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BOI Initiatives Support National Energy Policy
NGV, alternative energy investments to benefit
n energy policy initiated by the Ministry of
Energy and approved last May will offer timely
relief to soaring oil and gasoline prices, with regular
91 octane up 38% since February 1. The policy, designed
to reduce overall energy usage by 13% and to cut
transportation sector oil consumption by 25% over the next
three to four years, relies on the use of natural gas for vehicles
(NGV) and other alternative energy sources.
Prime Minister Thaksin Shinawatra is encouraging
the use of natural
gas as an alternative fuel source
because Thailand
has the capacity
to produce more
natural gas than
other fuels.
To reduce
oil consumption, Photo courtesy of PTT Public Company Limited
the government
has set a target to increase the use of (NGV) as a substitute
fuel to decrease the consumption of gasoline and diesel by
10% by the end of 2008.
The energy plan also specifies an increase in the number
of NGV vehicles from approximately 5,000 at present to
180,000 by 2008. If this goal is met, the Ministry of Energy
projects that Thailand would save approximately 2.2 billion
liters in annual oil consumption or 41 billion baht (US$ 1
billion) at current prices over the next three years.
To help meet the 2008 goals, the Ministries of Energy
and Transport signed an agreement this month which calls
for PTT Public Co. Ltd., formerly the Petroleum Authority
of Thailand, to modify 1,000 of Bangkok’s public buses for
NGV use.
The number of NGV service stations in Bangkok is also
A
expected to increase from the current 40 to 120, with an
additional 60 stations to be located along major highways.
The Board of Investment announced the following
new measures at its August meeting to promote investment
in NGV, energy conservation and alternative energy
activities:
• Producers of engines, tanks, and other NGV vehicle
parts are eligible for maximum investment privileges
including corporate income tax holidays and machinery
import duty exemptions.
• NGV vehicle assemblers will now receive machinery
import duty exemptions.
• Manufacturers of machinery for NGV service stations
can receive maximum privileges such as corporate income
tax holidays and machinery import duty exemptions.
• NGV service stations qualify for machinery import
duty exemptions.
• Biogas and fuel cell producers are now eligible
for an eight-year
uncapped corporate
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and import duty
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is now available in an electronic format.
exemptions.
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• Liquefied natural
gas (LNG) production
is now eligible for
investment incentives.
• The existing
import tax exemption
for energy-saving
Click here
machinery has been
extended by four years
to year-end 2009. —
By Chrissa La Porte
INSIDE
NEWS BITES/BOI APPLICATIONS.................................................2
BOI REGIONAL OFFICE...................................................................3
GUEST INTERVIEW: ARDA.............................................................4
FOCUS: ON LOGISTICS...................................................................6
INVESTMENT PROMOTION.............................................................8
COMPANY SPOTLIGHT: CANADOIL................................................9
BOI INVESTMENT MISSIONS...................................................... ..10
INSIDE THE BOI.............................................................................11
1
Thailand’s first animation studio to open this month
The Software Industry Promotion Agency is opening
the country’s first animation studio in September to
strengthen the animation and multimedia software
industries. Located in Chiang Mai, the studio’s facilities
will include a motion capture system worth around 10
million baht (US$ 250,000) and a mobile testing center.
The studio aims to train 80 animators in its first year
and will provide services to regional universities and to
animation and multimedia software companies located
throughout the country.
2003
1US$ = 40 THB
2004
Number of Value Number of
Projects
Projects
Total Foreign
Investment
2005 (Jan-July)
Value Number of Value
Projects
668
6,217
749
7,675
462
5,183
57
307
82
563
34
201
18
56
460
371
18
61
1,612
207
12
51
89
183
213
1,394
223
1,286
140
2,703
152
95
1,579
1,310
152
107
1,985
1,169
89
70
911
467
77
796
106
853
66
629
316
2,659
340
2,546
206
3,095
43
1,186
39
881
28
129
67
16
198
311
61
18
233
65
33
9
127
23
48
62
163
365
29
81
73
557
24
44
30
198
74
19
911
508
94
23
802
50
63
10
548
47
17
3
20
18
21
8
126
129
13
11
70
144
10
19
12
24
10
10
9
241
15
271
16
386
163 1,369
194
943
125
1,157
380
125
375
180
5,100
1,631
253
84
3,356
670
By Sector
Agricultural Products
Minerals/Ceramics
Light Industries/Textiles
Automotive/Metal
Processing
Electrical/Electronics
Chemicals/Paper
Services
By Country
New investments boost tire manufacturing capacity
Tire production in Thailand is set to grow thanks to a
new Dunlop investment and a Thai Bridgestone
expansion.
