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Legal Update

Big Breaks for Thai SMEs

20 April 2010
Mayer Brown JSM Legal Update

The Thai Board of Investment (BOI) identifies seven new business activities operated by small and medium-sized enterprises (SMEs) as eligible for investment incentives. BOI hopes that these incentives will drive Thai SMEs to shape up to be able to compete in a more global level.

Thai SMEs

Thai SMEs plays a major role in Thailand's economy, earmarking a 37.8% contribution to the country's gross domestic product in 2009. To buttress the role of SMEs further, and to fortify them against stiffer competition after the passage of the ASEAN China Free Trade Agreement, the BOI issued Notification No. 1/2010 on 5 January 2010.

Under the Notification, an SME is defined as an enterprise having net fixed assets, exclusive of land cost, and working capital of not more than THB 200 million.

Seven Activities

The BOI classified the following seven business activities of SMEs as activity of importance and benefit to the country, and are eligible for BOI privileges:

  1. Agriculture and Agricultural Products
  2. Mining, Ceramics and Basic Metals
  3. Light Industry
  4. Metal Products, Machinery and Transport Equipment
  5. Electronic Industry and Electrical Appliances
  6. Chemicals, Paper and Plastics
  7. Service and Public Utilities

To get the full list please click here.

Qualified SMEs will enjoy exemption from import duty regardless of the location of the project; corporate income tax holiday with no cap for eight years regardless of project location, and other rights and privileges provided under BOI No. 1/2543 dated 1 August 2000.

All applications must be filed by 31 December 2009. To be eligible, an SME must meet the following conditions:

  1. THB 500,000 to THB 20 million investment capital, excluding cost of land and working capital
  2. Thai nationals must hold 51% of the registered capital
  3. Debt-to-equity ratio must not exceed 3:1
  4. Used machinery valued at THB 10 million or less
  5. New machinery valued at 25% or more of the used machinery value
  6. THB 200 million cap on overall business value (net fixed assets, investment capital, land cost and working capital inclusive)

For inquiries related to this Client Alert, please contact:

Chitanong Poomipark ( )

Sirirasi Gobpradit ( )

Learn more about our Bangkok office, Financial Services Regulatory & Enforcement and Investment Management practices.

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