Doing business in ThailandAsia- Pacific Doing business
In November 2020 Thailand, along with 15 other countries, signed the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade zone agreement in terms of GDP. TGS member, Bizwings in Thailand knows this means doing business in Thailand is a good idea for global business as the 15 countries in the RCEP agreement form 30% of the global population, global GDP, and total trade. There are immense investment opportunities in Thailand thanks to the signing of the RCEP. Bizwings and TGS held a joint webinar to explain what the investment opportunities are and how TGS member firms can help their clients benefit from them.
The RCEP will bring significant economic growth to Thailand
Thailand’s economy is highly dependent on exports, which accounted for 60% of the country’s GDP in 2019. As you can imagine, signing this trade agreement will contribute to growth, not only due to the 5 aims of the agreement, but because it’s the first-ever agreement between the 3 largest economies for trade: China, Japan, and South Korea.
💡 Key highlights of RCEP:
- Reduce custom duties – and eliminate them in the future between member countries. Under the tax reduction scheme, 65% of goods traded will be reduced immediately to 0%, and 20% will be continuously reduced to 0% within 10 years.
- Prohibition of non-tariff measures – such as embargos, licensing restrictions etc.
- Increase transparency – e.g. to facilitate trade and accelerate customs clearance.
- Establish common rules of origin – this will facilitate member countries to utilize the benefits of the scheme.
- Enhance business environment – through regulations relating to intellectual property production, government procurement practices, e-commerce, and more.
The agreement is planned to take effect in early 2022. As a result, the member countries expect a lot more trade coming from the 3 biggest economies in Asia and a projected real income increase to 165 billion USD.
Should businesses invest in Thailand in 2021?
The question is then, why should businesses choose to invest in Thailand in the year 2021? Why not any of the other countries in the RCEP?
- Thailand is a strategic location for businesses looking to access RCEP benefits. It is in the heart of ASEAN and connected with the rising CLMV, Cambodia, Laos, Myanmar and Vietnam, countries.
- Thailand has solid economic growth – Thailand’s GDP has experienced solid growth over the past years. It is also the second-largest economy in ASEAN by GDP per capita.
- Thailand’s Board of Investment (BOI) plays a major role – it brings significant opportunities for investments in many fields of activity.
- Thailand has a skilled and cost-effective labor force.
- Thailand Ranks 21st in the World Bank’s ease of doing business 2020 – the country scores highly for utilities, starting a business, protecting minority investors, and trading across borders.
- TGS member firm, Bizwings are an efficient, international, and friendly multi-disciplinary firm. Bizwings are also a signatory of the United Nations Global Compact and, as TGS, are committed to sustainable business development.
Which business is profitable to start in Thailand?
RCEP will also strengthen the position of Thailand as the preferred manufacturing base in Asia given the country’s positive trade balance in several industries.
The industries that will receive benefits from expanding the export market to Thailand are:
✔️ Automotive parts.
✔️ Agriculture and food processing.
✔️ Financial services.
Non-ASEAN countries should be interested in expanding their production bases in these sectors given Thailand’s proven track record. Plus, there are many tremendous incentives in doing so and TGS member firm, Bizwings helps businesses take advantage of the Thai tax reduction scheme.
How can TGS help you benefit from the RCEP agreement as an investor?
The Board of Investment (BOI) is a government agency aimed at promoting foreign investment in Thailand. They provide major incentives to foreign investors that TGS can help you access such as:
✔️ Permission for foreign investors to buy land.
✔️ Exemption from work permit and visa rules.
✔️ Corporate income tax exemption for up to 8 years.
✔️ Permission to operate under 100% ownership.
✔️ Deduction of transportation, electricity, and water costs.
✔️ Exemption on import duties on machinery, raw materials used in R&D, and production for export.
TGS can help you make your business plan in Thailand become a reality
TGS member, BizWings supports many foreign investors to set up their company in Thailand and they can help you do the same. BizWings provide a comprehensive service that covers everything from research and initial due diligence to accounting, payroll, and business and investment consulting.
TGS member, BizWings supports you from a business idea, to set up, to running your business successfully in Thailand ensuring always that you maximize the opportunities Thailand’s involvement in the RCEP brings.
I want our company to be the "Wingman" for our clients, to be by their sides, and to set them up for success. We aim to think and fight against difficulties together with the clients.
Junnosuke Kurachi, CEO of Bizwings
You can watch the replay of the webinar just below! 👍
TGS is an entrepreneurial and innovative network with a focus on sustainable business development. We help you collaborate, recreate and innovate in Thailand and around the world.