Japanese company Dunlop recently announced that
it will establish the world’s largest quality tire factory in
Amata City Industrial Estate, a location chosen for its
proximity to Laem Chabang Port. Once production
begins in 2007, the factory is projected to manufacture
7 million tires a year.
Thai Bridgestone Co. is pursuing a production
capacity expansion valued at 4 billion baht (US$ 100
million). The company forecasts its new production at
28,000 tires a day, up from a current 10,000 tires per
day. Approximately 40% of Bridgestone’s total tire
production will be exported.
Auto manufacturers establish global export bases
in Thailand
Major automakers Mitsubishi and Mazda announced
new plans to expand pickup truck and parts production
in Thailand.
Mitsubishi Motors Co. recently premiered its new
Triton pickup in Thailand. Assembled at the Mitsubishi
plant in Chonburi, 130,000 pickups a year will be exported
from Thailand beginning early next year. The company
invested 21 billion baht (US$ 525 million) for vehicle
research, development, and production in Thailand,
Mitsubishi’s regional production base for worldwide
export.
Mazda will further develop its Thailand plant into an
export hub for light truck parts, making it Mazda’s third
such export center world-wide. Already an export center
for one-ton pickup trucks, Thailand currently has a
network of 170 parts suppliers. In 2005, Mazda Thailand’s
parts exports are forecast to reach 600 million baht
(US$ 15 million), a 20% increase from the previous year.
2
Japan
United States
East Asian NICs
Taiwan
Hong Kong
Korea
Singapore
European Union
United Kingdom
Germany
Switzerland
France
Netherlands
By Zone
Zone 1
Zone 2
Zone 3
3,569
1,279
Source: BOI International Affairs Division
Note: Projects with more than one foreign shareholder are counted twice.
Unit: US$ Million
The BOI Investment Review
BOI Working Group
Kenan Institute Asia Editorial Team
Dr. Atchaka Brimble
Booskorn Vutivijarn
Bussarakum Sriratana
Warisara Phungtonglow
Don Linder, Editor-in-Chief
Paul Wedel
Susan Crawford
Renee Santo
Alisa Kukarja
Chrissa La Porte
Graphic Designer
Chittrawinee Wichianson
The BOI Investment Review is produced every month by Kenan Institute Asia
(www.kiasia.org) on behalf of the Thailand Board of Investment.
Any questions or comments regarding content may be addressed to the editor at
[email protected].
Previous issues of the Investment Review can be downloaded from:
www.boi.go.th/english/services/boi_investment_review.asp
Eastern Region Investment & Economic Center
The BOI Eastern Region Investment & Economic
Center serves existing and potential investors within
the eight provinces of Thailand’s Eastern Seaboard region.
The region accounted for 62% of BOI-approved
investment projects in 2004, due in part to the availability
of industrial clusters, well-developed infrastructure and
its strategic location near major transportation.
Approved investment value in the region increased
by 47% in the first half of this year to 110 billion baht
(US$ 2.75 billion) from 74 billion (US$ 1.85 billion) during
the same period last year. The increase was led by major
auto and electronic expansion projects including those
by Toyota and Mitsubishi for auto and auto parts
production. Automotive and petrochemical industries are
dominant in the region.
The BOI Eastern Seaboard regional office, located in
the Laem Chabang Industrial Estate in Chonburi,
administers investment privileges to BOI-promoted
companies in Chonburi, Rayong, Chachoengsao, Nakorn
Nayok, Prachinburi, Chanthaburi, Trad and Sakeaw. This
area encompasses over 20 industrial estates, industrial
zones and industrial parks, in addition to export
processing zones (EPZs) which provide import duty
exemptions to export-oriented manufacturers.
Apart from granting BOI approvals for tax exemptions
and for bringing in foreign technicians and experts, the
regional BOI team facilitates communication between
investors and various government agencies including
immigration, labor and customs. Investors can also seek
help from the BOI regional office with difficulties that
may arise once businesses are operational.
