On September 22, 2015, the Cabinet of Thailand approved a policy aimed at developing industrial clusters. The idea is to grant additional privileges to certain types of businesses, provided they are located in designated provinces — typically those with lower economic development. The Ministry of Industry will oversee implementation, while incentives will be determined by the Board of Investment (BOI).
Target Industries
There are 10 targeted industries, divided into current priorities:
- Next-generation automotive industry
- Smart electronics
- Medical and wellness tourism
- Agriculture and biotechnology
- Food for the future
And long-term перспективные направления:
- Robotics
- Digital industry
- Biofuels and biochemicals
- Aviation & logistics
- Medical hubs
Designated Provinces
Eligible provinces for cluster development include:
- Nakhon Ratchasima
- Ayutthaya
- Pathum Thani
- Prachinburi
- Chachoengsao
- Chonburi
- Rayong
- Chiang Mai
- Phuket
Incentives for Industrial Clusters
The highest level of incentives will be granted to so-called Super Clusters, selected based on two criteria:
the type of activity (advanced technologies) and the location.
For example, the digital industry in Chiang Mai or Phuket may qualify as a Super Cluster, while environmentally friendly chemical production is encouraged in Chonburi and Rayong.
Super Cluster Incentives
Tax incentives:
- Corporate income tax exemption for 8 years, followed by a 50% reduction for the next 5 years
- For strategically important industries, the Ministry of Finance may grant tax exemptions for up to 10–15 years
- Import duty exemption on machinery
- Personal income tax exemption for specialists (both Thai and foreign)
Non-tax incentives:
- Eligibility for permanent residency for key specialists
- Permission for foreigners to own land for project implementation
Particularly noteworthy are the extended tax holidays (up to 15 years), as well as new benefits such as personal income tax exemptions and permanent residency options for employees.
Standard Clusters
In addition to Super Clusters, there are also standard clusters, primarily focused on agro-processing, textiles, and garment manufacturing.
These offer broader geographic flexibility but fewer incentives:
Tax incentives:
- Corporate income tax exemption for 8 years, plus 50% reduction for 5 additional years
- Import duty exemption on machinery
Non-tax incentives:
- Permanent residency opportunities for specialists
- Land ownership rights for foreign investors
Additional conditions:
- Companies must cooperate with local academic institutions to develop human resources and technology
- Applications for incentives must be submitted by the end of 2016, with project implementation starting by the end of 2017
Special Economic Zones (SEZs)
In parallel, Thailand is developing Special Economic Zones (SEZs) in border provinces:
- Tak
- Sa Kaeo
- Trat
- Mukdahan
- Songkhla
- Nong Khai
- Chiang Rai
- Kanchanaburi
- Nakhon Phanom
- Narathiwat
Target Industries in SEZs
- Agro-processing
- Ceramics
- Textiles
- Furniture manufacturing
- Jewelry
- Medical equipment
- Automotive and parts
- Electrical appliances
- Plastics
- Pharmaceuticals
- Logistics
- Industrial estates
- Tourism and related services
Companies located in these zones can benefit from both tax and non-tax incentives.
SEZ Incentives
Tax incentives:
- Corporate income tax exemption for 8 years
- 50% reduction for the following 5 years
Non-tax incentives:
- Double deduction of transportation, electricity, and water costs for 10 years
- Additional 25% deduction on infrastructure and construction costs
- Import duty exemption on machinery
- Import duty exemption on raw materials used for export production
- Other non-tax privileges
- Permission to employ foreign unskilled workers
The last point is particularly significant, as it simplifies the process of hiring foreign employees without strict qualification requirements — an important advantage for companies familiar with the complexity of work permit procedures.
Applications for BOI incentives must be submitted by the end of 2017.
It is also worth noting that for companies without BOI certification, the Ministry of Finance may introduce a reduced corporate tax rate of 10% for 10 years (down from 20%). Further clarification on this measure is expected.
For more detailed information, including activity classifications and regional benefits, please refer to the official BOI presentation.
Author: Alexandra Agapitova.
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