The Thailand Board of Investment today approved new conditions for investment promotion in data centers requiring foreign direct investments (FDI) to bring higher technology and contribute more benefits to the domestic economy, a series of measures to promote and support local small and medium size enterprises (SME), especially in sectors facing high competition, and improved tax benefits for tourism businesses in second-tier provinces.
The board today also approved investment applications worth a combined 99.73 billion baht (ca. USD 3 billion) in data center and renewable energy projects.
"The measures approved today aim to ensure that FDIs contribute to the strengthening of Thailand’s overall economy, and participate in the development of our human resources, and continuous uplifting of the technological level and competitiveness of our SMEs, which are such a crucial part of the supply chain,” Mr. Narit Therdsteerasukdi, Secretary General of the BOI, said after the Board meeting, which was chaired by the Deputy Prime Minister and Minister of Finance, Mr. Pichai Chunhavajira. "Some of the measures also address current concerns of both local and foreign investors already established here in regards to oversupply in specific industries.”
Promotion and Support Measures for Local SMEs and Entrepreneurs
This package of measures approved today aims to encourage Thai entrepreneurs to improve their potential and efficiency, increase their competitiveness amid intense competition and global trade tensions resulting from the impact of the U.S. trade policies, and support the entrepreneurs involved in some of the most vulnerable sectors.
A key measure to support Thai entrepreneurs is an increase in the corporate income tax (CIT) benefits granted to BOI promoted SMEs which will now receive a 5-year CIT exemption equal to as much as 100% of their investment in enhancing their capabilities and improvements, up from the previous 3-year CIT exemption capped at 50% of investment.
Also, as part of the package approved today, the BOI will suspend the promotion of certain types of businesses, such as sectors that may face oversupply or may have a negative environmental impact. Sectors affected entirely or in part by the suspension include solar cell and solar panel manufacturing, certain vehicle parts manufacturing (such as lead-acid batteries, accessories, decorations and equipment for vehicles that do not affect driving performance and safety), coil centers, long steel production, hot rolled steel production, and steel pipes.
The consideration of new project applications will also involve an increased focus on the production process, in order to ensure that "essential production processes” are actually happening in the country, with the aim to promote value-added investment using modern technology in the manufacturing sector, and the development of the local supply chains.
Finally, the consideration of applications for investment promotion will include tighter criteria and screening regarding the hiring of foreign personnel, in terms of the appropriate proportion of Thai personnel for the manufacturing activities which hire more than 100 people and the foreign personnel’s minimum remuneration to promote investment that allows growth while promoting the development of the Thai workforce.
Revised Requirements and Benefits for Data Center, Data Hosting and Cloud Service Projects
The Board approved a revision and improvement of the requirements and benefits for investments in data centers, data hosting and cloud services aimed to more appropriately reflect recent technological developments, to be more commensurate to the actual investment amount, and to ensure the projects contribute clearer benefits to Thailand’s economy, while helping workforce development and the appropriate management of natural and energy resources.
To get the highest level of tax benefits, CIT exemption for 8 years, the projects will need to meet power usage effectiveness (PUE) standards, and offer data hosting using advanced computing capabilities such as graphic processing units (GPU), etc. The tax benefits offered to other projects, not matching these requirements, will be capped at 5 years.
Applicants for investment promotion in this sector will also be required to submit a plan detailing how the project will contribute to Thailand’s economy. The plan should include activities such as professional training, cooperation with local technical schools and universities in creating courses or conducting joint research and development projects, skill development programs for Thai SME entrepreneurs, support to the strengthening of the country’s supply chains, etc. Implementation of the proposed plan will have to be completed before a project can exercise its rights to CIT exemption.
As of the first quarter of this year, the BOI had already granted investment promotion benefits to 27 data center projects, representing a combined investment of 240.6 billion baht. When including the 126.8 billion baht investment in a data hosting project which was approved earlier this year, the total of the approved investments in the data center and data-hosting sector as of end-March amounted to 367.4 billion baht, and represented a combined IT Load of approximately 1,365 megawatts (MW).
Promotion of Tourism Businesses in 55 Second-Tier Provinces
The meeting also approved measures to promote investment in tourism infrastructure businesses in the so-called 55 second-tier provinces. The measures are in line with the Government’s policy to upgrade tourism infrastructure and develop new tourist attractions to promote the distribution of tourists in less visited areas and to spread nationwide the economic benefits of tourism.
Investment in tourism businesses including large-scale quality tourist attractions, theme parks, Thai cultural centers, handicraft centers, museums, open zoos, international exhibition centers, large convention halls, cruise terminals, motor racing stadiums, cable cars and electric trams for tourism in the 55 designated provinces will receive 8 years CIT exemption privileges, increased from 5 years previously. Investments in hotel business in these provinces will receive 5 years CIT exemption, compared to the 3 years granted previously.
Project approvals
Today the Board granted investment promotion benefits to a total of seven projects. These include five new data center projects, all Tier 3 standard, which represent a combined investment of 91.7 billion baht, and a combined IT load of approximately 536 MW. The two wind power generation projects also approved today meanwhile represent a combined investment of some 8 billion baht, and a total generation capacity of 118 MW, as per the following details:
— Vistas Technology Co.,Ltd. received approval for a 6.85 billion baht data center project, with an IT load of approximately 50 MW, to be located in Chonburi Province.
— Bridge Data Centres III (Thailand) Co.,Ltd. received approval for a 14.45 billion baht data center project, with an IT load of approximately 80 MW, to be located in Chonburi Province.
— Digital Edge DC (Thailand) Co.,Ltd. received approval for a 24.52 billion baht data center project, with an IT load of approximately 96 MW, to be located in Chonburi Province.
Source: Thailand Board of Investment
— Galaxy Peak Data Center Co.,Ltd. received approval for a 23.55 billion baht data center project, with an IT load of approximately 160 MW, to be located in Rayong Province.
— Galaxy Data Center Pte. Ltd., a Singapore-based Chinese invested company, received approval for a 22.31 billion baht data center project, with an IT load of approximately 150 MW. The project will be located in Rayong Province.
— The Board also approved two wind power generation projects by local investors that will be selling electricity under power purchase agreements with the Electricity Generating Authority of Thailand, namely Alpha One Project Co., Ltd. which will invest 3.2 billion baht to setup a facility in Chumphon Province with a 48 MW generation capacity, and Alpha Two Project Co., Ltd. which will invest 4.84 billion baht in Prachuap Khiri Khan Province to generate 70 MW.