“In conducting our promotional activities, we
emphasize the region’s natural incentives, such as easy
access to ports, well-developed industrial infrastructure
and automotive and petrochemical clusters,” said
Ms. Varaporn Choeysa-ard, director of the Eastern Region
Investment & Economic Center. “Apart from these two
sectors, there are significant investment opportunities in
logistic services including sea-freight and warehousing,”
she said.
According to Ms. Varaporn, the region’s two deep
sea ports of Laem Chabang and Map-Ta-Put and the new
Suvarnabhumi Airport, to be opened next year, are
important investment advantages. Laem Chabang Port
includes a terminal for auto shipment, while Map-Ta-Put
has pipeline facilities to transport oil and natural gas.
The government also plans to strengthen the region’s
multi-modal connectivity by increasing double-track rail
service and expanding portions of the Chonburi bypass
road to accommodate higher cargo traffic.
Ms. Varaporn said that industrial development began
in the Eastern Seaboard approximately 30 years ago when
the government started transporting natural gas, found in
the Gulf of Thailand, to the region. “Infrastructure and
pipelines were built, initiating the development of Rayong’s
petrochemical industry,” she said.
Natural gas from the Gulf of Thailand is used in MapTa-Put’s petrochemical industry, where it is transformed
into ethylene and propylene. These compounds are then
converted into down-stream by-products including
polyester synthetic fiber and plastic resins. Some of the
major players in the area include
National Petrochemical, Tuntex
and Rayong Olefins (Siam Cement
Group).
Petrochemical by-products,
such as plastics, are used by
manufacturers in the nearby
automotive industry cluster.
Thailand’s auto sector consists of
major Japanese, European and
American manufacturers and
boasts a sophisticated network of parts and components
suppliers. Activities in electronics and steel have sprung
up to supply needed materials to the auto industry.
— By Alisa Kukarja
2004 Approved Investment Value
by Sector in the Eastern Region
Services and
Public Utilities, 9%
Chemical,
Paper and
Plastics,
22%
Electrical and
Electronics, 13%
Agriculture and
Agricultural
Products, 9%
Mining, Ceramics
and Basic
Metals, 4%
Light Industry,
9%
Metal, Machinery
and Automotive, 34%
For more information, contact the BOI Eastern Region
Investment & Economic Center at 66-(0)38-491-820 or
[email protected]
3
The Agricultural Research
Development Agency
Dr. Montri Chulavatnatol is the director of the Agricultural Research Development Agency
(ARDA), responsible for supporting agricultural-related R&D, promoting the
commercialization of agricultural output and empowering human resources in agricultural
research activities. He is also a senior consultant to the National Innovation Agency
(NIA).
What are the trends in Thailand’s agricultural research
and development?
The Thai government spends around 10 billion baht
(US$ 250 million) annually in R&D, with 50% going into
agricultural research. So, it is clear that agricultural R&D is
at the top of the national agenda.
Until recently, agricultural R&D was aimed mainly
at increasing productivity to ensure an adequate
food supply for local consumption and for
exports. However, given Thailand’s industrial
development, agricultural R&D priorities
have shifted to innovations that increase
the nation’s energy self-sufficiency, with
research being conducted to convert agricultural inputs into alternative fuels.
innovation will enable Thai firms to use local raw materials
in meeting the global demand for environmentally friendly
products.
Thais have also successfully converted the seeds of
domestic plants such as sunflowers, palm trees and jatrophas
into bio-diesel fuel. This is a strategic step toward reducing
Thailand’s dependency on oil imports.
Are there any other value-added R&D
opportunities in the agricultural sector?
The cosmetics industry has good
development potential due to the wide
variety of herbs and other local plants
that can be used in producing skincare
products. For example, the local herb plai
may be used as a skin-whitening and
What are some of Thailand’s major
anti-ageing agent in cosmetics and personal
Jatropha Plant
agricultural R&D success stories?
care products. Additionally, pink lotus
The shrimp industry, one of the nation’s top export
flowers, known to maintain youthful looking skin,
generators, has greatly benefited from R&D activities. Last are being used in skincare products. The local skincare
year, a new technology called ‘Chitosan-Ozone’ was market is expected to post double-digit growth this year.
introduced in shrimp farms to help control disease, increase This strong domestic market growth, coupled with increasing
productivity and improve quality.
international demand for herbal-based skincare, provides
Additionally, Thai software developers, with the good potential for further development of this sector.
