Digital Economy Promotion Agency (depa) is a government agency supervised by the Ministry of Digital Economy and Society of Thailand. The objectives of depa are to promote digital economy, to enhance Thailand’s competitiveness and to overcome the “middle income trap” in accordance with Thailand 4.0 policy. One of depa’s critical roles and responsibilities is to collaborate with the Office of the Board of Investment (BOI) for technical classification of qualified business activities in digital industry of Thailand. Thailand has been ranked by the World Bank in 2019 as the 27th best country in the world for its ease of conducting business comparing business regulations from domestic firms in 190 countries.
Source: World Bank
Moreover, Thailand is strategically located at the heart of Asia to serve foreign investors as a dynamic gateway to expand their business markets. The fast-growing economy in terms of digital technology, global standard infrastructure, competitive manpower and strong government support policies are considered to be Thailand’s most selling remarkable points attracting foreign investments to ASEAN Economic Community (AEC). In addition, Thailand is intensively enhancing robust ecosystems to support digital economy in Thailand by launching many national infrastructure improvement projects to ensure the country is ready to be the best Foreign Direct Investment (FDI) location for investors around the world.
To promote FDI in the digital industry sector and to enhance the national digital economy, competitiveness and innovation, depa as a government agency which has the authority to endorse the qualified investment projects in the digital industry sector and to propose BOI for granting superior investment privileges, e.g., the corporate income tax exemption up to 13 years, imported duties exemption on machinery, raw material used in production and other non-tax incentives. Essentially, BOI defines the criteria for Project Approval investing in digital industry as the following;
Criteria for project approval
•The value-added of the project must not be less than 20% of revenue.
•Modern production processes must be used.
•New machinery must be used. In case of imported used machinery, there are different criteria in 3 cases, general case, factory relocation case and other cases to be considered.
•Investment capital more than 10 million baht projects, excluding cost of land and working capital, must obtain ISO 9000 or ISO 14000 certification or similar international standard certification within 2 years from the full operation.
•Adequate and efficient guidelines and measures to protect environmental quality and to reduce environmental impact must be installed.
•Projects or activities with type and size that are required to submit environmental impact assessment reports must comply with related environmental laws and regulation or Capital resolutions.
•Project located in Rayong must comply with the Announcement of the Office of the Board of Investment No. Por 1/2554 dated May 2, 2011 on industrial Promotion Policy in Rayong Province.
•The minimum requirement of investment capital per each project is 1 million baht (excluding cost of land and working capital). As for knowledge-based services, the minimum requirement on investment capital is based on the minimum annual salaries expense specified in the list of activities eligible for investment promotion.
•For newly established projects, the debt-to-equity ratio must not exceed 3 to 1. Expansion projects shall be considered on a case by case basis.
•For project with an investment value over than 750 million baht (excluding cost of land and working capital) the project’s feasibility study must be submitted with details as specified by the Board of BOI.
Criteria for Foreign Shareholding
As for digital industry sector, BOI does not have equity restrictions for foreign investors except as specified in other laws. Founders of new business and foreign investors, who interested to invest in digital industry sector can request depa, for more assistance and information in terms of incentives and benefits of digital investment in Thailand.
General List of Activities Eligible for Promotion in Digital Industry BOI initially classified a general list of eligible activities for domestic investment promotion into 8 sections as follows;
Section 1: Agriculture and Agricultural Products
Section 2: Mineral, Ceramics and Basic Metals
Section 3: Light Industry
Section 4: Metal Products, Machinery and Transport Equipment
Section 5: Electronics and Electrical Appliances Industry
Section 6: Chemicals, Paper and Plastics
Section 7: Service and Public Utilities
Section 8: Technology and Innovation Development
The digital businesses are classified in Section 5; 5.7.1 Embedded Software, 5.7.2 Enterprise Software/ Digital Content, 5.7.3 High Value-added Software, 5.8 E-commerce and 5.9 Digital Services, Section 7 Service and Public Utilities (7.9.2 Innovation Incubation Center) and Section 8 Technology and Innovation Development (8.1.4 Digital Technology Development). In this regard, the list of eligible activities for investment promotion, conditions and incentives or benefits that are overseen by depa are as follows;
