0)8 463 1172
+46 (0)8 463 1174 to 75
Fax: +46 (0)8 463 1160
E-mail: stockholm@boi.go.th
SYDNEY
Thailand Board of Investment,
Sydney Office
234 George Street, Sydney,
Suite 101, Level 1,
New South Wales 2000,
Australia
Tel: +61-2-9252-4884
Fax: +61-2-9252-4882
E-mail: sydney@boi.go.th
TAIPEI
Thailand Board of Investment,
Taipei Office
Taipei World Trade Center
3rd Floor, Room 3E39-40,
No.5, Xin-Yi Road, Sec.5
Taipei 110, Taiwan, R.O.C.
Tel: (886) 2-23456663
Fax: (886) 2-23459223
E-mail: taipei@boi.go.th
TOKYO
Thailand Board of Investment,
Tokyo Office
Royal Thai Embassy
8th Fl., Fukuda Building West,
2-11-3 Akasaka, Minato-ku,
Tokyo 107-0052 Japan
Tel: (81 3) 3582 1806
Fax: (81 3) 3589 5176
E-mail: tyo@boi.go.th
Facts about Thailand
Population (2014) 65 million
ASEAN Population 625 million
Literacy Rate 96%
Minimum Wage 300 Baht/day
GDP (2014) US$ 373.6 billion
GDP per Capita (2014) US$5,445
GDP Growth (2014) 0.7%
GDP Growth (2015, projected) 3.5-4.5%
Export Growth (2014) -0.3%
Export Growth (2015, projected) 3.5%
Trade Balance (2014) US$ 24.6 billion
Current Account Balance (2014) US$ 14.2 billion
International Reserves (2014) US$ 157.1 billion
Capacity Utilization (2014) 60.48%
Manufacturing Production Index (2014) 168.2
Core Inflation (2015, projected) 1.59
Headline Inflation (2015, projected) 1.89
Consumer Price Index (Feb 2015) 106.15
(2011=100)
Corporate Income Tax 10-20%
Withholding Tax 0-15%
Value Added Tax 7%
Feb Average Exchange Rates
US$1 = 32.57 baht
€1 = 36.99 baht
£1 = 49.89 baht
100 ¥ = 27.48 baht
CNY1 = 5.21 baht
Top 10 Exports 2015 (Jan)
Product Share
Value
(US$ bn)
1 Motor cars, parts and accessories 10.77 1.86
2 Automatic data processing machines
and parts thereof
9.06 1.56
3 Precious stones and jewellery 5.63 0.97
4 Polymers of ethylene, propylene, etc
in primary forms
3.97 0.68
5 Refine fuels 3.80 0.66
6 Electronic integrated circuits 3.51 0.60
7 Chemical products 3.30 0.57
8 Rubber products 3.19 0.55
9 Machinery and parts thereof 3.00 0.52
10 Iron and steel and their products 2.55 0.44
Total 17.25
Source: Ministry of Commerce
Source: Bank of Thailand
Source: Bank of Thailand BOI
March 2015
Page 12