Thailand approved new measures to support the “bio-economy,” including incentives for digital agricultural trading and the setting up of agri-food industrial parks.
The two business areas were among those approved to be included in the list of activities eligible for state incentives, according to the Thailand Board of Investment.
The digital trading platform activity aims to facilitate the “farm to factory” concept, which aims to ensure the constant supply of high-quality raw materials to the industry and improve the productivity of the agricultural sector, including enabling farmers to access relevant modern technologies.
It is expected that this model will help enhance a more resilient supply chain in the agricultural and food & non-food industry and will further strengthen Thailand’s competitiveness as the world’s leading food supplier.
Despite the substantial number of existing companies in the bio-based sectors, clustering of these activities should be promoted to enhance the linkages between players in the same supply chain. The special zones for agricultural and food industry aim to group businesses involved in the agricultural and food supply chain, including food processing and businesses using agricultural products, by-products and waste as main raw materials, as well as businesses providing relevant science and technology services (such as testing laboratories) and training.
Both new activities will be eligible for tax benefits for 5 years.
The approved package also includes improved benefits and conditions for businesses involved in the production of extracts from natural raw materials and products using those extracts.
The scope of product coverage has been expanded and incentives have been improved with a view to promoting the adoption of advanced technology and higher product standards as well as the commercialization of research funded by the public sector.
Last year, the combined value of foreign and local applications for investment promotion in 2021 totaled 642.7 billion baht (US$19.5 billion), an increase of 59%, boosted mainly by foreign direct investments (FDI) in tech sectors and a continued increase in the value and number of projects in Bio-Circular-Green (BCG) industries, as well as the continued buildup of the power generation sector.
The combined value in activities classified as BCG, a cross-sector grouping of biotechnologies and environmentally friendly manufacturing, more than doubled to 152.4 billion baht, from 68.4 billion baht in 2020, confirming the growing commitment of investors to sustainable activities, including bio-plastics manufacturing and recycling of agricultural waste.
Meanwhile, FDI represented 71% of total pledges with 455.3 billion baht for a total of 783 project applications, a nearly three-fold increase in value from the 169.3 billion baht worth of applications filed in 2020.
Japan once again topped the list of FDI source countries with a combined investment value of 80.7 billion baht for 178 projects, followed by China with 38.6 billion baht in investment pledges for 112 projects, and Singapore with 29.7 billion baht for 96 projects. The top three sectors for FDI applications were electrics and electronics, petrochemicals and chemicals, and the medical cluster.