support of the NIA, have created software to trace the
movement of shrimp through the entire food chain, What advantages does Thailand have in the areas of
including farmers, cold storage operators, processors and innovation and R&D?
exporters. This is crucial in maintaining Thai shrimp Thailand is an ideal ASEAN base for agricultural R&D due
export competitiveness because many importing nations to an abundance of raw materials, strong governmental
require such traceability and documentation.
support and the existence of research centers such as
A consortium of Thai plastics firms is exploring NIA and ARDA. I also believe that Thais have a high
technology to manufacture biodegradable plastic, called entrepreneurial spirit and this, combined with our
Polylactic acid or PLA, from domestically produced open society, provides great opportunities for creativity.
cassava-based plastic pellets rather than from imported — By Alisa Kukarja
corn-based pellets. In this process, cassava is converted
into lactic acid, which is then polymerized into plastics. This For more information see: www.arda.or.th
Note: R&D activities are eligible for investment incentives including machinery import duty exemptions and an eight
year corporate income tax exemption.
4
Alternative Dispute Resolution Office:
Providing investors with internationally accepted arbitration
and mediation options
T
he Thai judiciary provides alternative dispute
resolution (ADR) services, including arbitration and
mediation, as out-of-court settlement options to
firms of any size or nationality facing business and financial
disputes. The availability of these ADR services, conducted
according to international best practices, is an important
benefit for foreign investors as it provides a globallyaccepted alternative to pursuing a case through an unfamiliar
foreign legal system.
The ADR Office operates under the Court of Justice
and administers both arbitration and mediation services.
In arbitration, the disputing parties select an arbiter who
will hear the case and render a legally-binding judgment.
Mediation, on the other hand, involves a neutral mediator
who helps the disputing parties to communicate and
reach a mutually acceptable agreement. The parties may
select the language to be used in the proceedings, with
assistance available to foreigners for proceedings conducted
in Thai.
Thailand’s arbitration law is based upon the United
Nation’s Model Law on International Commercial
Arbitration. This is important for instilling confidence in
foreign investors as a judgment awarded in Thailand is
enforceable in all other member countries and vice versa.
It also enables parties to conduct arbitration in a location
other than where the dispute originated.
According to Judge Montri Sillapamahabundit, of the
Office of the President of the Supreme Court, ADR
mechanisms offer both domestic and international firms
important advantages over a court procedure, including:
Mediation in Thailand
- More control and convenience, as parties can choose
the arbitrator / mediator and set the session times and dates
- Time and cost savings
- Closed sessions, preserving confidentiality
- Less confrontation, providing a better chance for
the parties to maintain a positive relationship
When drawing up contracts, an arbitration clause can
be specified as a dispute resolution mechanism. A number
of specialized institutions administer arbitration, such as
the Securities and Exchange Commission and the
Department of Intellectual Property. Judgments are
enforced by a court which has subject matter and
geographic jurisdiction over the case.
Once a lawsuit or arbitration case is filed, the ADR
Office encourages the parties to first try mediation. Judge
Montri said, “Parties in mediation can obtain the best
solution for themselves. They can decide what they want
or need and can create a tailor-made solution.”
The Thai mediation system is based closely on those
of the U.S. and Europe. The World Bank, the American
Bankruptcy Institute, the Kenan Institute Asia and
others have supported the development of mediation in
Thailand.
“Mediation is well-suited to Thailand because the
infrastructure is already here, including trained mediators
who abide by international codes of ethics and standards,”
said George Kelakos, an attorney and vice president of
the international board of directors of the American
Bankruptcy Institute.
According to Judge Montri, approximately 24% of all
civil cases go to mediation and of these cases,
approximately 60% are solved. Mediation is
commonly used for business disputes related to
financial matters, construction contracts and
sales agreements.
“Mediation is very cost effective for small
cases because court costs associated with a
trial may be more expensive than the actual
judgment,” said Judge Montri. Mediation services
are funded by the Office of the Judiciary and
are free, aside from out-of-pocket expenses such
as copy or delivery charges, which are borne
by the parties. — By Susan Crawford
For more information see www.adr.or.th
Cases which started in court and then switched to mediation.
