Thailand Industrial Estate Market 2008 by Colliers International Thailand

Market Research I N D U S T R I A L E S TAT E M A R K E T INDUSTRIAL ESTATE MARKET HIGHLIGHT

| OCT | 2008

c o l l i e r s i n t e r n at i o n a l

| T H AILAN D

IN D U STRIAL ESTATE M AR K ET |

OCT

|

2008

INDUSTRIAL ESTATE MARKET HIGHLIGHT Market Indicators 2007

2008F

SUPPLY DEMAND PRICE occupancy RATE

An industrial The increasingestate interest /park of is real an estate from of area theland Scandinavian set aside for market industrial is directly connected development.

Industrial to the parks upsurge are in tourism usually located to Thailand. close toThe transport flow of Scandinavian facilities, especially interest whereinmore Thai than property one transport started modalities from Sweden coincide: and later spread highways, railroads, to airports, Denmarkand and Norway. Earlier navigable rivers. people of these countries tended to buy resort properties in Spain and France.

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• In 2008, despite ongoing political and economic problems, industrial estates have been on an upturn in part due to new tax cuts for the property businesses that directly benefit developers.

While the domestic political situation is worrying investors, it is not as big a concern as the global economic slowdown.

• The total supply at the beginning of the first half of 2008 was 104,279 rais. The supply in the Eastern Seaboard area accounts for 69,635 rais, the highest of the five regions. The large supply in the Eastern Seaboard is due to BOI privileges in investment promotion zone 3, which was granted the longest term of corporate tax exemption and zero import duty on raw materials used in manufacturing export products. (See Appendix for full details of tax exemptions) Also, the Eastern Seaboard area is well located near Bangkok, Suvarnabhumi Airport and Laem Chabung and Map Ta Phut Deep Sea Ports. This strongly benefits projects in this area in terms of logistics and reduces transportation costs.

• There will be approximately 24,039 rais added to the supply of industrial estate land plots by 2010. The majority of supply will be added in the Eastern Seaboard area, with approximately 14,173 rais, followed by Southern Seaboard area and Central area, with approximately 6,000 rais and 3,336 rais respectively.

• The total take-up in the Eastern Seaboard area, consisting of 16 industrial estates, was highest, at 48,885 rais, followed by the Central area at 26,212 rais. The Central area also enjoys strong demand due to similar advantages of a convenient location close to Bangkok, a sea port, and available facilities.

• The Central area has the highest occupancy rate of 86%, while the Eastern Seaboard area has an occupancy rate of 70%, with the largest supply of 69,635 rais. In the Central area, Bangkok and Samut Prakarn have the highest occupancy rate, at 98% and 99%, respectively.

• The average SILPS (Serviced Industrial Land Plots) price in industrial estates ranges between THB 3 million and THB 4 million per rais.

• Thailand has great potential to be a gateway to ASEAN, but while logistics costs in Thailand are still high compared with other countries, such as Japan, the US and Europe, Thailand will encounter increasing competition for its role as a manufacturing base.

• The total supply of SME factories, as of 1H of 2008 was approximately 1,142,730 sq m. Ticon is the developer of SME factories which accounts for the largest share of supply, accounting for 494,418 sq m, followed by TFUND and Hemaraj, accounting for 286,482 sq m and 146,030 sq m, respectively.

• There were approximately 216,064 sq m in 114 factories added in the first half of 2008, of which approximately 170,011 sq m in 81 factories was added by TICON, followed by Amata, accounting for 24,593 sq m in 20 factories, while the supply added by Hemaraj was approximately 21,460 sq m in 13 factories.

• There will be approximately 153 factories added to the supply of SME factories by 2009, with an approximate area of 316,296 sq m.

• There is an increase in investment from small manufacturers favourable to rental factories’ demand. As small manufacturers tend to rent SME factories rather than buy industrial land plots and build their own factories, we could lead to a stronger market for SME factories, which would be positive to the SME factories market. However, current economic conditions may lead to a curtailing of SME factory demand in the short term. The average occupancy rate of SME factories is 81.36%.

