What can we expect from Thailand's Eastern Economic Corridor?
The Eastern Economic Corridor Development (EEC) project was agreed by the Thai cabinet back in June 2016. The EEC is located on the Eastern Seaboard in Thailand, and would generally be regarded as the region between Laem Chabang and Map Ta Phut which has a combined area of 13,285 square kilometres. This area is seen as serving huge importance as the country looks to establish itself with ASEAN.
The EEC aims to drive Thailand forward with a more “value-based, innovative-driven economy” which, in turn will have a hugely positive effect on the resort city of Pattaya, already popular with expats, tourists and those coming to the area on business. Pattaya will unquestionably need greater investment in high-end hotels and condominiums to cater for the additional business people coming to the region.
For those of you who are maybe unaware of Thailand’s industrial economy, the Eastern Seaboard which will be home to the EEC is now viewed by the Office of National Economic Development Board as “Thailand’s major industrial production base, especially for petrochemical, energy, and automotive industries.”
To give an ideal of the scale of investment that the region is targeting, investment of US$43 billion is anticipated over the next five years – the majority of which will come from overseas. To further aid this, the Board of Investment (BOI) is concentrating on new investment promotions via the Investment 4.0 policy.
How much of Thailand’s GDP does the EEC represent?
The area accounts for 20% of the country’s total GDP so your start appreciate the magnitude of the region when you consider Thailand is viewed by many as a country that relies heavily on rice. Whilst this still remains the case, the fact that the Eastern Seaboard already has huge potential, thanks to its well-established infrastructure such as road and rail links, deep-sea ports and industrial estates means that it is poised to take Thailand to the next level in terms of industry and innovation.
The excellent geographic location and the afore mentioned infrastructure, means that the EEC could easily be viewed as ASEAN’s main sea transportation hub. The Eastern Seaboard is recognised around the world for the relative ease that it can connect with the Dawei deep-sea port in Myanmar, Sihanoukville Port in Cambodia, and Vung Tau Port in Vietnam again, only enhancing its reputation.
Further infrastructure improvements are again planned for the EEC with a high-speed rail line linking Bangkok with Rayong, and further improvements to the U-Tapao airport. Once again these improvements will be great for the region as a whole with Pattaya, and the hotel and tourist industry reaping the rewards – again increasing Pattaya’s reputation will international investors.
Impressively, the EEC is expected to create 100,000 jobs a year in the manufacturing and service industries by 2020.
Reduced Corporate Income Tax (CIT)
Although the BOI is already extremely attractive for international investors, there will be increased incentives for businesses moving to the EEC with what is described as a “super incentive promotion package”. Arguably the most attractive of these incentives is a 50% reduction on CIT for five years in addition to the standard 13 years in line with the Competitive Enhancement Act incentives.
According to Thailand Business News, the EEC Act (Eastern Special Economic Zone Act) is still pending, and the following main advantages might be applicable:
- The exemption for corporate income taxation (CIT) will be granted up to 15 years instead of the current maximal tax holidays of eight years.
- A maximum personal income tax (PIT) rate of 17% for management, investor, experts.
- A five-years business visa
- A land lease for 50+49 years
- A 3-month public-private-partnership (PPP) procedure
- A fast-tracked environmental impact assessment (EIA)
The aviation industry is seen as key to Thailand’s development so this along with Next-Generation Automotive, Smart Electronics, Eco-friendly Petrochemicals and Bio-Chemicals, Automation and Robotics, Medical Hub, Affluent, Medical & Wellness Tourism, Food for the Future and Digital industries (source: Thailand Business News) will be at the heart of the EEC.
Of course, tourism is important to the region too. The deep-sea port at Chuk Samet will be developed to cater for cruise liners and yachts which will have a knock-on effect in nearby Pattaya that is has already seen massive developments in recent years. Hoteliers will no doubt be eagerly looking forward to the expected influx of tourists which as in turn attracted more investors.