5
Logistics
New Facilities, Technology to
Streamline Logistics Processes
T
hailand is upgrading logistics facilities and
technology infrastructure to increase the nation’s
freight handling capacity and assure faster, more
efficient cargo movement. A number of projects are
underway, including the construction of a new international
airport, the expansion of Thailand’s premier deep-sea port,
improvements in multi-modal linkages, the proliferation of
e-logistics and a move toward paperless customs
procedures.
These logistics advances are crucial to boosting the
competitiveness of manufacturing-based operations that
utilize imported materials to produce goods both for
domestic and export markets.
Advances in Air Freight
The nation’s growing air cargo needs will be met by
the new Suvarnabhumi International Airport, one of the
world’s largest single terminal complexes with a total floor
Bangkok Airport Air Cargo Volume
area of 500,000 square meters. It is expected to be fully
operational in approximately mid-2006. Suvarnabhumi
Airport will have a cargo capacity of 1.46 million tons per
year, double the capacity of Bangkok’s current international
airport, Don Muang. In 2004, 748,000 tons of cargo passed
through Don Muang, a 12% increase over 2003. The new
facility, located 30 km. east of Bangkok, will consist of a
190,000 square meter cargo terminal, which will allow
for faster cargo clearance and easier access to cargo, while
minimizing loss and damage.
The new terminal will have a 100,000 square meter
Customs Free Zone with an annual capacity of 1.26 million
tons. An additional 50,000 square meters have been
allocated for future expansion. The Free Zone will enable
firms to import cargo, store it and pay duties only when
the items are removed from the zone for domestic use.
This is particularly beneficial for distribution centers that
must stock expensive spare parts and components to
supply to both local and regional subsidiaries when
needed.
The Suvarnabhumi Airport’s proximity to Bangkok will
help to control logistics costs, as will the multi-modal
linkages for sea, rail and road transport that are available
in the airport’s vicinity. The government plans to expand
these linkages, and has earmarked approximately 400
billion baht (US$ 10 billion) for constructing double-track
rail lines to serve both passengers and cargo.
“The location of the new airport is good for
multi-modal transportation because it enables us to move
cargo efficiently from sea to air via rail or truck. Our
logistics costs for multi-modal connections will
therefore be less expensive compared to other
nearby countries,” said Mr. Suwit Ratanachinda,
president of the Thai International Freight
Forwarders Association (TIFFA).
Improvement in Sea Freight Capacity
Laem Chabang, Thailand’s leading deep-sea
international container port, located on the
Eastern Seaboard, is expanding to meet the
nation’s mounting sea freight needs. “Demand
for shipping is expected to increase rapidly due
to Thailand’s free trade agreements with ASEAN,
China, Australia, New Zealand, India and Japan,”
Mr. Suwit said. Container throughput at Laem
Source: Airline Cargo Business Assn.
6
Chabang totaled 3.6 million TEUs in 2004, up from
approximately 3.2 million TEUs the previous year.
Laem Chabang port, located 100 km. from the new airport,
currently consists of 11 terminals:
• 7 container terminals
• 2 roll-on roll-off (RORO) terminals for automotive cargo
• 1 break bulk terminal solely for sugar
• 1 empty terminal
Seven additional terminals will be developed, including
six container terminals and an additional RORO terminal, with
the first scheduled for completion in approximately June 2006.
Developments in E-Logistics
In addition to developments in physical logistics
infrastructure related to air, sea and rail transportation,
improvements have also been made in e-infrastructure. The
implementation of electronic data interchange (EDI) has enabled
the industry to automate a significant percentage of invoices,
packing lists, shipping documents, customs clearance
documents and customs declaration forms. The Customs
Department has also recently adopted a policy to use radio
frequency identification (RFID) technology in a move toward
paperless operations in Free Zones. See sidebar.
Investment Opportunities
According to Mr. Suwit, advances have been made in
Thailand’s logistics capabilities, but the nation is still in the
early stages of implementing logistics-related technology.