The Knowledge Report | October | 2008 | Industrial Estate Market

INDUSTRIAL ESTATE MARKET OVERVIEW

This idea of setting land aside through this type of zoning is based on several concepts: • To be able to concentrate dedicated infrastructure in a delimited area to reduce the per-business expense of that infrastructure. Such infrastructure includes roadways, railroad sidings, ports, highpower electric supplies (often including three-phase power), high-end communications cables, large-volume water supplies, and high-volume gas lines.

• To be able to attract new business by providing an integrated infrastructure in one location.

• To set aside industrial uses from urban areas to try to reduce the environmental and social impact of the industrial uses.

• To provide for localised environmental control that is specific to the needs of an industrial area.

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In 2008, industrial estates have been on an upturn due to new tax cuts for the property business that directly benefit developers.

While the domestic political situation is worrying investors, it is not as big a concern as the global economic slowdown. Thailand hopes to attract up to THB 3 trillion in foreign investment between 2008 and 2011 under a new campaign aimed at eliminating red tape and streamlining licensing procedures for overseas investors. The government’s infrastructure megaproject programme, expansion of industrial estate facilities and new incentives to support basic industries, such as steel, petrochemicals, cement and power, will help facilitate investment in other sectors. The Board of Investment (BOI) plans to offer more tax and non-tax privileges in an attempt to reach its investments target of THB 600 billion this year. Japan is the largest foreign investor, with investment mostly in the automotive, auto-parts, electronics and steel industries. Japanese investors are worried about the political stability in Thailand since

they are concerned that protests may lead to delays in the government’s implementation of economic policy. Thus, in the first six months of this year, the BOI managed to attract only THB 203.7 billion worth of investment from 640 projects. This figure was 11% lower than in the same period last year or only 30% of the full-year target.

As a result, the board plans tax exemptions for machinery imports by companies approved for regional operating headquarters (ROH) incentives. The ROH programme offers customs and currency privileges, plus a 10% corporate tax, one-third the normal rate.

Investments planned in upstream steel, petrochemicals, energy, processed food and electronics would result in a better performance in the second half of the year.

The Knowledge Report | October | 2008 | Industrial Estate Market

INDUSTRIAL ESTATE LOCATIONS

Colliers has divided the industrial estate market into five (5) locations, as follows:

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The Knowledge Report | October | 2008 | Industrial Estate Market

1. EASTERN SEABOARD AREA: This area covers the eastern part of Thailand, from Chacheongsao, Chonburi and Rayong to Prachinburi. The Eastern Seaboard area is located near Bangkok, Suvarnabhumi

Airport and Laem Chabang Deep Sea Port.

This strongly benefits projects in the Eastern Seaboard area in term of logistics and reduces transportation costs.

FUTURE SUPPLY IN EASTERN SEABOARD AREA

DEVELOPER Amata Corporation PCL

INVESTMENT AMOUNT

PROVINCE

AREA (RAI)

Chonburi & Rayong

6,000

2,000

CP Land Co., Ltd

(THB Million)

Rayong

3,000

6,500

Wellgrow Industries Co., Ltd

Chachaengsao

100

NA

Thai Factory Development PCL

Chachaengsao

273

NA

Prachinburi

2,000

NA

Saha Group I.P. Hemaraj Land and Development PCL

Phase I – 2,000

Rayong

Phase II - 800

NA

Source : Colliers International Thailand Research

2. CENTRAL AREA: This area covers Bangkok and the surrounding provinces of Pathumthani, Ayuthaya, Saraburi,

Samut Sakon, Samut Songkram, Samut Prakarn, Singhburi and Nakorn Pathom.

FUTURE SUPPLY IN CENTRAL AREA

DEVELOPER

PROVINCE

AREA (RAI)

INVESTMENT AMOUNT (THB Million)

VRM Group

Ratchaburi

1,266

NA

Rojana Industrial Park PCL (existing land development)

Ayuthaya

1,800

500

Rojana Industrial Park PCL (new land purchasing)

Ayuthaya

300

100 - 200

Source : Colliers International Thailand Research

3. NORTHERN AREA: This area covers the northern part of Thailand.

The industrial estates in this area are at Pichit

and Lamphun. No new supply will be added in this area this year.

