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Smart machinery: A key driving force in Thailand’s supply chain
Thailand Board of Investment (BOI)
After three years of economic disruption caused by the COVID-19 pandemic, Thailand is now ready to embark on the next chapter of its economic development by envisioning its investment strategy for the next five years (2023-2027). Thailand is set to begin ‘the new economy era’ by aligning its own unique strengths with prospective future investment trends, including cutting-edge, smart technology, and eco-friendly industries. On the back of this, and in response to the growing demand for cutting-edge manufacturing to propel Thailand towards an innovation-driven economy, the country’s smart machinery sector, particularly robotics and automation, has flourished in recent years.
As one of the world’s largest automotive and electrical and electronics producers, together with its reputation as the ‘Kitchen of the World and its dynamic medical and tourism services’, Thailand’s need for the application of robotics and automation in these sectors has expanded substantially.
Thailand has emerged as a leader in robotics and automation in the region and is now among the world's top 15 largest markets for robotic installations. According to the World Robotics Report 2023, the installations of industrial robots in 2021 and 2022 reached 3,900 and 3,300 units, respectively. Its performance is fostering Thailand’s aspirations to be a leader in this sector within ASEAN.
THE GOVERNMENT’S SUPPORTING POLICY
Investors in the machinery sector have been given substantial support through a range of tax and non-tax incentives from the Thailand Board of Investment (BOI). The BOI is dedicated to encouraging manufacturers to advance their manufacturing processes and embrace cutting-edge technologies.
Some of the projects promoted by BOI in recent years include the welding robots for metalworking applications, automated machines for the production of electronic parts, and automated warehouses for factories and distribution centers, among others.
BOI’s support for a wider range of activities does not end there. Last year the BOI announced the addition of new BOI categories with attractive incentives to support the use of new technologies, such as the manufacture of high-precision machinery, equipment, and machinery components, as well as machinery repair.
These new categories will further enhance Thailand's appeal as a destination for the high-precision machinery industry, which has experienced significant growth recently and will support the increasing demand for smart manufacturing.
Measure For Industrial Upgrades Towards Smart And Sustainable Industry
The BOI also encourages existing companies to upgrade their efficiency by offering additional incentives under Enhancement Measure for Smart and Sustainable Industry (The Board of Investment Announcement No. 15/2565). The scheme applies to both investment activities that have previously obtained investment incentives from the BOI and those that have not. To be eligible for this scheme, companies need to make additional investments to improve their existing operations through any of five improvement categories: (1) integrating automation and robotics; (2) improving digital technology; (3) incorporating Industry 4.0 technology; (4) enhancing energy conservation, using alternative energy, and/or automation 8 years* equipment with engineering design, including control system configuration and reducing environmental impacts; and (5) achieving international standards of sustainability, such as Good Agriculture Practices (GAP), Forest Stewardship Council (FSC), Program for the Endorsement of Forest Certification Scheme (PEFCs), and ISO 22000.
In many cases, the investors would upgrade or replace machinery in order to achieve the aforementioned improvements, such as improving the efficiency, transforming to Industry 4.0, reducing energy consumption, and mitigating environmental impact.
Existing projects that fulfill such improvement goals will enjoy 3 years of Corporate Income Tax (exemption on revenue from existing activities with a maximum exemption of 50% or 100% - depending on the conditions - of the value of investments made in efficiency enhancement). In addition, import duty exemption will be granted for machinery and equipment imported for improvement purposes under this scheme.
Connecting the dots, it is clear to see that there is a great deal of potential for investors to optimize the many opportunities in this exciting growth sector. Thailand stands ready to welcome new investments in the machinery sector, particularly in robotics and automation, which would help improve the country’s manufacturing productivity.
Contact details:
Thailand Board of Investment (BOI)
Tel: +66 2 553 8111
Note: Please go to the publication for Table 1: Eligible activities for investment promotion related to machinery