Therefore there are many investment opportunities available
to strengthen Thailand’s efficiency, particularly in the areas
of:
• Warehouse management technology
• Air and sea freight software
• Cargo packing software
• Trucking control software to monitor the movement of
delivery trucks
The upgrading of Thailand’s logistics sector is a
government priority and the Board of Investment offers special
promotions to logistics-related activities including:
• Maritime training institutes
• Distribution centers
• Enterprise software
• Air transportation services
• Maritime transportation services
Investment incentives for these activities range from
corporate income tax holidays to machinery import duty
exemptions. — By Susan Crawford
For more information on investment incentives, see
www.boi.go.th
Customs Adopts RFID
Technology for Paperless
Free Zone Operations
The Custom’s Department Free Zone Division
announced this month that it has adopted radio
frequency identification (RFID) electronic container
and seal systems in order to achieve paperless Free
Zone operations by 2008. As part of this initiative,
customs declaration forms from firms operating in
the nation’s 23 Free Zones will be submitted on-line
via electronic data interchange (EDI) to the Customs
Department within three years.
Free Zones allow for duty-free imports of items
used in the production of exports, although duties
must be paid on items that are removed from the
free zone or that are used to produce goods for
local sale. Customs will use RFID to track cargo
brought into a Free Zone.
Using RFID seals, containers for export can be
checked from the zone through to the port without
the need for Customs officials to re-open them. The
RFID technology will help to ensure the security of
cargo, enabling Customs to monitor the cargo during
transport and help determine whether any tampering
has occurred. This system is expected to be
implemented with exporters in 2006, and with
importers the following year.
A pilot project utilizing RFID seals was
implemented with leading hard disk drive
manufacturer Western Digital. TIFFA EDI Services
Co., Ltd., led by Managing Director Anusorn
Lovichit, served as system integrator and software
consultant for the project. “With this technology,
Customs can use the Internet to track the real-time
progress of Western Digital’s cargo shipments
between Free Zones,” Mr. Anusorn said.
Western Digital invested in both electronic
seals and RFID readers at Customs checking posts.
In addition to using electronic seals, cargo packing
lists, invoices and Customs Declarations are being
submitted electronically. The RFID hardware was
supplied by Identify Co. Ltd. and epcSolutions was
responsible for the software.
Customs will evaluate the pilot project results
in October, for possible implementation in Free
Zones nationwide. — By Susan Crawford
For more information, see www.tiffaedi.com
7
BOI Mid-year Investment Promotion Update
Net investment application value rose 7%, led by Japanese auto
assembly and parts manufacturing
(January-June 2005)
The net value of BOI investment applications reached
277.2 billion baht (US$ 6.9 billion) in the first half of 2005,
representing a 7% increase over the same period in 2004.
Japan remains the largest investor in Thailand, contributing
up to 45% of total investment value.
The metal, machinery and transport equipment sector,
which includes automotives, accounted for 38% of all new
investment, followed by services and public utilities with
26% and chemicals, plastics and paper with 13%.
In the first six months, the number of net investment
applications totaled 614, up 6% from the same period last
year. Of the total applications, 39% represented joint
ventures, while 32% were wholly Thai-owned and 29%
were foreign-owned entities.
The metal, machinery and transport equipment
industries attracted investment of 105.7 billion baht (US$
2.6 billion), up five-fold from 24.5 billion baht (US$ 612.5
million) in 2004. Ninety-six percent of investment in this
Foreign Direct Investment
sector consisted of auto assembly and auto parts
manufacturing projects, totaling 101.7 billion baht (US$
2.5 billion).
Services and public utilities rank second with a net
investment application value of 72.1 billion baht (US$ 1.8
billion). Most applications in this sector cover high value
projects for developing sea freight facilities, power
generation plants, and industrial zones.
The chemical, paper and plastics sector ranks 3rd with
36.5 billion baht (US$ 912.5 million) in net investment, led
by production of chemicals, body care products and
plastics, as well as oil refinery expansion.
The electrical appliances and electronics industry
received net investment applications valued at 31.4 billion
baht (US$ 785 million). High value semiconductor
manufacturing projects represent investment of
approximately 22 billion baht (US$ 550 million).
FDI Value by Country
200
178
180
1st half 2004
1st half 2005
160
Billions baht
Investment Applications by Sector
140
120
114
115
100
80
60
43
40
20
0
13
Tatal
Japan
22
Europe
24
17
Asean
25
15
USA
Foreign direct investment (FDI) surged by 56% to 178 billion baht (US$ 4.5 billion) in the first half of 2005,
led by Japan. Japanese FDI tripled to reach 115 billion baht (US$ 2.9 billion), accounting for 65% of total FDI.
Japan’s major investments are in auto and auto parts manufacturing and international procurement offices.
Europe follows Japan with a 21% FDI share at 22 billion baht (US$ 550 million). Major European investments
are in natural rubber products and electronic parts and equipment.