4. NORTH EASTERN AREA: The Industry Ministry plans to close the industrial park in Khon Kaen to cut the burden on the Industrial Estate Authority of Thailand

(IEAT). Khon Kaen’s industrial estate, on 40 rais of land, has no customers.

FUTURE SUPPLY IN NORTH EASTERN AREA

FUTURE SUPPLY IN NORTH EASTERN PROVINCE AREA

DEVELOPER

Industrial Estate Authority of Thailand Source : Colliers International Thailand Research

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Khon Kaen

AREA (RAI) 500

INVESTMENT AMOUNT (THB Million) 4

The Knowledge Report | October | 2008 | Industrial Estate Market

5. SOUTHERN SEABOARD AREA: This area covers the southern part of Thailand, focusing on four provinces with potential, namely Surat Thani, Nakorn Si Thammarat, Chumpon and Pattani. A steel industrial estate was part of the Southern Seaboard project.

A site for the Southern Seaboard industrial development is expected to be selected within this year and the development of a major

industrial area in the South is expected to take the pressure off the heavily industrialised Eastern Seaboard area. Potential industries on the new site include high-grade steel and furnace operations, petrochemicals and energy ventures.

FUTURE SUPPLY IN SOUTHERN SEABOARD AREA

DEVELOPER Sahaviriya Steel Industries PCL

PROVINCE

AREA (RAI)

Prachuabkirikun

6,000

INVESTMENT AMOUNT (THB Million) NA

Source : Colliers International Thailand Research

CURRENT SUPPLY The total supply at the beginning of the first half of 2008 was 104,279 rais. The supply in the Eastern Seaboard area accounts for 69,635 rais, the highest of the five regions, while the North Eastern area accounts for 4 rais, the lowest supply. The large supply in the Eastern Seaboard is due to BOI privileges in investment promotion zone 3, which was granted the longest term of corporate tax exemption and zero import duty on raw materials used in manufacturing export products. (See Appendix for full details of tax exemptions) In addition to BOI investment and promotion zone privileges, location is also a factor determining supply. The Eastern Seaboard area is well located near Bangkok, Suvarnabhumi Airport and Laem Chabung

and Map Ta Phut Deep Sea Ports. This strongly benefits projects in this area in terms of logistics and reduces transportation costs. The demand to expand production lines in the automobile industry is also pushing growing supply in the Eastern Seaboard. In addition, the central area, which accounts for the second-largest supply of 30,560 rais, also benefits from both Zone 2 and Zone 3 privileges. In the Northern area, Lamphun Industrial Estate is facing a shortage of supply as more companies decide to expand.

However, a new supply of 100 rais is expected to be added at Ban Thi, Lamphun.

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FIGURE 1 : CURRENT SUPPLY OF INDUSTRIAL LAND PLOTS, AS OF 1H 2008

Southern Seaboard 1%

North 3% North East 0%

Central 29%

Eastern Seaboard 67%

North

Central

Eastern Seaboard

Southern Seaboard

Source : Industrial Estate Authority of Thailand, Board of Investment (BOI) and Colliers International Thailand Research

FUTURE SUPPLY There will be approximately 24,039 rais added in the supply of industrial estate land plots by 2010. The majority of supply will be added in the Eastern Seaboard area, with approximately 14,173 rais, follow by Southern Seaboard area and Central area, with approximately 6,000 rais and 3,336 rais respectively.

FIGURE 2 : FUTURE SUPPLY OF INDUSTRIAL LAND PLOTS ADDED BY 2010

Source : Colliers International Thailand Research

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The Knowledge Report | October | 2008 | Industrial Estate Market

DEMAND In the first half of 2008, the total take up was 77,018 rais.

