At its 10 June 2009 meeting, the Board of Investment (BOI), chaired by H.E. Prime Minister Abhisit Vejjajiva, approved a new incentive scheme for the automobile industry, revised conditions related to low and middle-income housing projects, and removed limitations on the corporate income tax waiver for companies listing on the Stock Exchange of Thailand (SET) or Market for Alternative Investments (MAI).

Automobile Projects
To attract foreign direct investment in the automobile sector and to expand the range of opportunities for manufacturers of automotive parts and components, the Board announced it would promote large-scale investments for vehicles not yet produced in Thailand that use new technology. The new policy, which is designed to attract international automakers looking to restructure by relocating their production facilities to a more competitive location, offers exemption of import duties on machinery, regardless of location, and corporate income tax holidays of five years for projects investing a minimum of Bt 10 billion (excluding land cost and working capital) and six years for projects investing a minimum of Bt 15 billion (excluding land cost and working capital).

In addition, projects that apply under this promotion scheme during 2009 will receive an additional year of corporate income tax holiday. Total corporate income tax exemption under this promotion scheme may not exceed the capital investment, not including land and working capital.

To be eligible for this new policy, companies must submit their project application by the end of 2010, must invest a minimum of Bt 10 billion, exclusive of land cost and working capital, must invest in a new assembly line, must include the production of a new model that has never been manufactured in Thailand, and must be equipped with high-technology systems (e.g. hybrid drive, brake energy regeneration, electronic stability control, etc.), as approved by the Board of Investment. Actual production must be at least 100,000 vehicles per annum in any year during the frst fve years of operation and the company must submit their investment plan/sourcing plan for parts and component to the Board of Investment.

Low and Middle-Income Housing
Since 1993, the Board of Investment has promoted the development of medium and low-income housing. At the June 10 meeting, the Board deemed it appropriate to adjust the conditions and pricing for promoted projects to reflect the current market situation. Noting that investors incur the primary costs of property and construction materials, which comprise about 70-80% of the total cost, Industry Minister Chanchai Chairungruang said that “due to the increase in wage rates, the committee has allowed investors to increase the selling prices” of projects under BOI promotion.

Under the adjusted conditions, projects must construct a minimum of 50 units, regardless of location. In Zone 1, apartment buildings must have area of at least 28 sq.m. per unit and a maximum selling price of Bt 1 million. Townhouses or single detached houses in Zone 1 must not be less than 70 sq.m. with a maximum sale price of Bt 1.2 million. In Zones 2 and 3, the sale price and minimum area have remained the same at 31 sq.m. per unit and a maximum of Bt 600,000 per unit.

Investment in Capital Markets
To encourage BOI-promoted companies to be listed on SET or MAI, the BOI has approved the removal of the corporate income tax exemption cap on the BOI-promoted projects of these companies once they are listed on SET or MAI.

Applications for the corporate income tax exemption cap removal must be submitted to the BOI before the applicant receives approval for SET or MAI listing. Cap removal will be applicable to all projects of which corporate income tax exemption is still in effect (still in the tax holidays period and cap not yet exhausted) when SET/MAI listing is approved.