Thailand’s Board of Investment (BOI) has recently enhanced existing investment incentives and conditions to fast-track the growth of the Electric Vehicles (EV) domestic market and swiftly develop the necessary infrastructure of charging stations.
Previously, only larger projects would benefit from tax exemptions. Specifically, currently investments in charging stations with no less than 40 chargers, one quarter of which are required to be DC type, enjoy a 5-year corporate income tax (CIT) exemption. Now, however, charging stations with fewer chargers are also eligible to apply for BOI investment promotion and be entitled to 3 years of CIT exemption.
Figure 1. TAX incentives for charging station investments.
The amendment has also simplified the application process by abrogating two earlier conditions, namely:
1. Ineligibility for more investment incentives granted by other agencies; and
2. Mandatory ISO certification.
The abrogation of these two conditions, which may have been a deterrent for many prospective investors, is expected to spark a surge in EV investment. Investors must now only abide by the relevant safety regulations and submit a plan to either:
1. Implement an EV Smart Charging System; or
2. Connect to an EV Charging Network Operator Platform.
The latter would be developed as a centralized, efficient platform for operators as well as for Battery Electric Vehicles (BEV) users.
Figure 2. TAX incentives for manufacture of EV parts.
Foreign and domestic investment declined slightly in Q1 2022 due to an economic contraction in conjunction with global geopolitical risk. BOI investment promotion applications in the first trimester of 2022 totaled THB 110.7 billion (approximately USD 3.4 billion) – 6% lower than the total investment amount in the first three months of 2021. Despite a sharp decline in domestic investments, FDI soared, recording a 29% year-over-year growth, and accounted for 70% of the total investment amount in 2022. The quarter’s top three foreign investors were Taiwan, Japan, and China.
The top three targeted industries were:
1. Automotive – THB 41.6 billion (53% of target industries’ applications).
2. Agriculture & food processing – THB 12 billion (15.29% of target industries’ applications).
3. Electronics – THB 10.3 billion (13.12% of target industries’ applications).
Figure 3. Investments in THB billions and in percentages per sector.
Overall, the 12 targeted sectors (including the top performers listed above) attracted a combined value of THB 78.2 billion, which is equivalent to 70.6% of the total investment. Most of the BOI applications targeted the Eastern Economic Corridor (EEC), the Kingdom’s high-tech manufacturing hub, and totaled THB 60.4 billion.