FIGURE 3 : CUMULATIVE TAKE UP OF INDUSTRIAL LAND PLOTS, AS OF 1H 2008

Source : Industrial Estate Authority of Thailand, Board of Investment (BOI) and Colliers International Thailand Research

The total take-up in the Eastern Seaboard area, consisting of 16 industrial estates, was highest, at 48,885 rais, followed by the Central area at 26,212 rais. The strong demand in the Eastern Seaboard area is due to the BOI investment zone privileges and the advantage of location. As the automobile industry continues to expand, the demand in the Eastern Seaboard area will continue to be strong as it is home to

105 major automotive supply line companies and foreign companies are looking to expand manufacturing plants in this area. The Central area also enjoys strong demand due to similar advantages of a convenient location close to Bangkok and a sea port, and available facilities.

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The Knowledge Report | October | 2008 | Industrial Estate Market

SAMPLE OF SALES TRANSACTIONS AND PURCHASE SILPS DURING THE FIRST HALF OF 2008

INDUSTRIAL ESTATE

COMPANY NAME / BUSINESS

AREA (RAI)

Amata Nakorn Industrial Estate (Chonburi)

Mitsubishi Heavy Industry

Sinsakhon Industrial Estate

VPP Progressive

90

Q2 2008

3,000

Q1 2008

Ratchaburi Industrial Estate

GS Energy Company Limited

62

Q2 2008

Amata Nakorn Industrial Estate (Chonburi)

Tai Mou Precision Industrial

NA

Q3 2008

Hemaraj Eastern Seaboard Industrial Estate (Rayong)

Suzuki Motor

412

Q1 2008

Amata Nakorn Industrial Estate (Chonburi)

CABTEC Thai Company Limited

19

Q1 2008

Amata City Industrial Estate (Rayong)

Sammitr Motor Manufacturing

100

Q1 2008

Eastern Seaboard Industrial Estate (Rayong)

BASF Chemical (Thailand)

NA

Q1 2008

Navanakorn Industrial Estate (Nakorn Ratchasrima)a

Honda

90

Jul - 2008

Eastern Seaboard Industrial Estate (Rayong)

Danieli Far East

121

Jul - 2008

Land outside industrial estate (Lamphun)

Metal Manufacturing

100

2008

Hemaraj Eastern Seaboard Industrial Estate (Rayong)

Fuserashi Company Limited

21

Jul - 2008

SIL Industrial Land

Thai Rayong PCL

20

Apr - 2008

Eastern Seaboard Industrial Estate (Rayong)

Mungmaichromium

20

Apr - 2008

Hemaraj Eastern Industrial Estate (Maptaput)

PTT Asahi Chemical

120

NA

Source : Colliers International Thailand Research

TOTAL TAKE UP OF INDUSTRIAL LAND PLOTS IN 1H 2008 BY INDUSTRIAL ESTATE INDUSTRIAL ESTATE

TOTAL TAKE-UP IN 1H 2008

Hemaraj Chonburi Industrial Estate

5

Eastern Seaboard Industrial Estate (Rayong)

263

Hemaraj Eastern Industrial Estate (Map Taphut)

0

Hemaraj Eastern Seaboard Industrial Estate (Rayong)

534)

Saraburi Industrial Land

92

Rayong Industrial Land

41

Amata Nakorn Industrial Estate (Chonburi) Amata City Industrial Estate (Rayong)

}

475

Gateway City Industrial Estate

10

Rojana Industrial Estate

300

Sinsakhom Industrial Estate

3,000

Ratchaburi Industrial Estate

62

Total Land Sales Source : Colliers International Thailand Research

8

PERIOD

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4,782

The Knowledge Report | October | 2008 | Industrial Estate Market

OCCUPANCY RATE The Central area has the highest occupancy rate of 86%, while the Eastern Seaboard area has an occupancy rate of 70%, with the largest supply of 69,635 rais. In the Central area, Bangkok and Samut Prakarn have the highest occupancy rate, at 98% and 99%, respectively.

