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| Investment Policies and criteria |
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In determining the suitability of a project for which investment promotion privileges are requested, the Board of Investment applies the following criteria:
- For a project with investment capital (excluding cost of land and working capital) not exceeding 500 million baht, the following criteria are used:
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The value added is not less than 20 percent of sales revenue, except projects that manufacture electronic products and parts or process agricultural produce, and projects granted special approval by the Board; |
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Ratio of liabilities to registered capital should not exceed 3 to 1 for a newly established project. Expansion projects shall be considered on a case by case basis; |
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Modern production processes and new machinery are used. In cases where old machinery will be used, its efficiency must be certified by reliable institutions and the Board's approval must be obtained; |
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Adequate environmental protection systems are installed. For projects with a potential environmental threat, the Board shall prescribe special conditions on both the location of the project and the manner of pollution treatment. |
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| - For a project with investment capital (excluding cost of land and working capital) exceeding 500 million baht, the above criteria shall be used and a feasibility study of the project, as prescribed by the Board, must be submitted. |
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| - For a concession project or privatization of a state enterprise project, the criteria shall be based on the cabinet's decision dated 25 May 1998, as follows: |
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Projects of state enterprises shall not be granted promotion; |
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For a Build Transfer Operate or Build Operate Transfer concession project by the private sector, the state agency that owns the project must submit its project to the Board for consideration prior to any invitation to bid, and bidders shall be informed of any promotional privilege entitled to them, prior to the bidding. In principle, the Board will not consider a project where the private sector pays for a concession, unless such payment is deemed to represent a reasonable investment for the state; |
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For a Build Own Operate project, including a lease by the private sector or rental payment to the state, normal criteria are used; |
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For privatization of state enterprises, only expansions after the privatizatation shall be considered for promotion. |
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| To relax the limitation of foreign shareholding in manufacturing activities and to facilitate investors on their investment, the following criteria are used: |
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For a project in agriculture, animal husbandry, fishery, mineral exploration and mining and service business under List One of the Foreign Business Act B.E. 2542, Thai nationals must hold shares totaling not less than 51 percent of the registered capital; |
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For manufacturing projects, in all zones, foreign investors may hold a majority or all shares in promoted projects; |
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The Board may specifically fix the shareholding of foreign investors on some promoted projects when it is deemed appropriate. |
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| To improve the good governance of projects, the BOI has instituted a cap on a project's corporate income tax holiday at 100% of invested capital. This was an administrative change initiated in December 2001. By establishing a cap, the BOI can improve transparency and perform better cost/benefits analysis when reviewing projects. |
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