Other FDI sources include ASEAN and the U.S., with respective investment values of 17 billion baht
(US$ 425 million) and 15 billion baht (US$ 375 million).
8
Canadoil: Largest Canadian investor in
Thailand expands production, exports
S
igns of expansion are everywhere on the grounds
of Canadoil Group’s production facility on the Amata
City industrial estate in Rayong. The firm, a major
manufacturer and fabricator of steel pipes, pipe fittings, and
piping components, plans to open a new 4 billion baht (US$
100 million) pipe mill this September. Three new fittings
factories are scheduled to open between December and
February 2006.
Originally only a fittings company, Canadoil is expanding
into the pipe business with its new factory, while also
increasing its capacity in welded pipes by twenty-fold. Since
2000, when it first began operations in Thailand, Canadoil
has invested more than 7.5
billion baht (US$ 187.5 million),
making it Canada’s largest
investor in Thailand. The firm’s
2004 Thai sales revenues totaled
1.75 billion baht (US$ 43.75
million).
Canadoil’s new Thai investments will help the company
better meet growing demand
for its products. Canadoil
Group’s Chief Executive Officer
Giacomo Sozzi anticipates that
this demand will quickly escalate over the next three years
as its principal customers, major oil and gas companies, make
new investments in refining capacity. Demand will increase
not only for Canadoil’s traditional products, but also for new
products equipped to handle the more corrosive “sour” oil
and gas supplies that energy companies are increasingly
tapping due to limited supply of “sweet” fuels.
Mr. Sozzi identifies Canadoil’s unique organizational
structure as one of its greatest competitive strengths in
this growing industry. “Some companies only make pipes
or fittings or only design. Canadoil is vertically integrated.
This is what sets us apart from others in the industry,” said
Mr. Sozzi.
Canadoil’s activities encompass design, prefabrication,
and the manufacture of components. The company’s vertical
integration allows it to maintain one set of internal procedures
for inspection, verification, and qualification work. This
represents an important source of efficiency in what Mr.
Sozzi terms a “zero defect industry,” allowing Canadoil to
reduce supply times to customers.
The tax incentives offered by the Board of Investment
were a critical factor in Canadoil’s decision to invest in
Thailand, followed by location. Thailand’s location allows
Canadoil to competitively ship products throughout the
Middle East and Asia, markets where the company currently
foresees the greatest growth. The firm is constructing an
on-site free zone area, approved by Customs, to speed the
importation of raw materials such as steel.
Thailand also provides Canadoil with reasonable
labor costs, a necessity for the labor-intensive production
of seamless fittings. The loyalty, dedication, and willingness
to learn of Canadoil’s Thai staff are attributes that Mr.
Sozzi labels the “Thai competitive advantage.” Canadoil
has made significant investments to further improve the
productivity of its Thai staff, providing specialized training
to employees of all levels from welders to managers.
— By Chrissa La Porte
Canadoil Profile
• Produces more than 500,000 products
• Manufactures and sells steel pipes and fittings
targeted to the energy market
• New Thai pipe mill expected to generate revenues
of 10 billion baht (US$ 250 million) in 2007
• More than 95% of Thai production is for export,
generating substantial foreign currency income for
Thailand
• Currently has 700 staff in Thailand and plans to
double employment by year-end 2006
• Canadoil Group has 20% global market share in
fittings
For more information see www.canadoil.com
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Destination: U.S.
Secretary Seneral Satit Sirirangkamanont receives a gift from Honorary
Consul General of Thailand Joseph A. Milano (left) in Boston on July 19.
Deputy Secretary General Sudjit Inthaiwong (fifth left) meets with
executives from the Federation of Malaysian Manufacturers on July 27.
Destinations: Singapore and Malaysia
Deputy Secretary General Sudjit Inthaiwong led an
investment mission to Singapore and Malaysia from
August 24-27 to attract logistics sector investment.
A seminar, co-organized by DBS Bank and
A BOI delegation, led by Secretary General Satit Sirirangkamanont
and Director of Services and Utilities Division Ajarin
Pattanapanchai, promoted investment in bioscience and medical
care during a U.S. mission from July 10-22.