In the Eastern Seaboard area, industrial estates in Rayong have the lowest occupancy rate of 68%, while Chonburi industrial estate has the highest occupancy rate of 80%. The occupancy rate in the Central and Eastern Seaboard areas are close to each other as the range of prices in

both areas and the benefits of both locations are similar. Although the North Eastern area has an occupancy rate of 70%, a little higher than the Eastern Seaboard area, this area offers only one industrial estate in Khon Khaen, which has a supply of 4 rais. In addition, the MOI plans to set up an IT industrial estate in Khon Khaen covering 500 rais as the manufacturing sector is suffering from the rise in energy costs. The new IT industrial estate will likely attract more businesses and increase the overall take up in the North Eastern area.

FIGURE 4 : OCCUPANCY RATE OF INDUSTRIAL LAND PLOTS BY LOCATION, AS OF 1H 2008

Source : Industrial Estate Authority of Thailand, Board of Investment (BOI) and Colliers International Thailand Research

PRICE The average SILPS (Serviced Industrial Land Plots) price in industrial estates ranges between THB 3 million and THB 4 million per rai. The highest price per rai is THB 7.5 million per rai in the Eastern Seaboard area at Wellgrow Industrial Estate, which has an occupancy rate of 94% due to its convenient location and excellent facilities, while the highest price in the North Eastern area is only THB 1.7 million per rai, the lowest of the five regions. The Eastern Seaboard and Central areas have a wide range of prices, from THB 600,000 to THB 7.5 million per rai due to the large number of suppliers. During the first half of 2008, the new takeup in the Central area, which has an available supply of 9,853 rais, was around 3,322 rais. The large reduction in available land and the strong demand in the Central area will likely push the price up in the near future. In addition, around 10 major companies in the Eastern Seaboard area acquired around 1,392 rais in the first half of 2008, due mainly to the expansion of Eco Car development. However, there is still a large amount of serviced industrial land available in the Eastern Seaboard area (20,747 rai), which will help reduce the increase in price in the short term, although, if demand remains strong, prices will likely increase significantly in the long term.

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FIGURE 5 : SELLING PRICE PER RAI OF INDUSTRIAL LAND PLOTS BY PROVINCE, AS OF 1H 2008

Source: Industrial Estate Authority of Thailand, Board of Investment (BOI) and Colliers International Thailand Research

The trend in the price of SILPS will increase since land in Thailand is still at relatively low values. The SILPS at Hemaraj Industrial Estate increased by 5%, from THB 2 million per rai to THB 2.1 million per rai at the beginning of July, 2008. The average SILPS at Amata City Rayong stands at THB 2.3 million baht per rai, while the SILPS at Amata Nakorn increased to THB 4.5 million per rai from just THB 3.5 million per rai.

OUTLOOK The industrial sector has consistently driven the country’s economic growth. The key factor in maintaining investors’ confidence and persuading foreign investors to invest in Thailand’s industrial estates is the estates’ quality of environmental management and their proven commitment to promoting the quality of life of the surrounding communities.

Thailand has great potential to be a gateway to ASEAN. Although logistics costs in Thailand are still high compared with other countries, such as Japan, the US and Europe, Thailand will encounter increasing competition for its role as a manufacturing base. China is now considered the “world’s factory”, while Vietnam was seeing strong FDI until its recent problems.

Vietnam was the top regional destination for investors due to its rapid economic growth, although the country’s economy has had a slight effect. To compete, Thailand will have to increase its attractiveness to potential investors through the use of tax privileges and better infrastructure, while developing human talent to provide a well-trained, readily available workforce.

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The government should move forward with plans to develop the Southern Seaboard area and expand industrial estate zones in light of the rapid growth due to the now-overcrowded Eastern Seaboard area in Chonburi and Rayong. The government is preparing to offer incentives to attract investment to the long-delayed Southern Seaboard area, aiming to complete the project within four years. The government will offer both tax and non-tax incentives for the development of infrastructure, including water supply and an industrial estate in the Southern Seaboard area. Chumphon, Nakhon Si Thammarat and Pattani are potential locations due to their close proximity to the deep-sea port.

