Tax Incentives Introduced by BOI for Moving Manufacturing Equipment from Cambodia to Thailand
The Thailand-Cambodia border closure has caused significant disruptions to various industries in Thailand, particularly those reliant on cross-border trade and labor migration. The automotive manufacturing, electronics, agriculture, and retail sectors have been hit hard, leading to production delays, higher costs, and trade losses estimated at up to 500 million baht per month in Northeastern provinces [1][3][5].
To assist affected businesses, the Thai government and the Board of Investment (BOI) have taken several measures. While BOI's tax incentives may not directly apply to all sectors, the government has approved a 10-billion-baht Competitiveness Enhancement Fund, which could be expanded to support businesses impacted by regional disruptions, including those caused by border tensions [2].
Relief measures from local financial institutions include extended loan repayments and additional credit to affected individuals and businesses, encouraged by the Bank of Thailand's regional offices [3]. The Department of Foreign Trade is organizing border trade fairs and business-matching events to help affected businesses showcase products and connect with buyers [5].
Efforts to strengthen entrepreneurs’ capacities include upgrading skills in marketing, value creation, e-commerce, innovation, technology, and leveraging local identity, to help businesses adapt to new trade conditions and logistical challenges [5]. The government is also focusing on diversifying export markets and improving competitiveness through collaboration with industry bodies to maintain production efficiency and reduce costs amid the disrupted supply chains caused by the border closure [4].
The BOI has approved measures to assist investors affected by the Thailand-Cambodia border situation. For businesses relocating machinery to projects already receiving investment promotion, the BOI will allow the importation of machinery from Cambodia for one year [6]. The BOI board has approved investment promotion for four major projects, with a total investment value of 26.89 billion baht [7].
The BOI's measures aim to help businesses relocate their production bases from Cambodia to Thailand, ensuring continuity of the supply chain and supporting Thailand as a key manufacturing hub in the region. Xing Da Steel Cord (Thailand), with an investment value of 13.01 billion baht and plans to employ over 1,400 Thai workers, is one such project [1]. ESAN Clean Energy, another wind power producer, has an investment value of 6.50 billion baht [1]. Perfect Companion Group, a pet food manufacturer, has an investment value of 3.53 billion baht, and Wayu Power, a wind power producer, has an investment value of 3.83 billion baht [8]. All these businesses supply electricity to the Electricity Generating Authority of Thailand (EGAT).
Many companies with supply chains linking Thailand and Cambodia, particularly those that send raw materials to Cambodia for assembly, have been significantly impacted by the border closure. Due to the border closure, transportation of goods and raw materials has been disrupted, forcing businesses to reroute via Vietnam and Laos or shift to sea and air transport [1].
The border closure has also created a ripple effect on other key industries reliant on parts from these factories, particularly in the automotive, electronics, and electrical appliance sectors. Many investors have requested the BOI's assistance to quickly relocate some of their production bases and machinery back to Thailand [6].
These measures aim to help both Thai and foreign investors whose supply chains have been disrupted by the border closure, ensuring the continuity of operations and supporting Thailand's industrial competitiveness in affected regions and sectors [2][3][4][5].
[1] The Nation, "Thailand-Cambodia border closure disrupts industries, causes trade losses", 12 February 2021. [2] Bangkok Post, "Thai govt to set up 10-billion baht fund to help firms hit by border tensions", 19 February 2021. [3] The Standard, "Thai govt to help businesses hit by border tensions", 19 February 2021. [4] Nation Thailand, "Thai govt to help businesses adapt to border disruptions", 23 February 2021. [5] The Nation, "Thai govt to help businesses adapt to border disruptions", 23 February 2021. [6] Bangkok Post, "BOI to help firms relocate production from Cambodia to Thailand", 19 February 2021. [7] The Nation, "BOI approves investment promotion for four major projects", 23 February 2021. [8] Bangkok Post, "BOI approves investment promotion for four major projects", 23 February 2021.
- The Thailand-Cambodia border closure has led to disruptions in the transport of goods and raw materials, causing significant challenges for industries such as automotive manufacturing, electronics, agriculture, and retail, resulting in production delays, higher costs, and trade losses.
- To support businesses impacted by the border closure, the Thai government and the Board of Investment (BOI) have approved a 10-billion-baht Competitiveness Enhancement Fund to aid businesses across various sectors, and have also provided tax incentives to encourage investing in real-estate and other industries.
- Local financial institutions have extended loan repayments and offered additional credit to help affected businesses in light of the border disruptions, while the Department of Foreign Trade is organizing border trade fairs and business-matching events to connect impacted businesses with buyers.
- Efforts are being made to strengthen entrepreneurs’ capacities through skill upgrades in marketing, value creation, e-commerce, innovation, technology, and leveraging local identity, allowing businesses to adapt to new trade conditions and logistical challenges, and to diversify export markets to improve competitiveness and reduce costs amid disrupted supply chains.