In San Francisco and Seattle, seminars were held concerning
Thailand’s status in biotech R&D. Director Ajarin presented
promotional privileges and Thai investment opportunities for U.S.
firms in this field. The delegation also visited various companies
conducting medical and pharmaceutical R&D.
In Boston, a health care seminar was held to present Thailand’s
strategies to become a major Asian medical center. Secretary
General Satit highlighted investment opportunities for U.S. medical
service providers in Thailand. The delegation toured R&D
institutes to establish connections for potential collaboration with
Thai institutes. Honorary Consul General of Thailand Joseph A.
Milano assisted with the mission.
International Enterprise Singapore, educated potential investors
about Thailand’s investment climate as well as the available
services, facilities and incentives for foreign investors in the
logistics and transportation sectors.
The BOI delegates visited two large Singaporean logistics
companies to present Thailand’s investment advantages. The
delegates also met with firms interested in Thailand’s machinery
parts and precision metal parts manufacturing, metal recycling,
and electronic and automotive supporting industries. The
delegates provided in-depth information about the investment
application process and other legal issues.
In Johor Bahru, Malaysia, the delegation networked with
executives from the Federation of Malaysian Manufacturers and
discussed future cooperation in organizing training and
investment promotion activities. They also visited two large
Malaysian logistics companies to encourage investment in
Thailand.
Destination: Australia
Deputy Secretary General Sudjit Inthaiwong presents a token of
appreciation to Warner Village Theme Park International Marketing
Manager Anthony Luxton (right) and Senior Sales Manager Frankie Mak
(center) at a September 3 meeting.
At the 16th Australia-Thailand Joint Business Conference held in
Brisbane, Australia from August 1-2, Thai and Australian
delegations discussed the business climate in the two nations.
BOI Deputy Secretary General Sudjit Inthaiwong presented an
overview of Thailand’s investment opportunities. The conference
was part of the BOI’s July 31- August 5 Australian mission.
The conference touched on the health and spa, restaurant,
food processing, mining, education, film and ICT industries. Most
Australian investors expressed confidence in Thailand as a longterm investment destination.
In addition to the BOI, Thai delegations from the Thai Royal
Embassy in Australia, the National Science and Technology
Development Agency and the National Food Institute attended
the conference.
The Thai delegation also held a round-table meeting with
Queensland’s public and private sector officials from many sectors
including the railway and its supporting industries, agriculture
and ICT.
By Songsirinuj Tantivess, Chatchadaporn Krungkasem, Vannipa Pipupchaiyasit and Alisa Kukarja
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Delegation from Xiamen City, China
On August 5, Senior Executive Advisor Suchart Phisitvanich
(right), Senior Investment Promotion Officer Pichit Dejneeranat
(left) and other BOI staff welcome a delegation from Xiamen
City, led by Mayor Zhang Changping. The BOI team presented
promotional strategies to attract Chinese investment.
Laos, Cambodia and Myanmar Investment Seminar
Senior Executive Advisor Suchart Phisitvanich meets with
commerce and foreign affairs officials from Laos, Cambodia
and Myanmar in Bangkok on August 27. Following an opening
speech by Mr. Suchart, officials discussed regional investment
opportunities and strategies.
EU-Thailand Partenariat
At a July 14 press conference at the Central Sofitel Plaza Hotel,
BOI Deputy Secretary General Sujit Inthaiwong announces
that 300 selected Thai SMEs will have an opportunity to build
business partnerships with European companies at the
EU-Thailand Partenariat. It will be held from November 17-18
at Impact Arena in Muang Thong Thani.
Deputy Secretary General Sujit and Mr. Andreas List,
head of the European Commission Delegation to Thailand,
explained the event and the objectives. Guest speakers from
Thai SME’s selected to participate in the Partenariat also
discussed their expectations of the event.
Angolan Delegation
Deputy Secretary General Sudjit Inthaiwong welcomes
Angolan Deputy Minister of Industry Abraao Pio dos Santos
Gourgel (left) to BOI headquarters on August 30. The Angolan
delegation visited the BOI to encourage Thai investment in
the mining, energy, fishery and hospitality sectors.
India Fact-finding trip
In Delhi, India, BOI Director of International Affairs Vittaya
Praisuwan (right) discusses investment opportunities with
India’s Minister of State for Food Processing Industries Subodh
Kant Sahai. The objective of the August 7-12 trip was to attract
Indian investment in agro-processing, software, automotive parts
and electronic components.
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