It is difficult to predict the trends in investment for the rest of the year due to the rapidly changing oil prices and global inflation.

Political turmoil may not be the major concern for local or existing foreign investors, although it may affect companies that focus on selling their products in domestic markets and newcomers from overseas.

The Knowledge Report | October | 2008 | Industrial Estate Market

SUPPLY The total supply of SME factories, as of 1H of 2008 was approximately 1,142,730 sq m. Ticon is the developer of SME factories which accounts for the largest share of supply, accounting for 494,418 sq m, followed by TFUND and Hemaraj, accounting for 286,482 sq m and 146,030 sq m, respectively. TFUND

SME factories or manufacturing plants are standard factories for international companies who do not particularly want to develop their own factories, or even to own them in order to reduce their operation costs and risks related to any possible uncertainties. SME factories have been completely constructed and are offered for rent. SME factories are places either to manufacture goods or supervise machines procesing one product into another or the places for the storage of goods. SME factories are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs and etc. They are usually large plain buildings in industrial areas of cities and towns. The developer will offer to both rent and sell SME factories.

and TIF1 expanded their portfolios by acquiring freehold industrial properties from TICON and TFD respectively.

FIGURE 6 : CURRENT SUPPLY OF FACTORY FOR RENT BY SQ M, AS OF 1H 2008

Source : Colliers International Thailand Research

The total number of SME factories, as of 1H of 2008 was 549. The number of factories was highest at Ticon, with 179 factories for rent,

followed by TFUND and Hemaraj, accounting for 131and 76 factories, respectively.

FIGURE 7 : CURRENT SUPPLY OF FACTORY FOR RENT BY NUMBER OF FACTORY, AS OF 1H 2008

Source : Colliers International Thailand Research

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The Knowledge Report | October | 2008 | Industrial Estate Market

SUPPLY ADDED IN THE FIRST HALF OF 2008 BY SPACE (SQ M) There were approximately 216,064 sq m of 114 factories added in the first half of 2008. There was approximately 170,011 sq m of 81 factories added by TICON, followed by Amata, accounting for 24,593 sq m of 20 factories,

while the supply added in Hemaraj was approximately 21,460 sq m of 13 factories.

FIGURE 8 : SUPPLY ADDED IN FACTORY FOR RENT BY SQ M IN THE FIRST HALF OF 2008

Source : Colliers International Thailand Research

FUTURE SUPPLY There will be approximately 153 factories added in the supply of SME factories by 2009,

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with an approximate area of 316,296 sq m.

The Knowledge Report | October | 2008 | Industrial Estate Market

FUTURE SUPPLY OF FACTORY FOR RENT ADDED IN 2009

NO. OF FACTORIES

AREA (SQ M)

ESTIMATED COMPLETION

TICON

91

208,850

2H 2008 - 2009

AMATA

12

25,000

2H 2008

TFD

43

65,446

2H 2008 - 2009

HEMARAJ

7

17,000

2H 2008 - Q1 2009

DEVELOPER

Source : Colliers International Thailand Research

DEMAND Though the investment element in Thailand has been affected by political uncertainties, Thailand was still a top choice in the eyes of foreign companies when compared to several other countries in Southeast Asia.

Investors are now concerned more about the market’s fundamentals than political risks.

There is an increase in investment from small manufacturers favourable to rental factories’ demand. As small manufacturers tend to rent

SME factories rather than buy industrial land plots and build their own factories, we should see strong demand for SME factories, which would be positive to the SME factories market.

The average occupancy rate of SME factories is 81.36%.

OCCUPANCY RATE OF FACTORY FOR RENT, AS OF 1H 2008

DEVELOPER

NO. OF FACTORIES

TOTAL AREA (SQ M)

LEASED AREA

OCCUPANCY RATE (%)

TIF1

26

43,578

34,917

80.13%

TFUND

131

286,482

248,497

86.74%

PINTHONG

55

73,949

69,246

93.64%

TFD

29

35,820

25,815

72.07%

TICON

179

494,418

405,033

81.92%

HEMARAJ

76

146,030

105,549

72.28%

AMATA

53

62,453

40,715

65.19%

TOTAL

546

1,142,730

929,772

81.36%

Source : Colliers International Thailand Research

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The Knowledge Report | October | 2008 | Industrial Estate Market

RENT

SME factories in Thailand still have competitive price advantages over other sites in the region.

RENTAL RATE OF FACTORY FOR RENT, AS OF 1H 2008

DEVELOPER

RENTAL RATE (THB / SQ M / MONTH)

TIF1

200 - 220

TFUND

190 - 220

PINTHONG

120 - 150

TFD

200 - 220

TICON

190 - 220

HEMARAJ

200 - 210

AMATA

210 - 220

Source : Colliers International Thailand Research

OUTLOOK In 2008, Thailand’s economy was expected to improve due in part to the newly-elected Government, its fiscal stimulus packages and policies to promote investment. However, short-term political uncertainties have constrained growth, as has concerns related to the global economic slowdown, inflationary pressures and the credit crunch.

As a result, the BOI net application value dropped 13.4% year-on-year (YoY) to Bt203.5bn in 1H08, while the number of projects seeking approval was flat at 640. The average size of the projects applying for BOI privilege declined 13.4% YoY to Bt318.3mn/project, compared with Bt367.6mn/project in 1H07. The average size of auto projects applying to the BOI in 1H08 was Bt157.5mn/project, dropping 37.8% YoY from Bt253.3mn/project in 1H07. The data validates our view that the investment projects applying for BOI incentives this year would be smaller, but the number of projects could increase from 2007.

Thus, small projects should dominate the number of projects applying for BOI privileges in 1H 2008. Given their smaller scale of investment, many small-sized manufacturers may prefer renting SME factories instead of buying industrial land plots and constructing their own factories. This implies increasing demand for rental SME factories.

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The Knowledge Report | October | 2008 | Industrial Estate Market

APPENDIX: INDUSTRIAL ESTATE ZONING AND PRIVILEGES

Zone 1 Granting Tax and Duty Privileges

Industrial Estate

Zone 2

Outside Industrial Estate

Industrial Estate

Zone 3 (36 Provinces)

Outside Industrial Estate

Industrial Estate

Outside Industrial Estate

Industrial Estate

Outside Industrial Estate

Exemption

Exemption

Exemption

Exemption

8 years

8 years

8 years

8 years

50%

50%

reduction

reduction

3 years

-

7 years

3 years

Import duty on raw or essential materials

Exemption

Exemption

Exemption

Exemption

Exemption

Exemption

Exemption

Exemption

for export.

for 1 year

for 1 year

for 1 year

for 1 year

for 5 years

for 5 years

for 5 years

for 5 years

Will be

Will be

-

-

-

-

granted

-

granted

granted

privileges

privileges

privileges

Will be

Will be

Will be

granted

granted

privileges

privileges

Import duty on machinery.

Corporate Income Tax Exemption.

Exemption

50%

Zone 3 ( 22 Provinces)

reduction

Will be Double deduction from transportation.

50% reduction in corporate income tax for 5 years.

The project’s infrastructure cost is deducted.

Duty on raw or essential materials used for domestic sales.

-

-

-

-

granted

-

privileges -

-

-

-

Will be

Will be

Will be

Will be

granted

granted

granted

granted

privileges

privileges

privileges

privileges

75% -

-

-

-

reduction for 5 years

75% -

reduction

-

for 5 years

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The Knowledge Report | October | 2008 | Industrial Estate Market

293 offices in 61 countries on 6 continents USA 99 Canada 19 Latin America 18 Asia Pacific 62 EMEA 95 US$ 2 billion in annual revenue 868 million square feet under management 11,048 Professionals

Contact information THAILAND: Patima Jeerapaet Managing Director

Risinee Sarikaputra Senior Manager | Research

Colliers International 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

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w w w. c o l l i e r s . c o. t h

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.